Chineme Okafor in Abuja
The balance of funds in Nigeria’s Excess Crude Account (ECA) has dropped to $71.8 million from the $324.9 million that it was in January 2020, the Nigeria Natural Resource Charter (NNRC) has disclosed.
The NNRC also stated that the development followed a probe which had been initiated to find out how $4 million was withdrawn from the ECA for a suspicious consultancy payment.
It added that Nigeria could face a severe fiscal crisis necessitating quick adjustments.
The NNRC stated these in a twitter conference hosted by a member of its Advisory Panel, Ms. Ronke Onadeko, in which she talked about the implications of the falling oil price on the Nigerian economy as well as the country’s recent announcement of its liberalisation of the downstream petrol sector.
“Our SWF (Sovereign Wealth Fund) has just about $2.5 billion in savings which is poor.
the ECA account has been depleted over the years with indiscriminate withdrawals and abuse. In January it was $324.9 million. Now it’s $71.8 million, its fast dwindling,” said Onadeko during the conversation.
She informed that, “the ECA account funds that were to be saved have been depleted by the payment of (petrol) subsidy, argumentation of budget shortfalls and distribution to the three tiers of government.
“Just last month the NASS reported that $4 million was removed from the ECA account to pay a consultant…. these are the gaps and lapses and ways in which the account has been abused.
“Nigeria ranks low on the idea of countries that are oil producers and it is sad that at this time that we need the funds, the kitty is almost empty, we don’t have any form of buffers to protect us from the recession coming and we are now having to go back to reduce our budget.”
“Investigations are ongoing, and the Accountant General will have to come back with details of who the consultant is and what the payment was for,” she added.
According to Onadeko: “Nigeria has no defense against rising global uncertainties. We have to downward-adjust our budget and likely cancel our planned borrowing of $22.7 billion to fund our budget shortfall.”
She explained that the country would definitely face some financial stress as oil revenue dries up from the impact of Covid-19.
“We can be likened to a family with an unemployed breadwinner with no savings to fall back on,” she added.
Onadeko, noted that in this situation, the country’s financial stress would result to less money in the federation account, to states and local governments as well as for developmental projects across board.
“Each Nigerian’s spend will shrink, we will buy less goods and service and we will see production of factories slow down and jobs may be lost, incomes impacted negatively. We have a tough season coming up,” she warned while urging for self-introspection of the country’s spending pattern.
According to her: “We need to look inward and imbibe a more conservative spending regime, improve efficiency to guard against waste and to deploy technology more, it’s always cheaper and innovative and may cause new opportunities to arise.”
On how abuses on the ECA may be stopped, she said: “There is a push that only the SWF account be run and that the ECA account should be merged and brought under the NSIA. They are doing a decent job with the meager funds they have to manage. They got an additional $250 million last month to invest.”
Speaking on the government’s liberalisation plans for the downstream petroleum sector, she said: “We have the time to make many positive changes while prices are low, there is no sign that prices will rebound in the short or medium term. There are options though, migrating from PMS (Premium Motor Spirit) to CNG (Compressed Natural Gas) to power our vehicles in busy cities like Lagos, Port Harcourt, Abuja, Kano.”
“Nigeria is broke. We have no choice but to see this deregulation to a conclusive end once and for all and free the government of subsidy responsibilities,” Onadeko stated.