4. There should be clear and publicly disclosed policies, rules, procedures, or arrangements in relation to the SWF’s general approach to funding, withdrawal, and spending operations.
4.1. The source of SWF funding should be publicly disclosed.
4.2. The general approach to withdrawals from the SWF and spending on behalf of the government should be publicly disclosed.
The NSIA Act 2011 established three main funds i.e., the Stabilisation Fund, the Future Generations Fund, and the Nigeria Infrastructure Fund. See section 4 of the NSIA Act 2011, a copy of which is available here https://nsia.com.ng/downloads
The Act also establishes how funds accrue to the Authority, how and when withdrawals can be made, and how operational costs should be funded.
The NSIA commenced investment activities in 2013, with a seed capital of US$1 billion with the following contribution structure: Federal Government (45.83%), the 36 States of the Federation (36.25%), all 774 Local Government Areas (17.76%); and the Federal Capital Territory (0.16%). 20% of the capital was allocated to the Stabilisation Fund, and 40% each was allocated to the Future Generations Fund and the Nigeria Infrastructure Fund. Section 30 of the NSIA Act 2011 requires that subsequent funding of the NSIA be derived from all amounts above the Budgetary Smoothing Amount in the Residual Funds from the Federation Account, excluding the derivation portion of the revenue allocation formula. These funds are required to be transferred to the NSIA monthly. Based on Section 4(e) of the NSIA Act 2011, NSIA may also obtain funds such as co-investments from other strategic investors, sovereign and internationally recognized investment funds, and private companies.
In January 2016, NSIA received US$250 million in new funding. The funding was derived from the 3 tiers of Government’s share of dividends in the Nigerian Liquefied Natural Gas, NLNG, which they agreed to reinvest in NSIA. The contribution structure was: Federal Government (51.68%), the 36 State Governments (26.72%), 774 Local Government Areas (20.41%); and the Federal Capital Territory (1.19%). The US250 million capital was allocated to the 3 ring-fenced funds as follows: SF (20%), NIF (40%), and FGF (40%)
In July 2017, NSIA received additional US$250 million funding from the Excess Crude Account with the contribution structured as follows: Federal Government (45.83%), the 36 States of the Federation (36.25%), 774 Local Government Areas (17.76%); and the Federal Capital Territory (0.16%). The US$250 million capital was allocated to the three ring-fenced funds as follows: SF (20%), NIF (40%), and FGF (40%).
In April 2020, NSIA received an additional contribution of US$250 million from the Excess Crude Account with the contribution structured as follows: Federal Government (45.83%), the 36 States of the Federation (36.25%), 774 Local Government Areas (17.76%); and the Federal Capital Territory (0.16%).
Section 34 of the NSIA Act permits the NSIA Board to declare a distribution out of its uninvested and uncommitted available funds. This distribution, according to Section 35 of the NSIA Act, shall be made to the Federal Government, State Governments, Federal Capital Territory, Local Governments an Area Councils in proportion of their respective contributions to the Authority.
The Act however requires that the following conditions be satisfied before the NSIA can declare a distribution:
- the distribution is paid out of net profits that must have been made in each of the Funds for at least 5 years in the year following enactment of the NSIA Act;
- the NSIA made a net profit in each of the Funds in the year in which such dividend is paid; and such distributions are not more than 60% of the profits of the Authority at the time of the distribution.
Section 12 of the NSIA Act requires that NSIA provides the Governing Council with a report every 12 months, in writing on the assets, liabilities, redemptions, realisations, sales, general performance by asset class, and significant trends affecting NSIA’s investment objectives. Section 38 of the NSIA Act requires that NSIA carry out an annual audit of its operations and financial statements in accordance with International Financial Reporting Standards (IFRS), as applied in the Federal Republic of Nigeria and the generally accepted principles of accounting by an internationally recognized accounting firm through such firm’s local Nigerian branch approved by the Auditor General for the Federation.
The Authority therefore does have its accounts audited and released publicly within three months after the end of its financial year. Quarterly reviews are also performed, all in compliance with the requirements of section 37 (2) which requires that NSIA make the Annual Report, together with quarterly financial reports and key policy documents prepared by NSIA accessible to the public.
At the highest level, the NSIA is overseen by a Governing Council. The Governing Council’s 55 statutory members consists of the President of the Federal Republic (The Chairman), Nigeria’s 36 state governors, the Minister of Finance and 12 other members representing civil society, Nigerian youths, academia, and the private sector. At the next level is the Board of Directors and the related board committees; and at the third level is the Executive Management team.
The Board and Executive Management present results annually to the Governing Council as required by section 12 of the NSIA Act.