Higher exchange rate buoys NSIA earnings

04 Apr 2016
Chibuike Oguh


NSIA's total comprehensive income rose 40.15 percent from N15.77 billion in 2014 to N26.36 billion in 2015. 

Uche Orji, Managing Director, Nigeria Sovereign Investment Authority

Owing to a depreciation in the naira, which the Central Bank of Nigeria officially devalued by over 25 percent, the Nigeria Sovereign Investment Authority (NSIA) has reported that its total comprehensive income rose by 40.15 percent from N15.77 billion in 2014 to N26.36 billion in 2015.

The NSIA said net foreign exchange gains – attributable to increase in currency exchange rate – and other fee income rose nearly three times from N3.24 billion reported in 2014 to N8.77 billion last year.

NSIA's Consolidated Financial Statements for the year ended December 31, 2015, released on Friday, also show that its total assets rose 16.8 percent to N213.67 billion last year, compared to N177.84 billion reported in the previous year.

Managing Director of NSIA, Uche Orji, while making a presentation in Abuja on the financial performance and investment activities of the agency in 2015, said the agency posted stellar results for last year despite global market volatility.

“The year 2015 was a difficult year but the NSIA managed to protect its capital in a harsh and volatile market environment where equities and bonds in many leading economies suffered declines,” Orji said. “The 2015 fiscal year was characterized by high volatility and global market uncertainty…currency turmoil, dwindling oil prices and decelerating growth across markets created a difficult investment environment for the authority.”

However, the NSIA’s Managing Director stated that the agency “made fewer, but more strategic investments in 2015. More importantly, NSIA has invested in various private equity investment funds to tap into the high-growth sectors across Sub-Saharan Africa."

“In particular, the decision to invest in Alternative Asset classes proved beneficial in 2015 as this ensured that our portfolio was relatively immune from the market forces while traditional asset classes suffered significant declines,” Mr. Orji said.

Founded in 2011, the NSIA manages the Nigerian Sovereign Wealth Fund, which was set up with a seed capital of $1 billion. The NSIA makes investments through three ring-fenced funds: Future Generations Fund (FGF), Nigeria Infrastructure Fund (NIF) and Stabilization Fund. 40 percent of the seed capital is allocated to the FGF, another 40 percent is allocated to the NIF and SF has 20 percent allocation.

Apart from the SWF, the agency had $550 million in third-party assets under management. $350 million belonged to Nigerian Bulk Electricity Trading (NBET) and $200 million belonged to Nigeria’s Debt Management Office (DMO). Mr. Orji stated on Friday that the DMO recalled $100 million of its funds last year. Nevertheless, he said the $250 million in increased investment capital provided by the federal government last year has compensated for the reduction in asset under management.

NSIA’s profit for the year rose from N5.165 billion in 2014 to N11.775 billion in 2015, just as the cost of managing the fund’s investment jumped from N1.644 billion in 2014 to N2.333 billion.

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