The International Monetary Fund (IMF) on Friday clarified its categorisation of Nigeria as one of the countries with the worst use of the Sovereign Wealth Fund.

In a report, Fiscal Monitor, released on Wednesday in Washington DC as part of the ongoing World Bank/IMF Spring Meetings, the IMF ranked Nigeria second lowest among 33 countries using the sovereign wealth fund from their natural resources.

Nigeria was ranked only better than Qatar in the report.

Following the report, some Nigerians criticised the categorisation as unfair and flawed, as it appeared that countries that used their sovereign wealth funds for investments abroad were ranked better than those who used similar resources for investments in their domestic economies.

The managing director of the Nigeria Sovereign Investment Authority (NSIA), Uche Orji, said the report was fundamentally flawed, as it appeared to have focused more attention on the sovereign investment agency than its use of the fund for the benefit of the people.

Mr Orji said the NSIA has performed creditably with its use of the country’s small sovereign wealth fund in investments in its three strategic funds, namely Stabilisation Fund, Future Generation Fund and Nigeria Infrastructure Fund.

He said with the initial provision of $1 billion from the previous administration, and an additional $500 million from the present administration, the NSIA has been able to grow the fund to the current $2.53 billion.

Mr Orji said his agency was able to achieve that through its deployment of the funds into strategic investments in roads, healthcare, power and agricultural services that impact directly on the lives of Nigerians.

The IMF’s Senior Resident Representative and Mission Chief for Nigeria, Amine Mati, has provided more explanation on the report.

“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),” Mr Mati said in a statement sent to the media on Friday.

“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,” he added.

He said 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, he said IMF’s reference to sovereign wealth fund focuses on the excess crude account, which requires greater transparency on the rules governing deposits, withdrawals, and investment.

The excess crude account (ECA) is a special account kept by the Nigerian government where revenues realised from the sale of crude oil above established crude oil benchmark price, set annually in the federal budget, are saved.

Ideally, accruals in the account domiciled at the Central Bank of Nigeria (CBN) are supposed to be transferred to the Sovereign Wealth Fund to be managed by the NSIA which is mandated to deploy such funds in commercially-viable investments at home and abroad for the benefit of all Nigerians.

However, over the years, until the coming of the present administration, such accruals are routinely shared every month during the Federation Accounts Allocation Committee (FAAC) meeting attended by the three tiers of government.

The current administration has also been accused of illegally using part of the funds in the ECA without the approval of the National Assembly.

Critics say over the years the management of the ECA has not followed the basic principles of transparency and accountability as the rules governing deposits, withdrawals and use of the savings have not always been followed.