Borrow from Norway’s Best Practice!!!
Sovereign Wealth Fund
Alagi Yorro Jallow
Mamudu: The Gambia government should be in the process of putting together “The Gambia Sovereign Wealth Fund Policy” and enact the Gambia Sovereign Fund Law. At the end of the legislative process, the key pillar of the resulting law establishing the Gambia sovereign wealth fund must be TRANSPARENCY. I hope as we progress forward to enjoy the windfall from oil, our sovereign fund framework will heavily borrow from Norway’s best practice.
The Norwegian Oil Fund has over US$1 trillion in assets, including 1.3% of global stocks and shares, making it the world’s largest sovereign wealth fund. In May 2018 it was worth about $195,000 per Norwegian citizen. The fund’s investment philosophy is to take a long-term view in managing oil revenues for future generations on behalf of the people of Norway. The fund’s investment activities and its portfolio are so TRANSPARENT that ANYONE can follow the fund’s investment activities around the world.
Mamudu: Norway’s oil fund invests in equities, currently in about 9,000 companies around the world. Fund allocation allows up to 70% of the fund to be invested in equities, 7% of the fund can be invested in high quality unlisted real estate in select cities and up to 30% in fixed income securities. Information on these investments is available publicly, broken down by region, investee, investment instrument (equity or fixed income) and the amount invested. One of the major reasons why oil has not been beneficial to many African countries is OPACITY.
Mamudu: According to Reuters Business and Financial News, “Africa-focused oil and gas explorer FAR Ltd said on Thursday that its two offshore blocks in the Gambia could potentially hold 1.2 billion barrels of oil.
FAR, which operates and owns 50% of the two offshore licenses, said it was entitled to about 621 million barrels and was preparing to start drilling next year.
Its assessment came weeks after the Melbourne-based company bought an extra 10% of the two blocks, raising its ownership to 50%. The deal gave PC Gambia, a unit of Malaysian state-owned energy giant Petronas, the remaining half.
FAR was re-examining data for the A2 block to help it identify which prospect in the block to drill in 2020, Managing Director Cath Norman said.
Under the license agreement with the Gambian government, FAR agreed to drill one well in the first two years in either block”.
Mamudu: The Kingdom of Norway provides a good example in the management of public funds arising from the proceeds of natural resources. The key to Norway’s success is TRANSPARENCY. Oil revenue is managed via a special purpose vehicle, Government Pension Fund Global (also known as the oil fund), which is in turn managed by Norges Bank Investment Management, the sovereign fund management entity of Norway’s central bank, Norges Bank.