BARBARA BAKO, Abuja.
Despite recording about 82 percent dip in its profit, Nigeria Sovereign Investment Authority (NSIA) is devoting half of its contribution to infrastructural project to enhance the country’s development.
The income of the agency responsible for the management of the country’s Sovereign Wealth Fund saw a steep dip, falling from from N149.83 billion in 2016 to N27.93 billion in 2017 causing its profit to drop from N130.3 billion in 2016 to N22.5 billion.
Despite the drop in profitability however, the NSIA had decided to increase its funding for infrastructure development by 10 percent using half of its contribution for infrastructural project in areas such as agriculture, healthcare, motorways, real estate and power.
To achieve this objective, its Managing Director,Mr Uche Orji said the asset allocation strategy of the NSIA was restructured to reflect an increased focus on domestic infrastructure investment.
Prior to this time, 40 percent of its contribution had been going for projects.
“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.
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.
Of assistance in meeting this aim will be the $650 million which the National Economic Council (NEC) had approved for it to enhance its work.
“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.
Accordingly, part of the fund will be deployed in 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.
Orji had over the weekend in Abuja described 2017 as a challenging year for the agency owing to the Currency Management Policy of the Federal Government which impacted adversely on its profitability.
Consequently, dividend payout to its shareholders is now on hold till end of the 2018 operations when its profitability would have probably increased.
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 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.
“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.
Its law states that profits should be made in each of the three funds consistently for five years after which it will start declaring dividend and this is the fifth year.
“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.
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