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Nigeria paying for bad savings culture – ICAN

By on September 17, 2016

The President, Institute of Chartered Accountants of Nigeria, Mr. Titus Soetan, said on Thursday that the current economic recession in the country would have been avoided if substantial savings had been made into the Excess Crude Account when the price of crude oil was high.

Speaking during a courtesy visit to Punch Place, headquarters of Punch Nigeria Limited in Ogun State, Soetan said dwindling oil revenue and poor savings culture by past government administrations contributed significantly to the current recession.

Given the huge revenue gap created by the dwindling oil revenue, the ICAN president said that the economy would not have performed better regardless  of the economic policies of the government.

According to him, a minimum of $100bn in the ECA would have saved the country from recession.

He said, “In 2015, oil prices was about $100 per barrel and we were producing about 2.2 million barrels per day; and now, the price is now about $40 per barrel, which means that what will come in for us as a nation has reduced by 60 per cent. No matter the economic wizardry put there for now, those in government cannot perform better than what they are doing now.

“The situation has been bad for a while. When we had surplus money, we did not save and did not invest wisely. There was a former President who started the Excess Crude Account. He was saving the difference between the benchmark for the budget and the oil price. If the oil price is $100, and the benchmark is $60, then $40 is put into the account and saved.

“The politicians said the President didn’t have the right to save, that the law didn’t allow it and asked him to share the money. He shared the money and the balance in that account is now about $2bn. Other countries that are in our position have huge savings; assuming we have about $500bn in savings today, we will not be talking of economic recession. We would have achieved between $100bn and $200bn if we were able to follow that programme.”

In order to revive the economy, the ICAN president advised the government to inject more money into the economy and spend more on infrastructure.

Commenting on the institute’s 46th Annual Accountants’ Conference with the theme: ‘Accountability Now Nigeria,’ Soetan said that accountability and good governance were the collective responsibility of all Nigerians.

According to him, the conference, which holds in Abuja in October, will examine how to harness Nigeria’s resources for national development.

The 1st Deputy Vice President of the institute, Mr. Rasak Olayiwola, commended the government for liberalising the oil and gas sector through the removal of fuel subsidy, allowing market forces to determine the exchange rate and for implementing the Treasury Single Account.

 

[Punch]