Nigeria’s Wealth Fund Has ‘Good Year’ Tapping Dollar Investments

Nigeria’s $1.55 billion sovereign wealth fund had a “good year” after weighting its investments toward dollar assets, according to Chief Executive Officer Uche Orji.

“Our currency position was great as we were very long the dollar,” Orji, a former Goldman Sachs Group Inc. banker and head of the Nigerian Sovereign Investment Authority, said in an interview in Geneva on Monday. “It was the only game in town.”

The Abuja-based wealth fund, set up by Nigerian President Goodluck Jonathan in 2011, gained exposure to the dollar through equities, private equity and fixed-income assets, said Harvard-trained Orji. The fund, which invests revenue generated when the oil price exceeds that budgeted by the government of Africa’s biggest crude producer, has adjusted to the market slump since June, he said.

“The budget was at $75 and we all know where the oil price is now, so you don’t expect any contributions to the fund,” said Orji, who was attending the Africa CEO Forum in Geneva. “We prepared ourselves for the impact.”

Nigeria relies on crude exports for about 95 percent of its foreign-currency earnings and about 70 percent of government revenue.

The authority’s private-equity investments were “very successful” last year, said Orji, who declined to be more specific before the release of the fund’s annual report in the coming weeks. The NSIA’s mandate embraces a mix of stabilization, savings and infrastructure funds, while outsourcing to a range of asset managers, including Goldman Sachs and UBS AG.

Political Will

The Nigeria infrastructure fund, which has invested in toll roads and gas pipelines, has yet to allocate most of its $400 million, said Orji.

While the European Central Bank has commenced a 1.1 trillion-euro ($1.17 trillion) quantitative-easing program to help resuscitate the region’s sluggish economy, Orji said his view on the ECB hasn’t changed.

“We will see whether there is the political will to sustain it,” Orji said. “The political environment to make these things happen is a lot easier in the U.S. than anywhere else.”

Finance Minister Ngozi Okonjo-Iweala said last year the Nigerian federal government is targeting $5 billion for the wealth fund in the medium term. Orji said he doesn’t have a target and declined to comment on Nigeria’s elections that start March 28.

“You’ve got to able to look beyond these single events,” he said. “My No. 1 job is to keep these funds safe, and No. 2 is earn a return. Do I have the right asset allocation, do I have the right risk management in place? –- those are the things that keep me up at night.”

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