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No dividend on Sovereign Wealth Fund till 2017

By on April 1, 2015

The Nigerian Sovereign Investment Authority on Monday said it would not pay dividend on the Sovereign Wealth Fund until the end of the 2017 financial year.

The Managing Director and Chief Executive Officer, NSIA, Mr. Uche Orji, disclosed this while addressing journalists in Abuja on Monday about the financial performance of the agency in the 2014 financial period.

He said the law setting up the Sovereign Wealth Fund did not allow the agency to pay dividend until the fund had posted profit for five consecutive years.

The SWF, which was set up in 2012, is jointly owned by the federal, state and local governments. The three tiers of government are the shareholders that are expected to receive dividends from the fund.

Orji, while giving the financial performance of the agency for 2014, said the NSIA earned a net comprehensive income of N15.8bn in the period under review, noting that this was a significant improvement over the N505m recorded in the 2013 financial period.

He said inasmuch as the NSIA would like to see Nigerians enjoy the benefits of the fund through the payment of dividend, the law setting up the agency only permitted such to be paid after five years.

Orji said, “The NSIA was established by an Act of the National Assembly under the NSIA Establishment Act in 2011 to achieve three broad mandates namely: to build a savings base for the Nigerian people; to enhance the development of infrastructure; and to provide stabilisation support in times of economic stress.

“It commenced operation in 2012. We will not pay dividend until 2017 by law. So, 2016 year into 2017, the law says dividend would be paid after five years of consistent profitability across all three funds and so we hopefully will start to pay dividend by then.

“I want to say that we will love to continue making money again. So we pray that we continue to show good performance.

If we do and consistently show profitability across all three, then we will start to pay dividend to the state, local government and federal government as shareholders.”

He said the NSIA would this year convene its governing council meeting where it would meet with all stakeholders of the SWF such as state governors, the vice president and the Governor of the Central Bank of Nigeria, among others.

On the outlook for 2015, Orji said the year remained volatile owing to vulnerabilities in the external environment.

He, however, stated that despite the vulnerabilities and barring any unforeseen adverse event, the NSIA would maintain its diversified strategy for the future generation and stabilisation funds.

Asked what had been the impact of the naira devaluation on the SWF, he said, “We believe the recent devaluation of the naira presents both challenges and opportunities in the domestic market.

“From our position as investors, we have seen incredible buying opportunities and we expect the Infrastructure Fund to become increasingly active in the domestic market as we take advantage of short term price dislocations.”

In the 2014 annual report, the agency recorded N10.5bn change in fair value assets as well as total operating and administrative expenses of N1.6bn.

Key drivers of performance, according to the report, included investments in secondary interests in private equity, development in market equities and returns on hedge fund investments.

These, it added, were complemented by a long dollar currency position versus other currencies.

 

[Punch]