NIGERIAâ€™S Senate is working on legislation to create a sovereign wealth fund aimed at softening any impact falling oil prices may have on the Opec member’s economy, Finance Minister Mansur Muhtar said.
Muhtar told Reuters a presidential committee of top Nigerian economic advisers had sent lawmakers a draft proposal for the fund after deliberating on it for more than a year.
The fund could allow a certain percentage of the nation’s revenues to be invested in international markets, providing protection during a downturn in oil prices.
Nigeria, sub-Saharan Africa’s second biggest economy, has around $41.6 billion dollars in foreign exchange reserves, the central bank said on Tuesday.
“The senate is now working on the proposals made by the presidential committee with a view to coming out with a legislation that will guide and empower the government in setting up the fund,” Muhtar told the news agency in an interview.
Nigeria’s economy still depends largely on the rise and fall of volatile oil markets, which have traded between $100 and $34 in the past 12 months. Africa’s most populous country depends on oil and gas income for more than 80% of its revenues.
But the idea of public money being invested overseas has sparked some concerns in a country struggling with power outages, decrepit roads and underfunded hospitals and schools.
“The senate committee raised some issues on it recently, especially on the legal framework. We addressed and resolved it,” Muhtar told Reuters.
Standard Bank last year estimated the Nigerian government received a nominal $436 billion in direct hydrocarbon revenues and taxes between 1970 and 2007, which is the equivalent of about $1.2 trillion today.
But decades of mismanagement and corruption have seen the wealth squandered, leaving the vast majority of the country’s 140 million people impoverished and lacking even basic services such as mains electricity or reliable public healthcare.