The Sovereign Wealth Fund and Nigerian Economic Development
DOI:
https://doi.org/10.59413/eafj/v3.i1.3Keywords:
sovereign wealth, infrastructural fund, new generation fund, stabilization funds, Nigeria developmentAbstract
The study specifically investigated the impact of sub-national government sovereign wealth funds on the economic development of Nigeria. An ex-post research design was used for the study. Economic development was proxied by per capita income, while sovereign wealth funds were proxied by their three components: stabilization funds, future generation funds, and infrastructure funds. Data for the variables were obtained from the Central Bank of Nigeria for the period 2012–2022. An econometric approach was used to analyze the data. Findings showed that of the three components of SWFs, only future generation funds impact positively and significantly on economic development. In view of the findings, it is recommended that the government ensure effective and efficient management of the various funds by putting in place proper regulatory measures so as to attain the goals for which the funds were established.
References
Abdulkarim, Y., (2023). A systematic review of investment indicators and economic growth in Nigeria. Humanities and Social Sciences communication, 1-13. DOI: https://doi.org/10.1057/s41599-023-02009-x
Adonu, G. (2021). Catalyzing digital economy in Africa: The role of sovereign wealth funds. Unilag Law Review, 4(2). https:// unilaglawreview.org/2021/02/08/catalysing-digital economyin- africa-the-role-of-sovereign-wealth-funds/ DOI: https://doi.org/10.2139/ssrn.3631165
Alsweilem, K. A., & Rietveld, M. (2018). Sovereign wealth funds in resource economies. Columbia University Press. DOI: https://doi.org/10.7312/alsw18354
Balin, B.J. (2010), The Impact of Global Economic Crisis on Sovereign Wealth Funds, Asia – Pacific Economic Literature, the Australia National University and Blackwell Publishing Asia DOI: https://doi.org/10.1111/j.1467-8411.2010.01246.x
Barney, J.B. and Hesterly, W.S. (2008), Strategy Management and Competitive Manager. New York: Reason Prentice Hall
Bernstein, S. Scholar, A. and Lerner, J. (2009). “The investment strategies of sovereign wealth funds”, working paper 14.861, National Bureau of Economic Research, Ambridge, Available at http://www.nber.org.paper/w14861 DOI: https://doi.org/10.3386/w14861
Bertoni, F. and Lugo, S. (2013) ‘Testing the strategic asset allocation of stabilization sovereign wealth funds’, International Finance, 16, 95-119. DOI: https://doi.org/10.1111/j.1468-2362.2013.12022.x
Bertoni, F. and Lugo, S. (2014) ‘The effect of sovereign wealth funds on the credit risk of their portfolio companies’, Journal of Corporate Finance, 27, 21-35. DOI: https://doi.org/10.1016/j.jcorpfin.2014.04.004
Borisova, G., Fotak, V., Holland, K. and Megginson, W. L. (2015) ‘Government ownership and the cost of debt: Evidence from government investments in publicly traded firms’, Journal of Financial Economics, 118, 168-191. DOI: https://doi.org/10.1016/j.jfineco.2015.06.011
Bortolotti, B., Fotak, V., & Megginson, W. L. (2015). The sovereign wealth fund discount: Evidence from public equity investments. The Review of Financial Studies, 28(11): 2993– 3035. DOI: https://doi.org/10.1093/rfs/hhv036
Bortolotti, B., Loss, G., & van Zwieten, R. (2023). The times are they a-changin’? Tracking sovereign wealth funds’ sustainable investing. Journal of International Business Policy, 6; 220-240.. DOI: https://doi.org/10.1057/s42214-023-00161-4
Boubaker, S., Boubakri, N., Grira, J., & Guizani, A. (2018). Sovereign wealth funds and equity pricing: Evidence from implied cost of equity of publicly traded targets. Journal of Corporate Finance, 53: 202–224. DOI: https://doi.org/10.1016/j.jcorpfin.2018.10.007
Boubakri, N., Fotak,V., Guedhami O. and Yasuda5 Y., (2023). The heterogeneous and evolving roles of sovereign wealth funds: Issues, challenges, and research agenda. Journal of International Business Policy, 6, 241–252 DOI: https://doi.org/10.1057/s42214-023-00163-2
Carney, R. W. (2021). Sovereign wealth funds’ investment purpose and the investment implications. Available at SSRN 3902962. DOI: https://doi.org/10.2139/ssrn.3902962
Carpantier, J. F, Vermeulen, W. (2018). Emergence of sovereign wealth funds. Journal of Commodity Market, 11:1–21 DOI: https://doi.org/10.1016/j.jcomm.2018.01.002
Cuervo-Cazurra, A., Grosman, A., & Wood, G.T., (2023). Cross-country variations in sovereign wealth funds’ transparency. Journal of International Business Policy. https://doi.org/10.1057/s42214-023-00149-0 DOI: https://doi.org/10.1057/s42214-023-00149-0
Cumming, D. J., & Monteiro, P. (2023). Sovereign wealth fund investment in venture capital, private equity, and real asset funds. Journal of International Business Policy, forthcoming. DOI: https://doi.org/10.2139/ssrn.4364353
Cumming, D., Filatotchev, I., Reinecke, J., & Wood, G. (2020). New investor categories, agility and HRM: The case of sovereign wealth funds. Human Resource Management Review, 30(1): 100694. DOI: https://doi.org/10.1016/j.hrmr.2019.100694
Daniel, D. and Brickman, P. (2001). “Block Ownership of Sovereign Wealth Fund and Firm- Specific Information” Journal of Banking and Finance, 12(33).
