Company:Nigeria Sovereign Investment Authority

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Nigeria Sovereign Investment Authority
TypeSovereign wealth fund
IndustryInstitutional investor
Founded2011
Headquarters
Abuja
,
Nigeria
Key people
Uche Orji - Managing Director & Chief Executive Officer[1]
Olajide Zeitlin - Chairman of the Board of Directors[2]
Total equity$1.50 billion
DivisionsStabilisation Fund
Future Generations Fund
Nigeria Infrastructure Fund[3]
Website[1]

The Nigeria Sovereign Investment Authority is a Nigerian establishment which manages the Nigeria sovereign wealth fund,[4] into which the surplus income produced from Nigeria's excess oil reserves is deposited. This sovereign wealth fund was founded for the purpose of managing and investing these funds on behalf of the government of Nigeria. The wealth fund commenced operations in October 2012 and was set up by the Nigeria Sovereign Investment Authority Act, which was signed in May 2011. It is intended to invest the savings gained on the difference between the budgeted and actual market prices for oil to earn returns that would benefit future generations of Nigerians.[5] The fund was allocated an initial $1 billion USD in seed capital.[1] However, an additional $0.5billion has been contributed to date by the current administration.

History

Nigeria is the most populous country on the African continent[6] with an estimated 170,123,740 million people.[7] It is also one of the largest producers of oil, on which the majority of its economy relies.[8] Petroleum exports account for approximately 90 percent of its foreign revenue and 80 percent of government revenue.[5] Given Nigeria's dependence on oil, its economy is susceptible to shifts in oil prices.[5]

Excess oil reserves were previously allocated to the Excess Crude Account (ECA), which was set up in 2004 as a stabilisation fund to meet the country's yearly budget deficits and to contribute to the development of local infrastructure.[9][10] The constitutionality of the ECA has been brought into question.[11]

Nigeria's SWF was brought into law in 2011 via the Nigeria Sovereign Investment Authority Act[4][12] by President Goodluck Jonathan and is expected to replace the ECA.[3] The act authorized the establishment of the Nigeria Sovereign Investment Authority, giving it jurisdiction over the country's excess petroleum reserves. The fund is intended as security against future economic instability, to contribute towards the development of the country's infrastructure and as a savings mechanism for future generations, using the country's excess oil revenues.[4][5][12][13] It is also expected that managing these reserve funds will help to protect Nigeria's economy from external shocks.[12] With an initial financing of $1bn USD from the Nigerian government, Nigeria's fund is the third largest in Sub-Saharan Africa, after Botswana and Angola.[12][14][15]

Uche Orji was appointed as the Chief Executive Officer of the NSIA[4][16] with Alhaji Mahey Rasheed as the chairman of the board of directors.[1] The board was inaugurated on 9 October 2012.[17] The total professional and administrative staff complement of the NSIA is 25.[2] The firm, JP Morgan, was appointed as the custodian of the funds.[3]

The NSIA has formed partnerships with key players in the business sector in order to realize its objectives. The NSIA was invited to request observer status at the International Forum of Sovereign Wealth Funds (IFSWF), with the intention of eventual membership. The Authority was due to present its credentials at an October 2013 meeting in Oslo, Norway.[2] As a member of the IFSWF the fund has signed up to the Santiago Principles on best practices for managing Sovereign Wealth Funds[18] and publishes a self-assessment on how it adopts and implements the principles within its governance procedures.[19]

Three funds

Nigeria's Sovereign Wealth Fund is composed of three distinct funds or windows, each with specific investment and development objectives.[1][3][4] Of the initial $1bn, 85 percent of the funds will be distributed among the three windows with an initial 15 percent or $150 million remaining unallocated, to be assigned to either of the three funds as needed in the future.[20] The funds will be invested in various securities.[5] The Stabilisation Fund was allocated an initial 20 percent, while 32.5 percent each went to the Future Generation and the Nigeria Infrastructure funds.[1][20]

Stabilisation Fund

The Stabilisation Fund is intended to safeguard against budgetary deficits. It would be a last resort from which government may withdraw annually to meet shortfalls in the budget brought about by falls in oil prices[3] or other budgetary constraints.

Future Generations Fund

The Future Generation Fund is a savings fund that will seek investment in long-term investments and assets to provide savings for future generations of Nigerians.[3]

Nigeria Infrastructure fund

The Nigeria Infrastructure Fund is expected to secure investments in the infrastructural development of the country in areas such as agriculture and other government directed projects.[3]

