The international working group of sovereign wealth funds iwg defined swfs as special purpose investment funds or arrangements that are owned by. Reinvestment of future generation funds proceeds, interest and dividends. Act, 2011 to manage excess funds from the countrys sale of crude oil. It also discusses the impact of the global fi nancial meltdown 20082009, commodity price fl uctuations and the rise of the risks in the. Nigeria investment news swfi sovereign wealth fund. Sovereign wealth fund, swf, macroeconomic policy, fiscal policy, public. International forum of sovereign wealth funds nigeria. The rationale for sovereign wealth funds in nigeria.
Nigeria sovereign investment authority nsia sovereign. The nigerian sovereign investment authority, which is the agency managing the sovereign wealth fund, said it had grown the seed capital of. A country is said to have the oil or resource curse, when it is experiencing political and socioeconomic challenges such as volatility of revenues from its natural resources sector due to exposure to. The title and focus of the research is the impact of a sovereign wealth fund on the economy of the host nation. Nigerian sovereign wealth funds and the future swfi. It also discusses the impact of the global fi nancial meltdown 20082009, commodity price fl. It was established as independent agency by an act of the national assembly in may 2011. Contrary to expectations, the significant of this decision is. Nsia act 2011 nigeria sovereign investment authority.
A blueprint for sovereign wealth fund best practices edwin m. Truman, senior fellow at the peterson institute since 2001, was assistant secretary of the treasury for international affairs 19982000. Megginson and veljko fotak, rise of the fiduciary state. Executive summary this paper explores the issues relating to the establishment of a sovereign wealth fund swf in nigeria consistent with best practices.
Experience with established swfs suggests that successful oil based funds tend to be underpinned by a sound oil revenue management framework. Nigeria sovereign investment authority consolidated and. Imf report on nigeria s sovereign wealth fund not reflective of our role, impact nsia on april 11, 2019 5. This paper explores the relevance of the sovereign wealth funds swfs to the extant nigeria economy.
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. 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 longterm institutional investors in the areas of investing, asset allocation, risk, governance, economics, policy, trade and other relevant issues. It was established as an independent investment institution by an act of the national assembly in may 2011. Improving communications of the nigerian sovereign. Pdf should nigeria establish a sovereign wealth fund.
By paul oghenero okumagba department of sociology, delta state university, abraka, nigeria. Read all the latest news, breaking stories, top headlines, opinion, pictures and videos about sovereign wealth fund from nigeria and the world on today. Asset allocations at sovereign wealth fund, by type of fund source. This is as a result of the volatility in the price of crude oil which is nigeria s major source of foreign exchange revenue. Pdf sovereign wealth fund and fiscal federalism in. It then concludes in section 5 with proposals for legislative action by the national assembly in order to set nigerias swf on a sound legal foundation.
The nsia swf is a savings account, set up by law, with an independent board of directors and a clear mandate. Nigeria s sovereign wealth fund was an upgrade on the eca. Nigeria international forum of sovereign wealth funds. Africanglobe following the approval of its strategy document and the progress made with its investment policy guidelines, nigerias ministry of finance has announced that the sovereign wealth fund swf is expected to commence investment in a variety of instruments by march 20. Nsia was established by an act of the national assembly in. Ventures, 20 noted that the nigerian sovereign investment authority nsia has just been newly created to manage the nigeria sovereign wealth fund from. This makes it the only sovereign wealth fund in africa to be ranked alongside the likes of, uae, south korea, brazil and malaysia. The impact of a sovereign wealth fund on the economy of the. The legal framework for the nigeria sovereign investment authority nsia is the nsia act 2011. When for instance revenue from crude oil sales exceed the budget projections, the extra revenue represents excess liquidity. On 27 may 2011, the president signed the nigeria sovereign investment authority establishment etc. Stabilization funds are set up to insulate the budget and economy from commodity price volatility and external shocks e. Org e ffective governance of the oil, gas and mining sectors is a persistent challenge, especially for low and middleincome countries.
