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SWF: FG invests N32b $1b excess crude revenue

The Federal Government has so far invested N32 billion ($200 million) of its fledgling Sovereign Wealth Fund (SWF), representing 20 per cent of the $1 billion (about N160 billion) to guard against commodity price shocks.

Nigeria, Africa’s top oil producer and most populous nation, established the Sovereign Investment Authority (SIA) in 2011 in an effort to manage resources that economists say have often been squandered in the past.

Chief Executive of the Nigerian Sovereign Investment Authority (NSIA), Uche Orji, who disclosed this on the sidelines of the Africa Investor Conference in New York, maintained that the Federal Government is “targeting a return of 400 basis points over the U.S. consumer price index for the Future Generations Fund and 500 basis points over (the same index) for the Infrastructure Fund.

“The key to sovereign wealth funds is in the consistent contribution going forward,” he said.

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Of the $200 million, 25 percent was allocated to U.S. Treasuries and 75 percent to investment grade corporate bonds, while 32.5 percent of the overall $1 billion fund is for what is called a ‘Future Generations Fund,’ and a further 32.5 per cent into a ‘Nigeria Infrastructure Fund.’ The remaining 15 percent of assets are unallocated.

Credit Suisse Asset Management, Goldman Sachs Asset Management, and UBS are managing the money in what the SIA calls the ‘Stabilization Fund.’

By the second quarter of 2014 Orji expects to have both chosen the asset managers for the Future Generations Fund and have it fully allocated.

“We are targeting a return of 400 basis points over the U.S. consumer price index for the Future Generations Fund and 500 basis points over (the same index) for the Infrastructure Fund.”

Nigeria pumps around two million barrels of oil a day, but much of that money is wasted on corruption and a bloated, inefficient bureaucracy, economists say.

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Oil theft is another problem. An estimated 100,000 barrels per day of oil was stolen from pipelines in the Niger Delta in the first quarter of this year, a report by the London-based Chatham house, recently said.

In sub-Saharan Africa, Botswana’s is the biggest sovereign wealth fund at $6.9 billion, followed by Angola at $5 billion. Nigeria is now third in the region.

Nigeria SWF is dwarfed by Norway’s fund of $737 billion and Saudi Arabia’s fund of $676 billion, according to data collected by the Sovereign Wealth Fund Institute, but in sub-Saharan Africa, Botswana has the biggest fund at $6.9 billion, followed by Angola at $5 billion, while Nigeria is third in the region.