4 Responses to “Nigeria and The Curse of Black Gold”


  1. 1 Jason Mosley February 17, 2010 at 7:17 pm

    This is an unfortunately all too accurate story, I’m afraid. The legal dispute you mention, which undid much of the work of former Finance Minister Ngozi Okonjo-Iweala and her team, has resulted in a situation whereby the federal, state and local tiers of government now make claims on the revenues held in the ECA. You’ve mentioned the counter-cyclical benefits of saving some of the surplus during the boom years to use in order to offset the downturns, and there’s certainly a case that 2009 qualified for Nigeria. The leadership has certainly taken to describing its ECA disbursements as ‘stimulus’ measures (See for example, http://allafrica.com/stories/200910080502.html). The question is whether the funds were spent on stimulating the economy and protecting jobs, which is in doubt.

    Beyond counter-cyclical policy, though, is the use of the ECA to mitigate against ‘dutch disease’, and to restrain inflation. Nigeria doesn’t appear, since having set up the ECA, to have come up with a strategy for managing the fund in investments outside of Nigeria. That appears to have canceled out another potential benefit.

    I wonder if Angola, Uganda, Ghana or other oil exporters (or soon to be exporters) will succumb to the pressure to use the SWF for domestic investments. Angola’s experience with Sonangol — the national oil company, which functions almost as a SWF (from my non-‘SWF expert’ view), and has been an active investor overseas — suggests that it may well keep the SWF focused abroad. I’m less sure Ghana or Uganda will be able to resist the temptation to spend at home.

    • 2 Ashby Monk February 19, 2010 at 6:55 pm

      Interesting stuff, Jason. It’s clear that the ECA is a “compromised institution”. I wonder if the new Nigerian SWF will be an improvement…


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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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