Sovereign wealth fund is a state owned investment fund composed of financial assets such as stocks bonds, properly, precious metals or other financial Entrustment. It is just like savings account where the profits from excess crude oil will be saved . the only difference between sovereign wealth fund and excess crude account is that experts in fund management would manage the portion that is meant to be invested.
The fund seeks to invest a portion of the excess profit made from crude oil sales in the sovereign wealth fund to be held and managed by the Nigerian investment authority . The authority who is the fund manager is expected to invest the funds in a diversified portfolio of medium and long term investments for the benefit of future generations of Nigerian citizens. Funds for the portfolios will be constricted by the federal, state and local governments.
In accordance with the Nigerian sovereign investment authority (NSIA) Act, the three of government will set aside 10 percent of the excess oil revenue for investment every month. The NSIA would then allocate the revenue to three critical areas namely, national infrastructure development, long term savings and a stabilization fund. The funds set aside for future generations will build an intergrenerational savings base by investing in long term assest that generate a rate of return to accumulate wealth for the next generation of Nigerians while the stabilization fund will protect the budget by providing as table last resort source of finance when the budget account is deemed to be insufficient
The advantages of the new saving scheme include curbing wastages in governance and providing funds for the development of the nations infrastructure
REFERENCE
The worlds most expensive club, the economist 2007-05-24
Sovereign wealth funds new hedge fund . the new York times 2007-08-01
Who holds the wealth of nation? (PDF) Central Banking Journal (May 2005) volume 15, number 4). archived form the original on 2008-05-29 retrieved 2008-09-02
EZEALI B.O and Nwoba M.O.E (2012) public finance administration in Nigeria cases and issues. Chambers books limited Onitsha Anambra State: Nigeria
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