The Managing Director/Chief Executive Officer of the Nigeria Sovereign Investment Authority, Mr. Uche Orji, in this interview provides an update on the activities at the government agency since the beginning of the year; he spoke about the level of work at the Second Niger Bridge, the Lagos-Ibadan Expressway, as well as other projects being handled by the investment institution. Orji believes that with the quality of Nigerian healthcare practitioners working across the world, the country has a competitive advantage if it can fix the challenges in its heath sector and address the brain drain. Obinna Chima brings the excerpts:
Can you give a brief on NSIA activities since the beginning of the year?
So, year-to-date many things have occurred that have affected our programmes and our plans. You can attest to the fact that I do not think anybody I know today has executed much of what they had planned to execute at the beginning of the year. Whatever you planned to do in February or March has not happened and even if you decided to go ahead with it. The outcome would have been completely different from whatever the original intention was. It has been a very challenging period. We first made sure that all our employees are safe, which is very important. We ended up with a situation whereby the workforce delivered their output virtually working from home during the lockdown period.
Even up till now, we have maintained only about 40 per cent from our workforce physically present. But last week we resumed in-person work fully. So, the first thing was to keep our employees safe. The second thing is the Fund’s performance itself. The Fund has done relatively better than most of our peers. Of course, we do not count our chickens before they hatch as the year has not ended. But if you think about the volatile market environment, we have maintained a market position in most of our funds, which keeps us in a very good position. We set up these Funds to earn steady returns. What I can assure you is that no matter how volatile the market is, we set up the NSIA to ensure that we get stable returns, and it has been profitable.
On Infrastructure Fund, which is the one we tend to focus a lot on, we have executed a number of projects. Under our healthcare investment programme, we commissioned two diagnostic centres – one in Kano, in March 2020, even though it has been operational since December last year; and more recently, we commissioned one in Umuahia in August this year.
We have many more projects in the pipeline and over the next 12 months, we expect to also execute at least three more. One of the projects under consideration is the centre for advanced medicine in Abuja. There are also two other specialist centres that will deal with different aspects of therapy which are being considered. But we have not made our final decision on where those ones would be. So, like I said, in terms of healthcare, we have 14 projects in view.
Also, along with Global Citizen, we have created the Nigeria Solidarity Support Fund (NSSF). This Fund is for people that want to donate and help Nigeria fight Covid-19. The Fund is going to be used in building healthcare centres. It is a Fund that is owned by Global Citizen, but the NSIA is the Fund manager. The initiative has been launched.
Notably, there is an NSSF website where interested people can participate in the initiative. I want people to be aware of that initiative given that it will enable people to participate in the economic recovery process. In agriculture, we have a few interventions. Firstly, we are the managers of the Presidential Fertilizer Initiative (PFI). We also invested directly in a demonstration farm on land span of over3,000 hectares in Nasarawa State and it is doing well.
This is part of the NSIA-UFF joint venture investment in agriculture. UFF is a South African – Dutch specialist agricultural investment company. Remember that in 2016, we launched a joint fund targeted at US$200 million to invest in agriculture in Nigeria. This has taken off and so, we are in discussions with some other state governments including Ebonyi, Edo states and farm managers in Kano and others for potential investment. As I said, we have a lot of agriculture programmes for the states in the pipeline. Going back to our demonstration farm, the average farm in Nigeria produces about two to two and half tonnes per hectare of maize. But we are currently producing seven tonnes per hectare of maize and by the time all the mechanised equipment are installed, we would be targeting 13 tonnes per hectare. We intend to replicate this model in other areas where there are joint funds.
On the Presidential Fertiliser Initiative (PFI), the onset of COVID-19 inhibited many workstreams under the programme. Amongst the many workstreams that was critically affected was transportation. When COVID-19 started, we found out that the transportation time for raw materials was extended. Before COVID-19, it used to take three days for a truck to go from Port Harcourt to Kano. But, during the pandemic, that transportation time almost became eight to nine days. Also, at the height of the contagion, Indorama which is the biggest and only supplier of urea had to shut down. While things are back to normal now, the pandemic did take its toll on the PFI.
The final investment programme I will speak about is roads. You may not have been able to visit the site of the Second Niger Bridge since we conducted the last media visit, but a lot has changed since then. As we speak, the decking is ongoing. If you go there now, you will see a bridge decking gradually taking shape over the pier caps. Work is going on there and I think it is over 47 per cent completed now. The Lagos-Ibadan Expressway has similar level of completion as well as the Onitsha-Kano Road. The interesting thing is that these projects are run under a public-private partnership (PPP) arrangement.
