The Effect Of Terrorism And Kidnapping On The Nigeria Economy

Project and Seminar Material for Economics

The Effect Of Terrorism And Kidnapping On The Nigeria Economy


In spite of government counter-terrorism expenditure and efforts, the incidence of terrorism in Nigeria appears to be rising. This study examines the growth and fiscal consequences of terrorism in Nigeria by estimating the terrorism–macro economy relation using different measures of terror incidence. The results show that terrorism has an economically and statistically significant negative impact on growth; although this impact is considerably small and short-lived, manifesting only after a lag of about three years. Specifically, the cost of terrorism to Nigeria, in terms of lost GDP per annum, is estimated at 0.82 percent. Moreover, there is evidence that terrorism leads to the reallocation of economic activity away from private investment spending to government spending; that is, terrorism crowds out investment at a higher rate than its potential to crowd in government spending. Lastly, terrorism alters the composition of government expenditure with the defense component of government expenditure rising vis-a-vis other expenditure items. The results are robust to allowing for dynamic interactions between terrorism and macroeconomic aggregates

Chapter One


1.1 Background of the Study

The kidnapping of all manner of persons has gained ascendancy in Nigeria. A malady previously unknown to the people has rapidly become domesticated. In the last ten years, the volatile oil rich regions of the Niger Delta witnessed this phenomenon on a large scale with the target being mostly expatriates and Nigerians in the oil business. It has spread throughout the country extending to places as far as Kano and Kaduna in the far Northern part of Nigeria. South-East and South-South Nigeria have become known as the kidnappers’ playgrounds of Nigeria.

Kidnapping seems easier compared to other forms of serious crimes. According to Davidson (2010), a group of criminals armed with guns and cell phones apprehend unsuspecting victims and drag their victim into a secluded spot and begin to make phone calls to whomever and demand for a ransom. The police with a mandate to provide security for the people are often unprepared for the task at hand. They think their job is done if they manage to secure the kidnapped, but of the kidnappers nothing much is ever heard. As we all know, the police are poorly trained and poorly equipped, but beyond these inadequacies there are worrying signs that their loyalty is suspected.

Some whistle blowers have come to grief for confiding in them. The primary role of government is the provision of security for its own people. In Nigeria this role has been largely ignored. The Nigerian state no longer provides security for the Nigerian people. Nigerians have compulsorily become religious as whole families barricade themselves at night in prison-high walls and pray that God protection. But kidnapping as a variant of armed robbery is infinitely more disturbing as it often occurs in the open among persons going about their normal business. The widening scale of insecurity in Nigeria is a cause for concern as all are affected by it. Churches, mosques, markets, schools, homes and the highway, all are susceptible to this menace.

The abductees and their families are traumatized by the ordeal of kidnapping. Foreign investors are scared away from Nigeria. Nigerians are paying the price of poor governance and failures of leadership. Davidson (2010) points out that the general state of insecurity in some parts of the country has no doubt reached a stage where virtually everybody is now worried the direction the region is going. Presently, hardly can people sleep because of the fear of being robbed or kidnapped. Businessmen have taken flight with their businesses for fear of being kidnapped or robbed. Terrorism according to lodge is an illegitimate means of attempting to effect political change by the indiscriminate use of violence (Lodge 1988:5). Also Madunagu (2001:51) maintains that terrorism is “the use of violence to achieve political objectives”. The bottom line of the above definitions is that terrorism is an aspect of political violence. Since September 11, 2001, multiple attacks on the twin towers of the World Trade Centre and pentagon in the United States of America, terrorism has become a House Hold discussion in the world. Boko Haram according to Dr. Anslem Dilichukwu Omenma in one of his presentation at Caritas University political science seminar day, is traceable to the militia group called ECOMOG which enjoyed the patronage of top politicians in other parts of the northern Nigeria, began to patronize the group through budgetary allocations.

The Boko Haram group has affected Nigeria‟s economy badly most especially in the northern part.According to a seminar presentation in Caritas University by Dr. D.A. Omenma (H.O.D), the Boko Haram Insurgents started as a militia group called ECOMOG, which have being sponsored by prominent politicians in the north – eastern states of Borno and Yobe during the build up to the 2003 general elections. Later, other politicians in other parts of Northern Nigeria began to sponsor the group they provided them with huge sums of money, provision of training grounds on the many mountains scattered in the northern region as well as protection against arrests by the Federal governments. (Omenma 2012:15).

