|
Listen now
Getting your Trinity Audio player ready...
|
By PATRICK ATUANYA
Nigeria is lagging behind in the global Artificial Intelligence (AI) race but it needn’t be so as it has a ready made investment vehicle, the NSIA, already in place that can help super charge its AI leadership position on the continent.
However this can only be done with bold new vision and thinking that’s outside the box.
The Nigeria Sovereign Investment Authority (NSIA), is the manager of the country’s Sovereign Wealth Fund (SWF) and had N4.42 trillion ($2.76 billion) assets under management as of December 2024.
However the NSIA has posted lackluster returns for most of the years of operation since inception, due to its missing out on the solid equity returns over the period by hiring active fund managers instead of using cheaper index funds to gain exposure.
For instance, the compound annual return (CAGR) of Nigeria’s Sovereign Wealth Fund (managed by the Nigeria Sovereign Investment Authority, NSIA) from its inception in 2011 to 2024 is approximately 3.5% per year.
This is based on the fund’s growth from an initial $1.82 billion in 2011 to a net asset value of about $2.84 billion as of December 2024.
The poor performance compares with Norway’s Sovereign Wealth Fund (GPFG), which had a CAGR of about 6.44% per year annualized return since 1998, including 2011 to 2024.
Meanwhile, the S&P 500’s average annual return over the last decade-plus generally ranges between 9% to 12% depending on the exact timeframe.
The global AI race heats up as Nigeria looks on
Most developing economies have developed their own specific AI strategy and Nigeria should not be an exception.
The UAE, Israel, Saudi Arabia, Thailand and Malaysia with GDP that’s similar in range with Nigeria have all developed AI strategies that looks to help them be a part of the AI growth.
Based on 2024 estimates, the GDP (purchasing power parity or PPP) figures for the countries are:
Saudi Arabia: $2.213 trillion, Nigeria: $1.318 trillion, Malaysia: $1.212 trillion, United Arab Emirates: $745.994 billion, Thailand: $1.558 trillion and Israel: $472.177 billion.
As a response to the AI boom, Sovereign Wealth Funds (SWFs) and investment firms from Israel, the UAE, Saudi Arabia, Malaysia, and Thailand have been actively investing in global artificial intelligence (AI) firms and initiatives as part of their broader strategies to foster economic diversification, technological innovation, and regional competitiveness.
Israel
Israel is recognized for its strong AI talent and innovation. While it has limited sovereign wealth fund presence compared to Gulf states, there is a significant push for funding AI development through collaborations.
Recently, Israel and the U.S. have planned a $200 million joint tech fund focused on AI and quantum innovation, with potential partnerships including UAE, Saudi Arabia, and others, aimed at creating a regional hub for AI research and development.
Israeli VC firms like TLV Partners are heavily investing in early-stage AI startups globally, supporting Israel’s reputation as an AI technology powerhouse.
Israel’s national AI policy includes developing natural language processing for Hebrew and Arabic, creating a collaborative government environment, and maintaining international alignment on AI standards.
United Arab Emirates (UAE)
UAE’s sovereign wealth funds such as Mubadala and the Abu Dhabi Investment Authority (ADIA) are among the most active investors in global AI firms. Mubadala notably invested $500 million to acquire a 3% stake in Anthropic, a leading generative AI company.
That valuation has surged as Anthropic is nearing a deal to raise as much as $5 billion in a new round of funding that would value the artificial intelligence startup at $170 billion, according to a July Bloomberg report.
This valuation would be a significant increase from the $61.5 billion valuation the company received in a Series E funding round in March 2025. The new funding round is reportedly being led by investment firm Iconiq Capital.
Mubadala and Group 42 (G42) also co-founded the MGX investment vehicle, which plans to execute $100 billion in AI-related deals, targeting investment in AI startups, chip production, and AI infrastructure globally.
The UAE has partnered with major U.S. tech companies like Microsoft, OpenAI, and NVIDIA and launched programs such as the “Stargate Initiative” backed by about $7 billion from Abu Dhabi’s MGX, focusing on AI infrastructure and workforce development.
UAE-based G42 also formed a joint venture with Israel’s Rafael Advanced Defense Systems to promote AI and big data solutions, highlighting cross-border collaboration in AI technology.
Saudi Arabia
The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, is a major AI investor aiming to transition the Kingdom into a top global AI economy by 2030.
PIF is backing the $100 billion Project Transcendence initiative to accelerate AI adoption, focusing on data centers, AI startups, and localized Arabic AI model development.
PIF invests in AI startups both domestically and globally, including through funds like Sanabil and Jada Fund of Funds, deploying hundreds of millions of dollars into AI-focused ventures.
Saudi Arabia collaborates with global giants, including a $5 billion co-investment partnership with Google to develop Arabic-language AI technologies.
The kingdom is also developing infrastructure for AI semiconductor manufacturing and advanced technology hubs.
Malaysia
Malaysia’s approach involves ethical AI governance with a focus on building a vibrant AI ecosystem, though it has fewer publicized large-scale SWF investments directly targeting global AI startups compared to Gulf states.
National agencies and investment firms in Malaysia are focusing on capacity building and responsible AI deployment, supporting local AI startups and regional partnerships more than large outbound investments.
Malaysia’s sovereign funds are generally more conservative, focusing on diversification, with some investment in tech sectors including AI indirectly via broader technology funds.
Thailand
Thailand’s investments in AI via government and investment bodies emphasize infrastructure and human capital development to enhance competitiveness.
Public and private investments are growing in AI application sectors such as healthcare, agriculture, and finance.
Thailand prioritizes domestic AI tech adoption with increasing support for startups.
