Fiscal policy and revenue management in resource-rich African countries: A comparative study of Norway and Nigeria

Abstract

This study assesses ways in which oil-rich countries can escape the ‘resource curse’ through the implementation of effective fiscal and revenue management policies. A comparative study of the policies of Norway and Nigeria is conducted. The analysis suggests that a rule-based approach to fiscal policy together with a natural resource fund should be the benchmark policy framework in oil-producing countries. The analysis also suggests that Nigeria can learn from Norway's experience. Nigeria can adopt a cautionary fiscal rule to ensure that consumption is limited to a stream of returns from accumulated financial assets to prevent volatility in the economy. In addition, Nigeria should enhance transparency of their oil fund through ethical policy guidelines. Accounting for the structural differences from Norway, Nigeria should direct a portion of oil revenues to finance expenditure on public goods and infrastructure that could serve as a platform for private investments, job creation and long-term growth.