Nigerian Oil Savings Fund Requires Strong Protections,CSEA and Revenue Watch Advise Leaders

R4D’s SME initiative receives early award at G-20 international finance competition, CSEA collaborates with R4D on the implementation of SME financing scheme in Nigeria - Abuja, Nigeria. August 23, 2010 -- We are pleased to announce that a small and medium enterprise development initiative sponsored by the Results for Development Institute (R4D) has won top honors.. CSEA is collaborating with R4D on the implementation of SME financing scheme in Nigeria...
Dr. Mansur Muhtar joins CSEA as Distinguished Fellow - Abuja, Nigeria. August 12, 2010 -- We are delighted to announce that Dr. Mansur Muhtar, former Honourable Minister of Finance of the Federal Republic of Nigeria, is joining the Centre for the Study of the Economies of Africa, CSEA, as Distinguished Fellow...

Nigerian Oil Savings Fund Requires Strong Protections,CSEA and Revenue Watch Advise Leaders - Abuja, Nigeria. July 1, 2010 -- To promote sustainable economic development, the government of Nigeria is considering the creation of a Sovereign Wealth Fund, a savings tool that could protect against the volatility of the country’s main revenue source: oil...

2010 Global Development Awards and Medals Competition The Global Development Network (GDN) invites researchers and organizations from developing and transition countries to submit research proposals, completed research papers and proposals...
CSEA gets a grant for the Strengthening Institutions to Improve Public Expenditure Accountability Project Project aims to strengthen constructive engagement between institutions and policymakers....

FOR IMMEDIATE RELEASE CONTACT:

July 1, 2010 Menachem Katz, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Abuja, NIGERIA— To promote sustainable economic development, the government of Nigeria is considering the creation of a Sovereign Wealth Fund, a savings tool that could protect against the volatility of the country’s main revenue source: oil. However, according to a policy brief jointly issued by the Revenue Watch Institute (RWI) and the Centre for the Study of the Economies of Africa (CSEA), Nigeria risks repeating patterns of weak economic governance and volatile spending unless its new Fund features certain safeguards.

Sovereign Wealth Funds enable resource rich countries to save windfall profits when commodity prices are high, and soften the negative impact of price volatility. As researcher and Nigeria expert Alexandra Gillies explains in the Revenue Watch analysis, if Nigeria's leaders are to create a Fund that is more effective than existing fiscal policies, the Fund needs a solid legal standing, binding rules regarding the inflow and outflow of funds, and strict transparency requirements.

“The politics of Nigeria call for a carefully safeguarded Fund,” said Gillies. “Without strong and transparent governance, a new fund will end up as depleted as the current Excess Crude Account.”

Nigeria's Excess Crude Account (ECA) was created to save windfall profits from periods of high oil prices. However, permissive governance structures have allowed extensive ad hoc withdrawals, reducing the ECA balance by almost 85%, or 16 billion dollars, in just 18 months. The account's depletion is among the reasons why Nigeria's National Economic Council and Ministry of Finance are considering alternative stabilization programs such as an SWF.

“If the Fund has a clearly-defined relationship to the constitution and operates transparently, Nigeria can avoid the longstanding challenges to savings that arise from competition for resources among the federal, state and local governments,” said Gillies.

The RWI analysis was released recently in partnership with Nigeria-based think tank Centre for the Study of Economies of Africa (CSEA). Menachem Katz, Executive Director of CSEA said, “Stabilization of Nigeria’s economy against oil price volatility remains a crucial priority and a precursor for development and economic diversification.”

“Nigerians understand that we must diversify our economy and move past our unenviable legacy of oil dependence,” said RWI Nigeria Program Coordinator Dauda Garuba. “This Fund can help us build a stronger economic future, but it will only succeed if it is aligned with the constitution and accompanied by a sound policy framework.”

Learn more and download the briefing paper at www.cseaafrica.org.