The Rationale for Sovereign Wealth Funds in Nigeria: Issues and Considerations

Abstract

A significant concern of sovereign wealth funds to monetary policy formation and implementation is the volatility in government revenue arising from sharing of the monetized oil proceeds which normally led to spikes in both exchange and short-term interest rates with disruption effects on the monetary transmission mechanism. To complicate the process, the excess liquidity sharing arising would lead to significant cost on the part of the central bank for liquidity mop up operation. This study reviews the aftermath of the current sovereign wealth funds in Nigeria and its potential of enhancing stability and policy coordination.

Keywords

• sovereign wealth funds
• policy
• Nigeria