The total assets held by Nigeria’s sovereign wealth fund (SWF) has risen by 27 percent in 2017 to N533.9 billion.
But the fund, in the same year saw a sharp and steep decline in profit after tax to N23 billion compared to N130 billion made in 2016. Sources close to the NSIA blame the profit decline on the absence of the windfall gains the fund made from the unstable naira in 2016 and also massive local investments in the domestic market, particularly infrastructure.
In 2016, the NSIA made N93 billion in “Net Foreign Exchange Gains” compared to just N1.65 billion made in 2017.
Total comprehensive income also fell to about N28 billion as contained in an abridged version of the Authority’s financial statement seen by BusinessDay on Tuesday, but yet to be publicly announced.
But the Authority’s interest income doubled to N22 billion in 2017 compared to N11 billion in 2016. The Fund’s holdings of investment securities almost doubled to N430 billion compared to about N250 billion in 2016.
But the Funds says it has made commitment to invest more locally, which would take some time to mature and yield profitability. However, the Fund booked a N2.15 billion loss on ‘infrastructure subsidiaries investments.”
“The stability in naira meant that what we recognized for exchange rate gains was insignificant, that resulted up to the 70 percent drop you see in profit, while our investments in infrastructure which will take some time to mature contributed to the remaining 30 percent,” an NSIA source explained.
“We believe that in two to three years’ time, we will return to the kind of profitability we are used to when those investments will begin to yield gains,” he added.
NSIA is rebalancing the investment structure of the over$1.25bn Sovereign Wealth Fund in favour of more domestic commitments following huge opportunities within the local market.
Uche Orji NSIA Managing Director had warned then of a possible slowdown in profitability as investments would be driven more by value creation for the country in dire need of local investments, infrastructure development and jobs.
According to him, those investments would include massive commitments in the country’s poorly funded infrastructure, agriculture, real estate, power, health care system, water resources, mainstream oil and gas, among very many other key sectors of the economy.
“We have this broad area of possible investments but we focused on agriculture, health care, real estate and power. Of late we are adding a few new sectors that were not in the initial focus. So you are going to see us add mainstream oil and gas – gas pipeline and storage and processing and potential refining.”
“You will also see us in some water resources projects soon,” he had told BusinessDay. “The areas of investment is expanding, so we are driven by the huge local investment opportunities and not the volatility in the currency market which is not peculiar to the naira.”
Onyinye Nwachukwuw, Abuja
