NSIA CEO says 2022 presents most challenging investment environment in 15 years

The CEO of the Nigeria Sovereign Investment Authority (NSIA), Uche Orji, recently sat down for an exclusive interview with CNBC Africa to discuss the key drivers behind the organization's strong performance in what is anticipated to be the most challenging investment environment in the past 15 years. Orji highlighted four key factors that contributed to the NSIA's success in the face of inflation, geopolitical tensions, and supply chain disruptions. The first driver mentioned by Orji was the strong performance of the global market, which remained robust for the NSIA in the previous year. Despite concerns about inflation leading the organization to reduce risk towards the end of the year, investments in various markets, including public equities and private markets, outperformed their benchmarks. This performance played a significant role in driving positive returns for the NSIA. The second key driver behind the NSIA's success was the performance of its subsidiary companies. Orji disclosed that many subsidiary financial services entities owned and developed by the NSIA delivered strong financial results. These companies, ranging from market refinancing to family home funds and a development bank of Nigeria, all posted positive numbers. Additionally, investments in sectors like healthcare proved to be profitable and helped offset any previous losses. Foreign exchange gains constituted the third key driver of the NSIA's strong performance. With investments spread across multiple countries, the NSIA benefited from favorable foreign exchange movements, although gains were slightly lower due to currency depreciation in some regions. Despite this, foreign exchange gains made a significant contribution to the organization's overall performance. The final driver highlighted by Orji was the successful spin-off of a subsidiary focused on trading fertilizers. This move, aimed at reducing government subsidies, not only achieved its intended purpose but also turned a profit for the first time. Orji emphasized the significance of this achievement, noting that it was a testament to the subsidiary's operational efficiency and financial viability. In terms of financial results, the NSIA reported an income of 100 billion naira, a slight decrease from the previous year's 109 billion naira. Orji attributed this dip to the organization's cautious approach in light of inflationary concerns. Despite the slight decline in income, the NSIA's gross assets saw a significant increase from 900 billion naira to 1.2 trillion naira, reflecting a growth rate of 19%. Orji expressed satisfaction with these results, particularly noting the strong performance of most asset classes, with the exception of emerging market equities. Looking ahead to 2022, Orji acknowledged the numerous challenges facing the investment landscape, including inflationary pressures, geopolitical uncertainties such as Russia's invasion of Ukraine, and ongoing supply chain disruptions. However, he remains optimistic about the NSIA's ability to navigate these challenges and continue delivering positive results for its stakeholders.