Why is it that oil rich countries are unable to translate massive windfalls from multinational corporations such as British Petroleum and Chevron? The most common answer given to this question is corruption at the highest levels.

Officials tasked with negotiating oil deals or running a corrupt government often pocket much of the opaque oil revenues rather than allowing them to make their way into government or social welfare coffers.

While government corruption in oil producing states has earned its place at the top of the threat pyramid, an often overlooked problem when attempting to turn oil into national wealth is instability.

Nigeria had long been the poster child for this difficulty. The oil rich Niger Delta region was home to a number of insurgent groups that created mayhem throughout the area.

Angered by the lack of local development from oil revenues, favorite tactics included “kidnapping foreigners for ransom, vandalizing oil pipelines, setting up illegal oil refineries and fighting Nigerian soldiers.” This made the development of oil producing regions particularly difficult, thus perpetuating the cycle of insurgency.

This was all supposed to change in 2009. That year the Nigerian government was able to complete a ceasefire with a number of rebel groups. The results were monumental. More than 30,000 former rebels came back into the law abiding fold.

By promising the now-former rebels a monthly stipend and “vocational training in Nigerian and abroad,” financed by the Nigerian government, the governments convinced the rebels to lay down their arms.

This deal had the potential to revitalize Africa’s most populous country. Unfortunately, according to an ongoing GlobalPost report, progress with the former insurgents has been slow and violence threatens to return to the Delta.

While there has been some progress and former soldiers have been given the promised stipend and training, the same simmering complaints remain, according to at least one former insurgent.

Livinus Damka, who received some vocational training in Poland and a stipend while abroad, posed a simple question in an interview with GlobalPost. “How long must we stand y while the government makes a profit off our land and resources, while we are left suffering?”

Damka’s wife, Rita, echoed his sentiments, saying that if the government fails to employ the former insurgents, “it’s only natural we’ll look for a way out.”

The progress made in the Niger Delta is real. As previously mentioned, more than 30,000 former insurgents laid down their guns. However, there is a tremendous risk for a return to violence

Droping Oil Prices

Not only has the government’s treatment of the former insurgents been disheartening, the region’s revenue has been affected by the continuing drop in oil prices and experts are warning of potential violence surrounding the 2015 elections.

According to a post by the World Policy Institute “By far the biggest shock to Nigeria’s economy in 2014, bigger than the effect of Ebola and U.S. quantitative easing, has been the oil price collapse.”

According to the Institute, Nigeria requires an approximate value of $120 USD per barrel in order for its budget to break even. This compares to a drop below $65 USD per barrel at the time of writing and a prediction by Bank of America that prices will further slide to around $50 USD per barrel.

A price per barrel of just over 40 percent the required value for Nigeria’s budgetary projections is a near-apocalyptic projection for the West African state and leaves Nigeria unable to fulfill promises to former insurgents, along with less revenue for other development and social welfare projects.

Further, 2015 elections could bring violence, in particular in the oil producing Delta.

According to a report prepared by the International Crisis Group, while elections in Nigeria are always hotly contested, this cycle could be “more contentious than usual.”

The report goes on to say that “Tensions within and between the two major political parties, competing claims to the presidency between northern and Niger Delta politicians and along religious lines, the grim radical Islamist Boko Haram insurgency and increasing communal violence in several northern states, along with inadequate preparations by the electoral commission and apparent bias by security agencies, suggest the country is heading toward a very volatile and vicious electoral contest.”

This is particularly relevant as there is a tradition of rotating the country’s presidency between northerners and southerners, however, the death of Umaru Yar’Adua, the current President Goodluck Jonathan’s predecessor, threw that system into chaos. This leads both the north and the south (of which the Delta is a significant part) to lay claim to the presidency beginning in 2015.

Significant strides were made over the last half decade in stemming the ongoing insurgency in the Niger Delta. This has the potential to lead to greater oil revenue and an increased security atmosphere for residents and foreigners conducting business in the region.

However, the gains made have a real potential to fall away due to what former insurgents are calling the government’s failure to live up to its promises, the plunging price of oil and thus oil revenue and a particularly contentious election coming in 2015.

Andrew Friedman is a human rights attorney and consultant who works and writes on legal reform and constitutional law with an emphasis on Africa. He can be reached via email at This email address is being protected from spambots. You need JavaScript enabled to view it. or via twitter @AndrewBFriedman.

Credit:  www.afkinsider.com