Nigeria: Sticky Fingers
By Strategy Page, April 16, 2019
Apr 16, 2019 - 11:26:12 AM
While the continuing religions (Boko Haram) and tribal (herders versus farmers) violence gets the most headlines what is even more important to most Nigerians is the economy. The biggest problem with the economy was the oil and natural gas sector. A 2018 World Bank study detailed how Nigerian governments wasted opportunities from 1970 through 2014 to invest a trillion dollars of oil income into development. Instead most of it was stolen or squandered. During that 44 year period there were five spikes in oil prices and demand. These “oil booms” brought in extraordinary amounts of income which made it easy to spend most of it on infrastructure, and other long term investments in the economy. That was rarely done and all the oil income has made a few Nigerians (most of them corrupt politicians) fabulously rich but otherwise has done nothing for Nigeria.
Oil has been a curse not a blessing for Nigeria and one thing nearly all Nigerians can agree on is reducing corruption and theft of most oil income. Since 1972 the government has earned over a trillion dollars ($1,300 billion) in oil revenue, most of which has been stolen or misused. This corruption is the main cause of the unrest in the country, especially the oil producing areas. Since 1980, the poverty rate (the percentage of people living on less than $400 a year) has gone from 28 percent to over 60 percent today. For over four decades, the oil money has been going to less than twenty percent of the population, leaving most of the rest worse off today than they were in the early 1960s, before the oil exports began. The people in the Niger Delta are up in arms because most of them have not benefited from the oil production, but have suffered from the oil spills and other disruptions that accompany oil drilling and shipping. The four decades of theft have left the national infrastructure (roads, water supplies, power production, and so on) in ruins. In short, oil has not helped Nigeria at all.
The largest export remains oil, despite the price falling by more than half after 2012 and never really recovering. Despite that oil still accounts for 87 percent of exports and 80 percent of the federal budget. In the last few years the government tried to accurately count the losses in the oil industry. The conclusion was that the theft, from pipelines and government bank accounts, amounted to over $10 billion a year in the last decade. The annual GDP of Nigeria is $447 billion, for a population of 199 million ($2,244 per capita). Oil accounts for about 40 percent of GDP (directly or indirectly). The government has made several efforts to diversify the economy. The latest one got started in 2018. At that point the recession, triggered by the collapse of oil prices in 2013-14, was over and the government sought to diversify the economy by investing in agriculture, manufacturing and mining. The main problem remained the corruption and the threats and violence that are often used to carry out extortion and theft. And then there is the prevalence of bribes. Many Nigerians with money to invest prefer to do so overseas there investing is more profitable and less dangerous.
It always comes back to the corruption in Nigeria and the difficultly in suppressing or at least diminishing it. At the end of 2018 oil production was officially cut to 1.7 million BPD (barrels per day) to comply with OPEC cuts that are needed to increase the oil price. That did not work because Nigeria needed the money and produced as much oil as it could (about 1.9 million BPD). OPEC production level limits are requests, not demands because OPEC has no enforcement mechanism. If too many OPEC members cheat the oil price will not increase and all producers will suffer. Until the 2013 crash in oil prices (triggered by the North American fracking boom) major OPEC members could be expected to make additional production cuts to cover smaller OPEC producers would could, or would, not adhere to their production quotas. No more. The Saudis are hurting from low prices and need all the oil income they can get.
Daily production in 2018 was 2.09 million BPD, up from 2.03 million BPD in 2017. Given the investments in oil production (mainly by foreign companies) Nigeria should be producing 4 million BPD but continuing problems with oil theft gangs and repair/maintenance backlogs (especially of the pipelines) in the Niger River Delta (where all the oil is) and decades of government inability to deal with these problems are causing a growing number of foreign oil companies to sell their Nigerian assets and go elsewhere. In effect, it is more profitable to do business in other countries. For example it currently costs $23 per barrel to produce oil in Nigeria but without all the violence and corruption that could be $15 a barrel or less. The new oil production firms will demand better terms from Nigeria meaning less oil income for the government. The effort to explore for oil in the Moslem north is also crippled by the bad reputation Nigeria has when it comes to foreign oil companies.
