The Economic Cost of Terrorist Attacks in Nigeria

Incidences of terrorists’ activities have, by most accounts, provoked electric mix of insecurity and threat to socio-economic undertakings in recent time. Separating realities from emotions, economic analysts hold a view that in the event of wanton destruction of lives and property in any society, investments and other economic developments will suffer.

The Economic Confidential takes a critical look at the recent wave of terrorist activities in the country and what the trend they hold for its economy.

Generally, analysts agree that terrorism has a suppressive effect on an economy and study shows that it has actually never done any good in any part of the world.

In Nigeria for instance, it is inadequate to mention terrorism in Nigeria without reference to the activities of Boko Haram, a terrorist group which has taken responsibility for most of attacks in some parts of the country; especially the North East.

The increase in terrorist activities has, by most analysts’ ratings, complicated the Nigerian business climate and made it investor-unfriendly. The impact of these nefarious activities on Nigerian economy has been intense so much so that the Minister and Deputy Chairman of National Planning Commission (NPC) Dr. Shamsuddeen Usman, have course to says in a remark that terrorist activities of the group have created a lot of distortions in the economic activities in the northern region.

The direct implication of this includes declining investor confidence and reductions in foreign direct investment. With a reference to the 2012 Doing Business Data of the 183 economies sampled, Nigeria is ranked 133rd, maintaining the same ranking as that of 2011, an indication that no significant improvement has
taken place because of terrorist activities.

In the same manner, the World Bank Investment Climate Assessment Report for the 2011 fiscal period indicates that the Nigerian business environment in spite of the ongoing reforms, remain hostile. According to the report, investors are losing 10 per cent of their revenue as a result of the hostile investment climate, poor quality infrastructure, crime, insecurity and corruption.

Major contributions to the non-inspiring business growth were the bomb blast on October 1, 2010, during Nigeria’s 50th Independence anniversary celebrations in Abuja, suspected to be sponsored by the Movement for the Emancipation of the Niger Delta (MEND), a group of Niger Delta militants.

The subsequent blasts on January 1, 2011 at a market in Abuja and the Independent National Electoral Commission office in Suleja, Niger State, eventually sent
danger to investors.

Indeed, these crises spread to parts of the northern states of Borno, Bauchi, Yobe, Kaduna, Kano, Plateau and Kogi among others with new face of herds men attacking farmers in Benue State.

These are commercial centres of the country in which terrorists activities have paralysed socio-commercial activities.

In Maiduguri, the frequent bombings and clashes between terrorists and security agents have a grim consequence on socio-commercial activities. Media reports say the Maiduguri Monday Market and the Baga fish market; the biggest markets in the city is seriously affected as hundreds of shop owners, especially southerners have closed their businesses and left for other peaceful parts of the country.

It is reported that no fewer than 15, 000 shops and stalls in this markets have been abandoned by traders. Banks and their customers are also said to be operating under difficult situation and have reduced their business hours to guard against being attacked by members of the sect, according to reports.

According to the Borno State Commissioner of Information, Mr Inuwa Bwala, it will take the state 20 years to recover from the current predicament it has found itself. “It is only natural that when you have such a situation as we have now, it will affect the economic fortunes, especially where people go out to do business under the atmosphere of fear. `So there is no doubt that the crisis has taken its toll on our resources, on our business and on our economy.

The commissioner added that it would take not less than 20 years to recover and get to the position the state was before the crisis started. “It is our prayer that those who fled in the height of the crisis and those with general apathy among business men to invest in Borno State should do a rethink and come back, ’’ he told journalists by telephone” .

In Kano, the commercial nerve centre of the northern part of Nigeria, the group’s activities have once crashed the economy. Fear has crawled into every corner of
public life; traders in Kano say that sales are down by half as customers dare not venture out, according to a media report.

According to an analyst, Dr Richard Adebayo, a consultant psychiatrist, terrorists’ activities in Nigeria were relatively unknown in the early years of independence, but became rampant in the late 1990’s, culminating in today’s epidemic proportion. He said kidnapping and terrorism are the results of youth unemployment and display of stupendous inexplicable wealth by leaders.

Defining terrorism, the psychiatrist said, terror, from the Latin verb terrere, means to frighten. Explaining further, Adebayo says the purpose of terrorism is not the single act of wanton destruction, but the reaction it seeks to provoke; economic collapse.

For instance, observers say oil terrorism; a new lexicon introduced by security analysts to describe the pipeline system attacks, is an imminent threat to Nigerian economy.

However, some optimistic economic economy say Nigeria’s huge energy reserves continue to attract investment in spite the threats posed by militant groups and corruption.

In a remark, Mr Alec Weisman, a graduate of Ecology, Behaviour and Evolution from the University of California, said it is deduced that in spite a sizeable increase in militant activity in Nigeria, foreign companies remain committed to expanding their investments in its natural gas and power sector.

However, growing levels of violent activity and corruption could lead these companies to eventually reconsider their investments in the country. As a result, the incoming government should expand its efforts to combat the militants, terrorist and corruption  and to improve the investment climate.

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