GUEST COLUMNIST BY WAZIRI ADIOÂ
A popular saying admonishes us not to eat with ten fingers. This axiom is not a homily about 
table manners. It is a metaphor about the virtue of living prudently. A more prosaic rendering will
go like this: save a portion of your earnings for the possibility of emergencies in the here and 
now, and for the uncertainties of the future. Or put differently, always save for the proverbial 
rainy day. But both poetry and prose seem to elude us.
Our country has made a habit of not only 
eating with its ten fingers, but also, in periods of plenty, throwing its ten toes into the mix.
From data harvested from the Central Bank of Nigeria (CBN), Nigeria earned in excess of N70 
trillion from oil and gas alone between 1999 and 2014. By the time prices of crude oil started 
plunging in mid-2014, it was (and still is) difficult to point to what we had done with that 
sizeable windfall. Worse, we saved little during the long boom period to minimize the impact of 
what has turned into a not-so-short spell of not-so-high oil prices.
Before long, Nigeria landed at 
a desperate pass, one where we do not have enough dollars from oil, our near-sole export, to feed
our addiction to imports, one where most states struggle to pay salaries, and one where national 
productivity shrank and the economy contracted. 
To be sure, many factors combined to produce the undesirable outcome that we are just slowly 
emerging from. But a few things could have turned out differently if we were not eating with ten 
fingers and ten toes at boom time. Imagine if we had saved between $50 billion and $150 billion 
in the Excess Crude Account (ECA) alone before oil prices started sliding south in mid-2014.

Having that quantum of savings in ECA is not as far-fetched as it seems. Just remember that at 
some point in 2008, Nigeria had $20 billion in the ECA, and this was after $12 billion had been 
paid to the Paris Club to get $18 billion loan reprieve, and this was much before oil prices 
lingered in $100+/barrel territory for four years. We could have saved a lot, if we wanted, as later
analysis will show. But we did not. 
Countries that are dependent on natural resources are always advised to save a portion of their 
earnings.
This is a common, almost elementary, prescription for prudent management of 
revenues from natural resources. And it makes good sense for many reasons. One, prices of 
natural resources are known to be very volatile, prone to fluctuation not only across fiscal years 
but even within the same budget period, exposing countries dependent on them to the potentially 
devastating boom-and-bust cycle. Two, natural resources are non-renewable: so it makes sense to
save for the day they will be depleted. Nigeria’s oil reserve, for instance, is estimated to run out 
in 38 years.
On a related note, natural resources can quickly become less valuable, as alternative resources 
and technology can rapidly depreciate once-valuable resources. (In the 1840s, the economy of 
Peru prospered on the export of bird droppings—gueno—but that era ended when alternative 
sources of fertilizer came on stream. Just think of how electric cars and other technological advances can make oil a less valuable source of energy very soon.) Another reason for saving 
earnings from natural resources is the need to put something aside for the future generation, as 
the resources do not belong to only one generation. This is the inter-generational equity 
argument. 
It also makes sense to invest earnings from natural resources to create other streams of income, 
to diversify and multiply the revenue base of a country, and to creatively transform these natural 
resources into gifts that keep giving beyond their natural lifespans. A good example of this is 
Norway. In 2016, the Scandinavian country earned three times more from the investment of its 
oil savings than it earned from the sale of oil that year.
In addition, saving natural resource 
earnings helps in taming the negative impact of the sudden influx of foreign exchange on the 
local economy (Dutch Disease, crowding out of local manufacturing, mono-cultural economy, 
import-dependence) and assists in limiting the disposition to fritter away and pilfer resource 
rents. In sum, having a robust and prudently-managed resource savings is one of the means for 
ensuring that natural resources become real blessings, and not curses, to resource-rich countries.
From a policy paper released last week by the Nigeria Extractive Industries Transparency 
Initiative (NEITI), it is clear that Nigeria is aware of this simple but effective prescription. The 
problem, though, is that we have been more than half-hearted in our implementation.
Titled “the 
Case for a Robust Oil Savings Fund for Nigeria,†the NEITI report shows that our country has 
three different oil savings funds: the 0.5% Stabilization Fund, started in 1989, with a current 
balance of $95 million; the ECA, started in 2004, with a current balance of $2.3 billion; and the 
Nigerian Sovereign Investment Authority (our sovereign wealth fund), started in 2011, with a 
current balance of $1.5 billion. The combined balance in the three accounts is $3.9 billion. 
It is good news that we have been saving part of our oil earnings for the past 28 years. However, 
our present balance is too little and too inadequate to serve our purpose in the immediate and in 
the future.
Between 1989, when we formally started saving part of our oil earnings and 2014 
when oil prices started falling, Nigeria had sold $980 billion worth of oil. The $3.9 billion 
balance of our combined savings represents only 0.4% of the value of oil sold in 25 years of 
operating oil savings funds. We also have one of the lowest natural resource savings in the world 
in absolute and relative terms. The sovereign wealth funds of other countries covered in the 
NEITI study are as follow: Norway, $922 billion; Kuwait, $592 billion; Russia, $89.9 billion; 
Chile, $24.1 billion; Botswana, $5.7 billion; and Angola $4.6 billion. 
The comparison between Nigeria and Norway is inversely jarring. Norway has a population of 
5.2 million people, which is 2.8% of Nigeria’s 186 million people.
But its oil savings of $922 
billion is 23, 641% of the total $3.9 billion in Nigeria’s three oil savings funds. Comparison of 
the two countries in per capita terms and savings as a proportion of budget further buttresses the 
sharp contrast: While Norway’s $922 billion comes to $185, 000 per citizen, Nigeria’s $1.5 
billion sovereign wealth fund (NSIA) amounts to $8 per citizen; and while Norway’s $922 
billion can fund 37 years of the country’s budget, Nigeria’s $3.9 billion in the three oil saving funds can pay for only 16% of the N7.44 trillion federal budget for this year (it should not be 
forgotten that the money does not belong to the federal government alone). The fact that our total
savings cannot fund up to a fifth of a year’s budget at the federal level should serve as serious 
wake-up call. It shows how vulnerable we are as a country and how our half-hearted approach to 
savings makes a mockery of and undermines the need for oil savings in the first instance. 
Some will say a comparison with Norway is unfair, and maybe it is.
Excuse can be made for how
Norway is a developed country that does not need its oil revenues and can afford to save all. It 
can also be said that Norway is a smaller country, where three in five of the citizens work and 
pay taxes and without the huge developmental challenges that we have. But there are serious 
lessons we can learn from not just Norway and other countries cited in the NEITI study, but also 
and especially from our own experience. Truth is we did not manage most of our oil savings in a 
transparent, accountable and prudent manner, especially in moments of significant high oil 
prices.

