The $1,000,000,000,000 Nigerian Reminder

The $1,000,000,000,000 Nigerian Reminder

This month, the Sovereign Wealth Fund of Norway passed $1 trillion. In other words, it exceeded $1,000,000,000,000. That is twelve zeros.

Norway’s giant pension fund is now worth over $1 trillion. Yes, 1 followed by 12 zeros.

The fund’s managers announced Tuesday that currency shifts had helped push its value above $1 trillion for the first time.

“The growth in the fund’s market value has been stunning,” fund chief Yngve Slyngstad said in a statement. “I don’t think anyone expected the fund to ever reach $1 trillion when the first transfer of oil revenue was made in May 1996.”

For comparison: $1 trillion is roughly the size of Mexico’s economy

Simply, it means that Norway has a pension fund that is at least twice the GDP of Nigeria. Nigeria exports crude oil, just as Norway. But Norway has a strategic vision on building and accumulating wealth, Nigeria is a zen-master in wasting value.

Men (and women) build nations. We have not been lucky to have great ones in Nigeria. Norway started this fund in May 1996, and within roughly 20 years, they have $1 trillion in value.

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As you dig deeper into that fund, you will notice other great numbers. In the first half of 2017, the fund returned $68 billion (i.e. with b). In other words, Norway could be receiving about $120 billion this year as income, if the second half of the year tracks the first half. That is more than four times the federal budget of Nigeria.

Let me explain, if Nigeria had seeded such a fund when Norway did, our national budget can be 4x as it is today, and that budget funded entirely from the returns arising from the fund. The fund continues to grow, and the returns will continue to accumulate. The future of Norway is secured.

Nigeria does have a sovereign wealth fund, which was seeded in 2011. I know that government has contributed about $1.5 billion into it. But I have no idea the value of the returns, if any.

Nigeria’s sovereign wealth fund stood at $2 billion this month with the investment agency seeking further growth through agriculture and the addition of asset management, its chief executive officer said.

The government’s contribution stands at $1.5 billion, with the rest including funds owned by the institution and those managed for several government agencies, Uche Orji of the Nigeria Sovereign Investment Authority said in an interview on Wednesday in Kazakhstan’s capital, Astana.

We need to learn from Norway on how to build a future for generations. We seem to have wasted our moments as the dawn of the petroleum era arrives. We will continue to pump crude but the earnings may not even be enough to fund government. Reading the Premium Times exclusive on CBN tells me that we have already started that financial engineering even when the play has not started.

A massive and clearly illegal multi-source funding of the federal government by the Central Bank of Nigeria (CBN) could drag the Nigerian economy to its knees, experts familiar with domestic monetary conditions and current happenings at the CBN have warned. […]

Insiders say the apex bank is “creating money” to “finance a government that is broke and which does not have economic vision,” in what one of them called a “desperate move by the central bank governor, Godwin Emefiele, to remain in office”.

The game is on. Nigeria has a $1,000,000,000,000 reminder to learn from.


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