LONDON (Reuters) - "It's raining now," politicians told then-Nigerian finance minister Ngozi Okonjo-Iweala seven years ago, when she began to develop ways to save the country's oil wealth for a rainy day.
Okonjo-Iweala's brainchild Excess Crude Account began its short life in 2004, growing to as much as $20 billion (£12.4 billion) in 2007. The ECA then dwindled to less than $1 billion, a victim of political wrangling between central and local government.
Now Nigeria is giving resource revenue saving another try -- under a different government, with a fresh set-up, initial capital of $1 billion, and a new legal framework.
As sub-Saharan African countries unearth new resources -- Ghana and Uganda are turning on oil taps for the first time -- they face unprecedented chances to transform themselves.
The World Bank estimates Africa needs to spend $93 billion a year in infrastructure, and is only spending half of that at the moment.
Africa-watchers say the continent does not have the ability to spend efficiently on infrastructure and is better-served saving some of its nearly-3 percent fiscal surplus for future needs.
However, attempts to do so appear to be running into obstacles, not least in the struggle to stop governments from squandering their new-found wealth.
But proper management of oil money is crucial for Africa, if it wants to build on its success in attracting yield-hungry investors into the vibrant frontier economies.
"It's the biggest opportunity that Africa has ever had and is ever likely to have," says Paul Collier, International Monetary Fund advisor to African governments including Nigeria and an Oxford University professor.
"The next decade is all about resources discovery in Africa. The scale of money dwarfs everything and if history repeats itself, it will be the biggest missed opportunity. It's a vital matter that history does not repeat itself."
Along with Nigeria, Ghana and Uganda, South Africa, Mozambique and Angola have said they are considering ways to create a state-owned fund to invest part of their oil wealth.
But it's proving difficult.
Nigerian finance minister Olsegun Aganga proposed a new sovereign wealth fund last year but the fund has yet to be created, leading ratings agency Fitch to downgrade the country's credit rating outlook. Nigeria faces elections in April, adding further uncertainty.
Ghana said a year ago it was looking into launching a sovereign wealth fund to channel surplus revenues from oil production, but again, there is little further news.
Africa has seen as much as $1.8 trillion of illicit financial outflows -- defined as the proceeds of bribery and theft by government officials and commercial tax evasion -- in 1970-2008, according to think tank Global Financial Integrity.
TODAY VS TOMORROW
Sovereign wealth funds form a powerful $3 trillion-plus industry managing windfall surpluses from oil and exports for future generations. The biggest funds, in Abu Dhabi, Norway, Singapore and China, operate at arm's length from governments.
They aim to invest in high-yielding assets with a long-term horizon -- sometimes decades -- to diversify their economies and avoid "Dutch disease", named after the 1960s Dutch economic crisis following the discovery of North Sea natural gas.
Rapid oil sector growth could make other industries less competitive, as happened to the Dutch, and lead to lower growth and development than those with fewer natural resources.
But the concept of saving for tomorrow is an unfamiliar one in Africa, under pressure to spend today to build infrastructure and reduce poverty.
That's why previous attempts have failed.
Beyond Nigeria's ECA, a notable case is that of oil-producer Chad, which used up its future generations fund, driving the World Bank to suspend loans to the country in 2006.
"The ECA did not have a strong legal basis. We never put together the proper legislation... we ran out of time," says Okonjo-Iweala, now managing director at the World Bank.
Even developed economies, from Ireland to France, are raiding their future generations funds for today's needs.
"We have a lot of mistakes around us. We are lucky enough to have a lot of examples (bad and good) around us," says Emannuel Buah, deputy minister of energy in Ghana, citing Trinidad & Tobago's oil fund as a good one.
Nigeria has said its new SWF will have three parts -- inter-generational savings, a stabilisation fund to provide more immediate budget support, and an infrastructure fund for co-investment with other investors.
A properly managed sovereign fund within a transparent framework with crystal clear objectives could enable sub-Saharan African countries to guard oil dollars against corruption and squandering.
But focusing on domestic investment is crucial, to win local backing for the fund and stop internal squabbles over the money.
"Sticking a lot of dollars in a New York bank account is not growing your economy," says Collier.
"Investing domestically is."
(Editing by Ron Askew)