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New Nigerian company ‘to boost pension fund investments in infrastructure’

A new company that will enable pension funds to invest in Nigerian infrastructure bonds is set to be launched in a few weeks’ time, the head of the country’s sovereign wealth fund has said.

Uche Orji, chief executive officer of the Nigeria Sovereign Investment Authority (NSIA), told Reuters the authority is setting up the company in partnership with London-based local currency guarantee firm GuarantCo.
Orji said the new company “will provide enhancements for infrastructure bonds, and we believe this will make an effective platform for Nigerian pension funds to invest in them”.
The NSIA, which has some $1.25 billion under management, was created in May 2011. The agency’s investments are made through three distinct funds: The Future Generations Fund, to invest in growth investments and prepare for “such a time as the country’s hydrocarbon reserves are depleted”; The Stabilisation Fund, which “is intended to act as a buffer against short-term macro-economic instability”; and The Nigeria Infrastructure Fund (NIF), which “aims to invest in domestic infrastructure projects that meet targeted financial returns”.
The NIF also contributes to “the development of essential infrastructure, in order to stimulate the growth and diversification of the Nigerian economy, attract foreign investment and create jobs for Nigerians”.
According to Nigerian law, the NSIA may invest up to a maximum of 10% of the funds in the NIF in social infrastructure projects “which promote economic development in underserved sectors or regions in the country”.
A report released in 2015 by consultancy Ernst & Young (80-page / 2.4MB PDF) said Nigeria had been the largest recipient of foreign direct investment in Africa over the last decade, 80% of which had been invested in the oil and gas sector.
Just over one year ago, Chinese steel pipe manufacturer Jiangsu Yulong Group broke ground for a major manufacturing plant in Nigeria’s Lagos Lekki free trade zone, aimed at supplying the country’s developing oil and gas industries.
China said the first of three investment phases in the Yulong Lekki project would be an estimated $50 million. Yulong Group deputy general manager Willy Wen told China’s state Xinhua News Agency that the plant would become “the No.1 complex welding and seamless pipe manufacturer in Nigeria” as the group seeks to exploit new international markets.
Last September, the African Development Bank said it was finalising a $1bn “budget support package” aimed at boosting a series of infrastructure and private sector projects in recession-hit Nigeria.
However, the bank’s president Akinwumi Adesina said Nigeria should do more to “reap the dividends of devaluation”, including the creation of “incentives for foreign direct investments”. He also called on Nigeria’s leaders to “put in place the right incentives to boost private investment and revive growth”.

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