Sovereign Wealth Fund Management and Macroeconomic Stabilisation in Nigeria

Sovereign wealth funds serve dual macroeconomic functions as instruments of fiscal stabilisation and as vehicles for long-term wealth accumulation on behalf of citizens, making their governance and investment strategies matters of national economic significance. This study examines the management practices of the Nigeria Sovereign Investment Authority and evaluates its effectiveness in contributing to macroeconomic stabilisation during periods of oil revenue volatility. Secondary data are sourced from the Nigeria Sovereign Investment Authority annual reports, the Central Bank of Nigeria fiscal data, and International Monetary Fund country reports for the period 2012 to 2023. The study analyses the portfolio composition of the three sub-funds: the Stabilisation Fund, the Future Generations Fund, and the Nigeria Infrastructure Fund, examining their relative sizes, investment returns, draw-down patterns, and policy coherence. Descriptive analysis, trend examination, and a comparative analysis benchmarking the Nigeria Sovereign Investment Authority against peers in Botswana, Ghana, and Saudi Arabia are employed. The theoretical framework draws on the resource fund management literature, optimal savings theory applied to resource revenues, and fiscal stabilisation theory. Existing evaluations of the Nigeria Sovereign Investment Authority highlight governance strengths including an independent board and transparent annual reporting, alongside weaknesses in fund capitalisation relative to comparable economies. The study examines why the Stabilisation Fund has rarely been used as a countercyclical fiscal buffer and proposes governance refinements. Findings are intended for the National Economic Council, the Federal Ministry of Finance, and the National Assembly on strengthening the sovereign wealth fund mandate. Keywords: sovereign wealth fund, Nigeria Sovereign Investment Authority, macroeconomic stabilisation, oil revenue, fiscal policy