Prior to NSIA’s involvement, the Ministry of Works had awarded the contracts for the projects and they had completed the designs. Our role is to serve as the fund manager. We have not had the full opportunity to have those projects under our control. At the moment, we are working on a partnership basis and there will be a full concession signed very soon that will hand the projects over to the NSIA. Nonetheless, we have been funding these projects since August 2018. Soon, we shall be conducting a fund-raise to secure funding to complete the projects. If you remember, these were the projects for which we were given the funds that were recovered from Late General Sani Abacha. We have received the Abacha-funds from the United States government which was recovered from the Island of Jersey.
However, preparations are underway for utilization of the funds.
While we have so many things going on at the NSIA, you also know that most of our investee companies suffered some sort of delays in their project on account of COVID-19. This has not deterred us as we committed to delivering our mandate to the Nigerian people.
I am sure you saw the announcement of the US$39 billion InfraCo Fund by the Central Bank of Nigeria (CBN), where the NSIA, the African Finance Corporation and the CBN are coming together to create an infrastructure company. More details about it would be announced later. The idea is to create vehicles to help drive the development of infrastructure in Nigeria.
We are co-developers and investors in the Development Bank of Nigeria (DBN) as well as the Family Homes Fund. We believe that if we develop all these types of companies, it will make the financial market in Nigeria very efficient and effective. So, these are some of the things that have been happening over the past six months. It has been busy here at the NSIA. But in a nutshell, one of the things that make us proud is that we are have remained consistent in terms of profitability. Yes, we admit, it has been tough in the past few months, but year-to-date, returns have been descent.
Around April this year, the federal government announced that about US$150 million would be drawn from the Stabilisation Fund. Has that money been given to the government?
The money has been made available, but we are in the process of transferring it. I will explain why in a minute. So, the simple answer is yes, it has been called officially. The request for funds was only announced in April, but now it has been called and we have just agreed the exchange rate mechanism for which the transfer is to be made through the Central Bank. So, once again the answer is yes, it has been called but it will probably leave our account in the next few days. As you know very well with government, announcements and actions do take time. So, the process is ongoing. To be honest, we have liquidated all the investments from which the money was needed as far back as April. It is just a matter of the process of finally transferring the money. As you all know, the government has its processes. I do not think the money would be here within the next two weeks, so technically it is gone. It is just a matter of paperwork.
The federal government appears to be ceding more major projects to the NSIA for execution, what informed that and when will be the Second Niger Bridge and other major projects you are handling be finalised?
The NSIA was set up to enhance Nigeria’s infrastructure. Secondly, the NSIA by its law can raise private capital, alongside public capital and this is part of what can make a project move faster. Government does not have the resources and the NSIA can raise external capital from pension funds and other investors. So, combining public and private capital is the way now to deliver on infrastructure projects and the NSIA is the only entity of government set up to do that. So that I think are the reasons why that decision was taken to cede more projects to the NSIA.
For the state of the road projects, let me explain two things: These projects were already ongoing, and the Ministry of Works had awarded those contracts. The only one that the NSIA was involved in from the very beginning was Second Niger Bridge. The other two were already awarded by the Ministry of Works. So, the NSIA came in midway and had to inherit the contract as it was. In the partnership, part of what we are trying to do is to make sure the nature of the contract for these projects are acceptable to private investors.
The Second Niger Bridge was designed to be acceptable to private investors. So, we have not taken the full concession for the other two at the moment. The government has given us their own contributions and the NSIA has put its own contribution around already and we will be working together to deliver the project.
It is important to understand that the NSIA was brought in by the government to ensure public, private partnership on the project. The other thing that the NSIA was able to do with the projects was to commercialise them. If you look at some of these projects, they were not originally designed to be toll roads. Hence, part of the work is having the projects redesigned so that they are toll-able. That is ongoing. Another thing is the funding structure is such that the federal government will contribute some fund while the NSIA will pool funds from third parties to finish the project. With respect to the Second Niger Bridge, the NSIA’s involvement in that project dates to 2014; we were there from the very beginning. However, on the Lagos-Ibadan Expressway and Abuja-Kano road, we were invited after the fact and thus we were not there at the onset.
