BY MICHAEL EBOH
LAGOS — Nigeria is in danger of losing a substantial portion of the Sovereign Wealth Fund, SWF, valued at about N160 billion ($1 billion), unless the investment strategy of the fund is reviewed to focus more on investing in the Nigerian capital market and other local investments outlets, the Chartered Institute of Stockbrokers, CIS, warned, yesterday.
President of the CIS, Mr. Ariyo Olushekun, who spoke during a courtesy visit to the Chief Executive Officer of the Nigerian Stock Exchange, NSE, Mr. Oscar Onyema, in Lagos, said investing a significant portion of the Sovereign Wealth Fund in Nigeria would not only safeguard the fund, but also help grow the Nigerian capital market and the economy in general.
According to him, Libya lost about 80 per cent of its sovereign wealth fund, because a large chunk of it was invested outside the country.
He said: “Government should invest the SWF in Nigeria, especially in the capital market. There is no point investing the country’s resources outside the economy. If we do that we are using our resources to help other economy.
“Specifically, the future generation aspect of the fund should be invested here, so that the economy can benefit from it.
“This is particularly so, because if you invest the money outside the economy, there is no guarantee that the other markets will out-perform your local markets, anyway, but it is also on record that Libya lost about 80 per cent of its sovereign wealth fund due to almost similar reasons.”
Olushekun called on the Federal Government to urgently provide a stimulus package for stockbrokers to enable them play their roles in the capital market.
He said if the government was serious about reviving the capital market, it should grant tax incentives to quoted companies and investors.
He said: “Company income tax paid by companies should be reduced to about 25 per cent from 30 per cent currently. Investors are also paying Value Added Tax, VAT, when they buy and sell a stock. We don’t think this right. VAT is more applicable to consumption items. Buying and selling of stocks are not consumption items.”
The CIS boss promised that the institute would work with the embattled Director-General of the Securities and Exchange Commission, SEC, Ms Arunmah Oteh and other regulatory authorities in the capital market to drive the growth of the capital market.
He noted: “We have always been working with the regulatory authorities. What we seek at this moment is the cooperation of all the regulatory authorities. We want them to cooperate and partner with us in our quest of driving the revival and growth of the market.”
The Federal Government, had, last year launched the Sovereign Wealth Fund to save money for future generations, providing financing for badly needed infrastructure and to start a stabilisation fund to defend the economy against shocks in the global economy.
The fund, which was marred in controversy, has an initial $1 billion as its start up, with plans to increase the amount over the next couple of years.
The fund is expected to replace the Excess Crude Account, ECA, where extra revenues from the sale of crude oil above the benchmark rate are saved.