Uche Usim, Abuja

Scalding news came the way of Nigeria on Monday as a new report by the Natural Resource Governance Institute (NRGI) ranked the country as the worst governed Excess Crude Account (ECA) fund alongside Qatari Investment Authority.

The ECA is a Nigerian account used to save oil revenues above a base amount adopted as benchmark price in the budget.

Disturbingly, it has depleted from $2.07 billion in May 2015 to $183 million in March 2019, a development that has left economic experts bewildered.

The country’s woeful ECA ranking comes after NRGI assessed the performance of other Sovereign Wealth Funds operated by countries in Sub-Saharan Africa.

The new report, titled “Resource Governance Index: From Legal Reform to Implementation in Sub-Saharan Africa” contained on its website, assessed the lacuna between the state of resource governance in relation to oil, gas and mining laws, and the practices on the ground. 28 countries in the region were selected and assessed in different areas of resource governance.

The report highlighted that Sub-Saharan Africa is, on average, the lowest-scoring region in relation to sovereign wealth funds.

“Six funds, which together manage over $8 billion in resource revenues, attain failing scores,” the report said. “These funds are found in countries that achieve poor scores in control for corruption.

“The Nigerian government discloses almost none of the rules or practices governing deposits, withdrawals or investments of the ECA.

“The potential revenue loss through ECA constitutes a critical challenge in the country where over 90 per cent of government revenues come from the oil sector,” the report stated.

In December 2018, the Federal Account Allocation Committee revealed that $631 million was withdrawn from the ECA within three weeks.

The NRGI report further acknowledged noted that Nigeria has other sovereign wealth funds, some of which are more transparent. In the area of licensing, the report also identified that there is opacity in Nigeria’s key decisions including qualification of companies, process rules and disclosure of terms of extraction.

“In Nigeria’s oil and gas value realisation component, licensing is the weakest link with a score of 17 of 100,” the report said.

As the first step in developing mineral resources, it explained that the award of exploration and production licenses presents a critical opportunity to set the course of governance for the entire life cycle of a project. Sub-Saharan African countries that performed best in licensing are Mozambique, Burkina Faso, DRC (for mining), Guinea and Ghana.

10 countries achieved failing scores in this area, it said, including significant resource economies like South Africa, Nigeria, Botswana, Sudan and Madagascar.

The report further acknowledged that many sub-Saharan countries have made significant legal reforms in oil, gas and mining over the past decades.

“The Resource Governance Index shows that in all but two countries, there is an “implementation gap” between what laws say and how resource governance works in practice. This keeps countries from realizing the dividends of investments they have made in legal reforms”.

The Natural Resource Governance Institute (NRGI) is a non-profit organization that helps people to realise the benefits of their countries’ endowments of oil, gas and minerals. This is done through technical advice, advocacy, applied research, policy analysis, and capacity development.