Nigeria’s Excess Crude Account ‘most poorly governed
Nigeria’s Excess Crude Account ‘most
poorly governed
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Nigeria’s
Excess Crude Account, ECA, has been ranked the most poorly governed sovereign
wealth fund among 33 resource-rich countries around the world, a new report by
the Natural Resource Governance Institute has shown.
Nigeria was
placed in the joint last position alongside the Qatari Investment Authority as
a country whose government discloses almost none of the rules or practices
governing deposits, withdrawals or investment of the ECA.
The index, released on Wednesday, assessed 33 sovereign
wealth funds that collectively manage at least $3.3 trillion dollars in assets.
Sarah
Muyonga, Nigeria Manager at NRGI, said Nigeria’s low index score should serve
as an incentive to fix some of the challenges highlighted in the report.
“In the
past, the ECA played a useful role in cushioning the 2008 global financial
crisis when oil prices dropped considerably but has since been unable to play
the same stabilization role in this recent crisis,” said Ms. Muyonga.
“The low
index score for Nigeria reflects the lack of rules on disclosures related to
deposits and withdrawals alongside practice which are all necessary to improve
governance of the fund.
“The current state should definitely act as an incentive to
fix some of the challenges.”
The 2017
NRGI report, while noting that the funds of countries like Ghana, Colombia, and
Chile performed better than those of Canada and Norway, raised concerns over
the “failings” of the funds in the United Arab Emirates’ Abu Dhabi Investment
Authority which manages $590 billion.
The funds
with the weakest scores suffered the most from excessive risk-taking, high
management fees and politically motivated investments, according to the report.
However, the funds in countries such as Algeria, Angola,
Gabon, Saudi Arabia, Qatar, and Nigeria are so opaque that there is no way of
knowing how much may be lost to mismanagement or who benefits from the Fund’s
investments, the report added.
“The current state of recession Nigeria finds itself in
today can be partly blamed to lack of savings in the ECA which was established
in 2011 ideally to curb wastage and introduce some level of fiscal prudence,”
said Ms. Muyonga.
“The ECA has since then been subject to ad-hoc withdrawals
and in recent times has nearly been depleted and the government was only able
to start making deposit to the fund recently.”
Last month, the Nigerian government announced it had resumed
payment into its ECA with the sum of $87 million, the first payment since the
Muhammadu Buhari administration came into office in May 2015.
As at May this year, the ECA balance stood at $.2.29
billion, down from $2.49 billion the previous month.
Between 2011 and 2015, Nigeria earned $61.7 billion (about
N12.3 trillion) as excess crude money, with the fund reaching its peak in 2012.
The NRGI report stated that the Nigerian government had
failed to regularly disclose, publicly, the government officials’ financial
interests in the extractive sector or the identities of beneficial owners of
extractive companies, despite making commitments to do so with the Extractive
Industries Transparency Initiative (EITI) and the Open Government Partnership
(OGP).
According to Nigeria’s 2014 EITI data, the report noted,
just over half of public revenues from oil and gas were distributed to the
federal government and the rest were shared between the state and local
governments. In terms of revenue sharing, Nigeria ranks 11th, alongside the
United States (Gulf of Mexico) and Ecuador.
“The government has committed to disclosing all oil, gas and
mining contracts in its “seven big wins” policy strategy and as part of its OGP
action plan, but thus far, it has not disclosed contracts,” stated the report.
“Despite some progress in transparency of revenue collection
over the past five years, tracking payments from oil and gas companies remains
challenging.
