Strengthening the Nigerian Sovereign Investment Authority: A Policy Analysis of the Nigerian Excess Crude Account and the Nigerian Sovereign Investment Authority Act (original) (raw)

SOVEREIGN WEALTH FUND IN NIGERIA: PROBLEMS, PROSPECTS AND CHALLENGES

Afro Asian Journal of Social Sciences, 2017

Nigeria followed the footstep of most states with abundant resource (particularly oil) in establishing its own Sovereign Wealth Funds. Sovereign wealth funds are large pools of a state owned or controlled investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments and are invested in whole or in part outside their home countries. Since, 2004 " Special funds " in which SWFs is one have become issues of serious contention among the tiers of government in Nigeria. On May 22 2011, the 36 state Governors approached the Supreme Court, asking it to abort plans by the federal government to withdraw $1 billion from the Excess Crude Account. The bone of contention revolves around the question of legality and desirability of such account. This paper examined how the SWF is paradoxical to the provision of Nigeria 1999 constitution (as amended). The best possible way to strike a balance in economically and politically feasible solutions to the controversies that ensued between the federal government and states government on " Special Funds " were also examined. The major controversies surrounding the fund both locally and globally are that of distrust and political suspicion.

International Best Practices and Approaches to Oil Wealth Management: Lesions and Implication for Nigeria Sovereign Wealth Fund Management

ERN: Other Development Economics: Macroeconomic Issues in Developing Economies (Topic), 2015

This paper appraises the various approaches that can be used to manage oil resources in order to ensure fiscal sustainability. To do this paper review the macroeconomic condition prevailing before the adoption of Sovereign wealth fund strategy and the various ways the oil resources can be invested. Then the paper examines various methodological approaches that have adopted and the international best practices that have been adopted by other countries in oil revenue management and concludes that the Norway approach to oil management can help Nigeria ensure sustainable fiscal operation over the long term

Legal and Constitutional Evaluation of the Nigerian Sovereign Wealth Fund

Social Science Research Network, 2015

T he central aim of this paper is to examine the constitutionality of Nigeria's sovereign wealth fund (SWF) which was established in August 2012, pursuant to the Nigeria Sovereign Investment Authority (Establishment etc) Act 2011 (the NSIA Act). The paper reviews and discusses how questions on the constitutionality of a sovereign wealth fund have been dealt with in other jurisdictions with similar legal and governmental structures. It reviews practices in the United States and Canada, where the establishment of SWFs conform to their federal constitutional designs; and in Australia and Russia, where the law and practice of SWF are similar to the extant regime in Nigeria. This paper argues that questions on the constitutional basis of the SWF alone should not affect the establishment of a national SWF in Nigeria and therefore recommends a constitutional amendment to clear the grey areas. It discusses the importance of the law and development approach in resolving the identifiable setbacks in the Nigerian NSIA Act bearing in mind the potentials of the SWF in the socioeconomic development of the Nigeria.

Sustainable management of Nigeria’s oil wealth: legal challenges and future directions

Journal of Sustainable Development Law and Policy (The), 2016

Oil is a very important resource for Nigeria, as it remains the major economic driver and mainstay of the country. The unsustainable management of Nigeria's oil wealth, rather than the availability of oil itself, remains the real cause of the challenges confronting the economic performance of the country. This article contributes to the debate on how Nigeria can develop more coherent and sustainable practices in the management of its oil wealth. It examines how policies and rules of law that promote mismanagement, corruption, waste and the fixation with the sharing of oil revenues at the expense of production are unsustainable and unethical practices that may continue to stifle sustainable development in Nigeria. The article discusses the need for stronger legal regimes for the efficient management of Nigeria's oil wealth, and identifies the roles that active stakeholder engagement, such as the Nigerian public and civil society organizations (CSOs) should play.

