LONDON — Nigeria will announce in August the management team for its Sovereign Wealth Fund (SWF), which it expects to launch by the end of this year, the Finance minister told Reuters on Monday.
The government of Africa’s biggest crude oil producer may also issue a second Eurobond of at least $600 million next year which could be open to members of its Diaspora, Ngozi Okonjo Iweala said on the sidelines of a conference in London.
The members of the SWF board have been chosen and will be announced in August once due diligence has been carried out.
“By September or October, we should be getting the team in place and we should be able to launch by the end of the year,” she said. “We are in the last stage of due diligence.”
The fund will be launched with an initial $1 billion after the federal government gained approval in June from Nigeria’s State governors, who initially blocked the savings fund, saying it was unconstitutional.
“We’re at a stage now where it’s accepted by the governors,” she said.
“The issue is how much goes into the fund not whether the fund should exist.”
The long-awaited fund was supposed to replace the Excess Crude Account (ECA), in which Nigeria saves oil revenues over a benchmark price, currently $72 a barrel.
Governors get a portion of any money withdrawn from the ECA, but the SWF won’t give those guarantees, which means they are likely to want most of Nigeria’s savings to be kept in the ECA.
The aim of the SWF is to save money for future generations, to finance infrastructure and to defend the economy against commodity price shocks.
The ECA can be too easily dipped into by government, economists say.
The account contained more than $20 billion in 2007 but despite years of record high oil prices it now holds around $6,9 billion.
Okonjo-Iweala is under pressure from fuel importers who say Nigeria owes them billions of dollars in unpaid fuel import subsidies.
The State oil company NNPC told Reuters last week it was owed $7 billion in subsidy, more than the entire ECA.
Okonjo-Iweala declined to comment on NNPC’s claims.
Nigeria issued a debut $500 million Eurobond in January last year, which was 2,5 times oversubscribed.