Sovereign Investment Fund: Bridging Nigeria’s infrastructure gap

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Uche Orji, MD, NSIA

By Folasade Akpan

Over the years, the challenge of providing adequate infrastructure for Nigerians has been a herculean task for government at all levels and the Federal Government has at several occasions called on organisations to help in bridging the gap.

The Vice President, Prof. Yemi Osinbajo, at an event in 2020 said that in spite of government interventions over the years, Nigeria still faces a huge infrastructural deficit, which is constraining rapid economic growth.

He had said that according to the Nigerian Integrated Infrastructure Masterplan (NIIMP) and the Economic Recovery and Growth Plan (ERGP), Nigeria needs up to three trillion dollars over the next 30 years to bridge its infrastructure gap.

“To put this into perspective, the Federal Government would have to spend the entire revised 2020 appropriation of N10.81 trillion continuously for the next 108 years or more on capital expenditure to meet that target.

“It seems to me to be quite clear that the financial outlay and management capability required for infrastructural development and service delivery outstrip the financial and technical resources available to government.

“In other words, the traditional method of building infrastructure through budgetary allocations is inadequate and set to become harder because of increasingly limited fiscal space.”

To this end, the Nigeria Sovereign Investment Fund (NSIA), which was established in 2011 through the Nigeria Sovereign Investment Authority Act, was set up as an investment institution of the to manage funds in excess of budgeted oil revenues.

Its mission is to play a leading role in driving sustained economic development for the benefit of all Nigerians through building a savings base for the Nigerian people, enhancing the development of Nigeria’s infrastructure and providing stabilisation support in times of economic stress.

The Act empowers it to receive, manage and invest funds in a diversified portfolio of medium and long term assets on behalf of the Federal Government, State Governments, Federal Capital Territory, and Local Governments Area Councils in preparation for the eventual depletion of Nigeria’s hydrocarbon resources.

During a media conference recently to present the organisation’s scorecard for 2020, the Managing-Director, Mr Uche Orji, said that in spite of the COVID-19 pandemic that resulted in economic downturn for many organisations and countries, NSIA recorded gains.

He said that the organisation invested in international capital markets and had improved contribution from subsidiaries and affiliates and exchange gain from foreign currency positions.

This resulted in it growing its total assets to N981.78 billion in 2020 from N649.84 billion in 2019 by recording N160.06 billion in total comprehensive income in 2020 which amounted to 343 per cent growth compared to N36.15 billion it recorded in 2019.

He also said that the NSIA received additional contribution of 250 million dollars and provided first stabilisation support of 150 million dollars from the Stabilisation Fund to the Federal Government.

According to him, the authority also received 311 million dollars from funds recovered from late General Sani Abacha from the US Department of Justice and Island of Jersey.

He said that the funds were deployed towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and the Second Niger Bridge.

He added that the organisation was looking forward to completing the concession, capital raise and operationalisation of the Lagos-Ibadan Expressway, Second Niger Bridge and Abuja-Kaduna-Kano Highway.

Speaking on some of the projects and interventions the organisation had engaged in, he said that it entered a strategic collaboration with Bio Ventures for Global Health (BVGH) for cancer treatments.

He said that the group was helping in training personnel and bringing in lower costs cancer for those who were in the NSIA-Lagos University Teaching Hospital Cancer Centre.

The NSIA-LUTH Cancer Centre, a novel cancer treatment centre which was inaugurated in 2019, had treated over 4,000 patients as at the end of 2020

He also said it had operationalised the NSIA-Kano Diagnostic Centre and the NSIA-Umuahia Diagnostic Centre which were developed as first-rate diagnostic centres with individual investments of 5.5 million dollars each.

“Having tested the proof of concept with the first three centres, NSIA now aims to roll out more healthcare over the next few years.

“This is with a medium-term target of 20 centers and a pipeline that includes diagnostic centers, multispecialty hospitals, single specialty centres and manufacturing of pharmaceuticals.”

Still on health, he said that the organisation had committed to a new quaternary hospital project to be built in Abuja, partnered with University College London (UCL) Consult to develop a pharmaceutical investment strategy with to develop active direct investments in 2021.

For the power sector, Orji said that the NSIA was building a 10 megawatts solar power plant in Kano which presently was the single largest in Nigeria.

Expected to be completed at the end of 2022 at a cost of about 15 million dollars, the plant would link industrial customers to an additional source of power supply, he said.

He said it was also setting up a platform with international Development Finance Institutions (DFIs) to allow it spread across various parts of the country.

Orji also disclosed that the NSIA, in partnership with the International Finance Corporation’s InfraVentures, was in the process of developing a renewable energy platform.

It would deploy 250-500MW of renewable energy capacity on an incremental basis via small to medium-scale solar projects – with an initial focus on the embedded generation segment of the on-grid space.

In agriculture, through the Presidential Fertiliser Initiative (PFI), it produced 12 million 50 kilogram bags of NPK 20:10:10 equivalent in 2020.

This, he said, brought the total production since inception to over 30 million 50kg bags equivalent, while the number of participating blending plants increased to 44 from less than seven at inception.

Orji added that the NSIA completed construction of 3000 hectares Panda Agric Farm in Nasarawa, the first project of the UFF-NSIA partnership.

He added that the two-phase development of an animal feed processing with backward integration through the farming of maize and soybean on 5,000 hectares of land in Panda had progressed as planned with the attainment on key milestones.

Upon completion of the development stage, the developed asset estimated at 29 million dollars would include a farm for maize and soybean, a maize mill, a soybean mill and a new state of the art 147KMT feed mill, with the option of processing fish feed.

The facility would also incorporate grain storage and water management assets on an acreage of up to 5000 hectares of land.

It is however expected that the crop production and feed mill project would be completed in 2022.

He said that the NSIA launched Nigeria’s Innovation Fund to address investment opportunities within Nigeria in Information technology in the areas of data networking, datacenters, software and services as well as Agri-tech and Bio-tech.

Speaking on gas industrialisation, he said significant progress had been made on developing the Ammonia and Diammonium phosphate production plants in partnership with OCP.

On Financial Markets Infrastructure, the managing director said that the NSIA had significantly improved contributions from subsidiaries/affiliates such as Infrastructure Credit Guarantee Company (InfraCredit), Nigeria Mortgage Refinance Company (NMRC) and Family Homes Funds Ltd (FHFL).

He said it had also invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020.

Also, it had admitted InfraCo Africa, a Private Infrastructure Development Group (PIDG) company based in the United Kingdom as 33 per cent shareholder in InfraCredit, reducing NSIA’s stake from 50 per cent in 2019 to 33 per cent in 2021.

“NSIA expects that the outlook for 2021 would be positive, however we expect bouts of volatility as global markets adjust and recover from the impact of the pandemic.” (NAN)