Two instances will suffice. One, 2010 was one of the few years when both the price and the 
volume benchmarks were lower than the actual price and the actual production figures. This was 
a year we did not need to draw down on the ECA at all because Section 35 of the Fiscal 
Responsibility Act of 2007 says that there should be withdrawals only when actual price falls 
below the benchmark price. But a report of the National Economic Management Council (NEC) 
cited by NEITI shows that while inflow to the ECA was $10.9 billion, outflow was $15.9 billion,
resulting in a negative net balance of $5 billion.
Also, the NEC report shows that while $201.2 
billion accrued to the ECA between January 2005 and June 2015, $204.7 billion left the account 
during the same time, indicating that outflow was 102% of inflow. Imagine that instead of our 
save-and-spend attitude, a conscious decision was made to save between 25% and 75% of the 
ECA accruals. That would have left a balance of between $50.3 billion and $150.9 billion in 
ECA alone.
More than a mere academic, counter-factual exercise, this shows the road not taken. 
To be sure, there are binding constraints to having a robust oil savings fund in Nigeria, ranging 
from governance, developmental, conceptual to constitutional. The NEITI paper took account of 
all of these and made some recommendations, chief of which are the following: settling the cases
between the states and the federal government at the Supreme Court, consolidating all the funds 
into the NSIA (which is better structured and governed as a resource savings fund), saving even 
oil prices are low (Angola saves 100,000 barrels of oil per day), delinking budget from oil, 
creating incentives for savings, implementing complementary macro-economic policies, and 
amending Section 162 of the 1999 Constitution.

Some of these might look daunting, but not necessarily so if the will is there, as President 
Olusegun Obasanjo and late President Umaru Yar’Adua clearly demonstrated in building up the 
ECA. It is even possible to save when oil prices are low: the present administration added $500 
million to the $1 billion seed money to NSIA by the President Goodluck Jonathan administration
—$250m in November 2015 and another $250 million in March 2017. Both the ECA and NSIA were products of elite political consensus. Same consensus can be built upon to amend the 
constitution using the inclusive platform of NEC. Though it should be clear by now that eating 
with ten fingers puts everyone at risk, having a consensus on that, whether at the elite level or at 
the national level, is not a naturally occurring phenomenon. It has to be consciously shaped and 
midwifed. That is one of the critical leadership tasks of these testy times.
