The price of politics: What the 2020 oil shocks in Nigeria teach us about transactional political systems

Abstract

Political spending—funds that elite actors use to buy and sell political power—is the lifeblood of Nigerian politics. It fuels backroom deals, forges political coalitions, and is the means to incite or end violence. To date, political spending in Nigeria has largely been financed by its immense oil revenues flowing through the government. It is natural to assume that political budgets should rise and fall with oil’s boom-and-bust cycles, but the reality is not so straightforward. Based on an analysis of the 2020 oil crash in Nigeria, this paper examines how traumatic decarbonization—the sudden, unplanned loss of oil revenues—did not lead to a reduction in political budgets but did force a change in how they were funded and channeled. Despite the loss in oil revenues, patronage and the “contractocracy,” government contracts used to funnel rents to the elite, were protected and expanded massively in 2021 with funding from domestic and international loans. The 2020 oil crash demonstrated the resilience and rising cost of transactional politics in Nigeria, even when it came at the expense of the Nigerian people. Through this analysis, the paper further examines systemically corrupt political systems and how political actors adapt to changes in available political finance.