Sovereign Wealth Fund: Strategy Document Ready, Investment Starts March 2013
The Strategy Document was ratified by the Board of the Nigeria Sovereign Investment Authority (NSIA) led by Alhaji Mahey Rasheed (OFR) To ensure that the blue print is ready on time, the board has met twice since its inauguration on October 9 to review and reshape the draft submitted by the management team led by Uche Orji, the MD of NSIA.
Additionally, efforts to hire key personnel and acquire a functional office have reached an advanced stage.
Speaking on the progress made so far, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, stated that the country is poised to benefit significantly if the momentum is maintained.
“There is still a lot of hard work ahead, we need to remain focused and disciplined so that we can reap the rewards. We are not yet there but we are on the right track. The question we must keep asking ourselves is: Other countries have benefitted from SWF. Why not Nigeria?”
Orji, who was appointed MD in October following an international head hunt, explained the status of plans to appoint a Chief Investment Officer (CIO) for the organisation:
“We are in the process of filling the role of the CIO. We received 300 resumes for the CIO role and will soon commence the process of short-listing the candidates. We hope to have the interviews early next year and have a CIO in place by early March.
He stated that other key management and staff positions in the NSIA will be advertised starting tomorrow (December 21) and the projection is that the full complement of staff will be in place by the first quarter of 2013.
To ensure that resources are maximized, Orji stressed that prudence is the cornerstone of management at the NSIA. The organization will have a lean operating model at the early stages.
He also emphasised that in seeking the best investments for Nigeria, the NSIA will not limit itself but will search for the best deals wherever they can be found in the world.
In his words: “There are no geographical restrictions or product restrictions for the Future Generation and Fiscal Stabilisation Fund, and we expect to invest across the full spectrum of products (equities, fixed income, alternative assets, etc.), in accordance with our five year rolling plan, that will provide a superior risk adjusted returns for the future generations of Nigerians.”
The Mission of the NSIA is to: 1) Build a savings base for the Nigerian People, 2) Enhance the Development of Nigerian Infrastructure, and 3) Provide Stabilization Support in times of Economic Stress
There are three Fund Mandates that were established by the Act: (1) Future Generation Fund, (2) Nigeria Infrastructure Fund, and (3) Fiscal Stabilization Fund with each fund holding at least 20% of the assets under management.
Future Generations Fund:will start off fully outsourced and in the future in-house managers will be added to foster skills in asset management and investments. In addition to developing investment policies and guidelines, the process of appointing custodians and investment consultants for determining our asset allocation models is almost concluded.
Fiscal Stabilization Fund:This will be mainly managed in-house and will ensure liquidity is available to the government in times of economic stress.
Nigeria Infrastructure Fund:This will be mostly managed in-house. Our strategy will be mainly to largely invest directly, both Equity and debt instruments along with credible local and international partners. The Infrastructure Fund will target areas that give us a balance between financial and strategic benefits.
We are already in the process of developing our 5 year rolling plan and have engagements with other MDAs as well as the private sector participants to develop our priority lists and determine our specific investment strategy and we hope to start making investments by the second half of 2012.
A subset of the Nigeria Infrastructure Fund is our social infrastructure fund which will hold up to 10% of the assets in the Nigeria Infrastructure Fund aimed at segments of the economy for which we economic returns are not the primary drivers. Our investment processes and procedures are also being developed here and will be published as a guide for the submission of potential development projects.
Our processes and investment principles will be in accordance with the Santiago Principles which focuses on a transparent and independent investment process, with a focus to make our investments sustainable.