So, there are some issues the Ministry of Works still needs to tidy up as conditions precedent. For example, there are some debts owed to the contractors running many years before we even got involved and we do not want to entangle the NSIA in that arrangement and thereafter inherit those debts. So, we are making sure the legal and contract issues are sorted out. There are also design issues. But we are particular about the legacy debts issues because as you know, anything government is doing, especially if it has gone through several administrations, there would have been issues and all those concerns have to be completely taken care of before we can now take full ownership and then bring investors in.
As stated, the construction is going on and we are managing government funds for those projects and disbursing according to government’s instructions. You may see some of those projects now being handed over to us before the end of this year.
With respect to the completion timeline, the answer is not linear. For example, the Abuja – Kano, there have been concerns about the delay and part of it has to do with the nature of the contract. For the Second Niger Bridge, we are working very hard on it and I am confident that we would finish the bridge section before the end of 2022. We are talking about February 2022 for the section, but the access road would take additional time to complete. However, the section we are handling, which is 11.7 kilometres of the actual bridge, should be ready by the first quarter of 2022. We also expect to finish work on the Lagos- Ibadan Expressway, before the end of 2022. On Abuja-Kano road, once the Federal Ministry of Works is done with a few things that they need to handle, I should be able to give an updated timeline on that project. The fund-raise for these projects is going to keep us busy next year because we do not have all the fund. We have a substantial chunk of it as we have enough funds to keep us going until the end of next year, but we will raise the shortfall in the market.
By early next year we would do the fund raising, so that there would be no break in construction because of money. You are aware that the East –West Road has been returned to the Ministry of Niger Delta Affairs as we could not agree on several things on the execution plan. We returned the money given to us by government that was earmarked for the East-West road to the Federal Ministry of Finance, Budget and National Planning and transferred the project back to the Ministry of Niger Delta. So, the East-West Road is no longer part of the projects we are handling. For Mambilla, there are a couple of deal structuring and legal issues outstanding.
Overall, with the exception of the East-West Road which has been handed over to government, the other projects under the Presidential Infrastructure Development Fund (PIDF), which is the umbrella programme for these road projects and the Mambilla power project are all ongoing. In summary, this is the status of the projects under this programme.
With all your interventions in the health sector, especially with the specialised health centres, are those facilities affordable to Nigerians such that nobody would be denied treatment based on cost?
Let me start this way, if you need to treat yourself for cancer, the closest you can go to is Ghana for the kind of equipment we have in Nigeria presently. Quite frankly, I hate it when people make comparison because ours is more superior by far. In Ghana, I was told that the price currently is almost four times what you pay for same treatment at our centre in Lagos. This comparison is just for Ghana, but was you know patients also go to Dubai, Germany, Italy, Israel, UK, United States, South Africa, India, or Saudi Arabia at huge cost. These are most of the places Nigerians visit for medical tourism. Relative to these, we are the cheapest. The complete cost for radiotherapy for 30 days at the Cancer Centre in Lagos is one quarter what they pay in Ghana. Remember that care was to be sought in Ghana, you also have to pay for somebody to go with you; that person has to stay in a hotel and you have to bear additional cost. So, whether you look at the basic cost of care or the total cost which also include the cost of travels, logistics, feeding and other, ours is disproportionately cheap. That is because we chose at the NSIA to prioritise healthcare than to prioritise profit. The plan we have is to run them as “not primarily for profit.” Having said this, there is a cost to healthcare which the patient must bear.
We recognize this challenges in our local environment and so with our lower pricing system, it will take a long time for us to recoup our investment and then hand over the facility back to LUTH. But it is a sacrifice we have determined to make. This also applies to the facilities at Kano and Umuahia.
So, in terms of affordability, I know that the most affordable thing is to have service at the facilities for free, but it is not. Another thing I like to say is we do not have health insurance as a people. Maybe, we should talk about that. Also, we do not have many endowments and foundations focused on alleviating healthcare costs for our people.
Perhaps, we should talk about that as well. These are systems that need be created to ese the burden of the cost of care. I have said it many before that a lot of people in the United States cannot afford cancer treatment and yet they are afforded care by people who are wealthy and who put together foundations to help the less fortunate. So, the point I am making is that we must be our brother’s keeper. The money we invested here is the Future Generation Fund, so we must retain it and bring it back when we divest at some point in the future. Otherwise, your children and my children would ask us what happened to the fund. So, the alternative to solving the issue around funding healthcare is for all of us to pool our resources together to support the less privilege with the costs.
