African sovereign wealth funds and national investment funds have been gaining in prominence over the past few years. Introduction as the name suggests, sovereign wealth fund swf is an array of financial reform inform of instrument owned by a sovereign state, where a nations savings are accumulated for foreign direct investment and development purposes. Zoellick, world bank, 2008 sovereign wealth funds swfs have emerged as potential solutions to actively manage. This is the reserve amount which the federation account allocation committee agreed not to allow the excess crude account to fall. The nigerian sovereign investment authority act, 2011 nsia act 2011 which establishes the nigeria sovereign investment authority nsia has the principal aim of building a savings base for nigerian citizens, enhancing the development of nigerian infrastructure and providing stabilisation support in times of economic stress, among others. Sovereign wealth funds and the shifting wealth of nations.
Why nigerian state governments must establish sovereign. Nigerian sovereign investment authority nsia act, the legislation that. Dec 25, 2012 with the recent appointment of the board and management of the nigerian sovereign investment authority, nsia, to manage the sovereign wealth fund, swf, the nation has joined the economies of the. The oxford handbook of sovereign wealth funds douglas j. The world bank is expected to provide guyana with two experts who will provide guidance on the fiscal arrangements, rules and best practices that should govern the use of the sovereign wealth fund swf.
The decision of the federal government of nigeria to establish a national sovereign wealth fund nswf is by far one of the most significant economic policy decisions taken in recent times. Downloads nigeria sovereign investment authority nsia. Read all the latest news, breaking stories, top headlines, opinion, pictures and videos about sovereign wealth fund from nigeria and the world on today. Sovereign wealth funds and longterm investments in sub. The kuwait investment authority that was set up in 1953 for the purpose of managing its excess oil revenues is the oldest sovereign wealth fund uzor, 2011. The ft this week did a special feature on finance and banking in africa, which you can find here. Sovereign wealth funds are large pools of a state owned or controlled investment fund composed of financial assets. Overview of the sovereign wealth fund swf in nigeria nigeria has a sovereign wealth fund established by the nigeria sovereign investment authority nsia act 2011. A sovereign wealth fund is an investment pool of foreign currency reserves owned by a government. A sovereign wealth fund swf, sovereign investment fund, or social wealth fund is a stateowned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Botswana pula fund and ghana minerals development fund pioneered the establishment of african swfs in 1993.
The nigeria sovereign investment authority is a nigerian establishment which manages the nigeria sovereign wealth fund, into which the surplus income produced from nigerias excess oil reserves is deposited. A african pension and sovereign wealth fund infrastructure coinvestment platform to scale up regional investment b infradev marketplace to activate development of investable projects and performance tracking 58 75 56 74 50 48 46 43 42 42 39 37 35 32 31 30 27 25 24 23. Sovereign wealth funds and longterm development finance. As such, they represent both economic actors and embody power vested in the financial and diplomatic resources they can leverage. In this sense, therefore, swfs are part of a broader narrative, a tectonic shift to which decoupling, a popular buzzword in the financial markets over 2007. The jonathan government, following the example of other oilrich states, wants to establish a sovereign wealth fund, and it has deposited a reported one billion u. For nigeria, he said imfs reference to sovereign wealth fund focuses on the excess crude account, which requires greater transparency on the rules governing deposits, withdrawals, and investment. Sovereign investor models projects at harvard harvard university. Clason is the author of the richest man in babylon, one of the most inspiring books on wealth ever written. Sovereign wealth funds are large pools of a state owned or. Malan rietveld and angela cummine are sovereign wealth fund experts and have. Africa is the most dynamic region of the world in terms of sovereign wealth fund creaon.
Sovereign wealth fund a paradigm shift for nigeria agbaeze e. This thesis studies the potential role and design of a public capital stock in form of a sovereign wealth fund swf for germany. The sharp decline in oil prices seen in the early stages of the global financial crisis in 2008 led to a 20 percent drop in. All the articles are well worth a read but one centered on swfs in africa. Swf concentration by 10 largest swf size and scale as an investor class 16% 16% 14% 14% 11% 8% 7% 6% 4% 4% swf % aum adia gpgg safe sama cic kia hkma gic 1. Imf clarifies report on nigerias sovereign wealth fund. The largest investment pools are owned by countries that have a trade surplus, such as china and oilexporting countries.
