13.2 NSIA-NIF core governance bodies

TABLE 13.2 NSIA-NIF core governance bodies

GOVERNANCE BODY COMPOSITION AND APPOINTMENT CRITERIA

NSIA Governing Council

• Council provides advice and counsel to the NSIA board, while observing its independence. • Council is chaired by the President of Nigeria, who also appoints some of its members. • According to the NSIA Act 2011, the following government representatives have an automatic seat on the Council: President, 36 state governors, Attorney General, the Minister of Finance, minister in charge of the National Planning Commission, governor of the central bank, and chief economic adviser to the President. • In addition, the President appoints to the council four reputable representatives of the private sector, two representatives of civil society (such as NGOs or professional organizations focused on civil rights), two representatives of Nigerian youth, and four academics. NSIA board • Board is the main body responsible for the attainment of the objectives of NSIA, as established by the NSIA Act 2011. • Board operates via five subcommittees (all composed of nonexecutive board members): direct investment committee, externally managed investment committee, audit committee, finance and general purpose committee, and compensation and human resources committee. • It has nine members: three executive and six nonexecutive (with all nonexecutive directors coming from the private sector at the time of writing, although in principle they could also be drawn from the public sector, at the discretion of the Nominations Committee). • All board appointments are made by the President on recommendation of the Minister of Finance, who consults with the National Economic Council. The minister establishes an Executive Nomination Committee of five people (including the minister) with the qualifications and market experience to identify highquality candidates. This committee coordinates with the National Economic Council and recommends candidates to the President. • Nonexecutive board members include the chairman of the board, one member who is a distinguished legal practitioner, and four other professionals. • Executive members of the board include the managing director of NSIA and, at the time of writing, the chief operating officer and chief investment officer. The President appoints the managing director. • With the exception of the board member who is a legal practitioner, the NSIA Act 2011 establishes that all members must hold a university degree in economics, finance, or similar subject and possess at least 10 years of financial or business experience at senior management level. • All members must have a clean legal record. • Terms of appointment for the executive members are as long as their employment with NSIA continues; for nonexecutives, appointments are four years for the chairman and five years for the others (all renewable for one more five-year term).

Direct Investment Committee • This committee is specifically dedicated to assisting the board with regard to NIF investment decisions. • It is a committee of the NSIA board, comprising three members who should aim to serve a term of at least three years. • Responsibilities include, among others, setting NIF’s investment policies and guidelines (to be ratified by the board); overseeing investment and reinvestment of funds into NIF portfolio; monitoring portfolio performance and compliance with investment policies, and reporting findings to the board; advising the head of NIF and managing director of NSIA; ensuring the development of local, internal investment management expertise; developing selection policies and criteria for solicited and unsolicited infrastructure-related proposals, and evaluating the investment management aspects of new proposals; considering various measures of investment portfolio risk, such as volatility and liquidity, and advising the board accordingly; and advising the board on setting risk thresholds that appropriately reflect the board’s risk appetite. • Any member of the committee may be removed or replaced, for any reason at any time, by a majority vote of the board. • If authorized by the board, the committee can invite professionals with experience in infrastructure investing, who are not board members, to attend committee meetings. • The chairmen of the board’s Audit Committee and Finance and General Purpose Committee may be invited to attend meetings in a nonvoting capacity. • It convenes at least four times a year, requires a quorum equal to the majority of its members, and decides by simple majority (albeit seeking consensus to the extent possible). It informs the board of significant actions taken or issues discussed. • The committee chair coordinates with the NSIA’s managing director and chief investment officer to prepare an agenda and discussion materials ahead of a board meeting. • It can retain independent advisers to assist in the performance of its responsibilities or conduct investigations. • It performs a self-evaluation annually and reports findings to the board.

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TABLE 13.2 continued

GOVERNANCE BODY COMPOSITION AND APPOINTMENT CRITERIA

Externally managed investment committee • This committee is responsible for investment decisions of NSIA’s Stabilization Fund and Future Generations

Fund. • It is a committee of the NSIA board, with different composition and functions than the Direct Investment

Committee.

Compensation and Human Resources Committee

• This committee comprises three nonexecutive members who should aim to serve a term of at least three years. • It assists the board in fulfilling its oversight responsibility for ensuring that the compensation structure for NSIA employees is consistent with NSIA’s long-term objectives. • Any member of the committee may be removed or replaced, for any reason at any time, by a majority vote of the board. • It convenes at least two times a year, requires a quorum equal to the majority of its members, and decides by simple majority. • It can retain independent advisers to assist in the performance of its responsibilities or conduct investigations. • It performs a self-evaluation annually and reports findings to the board. Audit Committee • It is a committee of the NSIA board, comprising three board representatives, all selected from the nonexecutive directors and serving for a period of at least three years. • It assists the board in fulfilling its oversight responsibilities relating to NSIA’s accounting and financial reporting policies and practices, compliance programs, internal controls, and general compliance with applicable laws and regulations. • The committee meets at least four times a year, requires a majority as quorum, and decides on a simple majority basis. • It meets at least annually with NSIA’s chief financial officer and the external auditor. • It has the right to meet privately with any person it desires.

Finance and General Purpose Committee • It comprises three nonexecutive directors. • It assists the board in exercising its oversight responsibility with respect to NSIA’s material and strategic financial matters, including those related to funding, budgeting, expenditure, and general operation and financial structure.

Source: NSIA presentation to the Governing Council at the National Economic Council Meeting, June 28, 2018. Note: NGO = nongovernmental organization; NIF = Nigeria Infrastructure Fund; NSIA = Nigeria Sovereign Investment Authority.

the report and has the opportunity to raise questions and give counsel. Any resolution of the council is passed by simple majority. more broadly, the council reviews mid- and long-term investment policies; modification of financial status, such as the increase or decrease of capital; entrustment of assets to NSIA; appointment or dismissal of executive officers; valuation of management’s performance; and overall outlook of the fund.

The NSIA board is the main body responsible for the attainment of NSIA’s objectives, as established by the NSIA Act 2011. It has nine members—three executive and six nonexecutive. All members are appointed by the President, on recommendation of a Nominations Committee led by the minister of Finance, and must have relevant financial and private sector experience at senior management level. The three executive members are NSIA’s managing director and two other NSIA executives, currently the chief operating officer and chief investment officer. At the time of writing, all nonexecutive directors come from the private sector, although in principle they could also be drawn from the public sector, at the discretion of the Nominations Committee. The board meets at least once a quarter, requires a quorum of seven representatives, and decides on a simple majority (the chair has a casting vote). The executive board members and other senior management representatives constitute the Executive Committee, a management-level (not board-level) committee in charge of day-to-day management of the organization.