Awolowo: the greatest president Nigeria never had? He is interested in the intersections between Law and Finance and is passionate about governance and development issues in Africa. The overarching problem with the status quo in the operation and management of the sovereign wealth fund is that the NSIA continues to manage the fund despite not resolving the aforementioned political issues. The Authority was due to present its credentials at an October 2013 meeting in Oslo, Norway. [2] As a member of the IFSWF the fund has signed up to the Santiago Principles on best practices for managing Sovereign Wealth Funds[18] and publishes a self-assessment on how it adopts and implements the principles within its governance procedures. [5] Given Nigeria's dependence on oil, its economy is susceptible to shifts in oil prices. Proponents of this school argue that if the Constitution did not mention such an instrument when describing revenue allocation, then the sovereign wealth fund is unconstitutional. Nigeria has increased in its Sovereign Wealth Fund (SWF) capital by an additional $250 million, bringing the total investment portfolio to about $1.750 billion since inception, according to the business news website, Global Financial Digest. Nigeria has so far invested in the SWF $1 billion, then $500 million, and a further $650 million. Rather than saving with the cooperation of state governments, Nigeria saves amid vigorous opposition from its federating units (who sense that an arrangement like the fund is fundamentally against their interests). The government has said the fund will provide a firmer legal basis to ring fence Nigeria’s savings. Nigeria’s sovereign wealth fund has the important objective of addressing critical issues in relation to the Nigerian economy and is, perhaps, the most important fiscal initiative from the Nigerian federal government in the last decade. #On, Today in 1923, Cheikh Anta Diop was born.⠀ The only tactful way of doing this is for the federal government to initiate a constitutional review process for the amendment of the provisions of Section 162 of the Constitution. bill into law, creating the NSIA and authorizing the establishment of the three ring-fenced funds which are jointly owned by the three tiers of Government. [20] The funds will be invested in various securities. [3] The act authorized the establishment of the Nigeria Sovereign Investment Authority, giving it jurisdiction over the country's excess petroleum reserves. For Nigeria, he said IMF’s reference to sovereign wealth fund focuses on the excess crude account, which requires greater transparency on the rules governing deposits, withdrawals, and investment. NIGERIA’S SOVEREIGN WEALTH FUND I n 2004, the administration of former President Olusegun … Nigeria’s sovereign wealth fund stood at $2 billion this month with the investment agency seeking further growth through agriculture and the addition of asset management, its chief executive officer said. The average salaries for Nigeria Sovereign Investment Authority (NSIA) is 78,750 Naira. Nigeria’s sovereign wealth fund has grown slightly over $2 billion, Managing Director and Chief Executive Officer of the Nigeria Sovereign Investment Authority (NSIA), Dr Uche Orji,revealed. S, 'We need frequent actions of civil disobedience.'. Nigeria Sovereign Wealth Fund. The roles include Human Resources Assistant, Operations Officer. The constitutional lacuna, if addressed, presents a strategic way to deal with both the legal and some of the political issues relating to the management of the sovereign wealth fund. bill into law, creating the NSIA and authorizing the establishment of the three ring-fenced funds which are jointly owned by the three tiers of Government. [7] It is also one of the largest producers of oil, on which the majority of its economy relies. The second school believes that the Constitution in Section 162 does not expressly preclude the disbursement of funds to the Nigerian sovereign wealth fund. IMF report on Nigeria’s Sovereign Wealth Fund not reflective of our role, impact – NSIA . Current Assets for NSIA is $1,781,510,000 and SWFI has 7 periods of historical assets, 18 subsidiaries, 75 transactions, 4 Opportunities/RFPs, 41 personal contacts available for … When oil prices are high, Nigeria pays into the fund to save for a rainy day. In light of these issues, a sovereign wealth fund is essentially the only way the country can ensure a reliable stream of income. State governments argue that disbursing excess revenue to the sovereign wealth fund substantially reduces how much revenue ends up in the federation account and, thus, how much the states receive within any fiscal period. The Republic: A Journal of Nigerian Affairs © The Republic Knowledge Company, 2016-2020. [5] The Stabilisation Fund was allocated an initial 20 percent, while 32.5 percent each went to the Future Generation and the Nigeria Infrastructure funds.[1][20]. NIGERIA’S SOVEREIGN WEALTH FUND I n 2004, the administration of former President Olusegun Obasanjo es-tablished the Excess Crude Account (ECA) into which oil revenues sold above budgetary benchmark were paid. Nigeria’s Sovereign Wealth Fund was an upgrade on the ECA. To address this issue will require negotiations for the fixing of an objective formula for determining the oil price benchmark. In recent years a new cohort of Sovereign Development Funds, SDFs, have arrived on the scene seeking to catalyse investment and growth in their own economies. It is not difficult to conclude that the continued investment by the NSIA in other areas of the economy will boost economic growth and could lead to the provision of employment opportunities. The constitutional lacuna should, therefore, be addressed and more funds be disbursed to empower the NSIA to invest more in infrastructure and carry out more investments