The Political Economy of Oil Stabilisation Funds in Nigeria

2018

It is widely acknowledged that many oil-rich countries face the challenge of macroeconomic instability due to the highly volatile nature of oil prices. Nigeria, like many resource-rich nations, has had a relatively poor history in terms of oil revenue management. The government was highly ineffective in insulating the economy from the volatility in the global oil market. This volatility often translated into fluctuations in government expenditure, real exchange rate, and GDP growth. In an attempt to promote fiscal prudence and management, Nigeria established a stabilisation fund; known as the Excess Crude Account and adopted an oil-based fiscal rule. The adoption of these fiscal mechanisms succeeded in delinking fiscal spending at all levels of government from oil revenue fluctuations to a more predictable economic environment. This was also paramount in improving macroeconomic stability and facilitating the rapid reduction of Nigeria's external debt. However, empirical evidence has shown that the existence of a stabilisation fund is not a guarantee for fiscal success and economic growth. This thesis contributes to debates surrounding the politics of managing stabilisation funds in Nigeria by arguing that executive power, revenue sharing and election & security votes significantly contribute to the operation of stabilisation funds. The stabilisation fund enjoyed a very short-lived success as declining oil revenues coupled with pressures to spend resulted in a sharp decline in the funds accrued in the account. The account has also continued to generate political controversy across the various tiers of government because it is seen as a creation of the federal government that lacks constitutional backing and clarity in its operation. This paper, therefore, confirms that stabilisation funds are not a panacea for fiscal success, and if not managed properly, they can become problematic.

Enhancing Infrastructural Growth in Nigeria: The Sovereign Wealth Fund Strategy

The establishment of the Nigerian Sovereign Wealth Fund (NSWF) with seed capital of $1 billion is by far one of the most significant economic policy decisions taken in recent times. Contrary to expectations, the significant of this decision is not in terms of the monetary implications of the decision. But rather, in terms of what it says about the level of economic and fiscal discipline that the Government at all levels in Nigeria wish to bring to bear on the process of sovereign resource management. Nevertheless, this review believes that the three core mandate given to the fund to pursue concurrently is a bit ambitious and duplicatory of roles performed by the foreign reserve and excess crude account among others. It recommends the pursuance of infrastructural development only for a period of at least ten years, due to its accelerative effect on economic growth and development, through increased productivity and economic competitiveness in the global market.

The Sovereign Wealth Fund and Nigerian Economic Development

East African Finance Journal, 2024

The study specifically investigated the impact of sub-national government sovereign wealth funds on the economic development of Nigeria. An ex-post research design was used for the study. Economic development was proxied by per capita income, while sovereign wealth funds were proxied by their three components: stabilization funds, future generation funds, and infrastructure funds. Data for the variables were obtained from the Central Bank of Nigeria for the period 2012-2022. An econometric approach was used to analyze the data. Findings showed that of the three components of SWFs, only future generation funds impact positively and significantly on economic development. In view of the findings, it is recommended that the government ensure effective and efficient management of the various funds by putting in place proper regulatory measures so as to attain the goals for which the funds were established.

Sovereign Wealth Fund and fiscal federalism in Nigeria (2011–14): An assessment of contending issues

Regional & Federal Studies

ABSTRACT After more than half a century as a leading oil-producing nation in Africa, Nigeria followed the footsteps of most natural resources rich countries (particularly crude-oil) by establishing the Sovereign Wealth Fund (SWF). SWF is a large pool of state-owned investment fund composed of diverse financial instruments, invested in whole or in part, outside home countries. Since 2004, ‘Special funds’, of which SWF is part, have become issues of serious contention between the Federal and state governments in Nigeria. On 22 May 2011, the 36 state Governors approached the Nigerian Supreme Court, requesting the Court to use its judicial powers to squash plans by the Federal Government of Nigeria to withdraw $1 billion from the Excess Crude Account to float the planned SWF. The bone of contention surrounds issues of constitutionality, ownership and prudency in the management of the fund. Relying on extant literature, Acts of Parliament as well as commentaries, opinion pieces, editorials and news articles from Nigerian newspapers, this paper examines the controversies that surround the establishment of SWF in Nigeria within the context of the 1999 Constitution (as amended), and assesses the conflict mitigating capacity of the Nigeria’s federalism especially in the light of the nation’s fiscal practices.

Sovereign Wealth Fund or State Capitalism: Nigeria’s Search for a Stable Economic Order

Journal of International Studies, 2020

For quite some time now, the Sovereign Wealth Fund (SWF) has become an issue in the front burner of Nigeria’s national debate. The manner it was handled by the federal government became suspicious because there was serious disagreement among the stake holders, starting with the source of funding. But the whole idea of SWF in itself has remained controversial especially with regard to the problem it is meant to solve. The paper makes a contribution to this debate with an analysis of the extant literature and theoretical framework. It cites examples of successful experiences of the SWF and the circumstances that back up their results and suggests that Nigeria’s search for a stable economic order does not lie in the SWF but more importantly to take care of all the necessary structural changes and erect a new political framework for a viable and durable economic development.