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Nigeria launches Sovereign Wealth Fund |
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| Posted on October 18, 2011 | Back to news home | |
Dr Ngozi Okonjo-Iweala |
Nigeria launches Sovereign Wealth Fund
The SWF is meant to replace Nigeria's ECA, a pillar of IMF-backed reforms launched in 2003 into which the OPEC member nation saves any oil revenue above a benchmark price set each year in the budget. The Coordinating Minister for the economy and Minister of Finance Dr Ngozi Okonjo-Iweala, while announcing the launch in Abuja on Tuesday, said the Government had drawn up a series of initial steps designed to build a strong foundation for achieving the objectives of the fund as encapsulated in the Nigerian Sovereign Investment Authority act. "We are proceeding with the implementation of this very important programme following consultations with the Governors Forum because the feedback we have is the Nigerians strongly support saving for the future and the other core objectives of the fund", the Minister said. "It is also clear given the current challenges facing our economy and the global financial crisis, we cannot afford to waste any time", she added. Fund managers Okonjo-Iweala said the recruitment of the management team of the SWF would be managed by global auditor and consultancy KPMG, and those recruited would be confirmed by mid-December: “The Federal Government is determined to ensure that the entire process is rigorous and transparent because the integrity and calibre of individuals who constitute the Boards and Management Team is critical to the long term success of the Sovereign Wealth Fund. The president has directed that we put everything into process because he is committed to ensuring that Nigerians and the Nigerian economy benefit from the focused implementation of the fund” Consultation Dr Okonjo-Iweala stressed that the decision to begin implementation was taken after due consultation with Governors Forum and that the dialogue with the governors on the other areas was still going on: “We are still talking with the governors and dialogue is being conducted in an atmosphere of mutual respect because both sides appreciate that at the end of the day, it is all about improving the lot Nigerians and strengthening the economy”. She described the launch as comparable to “opening an account for the sovereign wealth fund and commencing with other necessary procedures in preparation for full implementation “ Criticism Critics of the ECA say there is no clear legal basis on which to determine how the savings in the account should be shared between the tiers of government – federal, state and local – which might lead to constant political wrangling. Nigeria’s State Governors have sought more clarity over how the country’s planned debut sovereign wealth fund (SWF) would work because of concerns they will have less access to oil revenues. The governors of the 36 states were concerned that revenues placed in the SWF will tie up oil income and that it won’t reach state level. “The sovereign wealth fund was discussed and the governors did agree that there was need for a rethink,” Isa Yuguda, Governor of northern Bauchi State said, following a meeting of the state heads at the presidential villa in Abuja when the new national economic council was inaugurated. The Excess crude account contained more than $20 billion when late President Umaru Yar'Adua came to power in 2007 but by the end of last year held less than 1 billion dollars The ECA now contains around 5 billion dollars. SWF aims The SWF has three main aims: saving money for future generations, providing financing for badly-needed infrastructure, and providing a stabilisation fund to defend the economy against commodity price shocks.
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