University of lagos, department of economics, akoka, lagos, nigeria olatunji. The international monetary fund imf has ranked nigeria as the worlds second worst country in the use of sovereign wealth funds this is revealed in the fiscal monitor report released today by the international monetary fund. Sovereign wealth fund news latest breaking stories and. The nsia act established the authority to receive, manage, and invest in a diversified portfolio or medium and longterm revenue of the federal government, all state governments, federal capital territory, all local government and area councils to prepare for the eventual depletion of nigeria s hydrocarbon resources and the development. It also evaluates the international principles and practices relating to sovereign wealth fund. Nigeria belongs to the last category as the swf is created from the resources in the excess crude account, eca. The nsia act established the authority to receive, manage, and invest in a diversified portfolio or medium and longterm revenue of the federal government, all state governments, federal capital territory, all local government and area councils to prepare for the eventual depletion of nigerias hydrocarbon resources and the development. Why nigeria needs to establish a sovereign wealth fund. Jun 16, 2010 nigeria s state governors on tuesday voiced opposition to having a sovereign wealth fund manage the countrys oil wealth, an early sign that new finance minister olusegun aganga will have to fight. Future generations fund investment policy statement. The bretton wood institution disclosed that the index was compiled using the. The international monetary fund imf on friday clarified its categorisation of nigeria as one of the countries with the worst use of the sovereign wealth fund. Sovereign wealth fund direct investments in 20172018. Nigerian governors and sovereign wealth fund vanguard news.
The aswpff is a highlevel platform for african sovereign. Following the introduction, section ii discusses the sovereign wealth fund in nigeria, while section iii presents the vehicle for swf investment operations in nigeria. International forum of sovereign wealth funds ifswf, which. A successful sovereign wealth fund, like the excess crude account, is less about finance and more about the quality of governance. While the report does not reference the nigerian sovereign investment authority, its sweeping reference to the nigeria s sovereign wealth fund and the use of. Pdf perspectives on the santiago principles and the nigeria. The wealth fund commenced operations in october 2012 and.
At a time when people are fearful of sovereign wealth funds, im saying lets look at this as an opportunity, r. Department of economics, federal university lafia, nasarawa state. Sovereign wealth funds swfs are attracting growing attention as they continue to grow in size and number allen, m. Improving communications of the nigerian sovereign investment. The president of nigeria goodluck jonathan has asked his economic team led by the newly appointed minister of finance olusegun aganga to make the requisite arrangements to establish a sovereign wealth fund swf as soon as possible.
Nigeria sovereign investment authority nsia is a sovereign wealth fund located in abuja nigeria, africa. A sovereign wealth fund swf, sovereign investment fund, or social wealth fund is a stateowned 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. Nigeria sovereign investment authority is a sovereign wealth fund created by the government of nigeria in 20. One major challenge that has confronted most countries with natural resources is the oil curse or in its causative form the dutch disease. Nigeria, sovereign wealth fund, investment, nsia, gdp, economic growth. Imf ranks nigerias sovereign wealth fund secondworst in. O 2014 sovereign wealth fund a paradigm shift for nigeria, sky journal of business administration and management, vol. Sovereign wealth funds are large pools of a state owned or controlled investment fund composed of financial assets. Goodluck ebele jonathan on may 26, 2011 and subsequently gazette on june 3, 2011. A survey of sovereign wealth fund research, journal of economic surveys 294 2015, pp. New challenges for the caspian countries summary this book considers fi nancial management and transparency aspects of sovereign wealth funds swf.
Apr 30, 2019 a sovereign wealth fund swf is a stateowned investment fund or entity which comprises of pools of money derived from a countrys reserves. The recent report and offhand remarks by officials of the international monetary fund imf ranking nigeria s sovereign wealth as the second weakest after qatar has set off a chain of reactions. Downloads nigeria sovereign investment authority nsia. Nigerias sovereign wealth fund to commence investment 20. Sovereign wealth institute nsia received a score of 910 points by the linaburg maduell transparency index administered by the sovereign wealth institute. Sovereign wealth and pension funds investing in africas. In 2011, nigeria legally established a sovereign wealth fund swf with a view to find a lasting solution to the frequent shortfall of funds needed for key budgetary and infrastructural developments in the country.
