Connect with us
UBA ads


Opinion: The Need to Stop Eating with Ten Fingers



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.

GTBank 728 x 90

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.

*Adio is the Executive Secretary of NEITI








Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Official: Nigerian Treasury bills calendar for Q3 2020

Official: Nigerian Treasury bills calendar for June – August 2020



Treasury, bills, calendar, Central Bank

The Central Bank of Nigeria (CBN) Published its Treasury Bills program for June to August 2020, indicating that it plans to raise about ₦821.8 billion in cash.

Check out: CBN says commercial banks can invest in Treasury Bills for now(Opens in a new browser tab)

The Central Bank sells treasury bills on a bi-weekly basis to investors and is one of the safest investments available. Interests are paid upfront and the principal paid in full upon maturity.


Learn to invest in treasury bills here

3rd quarter of 2020

GTBank 728 x 90

READ ALSO: Manufacturing PMI slide into recession territory

2nd quarter of 2020

READ ALSO: $14 billion Dangote Refinery: uncertainty surrounds take-off

1st quarter of 2020



READ MORE: UPDATED: Nigeria received $5.85 billion capital inflows in Q1 2020 –NBS

4th quarter of 2019

Treasury bills calendar, Treasury, bills, calendar, CBN

Calculate Treasury Bill

Continue Reading

Business News

Precious metals slump, investors focus on Central Bank’s intervention

Gold fell on Friday morning to $1,717.10. as global investors await the release of Friday’s U.S non-farm payrolls data for May



Nigeria Mining Sector shows growth prospect despite low bank credit provision, Gold hits eight-year high as global recession sentiments strengthened, Gold hits three weeks high, Investors rush to gold, Gold Future Drops to $1727.80 as Tensions Escalate between America and China, Precious metals slump, investors focus on Central Bank’s intervention

Spot gold went slightly lower, trading at $1,711.57 per ounce by 4 am local time on Friday morning and gold futures was down to $1,717.10.

Gold collapsed like a house of cards as investors overlooked civil unrest in the United States and heavily focused on hopes around central bank intervention and economic recovery,” said Lukman Otunuga, senior research analyst at FXTM.


READ MORE: Why the NNPC wants $5 billion advance payments for Nigeria’s crude

Gold fall on Friday morning also came as global investors await the release of Friday’s U.S (United States.) non-farm payrolls data for May, scheduled to be released at 1.30 pm Nigerian local time.

“There are quite a few market participants still bargain-hunting gold given the fundamental backdrop of the coronavirus crisis and ongoing recession,” Julius Baer analyst Carsten Menke said.

GTBank 728 x 90

(READ MORE: Gold prices surge by 17.4% in 2 months due to global economic crisis)

However, investors are still waiting to see whether the easing of restrictions will lead to a second wave of infections, supporting demand for gold, Menke added.

Gold, Gold prices tick up as President Trump decides on China today, Gold Prices Surges, Protests Erupts In America, Precious metals slump, investors focus on Central Bank’s intervention

What you need to know about Precious metals: Precious metals include gold, silver, and platinum. Gold and silver are the most popular metals, and have been used by jewelers, and as wealth status symbols since ancient times. Global investors use precious metals to hedge against inflation.

READ ALSO: Global oil market to re-balance in 2 months’ time


Meanwhile, palladium gained 0.34% to $1,947 an ounce, while platinum lost 0.31% to $833.91. Silver was down 0.63% to $17.9 4am local time, having hit a more than three-month high of $18.36 on Monday. 


“Some people are buying silver just because it’s much cheaper than gold (or) platinum,” a trader from Tokyo-based retailer Tokuriki Honten said.


Continue Reading

Billionaire Watch

The rich get richer in May

The gradual easing of the lockdown, which started on May 1, appears to have brought some relief to these men, giving them room to recover some of the earlier losses.  



Nigerian billionaires lose billions amid COVID-19 pandemic

The news of the lockdown hit raw nerves across all sectors in Nigeria. One thing that was obvious from the onset was that everyone was going to be hit somehow, but what no one could say for sure, was how.

Nairametrics had earlier examined the first 12 weeks of COVID-19 in Nigeria, and found that Nigeria’s billionaires lost billions between February and April. However, the gradual easing of the lockdown which started on May 1, appears to have brought some relief to these men, giving them room to recover some of the earlier losses.


Jim Ovia
Zenith bank founder Jim Ovia is the largest individual shareholder with 3,546,199,395 direct shares and 1,513,137,010 indirect shares.

Zenith bank closed April at N14.3, putting the value of Ovia’s total 5,059,336,405 shares at N72,348,510,591.5 (N72.35 billion).

During the month of May, the share appreciated by 18.2%, and was worth N16.9 at the end of trading on May 29.

GTBank 728 x 90

With this, the worth of Ovia’s 5,059,336,405 shares increased by N13.15 billion to N85,502,785,244.50.

The volatility of the shares in the previous quarter had seen the billionaire lose about N21.2 billion, but May 2020 sure gave him a chance to recover some of this.

READ ALSO: Forbes 2020 world’s richest rankings: Only 4 Nigerians make exclusive billionaires list

Herbert Wigwe
Group MD/CEO of Access Bank, Herbert Wigwe, has 201,231,713 direct shares and 1,184,680,195.5 indirect shares with the bank, totalling to 1.39 billion shares.

