The Nigerian Senate has just recently passed the Sovereign Wealth Fund Bill. Its aim is to enable Nigeria to effectively manage and invest its oil revenues for the benefit of Nigerian citizens and its economy. The Sovereign Wealth Fund (SWF) will be managed by the Nigeria Sovereign Investment Authority and would be split into the Nigeria Infrastructure Fund, the Future Generations Fund and the Stabilisation Fund.
[http://www.thenationonlineng.net/2011/index.php/business/5835-sovereign-wealth-fund-bill-passed.html]
Whilst this seems like a good way for Nigeria to make use of its oil revenues, the devil is in the detail. The Nigerian government needs to ensure that transparent and accountable systems are in place to ensure the effective management of these funds. I recommend they consider the following ideas:
Nigeria Infrastructure Fund
1. The Sovereign Wealth Investment Authority (SWIA) should publish online all investment proposal documents for each investment considered. The proposal document should include amongst others the rationale for the investment, what impact or results that investment will yield, how much has been invested and the potential risk. They should also publish minutes from the meetings where the proposed investments were being considered. These should be published immediately after a decision has been made.
2. The SWIA should publish progress reports on an annual basis on the status of investments.
3. They should look to establish an independent evaluation office responsible for evaluating the infrastructure fund projects. The evaluation office will report to the governing board. The evaluation should be conducted at the completion of the investment projects and the reports made publicly available.
Future Generations Fund
4. The accounts for this fund should be published on a quarterly basis in the national newspapers and on the SWIA website. The information on where the funds have been invested should also be made public. This will empower citizens with the information needed to track and challenge the management of the fund.
Stabilisation Fund
5. If this stabilisation fund is to avoid the fate of the Excess Crude Account (the current way Nigeria has saved excess oil revenues), it is essential to have clear published rules on when these funds can be utilised. This is in order to prevent unnecessary withdrawals from this fund.
I agree wholeheartedly with your suggestions. Historically, Nigeria has proven adept at starting initiatives like this, but has often failed to adequately implement and follow through. Having a clear plan of execution and frequent progress reporting and reflection should help remedy this. Good work.
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