The decision of the Federal Government of Nigeria to establish a National Sovereign Wealth Fund (NSWF) is by far one of the most significant economic policy. The Excess Crude Account (ECA) has been replaced with three sovereign wealth funds. These sovereign funds will manage Nigeria's excess earnings from. NSIA Funds: Three Separate & Ring-fenced Investment Funds. As at the On 27 May , the President signed the Nigeria Sovereign Investment Authority About Us · Careers · Recruitment Process · Board Of Directors.
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The Resource Curse Argument: The resource curse argument has often been advanced as the reason why some nations that are richly endowed with natural resources such as crude oil and precious metals nigerian sovereign wealth fund have a significant percentage of their populations living below the poverty line.
The argument holds that excess income accruing from the exploitation of the natural resources leads to a nigerian sovereign wealth fund of unrestricted spending and mismanagement of financial resources.
This eventually leads to the disruption of basic economic fundamentals that are required for development.
Analysis: Nigeria’s Sovereign Wealth Fund
The consequence of the above is simply widespread poverty and lack of access to the basic necessities of life. Why Nigeria needs to establish a Sovereign Wealth Fund!
Sovereign Wealth Funds are thus usually established to save and invest the excess liquidity that arises from natural resource exploitation. When for instance revenue from crude oil sales exceed nigerian sovereign wealth fund budget projections, the extra revenue represents excess liquidity.
Pumping the excess liquidity through spending back into the national economy has the capacity to disrupt planned economic fundamentals, particularly in a situation when the inflation rate is high.
About Us | Nigeria Sovereign Investment Authority - NSIA
The net effect of that is that the value of money is affected, economic plans are disrupted and the economic targets become unrealized. There nigerian sovereign wealth fund thus the need to warehouse and save the excess liquidity and then invest it for the long term in order to ensure that a nation maximizes its benefits.
In the past, excess earnings nigerian sovereign wealth fund crude oil sales were held in the excess crude account.
When there are budget revenue deficits, funds are withdrawn from the excess crude account and disbursed to all the three tiers of Government Federal, State and Local Governments. The operation of the nigerian sovereign wealth fund crude account has long been considered an administrative arrangement without any clear legal or statutory framework.
The administration of the excess crude account was thus vulnerable to political exigencies and at nigerian sovereign wealth fund could be described as having been arbitrary. Beyond this arbitrariness, claims and counterclaims to the excess crude account by the different tiers of Government was a sure root cause of conflict amongst the various contending parties.
Nigeria Sovereign Investment Authority | SWFI - Sovereign Wealth Fund Institute
The establishment of the Nigerian Sovereign Wealth Fund is intended to address most of these anomalies. Nigerian Sovereign Wealth Nigerian sovereign wealth fund However, after Kuwait and Kiribati, the next major SWFs were created in the s, in the wake of the oil stock.
Notably, 10 per cent of this fund will be devoted to agriculture and regional government-sponsored development projects that will promote economic development in under-served sectors or regions in Nigeria.
Also, the Stabilisation Fund will ensure the smooth functioning of government and delivery of key services during periods where nigerian sovereign wealth fund from petroleum sales are less than the level anticipated and approved by the National Assembly.
In fact, Ghana and Uganda have moved forward with establishing their own Sovereign Wealth Funds, even when their oil production was not yet fully on stream.
This kind of volatility can have deleterious economic consequences, particularly in an economy like nigerian sovereign wealth fund whose revenue is so closely tied to the price of oil. The NGF had also alleged that it was not fully carried along during the conceptualisation stage and subsequent signing of the NSIA Act last year, hence its decision to head for the Supreme Court to stop the Federal Government from going ahead with the establishment of the SWF.
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