A Review of the Nigerian Energy Industry

Nigeria’s SWF below other oil producing nations’ – Report

SWF22 September 2013, Lagos – A report by BGL Securities Limited says Nigeria, with its $1 billion initial investment in the Sovereign Wealth Fund, SWF, is behind other major oil producing nations in relation to investment in the Fund.

The Nigeria Sovereign Investment Authority, NSIA, which administers the Fund on behalf of the Nigerian government, commenced the investment of the Nigerian funds in June this year, with a pledge to ensure judicious use of the $1 billion initial fund.

The BGL report said the amount of money so far dedicated to the sovereign fund by the Nigerian government was quite low when compared to those of some other oil producers, including many of Nigeria’s fellow Organisation of Petroleum Exporting Countries, OPEC, member nations.

According to the report, Norway, which boasts 1.92 million barrels daily oil production, has the largest SWF of $737.2 billion while OPEC power house, Saudi Arabia, with $657.9 billion and 11.55 million barrels per day,. mbd, oil production is second while the United Arab Emirates is next with $627 billion and 3.21 million barrels per day oil output.

Next is Kuwait with $386 billion, producing 2.78 million barrels of oil per day. OPEC member, Algeria boosts SWF of $77.2 billion, producing 1.8 million barrels of oil day as against Nigeria which is managing a SWF of $1 billion from its daily oil production of about 2.2 million barrels.

BGL said of this finding in relation to Nigeria: “There is a lesson for Nigeria to learn from the foregoing. Petroleum production and exports currently play a dominant role in Nigeria’s economy and accounts for about 90 per cent of her gross earnings.

“This dominant role has pushed agriculture, the traditional mainstay of the economy till the early 1970s, into the background. During those periods, agricultural produce exports were the main source of foreign exchange earnings for the economy with the production and export of cocoa, groundnut, rubber, palm kernels and palm oil accounting for 96.4 per cent of total exports earnings; non-oil export products accounted for 97.3 per cent of total export then.

“In our opinion, those days can be conveniently brought back. Alongside the development of others sectors of the economy such as tourism, agriculture, sport, manufacturing, textile, amongst others, the diversification of the Nigerian economic base into agriculture will reduce the dependence on oil to fund the operation of the economy and so allow more savings into the SWFs”.

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