Nigeria’s oil reserves are more likely to be exhausted in less than 50 years at current depletion rates, assuming no other significant oil fields are discovered or become commercially viable the World Bank said.
This was revealed in a World Bank Report entitled, “The Changing Wealth of Nations 2021” released Thursday.
The World Bank report said many countries such as Nigeria “with high rents from non-renewable natural capital have not invested sufficiently to offset the depleting asset. This is expressed in terms of negative adjusted net savings.
“This is true not only for hydrocarbon-rich countries such as Iraq and Nigeria, but also for some mineral-rich countries, such as Guinea and Sierra Leone. The negative adjusted net savings in these countries are a lead indicator of unsustainable wealth management. If continued, it will negatively impact the value of future wealth.
“This is because the value of a depleting non-renewable asset is being consumed rather than being invested in offsetting asset accumulation such as via human capital or productive capital investment. Therefore, governments may need to consider policies that would better preserve and build wealth or look for alternative sources of income to raise their net savings.”
It noted that the share of human capital in total wealth had increased by more than 10 percentage points between 1995 and 2018 in Nigeria.
“Although Nigeria’s non-renewable wealth (mainly from fossil fuels) increased by more than 30% during the 2004-2014 commodity boom (in part due to newly discovered deposits and the increase in fossil fuel prices), this non-renewable wealth dropped below pre-boom levels after 2015.
“At the same time, Nigeria had among the largest declines in renewable natural capital per capita. It dropped from $3,000 to $1,300 in fewer than five years. The decline of these assets in turn affected the country’s’ total capital per capita, especially after 2015.
The international financial institution urged the West-African country to look towards investing in renewable natural capital and intangible assets, like knowledge, innovation and institutions, as a way of diversifying and reducing their dependence on non-renewable natural capital.