The Minister of Finance and coordinating minister of the economy, Mrs. Ngozi Okonjo-Iweala, said on Monday that the Federal Government would inaugurate the Sovereign Wealth Fund by the end of the year.

Okonjo-Iweala said on the sidelines of a conference in London that the government would announce the management team for the fund in August.

She also disclosed that the government would issue a second Eurobond of at least $600m next year which could be open to members of its diaspora.

Reuters quoted Okonjo-Iweala as saying, “The members of the SWF board have been chosen and will be announced in August once due diligence has been carried out. By September/October, we should be getting the team in place and we should be able to inaugurate by the end of the year. We are in the last stage of due diligence.

,”The fund will be inaugurated with an initial $1bn,” according to the minister, after the 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. The issue is how much goes into the fund not whether the fund should exist,” she added.

The fund was supposed to replace the Excess Crude Account, 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 Governors get a portion of any money withdrawn from the ECA but the SWF won’t give those guarantees, which means they are likely to want most of Nigeria’s savings to be kept in the ECA.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.

Analysts said that the ECA could be easily dipped into by government. The account contained more than $20bn in 2007 but despite years of record high oil prices it now holds around $6.9bn.Nigeria issued a debut $500m Eurobond in January last year, which was 2.5 times oversubscribed.

Source: Punch/Ademola Alawiye