A former Director General of the National Centre for Economic Management and Administration (NCEMA), Prof. Mike Obadan, has accused government across the three tiers of misuse and poor management of the nation’s Excess Crude Account (ECA).
According to the professor of Economics at the University of Benin, Benin City, “The imprudent use of the ECA funds even at a period of rising prices, has led to it been depleted to the very precarious level of less than $2.0 billion at the beginning of this month. Thus, it appears that the country has found it difficult to reach a political consensus to rein in fiscal expansion and re-accumulate its reserves.”
He therefore called for a reform of public expenditure and downward adjustment as indispensable, while the elimination of wasteful spending and corruption in procurement is vital to re-bouncing the economy.
According to him, the misuse of the fund has led to the present predicament the economy is facing, adding, “There was no discipline to re-build the ECA to a comfortable level as the funds were constantly being depleted, following agitation by state governments to share the proceeds of the ECA without thinking of the rainy day or the implications of the sharing for the macro-economy.
“If the fund were properly managed the country would not feel the kind of mess, whereby panicky measures are today being introduced to save the economy, he said.
Obadan, spoke at the sideline at a Policy Dialogue on Management of Oil Price Shock in Nigeria, which was organised by the National Institute of Legislative Studies (NILS), in Abuja.
He however commended the federal government for effectively managing the Sovereign Wealth Fund (SWF), which he said, has generated a net profit of N525 million at the end of 2013.
He pointed out that countries like Norway, Chile and Kuwait have successfully managed their excess crude funds accounts to curtail the impact of the boom bust cycle of oil. The ECA, he said, is used to save oil revenues above a defined benchmark oil price, adding that this was a commendable government policy when it was introduced in 2004.