Uche Usim, Abuja
The volatility of the global business environment took its toll on the Nigeria Sovereign Investment Authority (NSIA), the agency managing the Sovereign Wealth Fund, with its profit declining from N130.3 billion in 2016 to N22.5 billion in 2017.
The Managing Director of the Authority, Mr Uche Orji, made the disclosure in Abuja at the weekend while reeling out its 2017 financial operational results to finance journalists in Abuja.
According to Orji, the agency performed well in its investments, stressing that the issue of dividend payment was discussed by the board but was stepped down till 2019. Orji said: “The law said that we should show profits in each of the three funds consistently for five years after which we will start declaring dividend and this is the fifth year of showing profitability.
“The dividend policy was considered by the board but we decided to step it down and consider it again next year.” He said the total comprehensive income dwindled from N149.83 billion in 2016 to N27.93 billion in 2017.
The agency also recorded a decline of N107.8 billion in profit from N130.37 billion in 2016 to N22.55 billion in 2017. Orji, while describing the 2017 financial year as a challenging one for NSIA, however, expressed optimism that the agency will recover lost grounds and declare profit for 2018.
On reasons for the decline in profitability, the NSIA CEO blamed it on the currency management policy of the Federal Government.
He said: “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 and reflating the Naira’s real value in 2016.
“To this effect, the naira weakened in value from N196/$ to N305/$ in 2016.
“Considering that at the end of that year, about 80 cent of the Authority’s assets under management were denominated in the United States Dollars, the devaluation resulted in the recognition of significant exchange gains in the Authority’s naira books at the close of the year.”
He also said that the delay in inaugurating the NSIA board led to a lag in re-investment of matured fund which affected profitability.
However, he said despite the drop in profitability, the NSIA had decided to increase its level of funding for infrastructure development.