Nigeria is at a critical moment in its history as political uncertainty and low oil prices threaten its well-being, Control Risks, a global business risk consultancy states in its annual RiskMap report.
The price of OPEC basket of twelve crudes which includes Nigeria’s Bonny Light, stood at $52.25 dollars per barrel on Wednesday, falling from $53.03 the previous day. The country’s lawmakers are likely to peg the oil benchmark at $53 per barrel after a couple of cuts from the initial $78 per barrel. The economic struggle of the country has been worsened by the air of uncertainty in the country, as it awaits the March 28 presidential election which is expected to be keenly contested.
“The postponement of Nigeria’s elections has unnerved some investors and made others delay their final investment decisions. The economic impact of that has been shown by the drop in the naira. The genuinely competitive elections are a critical juncture on Nigeria’s path towards becoming a mature democracy, but closely contested polls are uncharted territory for the country’s political system,” said Tom Griffin, Managing Director West Africa, Control Risks.
“Regardless of the outcome of the polls, the incoming administration will have to contend with multiple challenges: resurrecting the oil sector reform agenda, managing a likely cash-flow crisis in government, dealing with the threat from Islamist militant group Boko Haram and maintaining stability in the restive Niger delta.”
The MD West Africa for Control Risks also said that West Africa will remain a piracy hotspot in 2015. This will be led by Nigeria, where “maritime operators are bracing for the fallout from the contested general elections. How whoever wins the presidential election manages the Niger delta’s former rebels will also play a role in the future of piracy in the sub-region.“The terrorist threat will continue to evolve tactically and geographically given the adaptability of Islamist militant groups operating in West Africa. Islamist militant group Boko Haram will grab further headlines in 2015, but faces limitations outside its north-eastern heartland and has come under pressure from the Nigerian government and regional military offensive.
In Nigeria’s northeast where terror group Boko Haram has killed over 13,000 people in its 5-year campaign, Griffin believes there will be more attacks. “Islamist militant group Boko Haram will grab further headlines in 2015, but faces limitations outside its north-eastern heartland and has come under pressure from the Nigerian government and regional military offensive. This, however, increases the risk that the group will lash out outside its northeastern heartland.”
Despite the impending crises highlighted in the RiskMap 2015, Griffin believes Nigeria will come out fine. “Nigeria has an impressive capacity for weathering impending crises,” he said. The report also notes that diversification of the economy remains crucial to improving the sustainability of Nigeria and indeed, West Africa’s economic growth.