This interview will appear in the 3Q Y2013 (October 2013) issue of the Sovereign Wealth Quarterly.
This is a Q&A with Uche Orji, the Managing Director/CEO of the Nigeria Sovereign Investment Authority (NSIA).
1. How can Nigeria’s sovereign wealth funds act as a catalyst and channel foreign investment to Nigeria?
The NSIA seeks to be the investment partner of choice for global investors in Nigeria. Global investors are increasingly looking to Nigeria as one of the next major growth markets and many are in search of a local partner of choice that speaks the language of the private sector and can effectively interface with government. To that end, the NSIA has recently signed MoUs with General Electric and the Africa Finance Corporation, among others. The focus of these MoUs is on infrastructure investment through the NSIA’s Nigeria Infrastructure Fund. The Future Generations Fund, which has a global mandate, will also selectively make domestic investments through its illiquids allocation.
2. Can you go into detail about the Stabilisation Fund and the purpose of it?
The objective of the Stabilisation Fund is to provide stabilisation support to the economy during times of economic stress. The Stabilisation Fund will be mainly managed in-house in a diversified portfolio of liquid, low risk products such as Treasury bills and liquid, short-term, investment grade bonds.
3. What is the mechanism for ongoing funding with regard to the Nigerian Sovereign Investment Authority?
The NSIA’s funding mechanism is defined in the NSIA Act. Essentially, it is the excess hydrocarbon revenue (oil and gas) above the budgeted “Benchmark Oil Price” set annually by the National Assembly, less contributions to budgetary buffers.
4. What sectors will the Nigeria Infrastructure Fund be allocating to?
The Nigeria Infrastructure Fund will focus on infrastructure projects in Nigeria that meet our financial return hurdles. The Infrastructure Fund is presently carrying out detailed reviews of a number of sectors, including transportation, healthcare, water resources, and energy infrastructure.
5. Does the Future Generations Fund have a target allocation by asset class?
Yes, the Future Generations Fund has a target asset allocation by asset class. This allocation will continue to develop over time. Broadly, the Future Generations Fund will invest in listed securities, including equities and fixed income globally; unlisted securities, including private equity, real estate, commodities, as well as inflation hedges.
6. When selecting investment managers and partners, what criteria are essential to you?
Philosophy, investment process and alignment are our required objectives. We also look for a sound reputation, performance track record, and a balanced service team i.e. quality, stability and cost of service.
7. How will the Nigerian Sovereign Investment Authority be a major regional player in the African institutional investor community?
Discipline will be the key to our success. The NSIA has received seed funding of $1 billion. While this is a modest sum by global standards, the NSIA, through the government’s disciplined contributions to the fund, could become one of the largest pools of capital in Sub-Saharan Africa. Secondly, the NSIA’s governance will be the key factor that sets us apart. The NSIA Act is very clear that the NSIA is an independent organization and the Federal Government has been very committed in supporting this. We describe our model as “F-I-T”: Financial sustainability Independence in decision-making, and Transparency in process. Finally, our ability to draw in international co-investors will only serve to enhance our credibility as an investment house.
About Uche Orji
Mr. Uche Orji is the Managing Director/CEO of the Nigeria Sovereign Investment Authority (NSIA). Mr. Orji joined the NSIA as CEO on October 2nd 2012 from UBS Securities, where he was Managing Director in the New York branch of its Equities division. Prior to his experience at UBS, Mr. Orji was a Managing Director in J.P. Morgan’s Equities division in London. Prior to JP Morgan, Mr. Orji was at Goldman Sachs Asset Management, London, as analyst/portfolio manager.
Mr. Orji holds a BEng in Chemical Engineering from the University of Port Harcourt, Nigeria and an MBA from Harvard Business School.
About the NSIA
The Nigeria Sovereign Investment Authority (NSIA) was set up by an Act of Nigeria’s National Assembly (the NSIA Act) in 2011. The objective of the NSIA is to promote fiscal stability, build a savings base for future generations of Nigerians and enhance the development of Nigeria’s infrastructure. The NSIA’s investments are made through three distinct funds: Stabilisation Fund, Future Generations Fund, and the Nigeria Infrastructure Fund. Please visit the NSIA at: www.nsia.com.ng.