Das, U. Miserere, A. and Vander Horal, H. (2010). Economics of Sovereign Wealth Funds: Issues for Policymakers, Washington: International Monetary Fund.
Del Giudice, A., Marinelli, N. and Vitali, S. (2014) ‘Sovereign Wealth Funds and Target Firms: Does' Networking' Matter?’, Journal of Financial Management, Markets and Institutions, 2, 185-206.
Fernandes, N. (2014) ‘The impact of sovereign wealth funds on corporate value and performance’, Journal of Applied Corporate Finance, 26, 76-84. DOI: https://doi.org/10.1111/jacf.12056
Frynas, J. G. (2017). Sovereign wealth funds and the resource curse: Resource funds and governance in resource-rich countries. In D. Cumming, G. Wood, I. Filatotchev, & J. Reinecke (Eds.), The Oxford handbook of sovereign wealth funds. Oxford University Press: 123–142. DOI: https://doi.org/10.1093/oxfordhb/9780198754800.013.13
Gagliardi, T., Gianfrate, G. and Vincenzi, R. (2014) Sovereign wealth funds’ investments: The bondholders’ perspective, Working paper.
Gangi, F., Meles, A., Mustilli, M., Graziano, D., & Varrone, N. (2019). Do investment determinants and effects vary across sovereign wealth fund categories? A firm-level analysis. Emerging Markets Review, 38: 438–457. DOI: https://doi.org/10.1016/j.ememar.2018.12.004
Ghouma, H., & Ouni, Z. (2022). The sovereign wealth funds risk premium: Evidence from the cost of debt financing. Journal of Corporate Finance, 76: 102255. DOI: https://doi.org/10.1016/j.jcorpfin.2022.102255
Gianfrate, G., & Merlin, E. 2016. Who is the sovereign among sovereign wealth funds? A network analysis of co-investments. The Journal of Private Equity, 19(4): 7–18. DOI: https://doi.org/10.3905/jpe.2016.19.4.007
Gintschel, A., & Scherer, B. (2008). Optimal asset allocation for sovereign wealth funds. Journal of Asset Management, 9(3): 215–238. DOI: https://doi.org/10.1057/jam.2008.19
Grieve, M.T. (2008). “Hedge Financial Activism, Corporate Governance, and Firm Performance” Journal of finance, 12, 63. DOI: https://doi.org/10.1111/j.1540-6261.2008.01373.x
IMF (International Monetary Fund) (2008), Sovereign Wealth Funds – A Work Agenda, February 2008. DOI: https://doi.org/10.5089/9781498334907.007
Inim, V.E., Udoh, F.S and Lungus, T.D., (2023). Sovereign wealth fund on sustainable economic growth in Nigeria. Asian Journal of Social Sciences and Management Studies, 10(2): 58- 64, DOI: 10.20448/ajssms.v10i2.4704. DOI: https://doi.org/10.20448/ajssms.v10i2.4704
James, A., Retting, T., Shogren, J.F., Watson, B., and Wills, S., (2022). Sovereign Wealth Funds in Theory and Practice. Annual Review of Resource Economics, 14:621–46 DOI: https://doi.org/10.1146/annurev-resource-111920-015758
Jost, T., (2009). Sovereign Wealth Funds – Size, Economic Effects and Policy Reactions. HAW im Dialog - Weidener Diskussionspapiere, No. 13, ISBN 978-3-937804-15-6
Liu, P., Mauck, N., & Price, S. M. (2020). Are government-owned investment funds created equal? Evidence from sovereign wealth fund real estate acquisitions. The Journal of Real Estate Finance and Economics, 61: 698–729. DOI: https://doi.org/10.1007/s11146-019-09730-y
Lopez, D. (2023). SWF 3.0: How sovereign wealth funds navigated COVID-19 and changed forever. Journal of International Business Policy, DOI: https://doi.org/10.2139/ssrn.4026109
Malan, S. (2013). The investment strategies of sovereign wealth funds, working paper 14.861, National Bureau of Economics Research, Ambridge.
