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Nigeria Running on Empty

Christmas was hot in Nigeria last month, when the country was ablaze with church bombings, terrorism and sectarian tension. The heat will only intensify in the New Year, as oil prices spike with an end to nearly four decades of fuel subsidies. From the WSJ:

Nigeria had been spending 1.2 trillion naira ($7.3 billion) a year—about a quarter of all government spending in the 2012 budget—to keep petroleum products within reach of its deeply poor population of 167 million people. […]

Many of the 70% of Nigerians who live on less than $2 a day, however, view the subsidy as the only windfall the nation’s poor have enjoyed from the more-than-two-million barrels of oil the nation exports daily.

Nigeria’s top two labor unions called for “strikes, street demonstrations and mass protests across the country,” starting Tuesday, according to a statement quoted by Vanguard, a newspaper based in the commercial capital, Lagos.

Nigeria may be one of Goldman Sach’s “Next Eleven” developing economies, but it remains a laggard. It lacks the consistent stability, good governance and civic infrastructure to maximize its potential. It suffers from a combustible mixture of youth (the median age is 19.2), endemic poverty, acrimonious (recent) history, rapid  population growth, ethnic rivalries, linguistic divides, limited education and hot religion. Throwing fuel on the fire, so to speak, is dangerous.

Sporadic but fierce violence is a staple of Nigerian society. The oil-rich Niger Delta is infamous for kidnappings, militancy and human rights violations. Even more worrying is Nigeria’s religious violence. Annual death tolls are in the low thousands, and incitements and reprisals are common among Muslims and Christians alike. Boko Haram, a pseudo-Islamic sect, may be the most fearsome combatant,  charged with church bombings, mass prison breaks and indiscriminate slaughter.

Nigeria is riven with stark divisions: rich and poor, Christian and Muslim, 250 distinct ethnic groups and double the number of languages. But Nigerians have long been united in their universal dependence on cheap gas. Now that this commonality has become yet another source of conflict, President Goodluck Jonathan will need more than just his first name to navigate Nigeria through the New Year.

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  • Toni

    An Austrian-born mercenary in Africa* (really) once told me that of every four oil tankers that leave Nigeria, one funds the rampant corruption of its leaders.

    Corruption is another of Nigeria’s many afflictions. There are beaucoup bucks to fight over, and whatever gets done by government and the private sector is done inefficiently and probably badly.

    None plans for falling oil and natural gas prices. Worse, oil and gas compete worldwide. When oil prices get too high, many big users can switch to gas. A drop in gas prices tugs down oil because users can keep burning gas, or switch to it.

    Ergo, all the gas the world fracking revolution brings on the market is bad news for Nigeria, and worse for Nigeria’s multitudinous poor.

    * I don’t know for whom the mercenary had been fighting in Nigeria, but he’d faced a Nigerian firing squad and talked his way free. As apartheid in South Africa was crumbling, he hoped war didn’t erupt, because he’d promised to fight on the side of Zulu Chief Buthelezi.

    One meets the most fascinating people in the cheapest restaurant in a pricey Manhattan hotel. Josef’s other trade was leading big game hunts on his Namibian ranch. (I nearly ran screaming but stayed and learned how dangerous this is.) On this occasion, he was bodyguarding Namibia’s prime minister during the latter’s honeymoon.

    Hey, sorry to go on and on, but I’ve been really lucky to meet a legion of interesting people in my life.

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