19 October 2011, Sweetcrude, Abuja – Governors of Nigeria’s 36 states have dropped their opposition to the Federal Government’s plan to establish the Sovereign Wealth Fund (SWF), Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said.
The governors had opposed the establishment of the Fund on the grounds that it was illegal and unconstitutional. They also argued that it was out of place for the federal government to dictate to them how to spend their resources.
Dr. Okonjo-Iweala announced Tuesday the commencement of the operation of the fund after the governors reversed their position. She said already, $1billion has been taken out of the $6 billion in the excess crude account, for the take off of the Fund.
Okonjo-Iweala, who is the Coordinating Minister for the Economy, spoke in Abuja. She said governors engaged the federal government in “constructive dialogue” and gave their support to the Fund on the condition that only the initially agreed $1 billion should be deducted from the Excess Crude Account to finance the Fund.
She said the federal government and the governors would discuss how to spend the remaining $5 billion cash in the Excess Crude Account.
Dr. Okonjo-Iweala said: “What we have done can be compared to opening an account for the Sovereign Wealth Fund and commencing with other necessary procedures in preparation for full implementation.”
She listed the core objectives of the fund as: “saving for the future; investment in strategic infrastructure and the building of a buffer shock such as the current global financial crisis which has damaged many economies across the world, including those of the Western nations.”
She said accounting firm KPMG has been appointed by government to commence the process for the appointment of the management team of the SWF in “a transparent and credible manner”.
The firm will be expected to seek applications from interested Nigerians from within and outside the country and pick suitable candidates as chief executive officer and two Executive Directors.
These positions are to be advertised in local and international media particularly The Economist and the Financial Times by the KPMG.
After short-listing the candidates, KPMG is expected to forward the list to the Executive Nomination Committee comprising “highly respected Nigerians who shall support the interviewing and sourcing process of all board members.”
The vetting of applications and short listing of candidates will be rounded off by mid-next month while the final appointment will be made by December, she said.
The minister said while the operating manual of the Fund is still being worked out, the management team to be appointed will be part of the governing council.
Dr. Okonjo-Iweala said the President, some members of the Economic Management Team particularly the minister of finance, members of academia and youth representatives, will make up the governing council.
The finance minister said in the 2012 budget oil price benchmark has been slashed from $75 to $70, “because of the increased volatilities and uncertainties and the need to protect the country from these volatilities and uncertainties.”
She said government has taken to experts’ advice that there might not be an immediate end in sight to the persistent volatilities and uncertainties in the price of crude oil, hence the decision to err on the side of caution by being more prudent.