Almost five months after President Goodluck Jonathan signed the Sovereign Wealth Fund (SWF) Bill into Law, the account is yet to effectively take-off, because the Federal Government has not been able to appoint those who will manage the funds, THISDAY has learnt.
The passage of the fund bill, celebrated as the biggest single achievement by former Finance Minister, Mr. Olusegun Aganga , was expected to replace the Excess Crude Account (ECA), created to keep back earned oil revenues which are above budget benchmark price.
However, both accounts have continued to exist alongside notwithstanding the passage of the SWF, which was supposed to displace the former.
Minister of State for Finance, Mr. Yerima Ngama Lawal , told THISDAY that the SWF account has not fully taken effect because no managers have been appointed to run the fund and as such, would continue to exist side by side with the ECA, which was meant to provide succour in rainy days.
But the ECA has been a subject of controversies since its creation as politicians have consistently depleted its stock with no commensurate positive impact in the living standard of Nigerians. Moreover, proceeds from the ECA have often been used to augment shortfalls in projected revenue on monthly basis, thus defeating the essence of its creation.
The SWF is expected to provide a firmer legal basis to specify the use of oil, save for the future generations, provide long-term infrastructure financing as well as providing a stabilisation fund to defend the economy against commodity price shocks.
However, because both accounts have a similar component of providing short term augmentation in critical periods, it was of no use maintaining SWF side by side with the ECA.
The Minister said: "Actually, whenever we earn more money than budgeted, we actually do appropriation to the excess crude and the issue of the sovereign wealth fund is actually another appropriation from the excess crude to the sovereign wealth fund- the two have different purposes. For short term augmentation, we usually take from the excess crude; if you see us augmenting from the SWF, it means the excess crude is not adequate and that is not the situation. The excess crude is adequate to meet all augmentation."
He said when the SWF fully commences, there would be no need for the ECA.
"It is yet to take off but that does not mean we have not opened the account and that doesn't mean money has not been appropriated into it, but just that the people to manage that fund have not been appointed," he said.