globally through the stabilization fund and future generation fund. Sovereign Wealth Fund Institute (SWFI) is a global organization designed to study sovereign wealth funds, pensions, endowments, superannuation funds, family offices, central banks and other long-term institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. We also use third-party cookies that help us analyze and understand how you use this website. Nigerian sovereign wealth fund grows to $2bn, says CEO September 7, 2017 1.3K views 0 comments Uche Orji, chief executive officer of the Nigeria Sovereign Investment Authority said Wednesday that the country’s sovereign wealth fund stood at $2 billion this month with the investment agency seeking further growth through agriculture and the addition of asset management. Nigeria, Africa’s top oil producer, started a sovereign wealth fund with an initial capital of $1 billion and hired KPMG to select its management team. NSIA was established by an act of the National Assembly in May 2011. Nigeria has increased in its Sovereign Wealth Fund (SWF) capital by an additional $250 million, bringing the total investment portfolio to about $1.750 billion since inception, according to the business news website, Global Financial Digest. These cookies will be stored in your browser only with your consent. [8] Petroleum exports account for approximately 90 percent of its foreign revenue and 80 percent of government revenue. Origin On 27 May 2011, the President signed the Nigeria Sovereign Investment Authority (Establishment etc.) [3], The Nigeria Infrastructure Fund is expected to secure investments in the infrastructural development of the country in areas such as agriculture and other government directed projects. Sovereign wealth funds invest globally. Origin On 27 May 2011, the President signed the Nigeria Sovereign Investment Authority (Establishment etc.) The theme of the Webinar was “Nigerian Sovereign Wealth Fund and the urgency for economic diversification.” Aganga said that the country needs to start shifting it’s focus from oil to non-oil sector in order to effectively achieve economic development. It is intended to invest the savings gained on the difference between the budgeted and actual market prices for oil to earn returns that would benefit future generations of Nigerians. The Political Economy of Nigeria’s Sovereign Wealth Fund, Click to share on Facebook (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to email this to a friend (Opens in new window), #EndSARS and the Fight for Nigeria’s Heart, #EndSARS and the Crisis of Governance in Nigeria, #EndSARS and the Makings of a Historical Movement. [12][14][15], Uche Orji was appointed as the Chief Executive Officer of the NSIA[4][16] with Alhaji Mahey Rasheed as the chairman of the board of directors. NIGERIA SOVEREIGN WEALTH FUND: A ROAD MAP TO AVOID THE OIL CURSE. The Nigerian sovereign wealth fund has the important objective of addressing critical issues in relation to the Nigerian economy and is, perhaps, the most important fiscal initiative from the Nigerian federal government in the last decade. This school also believes that Section 162 of the Constitution directs the state to harness the resources of the nation in the bid to create a prosperous and self-reliant economy. Unlike the political and economic perspectives to the debate on the establishment of the sovereign wealth fund, the debate’s legal perspectives are more robust and more developed, with two competing schools of thought. Sovereign wealth funds in the Gulf, where governments are struggling to absorb the impact of lower oil prices, have been making adjustments to generate higher yields. Editorial - After five oil booms and near depletion of the savings from the last round of booms, the Federal Government has initiated moves to establish a Sovereign Wealth Fund. This website uses cookies to improve your experience while you navigate through the website. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed. One major challenge that has confronted most countries with natural resources is the 'oil curse' or in its causative form the 'Dutch disease'. Although the ECA was generally regarded to be a noble idea at inception, it was criticized for having a faulty political and constitutional foundation, and for being dictatorial, uncoordinated and unconstitutional. People walk past the London Stock Exchange Group offices in the City of London, Britain, December 29, 2017. Historically, given the socio-economic antecedent of the country, there is no doubt that there is a dire need for accountable and prudent management of revenue from natural resources and diversification of the Nigerian economy. Natural Resource Governance Institute, NRGI, has described Nigeria’s $2.4 billion Excess Crude Account as one of the most poorly governed sovereign wealth funds in the world. As a result of this provision and the fact that the National Assembly is also empowered to legislate on this section, legal scholars have argued that the establishment of the Nigerian sovereign wealth fund under the NSIA Act is constitutional. Mr. Orji is the Managing Director/CEO of the Nigeria Sovereign Investment Authority. By controlling the benchmark, the federal government can effectively tilt the sharing formula in their favour whenever they choose. Nigeria is the most populous country on the African continent[6] with an estimated 203,452,505 million people. Sovereign Wealth Fund in Nigeria: Issues and Challenges Benjamin J. Cohen argued over two decades ago that ‘high fina nce can no longer be kept separate from high politics (M onk, 2009; 451). T he debate on how to sustainably … You also have the option to opt-out of these cookies. This conclusion finds its root in the decision of the Supreme Court in the onshore/offshore dichotomy debate in the case of AG