Niger Delta, a burning issue

After Chinese manufacturing sector recovery, I keep focusing on international issues. In this post, I will be going through the reading of several articles (Reuters, Daily Telegraph) concerning the harmful situation that is going on in the Niger Delta. This area suffers many problems at the moment and had been suffering these issues for decades now since oil production started. This asset has been mismanaged over years due to a lack of political efficiency. And from a potential wealth it has came to a source of conflict over several countries concerned by oil extraction.

First of all, oil production has led to social issues in the Niger Delta. Foreign companies are dealing with oil extraction and local population is in most cases left behind. This leads currently to a major issue in this area of Africa. Militancy is increasing and it appears that abducting has become a “fashionable” activity, because of the great amount of money it could provide. Indeed, many groups use to kidnap more and more people, mainly individuals suspected of having money or at least linked with people that do have money. Kidnappers are asking for ransom usually ranked between $700.000 and $3 million.

It is obvious to me that the government should lead as quick as possible legislative schemes in order to slow down militancy because as far as financial outcomes are concerned, this situation is likely to bring foreign investors reluctant on spending money in oil companies, joint ventures or upgrading production facilities schemes.

The main issue that local governments will have to face is oil productivity which has been cut by almost 40 percent due to sabotage or kidnapping of oil workers. Government earn $ billion a year and local population receive a very few part of it. That’s why government is trying to pass a proposal through parliament. Government should curb its stake in joint venture with foreign oil companies by 10 percent and give it to local trusts. That would bring local population to be involved in oil producing process and relying on it. This should lead to calm down militancy and offer local population what they had always be asking for. Then, it is all relying on governments processes, as it has always been a matter of implementation in this African area. But according to Nigerian President and his advisor this scheme is all Nigeria has always needed. Only time could bring a proper reply to this.

A comparison between different articles would not be relevant to this issue, because every single article deals with a different analysis of the situation. It allowed me to have an overall viewing of the situation in the Niger Delta though. Of course, to me it is pretty obvious that potential wealth are in most cases mismanaged in black Africa, and instead of leading to an upgrade of countries economic situation, it comes up more with conflict, disputes, attacks, kidnapping and murdering. Government has to run tightened policies to try and end up militancy in this area of the globe, and getting local population involved in oil producing process could be a great idea to keep the assets safe. This point is really important to keep the industry attractive to industrialized countries investors, on which this sort of countries are relying on their way to stand up as an economic power.

References :

http://www.telegraph.co.uk/expat/expatnews/6452428/Now-its-not-just-oil-workers-under-threat-from-Nigerias-kidnappers.html

http://uk.reuters.com/article/idUKLS714353._CH_.2420

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/nigeria/6377224/Nigeria-planning-oil-deal-for-delta-to-reduce-violence.html