At N6.60 per unit, the total shares were worth N9.15 billion (N9,147,018,596.1) on April 30.


Access bank stocks moved upwards to N7.1, bringing the worth of the stocks to N9.84 billion (N9,839,974,550.35).


Wigwe’s stock value gained N692.96 million, a mild compensation for losing N2.22 billion in the first 12 weeks of COVID-19 presence in Nigeria.

READ MORE: Herbert Wigwe sells 28.8 million Access Bank shares

Aliko Dangote
Dangote Cement shares were worth N130 at the end of April, having had a rough first quarter. However, the price improved over the next four weeks and ended May 29 at N139 per unit.

Aliko Dangote directly owns 14,500,315,501 shares in Dangote Cement Plc, as well as 27,642,637 shares which he controls through Dangote Industries Limited.

All 14,527,958,138 shares were worth N1.88 trillion (N1,888,634,557,940) on April 30, and the value increased to N2 trillion (N2,019,386,181,182) by May 29, an increase of N130 billion (N130,751,623,242).


A similar trend is also seen in Dangote Sugar where share price increased from N12.45 on April 30 to N12.90 at the close of trading on May 29.

The billionaire directly owns 653,095,014 shares and indirectly owns 8,122,446,281 shares through the Dangote Industries Limited in Dangote Sugar, summing up to 8.77 billion shares.

All shares were worth N109 billion (N109,255,489,123) on April 30, and appreciated through the month of May to close at N113 billion on May 29.

From the increase in the market share price of Dangote Sugar, Aliko Dangote became N3.9 billion (N3,948,993,583) richer.

Summing up the gains in Dangote Cement and Dangote Sugar, we can see that the billionaire added another N134.7 billion (N134,700,616,825) to his worth.

This article does not include calculations for NASCON. Aliko Dangote is not listed on the board, hence, there is no way to confirm the exact amount of stocks he owns in the company.

However, NASCON allied shares were worth N10.05 on April 30 and made a 10.4% increase to N11.10 by May 29.

READ MORE: Dangote: The King cement maker moving against all odds

Tony Elumelu
The popular TOE, as he is called, controls a total of 2,304,211,118 units of shares – 190,100,234 direct and 2,114,110,884 indirect shares.

UBA’s shares tried to regain losses from earlier months, and moved from N6.05 on April 30 to N6.65 on May 29.

The total worth of Elumelu’s 2.3 billion shares appreciated from N13,940,477,263 on April 30 to N15,323,003,934 on May 29, giving the billionaire an additional N1.38 billion (N1,382,526,670.8).

Compared to the N1.49 billion lost in the preceding 12 weeks, Elumelu clearly recovered most of the earlier losses.

Abdulsamad Rabiu
The merger of CCNN and Obu cement gave birth to BUA cement. The 2019 financials from the company shows that Rabiu owns 19 billion (19,044,995,225) direct shares.

He also has indirect shareholdings through 3 companies, totalling to 12.2 billion (12,225,657,346) units.

BUA cement stocks ended April 30 at N32.60 and appreciated by 28% to N42 per unit at the close of trading on May 29.

By April 30, Rabiu’s 31.27 billion shares (direct and indirect) were worth N1.01 trillion (N1,019,423,273,814.60) at N32.6 per unit, and by the end of trading on May 29, the market value of the same shares had risen to N1.31 trillion (N 1,313,367,407,982.00).

The billionaire’s worth added N293.94 billion (N 293,944,134,167.40) representing a 28% gain, and making him the highest billionaire gainer in the period under review.

Mike Adenuga
As Chairman of Conoil Nigeria Plc, Mike Adenuga directly controls 516,298,603 units of shares, as well as 103,259,720 units of shares controlled through Conpetro Limited, making for about 74.4% of Conoil’s issued share capital.

Conoil’s stock prices closed at N17.4 on April 30, putting the value of Adenuga’s indirect shares at N1.79 billion (N1,796,719,128), and his direct shares at N8.9 billion (N8,983,595,692.2), totalling to N10.78 billion.

Conoil gained 20.7% in May, and ended at N21 per unit share at the end of trading on May 29.

With this, the total shares were worth N13 billion; direct – N10,842,270,663 and indirect – N 2,168,454,120.

After losing N371 million in the preceding 12 weeks, it must have been refreshing to gain some N2.23 billion in four weeks.

Austin Avuru
However, the month of May was not profitable for the co-founder of Seplat, Austin Avuru, who indirectly owns about 58,970,463 indirect shares in the oil and gas company.

A stock price of N494.4 as at April 30 showed that these stocks were worth N29.15 billion (N29,154,996,907.2).

At the share price of N476.4 on May 29, Austin Avuru’s shares were worth N28,093,528,573.20.

He lost another N1.06 billion, after an earlier loss of N6.5 billion between February to April.

In all, Seplat stocks have fallen some 28% from January till May 29. Sad loss for Avuru.

Gain (N’billions)
% gains
Aliko Dangote
Tony Elumelu
Jim Ovia
Herbert Wigwe
Austin Avuru
Mike Adenuga
Abdulsamad Rabiu
Note: The stock figures, and prices used in the analysis above was sourced from the Nigerian Stock Exchange (NSE) website.

Continue Reading