The Association of Local Government of Nigeria (ALGON) has raised concerns about being excluded from the operations of the Nigeria Sovereign Wealth Fund, despite owning 17.8% of the National Sovereign Investment Authority (NSIA).
During a session with an ad hoc committee of the House of Representatives, investigating the NSIA, ALGON emphasized that local governments have not been adequately involved in the NSIA’s activities.
The President of ALGON, Alabi Kolade, pointed out that NSIA management had not consulted with the association regarding the handling of the funds. He stressed that most of the fund’s investments in healthcare and education primarily benefited tertiary institutions.
Kolade stated, “Your activities are conducted secretly, excluding local governments. I have evidence to support this. They should provide more transparency and allow us to have a say in their decisions.”
Regarding the ownership structure of the NSIA, the federal government holds 45.8% of the shares, states have 38.2%, local governments own 17.8%, and the FCT has 0.16%.
Over the past decade, the federation has invested over $1.75 billion for the NSIA to manage as an investment manager. The NSIA manages several core funds, including the Stabilization Fund, Future Generations Fund, and Nigeria Infrastructure Fund, along with third-party funds such as the Presidential Infrastructure Development Fund and the FGN Stabilization Fund.
Kolade argued that most NSIA projects primarily benefit states and the federal government, leaving local governments out of the equation. He highlighted that local governments are responsible for primary healthcare and primary schools, but these areas have not seen any significant NSIA investments.
He requested that local governments be more involved in NSIA operations since they are a significant part of the ownership structure.
However, a representative of the Nigeria Governors’ Forum (NGF), Shittu Lateef, challenged Kolade’s position. Lateef asserted that the NSIA had already briefed the governors, and they had no objections to ALGON’s stance.
Lateef explained that local governments are currently appendages of the states, and the state governments were briefed on behalf of local governments. He also noted that many NSIA projects are located in local governments, making ALGON’s argument about beneficiaries questionable.
The Managing Director/CEO of NSIA, Aminu Sodiq-Umar, reported to the committee that NSIA’s assets had grown by over $600 million in the past decade, increasing from $1.760 billion to over $2.27 billion. He highlighted the organization’s focus on managing its investments with a long-term perspective.
In response to questions about investments that incurred losses, Umar-Sodiq stated that it’s natural to have both gains and losses in a growth investment portfolio. He emphasized the importance of managing volatility and correlation while substantially ensuring gains outweigh losses, as per the nature of investment business.
During the session, Chairman of the Committee, Ademorin Kuye, moved a motion to hold an executive session with NSIA to discuss the authority’s strategies.