Payments to Ex-Militants as Oil Output Drops

Source: Bloomberg 8/1/2016, Location: Africa

Nigeria resumed payments to former militants in the oil-rich Niger River delta, addressing some grievances amid attacks that cut crude production close to a 30-year low.

About 30,000 ex-fighters, who were receiving a 65,000 naira ($206) monthly allowance, were told the government would resume paying stipends after a “hiccup,” the office of Paul Boroh, coordinator of the presidential amnesty program, said in an e-mailed statement.

The payments were halted in March due to “the revenue constraint” of the country, Piriye Keyaramo, a spokesman for the Amnesty Office, said Tuesday by phone.

Africa’s biggest economy is likely headed for a recession because of a slump in crude prices and a 15-month currency peg to the dollar that crippled foreign-exchange supplies.

Nigeria is also trying to engage militants to establish a cease-fire after oil output fell to 1.4 million barrels a day, Minister of State for Petroleum Resources Emmanuel Kachikwu said Monday on state television. Peace talks that started last week with the Movement for the Emancipation of the Niger Delta, and the resumption of amnesty payments may do little to halt attacks on wells and pipelines by a different rebel faction, the Niger Delta Avengers, according to Dolapo Oni, a Lagos-based analyst at Ecobank Transnational Inc.

“I don’t think the payments are going to stop anything” until the government finds a longer-term solution that gives communities in the region a stake in the industry, Oni said in a phone interview.

Cutting Financing

Following several years of relative calm, the attacks by the Niger Delta Avengers, or NDA, started in February after Buhari ended security contracts and said payments that had turned earlier militants into protectors would cease in 2017. While the rebels say they want more local control of oil resources and earn justice for impoverished local communities, the return of violence has worsened economic problems in Nigeria, where oil accounts for two-thirds of government revenue and almost all exports earnings.

Resuming the stipends “is all part of plans to begin discussions on how to bring a lasting solution,” Pabina Yinkere, Lagos-based head of research at Vetiva Capital management Ltd., said by phone. "After the events and the continued attacks on facilities and the recognition of how economically sensitive the Niger delta is for the country, the government probably has no other option than dialogue."

The government has threatened military intervention in the Niger delta. The army on Monday said military aircraft had attacked criminal gangs near Lagos, the commercial hub, accused of vandalizing oil pipelines to steal refined petroleum products.

Boroh’s office said he had assured the Movement for the Emancipation of the Niger Delta militants that their patience was appreciated by President Muhammadu Buhari, who backs the amnesty and plans to invest heavily in the region. After Buhari took office in May 2015, the government said it would cut financing of the amnesty program this year by half, to about $100 million, and end it next year.

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