By Wale Suleiman
If there is one institution in the country through which one could glimpse at the future of Nigeria today, it will undoubtedly be the Nigeria Sovereign Investments Authority (NSIA). It was set up to receive, manage and invest revenue of the Federal and State governments, Federal Capital Territory Administration, Local government and Area Councils to prepare for the eventual depletion of Nigeria’s hydrocarbon resources. It is expected to invest in the development of critical infrastructure in Nigeria that will attract and support foreign investment, economic diversification, growth and job creation.
The NSIA is the manager of Nigeria’s Sovereign Wealth Fund. It was established as independent agency by an Act of the National Assembly in May 2011.
If you have any apprehension about Nigeria’s economic future, just take a look at the new board of NSIA that was recently inaugurated by Acting President Yemi Osinbajo. The nine member board included Halima Buba (North-East), Bello Maccido (North–West), Lois Laraba Machunga-Disu (North Central), Urum Kalu Eze (South East) and Asue Ighodalo (South-South). The chairman of the board is Babajide Zetilin who represents the South West. Other members include Uche Orji (Managing Director), Stella Ojekwe-Onyejeli and Hanspeter Achermann.
They are men and women of character and proven professional pedigree with diverse experience and specialisation in fields such as banking, law, oil and gas and entrepreneurship. While inaugurating the board, the Acting President declared: “For those who may demand an explanation of the basis of our choice beyond your academic and track record perhaps it is important to mention that you have been nominated to serve on account of your well-demonstrated integrity, patriotism and unique sense of duty.”
Finance Minister Kemi Adeosun also expressed confidence that those selected to manage the sovereign wealth of the country are people who “will look after our future resources and provide very good decisions and guidance to the execute management in line with the administration’s expectations and requirements”, she said.
Because of the enormous nature and sensitivity of the mandate of NSIA, they would be required to report to the National Economic Council (NEC), which is the governing council of the organisation. NEC would requests periodic evidence of performance and stewardship from the board of NSIA, even though it is under the minister of finance.
For advocates of prudent and efficient management of Nigeria’s natural resources, the establishment of NSIA was a step in the right direction. The careful and painstaking selection of the new board by the current administration of President Muhammadu Buhari is another step that would facilitate the realisation of the authority’s mandate.
The mandate of the NSIA is huge as it serves to fulfil a critical function in our economy and country as a whole, principally as a good tool of fiscal discipline, ensuring future availability of capital through investments in long term assets and managing Nigerian savings. The selection of these calibre of Nigerians to the board is to avail it of fresh, innovative thinking to create fresh functional solutions to Nigeria’s economic challenges using limited capital to generate inflow of investments. This is the focus of the economic agenda of the current administration, and the NSIA is now, more than ever before, critical to the realisation of this objective.
That is why, despite the fiscal challenges the government currently faces, the Buhari administration has increase the federal government’s commitment to the NSIA by 50 per cent by committing an additional $500 million. The funds are expected to be deployed into projects that are in line with the administration’s key priority areas, especially infrastructure and agriculture.
The authority has focused on domestic infrastructure investment capable of unlocking the economic potentials of the country. The NSIA is already deeply involved with the modular refineries projects in Delta and Akwa Ibom states, and the second Niger Bridge. It has also engaged in fertilizer blending programme, and recently it released more than three million bags through the Programme. It is the first time the country will run fertilizer without subsidy and it is being sold at 30 per cent below market price to the farmers in a free market environment.
The new management and board is now focussed more on agriculture namely in agriculture commodities exchange, agriculture infrastructure, power, toll roads and other areas such as health care. Health care is one of the big focus areas for NSIA and will also venture into midstream to downstream oil and gas; gas for industry and gas for power.
The NSIA holds the key to Nigeria’s future development and economic growth, and its mandates and operations must be insulated from government bureaucracy and partisan politics. As the country navigates away from recession, the NSIA must remain in strategic partnership with government to drive economic growth and development.
The good news is that though a public agency, the NSIA is driven by a private sector philosophy and adopts global best practices in its operations and processes. The NSIA subscribed to the Santiago Principles which are a set of 24 guidelines that assign “best practices” for the operations of Sovereign Wealth Funds globally. The principles were proposed in 2008 through a joint effort between the International Monetary Fund (IMF) and the “International Working Group of Sovereign Wealth Funds”.
The principles have four key objective and the NSIA act was drafted with these in view:. To help maintain a stable global financial system and free flow of capital and investment; to invest on the basis of economic and financial risk and return-related considerations, and to comply with all applicable regulatory and disclosure requirements in the countries in which they invest.
The NSIA has received global recognition for its impressive strides within the short time of its existence. It was admitted into the International Working Group of Sovereign Wealth Funds and awarded the “African Sovereign Wealth Fund of the Year” by the Africa Investor magazine in 2013; and only recently it was awarded the “Most Innovative Sovereign Wealth Fund’ in the world by the internationally influential European CEO magazine.
With the new board, it may be set for far greater achievements.