Nigeria’s Oil Revenue Savings Lowest In The World – NEITI

Nigeria Extractive Industry Transparency Initiative (NEITI) on Tuesday said the nation has one of the lowest natural resource revenue savings in the world.

The agency made the shocking revelation in Abuja at the unveiling of its latest NEITI Occasional Paper series titled: “The Case for a robust oil savings fund for Nigeria” offered recommendations on ways to dismantle the obstacles to developing a ‘functional natural resource revenue savings in Nigeria.”

According to the paper, NEITI said Nigeria’s oil savings cannot fund 20 percent of 2017 budget.

The paper reads: “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”.

“Nigeria has one of lowest natural resource revenue savings in the world. The balance in the three funds (0.5% stabilization fund, ECA and NSIA) is less than $3.9 billion, not enough to fund 20% of 2017’s federal budget.

“Nigeria’s $1.5 billion sovereign wealth fund is one of the lowest in the world, has one of the worst ratio to annual budget (10%), and one of the lowest SWF per capital ($8), better only than war-torn Iraq and crisis-hit Venezuela, but not by much.”

As part of its recommendations, NEITI said the Federal Government need to take adequate steps to consolidate proceeds from oil into the NSIA fund, as well strengthen appropriate guarantees on transparent and accountable governance practices.

NEITI further urged the government to make it a habit for all tiers of government to save, whether during periods of high or low oil prices, to provide regular buffers for investments, to the future benefits of the people.

In addition, the agency emphasized on the importance for the country to remove its expenditures from oil revenues and pursue a new system that thrives on prudent macro-economic policies and programmes.

In other to achieve this, the agency urged the two tiers of government to demonstrate a strong political will to establish a system to promote the culture of saving excess revenue during periods of high oil prices.

Recall that Acting President Yemi Osinbajo on June 12, signed the 2017 “Budget of Economic Recovery and Growth” of N7.44 trillion into law.

The budget has a revenue projection of N5.08 trillion and an aggregate
expenditure of N7.44 trillion. The projected fiscal deficit of N2.36 trillion is to be financed largely by borrowing.

As at June 8, 2017, Nigeria’s external reserve was US$30.28 billion.