Nigeria's crippled economy helps Boko Haram survive

Nigeria’s struggling economy is hampering its fight against the Islamic terror group Boko Haram. In 2014, Nigeria overtook South Africa as the continent’s largest economy, yet an estimated 61 percent of the country’s population lives on less than a dollar a day. The 2016 budget already faces a deficit of more than $150 million. And beyond the economic downfall, poverty and political corruption continue to weaken Nigeria’s ability to protect itself.

Nigeria’s information minister Lai Mohammed is accusing 55 members of the preceding administration, including governors, ministers, and other government workers, of stealing $9 billion from the national treasury. Mohammed said the stolen funds included $2.1 billion budgeted to buy weapons for the military to fight Boko Haram.

According to Mohammed, local authorities initially planned to use the $2.1 billion missing from Nigeria’s treasury to equip the military with 12 helicopters, four fighter jets, bombs, and ammunition. Instead, former President Goodluck Jonathan used the money to finance his party’s electoral campaign against President Muhammadu Buhari, Mohammed said. Last year, Nigerian troops complained of a lack of sufficient weapons and months of unpaid salaries.

Buhari, who promised to resolve corruption and insurgency, has not been silent. Local officials detained Jonathan’s former security adviser, Sambo Dasuki, who is linked to taking the $2.1 billion.

“We have very strong accountability issues across every aspect of the economy,” said Chukwuka Onyenekwe, executive director of the Nigeria-based Center for the Study of the Economies of Africa.

On Jan. 13, oil prices dropped below $30 a barrel, leading Nigerian stocks to fall to a three-year low. Within the first two weeks of this year, the Nigerian stock market lost $10.5 million as investors continued to flee the wary economy. The Nigerian naira also briefly dropped to an exchange rate of 305 to one U.S. dollar, its lowest value in 43 years.

Buhari opposed suggestions from financial experts to devalue the Nigerian currency as a financial remedy.

Instead, the Central Bank of Nigeria restricted access to foreign reserves. Nigerians spending Christmas holidays abroad as well as international business people felt the impact. Some debit cards failed to work abroad, while others restricted daily use to $300.

“Nigeria needs to allow market sources to determine the exchange rate,” Onyenekwe said. “Using controls is a short-term solution.”

Buhari recently signed an agreement with United Arab Emirates (UAE), where many stolen Nigerian funds are hidden. The agreement will enable the UAE to return stolen funds and extradite guilty Nigerian officials back to the country.

“It takes a long time to recover funds that have been looted,” said John Campbell of the Council on Foreign Relations. “The fact that there is now a mutual legal-assistance agreement between Nigeria and the United Arab Emirates helps to change the culture of corruption. It makes corruption now and in the future more difficult.”

But more can be done to salvage the economy. Onyenekwe said Nigeria needs to diversify its revenue sources, and he urged leaders to take the first step.

“We need the necessary infrastructure to drive the industrialization that would create jobs and lead to the actual diversified economy,” he said. “You need an industrial base to do that.”

Boko Haram’s insurgency continues to thrive in rural northeastern Nigeria. The country’s economic issues weaken the fight against the extremist group, but Campbell said that is only “one of the causes.”

“It simply can’t be dismissed as a result of economic conditions,” Campbell said.