22 July 2017, Sweetcrude, Abuja – The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), has regretted that the country spent more than what was saved from crude oil revenues over the past four decades.
Adio noted that in the last 40 years of oil production, Nigeria has extracted about 31 billion barrels of its oil reserves, adding , however, that from 1980 to 2015, the country exported crude oil worth about $1.09 trillion, but has a current savings balance of $3.9 billion as at June 2017 in its three funds.
He added that $201.2bn entered into the Excess Crude Account between 2005 and 2015, and that the country spent $204.7bn within the same period. He said the spending pattern means there were no savings made by the country.
Speaking on a local television programme, yesterday, as part of the latest initiative launched by NEITI through its Occasional Papers Series in Abuja to promote a robust oil revenue savings fund, Adio said Nigeria wouldn’t have to keep borrowing if there was a disciplined culture of saving in place.
He explained that Nigeria currently has three oil savings, including the Stabilisation Fund, the Excess Crude Account, and the Sovereign Wealth Fund, all of them with with a total savings of $3.9 billion only.
The NEITI Executive Secretary recalled that the National Executive Council conducted a study in 2015 which revealed that inflow to the Excess Crude Account (ECA) between 2005 and 2015, was $201.2 billion while outflow was $204.7 billion, indicating that the amount withdrawn from the account exceeded the amount that was transferred into the account for the period.
He said, “Between January 2005 and June 2015, the money that entered into the excess crude oil account as savings was $201.2 billion but the country spent $204.7 billion within the same period, which means that the country spent more than what it saved from oil from 2005 to 2015, and this amounts to no savings at all.”
“Even if the country had saved 25 per cent of the $201.2 billion, by the time prices of oil started falling, we would have had about N50.3 billion in excess crude oil account alone.”
The NEITI chief expressed regret that the $1.5 billion currently in the Sovereign Wealth Fund is one of the world’s worst ratio to annual budget (10%), and one of the lowest sovereign wealth fund per capita (8%) globally.
Global comparisons among other resource-rich countries from the Occasional Paper shows that Norway, a country of 5.2 million people has a sovereign wealth fund worth $922 billion, Chile $24.1 billion, Angola $4.6 billion, Botswana $5.7 billion. Others are Russia $89.9 billion, and Kuwait $592 billion.
Adio contended that the country’s paltry savings may have defeated the rationale for having the savings int he first place, adding that, “Nigeria does not have oil savings to finance even a fifth of a year’s budget at the federal level, not to talk of having enough for investments or for the future generation.”
According to him, “We have been in the journey of saving our earnings for over 30 years now, but the problem we have is that we save and spend instead of saving and keeping.
“So we need to look back as a country and know where we got it wrong. There is good need to spend but it will be easier if we have savings so that we can spend from what we have saved. We are not against savings but we should be able to spend from what we saved. When we had a boom, we were saving but our spending became far more than our savings.
“Yes we know there are some infrastructural and developmental challenges that need to be addressed with money but we need to develop the culture of saving as a country. It makes sense to save especially when we depend on revenue generated from natural resources.”