How Nigeria can compete in AI
Nigeria can compete with the rest of its peer countries by setting up a $500m Artificial Intelligence (AI) fund domiciled in the NSIA, and developing a national AI policy document.
The new fund should focus on investing up to 80% of assets in global AI companies in early growth stages that can change the world in the next 5 – 10 years, leveraging partnerships, startup funding, and AI infrastructure projects.
The fund should identify up to 100 global AI companies and seek to take at least a 5% stake in up to 20 of the fastest growing ones, while keeping an eye out for new innovators.
It should also invest in global stocks that stand to benefit from the development of AI technology, such as semiconductor, infrastructure and power companies, along with the investments in a few startups.
Up to 10% of the fund can be invested in established artificial-intelligence companies such as Nvidia, OpenAI, Perplexity, Microsoft, AMD and Anthropic to name a few.
The remaining 10% of its assets can be invested in local companies making AI investments such as MTN Nigeria and Airtel.
The current NSIA leadership would have to sit up or change for such a vision to materialise as right now some of the firms the NSIA has backed such as Kasi Cloud and Metrowaves sports, to the tune of millions of dollars, are facing project delays and low transparency on use of funds.
In June 2018, the NSIA approved a $20 million equity investment in Metrowaves Sports and Infrastructures Limited through its subsidiary, NSIA Property Investment Company Ltd. (NPIC), to support the development of a 10,000-seater multipurpose Arena in Lagos state.
MoneyCentral struggled to find any major benefit to the nation from the NSIAs investment of $20 million in this entertainment arena project. Delivery timelines are unclear, while the recent naira devaluation has led to an increase in costs for domestic real estate projects.
Kasi Cloud Limited, is another NSIA backed company that says it is focused on building hyperscale data centers to support digital infrastructure across Africa.
Kasi broke ground on its first data center campus in Lekki, Lagos, on April 19, 2022, with a planned $250 million investment across 4 hectares of land in the Maiyegun area (various sources). This campus, dubbed LOS1, is the first of several planned facilities, with additional campuses in Eket, Akwa Ibom (DNEK1 and DNEK2).
Construction began in 2022, but no public updates confirm completion of LOS1 or DNEK campuses by mid-2025. The 2022 groundbreaking included high-profile attendees like Lagos Governor Babajide Sanwo-Olu, but progress reports are unavailable, suggesting delays.
Three years later the data centre LOS1 is not operational and there is no timeline for its completion, while the section on its website detailing news updates about the project was last updated in April 2022.
The Nigeria Sovereign Investment Authority (NSIA) is a key investor in Kasi Cloud, with a seed commitment of US$25 million. The NSIA in 2024 2024, invested additional equity of $6million in Kasi Cloud Limited. The equity investment is valued at N9.576 billion on its books.
In addition to the equity investment there is a further loan extended by the NSIA to Kasi Cloud of $10million project finance ($2million addition in 2024) hinged on interest rate of 7.5%+ 6month SOFR as contracted by NSIA Property Investment Company Ltd. (a subsidiary to the Authority), which commenced in April 2022 and will mature on April 2029.
This also includes fresh disbursement of N1.25 billion loan to Kasi Cloud Limited availed in Sept-24 but contracted to be paid down by Aug-2031.
In addition, the Authority (NSIA) had a 10%- N3.86 billion working capital Loan to Kasi Cloud in Oct-23, collateralised with a deposit of $5million and this was expected to mature on 15th October 2025.
Total NSIA loan exposure to Kasi Cloud is equivalent to N25.7 billion according to its financials, with equity investment at N9.576 billion, it puts total exposure at N35.27 billion.
The NSIA would have been better served investing in a basket of NASDAQ technology companies than it did with its investments in these white elephant looking projects with no end in sight.
Urgency of AI for Nigeria
The rise of artificial-intelligence (AI) is often described as being akin to the fifth industrial revolution.
Nigeria was missing in the first 2 and only came very late into the third. The fourth and fifth are staring at the country right before its eyes and its leadership needs to step up and grab the opportunity.
The first three revolutions were powered by steam (1760s – 1840s), electricity (1870s – 1914), and digital technology (1950s – early 2000s), respectively.
Throughout history, major technological innovations have reshaped society, leading to what historians and economists term “industrial revolutions.”
Each revolution has been characterized by a fundamental shift in how we produce goods, organize labor, and interact with the world.
The fourth (2000s – Present) revolution is still ongoing and is focused on smart automation and interconnectivity.
However, as artificial intelligence (AI) evolves beyond simple automation to become a collaborative partner, a new era is dawning: the Fifth Industrial Revolution.
This revolution is not just about technology, but about a profound change in the relationship between humans and machines, prioritizing human-centric design, collaboration, and sustainability to create a more integrated and purposeful future.
Financing the new $500m Nigeria AI Fund
The Nigeria Sovereign Investment Authority (NSIA), managers of the country’s Sovereign Wealth Fund have so far received additional contribution of $138.79 million in the first Half of 2025 as Royalty by Price from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) based on the implementation of the Petroleum Industry Act (PIA) of 2021.
It also received additional contribution of $175 million from the Government in the first half (H1) of 2024, according to disclosures in its financials.
The PIA introduces a new royalty and tax regime for upstream (exploration and production) and downstream (refining and distribution) activities which aims to ensure government revenue is maximized while maintaining competitiveness for investors.
PIA also establishes a royalty payable based on price ranging from 0% – 10% for crude oil and condensates (“Royalty by Price”) which underscores the new source of capital inflow for the NSIA.
The Nigerian government can use these new inflows to build up its $500 million AI fund for the NSIA, which should then have expert managers and possibly ringfenced from the other NSIA funds to help Nigeria become a major global player in AI as well as help its future unborn to sit at the table and forefront of AI innovation of tomorrow.
Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!
