Nigeria has officially hit recession as announced by the National Bureau of Statistics when it released its economic quarterly report for the second quarter of the year, August 31, 2016.
The report showed that the country had been gravely affected by the global fall in the price of oil. Nigeria’s first quarter GDP had fallen by 0.4 percent while it fell by 2 percent in the second quarter; the two falls enough to certify Nigeria’s economic collapse.
Venture Africa has blamed the recession, not on the global fall in oil price, not even on the prevalent corruption practices within the country, but on a lack of vision.
As reported by Proactive Investors, Norway is another country that has been severely hit by the contraction in oil price. However, the country does compare to the giant of Africa in any other way. Over the years, Norway has been able to develop a sovereign wealth fund to take care of situations like the global fall of oil price.
According to CNN Money, Norway has sovereign wealth fund to the tune of $800 million, and the country might need to withdraw $9 million in 2016, as the report states to counter the effects of the global fall in oil price.
Although Norway, like Nigeria, have a revenue system that depends on oil, Nigeria’s wealth is relatively short while that of Norway seems long established.
Nigeria’s wealth fund was established in 2011 after it was developed from the Excess Crude Account by the past administration, and presently has, according to All Africa, $1.07b left in it as at ,May 2016.
Ventures Africa goes on to report that Nigeria produces more oil than Norway, daily, however, it has only saved $1.07b fro oil since it became an independent nation. This is as a result of mismanagement of public funds by leaders.
Even at its highest, $67 billion in 2007, Nigeria’s overall gross reserves is not up to 10% of Norway’s sovereign wealth fund.
The report further questions why a system that has discouraged a saving culture and encouraged lack of vision has continued to flourish in Nigeria, even after the Military regime. The answer, it reports is likely corruption. However, corruption is not the only answer as the shortage of good leaders in the nation is not hard to notice, especially when attention is paid to the saving culture, or the lack of it, within the country.
The reason Nigeria is currently in a recession, the platform points out, is because a system which breeds reckless spending practices has long been in place.
Venture Africa further analyzes the present administration in the country, saying:
“The present leadership promised diversification, but it actually seem to be waiting for oil prices to rise again. It’s a strange addiction, one that should be the subject of independent research studies,” adding that the current administration has promised diversification, however, pointing out, diversification would not inspire any change in the nation’s foreign reserves:
“If, and when Nigeria eventually achieves diversification, would there be a better saving culture? Will our foreign reserves undergo any significant change when they are funded by other export goods and services? Probably not.”
The report concludes by informing that President Buhari’s administration lacks vision just like most of the other administrations before it.