Notes

disclosed in the segment reporting section of NSIA’s financial statements. NSIA, as a body corporate, publishes an annual report with consolidated financial statements, audited by PricewaterhouseCoopers under International Financial Reporting Standards. NIF investments are recorded as assets on NSIA’s balance sheet, together with assets held by the Future Generations Fund and the Stabilization Fund. NIF assets are illiquid and recorded at cost on NSIA’s balance sheet, consistent with International Financial Reporting Standards criteria. NSIA does not publish a marked-to-market valuation of the NIF portfolio or its individual investments, or NIF performance updates. monthly NIF performance reports and quarterly portfolio monitoring reports are generated for internal monitoring and reporting purposes.

The direct Investment Committee is accountable for assessing the risks of investment projects brought before it, undertaking a holistic risk-benefit analysis during its deliberations. Risk assessment is performed in the project due diligence phase, and results are included in a specific section of the investment memo provided to the Executive Committee, the direct Investment Committee, and the board for decision-making (see the governance subsection for a description of the investment decision process and bodies). The risk assessment process is meant to be managed by a head of infrastructure risk reporting directly to the managing director. This role was vacant at the time of writing, but recruitment was in progress.5

NSIA has developed a bespoke tool for ex ante risk assessment of all infrastructure projects. The tool takes into account several factors including a project’s fit with NIF’s mandate, integrity checks of project counterparts, and any technical, commercial, and financial risks. The infrastructure investment team is responsible for conducting the analysis, which is reviewed and approved by the head of infrastructure risk. Factors that are deemed as medium or high risk are included in the investment memo for approval along with proposed actionable mitigants.

In addition to assessing investment-specific risks, NIF must comply with portfolio concentration limits, which are regularly monitored by the compliance team. As of december 2018, limits included commitments to one project or one manager capped at 25 percent of total NIF assets; commitments to any one infrastructure sector in Nigeria capped at 35 percent of total NIF assets; a ban on providing guarantees to any infrastructure project, other than wholly owned subsidiaries or affiliates of NSIA; commitments to external fund managers or intermediaries capped at 50 percent of total NIF assets; exposure to a single external fund manager capped at 20 percent of total NIF assets; and exposure to a single external fund capped at 10 percent of total NIF assets.6

NOTES

1. See the “Fund mandates” page on the NSIA website (http://nsia.com.ng/about-us /fund-mandates). 2. NSIA presentation to the Governing Council at the National Economic Council meeting,

June 28, 2018. 3. So called to distinguish it from a separate Externally managed Investment Committee in charge of both the Future Generations and Stabilization funds. 4. Executive board members can attend direct Investment Committee meetings but are not allowed to vote.