That is why I am very thrilled and proud of NSIA’s partnership with Global Citizen, which is a global entity based in the United State. It brings people who are top there in the society to be philanthropic and bring money into health. NSSF is targeting to raise N20 billion, which would be used to help each of the 774 local government areas in developing primary healthcare centres. These are the kinds of initiatives I want to see more of. The best I can do is to ensure that the specialised health centres are competitively priced.
The other thing about this cancer centre which people don’t understand is that it is not about getting money to buy the equipment, the cost of those things is like two months profit for the NSIA, based on how we are running now. But the biggest challenge was getting the doctors, oncologists, and radiotherapists to run the facility To address the gap, we built a training centre at LUTH so that we can treat people and once we get to that point where we now have a proper base of highly skilled people who can manage the equipment and run the facility, we will leverage this pool of talent to populate other healthcare facilities nationwide. Some have asked me “when we are establishing a facility in their state?”; We can, and we will do that. However, the equipment is not the problem, the problem is who will operate them. Nigerian healthcare workers across board are some of the best in the world. All they need is access to the right equipment and training on how to use same. So, we are spending money on training people. I will love for this country to not have to worry about cancer. But unfortunately, it is the harsh reality of our existence today. The fact is that we must address it head on. To that extent, I want this country to be a centre of excellence in this space such that patience world over will see Nigeria as a medical destination and travel here for treatment from other parts of the world as was the case the 70s.
Are you aware that some of our people go to Eastern Europe to get medical treatment? That is because the quality is high, and it seems affordable without the secondary costs. Why do people go to India? Largely for the same reason – quality of care. One area that Nigeria has competitive advantage from the developed world is medicine. We have trained doctors working in the United States and England and working everywhere in the world. So, if we treat our doctors well and keep them, patients seeking care will come here for treatment. I am more than impressed by the doctors we have in this country. After my father’s death, I called the Chief Medical Director to ask how much it would cost to fix the hospital. That personal tragedy fueled my passion to stimulate investments in the sector and that was partly how we began exploring the sector to see areas where we can add value.
How much savings do we have in the Sovereign Wealth Fund presently and looking at what has happened globally since the outbreak of the virus, what lessons do you think the country can draw from this in terms of saving into the SWF?
In terms of core funds, government has contributed US$1.75 billion to the NSIA since inception and only recently called US$150 million withdrawal from one of the funds. At a certain point in the last 6months, NSIA’s total asset was somewhere between US$2.1 billion and US$2.2 billion. I would like to speak more to what the government has contributed in terms of the core funds as well as through third party managed funds. At the end of the year, we will sit down and look at the returns. But all I can tell you is that the NSIA is viable entity and if you take out the US$150 million the government has asked for, the net contribution of government to the core fund is US$1.6 billion.
In addition to the foregoing, there were an additional third-party funds entrusted to the NSIA which are not part of the Authority’s core funds. For instance, on the PIDF programme I spoke about earlier, government had made contributions of US$650 million in one tranche, a N90 billion in another and more recently, the US$311 million recovered Abacha asset that was transferred to the NSIA. These are third party managed funds, but they are contribution in a sense and are added to our assets under management. So, on PIDF, this is about US$1.2 billion in assets. NSIA also manages funds for the Debt Management Office (DMO) of US$100 million as well as the FGN Stab Fund managed separately in naira, which is about N30 billion.
With the pandemic taking hold in every corner of the planet, every country has been affected by the economic impact of the virus. This government of today has done more than I expected. As you know, oil price collapsed and yet somehow an additional US$250million was contributed in 2020 bringing the recent contributions to NSIA’s core funds to US$750 million over the last 4 year. This is outside the significant third-party managed funds under the NSIA which government has been funding. Of the total core contribution, only US$150 million was called back due to the recession and collapse in oil price which was exacerbated by COVD-19. I think it is very important that we point these out.
The lesson we are learning now is what we should have learnt between 1973 and 1974. In 1973/1974, the OPEC crises happened, the oil sector ballooned, and the Middle Eastern countries started setting up Sovereign Wealth Funds from 1976 – 1978. Abu Dhabi and Norway set up theirs around that period. That was when many nations started developing and introducing SWFS as a savings mechanism. So, the truth about it is that this is something that should have done since the late 70s or early 80s. The countries that had that set up their SWF then are better prepared now. So, where we are now, we just need to prepare ourselves for the future, to make sure that we are ready.