International Monetary Fund has ranked Nigeria as the second worst country in the world in the use of sovereign wealth funds. According to the Fiscal Monitor report released on Wednesday, Qatar was the only country worse than Nigeria on the index.
The Bretton Wood institution said the index was compiled using the corporate governance and transparency scores of the sovereign wealth funds and the size of assets as a percentage of 2016 GDP of the countries considered.
The fund said it used data compiled by the Natural Resource Governance Institute and Worldwide Governance Indicators. “It is critical to develop a strong institutional framework to manage these resources—including good management of the financial assets kept in sovereign wealth funds—and to ensure that proceeds are appropriately spent,” the report read.
“This remains a significant challenge in many resource-rich countries that, on average, have weaker institutions and higher corruption. “The governance challenges of commodity-rich countries— that is, the management of public assets— call for ensuring a high degree of transparency and accountability in the exploration of such resources.
“Countries should develop frameworks that limit discretion, given the high risk of abuse, and allow for heavy scrutiny.” Explaining that sovereign wealth funds have to be transparent, the IMF advised that countries should ensure that the natural resources of countries should be channeled properly to the people that need them. Of the 10 African countries considered, Ghana was ranked the highest.