Nigeria’s Opposition Wants to Scrap Sovereign, Oil Funds

Nigeria’s main opposition party said it will scrap the country’s sovereign wealth fund and a separate excess crude account if it wins elections in February.

“We’re going to put a stop to them,” Lai Mohammed, a spokesman for the All Progressives Congress, or APC, said in an interview in London yesterday. “The sovereign wealth fund and the excess crude account are illegal.”

The $1.5 billion sovereign wealth fund, called the Nigeria Sovereign Investment Authority, was started in 2011, with the ruling People’s Democratic Party saying the country needed to save money for future generations. The Excess Crude Account, which stands at $4.11 billion, is used by the government to cover shortfalls in its budget and give foreign investors comfort the state can guard against a fall in the value of the currency.

Foreign investors closely monitor the excess crude account, which has helped attract high portfolio flows to Nigeria in the past two years, according to Esili Eigbe, Lagos-based head of West African research at Exotix, a frontier markets investment bank.

“Part of the reason you’re seeing a push for Nigeria is because of some of the shock absorbers,” such as the account that holds oil earnings above a budget benchmark, he said in a telephone interview. “You have to look at this in the context of the household. The household without savings is vulnerable to swings and shocks.”

Central Account

Nigeria’s constitution requires that all government revenue should go to a central account and then be shared among the federal, state and local governments, according to Mohammed. Allocating money to the wealth fund and the oil account deprives state and local governments of resources needed for development, he said.

Former Nigerian Vice President and APC leader Atiku Abubakar last week announced he would run for president of Africa’s largest economy and biggest oil producer in the Feb. 14 elections. The APC was formed last year following the merger of four opposition parties. It is scheduled to choose its presidential candidate on Dec. 2, said Mohammed.

“Five aspirants have indicated their intention to run for the top ticket” including former military ruler Muhammadu Buhari, former Vice President Atiku Abubakar, Kano state Governor Rabiu Kwankwaso, Imo state Governor Rochas Okorocha and newspaper publisher Sam Nda-Isaiah, said Mohammed.

The opposition party says President Goodluck Jonathan’s administration has neglected tens of millions of Nigerians who live in poverty, and failed to deal with an Islamist insurgency that has killed thousands. The PDP has been in power since military rule ended in 1999.

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