Federation v AG Abia, (No. #ReadSomethingAfrican He brings a wealth of global experience in the financial services sector to his role as MD/CEO. [5], Excess oil reserves were previously allocated to the Excess Crude Account (ECA), which was set up in 2004 as a stabilisation fund to meet the country's yearly budget deficits and to contribute to the development of local infrastructure. Nigeria sovereign wealth fund has only $1billion as take-off fund. This sovereign wealth fund was founded for the purpose of managing and investing these funds on behalf of the government of Nigeria. July 6, 2010 / 4:18 PM / 10 years ago. ALL RIGHTS RESERVED The NSIA SWF is a savings account, set up by law, with an independent Board of Directors and a clear mandate. These cookies do not store any personal information. Nigeria will soon join the economies of the world that have used their foreign reserve to set up sovereign wealth funds to create more assets for the country with foreign reserves. The future generations fund will focus on providing and generating income for the country’s citizens. This arrangement is made worse by the fact that the structure that underpins the sovereign wealth fund was set up by the federal government and carried out without any state consultation. When they are low, the country can withdraw from the fund to pay salaries steadily and invest in the future despite low revenues. [12] With an initial financing of $1bn USD from the Nigerian government, the fund is the third largest in Sub-Saharan Africa, after Botswana and Angola. [17] The total professional and administrative staff complement of the NSIA is 25. A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds.Sovereign wealth funds invest globally. As the Nigerian Sovereign Investment Authority continues to make progress in the management of the sovereign wealth fund, it is important that the various issues concerning the management of the fund be put in perspective and dealt with. Nigeria’s dependence on crude oil revenue makes its economy subject to the vagaries of the international oil market. The issue of the sovereign wealth fund undermining the fiscal federal structure in the country has been the major argument canvassed by state governments in Nigeria for the non-establishment of the sovereign wealth fund. The fund is intended as security against future economic instability, to contribute towards the development of the country's infrastructure and as a savings mechanism for future generations, using the country's excess oil revenues. IMF report on Nigeria’s Sovereign Wealth Fund not reflective of our role, impact – NSIA On April 11, 2019 5:21 am In Business , News by vanguard Kindly Share This Story: As at the end of 2013, all capital had been deployed in accordance with the allocation to three managers: UBS (US Treasury mandate), Goldman Sachs and Credit Suisse (Corporate Bond mandates). For oil producing states, the prospect of diverting excess oil revenues to the sovereign wealth fund is doubly contemptible. The fund was established by the Nigeria Sovereign Investment Authority Act, signed in May 2011, and commenced operations in October 2018 . These states will certainly oppose the idea, as they have always done, because of the discretionary power of the federal government to determine the ‘oil price benchmark’. The benefits of the fund on the Nigerian economy are evident and there is reason to believe these benefits will continue. This attention naturally came with a discussion of the myriad issues surrounding the fund’s management. Yet Albayrak still held on to his post as deputy head of the sovereign wealth fund, which was created in 2016 and now manages state assets officially valued at $22.6 billion. Aside from the question of its legality, the ECA generated controversy over allegations of corruption and mismanagement. The major concerns that ring through this debate can be examined through the perspectives of law, economics and politics. Sceptics say a Nigerian sovereign wealth fund is likely to suffer the same fate as the ECA, with squabbling over who controls the funds and how they are managed. These issues with the ECA led to the establishment of the Nigerian sovereign wealth fund. Fund Mandates NSIA Funds: Three Separate & Ring-fenced Investment Funds. Introduction. Business News Update: FG to withdraw $150 million from sovereign wealth fund, to borrow $6.9 billion. He urged Federal Government to urgently consider funding the East-West road from the Sovereign Wealth Fund to guarantee its completion by 2022 as being taunted by the Minister of the Niger Delta. [1] The board was inaugurated on 9 October 2012. Looked at from an economic perspective, the sovereign wealth fund is clearly a net-positive for Nigeria. Nigeria was one of only three OPEC member states not to have a sovereign wealth fund. The consistent growth and profitability of the sovereign wealth fund for the past five years, as well as its consistent positive ranking on the index of the Sovereign Wealth Fund Institute, is indicative of the fact that the sovereign wealth fund is being well managed. The debate on how to sustainably manage Nigeria’s sovereign wealth has been raging for about a decade and a half. By Aurélie M'Bida Posted on Friday, 17 January 2020 16:16, updated on Tuesday, 11 February 2020 10:26 . [11], Nigeria's SWF was brought into law in 2011 via the Nigeria Sovereign Investment Authority Act[4][12] and is expected to replace the ECA. The Nigeria Sovereign Investment Authority is the manager of Nigeria’s Sovereign Wealth Fund. [1][3][4] Of the initial $1bn, 85 percent of the funds will be distributed among the three windows with an initial 15 percent or $150 million remaining unallocated, to be assigned to either of the three funds as needed in the future. 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