Nigeria has $2.5 billion in Sovereign Wealth Fund, $33 billion in foreign reserves as of July 2021 and $88 billion in debt as of March 2021.
A significant contrast to what fellow oil producers, Kuwait reportedly have in their $700 billion ‘Life-After-Oil” fund. It is interesting to know that this fund is separate from the $41.7 billion dollars in their foreign reserves as of March 2021.
According to Bloomberg, Kuwait is making moves to invest its way out of dependency on oil money. It is called the Future Generations Fund, a national savings pot designed to help the country prepare for life after oil. The Future Generations Fund cannot be touched without approval from parliament.
This Future Generations Fund, which is managed by the Kuwait Investment Authority, has more than 50% of its investments in the U.S. and a high level of exposure to the equity markets.
READ: Nigeria’s excess crude account falls to $72 million
Kuwait holds approximately 7% of global oil reserves and has a current production capacity of about 3.15 million barrels per day. In contrast, Nigeria currently produces 1.38 million as of May 2021 with a maximum production capacity of 2.5 million barrels (a level it has not attained in years and with OPEC quotas, may never attain).
Other countries with large funds are Norway (Norway’s sovereign wealth fund), China (China’s Investment Corporation) and the United Arab Emirates (Abu Dhabi Investment Authority) which hold $1.3 trillion, $1 trillion and $649 billion in assets according to the Sovereign Wealth Fund ranking.
A quick glance at the Sovereign Wealth Fund institute shows Nigeria ranks 58 in SWF ranking – 4 places lower than fellow African oil producer, Angola, which has $3.2 billion in assets.
READ: Possible oil supercycle would improve Nigeria’s foreign reserves
The big problem
The idea behind the Future Generations Fund is to acquire stakes in long-term investments and assets to provide savings for future generations of citizens.
The issue here is Kuwait with 4.2 million people and forecasted population growth of 5.3 million by 2050 has a future fund of $700 billion to cater for their future population. On the other hand, Nigeria, a country with currently 200 million people and a forecasted population growth of 401 million people by 2050, has a future fund of $2.5 billion. Depressing.
Nigeria is living paycheck to paycheck with low savings but high debt for future Nigerians.
Using 2050 for the population forecast as the IEA is targeting Net-zero emissions (with less reliance on oil) by 2050.
Background of the Sovereign Wealth Fund in Nigeria
Earlier in the decade, Nigeria was one out of three OPEC member states with no sovereign wealth fund. The then Finance Minister, Ngozi Okonjo-Iweala, who currently serves as the Director-General of the World Trade Organization, advocated for a sovereign wealth fund which would have three aims: saving money for future generations, providing financing for badly-needed infrastructure, and providing a stabilisation fund to defend the economy against commodity price shocks.
Although the Sovereign Wealth Fund idea faced severe opposition from state governors, it eventually came to fruition. The SWF protects savings better than the ECA (Excess Crude Account) which at that time had been raided and depleted from $20 billion to $1 billion.
Recommendation
The Federal Government has to make conscious efforts to secure the future of the Nigerian citizenry. A tripartite solution is needed:
- Reduce debts/costs
- Increase earnings
- Control population growth.
The fact that the Nigerian federal government has spent a total of N1.8 trillion on debt servicing in the first five months of the year, which represents about 98% of the total revenue generated in the same period is quite alarming.
Nigeria also has to find alternative sources of revenue to allow foreign inflow from oil earnings flow to the SWF without affecting budget financing. Diversification of resources should be on the front burner of the country’s economic plan.
The population forecast of 400 million should ring alarm bells to those at the National Assembly and Aso rock. Urgent population policies are required to fix this issue.
Ever since the Nigerian government put out a population policy in 1988 themed “Four is Enough,” nothing else has been put in place in this regard. The policy which sought to reduce fertility from the 6 children/family to an average of 4 children/family needs to be reviewed to “Two is Enough.”
This is not fact-based news. Nigeria doesn’t know the number of its population and all this wrong forecast cannot be used to address our problems.
There is no way you can fix Nigerian population issue without providing facts and developing the people else we are just going to be moving in vicious circle with the wrong population high numbers projections.