The sects spokesman Abu Qeda in one of his confessions in 2012 stated that the Boko Haram sect started as a fundamentalist group officially called Ahlus Sunna Lid Dawatis Jihad but now popularly known as Boko Haram. Since the inception of the activities of this group, Nigeria’s security has been threatened and it has also affected the economy.

The project is therefore an attempt at a critical study to show how Boko Haram has affected the economy either positively or negatively. It has been noted that Boko Haram is regarded as terrorist group that has affected Nigeria‟s economy especially in the north, attempts would be made to see how this sect has really affected the economy of Nigeria and possibly recommend lasting solutions to the menace, so that the peace and stability which the country has longed for would be achieved and there would be an end to terrorism in Nigeria.

A cursory look around the world will reveal that for many countries under this dispensation, have also suffered and are still suffering from terrorist attacks. For instance, the United States of America which has lasted for almost two hundred years since the 18th century still suffered in the hands of Osama Bin Laden before he was finally killed in 2011. Also Israel, Pakistan and even some other countries in Africa have had terrorist’s attacks that have rendered peace and stability almost a mirage. Example, Libya in 1986 was attacked by the United States of America.

In Nigeria Boko Haram snowballed into national menace after the 2011 general elections, the northern governors who had relationship with the sect began to withdraw their patronages and eventually abandoned them to their fate. (The Nation 2011:13). Most scholars and analysts tend to subscribe to the opinion that terrorism is a political expression and not a criminal act. As a result they agree that terrorist groups across the world have a common adversary in the status quo, represented by the regime in power, the political system of the economic system. In their view therefore, the major objective of terrorists is to disrupt the statuesque or dismantle the regime in power so as to impose their own values on the rest of the society.

However since the terrorists usually lack willing public support and face stiff suppression from the government, they always resort to indiscriminate violence on a tactical and strategic basis to spread fear and intimidation and persuade the public of the validity of their cause (Lodge, 1988:3). All terrorist acts involve violence or equally important, the threat of violence. The Islamic militant sect, Boko Haram has been terrorizing Nigeria‟s population for almost two years, sapping economic development in the northern part of the country. According to “focus Nigeria” an interactive programme on television, 2012, the insurgency has brought about the demise of business in the country most especially in the northern parts. For instance, traders who come from all over Nigeria and neighboring countries to buy textiles in Kano, no longer frequent the market again and the market is not as busy as it use to be. The study is set to investigate how this menace has eaten deep into our economy.

1.2 Statement of the Problem

Security of lives and property is one of the issues that attracts the attention of both the masses and government of a given society indeed, any breach of security whether in the form of kidnapping, abduction, bomb explosion and so on, which could result in physical injury against a victim, destruction of properties or loss of human lives is usually least appreciated by most peace loving individuals, groups and governments alike. Yet, it appears that a breach of security in Nigeria particularly kidnapping, is becoming more rampant than ever before in recent years. One would reason that the mass media which has a social responsibility to provide the public with adequate information about certain incidents in the society, could have paid greater attention to issues bordering on kidnapping and inform the public accordingly. The high level of terrorism and violence in Nigeria by the fundamentalist group (Boko Haram) has heightened fears among the populace and the international community and has eaten deep into our economy and as a matter of fact, the hostility has gone beyond religious or political coloration.

Several meetings, summit, conferences etc have being held in a bid to curb the menace in the country but all to no avail. Also apart from the fact that meetings have been held, the federal governments have spent millions of naira in making sure that security is brought back to the country but that has never looked worked. The president has told all security agencies to be at alert and to get their arsenals ready and to put more effort in the promotion of effective security in the country. It is in view of the above that the researcher intends to investigate the effect of terrorism and kidnapping on the Nigeria economy.

