From Uche Usim, Abuja
As the Nigerian Sovereign Investment Authority (NSIA) celebrated its achievement last year, as shown in its recent report, what is clear is that this government agency has succeeded in its mandate. Growing its total assets to N981.78 billion in 2020, when there was global economic meltdown caused by coronavirus pandemic, shows great management of resources. The N981.78 billion is an increase of N331.93 billion when compared to the N649.85 billion recorded in the previous year. This result is an indication that the Federal Government was right in supporting this agency in executing its programmes.
Indeed, an area where the NSIA has made giant strides, which Nigerians should not lose sight of, is in road infrastructure intervention. Today, people talk about the Second Niger Bridge, for instance, without knowing how the success came about. By 2019, government had disbursed ₦181.9 billion for three PIDF/Motorways Across projects under construction. These include Second Niger Bridge, Lagos-Ibadan expressway and Abuja-Kano expressway. The Second Nigeria Bridge, which is nearing completion, is an 11.9km, 2×3 lane highway connecting Asaba, Delta State, and Onitsha in Anambra State.
Already, the piling works has been completed, with all 30 piles. According to the 2019 report of the NSIA, “The deck which will span across the piles is currently being pushed through using the incremental launch system from the western approach. Geotextile and sand filling protection layers is being done at key points on the construction site while roadworks and earthworks are going on concurrently.” The Lagos – Ibadan Expressway project involves the rehabilitation, reconstruction, and expansion of this major highway. It is a 127km highway which connects Lagos and Ibadan as well as the northern region of the country.
Abuja-Kano Expressway project entails the modernisation of 370 km of road. Already, significant progress has been made with over 111km of road fully completed. NSIA report indicate that “construction work, including site clearance, earthworks, culverts and drains construction, pavement and surfacing works are ongoing on the remaining sections, with a view to ensure completion in accordance with the project plan.”
Interestingly, the NSIA had been at the centre of a Trilateral Agreement amongst the governments of Nigeria, Bailiwick of Jersey and the United States on the US$311 million recovered assets that is to o be invested across the three PIDF projects under construction. “With these, the PIDF will be able to fund its activities through Q3 2021,” says the report, with NSIA overseeing the projects with the view to ensuring strict cost control measures.
In agriculture, the Panda Farms, a joint venture investment between NSIA and UFF African Agri Investments, a Dutch-based agriculture investment firm, stand out. In 2019 the farm acquired farming, irrigation, and feed production equipment, to strengthen its capacity to cultivate the over 2300 hectares of arable land available within the facility.
In the area of energy, the NSIA intervened in Kano Solar, with the development of a 10MW solar power plant in Kumbotso Local Government Area, Kano State. When completed, the project will give impetus to investments in renewable energy in Nigeria.
NSIA invested in local fertilizer production and saved over $350 million from the erstwhile payments on subsidy and import substitution through the implementation of the Presidential Fertilizer Initiative (PFI).
President Muhammadu Buhari approved the PFI in 2017, with clear-cut objectives of boosting agriculture, cutting back on stupendous foreign exchange spent on fertilizer substitution and importation and boosting job creation locally. Four years down the line, there are lots of harvested fruits from the programme, prompting the President to approve its restructuring for another four years starting from 2021, but with some modifications.
The approval, which takes effect immediately, was communicated in a letter through the Office of the Chief of Staff to the President, issued in November 2020.
Within four years of the initiative, the programme has delivered on key outcomes including over 30 million bags of 50kg NPK 20:10:10 equivalent spanning project period; price reduction on fertilizer from over N10, 000 to under N5, 500, resuscitation of 41 blending plants from an initial number of four plants at project inception and creating 250,000 jobs (direct and indirect) across the agriculture value chain. This includes jobs in logistics, ports, bagging, rail, industrial warehousing, and haulage touch-points and others that have been created.
It also said food security has been achieved by facilitating increase in domestic food production through the provision of affordable, high quality fertilizer. Already, the PFI has been extolled by various agriculture and finance stakeholders because aside the gradual realisation of the food sufficiency goal, it has shown the possibility of exporting farm produce in large quantities to buoy foreign reserves, when local consumption target is achieved.
For decades, Nigerian farmers have been hit by poor harvest because of near-zero access to fertilizer to boost crop performance. Managing director of the NSIA, Uche Orji noted that the number of participating blending plants increased to 44 from less than seven at inception, noting that the Authority has completed the restructuring of the PFI. He stated also that the Authority has embarked on the next phase of the PFI, which substantially reduces NSIA’s involvement and transfers more of the responsibility to the fertilizer blenders. He said the NSIA has also completed the construction of 3000 hectares Panda Agric Farm in Nasarawa, which is the first project of the UFF-NSIA partnership.
