Last week, history was made abroad as Nigerian voters unseated an incumbent president for the first time since military rule ended in the country 15 years ago.
Nigeria is Africa’s most populous country, its biggest oil producer, and has its largest economy, but extreme corruption throughout the government and the growing threat of insurgent violence ushered in a changing of the guard.
The country’s president, Goodluck Jonathan, had been criticized throughout his term as a nepotistic ruler who supported the corruption of high-ranking officials.
As the signs of corruption throughout the country became more and more obvious, so too did the vicious attacks and kidnappings organized by Boko Haram — a terrorist group made infamous by its kidnapping of hundreds of Nigerian girls from a school last year.
With these converging plotlines, Muhammadu Buhari won the election handily.
Buhari, a military dictator in Nigeria 30 years ago, won favor for promising a tougher stance on corruption in government and on insurgents in the country’s northern provinces.
He defeated Goodluck Jonathan by 2.5 million votes, forcing the incumbent to concede publicly, which helped avoid one of the violent clashes that have become all too common come election time in Nigeria.
In 2011, when the same candidates faced each other, Jonathan’s victory was marked by nearly 1,000 deaths in violent skirmishes in Buhari’s home province.
I tell you all of this not to offer lessons in international politics, but to illustrate the importance that oil and government corruption plays in the daily lives of people everywhere.
Plus, the new regime in Nigeria could create some investment opportunities in the U.S. energy markets…
Oil Corruption and U.S. Abandonment
Despite the headlines you may see throughout most of the western media, the main issue for voters in Nigeria’s elections was government corruption.
Specifically, the theft of oil money by high-ranking officials within the government.
It was made public last year that about $20 billion in oil revenue for an 18-month period was unaccounted for by the Nigerian central bank. The bank’s president — appointed by Goodluck Jonathan — was fired.
And as the United States abandoned Nigeria as an exporter, the country fell further into corrupt practices…
In some cases, Nigeria’s oil companies sold oil to Asian and European buyers, prompting Saudi Arabia and some other big producers in OPEC to cut prices to Asia and set off the current bear market in oil prices.
With oil prices low, instead of investing whatever money was available in the military, health care, and a diversified economy, government officials continued to pillage the country’s accounts. Federal employees went unpaid, reserves of foreign currency were raided, and Nigeria’s version of the dollar — the Naira — lost a lot of its value.
These gross violations by government officials led to Buhari’s victory, but now present problems for the new leader going forward: rampant oil theft, corruption, Boko Haram insurgents, and an economy dangerously reliant on oil and natural gas.
As the new regime attempts to fix these problems, investors in the U.S. and throughout the world should keep their eyes on Nigeria…
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