FG plans fresh $1bn injection into SWF

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The Federal Government has disclosed its intention to inject  a fresh $1 billion into the Nigerian Sovereign Wealth Fund (SWF). The three-pronged Sovereign Wealth Fund will finance the Stabilisation Fund, Future Generation Fund and the Nigerian Infrastructure Fund.

Buhari plans to add $4.5 billion to the SWF by 2018, dismissing concerns that the fund may not receive additional investment as a result of falling oil prices, which is the bedrock for its funding.

Nigerian Sovereign Investment Authority (NSIA), according to its Managing Director, Uche Orji, SWF still has about $1.5 billion assets under management since its establishment in 2011 by the Goodluck Jonathan government.

The new proposal seeks to inject at least $1 billion each year over the next 3 years in the Medium Term Plan (2016-2020). This was contained in a draft which also highlights plans to raise the Excess Crude Account (ECA) to $4.5 billion by 2018 and grow foreign reserve to $7.65 billion.

The proposed Mid-term policy document has six main pillars including economy, social development, infrastructure, governance, environment and regional development, which will be the focus for the government’s fiscal expenditure.

The Buhari government will seek non-oil alternative funding to cushion the effect of the falling oil prices that have seen Nigeria’s revenue fall short.

The NSIA which is responsible for the management of the SWF had said recently that a total income of N505.694 million for the 15 months which ended December 2013.

Its account audited by PricewaterhouseCoopers showed that the NSIA recorded a gross operating income of N1.466 billion and non-operating income of N495 million, bringing the total gross income to N1.961billion.

It spent N21.905 million on investments, management and custodian fees, while N1.414 billion was spent on operating and administrative expenses. There was N19.464 million provided for change in net fair value, bringing the total comprehensive income for the 15 months to N505.694 million.

NSIA ended the period with total assets of N157.595 billion. An analysis of the authority’s equity and reserves showed that government made a contribution of N155.250 billion, while retained earnings stood at N525.158 million, amounting to N157.755 billion.

The FG had earlier declined injection of fresh fund into SWF, owing to decline of the Nigeria’s revenue, following continued decline of  crude prices in the past year.

“The weakness in crude oil prices might persist for the foreseeable future, thereby potentially impacting on new contributions from the federation,” Nigerian Sovereign Investment Authority Chairman Mahey Rasheed said in its 2014 annual report released recently that: “Consequently, I do not anticipate a substantial growth in the funds under management through that source.”

The fund, set up by former President Goodluck Jonathan in 2011, invests revenue generated when the oil price exceeds that budgeted by the government. Nigeria relies on crude exports for about 95 percent of its foreign-currency earnings and about two-thirds of state revenue.

Despite “volatile market conditions,” the fund saw net comprehensive income rise to 15.8 billion naira ($79.4 million) in the year through December, from 525 million naira in the 15 months through the end of 2013,  Orji . The fund’s total assets were 177.8 billion naira.

 

AUTHOR:  Simeon Damilola

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