A SWF is a state-owned investment fund that invests in real and financial assets. Most SWFs are funded by surpluses generated from commodity export revenues. Some others are funded by other assets transferred to the SWF by the government.
The Nigeria Sovereign Investment Authority is an agency of the Federal Government of Nigeria set up to manage funds in excess of budgeted hydrocarbon revenues.
The NSIA was established by an act of the National Assembly in May 2011. The Act was signed into law by His Excellency, President Goodluck Jonathan on May 28, 2011.
The Board of the NSIA was inaugurated on October 9th, 2012
Shareholders consist of the Federal Government of Nigeria, the 36 states and the FCT and all the Local Governments and Area Councils in the federation through a sharing arrangement that is consistent with national revenue sharing formula i.e 52.86%, 26.72%, and 20.60% respectively.
To establish NSIA as a leading sovereign wealth fund globally playing a role in promoting Nigeria’s economic development
Our mission is to play a leading role in driving sustained economic development for the benefit of all Nigerians through:
1. Building a savings base for the Nigerian people
2. Enhancing the development of Nigeria’s infrastructure
3. Providing stabilisation support in times of economic stress.
At the highest level, the NSIA is overseen by a Governing Council. The Governing Council’s 55 statutory members consists of the President of the Federal Republic (The Chairman), Nigeria’s 36 state governors, the Minister of Finance and 12 other members representing civil society, Nigerian youths, the academia and the private sector. At the next level is the Board of Directors and the related board committees; and at the third level is the Executive Management team.
The NSIA operates three ring fenced funds:
a. The Stabilisation Fund (SF)
b. The Future Generations Fund (FGF)
c. The Nigeria Infrastructure Fund (NIF)
The Nigeria Infrastructure Fund also has a sub set which is “Social Infrastructure” to which 10% of the NIF is dedicated
NSIA’s funding comes from funds in excess of budgeted hydrocarbon revenues. The National Assembly approved the initial amount of USD1 billion as seed funding.
There are a number of ways the NSIA will help to promote economic stability:
a. The first is that the Stabilisation Fund is designed to provide macroeconomic stabilisation in times of economic distress – that is, the Ministry of Finance can make a case for withdrawing from the Fund for economic stabilization.
b. The SWF is a tool of fiscal discipline as it forces and enforces an investment and savings culture in a clearly defined manner.
c. Investments in infrastructure will help enhance development, which in the long run aids in overall economic growth.
The NSIA Act requires a minimum allocation of 20% to each of the three funds, with the outstanding 40% allocated at the Board’s discretion.
In order to balance the infrastructure needs of the current Generations with the savings needs of the future Generations of Nigerians, the Board at its discretion, decided on the following allocation formula: 20% to Stabilisation Fund, 40% to Future Generations Fund and 40% to Nigeria Infrastructure Fund.
The NSIA outsources the management of the Stabilisation Fund and the Future Generation Fund. The NIF is managed in-house.
The NSIA Board sets investment policy statements for each of the three funds to execute the mandates of the funds. The execution of the mandate of the FGF and SF is primarily achieved through the selection of specialised managers. The execution of the NIF mandate requires deal origination, development, and execution, as such an in house team has been built to fulfil these task.
As at May 2014, 100% of the Stabilisation Fund has been invested, approximately 50% of the Future Generation has been deployed and two investments from the Nigeria Infrastructure Fund (In Agriculture and Real Estate) have been made
The objective of the asset allocation of the Stabilisation Fund is focused on capital preservation and liquidity and as such investments have been made in US Treasury Bills and investment grade corporate bonds.
The asset allocation of the Future Generation Fund is based on long investment time horizon. The allocation is therefore diversified across absolute returns (25%), long/short equity (25%), private equity (25%) and 25% across other diversifying asset classes such as hard assets and commodities.
The Nigeria Infrastructure Fund invests across the entire capital structure i.e. equity, mezzanine and debt.
The Stabilisation Fund has a short term horizon of up to 3 years while the Future Generations Fund and Nigeria Infrastructure Fund have long term time horizons of a minimum of 20 years.
For the Stabilisation Fund it is US CPI (Consumer Price Index), for the Future Generations Fund it is US CPI + 4% and for the Nigeria Infrastructure Fund it is US CPI + 5%.
Investments are guided by the following principles:
- • Sectors that align with national priority
- • Projects with attractive commercial and social returns
- • Sectors where we can attract private capital
- • Sectors where the regulatory environment is conducive
In line with the above principles, the Infrastructure Fund is presently focused on five sectors: Agriculture, Healthcare, Motorways, Power and Real Estate. We expect in the next phase of the NSIA infrastructure investments, to expand into more sectors including gas pipelines, water and sanitation, telecommunications and more.
We have made investments in agriculture through investment in the Fund for Agricultural Finance in Nigeria (FAFIN) and the Nigerian Mortgage Refinance Company. We have also entered into a consortium agreement with Julius Berger to co-develop the Second Niger Bridge. We have investments in the pipeline also in the Power, Real Estate and Healthcare sectors.
NSIA has entered into a number of strategic partnerships which we believe will enable NSIA better meet Nigeria’s infrastructure challenges. These include Memoranda of Understanding with Africa Finance Corporation, the International Finance Corporation and General Electric. We also have an ongoing collaboration with the Nigeria Infrastructure Advisory Facility (NIAF), a technical and legal assistance facility from the UK’s Department for International Development (DFID).
We have also signed MOUs with 4 Teaching Hospitals and 1 Federal Medical Centres to co-develop PPPs in Healthcare.
Yes; we are a member of the International Forum of Sovereign Wealth Funds and a signatory to the Santiago Principles. We also belong to the Institutional Investors Roundtable
This NSIA welcomes unsolicited project or investment proposals from individuals and organisations. Specific information on how to do this is available on this site.
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