Nonetheless, the NSIA, under the new modifications has been transitioned to an upstream player thereby limiting its involvement to importation, storage and the wholesale of raw materials. Such a task has been outsourced to blenders. More so, the NSIA subsidiary, NAIC-NPK Limited, will be spun off to the Ministry of Finance Incorporated. With the new order, blenders will no longer be paid blending fees by NAIC-NPK as they will recover their cost directly from selling the fertilizer to the market, leaving the entire process structurally impactful.
This will balance the incentives of the business and ensure the blenders build the right capacity to actively participate in the local supply sub-sector. With the new modification, the blending plants are expected to provide bank guarantees to cover requisitioned raw materials demand that are appropriated for their respective production volumes. In the latest arrangement, the Federal Ministry of Finance, Budget and National Planning and the Central Bank of Nigeria are to engage Deposit Money Banks (DMBs) banks to facilitate lines of concessionary credits to blending plants for the purchase of raw materials for their businesses.
The new PFI also expects the Central Bank of Nigeria (CBN) to ensure that the foreign exchange needed for the programme is provided as and when needed to cover some raw materials Under the new format, blenders will be responsible for bulk of the activities in the fertilizer production value chain such as transporting the raw materials, sourcing filler, blending the fertilizer, and selling to off-takers.
Also, the Federal Ministry of Agriculture and Rural Development will perform its statutory monitoring and quality control role over blender activities.
The benefits of this new approach include but are not limited to unlocking more development finance (loans and investments) into the local fertilizer blending value chain of Nigeria. It is also expected to strengthen market systems and encourage actor participation. This will lead potentially to mergers and acquisition and innovation and growth across the industry, which will benefit farmers. The new approach would further reduce food price inflation in the market, as the availability of fertilizer will drive down the price or cost of food products. It will reduce the high rate of unemployment as more people will become engaged in the production process.
In Financial Markets Infrastructure, Orji said the NSIA has significantly improved contributions from subsidiaries/affiliates such as Infrastructure Credit Guarantee Company (InfraCredit), Nigeria Mortgage Refinance Company (NMRC) and Family Homes Funds Ltd (FHFL). He explained that the Authority has also invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020. He added that the NSIA has admitted InfraCo Africa, a PIDG company based in the UK as 33 per cent shareholder in InfraCredit, thus reducing NSIA’s stake from 50 per cent in 2019 to 33 per cent in 2021.
For its Innovation Fund, Orji said the NSIA launched its Nigeria Innovation Fund to address investment opportunities within Nigeria in Information technology; with an immediate pipeline that include data networking, data centres, software, and services as well as Agri-tech and Bio-tech. In gas industrialization, he noted that the Authority has made significant progress on developing the Ammonia and Diammonium phosphate production plants in partnership with OCP. For the Future Generations Fund, Orji said the NSIA has significantly changed asset allocation, completely changed, and expanded the stable of hedge fund managers, made commitments into the venture capital sector and commenced direct trading and co-investments in equities with selected VC and private equity managers.
For the Stabilisation Fund, he said the Authority has been able to liquidate a portions of the Stabilisation Fund assets in 2020 to meet the $150m redemption that augmented the July 2020 FAAC to all three tiers of government.
He explained further that the Stabilization Fund performed well given the economic climate and ultra-low interest rates set by central bankers. Highlights of NSIA’s activities and performance in 2020 showed that the Authority recorded 343 per cent growth in Total Comprehensive Income to N160.06 billion in 2020 as against N36.15bn in 2019.
Excluding devaluation gain of N51 billion, core income of N109bn was recorded in 2020 compared to N33.07 billion in 2019. The NSIA also received an additional contribution of $250 million; and provided first stabilization support to the Federal Government where $150 million was withdrawn from the Stabilisation Fund.
Speaking at a briefing to present the financial performance, the Managing Director of the NSIA, Mr Uche Orji said the Authority received $311 million from funds recovered from the late General Abacha from the US Department of Justice and Island of Jersey.
This amount, he stated, was deployed towards the Presidential Infrastructure Development Fund projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and Second Niger Bridge. He said that the COVID-19 pandemic adversely affected logistics around infrastructure projects especially the toll road projects and the presidential fertilizer initiative. In squaring up to the pestilence, Orji said that the NSIA partnered with Global Citizen, a not-for-profit group, to form the Nigeria Solidarity Support Fund.
Separately, he noted that the NSIA acquired and distributed oxygen concentrators to the 21 teaching hospitals as part of corporate social responsibility; in addition to staffing support to the Presidential task force on COVID-19. On the performance of the Nigeria Infrastructure Fund, the NSIA boss said the Authority reached major milestones across domestic infrastructure projects specifically in motorways, agriculture, and healthcare.