Oil Revenue Volatility and Macroeconomic Governance in Nigeria: An Institutional Analysis

This study examines the institutional determinants of Nigeria's capacity to manage oil revenue volatility, investigating why successive governments have failed to translate petroleum wealth into stable macroeconomic management and long-term development financing. Nigeria's economy has been characterised by cyclical boom-bust dynamics driven by global oil price fluctuations, with the consequences of revenue instability falling disproportionately on public services and the welfare of poor households. Using a qualitative institutional analysis design, the study draws on interviews with fiscal economists, central bank officials, and budget analysts in Abuja, documentary analysis of the Excess Crude Account management history, the Sovereign Wealth Fund legislation and implementation records, and comparative case studies of oil-revenue management in Botswana, Ghana, and Norway. The political economy of natural resource management and the institutional theory of fiscal rules are applied to analyse the governance conditions that enable or undermine prudent revenue management. Findings reveal that institutional failure in Nigeria's oil revenue management stems from a combination of weak fiscal rules without enforcement mechanisms, executive dominance over spending decisions that circumvents legislative oversight, and political cycles that create incentives for pre-election spending surges that deplete stabilisation funds. The failure of the Nigeria Sovereign Investment Authority to accumulate substantial assets reflects the political unwillingness of successive governments to constrain short-term spending despite formal fiscal savings commitments. Recommendations include constitutional amendment to establish legally binding counter-cyclical fiscal rules, independent fiscal council with public reporting powers, and mandatory legislative approval for sovereign fund withdrawals. Keywords: oil revenue, macroeconomic governance, fiscal rules, sovereign wealth, institutional analysis