Falling oil prices, serious challenge to Nigeria –Campbell

A former United States ambassador to Nigeria, John Campbell, has raised the alarm that current situations in Nigeria, especially falling oil prices, are making it difficult for the country to avoid disintegration.

He stated that apart from the Boko Haram insurgency plaguing the country, the falling oil prices posed a new challenge to the Federal Government.

Campbell also noted that any attempt by the President Goodluck Jonathan administration to pursue policies of austerity could lead to a protest similar to that of the oil subsidy removal in 2012.

The Ralph Bunche Senior Fellow for Africa Policy Studies writing on the Council on Foreign Relations website said, “National elections are scheduled for February 14, 2015. Elections are the occasion and the venue for competition, often violent, among Nigeria’s fractured political elite. In the past, abundant oil money provided a means to resolve numerous conflicts, to literally ‘grease the skids.’ Now, there is less money available.

“Nigeria has benefited from an oil boom since the end of military rule in 1999. Prices rose from $10 per barrel that year to $140 per barrel in 2008. As late as June 2014, they remained above $100. However, since June, oil prices have fallen by more than 30 per cent. It is unlikely that they have reached bottom.”

According to him, the FG may be reluctant to approach international financial institutions for assistance because of the likely requirements those institutions will impose on it.

“The confluence of declining oil prices and government revenue, a failing effort against Boko Haram, and contentious national elections in two months is making it harder for Nigeria to pull back from the brink,” he said.

The former US ambassador to Nigeria stated further that a major cut in oil production by the Organisation of Petroleum Exporting Countries, led by Saudi Arabia could cause oil prices to recover to the $100 per barrel level.

Campbell also noted that Nigeria’ dependency on oil was “now stirring serious concern throughout the country’s political class.”

“Among other things, a whole array of government expenditures associated with petroleum play a major role in sustaining the cooperating and competing patronage networks that run Nigeria. Absent this political lubricant, the country’s already unstable political situation promises to get worse just two months ahead of national elections,” he said.

--Punch News