We Are Ready To Augment FAAC Allocation With $150m This Month—NSIA

The Nigeria Sovereign Investment Authority has said that it is ready to provide the $150m that the Federal Government was seeking to augment allocation from the federation account.

The Federal Government had mooted the idea in April to withdraw the sum of $150m from the stabilisation fund of the Sovereign Wealth Fund to cushion the negative impact of oil price drop on revenue inflow.

Specifically, the Minister of Finance, Mrs Zainab Ahmed, had on April 6 said the need to withdraw the amount had become imperative due to the persistent decline in allocation to the three tiers of government.

She said for instance that since January, revenue inflow into the account has been on a decline adding that the situation had affected the amount distributed to to the three tiers of government by the Federation Account Allocation Committee.

She said based on the fiscal assumptions underpinning the 2020 Appropriation Act, monthly FAAC disbursements to the Federal and State Governments were projected at N888.5bn.

However, due to the significant drop in international oil prices, she said FAAC monthly disbursements have declined in recent months to N716.3bn in January and N647.4bn in February 2020.

The NSIA had expressed support for the decision of the government, adding that the move was in line with the objectives for which the fund was created.

Specifically, the Authority stated that Sections 47 and 48 of the Nigeria Sovereign Investment Authority’s Establishment Act 2011 supports the withdrawal from the Stabilisation Fund.

In terms of the process for the withdrawal of the fund, the NSIA said Section 47 empowered the Minister of Finance to, on behalf of government, call for the withdrawal of the fund.

Speaking in an exclusive interview with THE WHISTLER, the Managing Director, NSIA, Mr Uche Orji, said the $150m has been set aside for disbursement to the Federal Government.

He said while the Federal Government had not made a formal request for the fund, the NSIA had taken steps to pull the cash together by selling off some of the investments it made in various asset classes.

He said once the request is officially made by the government to draw the Stabilisation Fund, the $150m would be provided this month for allocation to the three tiers of government.

He said, “The government has called for $150m from the NSIA to help augment federal allocation, they have announced it but they haven’t really written us.

“But we are looking at that. By July, we should be able to release it. We sold off investments and the money has been kept in cash.

“So we are willing to assist the government augment federal allocation. That is the role of the stabilisation fund.

“If we had grown this fund as aggressively as it was planned, we would have been able to augment more.”

Orji described the NSIA’s ability to augment the revenue inflow at a time of declining revenue as good news for Nigerians.

He noted that this was one of the reasons why the Authority was set up to provide a buffer to the federation during the rainy days.

He added, “So at least the fact that NSIA has been able to pull cash together and assist the government to augment allocation is good news.

“The fact that we have a lot of programmes in agriculture, health and infrastructure is good news.”