NSIA Hints On Diversification To Break Investments’ Dollarisation

The Nigeria Sovereign Investment Authority (NSIA) has indicated plan to diversify its investment away from dollar dominated ones and invest in other currencies like the Chinese Yuan, amongst others.

NSIA said the aim is to avoid putting all its eggs in one basket on the back of growing concerns about the possibility of a collapse of the green back in the face of current realities. The dollar is seen as one of the safest investments in the world.

“The Authority will take steps to strengthen the resilience of its strategy through strategic asset allocation and diversification, portfolio selection, and other options to enhance the risk/return profile and liquidity,” managing-director and chief executive officer of the NSIA, Aminu Umar-Sadiq said yesterday at a media briefing in Abuja. “We have to diversify our investments.”

The Authority also announced the creation of 245,000 direct jobs and 315,300 estimated indirect jobs within the last 10 years of its operation.

This newspaper had reported that NSIA posted net assets growth of 552 percent from N156 billion in 2013 to N1.017 trillion in 2022.

Its total revenue for 2022 totaled N111.4 billion, a 27.2 percent decline from 2021. This comprises of income earned from the Authority’s core assets within the three funds and its fiduciary activities in relation to its third-party managed assets.

“The Authority through capital preservation, diversified portfolio of assets and an enterprise approach to risk management has grown the Net asset of the Authority to $2.27 billion as at end of Dec-22, representing a 20.6% growth over the years,” the Umar-Sadiq stated.

Umar-Sadiq said the Authority’s strategic focus for 2023 will include driving growth through platforms, assessing exit opportunities from existing investments, attracting local currency capital, increasing third-party asset management portfolio and leveraging ESG as an asset class.

The NSIA, had in its audited results for the 2022 financial year, said the firm’s financial performance underscores the resilience of its investment strategy, and the quality of its earnings.

NSIA’s activities and performance during the period under review showed that in spite of the challenging macroeconomic environment across markets, its non-volatile revenue such as interest income, revenue from infrastructure business, and management fees earned from fiduciary activities, grew 34.5 percent or N15.7 billion, year-over-year.

However, the agency’s total comprehensive income declined 34 per cent to N96 billion in 2022, compared to 147 billion recorded in 2021. The decline was largely attributed to strong macroeconomic headwinds marked by unprecedented shocks, such as the COVID-19 lockdown in China, the Russia-Ukraine conflict, food and energy crises, supply-chain disruptions, soaring inflation, and monetary policy tightening, which precipitously impacted the financial markets.

At the end of December 2022, the Stabilisation Fund had returned 12.43 percent in Naira terms but only returned 4.08 percent in USD for the year. Hedge Assets made a negative return of (3.48 percent).

These assets consist of US Treasury bonds portfolio which accounts for 15% of the Stabilisation Fund and is tracking the Bloomberg Barclays US Treasury bond 1–3 year index. Growth Assets returned 7.35 percent for the year.

The assets consist of a China Bond Fund (2 percent), short duration bond funds (14 percent) and Structured Products (69 percent).

Performance within the growth assets was driven by the structured products portfolio which returned 8.62 percent for the year, while the short duration bonds portfolio retracted by (3.36 percent) for the year.