What Is Nigeria Sovereign Fund Authority (NSIA) All About

What Is Nigeria  Sovereign Fund Authority (NSIA) All About


What Is Nigeria Sovereign Fund Authority (NSIA) All About – This is a national matter and raises issues on; Nigerian Sovereign Investment Authority Act, Sovereign Wealth Fund Nigeria Board, Nigeria Sovereign Investment Authority (Nsia) Vacancies, Uche Orji Nsia, Nigerian Sovereign Investment Authority (Nsia), Nsia Nigeria Address, Problems Of Sovereign Wealth Fund In Nigeria, Sovereign Wealth Fund Nigeria Recruitment, Nigeria Infrastructure Fund.
Just read on. I promise you that these issues will all be addressed in this article.

In fat, it is not that we never knew or that they (the government of Nigeria) never knew that Nigeria is the most populous black nation in the world and most populous in Africa. It was not that they never knew that the population was growing rapidly without control. It was not that they never knew that Nigeria only dependence for economic survival was oil. It was not that they never knew that the price for this single commodity is always fluctuating in the global oil market, and affecting the foreign exchange earning and rates which impacted negatively on the economy.


What Is Nigeria  Sovereign Fund Authority (NSIA) All About

What Is Nigeria  Sovereign Fund Authority (NSIA) All About

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A New Dawn:

2011 was a new dawn. It was the particular year the people of Nigeria realised that provision has to be made for future generation, and that investment has to be made in infrastructural facilities. The idea of Sovereign Investment Fund came up. The fact is that this was copied from other nations who had such fund before Nigeria.

However, there is need to state here that in 2004 a fund called Excess Crude Account (ECA), was set up  as a stabilisation fund to meet the country's yearly budget deficits and to contribute to the development of local infrastructure. The constitutionality of the ECA was seen as questionable. Yes, any fund so attached to national budget can also go along the national budget without must accountability. That was why ECA was seen as without well defined national objective.

What Is Nigeria  Sovereign Fund Authority (NSIA) All About

The Birth of Nigeria Sovereign  Investment Authority (NSIA):

Nigeria Sovereign Investment authority was established in May, 2011.

The Nigeria Sovereign  Investment Authority (NSIA) is Nigeria’s  investment authority. It was establishment to manage the Nigeria sovereign wealth fund. Nigeria Sovereign wealth fund is a fund  into which the surplus income produced from Nigeria's excess oil reserves is deposited.  This sovereign wealth fund was founded for the purpose of managing and investing these funds on behalf of the government of Nigeria. This is the difference between NSIA and ECA.

It was established by Nigeria Sovereign Investment Authority Act,  May 2011. The fund commenced operations in October 2012 . This fund has one major national objective; to invest the savings gained on the difference between the budgeted and actual market prices for oil to earn returns that would benefit future generations of Nigerians. A take-off capital or seed capital of $1 billion USD was allocated to it. However, additional sums have been contributed to date by the current administration.

The NSIA Act 2011 was structured among other things  after the Santiago Principle. The Santiago Principles  are a set of 24 guidelines that assign “best practices” for the operations of Sovereign Wealth Funds globally. 

The 24 principles are classified into 4 major objectives, which are:

1. To help maintain a stable global financial system and free flow of capital and investment
2. To invest on the basis of economic and financial risk and return-related considerations
3. To comply with all applicable regulatory and disclosure requirements in the countries in which they invest
4. Transparent and sound governance structure providing for operational controls and risk management and accountability

What Is Nigeria  Sovereign Fund Authority (NSIA) All About


The board was inaugurated on 9 October 2012 with Uche Orji as the Managing Director and Chief Executive Officer. The total professional and administrative staff component of NSIA was 25. The firm, JP Morgan, was appointed as the custodian of the funds. 

After a short period of operation, the NSIA was  invited to request observer status at the International Forum of Sovereign Wealth Funds (IFSWF), with the intention of eventual membership because within this time it had performed very well. On 5th April 2016 Vanguard newspaper reported that NSIA generated income of N26.3b in 2015 and N15.77b in 2014.

 NSIA is the third largest in Sub-Saharan Africa, after Botswana and Angola.

What Is NSIA All About?

The fund is intended to:
  1. provide security against future economic instability,
  2. contribute towards the development of the country's infrastructure, 
  3. be a savings mechanism for future generations, using the country's excess oil revenues, and
  4.  protect Nigeria's economy from external shocks if well managed.

A Three Component Sovereign Wealth Investment Fund:

This national investment authority has three distinct components with different investment mandates. 
These are:
  1.  The Stabilisation Fund,
  2. The Future Generation Fun and
  3. The Nigerian Infrastructure Fund.

    What Is Nigeria  Sovereign Fund Authority (NSIA) All About


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Equity Standing:

Out of the One billion US Dollars allocated to it as take-off capital,  85 percent of the   funds were distributed among these three windows. The balance of  15 percent or $150 million remained un-allocated, and  to be assigned to either of the three funds as needs arise in the future. The Stabilisation Fund was allocated an initial 20 percent, while 32.5 percent each went to the Future Generation and the Nigeria Infrastructure funds.

Stabilisation Fund
The Stabilisation Fund is intended to safeguard against, and stabilise the national budgetary deficits. It would be a last resort from which government may withdraw annually to meet shortfalls in the budget occasioned   by falls in oil prices or other budgetary constraints.

Future Generations Fund
The Future Generation Fund is a savings fund that will be invested in long-term investments and assets to provide savings for future generations of Nigerians. Nigerians hope that this fund will really be there for  the future generations. Future Generation is not well defined here.

Nigeria Infrastructure fund
As a matter of fact, the Nigeria Infrastructure Fund is expected to invest in the infrastructural development of the country in areas such as agriculture and other government directed projects. We all know that Nigeria is in dare need of economic diversification propelled by adequate power supply.

Nigeria  Sovereign Investment Score Card:

NSIA is guided by the Santiago principles and that  has  led it to develop and put into practice frameworks for good corporate governance, risk management, transparency and accountability. The Santiago Principles  are a set of 24 guidelines that assign “best practices” for the operations of Sovereign Wealth Funds globally.

Consequently, the adoption and application of these principles  has manifested in NSIA’s very early attractiveness as a credible partner to leading private investors, private equity funds and DFIs.

What Is Nigeria  Sovereign Fund Authority (NSIA) All About

In recognition of the impressive strides the NSIA has recorded despite its young state it received global recognition through its admission 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.  It was also  awarded the “Most Innovative Sovereign Wealth Fund’ in the world by the internationally influential European CEO magazine not long ago.

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