A Review of the Nigerian Energy Industry

SWF to create template for pension investment in infrastructure

ngozi okonjo iweala02 August 2013, Abuja – Impressed with N2.9 trillion held by pension funds in the country, the federal government has asked the Nigeria Sovereign Investment Authority, NSIA – operator of the Sovereign Wealth Fund, SWF – to come up with modalities that will make it easier for pension fund managers to invest in infrastructure projects nationwide.

Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, who made the disclosure in Abuja thursday said with the assemblage of the right professionals which the NSIA parades, the institution could be of assistance by introducing measures that would encourage investment in infrastructure by pension funds.

President Goodluck Jonathan, she said, had asked that the nation’s pension funds be made a bit more active like others elsewhere in the world in the area of infrastructure development and others.

“One of the things we want to thank the Nigeria Sovereign Investment Authority for is that they have got the expertise to be able to work with the pension funds to design a mechanism whereby they can also invest in infrastructure.

“To invest very carefully so that they can earn returns because this is people’s money. This is being put on the drawing board now and discussions are going on,” she said.

Okonjo-Iweala, who was on her inaugural visit to the NSIA headquarters in Maitama, Abuja, said the emergence of NSIA provided an ample opportunity for pension funds to be managed by globally-acclaimed professionals who can take best investment decisions with the funds for the overall benefit of its beneficiaries.

The minister said saddling the NSIA with the task of assisting in the investment of pension funds would be a relief to the government’s quest to ensure that the funds are appropriately invested and managed for the end-beneficiaries.

She said she was pleased with what the management and board of the NSIA had done since the take-off of the SWF, adding that offshore reports and validation had indicated that the NSIA took off on a firm footing.

Expressing her endorsement of the structure, smooth take-off of the NSIA, Okonjo-Iweala said the initial $1 billion take-off fund had been appropriately allocated to the three-ringed components of the SWF: The Stabilisation Fund, Nigeria Infrastructure Fund, and the Future Generation Fund.

“They have decided on the first infrastructure investment that they are going to make. The board has decided, and very shortly, they will let the public know on which one they will be working on,” she said, adding that the board and management were fully aware of the huge responsibilities on their shoulders.

In his remarks, the NSIA Managing Director, Mr. Uche Orji, disclosed that NSIA is set to unveil specific infrastructure projects it will be undertaking in the country after successfully signing separate memoranda of understanding, MoUs, with global strategic partners recently.

Under such partnerships, it already has MoUs with General Electric, GE, African Finance Corporation, AFC, and International Finance Corporation, IFC.

The partnership will help to mobilise public and private resources that will open the nation’s infrastructure investment in six sectors, including housing, healthcare, transportation, road, power and gas.

But after the signing of the MoUs, the NSIA did not disclose the specific infrastructure projects it intends to invest in the six sectors.

However, Orji disclosed that the NSIA was set to announce specific initial projects in which investments would be made in the next two to three weeks.

Although he did not open up on the initial infrastructure projects in which the NSIA would invest, THISDAY gathered that it will mostly likely be in road and power sectors.

Orji said JP Morgan had been appointed NSIA’s global custodians after a competitive selection process, which included other custody firms such as State Street, Citigroup, Northern Trust, HSBC and JP Morgan while Stanbic IBTC has been appointed local custodians.

He also disclosed that the world’s largest investment consultancy, Cambridge Associates, had been appointed as investment consultants while investment policy statements and asset allocations for the three component funds of the SWF had been finalised.

On the Infrastructure Fund, Orji said: “NSIA engaged in in-depth discussions with a few strategic partners, which include private equity firms, investment managers, and OEMs (Original Equipment Manufacturers) interested in making capital investments.

“The mandate of this fund is to enhance infrastructure development in Nigeria through strategic investments and provision of a platform for attracting foreign investments.”

According to him, NSIA’s relationships with these firms formalised its process of engagement in the joint execution of infrastructure projects in Nigeria.

In addition, the NSIA has announced the appointment of a Swiss national, Mr. Hanspeter Ackerman, as its chief investment officer.

Ackerman, with over 30 years experience, will be responsible for leading the investment assessment and evaluation of the NSIA as well as providing the overall guidance and supervision to the Nigeria Infrastructure Fund.

He holds a B.Sc. in Business Administration from the Handelsschule Kaufmaennischer Verein in Bassel, Switzerland, and is a Chartered Financial Analyst.

Until recently, he was an assistant general manager with Samba Capital in Riyadh, Saudi Arabia, where he functioned as the chief investment officer and Head of Asset Management.

– Ndubuisi Francis, This Day

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