The House of Representatives and stakeholders in the financial sector has called for sustainable and frequent injection of funds into the Sovereign Wealth Fund account.
This amongst other things was reached at the end of a two-day public hearing on the amendment of the Nigerian Sovereign Investment Authority (Establishment Act), 2011, held by House committee on banking and currency.
Chairman of the committee, Hon. Jones Onyereri, in summing up consensus reached at the session, stressed the need to restore the sovereignty of naira as a national currency and ensure transparency of its funding and entrench parliamentary accountability.
He also emphasized the need for the legislature to approve the injection of fresh funds into NSWF.
Making his presentation, representative of the Central Bank of Nigeria, CBN, Mr. Kofo Alada, 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.
While commending the initiative, Alada posited 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 was created.”
Mr. Alada however opposed the proposed amendment to section 29(1 & 2) of the SWIA Act, to convert the $1 billion to naira equivalent, stating that such move could send wrong signal to the international community.
“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,” he stressed.
He further 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.
Presenting also, the board secretary of NDIC, Mr. Belema Taribo, noted the need to include Local Governments on the board of NSIA adding that members of the Board be confirmed by the Senate as applicable to other agencies of government.
Taribo 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.
On their parts, Secretary to Governing Council of NSIA, Mr. Uduak Ukpeh, and Senior Legal Adviser, Mr. Tosho Suleiman, explained that all 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.
Earlier, Speaker Yakubu Dogara in his address 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 difference between the budgeted and actually market prices for oil and to earn returns that would benefit present and future generations of Nigerians.”