Excess crude account not transparent, not NSIA—IMF

International Monetary Fund (IMF) Director, African Department, Mr. Abebe Selassie, has clarified IMF position on Nigeria Sovereign Wealth Fund. Answering Nigerian reporters question after the Africa Department Press conference in Washington said “I want to be precise on this issue because I have seen a lot of noise concerning it. There has been two Sovereign Wealth Funds in Nigeria. There has been the Excess Crude Account (ECA), and the Nigeria Sovereign Investment Authority (NSIA). The NSIA has been run transparently and based on standard best practice and it has been doing a good job”. He said the IMF is only concerned about the implementation of the ECA by government and not the NSIA. “The concern that we have is about the ECA, because if you recall that the ECA economically, was set up to save resources when oil prices are high, and to be drawn on when oil prices are low. We do not think that the ECA has been doing effectively well enough job that way. Because you see, when oil prices fell, the economy was very hard in the last couple of years, we feel like much better job could have been done, saving enough more in the ECA when oil prices were at $100 and $120 per barrel,” Selassie said. He reiterated the Fund’s  advice to Nigeria to remove fuel subsidy, saying 70 to 80 per cent of the beneficiaries of subsidy are rich people.

He said: “The reason why subsidy removal is important is because the lion share of the benefit of the subsidy goes to the rich people. If you think of the subsidy, who drives the big cars, who use the biggest generators in Nigeria? It is not to say poor people are not going to benefit when subsidies are removed that is why our advice is such policies like subsidy removal has to be tied with social protection measures for the poorest people”. 

“We need to do this. In aggregate if you have hundred dollars being spent on subsidy, my sense is the lion share 70 to 80 per cent tend to go to the richer people. So what we have to do is reforms, find a way to the poor benefit more. I think it is better to use that resource to invest in health, to build more roads education,” he said.

Meanwhile Mr Amine Mati, the IMF’s Senior Resident Representative and Mission Chief for Nigeria, in statement said IMF would like to make the following statement clarifying recent media reports on IMF’s characterisation of sovereign wealth funds in Nigeria, “In view of recent local media reports, I would like to clarify that the reference to the Sovereign Wealth Funds (SWF) included in Figure 2.16 of the IMF’s Fiscal Monitor showing a low ranking for Nigeria does not refer to the Nigerian Sovereign Investment Authority (NSIA). The NSIA is a Sovereign Wealth Fund that has worked extensively with development partners to ensure it is applying transparency practices that are aligned with the Santiago Principles of transparency, good governance, accountability and prudent investment practices.” 

“The figure in the IMF’s Fiscal Monitor reports a score prepared by the Natural Resource Governance Institute (NRGI), which assesses the corporate governance and transparency of SWFs around the world using a methodology outlined in the referenced NRGI publication. For Nigeria, that SWF reference focuses on the Excess Crude Oil account, which requires greater transparency on the rules governing deposits, withdrawals, and investment.”

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