The fund saw valuations decline after the central bank introduced policies that weakened the naira by at least 15 per cent against the greenback
The Nigeria Sovereign Investment Authority is restructuring its portfolio to focus more on domestic investments after a drop in the currency wiped out foreign exchange gains last year.
“The asset allocation strategy of NSIA has been restructured to reflect an increased focus on domestic infrastructure investments with 50 per cent of future contributions to be dedicated to infrastructure,” according to a statement on Monday from the fund.
The fund, which last year had 80 per cent of assets under management denominated in dollars, saw valuations decline after the central bank introduced policies that weakened the naira by at least 15 per cent against the greenback. Measures like a market price-determined trading window for investors and exporters were aimed at improving supply of dollars at a time revenue from oil, the nation’s biggest export, had fallen and caused the economy to contract in 2016.
Profit at the institution slid 82 per cent last year to NGN22.6 billion ($62.5 million) as foreign exchange gains plunged 98 per cent. They made up more than half of 2016’s profit.
NSIA’s Managing Director Uche Orji expects the government, which provides the fund’s capital, will inject additional money after oil prices more than doubled since a low in 2016. “The expectation is that we will increase, but I don’t know by how much," he said, referring to the asset base.
Nigeria, Africa’s biggest oil producer, has been tapping into its oil savings. The government used $1 billion to fight Islamist militants and may draw a similar amount to fund the completion of a state-controlled steel plant. The so-called excess crude account stood at about $2.32 billion at the end of last year.
The NSIA currently manages $2.15 billion up from $1.5 billion at the end of last year. That includes a government deposit of $650 million approved in May to fund infrastructure development.
The fund will increase investment in farming, health care, power and toll roads, Orji said in an interview from his office in the capital Abuja. It already spent more than $200 million on infrastructure and farming projects that will “generate returns after at least two years,” he said.
The NSIA didn’t re-invest funds that matured at the beginning of the year immediately, pending the inauguration of new directors, the managing director said.