West Africa’s political crises

West Africa isn't known for its political stability – but events in this critical region threaten to throw the whole area into chaos, with profound political and economic repercussions.

Currently, the two hotspots are the Ivory Coast and Nigeria. The former only recently emerged from decades of brutal and intractable civil war, and that conflict may yet flare up if the current political crisis cannot be resolved. In an election widely regarded as fair and untainted, candidate Allassane Ouattara defeated incumbent Laurent Gbagbo. President Gbagbo has resisted, calling the election fraudulent and refusing to step down from office.

A political standoff has developed, with the country's vital cocoa-exporting industry in disarray. Some farmers loyal to Gbagbo are seeking new venues for selling their crops, Bloomberg reports, as European traders adhere closer to Ouattara's request to embargo his own country's exports.

Ouattara wants to lock down the cocoa trade because it provides the embattled Gbagbo with cash and resources to continue resisting. 

The standoff has dragged on for nearly three months, and nearly 300 Ivorian citizens have died as a result of clashes between the factions. Economically, it's also a disaster, with a complete lockdown in the Ivorian economy, as banks and trading houses end up shuttered by the chaos.

"This is a significant setback for Gbagbo’s administration," Samir Gadio, an emerging market strategist at London's Standard Bank, wrote in an investment note. "The financial system has virtually come to a standstill, which is likely to erode the regime’s base of support going forward, especially if public and private sector salaries are not serviced later this month."

Earlier in the year, cocoa futures stood below $2,900 per metric ton; they've now surged to $3,412 per metric ton, driven by the continuing shortage of beans on the market. 

The other troubled African nation is Nigeria, which is also struggling with a legacy of violent resistance and resource wars. There are two separate political problems in Africa's most populous nation. The first is the ongoing rebellion in the Niger Delta, which contains most of the country's oil wealth. A combination of corruption, exploitation and negligence have ruined the environment, pillaged the natural wealth of the region and wasted vast amounts of resources.

In an unrelated issue, Nigeria is riven by a religious and ethnic conflict which pits the largely Muslim north of the country against the mostly Christian southern states.

The country has an election scheduled for April. A Muslim group called Boko Haram, which models itself on Afghanistan's Taliban, is engaged in terrorism and guerrilla warfare, news sources report.

"Boko Haram's strategic focus is to attack institutions of the state to discredit it," Jude Uzonwanne, the Nigeria strategist for Monitor Group, an investment advisor, told Bloomberg. "They're likely to intensify the attacks as the elections come closer and it becomes a guessing game how it will end."

Some see the problem as essentially economic, since the agricultural and nomadic residents of northern Nigeria have seen much of their fertile land overrun by desertification and have experienced few of the benefits of the country's oil wealth.

"These people are now using violence on a religious platform to address their social and economic exclusion," Peter Egom, an analyst at the Nigerian Institute of International Affairs in Lagos, told the news service.

As Africa's largest producer of oil, Nigeria and its political struggles have an outsize effect on global energy markets. Outright civil war in Nigeria could provoke shortages and a price spike.

Brent crude oil futures for April delivery rose 2.014 percent to $103.73 per barrel today. West Texas intermediate light, sweet crude futures gained 0.318 percent to $87.85 per barrel.

Overall, African political volatility may continue to create bullish momentum for commodities as supplies look uncertain.