Emma Okonji and Nosa Alekhuogie
The Managing Director of Nigeria Sovereign Investment Authority (NSIA), Mr. Uche Orji, has said Nigeria needs substantial amount of funds to overcome the spread of COVID-19 across the country.
Orji who spoke yesterday as a guest on Arise Television, the sister broadcast arm of THISDAY Newspapers, said adequate financing was the first step necessary to curtail the spread of the virus that has infested over one million people and killed over 80,000 people globally, including Nigeria.
According to him: “The subsidies the Minister of Finance had earlier spoke about was the necessary first step that Nigeria needs to raise substantial amount of money for the financing of the entire portfolio that was put in place to stop the spread of Coronavirus in the country.
“The first thing to do, be it at the country level or a corporate level, is to draw as much cash as possible and hold it especially when you can’t put a finger to the end of this problem. First of all, make sure you have the money. It could be raised from International Monetary Fund (IMF), World Bank, African Development Bank (AFDB), Sovereign Wealth Fund, or any means by which you can.”
He said another way to raise money as a country, was to look through the country’s budget to review it and cut down on some budgets that the country could do without.
“Obviously, what is happening with the oil market is something that should be. We have a demand and supply shock at the same time; let’s hope that the outcome of the OPEC meeting scheduled to hold today, will reach some kind of agreement so we can manage the oil sector better and generate more money for the country to address our financial challenges, including the challenges of the Coronavirus.
“If you look at the UK or US, citizens are applying for mortgage and the government is giving support for small businesses. These are the right things to do although we don’t have as much resources as they do but I think we would come out of this much better and much stronger and I think both the local and international markets would recover, and these things would come and go. Taking advantage of the situation to have some necessary reforms and restructure of our finances is the right thing that the government is doing, and we need to commend government for that initiative,” Orji said.
According to him, “The raising of funds was designed to help the government pull through the economic stress and the requirement of the NSIA law is that the Ministry of Finance can upon convincing demonstration to address an urgent need, withdraw from the fund. I don’t know of any country that has not withdrawn from its sovereign funds.
“This is the first time in recent history that this is happening. The stabilisation fund in the reserve has about $351 million as of last week in which $300 million was contribution by the government, $50 million was returns on the fund, and this fund can be liquidated on short notice in less than seven days. It is an investment fund that constitutes of 20 per cent of the NSIA portfolio.”
Speaking on how to invest in the stabilisation fund, Orji said: “There are three trenches of contribution made by the government, the first was $200 million, which was received in 2013, the second being $50 million was received in 2017 and 2018. The investment profile low risk portfolio and we have kept a lot of it in cash. In 2018, we kept about 50 per cent of the fund in cash and the idea was that the market last year was over-bought.”
Speaking on the overall investments, Orji said everything has changed, but that the investment community would take its time to digest what is coming.
“This is not 2008 financial crises, this is not 1987 Black Monday, and this is different. It is the first time we have had a synchronized economy slow down caused by something we cannot contain. Nobody knows when this is going to end. The focus has changed for us as well, something that has come out of this for us is the healthcare and agriculture. They are the top two things that matter now. We have been investing in healthcare all along and we realised that 40 per cent of the pharmaceutical ingredients come from China , 50 percment of drugs we import comes from India, there are vulnerabilities, so we are finding ourselves re-accessing our investments.”
Addressing the issue of mismanagement in the oil sector, Orji said the situation remained unprecedented and that almost every country is going to their sovereign wealth fund.