In 10 years, Nigeria accumulated a total of $201.2bn in Excess Crude Account, which it squandered within the same period.
The Nigeria Extractive Industries Transparency Initiative stated this in its Occasional Paper (Issue 2) made available to our correspondent in Abuja on Monday.
The publication, which focused on ‘The case for a robust oil savings fund for Nigeria’, said despite current efforts to pull Nigeria out of recession, the economy remained vulnerable to one of the conditions that created the problem in the first place – lack of adequate and prudently managed savings in a period of plenty.
According to the publication, between 2005 and 2015, $201.2bn accrued to the nation through the instrumentality of the ECA, and the entire amount was shared among the three tiers of government within the period.
The ECA was created by the Federal Government to save oil sales above the annual budget benchmark price. Within the period, most state governments argued that the funds were illegal and opted that the money should be shared to meet immediate challenges.
According to NEITI, to overcome commodity price volatility and depletion of non-renewable resources, countries dependent on revenues from natural resources are usually advised to save for the rainy day and for the future generation.
Although Nigeria has created instruments for such savings such as the ECA and the Sovereign Wealth Fund, it has hardly retained much as leaders especially at the sub-national level have always argued that the rainy day is already around.
One of the major highlights of the publication indicated that “Nigeria has about three decades of experience in implementing different oil revenue funds. However, attempts at oil revenue savings have been plagued by contested legal frameworks, governance issues and inadequate political will.”
Other highlights showed “Nigeria has one of the lowest natural resources revenue savings in the world. The balance in the three funds (0.5 per cent stabilisation fund, ECA and NSIA) is less than $3.9bn, not enough to fund 20 per cent of 2017 federal budget.
“Nigeria’s $1.5bn Sovereign Wealth Fund is one of the lowest in the world; it has one of the worst ratio to annual budget (10 per cent), and one of the lowest SWF per capita ($8), better only than war-torn Iraq and crisis-hit Venezuela but not by much.
“In contrast, Norway, a country of 5.2 million people (2.8 per cent of Nigeria’s 186 million people) has a Sovereign Wealth Fund worth $922bn (which is 23,641 per cent of the $3.9bn balance in Nigeria’s three oil revenue funds).”
The conclusion is that Nigeria has no prudent and robust oil revenue savings scheme that can tie it over expected volatility of oil prices and eventual depletion of its reserves in 38 years; neither does it have a strong mechanism for promoting inter-generational equity.