Why NSIA’s 2017 profit drops by N107bn – Orji


…As NIPC adopts initiatives to attract more Investors***

The Managing Director, the Nigeria Sovereign Investment Authority (NSIA), Mr Uche Orji on Sunday explained why the nation’s Sovereign Wealth Fund recorded a decline in its profit from N130.3 billion in 2016 to N22.5 billion in 2017, blaming the current Federal Government’s Currency Management Policy.

The Head of the agency managing the Sovereign Wealth indicated this, while presenting highlights of the financial performance of the fund to the media in Abuja, describing the year 2017 as a highly challenging year for his agency.

He noted that the total income of the agency declined from N149.83 billion in 2016 to N27.93 billion in 2017.

He, also noted that the agency also recorded a decline of N107.8billion in profit from N130.37 billion in 2016 to N22.55 billion in 2017.

Orji said the Currency Management Policy of the Federal Government for the decline in profitability.

“The decline of the net foreign exchange gains which accounted for the reduced net operating income recorded in 2017 was as a result of government’s Currency Management Policies, which were aimed at stabilising the Naira in 2016.

The Managing Director, Nigerian Ports Authority (NPA), Hadiza Bala Usman commissioning the newly built MV Osanyamo, owned by STARZ Investment Company Limited in Onne last Friday. PHOTO BY NPA MEDIA

“To this effect, the Naira weakened in value from N196 per dollar to N305 per dollar in 2016.

“Considering that at the end of that year, about 80 cent of the Authority’s assets were denominated in the United States Dollars, the devaluation resulted in significant exchange gains in the Authority’s Naira books,” he said.

Orji said dividend payment to its shareholders was discussed at the last board meeting but was stepped down till next year.

The agency commenced operations in 2013 with 1.55 billion and there had been expectations that dividend to its shareholders would be paid at the end of the 2017 financial period.

The Managing Director, Nigerian Ports Authority (NPA), Hadiza Bala Usman (2nd right); The Managing Director of STARZ Investment Company Limited, Gregory Ogbeifun (2nd from left); the Executive Director NPA, Marine and Operations, Dr. Sokonte Davies (right) and the Port Manager, Onne Port, Alhassan Ismaila during the official Christening and Commissioning of MV Osanyamo in Onne last Friday PHOTO BY NPA MEDIA

“The law said that we should show profits in each of the three funds consistently for five years after which we will start declaring dividend and this is the fifth year of showing profitability.

“The dividend policy was considered by the board but we decided to step it down and consider it again next year,” he said.

Orji said also the delay in inaugurating the NSIA board led to a lag in re-investment of matured fund which affected profitability in the year under review.

However, he said despite the drop in profitability, the NSIA had decided to increase its funding for infrastructure development.

To achieve this objective, Orji said the asset allocation strategy of the NSIA was restructured to reflect an increased focus on domestic infrastructure investment.

Orji said henceforth 50 per cent of future contributions would be dedicated to infrastructure as against the previous arrangement where 40 per cent of the fund was allocated.

He gave the areas of priority for the agency as agriculture, healthcare, motorways, real estate and power.

On the outlook for 2018, he said the NSIA would continue to maintain its diversified asset strategy to drive returns and mitigate market volatility.

“The NSIA anticipates increased investment in infrastructure as more projects come up to financial close.

“The deployment of the Presidential Infrastructure Development Fund is expected to drive 2018 infrastructure investment strategy as 650 million dollars has been voted by NEC to complete critical infrastructure projects across the country,” he said.

According to Orji, the construction of the 2nd Niger Bridge, which is one of the major road projects being financed by the NSIA, would be completed in the next four years.

In the meantime, the Nigerian Investment Promotion Commission (NIPC), may have adopted new initiatives aimed at attracting more investors into the country, in spite of current challenges.

The Director, Strategic Communication in the Commission, Mr Emeka Offor disclosed this in in Abuja, noting a newly  introduced one-Stop Investment Centre which aimed to streamline investment procedures, provide prompt, efficient and transparent services and coordinate investment-facilitating agencies.

According to him, the centre provides data on the Nigerian economy, investment climate, legal and regulatory framework as well as sector and industry specific information.

“So far, the commission has carried out lot of programmes, and for the first time developed what is called Compendium of investment Incentives in Nigeria.

“The compendium is a compilation of fiscal incentives in Nigeria tax laws and sector-wide fiscal concessions duly approved by the Federal Government and supported by legal instruments.

“The compendium will be updated periodically as more incentives are duly gazetted to encourage investments in Nigeria and it will enable investors get incentive information in one document,” he said.

Offor said another scheme aimed at attracting more investors was tracking of investment announcements in the country.

“In 2017 the NIPC began tracking the various investment announcements in different sectors of the economy, showing the investment information and interests in the country in the different quarters of the year.

“These are only investment announcements. Not actual investments.

“It is possible an announcement is made, MoU signed, but the investment that actually comes in is less than the amount that was originally announced or does not even happen at all,” he said.

Offor said to make information accessible, the commission  launched an up-to-date online portal, iGuide Nigeria, containing necessary information and relevant data that would greatly improve the ‘Ease of Doing Business’ in the country.

According to him, the portal will help investors get access to the basic information needed to make informed decisions on Nigeria as a preferred investment destination.

“iGuide is an online platform providing investors with up-to-date and pertinent information on the processes, procedures and basic costs of doing business in Nigeria.

“It provides information on starting business, labour, production factors, land, taxes, investor rights, growth sectors and opportunities,” he said.

Offor added that the portal’s language functionality would enable investors read the information in major languages of the world.

Offor, however, said lack of funding had been a major challenge faced by the commission because it needed more funding to make its One-Stop Investment Centre functional.

Offor said another challenge faced by the commission was capacity building for its staff to enable to the needs of world class investors.

“I believe that with government continued support, the commission will make the country the best destination for investors,” said Offor.