The problems of Nigeria has always been the leadership. It squandered the revenues from oil boom and stole the public money. The leaders usually make more babies too because they use the money they embezzled to marry more women.
Blaming the poor population for the setback is an attempt to hide behind the corrupt leaders.
Address bad leadership and every thing will start to fall in place.
That’s true, as you aptly captured it. All these shenanigans narratives can never be the true picture of the scenario bedeviling our Nation. Just as you rightly said: “ADDRESS BAD LEADERSHIP….”.
Who is responsible for addressing “bad leadership”? . Are you expecting “bad leaders” to address themselves? That is cliche argument. A quick glance at the fertility rates in UK, US and Canada are 1.7, 1.8, 1.5 births per woman. Nigeria is sitting at 5.2 births per woman. This is totally unsustainable. The elite can take care of their “babies”. The poor cannot. A large section of them end up being bandits and hoodlums. We need to address the population problem.
The poor population are a symptom of bad government, but unless Nigeria starts immediate population control, the country will continue to have bad government and unrest. Nigeria must stop comparing its problems with other nations. Kuwait has one religion, one ethnic (with clans).
Your population control idea have been trashed by the same western egg-heads who proposed them. The only agreeable workable idea I see you have is the need for nations of ethnic homogeneity to emerge from the so called “Nigerian state”, where leaders will be truly accountable to their own people. FULL STOP!
Yah your right, the Leaders have to be addressed, but also Nigeria Government should control Population, over population is another big issue Nigeria is facing. They can’t provide good Health Care and Employment Opportunities for all it Citizens. Even if Nigeria change Leaders before they will start finding ways to reduce the level of debts Buhari government have placed this country, population will keep increasing. Nigeria Leaders have No Plan for the Future Nigerians. What they are after is Oil Money, which one day will have no value because they world as we know it is becoming environmentally friendly. An over dependence in Crude Oil is one thing that causing Global warming. Nigeria Government should find a way of controlling the Natality rate before it too late. One day this Oil won’t be able to feed this Nation. The Current Government is making situations worse for the young ones. Bad Leadership and Over Population are issues Nigeria is Facing.
Assuming the Government before him has done the right thing, we won’t be facing all these hardship today. Was it Buhari that made the population over 200millions? No.
Please we need to start from scratch, ask questions from your Local Government chairmen to state level before apporting blames to Buhari all the time. In Nigeria, the youths don’t think of anyform of innovation compared to other countries.
You are very right! The population figure is totally exaggerated and it does not make any sense!!
It’s depressing to even think about and imagine what Nigeria will be finally reduced to after Oil
Until we have a sound and educated leadership that has the interest of the country at heart , Nigeria will continue to lag behind other countries in the world. The policy makers in Nigeria are the destroyers of that same policy. Consider a situation where a law maker in one Northern state Assembly brought his four wives when the house is in session to brag about his virility and how he has 23 children between his four wives. Population control and Policy making , indeed.
We have Blood of Jesus. …Insha Allah we will survive and we are prepared for the future
This over reliance on divine intervention is partially why we are in this position in the first place.
I am pretty certain the country will collapse once the terminal decline of oil demand and production begins. When you think about, there is nothing else binding these disparate, artificial collection of tribes and ethnic groups together other than the pittances they collect from it.
To the detriment of all other industries of course. I am relatively young so I would be surprised to see Nigeria exist in its current form in 30-40 year from now.
I’m a Nigerian, Nigerian government are most corrupt governments in the world everybody knows that. A country where house of representatives and local chairman are living large with escort, America presidents never live luxurious life like them or to talk about money laundering their fast world knows. Forget about population in Nigeria because it has nothing to do with our money, Those 400m citizens are not benefiting one cent from government. No water. No road, light hospital, job. They knows all this that’s why they like buying houses in abroad for their families to live. Nigeria is oil producing country that’s has most poor people in dirty environment A country where only people under government are enjoying.
Please stop lying to people. Stop the constant disparaging of Nigeria. Have you been to Kuwait? It is a shit hole place too. Kuwait doesnot have 700bn anyway, they were bankrupt just last October and had to beg Qatar fir funding.
The truth is that Nigeria need to reduce population growth. We are having more people than we can handle when we are not developing as fast as we have them
Jamilu