Sovereign Wealth Fund, Key To Diversification Of Nigeria’s Economy – Stakeholders

Finance and Economic Experts on Thursday said that the effective implementation of the Sovereign Wealth Fund was key to diversification of the economy.

The experts said during a Webinar that while the country does not lack the required ideas to effectively reposition the economy, there seems to be a gap in the implemententation of these plans.

Those that spoke at the Webinar organised by Ernst and Young Nigeria Alumni are a former Minister of Finance, Dr Olusegun Aganga, the Managing Director of the Nigerian Sovereign Investment Authority Mr Uche Orji, and a former President of the Nigerian Economy Summit Group Kyari Bukar.

The theme of the Webinar was “Nigerian Sovereign Wealth Fund and the urgency for economic diversification.”

Aganga said that the country needs to start shifting it’s focus from oil to non-oil sector in order to effectively achieve economic development.

For instance, he said Nigeria relies mainly on oil revenue for its survival , adding that oil accounts for 75 per cent of goverment revenue and 85 per cent of exports.

The former minister, who was instrumental in setting up the Sovereign Wealth Fund in 2011 said that the high level of unemployment in the country is a sigh that there are fundamental macroeconomic challenges that needed to be addressed.

While referring to goverment official figures as released by the National Bureau of Statistics, Aganga who also served the nation as Minister of Industry Trade and Investment said that about 82 million Nigerians are poor.

He said the figure is more worrisome when considered from the standpoint that the 82 million poor Nigerians exceed the population of South Africa and Ghana put together.

Explaining why the country has many poor people, he blamed the development on breakdown of value system, lack of development of human capital as well as lack of continuity of government policies.

He said, “The fact that you are a resource endowed country does not make you a rich country. It is what you do with the resources that you have that will make your country a wealthy nation.”

On what the goverment needed to do to reposition the economy in light of the current economic challenges, he said there is need to build a competitive industrial and services sector.

He said, “We can’t be rich as a nation without having an industrial and advanced services sector.

“Nigeria has all it needs to become the China of Africa. We need to reform the institutions and agencies that are charged with the responsibilities of implemententation of government programmes.”

The former minister also suggested that the government should eliminate all leakages as well as put an end to the issue of abandoned and incomplete projects.

He advocated the containment of population growth as well as called for civil service reforms that would position the public sector for improved productivity.

Orji in his presentation at the Webinar said that the NSIA has three major funds being managed on behalf of the federation.

He said the three mandates of the NSIA are the reasons for the setting up of the three funding windows.
of future generation, infrastructure and fiscal Stabilization fund

He assured that the authority’s investment strategy remains robust with a favorable trajectory across its three funding windows.

He said since the NSIA commenced operations with an initial capital of $1bn in 2013, the goverment had increased the contribution to about $1.75bn.

Orji explained that the fund would have made more impact if more capital injections were made in the early part of the establishment of the NSIA.

He said, “We have invested in more than 32 private equity funds across the world and in Nigeria we have invested in about seven of them.

“We have also created venture capital companies and we want to see more of these because they are the ones that will reach further down to the Micro, Small and Medium Enterprises.”

He also said the NSIA is working towards addressing the challenges in the technology sector in the country through its venture capital project.

Orji said the NSIA is interested in this area because it holds the key to the development of the country.

“We are hoping to become very active in this area and one of the ways we want to achieve it is through venture capital,” he added.

He said the NSIA is also working towards showing consistent profitability in its operations as this is the only way it can remain a credible institution.

Under the infrastructure fund, he said the Authority is focusing on key projects in the power, agriculture, gas industrialisation, roads and healthcare sectors.

He said these five sectors formed the major focus of the NSIA on the development of infrastructure for the country.