See also

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 Ujah, Emma (21 May 2013). "Sovereign Wealth Fund takes off with $1bn grant". Vanguard. http://www.vanguardngr.com/2013/05/sovereign-wealth-fund-takes-off-with-1bn-grant/. Retrieved 30 June 2013. 
  2. ↑ 2.0 2.1 2.2 "Sovereign Investment Authority Swings into Action". ThisDay. 26 May 2013. Archived from the original on 23 June 2013. https://web.archive.org/web/20130623094735/http://www.thisdaylive.com/articles/sovereign-investment-authority-swings-into-action/148509. Retrieved 29 June 2013. 
  3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 "Sovereign Wealth Fund will become operational in March – CEO". 21 February 2013. Archived from the original on 14 July 2013. https://archive.is/20130714014142/http://www.nannewsngr.com/section/economy/sovereign-wealth-fund-will-become-operational-in-march-%E2%80%93-ceo. Retrieved 30 June 2013. 
  4. ↑ 4.0 4.1 4.2 4.3 4.4 "General Electric to contribute 15% equity in NSIA projects". Ventures. 24 June 2013. http://www.ventures-africa.com/2013/06/general-electric-to-contribute-15-equity-in-nsia-projects/. Retrieved 29 June 2013. 
  5. ↑ 5.0 5.1 5.2 5.3 5.4 Bala-Gbogbo, Elisha (20 December 2012). "Nigeria Sovereign Wealth Fund to Start Investing in March". Bloomberg.com. https://www.bloomberg.com/news/2012-12-20/nigeria-sovereign-wealth-fund-to-start-investing-in-march.html. Retrieved 30 June 2013. 
  6. ↑ "50 Things You Didn't Know About Africa". World Bank. http://www.saylor.org/site/wp-content/uploads/2012/05/polsc325-4.1-50-Things-you-didnt-know-about-Africa.pdf. Retrieved 7 May 2012. 
  7. ↑ "Africa: Nigeria". The World Factbook. Central Intelligence Agency (United States). https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html. 
  8. ↑ Shaw, Timothy (1984). "The state of Nigeria: Oil prices power bases and foreign policy". Canadian Journal of African Studies 18 (2). 
  9. ↑ "Nigeria Sovereign Investment Authority". SWF Institute. http://www.swfinstitute.org/swfs/excess-crude-account/. Retrieved 1 July 2013. 
  10. ↑ Fani-Kayode, Femi (4 January 2012). "Who will deliver us from this Goodluck?". ModernGhana.com. http://www.modernghana.com/news/370042/1/who-will-deliver-us-from-this-goodluck.html. Retrieved 1 July 2012. 
  11. ↑ "All quiet at Sovereign Wealth Fund as excess crude account depletes". Business Day. 9 April 2013. http://businessdaynigeria.com/all-quiet-sovereign-wealth-fund-excess-crude-account-depletes. Retrieved 1 July 2013. 
  12. ↑ 12.0 12.1 12.2 12.3 Rice, Xan (25 June 2013). "Volatility delays investment from Nigeria sovereign wealth fund". Financial Times. http://www.ft.com/intl/cms/s/0/ad73a00a-ddb3-11e2-892b-00144feab7de.html#axzz2Xf6ENx3k. Retrieved 29 June 2013. 
  13. ↑ Alanenetonwa, Lawson. "Senate Passes Nigerian Sovereign Investment Authority Bill". The Mace Online. http://www.themaceonline.com/senate-news/169-senate-passes-nigerian-sovereign-investment-authority-bill. Retrieved 30 June 2013. 
  14. ↑ "Nigeria Sovereign Wealth Authority Plans $525m Infrastructural Investment". ChannelsTV. http://www.channelstv.com/home/2013/05/20/nigeria-sovereign-wealth-authority-plans-525-million-infrastructural-investment/. Retrieved 29 June 2013. 
  15. ↑ Anthony-Uko, Nse (21 May 2013). "Nigerian Sovereign Investment Authority". Leadership. Archived from the original on 14 July 2013. https://archive.is/20130714014140/http://leadership.ng/organization/nigerian-sovereign-investment-authority. Retrieved 29 June 2013. 
  16. ↑ Chiejina, Nduka. "Nigerians to pay for amenities financed with Sovereign Wealth Fund". The Nation. http://thenationonlineng.net/new/business/nigerians-to-pay-for-amenities-financed-with-sovereign-wealth-fund/. Retrieved 30 June 2013. 
  17. ↑ "FG Saves N119bn with Integrated Payroll System". ThisDay. 5 June 2013. Archived from the original on 12 June 2013. https://web.archive.org/web/20130612025558/http://www.thisdaylive.com/articles/fg-saves-n119bn-with-integrated-payroll-system/149414. Retrieved 29 June 2013. 
  18. ↑ "Our members". International Forum of Sovereign Wealth Funds. http://www.ifswf.org/our-members. 
  19. ↑ "Santiago Principles Self-Assessment Nigeria Sovereign Investment Authority". International Forum of Sovereign Wealth Funds. http://www.ifswf.org/assessment/nigeria. 
  20. ↑ 20.0 20.1 Inokotong, Joseph (21 May 2013). "Nigeria Sovereign Investment Authority unfolds areas of interest". http://www.nigerianpilot.com/nigeria-sovereign-investment-authority-unfolds-areas-of-interest/. Retrieved 30 June 2013. 

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