After the deployment of the initial take-off fund of One (1) Billion US Dollars, further funding of the Sovereign Wealth Funds-the Future Generations Fund, The Nigerian Infrastructure Fund and the Stabilization Fund, shall be as follows:
- Residual funds to be transferred from the Federation Account to the NSIA
- 20% of the initial sum of One (1) Billion Dollars and subsequent funding from the Residual Account shall be disbursed to each Fund (the Future Generations Fund, The Nigerian Infrastructure and the Stabilization Funds respectively) until the amount of funds in each Fund reaches a ceiling percentage of gross domestic product to be determined by biennially upon the assessment of a professional.
In complying with the principle of corporate governance so as to promote accountability and transparency, the Act also provides for the modes of appointment, functions, organization and removal of the Board of Directors and the governing council of the NSIA as well as keeping the proper accounting records by the Board etc.
Perhaps more is the fact that Part VII of the Act subscribes to the international best practices in the workings of the SWF by enjoining the NSIA to ensure that the investment objectives of the Fund must be consistent with the principles enunciated in the “SANTIAGO PRINCIPLES”
The Santiago Principles of 2008 comprises of a set of generally accepted principles and practices formulated by the International Working Group of Sovereign Wealth Funds to ensure that the conduct of investment practices of SWFs is done on a prudent and sound basis. These principles border on such areas as:
a) Legal framework, objectives and coordination with macroeconomic policies
b) Institutional framework and governance structure, and
c) Investment and risk management framework.
Although, subscribing to these principles is voluntary, the overriding objective is to achieve a regulatory benchmark for the operation of SWFs all over the world.
CHALLENGES AND PROSPECTS OF NIGERIA’S SWF:
Perhaps, the greatest challenge to the operation of the SWF in Nigeria is the determination of its constitutionality or legality against the background of the provision of Section 162 of the 199 Constitution. The Section provides as follows:
162(1) The Federation shall maintain a special account to be called "the Federation Account" into which shall be paid ALL revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.(Emphasis mine)
(3) Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly.
(4) Any amount standing to the credit of the States in the Federation Account shall be distributed among the States on such terms and in such manner as may be prescribed by the National Assembly.
(5) The amount standing to the credit of Local Government Councils in the Federation Account shall also be allocated to the State for the benefit of their Local Government Councils on such terms and in such manner as may be prescribed by the National Assembly.
The Constitution as can be gleaned from this provision, gives no leeway for the deduction of any part of the revenues of the Federal government, the States, or the Local government into a pool of funds known as the Sovereign Wealth Fund. This thus creates a constitutional challenge upon which the legality of the NSIA is now been contested in the Court of Law by the governors of the Thirty- Six (36) states of the Federation.
Another notable challenge are the concerns voiced by Nigerian over the credibility of the individuals that would ultimately oversee the management of these Funds given the antecedents of similar programmes with identical objectives as the SWF, for example, the Petroleum Development Trust Fund, which was used as a corruption vehicle to embezzle public funds
No comments:
Post a Comment