Economic implications of Boko Haram, by Aisha Sani Yarima

The recently concluded World Economic Forum on Africa (WEF) to which Nigeria played the host was overshadowed by concerns about security which is rather far from the positive growth story that was originally intended by a government seeking international acknowledgement on its effort in economic growth.

Nigeria remains one of the most challenging investing environments around. Before Boko Haram came into the picture, investors were already grappling with issues such as corruption and access to electricity in a country that has received low scores from independent organizations on the ease of doing business.

Despite the brazen attacks by Boko Haram, Nigeria’s economy seems to be withstanding the “times”. Stocks have barely dropped since the abductions last month of the chibok girls and foreign companies have not announced plans to relocate out of the country. However, this shouldn’t be seen by the Nigerian government as a reason to remain un-committed in the fight against terror. While in the short term, the problem of Boko Haram can be categorized as a geographical mishap, its pending long term effect may be sooner than later with various observers predicting an increase in the number of violent attacks ahead of key elections next year.

Economic affairs in the north is already depleting due to a massive departure of people and financial institutions from the northern region.  But if the government delays in implementing comprehensive plans to tackle insecurity from its roots, then not only will the northern region be an economic desolation, the country as a whole risk losing billions of dollars in foreign direct investment. With more than USD 21 billion of foreign direct investment in 2013, Nigeria attracted the most foreign direct investment in sub-Saharan Africa since 2007. But the story may change if Boko Haram’s insurgence doesn’t.

In the long term, if the security situation of the country’s northeastern region persists and expands, investors may heave money from manufacturing and infrastructure investments in northern Nigeria and the flow of investment into Nigeria will be disrupted if Boko Haram starts targeting westerners. Also, with the rise in Nigeria’s security bill from 16% in 2010 to 20% in 2012, less money will be available to spend on other crucial sectors like power, health care and education. The chain effect of this is that the potential investment returns for foreigners will be affected.

Whether the Nigerian government acknowledges it or not, Boko Haram is a distraction from economic growth and that could have far reaching effects on the economic integration of the West African region.

BY AISHA SANI YARIMA, DEPARTMENT OF MASS COMMUNICATION, UNIVERSITY OF MAIDUGURI