Nigeria’s Unbalanced Budget

On May 12, after a week’s delay, Nigeria quietly released the details of its federal budget. Although few gave it much attention—more eyes have been focused on Boko Haram’s roiling insurgency in the north—the budget allocations could very well retrigger instability in the south, where militias had fought for decades over the spoils of the oil-rich Niger Delta. In particular, the government cut 70 percent of funding for its Niger Delta amnesty program, a guns-for-cash-and-jobs training exchange for former militants involved in past Niger Delta conflicts. The decision was surprising, since President Muhammadu Buhari had only announced a few months earlier that he would extend the program through 2017. The cuts come following steep declines in Nigeria’s oil revenue and amid rumblings of a recession.

The cuts come at a particularly crucial time for the country’s stability. The program was regarded as having successfully disarmed and transitioned back into society nearly 30,000 former insurgents after it was created in 2009. In other words, many former insurgents had laid down their weapons and not picked them back up. But tensions have been rising again over federal petroleum policies, which distribute the oil revenue among Nigeria’s 36 states and govern the environmental and social responsibilities of the oil companies operating in the Niger Delta. Now newly formed militias are repeating the old call for more regional autonomy. Part of their discontent is related to long-standing religious and regional tensions, as Christian southerners are wary of the Muslim president, Buhari, who hails from the country’s north and who is now seeking to reduce their resources. That is why this budget cut could reignite conflict in the Niger Delta.

Despite the initial success in the program’s (admittedly narrow) mandate, the amnesty program itself has long been problematic and controversial. Over the years the budget of the program swelled. At its inception, its cost was pegged at $145 million, but over three years it swelled to $1 billion, according to Lamido Sanusi, the former governor of Nigeria’s Central Bank. And yet little of that money reached the lower ranks of the former militant groups. Scholars Olubayo Oluduro and Olubisi F. Oluduro estimate that about 80 percent of the budget went to overhead and only 20 percent trickled down to programs for ex-militants.  

This dearth in funding resulted in a carelessly executed program. Even the training facilities were shoddily built and inadequate for use as an education and rehabilitation center. The vocational training programs often prepared former militants for careers in sectors with limited demand or, in the case of the oil and gas industry, seemed unwilling to employ them, according to the Nigeria Stability and Reconciliation Programme, a nonprofit that aims to reduce conflict throughout the country. The organization noted in a report that “the low representation of Niger Deltans in oil companies has been one of the driving forces of the conflict.” Oil companies are often mistrustful of former militants and may instead hire foreigners or relocate some of their employees. Although some former militia leaders were able to vocalize their grievances and push for better policies in the amnesty program, such as job training, in general, a significant proportion of militants were not consulted in its creation. Instead, the amnesty program was formed with input from state governors and a “few influential traditional rulers,” who were valuable in mobilizing a certain level of local support, but who could not necessarily speak to the grievances of the young men who had picked up arms.

In essence, the program treated symptoms and failed to address root causes. One of those causes was the massive environmental and economic degradation of the Niger Delta by aggressive oil production. The oil drilling and spills has fed toxic chemicals into the soil and waters, deeply affecting the farming and fishing communities nearby. According to a 2011 report by the United Nations Environment Programme (UNEP) it will take 25 to 30 years to restore the land, at a cost of $1 billion.

The environmental degradation has lasting socioeconomic impact too. UNEP found that oil-spill contamination of soil and groundwater exceeded acceptable levels set forth by the Nigerian government. The result has been a collapse in the communities’ farming and fishing activities, which are their livelihoods. The UNEP reported that “any crops in areas directly impacted by oil spills will be damaged, and root crops, such as cassava, will become unusable.” This damage is often irreversible. Even after a cleanup, UNEP found that “when farming recommences, plants generally show signs of stress and yields are reportedly lower than in non-impacted areas.” In fact, some local aquatic businesses, such as fish farms, had been “ruined by an ever-present layer of floating oil.” Not even the air has been spared. Hydrocarbon and benzene fumes have polluted the air. These chemicals sometimes leach into drinking water, making it hazardous to drink.

Over time, locals came to regard the government as more concerned with serving the needs of foreign petroleum elites than with the well-being of its own citizens. According to academic Iyabobola O. Ajibola, “these injustices included non-provision of amenities, non-provision of employment opportunities, and the refusal or delay in the payment of compensation to communities.” Nigeria has guidelines for protecting the environment and regulating the petroleum industry, designed to protect local communities. But these rules have been manipulated by oil companies, who exploit weak enforcement, such as differences in interpreting the regulations by the Nigerian Department of Petroleum Resources and the National Oil Spill Detection and Response Agency.

These grievances against the government continue to fester. Combined with new frustrations with former militia leaders who are perceived as selling out if they participate in the amnesty program, the anger has given rise to new militias. The Niger Delta Avengers, which formally announced its creation in April of this year, launched sophisticated attacks on Chevron’s operations in Delta state and also sabotaged pipelines to oil refineries in the cities of Warri and Kaduna. The group has released a press statement on its website claiming responsibility for the assaults and demanding a sovereign state. It also admonished participants in the amnesty program for what it saw as selling out to the government and multinational oil companies.

If theviolence escalates, it could deeply reduce oil production, which has already reached historic lows due to the collapse in global oil prices. This would further hurt the country’s flagging economy—70 percent of government revenue comes from the sale of oil—and the decline in oil prices did not help.

The budget was not all about downsizing. In fact, at $30 billion, it is record-breaking in size. The budget triples public expenditure, mostly focusing on rehabilitating the country’s infrastructure. The amnesty program is not where the government should be making cuts. Its discontinuation could be ruinous to the country’s stability and thus its overall economy. The funding for the amnesty program should of course go toward its reform. Not only does the program need to significantly reduce overhead costs but it also needs to engage with the new militias and directly address their political grievances. The government may also need to invest more in reversing the environmental degradation in the Niger Delta. These may be expensive measures, but they are crucial. Tasked with defeating Boko Haram in the north, Nigeria cannot afford to respond to another insurgency in its south.