Reps, CBN, others seek sustainable funding of sovereign wealth fund
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…call for Constitution amendment
Members of Parliament and other financial experts on Tuesday expressed support for sustainable and frequent injection of funds into the Sovereign Wealth Fund account.
Recall that aside the sum of $1 billion which was injected as seed funding into the SWF, Federal Government recently approved additional sum of $250 million into the scheme.
The stakeholders who converged at the public hearing on the amendment of the Nigerian Sovereign Investment Authority (Establishment Act), 2011, held at the instance of the House Committee on Banking and Currency chaired by Jones Onyereri, stressed the need to amend the 1999 Constitution with the view to checkmate politicisation of the scheme.
Speaking earlier, Onyereri stressed the need to restore the sovereignty of naira as a national currency and ensure transparency of its funding and entrench parliamentary accountability.
Other lawmakers also emphasised the need for the Legislature to approve the injection of fresh funds into NSWF.
In his presentation, Kofo Alada, CBN’s Head of Legal Department urged the House to amend section 28, 29 and 30 of the NSIA Act and section 80 of the 1999 Constitution in the bid to ensure adherence to sustainable funding of the Sovereign Wealth Fund.
Alada who applauded the initiative, noted that Nigeria “has not lost the opportunity to put things right, adding that the proposed funding “can be monthly, this can be annual. I believe that there are certain states where something similar were created.”
He however opposed the proposed section amdnment to section 29(1 & 2) of the SWIA Act, to convert the $1 billion to naira equivalent, stressing that such move could send wrong signal to the international commumity.
“Owing to the nature of the foreign investment requirements of the Authority, the denomination of the seed funding in United States dollars is in line with best practice amongst sovereign wealth funds all over the world for Monetary convertibility reasons.
“Furthermore, countries prefer to invest their sovereign funds abroad to cushion the effects of fluctuations on the domestic economy and also to avoid the ‘Dutch Disease’ phenomenon, whereby excess liquidity from revenue earnings lead to overdependence on one sector,” Alada stressed.
Alada maintained that the since Nigeria derives its major revenue from petroleum hydrocarbon, the proposed conversion of the funds accrued into NSWF should be left in dollars.
Also speaking, Belema Taribo, who spoke on behalf of Nigerian Insurance Deposit Corporation (NDIC) stressed the need for inclusion of Local Governments on the board of NSIA and that the members of the Board should be confirmed by the Senate as applicable to other agencies of government.
He observed that 60 percent of the investment are in dollars while other investment made within the country were carried out in naira, adding that that was the reason why the Authority was not suffering like other financial institutions operating in the country.
Shehu Garba, sponsor of the bill emphasised the need for government at all levels to cultivate saving culture in the bid to address the infrastructural challenges.
While speaking, Uduak Ukpeh, Secretary to Governing Council of NSIA and Tosho Suleiman, Senior Legal Adviser explained that all the state governors are represented in the Board, just as they expressed optimism that the suit over the floating of the NSWF initiated by the Governors’ Forum is being resolved.
In his address, Speaker Yakubu Dogara noted that the Authority was empowered to manage the Nigerian Sovereign Wealth Fund into which the surplus income produced from Nigeria’s excess oil reserves is deposited.
“This sovereign wealth fund was founded for the purpose of managing and investing the said funds on behalf of the government of Nigeria. It is intended to invest the savings gained on the differ between the budgeted and actually market prices for oil and to earn returns that would benefit present and future generations of Nigerians.”
Welcome to henry jex blog
…call for Constitution amendment
Members of Parliament and other financial experts on Tuesday expressed support for sustainable and frequent injection of funds into the Sovereign Wealth Fund account.
Recall that aside the sum of $1 billion which was injected as seed funding into the SWF, Federal Government recently approved additional sum of $250 million into the scheme.
The stakeholders who converged at the public hearing on the amendment of the Nigerian Sovereign Investment Authority (Establishment Act), 2011, held at the instance of the House Committee on Banking and Currency chaired by Jones Onyereri, stressed the need to amend the 1999 Constitution with the view to checkmate politicisation of the scheme.
Speaking earlier, Onyereri stressed the need to restore the sovereignty of naira as a national currency and ensure transparency of its funding and entrench parliamentary accountability.
Other lawmakers also emphasised the need for the Legislature to approve the injection of fresh funds into NSWF.
In his presentation, Kofo Alada, CBN’s Head of Legal Department urged the House to amend section 28, 29 and 30 of the NSIA Act and section 80 of the 1999 Constitution in the bid to ensure adherence to sustainable funding of the Sovereign Wealth Fund.
Alada who applauded the initiative, noted that Nigeria “has not lost the opportunity to put things right, adding that the proposed funding “can be monthly, this can be annual. I believe that there are certain states where something similar were created.”
He however opposed the proposed section amdnment to section 29(1 & 2) of the SWIA Act, to convert the $1 billion to naira equivalent, stressing that such move could send wrong signal to the international commumity.
“Owing to the nature of the foreign investment requirements of the Authority, the denomination of the seed funding in United States dollars is in line with best practice amongst sovereign wealth funds all over the world for Monetary convertibility reasons.
“Furthermore, countries prefer to invest their sovereign funds abroad to cushion the effects of fluctuations on the domestic economy and also to avoid the ‘Dutch Disease’ phenomenon, whereby excess liquidity from revenue earnings lead to overdependence on one sector,” Alada stressed.
Alada maintained that the since Nigeria derives its major revenue from petroleum hydrocarbon, the proposed conversion of the funds accrued into NSWF should be left in dollars.
Also speaking, Belema Taribo, who spoke on behalf of Nigerian Insurance Deposit Corporation (NDIC) stressed the need for inclusion of Local Governments on the board of NSIA and that the members of the Board should be confirmed by the Senate as applicable to other agencies of government.
He observed that 60 percent of the investment are in dollars while other investment made within the country were carried out in naira, adding that that was the reason why the Authority was not suffering like other financial institutions operating in the country.
Shehu Garba, sponsor of the bill emphasised the need for government at all levels to cultivate saving culture in the bid to address the infrastructural challenges.
While speaking, Uduak Ukpeh, Secretary to Governing Council of NSIA and Tosho Suleiman, Senior Legal Adviser explained that all the state governors are represented in the Board, just as they expressed optimism that the suit over the floating of the NSWF initiated by the Governors’ Forum is being resolved.
In his address, Speaker Yakubu Dogara noted that the Authority was empowered to manage the Nigerian Sovereign Wealth Fund into which the surplus income produced from Nigeria’s excess oil reserves is deposited.
“This sovereign wealth fund was founded for the purpose of managing and investing the said funds on behalf of the government of Nigeria. It is intended to invest the savings gained on the differ between the budgeted and actually market prices for oil and to earn returns that would benefit present and future generations of Nigerians.”
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