The federal government yesterday shunned state governors and went on to launch the controversial Sovereign Wealth Fund (SWF) with a series of initial steps designed to build a strong foundation for achieving the objectives of the fund as encapsulated in the Nigerian Sovereign Authority (NSIA) Act.
The process is beginning with the $1 billion (N150 billion) set aside as initial funding.
Similarly, the federal government has also dropped the oil benchmark from $75 per barrel to $70.
Announcing the developments during a press conference in Abuja, the coordinating minister for the economy and minister of finance, Dr. Ngozi Okonjo-Iweala, stated that “we are proceeding with implementation of this very important programme following consultations with the Governors’ Forum because the feedback we have is that Nigerians strongly support saving for the future and the other core objectives of the fund.”
She said the move is in line with the preparations being made to tackle the current challenges in the economy.
“It is also clear that given the current challenges facing our economy and the global financial crisis, we cannot afford to waste any time,” she said.
The decision to reduce the oil benchmark was due to the volatility of the price of crude oil in the international market, the minister stated.
She said if proactive measures were not taken now, it may lead to crisis in the nation’s oil sector, thereby affecting revenue generation of the country.
The core objectives of the SWF, she said, include saving for the future and investment in strategic infrastructure.
She added that the fund would also be used to build a buffer against shocks such as the current global financial crisis.
The NSIA bill became law on May 27, this year, following its passage by both arms of the National Assembly and the presidential assent.
The key steps, as announced by the minister, are the recruitment of the management team to manage the fund through a transparent process.
She said the recruitment exercise, which has commenced, is targeted at the best qualified Nigerians within and outside the country.
She said KPMG has been engaged to manage this process and advertisements calling for applications from interested Nigerians will soon be published in The Economist and Financial Times.
Other steps, she said, was that, as directed by the NSIA Act, an Executive Nomination Committee which is a group of highly respected Nigerians shall support the interviewing and sourcing process of all board members.???
Okonjo-Iweala said the federal government is determined to ensure that the entire process is transparent because of the integrity and calibre of individuals who constitute the board and management team.
She said “The president has directed that we put everything into this process because he is committed to ensuring that Nigerians and the Nigerian economy benefit from the focused implementation of the fund.”
She stressed that the decision to begin implementation was taken after due consultation with the Governors’ Forum and that dialogue with the governors on other areas was still ongoing.
She said: “We are still talking with the governors and the dialogue is being conducted in an atmosphere of mutual respect because both sides appreciate that, at the end of the day, it is all about improving the lots of Nigerians and strengthening the economy.
“What we have done can be compared to opening an account for the fund and commencing with other necessary procedures in preparation for full implementation,” she said.