1.3 Objective of the Study

The main objective of the study is to ascertain the effect of terrorism and Kidnapping on the Nigerian economy; but to aid the completion of the study, the researcher intend to attain the following specific objective;

  1. To ascertain the effect of terrorismand the threat it poses to Nigerian’s economy
  2. To ascertain if there is any relationship between terrorism and the growth of Nigerian economy
  3. To ascertain the relationship between kidnapping and economic growth
  4. To examine the role of government in curbing the menace of terrorism and kidnapping in Nigeria

1.4 Research Hypotheses

The following research hypotheses were formulated by the researcher to aid the completion of the study;

  1. H0: there is no significant relationship between terrorism and the growth of Nigerian economy
    H1: there is a significant relationship between terrorism and the growth of Nigerian economy
  2. H0: there is no significant relationship between kidnapping and economic growth
    H2: there is a significant relationship between kidnapping and economic growth

1.5 Significance of the Study

The significance of this study is that it will act as a guide to the government in their quest to quell the problem of terrorism (Boko Haram) as it affects the economy of the country. Also judging from the fact that terrorism is currently a prevailing cankerworm and its very spontaneous and topical, this study will help to proffer solutions.

More so, this work, theoretically will be useful to writers, scholars, journalists etc. in order to add to their existing knowledge what they already know about terrorism and Nigeria’s economy, particularly the Boko Haram activities.

1.6 Scope and Limitation of the Study

The scope of the study covers the effect of terrorism and kidnapping on the Nigeria economy; but in the cause of the study, there are factors that limit the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.

1.7 Operational Definition of Terms


Terrorism is, in the broadest sense, the use of intentionally indiscriminate violence as a means to create terror among masses of people; or fear to achieve a religious or political aim.


Kidnapping is the unlawful carrying away and confinement of a person against his will. Thus, it is a composite crime. It can also be defined as false imprisonment by means of abduction, both of which are separate crimes that when committed simultaneously upon the same person merge as the single crime of kidnapping.


Menace means a possible danger, a threat, or an act of threatening. It also means something that threatens to cause evil, harm, injury etc. this also means the show of an intention to inflict evil, indication of a probable evil or catastrophe to come.


Armed uprising or rebellion against a government. The term has been used variously to describe revolutionary movements, civil wars, anti-colonial struggles and terrorist agitations, it is also seen as the state or attitude of being indulgent or tolerant.


This refers to the wealth and resources of a country or religion, especially in terms of the production and consumption of goods and service. It is also the state of a country or region in terms of the production and consumption of goods and services and the supply of money

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  1. Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
  2. Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature.
  3. Chapter three deals on the research design and methodology adopted in the study.
  4. Chapter four concentrate on the data collection and analysis and presentation of finding.
  5. Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five

Summary Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was on the effect terrorism and kidnapping on the Nigerian economy.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of kidnapping and terrorism on the Nigeria economy.

5.2 Summary

The results from the study can be summarized in three main findings. First, we find that terrorism has an economically and statistically significant negative impact on growth; although this impact is considerably small and short-lived, it only manifests after a lag of about three years. Secondly, there is evidence, albeit not statistically robust, of terrorism leading to the reallocation of economic activity away from investments spending to government spending. Specifically, terrorism crowds out investments at a rate.

5.3 Conclusion

The purpose of this study is to show whether there is a relationship between kidnapping and terrorism on the Nigeria economy. In particular the study examines the interconnections between endemic poverty created by official corruption, state neglect of the needs of the masses and terrorism in contemporary Nigeria which birth kidnapping and insurgency. We assert that economic deprivation, frustration and desperation are the underlying causes of terrorism in Nigeria; that official corruption and mismanagement of state funds have bred and institutionalized a legacy of a propensity to engage in violent crime for a large proportion of the Nigerian youths. The snowball effects are reflected in acts of terrorism and other social vices prevalent among the youths.

5.4 Recommendation

Nigerian international partners should support programs at all levels of government that address poverty, youth unemployment and women‘s lack of empowerment; encourage and support the federal government to genuinely implement a national policy of zero tolerance for corruption.

Finally, peace education should be introduced into the primary and secondary school curricular to imbibe the culture of peaceful resolution of conflicts in the youth right from a tender age. Further research should look into the nexus between the impact of social media and insurgency in Nigeria.

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