But for the
recurring wastefulness of federal government, the country could have
used about $1 trillion it earned from its production and sale of crude
oil in five different oil booms to develop and diversify its economic
base, a report titled ‘’Stabilizing Nigeria’s Volatile Economy’’, has
disclosed.....
The report
which was co-authored by a former Vice President of the World Bank,
Africa Region, Dr. Obiageli Ezekwesili; former president of the Nigerian
Association of Energy Economics (NAEE), Prof. Adeola Adenikinju; Prof.
Andrew Onyeanakwe of the University of Ibadan, and Mr. Bode Longe, an
economist, explained that between 1970 and 2014, Nigeria benefited from
five oil booms but refused to use the huge revenues earned from these
booms to expand the nation’s economic base.
The report,
which was funded by the Nigeria Natural Resource Charter (NNRC) and the
Shehu Musa Yar’Adua Foundation, stated that Nigeria’s failure to manage
these oil prosperity cycles has delayed her economic rise.
“Despite
being the largest producer and exporter of petroleum in Africa and one
of the 10 largest producers in the world, Nigeria has failed to
transform decades of oil earnings into sustainable development’’ the
researched report stated.
“In the
period spanning 1970 to 2014, Nigeria wasted five oil booms – earning a
conservative estimate of a trillion dollars in oil revenue but making no
significant savings. These earnings have also not translated to lasting
or productive capital through human development, infrastructure and
institution building.
‘’Nigeria’s
failure to effectively manage revenue earned from oil and gas has
delayed the country’s transition from a developing economy to an
advanced one.”
The report,
which was made available to THISDAY also drew a nexus between oil price
boom and bust to the country’s unemployment rates, stating that each oil
price boom brought about some reduction in national unemployment rates,
while a bust contributed to increases in unemployment levels in the
country.
The 37-page
report added, “The volatility and unpredictability of oil prices over
the years has made oil revenues difficult to manage. Sharp swings in
prices distort the economic growth of oil revenue dependent economies,
with ripple effects on budget deficits and fiscal planning.
It revealed
that the Obasanjo Administration’s economic reforms of 2003 to 2007
represented the first attempt to break the pattern through innovation of
a savings mechanism known as the Excess Crude Account (ECA) into which
extra revenue from oil was warehoused for ‘rainy day expenditures’.
The report
said the ECA proved so successful that at the end of that administration
in 2007, it had accumulated $17 billion, despite paying the Paris Club
$12.4 billion in exchange for the remainder of its $30 billion official
debts being written off, stating however that the tempo of the
accumulation of savings was not sustained by successive administrations.
It further
stated that the governments that succeeded that of Obasanjo did not take
advantage of the ECA and so lost the chance at growing the country’s
foreign reserves to as much as $100 billion dollars, and ECA level to at
least $40 billion, even though there was a six-year record of high oil
prices.
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