Abuja - Nigeria has begun putting in place its sovereign wealth fund (SWF), which will be managed by global auditor and consultancy KPMG, the country’s finance minister said on Tuesday.
Ngozi Okonjo-Iweala said the management team of the SWF would be confirmed by mid-December. An initial $1bn has been taken from the Excess Crude Account (ECA) to be used in the SWF. The ECA now contains around $5bn, she said.
“We are proceeding with the implementation of this very important programme following consultations with the Governors Forum because the feedback we have is the Nigerians strongly support saving for the future and the other core objectives of the fund,” Okonjo-Iweala told reporters.
“It is also clear given the current challenges facing our economy and the global financial crisis, we cannot afford to waste any time.”
The SWF is meant to replace Nigeria’s ECA, a pillar of IMF-backed reforms launched in 2003 into which the OPEC member nation saves any oil revenue above a benchmark price set each year in the budget.
Former World Bank chief Ngozi Okonjo-Iweala had announced that the 2012 budget would set the benchmark price at $75 a barrel but she said on Tuesday that this would be reduced to $70 a barrel because of volatile oil markets.
Critics of the ECA say there is no clear legal basis on which to determine how the savings in the account should be shared between the tiers of government - federal, state and local - leading to constant political wrangling.
The account contained more than $20bn when late President Umaru Yar’Adua came to power in 2007 but by the end of last year held less than $1bn. Okonjo-Iweala said the ECA currently contained around $5bn after the removal of $1bn for the SWF.
Nigeria was one of only three OPEC member states not to have a sovereign wealth fund. The government has said the fund will provide a firmer legal basis to ringfence Nigeria’s savings.
It has three main aims: saving money for future generations, providing financing for badly-needed infrastructure, and providing a stabilisation fund to defend the economy against commodity price shocks.