In 1926, george samuel clason, an american business man, started writing a series of pamphlets on thrift and financial success, using babylonian parables. Sovereign wealth funds swfs represent both an increasingly important and potentially dominant category of alternative investor, and a novel form for governments to project their interests both home and abroad. How africas sovereign wealth funds could bridge its. The nsia act 2011 mandated the fund to receive, manage and invest in a diversified portfolio of medium and longterm. Stabilization funds are set up to insulate the budget and economy from commodity price volatility and external shocks e. African sovereign wealth funds guide african markets. The emergence of sovereign wealth funds swf has signaled a major reshaping of the. Nigeria, thailand, brazil and india all of them planning such. Sovereign wealth fund news latest breaking stories and.
Chart a swfs assets under management in usd billions 0 1,000 2,000 3,000 4,000 5,000 6,000 dec. Third, by joining the league of countries with swfs albeit belatedly, nigerias. Nigeria passed a sovereign wealth fund bill through parliament in may, in an effort to boost savings from oil. Based on data from the socioeconomic panel soep, three possible. With the recent appointment of the board and management of the nigerian sovereign investment authority, nsia, to manage the sovereign wealth fund, swf, the nation has joined the economies of the. Nigerias sovereign wealth fund swf was one of the fastest growing in 2007. Nigerias parliament is considering a bill to create a sovereign wealth fund aimed at better managing the opec members windfall oil savings, billions of dollars of which have been frittered away. A sovereign wealth fund swf, sovereign investment fund, or social wealth fund is a. Sovereign wealth fund news latest breaking stories and top. List of african sovereign wealth funds 20 investment. These results were used as background information and input in the preparation of the generally accepted. Sovereign wealth funds swfs have emerged as potential solutions to actively manage. But standard bank research says sections of the elite are preventing proper implementation of the bill.
Nigerian governors and sovereign wealth fund vanguard news. Nov 17, 2010 nigerias new minister of finance, olusegun aganga, a former managing director at goldman sachs, announced in september, 2010 that a nigerian sovereign wealth fund draft bill has been submitted to the national assembly. The nsia employees are wholeheartedly committed to making a measurable impact through each of the authoritys mandate. Sovereign wealth funds swfs form a heterogeneous group of investors, which. However, when revenue from natural resources starts pouring in, these same countries realize. Nigeria s sovereign wealth fund is composed of three distinct funds or windows, each with specific investment and development objectives. The current level of infrastructure deficit in nigeria is a major constraint in the national vision of becoming one of. Sovereign wealth funds swfs, like other endowments, are designed to preserve wealth for future generations.
Despite concerns that sovereign wealth fund investments may serve. Swfs are a small component of global institutional investors 35% 28% 27% 5% 3% 2% global investor allocation pension funds. So keeping them safe, healthy and engaged is our top priority. This special issue comprises three papers that investigate whether developing countries should really hold their resource revenues in offshore funds, when there are. Cohen argued over two decades ago that high fina nce can no longer be kept separate from high politics m onk, 2009.
Pdf nigeria followed the footstep of most states with abundant resource. Appendix 3 sovereign wealth funds the exceptionally rapid and sustained increase in global foreign exchange reserves since 2001 has been welldocumented. Nov 18, 2019 a sovereign wealth fund is an investment pool of foreign currency reserves owned by a government. Sovereign wealth funds and natural resource management in africa. At the nsia, people remain our greatest asset they are our differentiating factor. In order to understand and analyze the policies and institutional arrangements of leading sovereign wealth funds, we have used official documents, economic theory, and statistical analysis, as well as interviews with leading sovereign wealth fund policymakers, advisors, and scholars. As at the end of 20, all capital had been deployed in accordance with the allocation to three managers. List of african sovereign wealth funds 20 investment frontier. The nsia act 2011 mandated the fund to receive, manage and invest in a diversified portfolio of medium and longterm, revenue of federal government, state government, fct and local.
