It is May 2021 in the Niger Delta. A man named Government Ekpemupolo issues an ultimatum to Nigerian President Muhammadu Buhari. The former rebel leader is unsatisfied with the Niger Delta Development Commission (NDDC) appointed by the president. He accuses its members of corruption and profiting from the region’s oil wealth. Ekpemupolo demands that the government appoints a new board or face the consequences.

Ekpemupolo’s demands hold weight. As a former commander of the Movement for the Emancipation of the Niger Delta (MEND), he has years of experience fighting the Nigerian army. He and his troops used to make a fortune stealing oil, but the government now employs them to defend the same pipelines and facilities they used to steal from.

President Buhari conceded to Ekpemupolo’s demand and appointed a new board. After all, he depends on the former warlord to keep the oil industry operative. Moreover, oil’s share of Nigeria’s total export value was 74% in 2021, and losing the sector is not an option.

Reportedly, the Nigerian government pays Ekpemupolo’s security firm over $100 million a year for its protection services. However, despite security arrangements with armed groups, oil theft remains a significant problem in Nigeria. An investigation by the country’s senate found that during the first eight months of 2022, over $2 billion of oil was stolen and that just two-thirds of national oil production could be “effectively guaranteed.”

The regions where oil is produced are often poor and conflict-affected. As a result, locals depend on oil theft and security contracts to make a living. Sometimes those involved in protection rackets are simultaneously involved in oil theft. This state of affairs deters companies from investing in Nigeria’s oil industry.

Violence, too, makes investing in the Nigerian oil industry unappealing. In 2006, for example, Ekpemupolo’s MEND bombed an oil refinery and warned the Chinese government and its companies not to invest in the Niger Delta.

As a result of theft and lack of investment in the oil industry, Nigeria’s oil output has been decreasing in recent years. As a result, production fell below 1 million barrels per day in August 2022, the lowest amount since 1990. This decrease, among other things, resulted in the government’s oil saving account becoming almost entirely depleted.

Nigeria has, in recent years, been unable to meet its OPEC assigned production quota of 1.8 million barrels per day. This is partly because infrastructure decay and field productivity decline need to be addressed. In addition, no companies are willing to invest in a sector plagued by thievery, corruption, and instability. The resulting insecurity of assets, and concerns about the safety of employees, make it too risky for a business move.

In the meantime, Nigerian oil production is on a downward trend, and the nation is losing as much as $150 million in oil revenue every two days. As a result, Angola and Libya have overtaken Nigeria as Africa’s leading crude oil producers.

Improving security and combating theft and corruption in Nigeria’s oil-producing regions are vital to the government. If this is done successfully, it improves businesses’ prospects of investing in the Nigerian oil industry, allowing oil production to increase again.

Any solution should include local communities, who must feel that they benefit from the resources extracted near their homes. Therefore, locals should have a stake in stable and orderly oil production and transfer. At the same time, government oversight should limit the ability of opportunists to gain possession of the black gold illegally.