NSIA to Exit Fertilizer Blending After Transforming Sector
By Patience Ikpeme
The Nigeria Sovereign Investment Authority (NSIA) has announced its plans to withdraw from direct involvement in the fertilizer blending sector, having successfully grown the number of operational blending plants in Nigeria from just four in 2017 to over 90.
Speaking at the NSIA’s Media Engagement on the Authority’s 2024 Earnings Presentation, Managing Director and CEO, Mr. Aminu Umar-Sadiq, stated that the significant increase in blending capacity, coupled with the Central Bank of Nigeria’s removal of the foreign exchange ban on fertilizer imports, has created a liberalized and dynamic sector where NSIA’s direct intervention is no longer essential.
“Because we have gone from four operating blending plants to over 90 today, is to say, particularly with the CBN Governor removing the FX ban on the importation of imports, to say it’s now a liberalised sector with active, buoyant players, NSIA is actually no longer needed,” Mr. Umar-Sadiq explained.
He further elaborated that the eight-year plan initiated to revitalize the blending space has achieved its objective. “And therefore, the expectation is that by next year we are out. And I want to suggest that His Excellency, President Bola Ahmed Tinubu, is also aligned with that, and to the extent that there is no shock in the system, we’ll be looking at, over the next two to three years, to actually fully transition out of the sector.”
Mr. Umar-Sadiq detailed the strategic approach adopted by NSIA since the commencement of the programme in 2017. “What was important and what was crucial in terms of that business model was to ensure that the focus, the objective was to resource-take the sector so that the blending plants are actually dependent. It was not to sustain NSIA’s continued engagement, continued intervention in the sector.”
Initially, NSIA undertook the responsibility of procuring all raw materials, managing transportation to blending plants, paying the plants for blending services, and then selling the finished fertilizer. Over time, as the blending plants developed a track record of cash flows, NSIA gradually reduced its direct involvement. This transition involved enabling the blenders to access bank guarantees for raw material purchases and eventually manage their own transportation and procurement of urea and limestone, with NSIA’s role limited to importing phosphate and potash.
The ultimate goal is for these blending plants to become fully capable of sourcing all inputs independently, allowing NSIA to exit the sector entirely within the next two to three years.
Addressing potential impacts of new policies from the US under President Donald Trump, Mr. Umar-Sadiq noted NSIA’s defensive strategic asset allocation within its stabilization and future generations funds, including investments in private equity, hedge funds, real estate, and inflation-linked funds. This strategy aims to provide downside protection and stable income growth, aligning with NSIA’s primary mandate as a savings fund.
Regarding fundraising, Mr. Umar-Sadiq described NSIA’s role as a catalyst, conceptualizing and initiating projects that attract further investment. He cited the Financial Guarantor, which grew from $25 million to over $300 million in attracted capital, and ongoing efforts by NMRC and MedServe to secure significant investments. He reported that NSIA has committed approximately $500 million across its projects and attracted just over $1 billion in third-party capital.
Providing an overview of NSIA’s financial performance, Mr. Umar-Sadiq disclosed that the Authority has received a total of $1.82 billion in net Government Contributions since its inception, which has been efficiently utilized, resulting in a Net Asset Value (NAV) of $2.84 billion (N4.354 trillion) as of December 2024. He also noted that NSIA has executed over 150 investments across the African continent in various sectors.
Key financial highlights for 2024 include over $500 million committed to domestic infrastructure, over $1 billion catalyzed in third-party investment, a robust infrastructure investment portfolio across agriculture, healthcare, and power, investments in over 50% of locally owned and run private equity funds, Operating Income of N1.853 trillion, Profits After Tax of N1.886 trillion.
Total Comprehensive Income (TCI) of N1,885.6, Return on Average Assets (RoAa) of 12.2%, and Return on Average Equity (RoAe) of 12.4%. The Managing Director noted significant growth in operating income driven by strong performance across major income lines and a total asset growth of over 90%. He also pointed out that NSIA achieved its strongest performance in Core TCI in 2024, demonstrating stable earnings generation.