Sovereign wealth funds and natural resource management in. The results of this study are based on analysis of a survey sent to members of the international working group of sovereign wealth funds iwg. Sovereign wealth fund, swf, macroeconomic policy, fiscal policy, public. Sovereign wealth and pension funds investing in africas. Sovereign wealth fund direct investments in 20172018. It had 20 sovereign wealth funds as of 2016 table 1. The swf grew at a rate of 291% and many, like dow jones jan randolf, consider it to be a new financial power brokers, replacing the combined financial muscle of hedge funds and private equity, and usurping central banks as the international capital providers of last resort. Nigeria, sovereign wealth fund, investment, nsia, gdp, economic growth. Sovereign wealth funds swfs are increasingly becoming major players in international financial markets. At a time when people are fearful of sovereign wealth funds, im saying lets look at this as an opportunity, r.
The nigeria sovereign investment authority is a nigerian establishment which manages the nigeria sovereign wealth fund, into which the surplus income produced from nigeria s excess oil reserves is deposited. The nsia act creates three investment funds namely the future generation fund, the nigeria infrastructure fund and the stabilization fund. In that month, the norwegian government pension fund was the largest sovereign wealth fund swf globally, with managed assets amounting to. This was revealed yesterday at a post cabinet press briefing that was held by minister of state, joseph harmon, at the ministry of presidency. We investigate the impact of sovereign wealth fund swf investment on ex ante implied cost of equity capital of targeted firms. Dec 20, 20 african sovereign wealth funds and national investment funds have been gaining in prominence over the past few years. Nigerias new minister of finance, olusegun aganga, a former managing director at goldman sachs, announced in september, 2010 that a nigerian sovereign wealth fund draft bill has been submitted to the national assembly. World bank to provide experts on sovereign wealth fund. Through the emergence of sovereign wealth funds, we are witnessing a major rebalancing of the wealth of nations. Despite frequently voiced concerns that sovereign wealth fund investments serve political objectives and conflict with national interests, little is known about the investment allocation of sovereign wealth funds. Combining ownership and supervisory roles presents conflicts of interest that may.
The sovereign wealth fund 5 section three overview of the sovereign wealth fund swf in nigeria nigeria has a sovereign wealth fund established by the nigeria sovereign investment authority nsia act 2011. Andrew rozanov 2005 of state street corporation coined the term sovereign wealth fund in may 2005. Using an international sample of 310 targets involved in 403 swf deals and their matched firms, we find that targeted firms exhibit, on average, higher cost of equity financing than their peers after the announcement date. This sovereign wealth fund was founded for the purpose of managing and investing these funds on behalf of the government of nigeria. The wealth fund commenced operations in october 2012 and. Recent examples include the nigerian sovereign investment authority, and the. Sovereign wealth fund and economic growth in nigeria. What happens, though, when the claims of the present are more pressing. Asset allocations at sovereign wealth fund, by type of fund source.
In order to understand and analyze the policies and institutional arrangements of leading sovereign wealth funds, we have used official documents, economic theory, and statistical analysis, as well as interviews with leading sovereign. Why nigerian state governments must establish sovereign wealth funds 18 aug 2016. Ubs us treasury mandate, goldman sachs and credit suisse corporate bond mandates. In that month, the norwegian government pension fund was the largest sovereign wealth fund swf globally, with managed assets amounting to almost 1. Foreign reserves as a defacto sovereign wealth fund. The funds are then invested to produce the highest return possible. While swfs are a heterogeneous group, most of the larger and more established. This newsletter includes some of the following headlines. Sovereign wealth funds and infrastructure development in africa. According to our research, the continent counts at least 15 swfs appendix a1. The establishment of a sovereign wealth fund swf by the government in. The excess crude account was to be restructured and renamed the nigerian sovereign investment authority.