Tony chukwunyem, nigeria tops african sovereign wealth fund rank ing, new. This makes it the only sovereign wealth fund in africa to be ranked alongside the likes of, uae, south korea. Legal and constitutional evaluation of the nigerian sovereign wealth fund 105 the potentials of an efficiently managed swf. Nigeria has a sovereign wealth fund established by the nigeria sovereign investment authority nsia act 2011. The bill was assented to by the president of the federal republic of nigeria, dr. The authority was established by the nigeria sovereign investment authority establishment etc. Sovereign wealth fund and fiscal federalism in nigeria 201114. That is a cautionary note for the sovereign wealth fund. Pdf nigeria followed the footstep of most states with abundant resource particularly oil in establishing its own sovereign wealth funds. Ubs us treasury mandate, goldman sachs and credit suisse corporate bond mandates. Recent examples include the nigerian sovereign investment authority, and the. Zoellick, world bank, 2008 sovereign wealth funds swfs have emerged as potential solutions to actively manage. Sovereign wealth fund news latest breaking stories and top.
This sovereign wealth fund was founded for the purpose of managing and investing these funds on behalf of the government of nigeria. Sovereign wealth fund a paradigm shift for nigeria agbaeze e. The ai african sovereign wealth and pension fund forum aswpff this report is an initiative of the ai african sovereign wealth and pension fund forum aswpff with technical support from africa investor ai capital and the global clearinghouse for development finance globaldf. The creation of sovereign wealth fund for nigeria was approved by the legislature in may 2011. Stabilisation fund sf, nigeria infrastructure fund nif and the future generation fund fgf. While the report does not reference the nigerian sovereign investment authority, its sweeping reference to the nigeria s sovereign wealth fund and the use of thirdparty data raises concerns.
Nov 07, 2011 nigerian governors and sovereign wealth fund. The wealth fund commenced operations in october 2012 and was set up by the nigeria sovereign investment authority act, which was signed in may 2011. According to the report, qatar is the only country worse than nigeria on the index. Section ii discusses the objectives and governance structure. But as the resource governance index reveals, it is not an insurmountable one. Last year, nigeria, the biggest oil producer in subsaharan africa, replaced its excess crude account eca with three sovereign wealth funds, future generations fund, nigerian infrastructure fund and stabilization fund, under the management of the nigerian sovereign investment authority nsia.
Nigerian governors oppose sovereign wealth fund reuters. A sovereign wealth fund swf is a stateowned investment fund or entity which comprises of pools of money derived from a countrys reserves. Introduction as the name suggests, sovereign wealth fund swf is an array of financial reform inform of instrument owned by a sovereign state, where a nations savings are accumulated for foreign direct investment and development purposes. Perspectives on the santiago principles and the nigeria sovereign wealth fund article pdf available march 2015 with 65 reads how we measure reads. The future generation fund, the nigeria infrastructure. He directed the division of international finance of the board of governors of the federal reserve system from 1977 to 1998.
A successful sovereign wealth fund, like the excess crude account, is less about finance and more about the. The nigeria sovereign investment authority is a nigerian establishment which manages the nigeria sovereign wealth fund, into which the surplus income produced from nigeria s excess oil reserves is deposited. Nigeria followed the footstep of most states with abundant resource particularly oil in establishing its own sovereign wealth funds. Nigerias sovereign wealth fund safe, profitable says uche.
Imf clarifies report on nigerias sovereign wealth fund. Sovereign wealth funds are large pools of a state owned or. The nsia operations are professional and transparent. Has the government created a special fund or natural resource fund that concentrates revenue directly from oil, gas or mineral extraction. The nsia act 2011 mandated the fund to receive, manage and invest in a diversified portfolio of medium and longterm, revenue of federal government, state government, fct and local government. May 07, 2010 nigeria is making a bold but calculative move to establish a sovereign wealth fund swf. Sovereign wealth fund and economic growth in nigeria. Nigeria s dependence on crude oil revenue makes its economy subject to the vagaries of the international oil market. Sovereign wealth funds are thus usually established to save and invest the excess liquidity that arises from natural resource exploitation. The recent report and offhand remarks by officials of the international monetary fund imf ranking nigeria s sovereign wealth as the second weakest after qatar has set off a chain of reactions with many analysts expressing divergent views. Reserves are funds set aside for investment to benefit. Nigeria sovereign investment authority international.
This problem is heightened by the mismanagement of public funds and the absence of adequate infrastructure to meet the needs of nigeria s everincreasing population. The emerging role of sovereign wealth fund as an economic. As at the end of 20, all capital had been deployed in accordance with the allocation to three managers. This paper had examined the concept of poverty and the nigeria sovereign wealth fund, a new initiative by the federal government to alleviate poverty in nigeria, viza viz some of the previous efforts at alleviating poverty in nigeria,why those.
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