Nov. 25 (Bloomberg) -- Nigeria’s economic council approved the creation of a sovereign wealth fund that will invest savings during periods of high oil revenue, Finance Minister Olusegun Aganga said.
The council, headed by vice president Namadi Sambo and comprising the governors of the country’s 36 states, the central bank governor and Aganga, backed the bill after months of debates, he told reporters today in Abuja, the capital. The bill is likely to be agreed on by the Cabinet next week and sent to parliament after that, Aganga said.
A “significant” portion of savings from the so-called excess crude account, which is usually shared among the central, state and local governments, will be invested in the fund, Aganga said. He said on Sept. 3 that $1 billion would be used to start the fund.
“It’s an idea that’s long overdue,” Tony Onwu, chief executive officer of Diamond Capital, a unit of Lagos-based Diamond bank Plc, said today in a phone interview.
Fitch Ratings lowered its outlook on Nigeria’s BB- credit rating to “negative” from “stable” on Oct. 22, concerned about withdrawals from the excess crude account and a drop in foreign currency reserves.
Nigeria, Africa’s most populous country and the continent’s top oil producer, relies on crude oil exports for about 95 percent of its foreign currency earnings, according to the Finance Ministry.
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