The long-delayed maintenance and refurbishment of the oil production facilities in the Niger River Delta remains a problem although some of the foreign companies that control various oil fields and pipeline are more successful at keeping their infrastructure in good shape. At the end of 2018 Nigerian oil production was rising to levels not seen for years. That has been the trend for most of 2017 because the new government had negotiated a peace deal with the local rebels (who opposed corruption and bad treatment of locals in general). Production rose and is on the way to the goal of 2.5 million BPD by 2020 but achieving that level of production depends on keeping the peace in the Delta. Continued corruption and rampant oil theft makes it difficult to increase production and sustain those higher production level goals. The oil theft gangs in the Niger River Delta continue to flourish with the help of corrupt government officials (civil and military.) In addition to the damage thieves do to pipelines (punching holes in them and quickly collecting oil before the police show up) the truce with some of the Delta rebels fell apart at the start of 2019 and there have some attacks but, so far, nothing serious.
In 2018 the navy renewed its campaign against oil thieves because a mid-2018 scandal involving three naval officers who were illegally selling seized equipment (from oil theft gangs) back to the gangs made possible a crackdown on corruption in the security forces working the oil production facilities. But the corruption proved to be more persistent than anyone expected and it was possible for the oil theft gangs to survive major navy campaigns to find and shut down them down. The military, especially the navy, has been very successful in finding and shutting down oil theft gangs. Since 2016 this effort has found (via more than 16,000 patrols) and shut down over 1,800 illegal refineries. Much of the refinery equipment was destroyed where found but the navy has seized over 1,5oo weapons, 1,600 boats, 198 barges, 258 outboard engines, 133 tanker trucks, 349 vehicles, 95 generating sets and much more recoverable equipment. The navy was supposed to sell off this stuff with the proceeds going to the government but it was discovered that corruption had quietly crippled the navy operations in the Delta. New commanders were sent in to clean up and revive the navy operations. When there is a noticeable reduction in oil theft gang operations that usually means the surviving gangs are building camps further from the areas where oil production takes place. This makes it more difficult for the navy to find them but also makes it more difficult for the gangs to get to pipelines, puncture them and steal oil. The gangs make less money but the incentive to steal the oil remains and without constant and uncorrupted action by the security forces the damage will increase and government oil income will decline or refuse to increase. The threat of corruption returning is, so far, always present and no one has come up with a way to change that. As a result the Nigerian oil industry is less competitive than it should be and less profitable for the government and Nigeria in general.
The impact of the oil industry corruption is made worse by the renewed innovation and production in the United States and Canada. This oil and natural gas takes export customers away from Nigeria. The first and largest customer lost was the United States itself, which over the last few years has once more become a major exporter. The U.S. still imports some Nigerian oil but the Americans are now seen more as competitors than customers.
You don’t hear much about the American oil market in Nigerian media, instead much of the reporting is about tribal and religious violence. In Nigeria, as in the rest of the world, “if it bleeds it leads” defines local media content.
April 15, 2019: In the southwest (Ekiti State) Fulani raiders attacked a Moslem farming family, killing two people, wounding three and looting the farm and fleeing before dawn.
In the northeast (Borno State) across the border in Chad Boko Haram attacked a Chad military base near Lake Chad, killing seven soldiers. But the late night attack that continued into the next day, left over fifty of the attackers dead and was a failure.
April 14, 2019: Today is the fifth anniversary of the Boko Haram raid on a boarding school for girls near the town of Chibok. The raiders kidnapped 276 people from the school, most of them teenage students and a few faculty. Despite energetic government efforts to find and rescue the “Chibok girls” 112 remain missing. Boko Haram is still in the area as they demonstrated when they raided a village ten kilometers from Chibok today, The raiders arrived in four trucks and more than a dozen Boko Haram gunmen fired randomly to chase the villagers away. The village was looted and before the loaded trucks drove away the village was burned down.
April 13, 2019: In the northeast (Borno State) troops from Nigeria and Chad carried out a joint operation near the Chad border and Lake Chad. The joint force went after known or suspected Boko Haram camps and killed 27 Islamic terrorists while capturing some and wounding many of those who fled. The joint forces suffered no casualties. Vehicles and large quantities of weapons and ammo were seized along with documents and equipment.
