At a time when oil is no longer an income generator for the country, Nigeria looks inwards at other options, such as the thriving real estate and agricultural sectors.
Nigeria is presently going through economic recession. The oil glut has played a key role in the country’s present economic predicament. The federal government of Nigeria has, however, demonstrated its commitment to developing other key sectors of the economy thereby diversifying the nation’s socio-economic base. One of such key sectors is the real estate and agricultural sector.
Efforts by the Federal Government to diversify the economy away from crude oil received a major boost as the Nigeria Sovereign Investment Authority (NSIA), the managers of Nigeria’s sovereign wealth fund, and Old Mutual Investment Group (OMIG),a South African company, signed a $700 million partnership agreement for investments in real estate and agriculture
The agreements, signed in Abuja, consist of $500 million real estate co-investment vehicle between NSIA and OMIG, and a $200 million agriculture co-investment vehicle between NSIA, OMIG and UFF Agri-Fund, (UFF is the agriculture management company of Old Mutual Investment Group).
Under the real estate agreement, the objective is to invest $500 million in commercial and retail assets. The Vehicle is expected to have initial commitments of up to $100 million each from NSIA and Old Mutual and is targeting a total commitment size of $500 million with deal origination and execution to be undertaken jointly by both parties, NSIA said.
For agriculture, both parties will make commitments for an initial special-purpose vehicle size of $50 million ahead of the targeted size of $200 million with deal origination and execution to be undertaken jointly by NSIA and UFF Agri-Fund. The aim of the agreement is to improve food security and promote rural economic development to capitalise on the growing opportunities that the Nigerian agricultural industry provides.
NSIA and OMIG’s interest in the real estate and agriculture sectors is underpinned by a shared vision of the significant opportunities presented by both sectors, given a number of advantageous socio-economic trends prevalent in Nigeria. Speaking during the official signing,
Speaking at the event, the Minister of Finance, Mrs Kemi Adeosun said today’s ground-breaking announcement between the NSIA and OMIG of South Africa, marks a critical milestone towards delivering on NSIA’s broader mandate to invest in key sectors of the Nigerian economy. It is consistent with the administration’s concerted efforts to diversify the Nigerian economy away from oil and attract investments into other core sectors which can stimulate sustainable growth.”
While commenting on the significance of the agreement, the managing director & CEO NSIA, Uche Orji, said, “We believe that the real estate and agriculture sectors offer considerable potential for economic growth in Nigeria. Our commitment in these sectors is underpinned by economic imperatives of urbanisation, population growth and enhancement of liquidity for the sectors. The real estate vehicle once created, alongside the agriculture vehicle will be configured to address some of these issues. The NSIA will continue to serve as a catalyst for private sector involvement in the key sectors of the economy by exploring partnerships with credible entities such as Old Mutual Investment Group and UFF Agri-Fund.”
According to him, “We are in the 4th year of a 5-year Infrastructure Development Rolling Plan. An initiative in which we identified over 16 broad areas of concentration and investment opportunity, summed up with concentration and focus on five core economic sectors of the economy, namely; Infrastructure, Healthcare, ICT, Agriculture, Real estate and Housing.”
He said the signing ceremony is based on a commitment and mandate for NSIA to invest wisely in our collective future and look beyond oil and gas towards Nigeria Future, saying its commitment and promise is to ensure a vibrant economic future for all Nigerians.
“Our partnership with Old Mutual Investment Group of South Africa is testimony that we are moving beyond the rhetoric and is physical evidence that we are committed to investment opportunities that will favorably position Nigeria as a preferred international investment destination in Africa and indeed across the globe. We are not only interested in these investment initiatives with our funding, “we have also created two Special Purpose Vehicles to ensure we actively catalyse and participate in the management of these vehicles.
“These projects we are undertaking are based on projections of solid, steady investment returns from a number of infrastructure projects including Agriculture and Real Estate. The payoffs from these investments will be felt with the immediate short term gains with regards job creation, and in the future with regards further direct foreign investment ventures and over the long term with increased foreign exchange earnings from the export of cash crops from our agricultural output as an example,” he added.
Also speaking at the official signing, OMIG CEO, Diane Radley said the partnership with NSIA is a critical step in the development of the OMIG’s commercial real estate and agriculture strategies in Africa.
“As the largest manager of real assets in Africa, we have a deep belief in the opportunities in agricultural and real estate investment across the African continent. Our dealings with agriculture as an asset class has shown that it has already gained huge momentum globally but are still in the infancy in Africa. This presents a significant investment opportunity for both local and international investors,” she said.
The experience combined with NSIA’s significant local knowledge and capacity in the real estate and agriculture sectors of the Nigerian economy, allows for a formidable partnership and Radley said her business is honoured to be entering into this agreement with them. “Together, we believe we can add significant value to both our clients as well as the development the Nigerian economy as we continue to be committed to sustainable long-term investing,” she said.