As African giant and most populous black nation on earth, Nigeria, continues to wallow in acute dollar scarcity and persistent foreign reserves depletion which has dealt an heavy blow to the value of the naira, Norway is smiling to the bank with its sovereign wealth fund, contributing a colossal $143 billion from the AI-driven tech surge in the first 6 months of 2023.
The sovereign wealth fund is a national savings buffer designed to aid the country prepare for life after oil, and is now helping to put the investment giant back on track after one of its worst years ever.
Norway’s sovereign wealth fund, designed to prepare for a post-oil era, has experienced a substantial boost of $142.65 billion in the first half of 2023 due to AI-driven tech surges, counteracting a previous challenging year.
In contrast, Nigeria’s urgent demand for dollars continues while the country missed opportunities to capitalize on surplus oil revenue for future wealth.
Norway thrives, Nigeria struggles; Funds misused
Norway’s impressive gain, amounting to three times Nigeria’s 2023 budget, underlines the divergent paths these nations have taken.
Niyi Awoyemi, a public finance expert, noted Nigeria’s failure to leverage oil revenue for future prosperity, with funds from the Excess Crude Account often diverted for political rather than economic purposes.
While Norway’s $1.4 trillion fund saw substantial tech holdings increase by nearly 39% in H1 2023, including stocks from Apple, Microsoft, and Nvidia, Nigeria faces difficulties due to struggling oil production and insufficient regulations for deposits and withdrawals.
This stark comparison illustrates Nigeria’s challenges in addressing foreign currency shortages, with its Excess Crude Account balance stagnant at around $474 million over the past two years.
Mismanagement of funds and a lack of transparency by government agencies have contributed to the squandering of oil proceeds, impeding potential long-term benefits.
As Norway readies itself for a post-oil future, Nigeria grapples with an ongoing reliance on oil revenues, hampered by foreign currency shortages and mismanaged funds.
A recent House of Representatives investigation into the Central Bank of Nigeria’s management of funds highlights the concern over non-disclosure and misappropriation of investments from excess crude oil and petroleum profits tax/royalty accounts.
Despite former President Obasanjo’s efforts to encourage oil savings, subsequent administrations have drawn down the Excess Crude Account for various purposes, inhibiting Nigeria’s ability to accumulate wealth for future generations.