Just across the border in Cameroon police detained 30 Nigerian civilians who had just come across the border in a bus. The Nigerians were all women and children, had no identification and no permission to enter Cameroon. Moreover the 30 were coming from a part of Borno where there was known Boko Haram activity and Cameroon police suspected the 30 are wives and children of Boko Haram members who are being sent to Cameroon to keep them safe. Cameroon police contacted their Nigerian counterparts for assistance in identifying the 30.
April 11, 2019: In the northwest (Zamfara State) the army completed a ten day operation to find and eliminate camps used by raiders and succeeded in clearing several and killing 35 armed tribesmen and capturing weapons and equipment.
April 10, 2019: In the northeast (across the border from Borno state in southeast Niger) Boko Haram gunmen were repulsed when they again attacked near the border town of Diffa, which has been the scene of clashes between the Niger troops and Boko Haram forces for years. This time the suicidal attackers took civilian hostages and fought to the death. In some cases the hostages were families of local policemen.
April 9, 2019: In the northeast (Yobe State) Boko Haram attacked the state capital (Damaturu) for the first time since 2014. The attack failed and the Islamic terrorists suffered heavy casualties, including about twenty dead and the loss of two gun trucks captured along with many other weapons.
Elsewhere in the northeast (Katsina state) a clash between tribal militias left 18 dead. A similar clash elsewhere in Katsina state left five dead.
Elsewhere in the northeast, across the border in Niger, two Boko Haram suicide bombers attacked a checkpoint leaving a policeman and two defense volunteers dead.
April 8, 2019: In the northeast (Borno State) troops ordered 10,000 residents of Jakana (40 kilometers north of Maiduguri, the state capital) to leave the town and move to a refugee camp outside Maiduguri for screening to detect Boko Haram members or supporters. After three days about half the refugees were allowed to return to Jakana. Elsewhere in Borno an airstrike killed at least five Boko Haram and wounded many more.
In the northwest (Zamfara State) an airstrike killed about 40 tribal militiamen
Elsewhere in the northeast (Kaduna State) Fulani raiders dressed in military uniforms killed 21 civilians.
April 7, 2019: In central Nigeria (Kogi State) Fulani gunmen killed a policeman and seven farmers.
In the northeast (Katsina state) a clash between tribal militias left 36 dead.
April 6, 2019: In the northwest (Zamfara State) an airstrike killed 25 tribal militiamen who had been out raiding other tribes.
In the southeast (Anambra state) herders attacked a village and killed six civilians.
In the northeast (Borno State) two Boko Haram suicide bombers killed nine people.
April 3, 2019: In the northeast (Borno State) Boko Haram killed five MNJTF (Multi-National Joint Task Force) troops.
ISGS, the Mali/Niger ISIL group, released its first video showing an undated attack near the Niger border. Actually the video was released by ISWAP Islamic State West Africa Province ) , the Boko Haram ISIL faction , which is one of two factions of Boko Haram. ISWAP personnel are mostly in northeastern Nigeria as well as smaller numbers in Chad, Niger and northern Cameroon. ISGS and ISWAP do not appear to work together except when it comes to Internet media activities, where ISWAP will mention ISGS accomplishments. ISIL does not have effective central authority at the moment with the senior leadership still dispersed and on the run from recent defeats in eastern Syria.
April 2, 2019: In the northwest (Zamfara State) tribal violence left about fifty dead, including some armed CJTF (Civilian Joint Task Force) local defense volunteers.
In central Nigeria (Benue State) more violence between Fulani herders and Christian villagers left five Christians dead.
In the northeast (Tabara state) tribal violence left a dozen dead.
April 1, 2019: In the northeast (Borno State) Boko Haram killed about a dozen soldiers while fighting near Lake Chad and the town of Kukawa. The Islamic terrorists also suffered heavy losses but no numbers were available.
In the southern part of Borno State (135 kilometers southeast of the state capital) the air force attacked Boko Haram forces near Gwoza, a town near the Cameroon border that the army has repeatedly chased Boko Haram out of since 2014.
March 31, 2019: In the northwest (Zamfara State) tribal violence continued, despite military intervention. At least fifty have died in the last few days. Airstrikes against groups of armed tribal raiders, killing several of them and scattering the group.
In the northeast (Adamawa State) troops killed over 40 Boko Haram gunmen.
Source: Ocnus.net 2019