The Nigeria Infrastructure Fund (NIF) focuses entirely on domestic investments in selected infrastructure sectors with a 40% allocation of Funds under Management. The NIF is managed by an in-house team of investment professionals tasked with identifying infrastructure investments, undertaking project development for potential investments and recommending projects for investment to the Board.
In pursuit of the objectives of the NIF, a Five-Year Infrastructure Investment rolling plan (the Five-Year Plan) has been prepared to provide strategic guidance for NIF investments. Furthermore, an Infrastructure Fund Investment Policy Statement (IPS) was also developed. The IPS provides an investment framework for the NIF, setting out the NIF’s investment objectives, risk tolerance and constraints. The IPS was adopted by the Board of Directors in 4Q 2013.
The Five-Year Plan
In accordance with the NSIA Act, each year, a Five-Year Infrastructure Investment rolling plan is to be developed pursuant to such strategies, regulations, policies and guidelines as it may determine to be most effective to achieve its objectives. These objectives include supporting, through investment predicated upon financial returns to NSIA, the development in Nigeria of essential infrastructure such as power generation, distribution and transmission infrastructure, healthcare infrastructure, real estate, agriculture, transport infrastructure, water resources infrastructure, amongst others. This is in order to stimulate the growth and diversification of the Nigerian economy, attract foreign investment and create jobs for Nigerians.
Choosing the Focus Sectors
In narrowing down to the Focus sectors for the Five-Year Plan, management consulted with relevant sector experts, regulatory agencies, strategic partners, Ministries, Department and Agencies (MDA’s) etc. Management focused on sectors of
- National priority and potential for nationwide economic development impact
- Potential for attractive commercial and social returns
- Conducive regulatory environment and
- Ability to unlock private sector participation.
Agriculture is a sector of strategic importance to NSIA and an area where we see opportunities for significant economic impact and robust financial returns through direct investments in critical agriculture infrastructure, strategic trading platforms and indirectly via agriculture-focused funds. In December 2013, the Board approved a US$10 million commitment to the Fund for Agricultural Finance in Nigeria (FAFIN), as one of three Fund sponsors, alongside the Nigerian Federal Ministry of Agriculture and Rural Development (FMARD) and KfW, the German Government-owned development bank. FAFIN is a U.S. $100 million target agriculture-focused investment fund that provides tailored capital and technical assistance solutions to commercially-viable small and medium-sized enterprises (SMEs) and intermediaries across the agricultural sector in Nigeria. The Fund is dedicated to spurring agriculture-led inclusive economic growth in Nigeria through enhanced agricultural productivity, value-added processing, and market linkages throughout the value chain.
NSIA is interested in strategic “high-impact high-value” opportunities across the entire healthcare value chain that will facilitate the delivery of high quality, affordable and accessible healthcare services to Nigerians. Consequently, NSIA has entered into strategic partnership agreements with the Federal Ministry of Health and leading global healthcare sector participants to identify and invest in healthcare infrastructure projects. We will leverage the investment and technical expertise of our strategic partners to deploy much needed capital within the sector on a commercial basis while driving development in this key sector of the nation’s economy.
NSIA has identified the affordable and mass housing real estate segment as a critical target segment for its real estate sector strategy. In addition, NSIA remains interested in the commercial real estate (office buildings, malls) and the hospitality sub-sectors (5-Star hotels and other luxury real estate). Our identification of these target segments is predicated upon the large housing deficit in Nigeria and the growing middle class demography in the country. With a population of nearly 160 million people, rapid urbanisation and a substandard housing stock, there is a need to provide housing at all levels, particularly in the low and middle income segments.
Pursuant to NSIA’s real estate strategy of unlocking demand in the real estate sector, NSIA, through NIF, invested N1.6 billion in the Nigeria Mortgage Refinance Company (NMRC).
In anticipation of the implementation of a new national tolling policy, following the release of a policy green paper by the Ministry of Works, NSIA is actively pursuing investments in road infrastructure delivery and maintenance to improve the general state of the roads, reduce the funding burden on the Federation Account and introduce private sector efficiencies to the procurement, delivery and management of road infrastructure. Consequently, NSIA in partnership with Julius Berger is developing a project to finance, construct, operate and maintain the Second Niger Bridge, improving the connection between the Southern and Western regions of Nigeria.
Given the pivotal role of power generation and distribution in our economy, particularly in light of the nation’s strategic focus on developing its industrial base, NSIA has targeted the power sector as a key focus sector. Our strategy is to invest alongside private investors in attractive projects across the power sector value chain. With the ongoing transformation of Nigeria’s power sector through privatization, there are significant opportunities for the NIF to participate in.