Three reasons Nigeria's elections next week could turn violent

Nigerian elections are just ten days away, and things are getting tense. 

The country has a couple of things going on that make its political situation tenuous, even without an election. This year they're all coming together to create a particularly explosive election cycle.

Religion

The country is populated largely but Muslims in the north and Christians in the south, so there's occasionally religious conflict. The election, pretty tightly contested between the Christian incumbent, Goodluck Jonathan, of the People's Democratic Party, and the former dictator of the

country Muhammadu Buhari. Buhari, who ruled the country back in the 1980s, is Muslim and represents the All Progressives Congress.

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RBC

The election in 2011, which Goodluck Jonathan won by a pretty hefty margin, led to violence in the Muslim north. This race is much closer. 

RBC Capital Markets sent out a note outlining the stakes of the election on Wednesday. This is a key detail:

" Holding the presidency is particularly important because it often entails the redistribution of government patronage and contracts to the incumbent’s home region. Given that the North lacks natural resources and suffers from some of the highest rates of poverty, the economic costs of being locked out of power are substantial." 

Terrorism bookends the country

The terrorist organization Boko Haram is wreaking havoc in the north of the country, laying siege to the largely rural and sparsely populated region. Nigeria just doesn't have, or won't commit, the resources to fight Boko Haram properly. From Emad Mostaque's op-ed in the Wall Street Journal in late January: 

Boko Haram’s initial strategy was to try to undermine and gain control of the Kanuri ethnic regions of northeast Nigeria while looking to polarize society by attacking states along the Christian-Muslim divide known as the Middle Belt region. The Nigerian government response to this push has been slow, with only 25,000 poorly equipped troops deployed against Boko Haram in the country’s northeast. Nigeria’s whole defense budget for 2014 was only a third of the $5.8 billion security budget, small for a country with a GDP of more than $500 billion and facing an insurgency.

The worry is that Boko Haram, which now more or less rules a part of the north, will keep people from going to the polls. If enough people are kept away, that could swing the election in favor of Jonathan.

Meanwhile, the ceasefire with the southern rebel group, Movement for the Emancipation of the Niger Delta (MEND), ends this year. There's a fear from MEND " that if Jonathan is defeated,  the large annual cash payments that accompanied the 2009 amnesty agreement will cease," according to RBC. So if  Buhari wins, there could be bloodshed in the south that the military, with its focus on Boko Haram, is ill-equip to defend against.

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Oil

If these two things weren't bad enough, the collapsing price of oil puts the country in a tough situation economically. The pinch has caused the Nigerian currency, the naira, to crash. Thanks to a devaluation in December and central bank intervention since then, the naira stayed sort of stable throughout the month of January, but it's still seeing a lot of volatility. 

But even with a stable currency, Nigeria is a big oil exporter, and it relies heavily on high prices to balance its budget.

Worse, Nigerian leaders often steal oil. This includes candidates trying to bolster their campaign coffers. RBC writes, "n ot only does crude theft spike around elections,  but additionally, more production is shut-in because of the infrastructure damage that  accompanies both the theft itself and the increase in generalized election-related violence  around production facilities."

RBC thinks that because the price of oil is so low, crude theft could be much worse than in previous election cycles.

On top of that, an audit of the country's oil revenues is expected this week, and it probably won't look good for Jonathan, the incumbent. 

According to the FT, " PwC, the international accountancy firm, was commissioned to carry out the audit last March after Lamido Sanusi, then governor of the Central Bank, publicly questioned discrepancies of more than $1bn per month between oil sales and income."

The budget shortfalls in the 18 months between January 2012 and July 2013 alone were about $20 billion, according to Sanusi (who was promptly fired after making those allegations).