AGANGA INSISTS ON SOVEREIGN WEALTH FUND
Minister of finance, Olusegun Aganga has renewed his call for the establishment of the Sovereign Wealth Fund (SWF), saying that country is more than 25 years behind the establishment of the fund when compared with its oil producing peers.
According to him, Nigeria's neighbouring country, Ghana which has just discovered oil is poised to establish a similar fund for efficient management of the resources.
Addressing newsmen in Lagos recently, Aganga said, 'One of the reasons Nigeria's debut Euro bond was oversubscribed was because international investors knew we were establishing this fund. It is your money, but we are just there to manage it. If countries happens to succeed in their quest for alternative sources of oil, our oil prices will fall and we will be in trouble. That is why we have to save, through the SWF.'
He noted that the difference between high oil prices and the budget benchmark before now was usually kept in Excess Crude Account that was not working. 'So the SWF will have the money work better, save for the future, stabilize shortfall in oil prices and help us invest in infrastructure,' Aganga added.
Earlier, an economist and Chief Executive Officer, Wyoming Capital and Partners said the benefits of creating a Sovereign Wealth Fund far outweigh the disadvantages. This he noted, is because it engenders sustainable development which allows current generation of Nigerians to enjoy the use of non renewable resources without creating problems for future generation to also enjoy theirs. This is the fulcrum for development around the World.
'Another benefit is that it guides against financial imprudence and fiscal rascality by states and federal government as the case may be. It is the best way to go for a Nation that has lost good ground for growth and development.
'If the enabling laws allow fractional investment in Nigeria, it will help to deepen local financial markets and provide liquidity support for new instruments that may be issued as a result. If prudently managed, it will help to provide support for foreign reserve management by the CBN,'
However, he said the only disadvantage is that Federal, States and Local Governments will no longer have unfiltered access to Excess Crude Account, which had been used in the past four years to fund frivolities.
Sovereign Wealth Fund as being contemplated by the Federal Government of Nigeria is an arrangement to preserve excess revenue from oil and other commodities in financial assets, properties and other instruments that are issued by other sovereigns and corporations around the globe, good enough to satisfy long-term future needs of the Nigerian State.
It is intended to be a radical departure from current Excess Crude Account (ECA), which has been imprudently managed in the last four years, owing to absence of enabling law.