Mami, E. (2023). The role of sovereign wealth funds in natural resource-rich countries: A systematic meta-narrative review. Journal of International Business Policy, forthcoming. DOI: https://doi.org/10.1057/s42214-023-00159-y
Marcus, S.S., & Vale, S. (2022). Is there a nonlinear relationship between public investment and private investment? evidence from 21 Organization for Economic Cooperation and Development countries. International Journal of Finance and Economics, 7(3):1–16 DOI: https://doi.org/10.1002/ijfe.2712
Megginson, W. L., Lopez, D., & Malik, A. I. (2021). The rise of state-owned investors: Sovereign wealth funds and public pension funds. Annual Review of Financial Economics, 13: 247– 270. DOI: https://doi.org/10.1146/annurev-financial-110420-090352
Megginson, W.L., Malik, A. & Zhou, X.Y., (2023). Sovereign wealth funds in the post-pandemic era. Journal of International Business Policy. https://doi.org/10.1057/s42214-023-00155- 2 DOI: https://doi.org/10.1057/s42214-023-00155-2
Mohaddes, K., & Raissi, M. (2017). Do sovereign wealth funds dampen the negative effects of commodity price volatility? Journal of Commodity Markets, 8: 18–27. DOI: https://doi.org/10.1016/j.jcomm.2017.08.004
Murtinu, S. and Scalera, V. G. (2015) ‘Sovereign wealth fund investments and stock prices: The effect of target industry and location’, Rivista Internazionale di Scienze Sociali, 4, 447-462 DOI: https://doi.org/10.2139/ssrn.2668726
Murtinu, S., Scalera, V.G., (2016). Sovereign Wealth Funds' Internationalization Strategies: The Use of Investment Vehicles DOI: https://doi.org/10.1016/j.intman.2016.03.003
Oleka, D. C., Ugwuanyi, B. U., & Ewah, E. B. (2014). Sovereign Wealth Fund and Economic Growth in Nigeria: An Empirical Analysis. IOSR Journal of Economics and Finance (IOSR-JEF), 4(5): 03-20. DOI: https://doi.org/10.9790/5933-0450320
Olika, D., (2019). Who’s Afraid of Saving Money? The Political Economy of Nigeria’s Sovereign Wealth Fund
Osirim, M., Wadike, C. G., & Davies, S. D., (2021). Sovereign Wealth Fund Model:A Tool for Economic Stability and Public Financial Management: Evidence from a Developing Country. Current Journal of Applied Science and Technology, 40(32): 10-20 DOI: https://doi.org/10.9734/cjast/2021/v40i3231553
Ouoba Y. (2020). Natural resources fund types and capital accumulation: a comparative analysis. Resource Policy, 66:101635 DOI: https://doi.org/10.1016/j.resourpol.2020.101635
Rasaki, M. G., & Malikane, C. 2018. Sovereign wealth funds and macroeconomic stability in oil- exporting African countries. OPEC Energy Review, 42(2): 151–169. DOI: https://doi.org/10.1111/opec.12128
Rozanor,. T. (2006) A Blueprint for Sovereign Wealth Fund Best Practices, London: Peterson Institute.
Schena, P. J., Braunstein, J., & Ali, A. (2018). The case for economic development through sovereign investment: A paradox of scarcity? Global Policy, 9(3): 365–376. DOI: https://doi.org/10.1111/1758-5899.12549
Triki, T., & Faye, I. (2011). Africa’s quest for development: Can sovereign wealth funds help? In Institutional investors in global capital markets, 12: 263–290. Bingley, UK: Emerald Group Publishing. DOI: https://doi.org/10.1108/S1569-3767(2011)0000012013
Tsani, S. (2013). Natural resources, governance and institutional quality: the role of resource funds. Resource Policy, 38(2):181–95. DOI: https://doi.org/10.1016/j.resourpol.2012.11.001
Veljko, F., Bernard, B. and Merganser, W. (2008). The Financial Impact of Sovereign Wealth Fund Investments in listed companies. http://faculty.staff.eu.edu/m/william.l.megginson.i
Ward, C., Brill, F., & Raco, M. (2022). State capitalism, capitalist statism: Sovereign wealth funds and the geopolitics of London’s real estate market. Environment and Planning A: Economy and Space. https://doi.org/10.1177/ 0308518X221102157.
Wurster, S., & Schlosser, S. J. (2021). Sovereign wealth funds as sustainability instruments? Disclosure of sustainability criteria in worldwide comparison. Sustainability, 13(10): 5565. DOI: https://doi.org/10.3390/su13105565
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Endurance Gabriel Udo, Friday Eyo Uko, Ofonime Moses Akpan (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.