By Austin Okere
The mistake we keep making as a nation is failing to
anticipate and plan for our oil windfalls. There have been many boom opportunities
since Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC)
in 1971; oil prices increased by 400% in six short months after the Yom Kippur
War following the Arab Oil Embargo. Crude prices doubled from $14 in 1978 to
$35 per barrel in 1981 following the Iran/Iraq war.
The price of crude oil
spiked in 1990 with the uncertainties associated with the Iraqi invasion of Kuwait and the
ensuring Gulf War – the so called ‘Gulf War windfall’ under then Head of
State, Ibrahim Babangida. Data from the U.S. Energy Information
Administration show that the latest windfall happened between February 2011 and
August 2014, under the Goodluck Jonathan presidency, when oil prices were much
in excess of$100 per barrel. Another golden opportunity was squandered.
During this same period, Saudi Arabia has amassed a whopping $593b
in foreign exchange reserves and has recently announced that it is creating a
$2 trillion mega-sovereign wealth fund, funded by sales of current petroleum
industry assets, to prepare itself for an age when oil no longer dominates the
global economy. Coming closer home, Algeria , the second biggest African
oil producer, with 1.9mbpd has accumulated foreign reserves of $156b and a
sovereign wealth fund of $50b. Nigeria, by far the biggest producer in Africa
with 2.5mbpd has only managed foreign reserves of$28b and a sovereign wealth
fund of a paltry $2.9b – about 5% that of Algeria. The major difference being
that while the Algerians saved for a rainy day during the boom years, Nigeria was
busy squandering her wealth, with nothing to show by way of infrastructure or
any solid investments.