Containing violence is costly, and for Nigeria, it has come at a bill of $1.34 trillion within 13 years – from 2007 to 2019. BusinessDay analysis of data from the 2021 Economic Value of Peace report by the Institute for Economics and Peace (IEP) shows that cost of violence in Nigeria – calculated as security expenditure to manage violence as well as its economic impact – has risen every year since 2007, when it was $69.3 billion and by 2019 was almost double, costing $132.6 billion.
With a GDP of $448.1 billion in 2019, this means it cost Nigeria 30 percent ($132.6bn) of its GDP in dealing with violent occurrences, an amount that could have spurred additional economic activity and widened the economy.
The rising cost of violence further illustrates the intensity of the country’s security challenges, from banditry, to herdsmen attacks, kidnapping and insurgency in the Northeast, all of which essentially amount to terrorism.
“Nigeria is on the path of becoming a shadow economy, one that is full of crime,” said Confidence MacHarry resident security expert at SBM Intelligence. “If the economy was booming, all these insecurity challenges would not be on the rise. That is why the government needs to find the political will to solve these challenges.”
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Violence has a significant impact on economic performance around the globe. Violence and the fear of violence create significant economic disruptions. It generates costs in the form of property damage and business assets, physical injury or psychological trauma and also alters economic behaviour, primarily by changing investment and consumption patterns.
IEP estimates the economic impact of violence by comprehensively aggregating the costs related to violence, armed conflict and spending on military and internal security services. The estimate includes the direct and indirect costs of violence as well as an economic multiplier. The multiplier effect calculates the additional economic activity that would have accrued if the direct costs of violence had been avoided.
For the past decade, Nigeria’s numerous internal security crises have intensified, affecting economic growth, particularly the agriculture sector. Also notable is the kidnapping and murder of people by Boko Haram insurgents in the North and the lingering conflict between herders and farmers in north-central Nigeria.
“I am not even sure if I will cultivate my farm this year because of the insecurity. I am finding it difficult to convince my partners of my safety in the farm,” said Aboidun Olorundenro, operations manager, Aquashoots Nigeria.
Between June 2011 and the end of March 2020, at least $18.3 million was paid to kidnappers as ransom, according to a report by SBM Intelligence. It also found that between January and November 2020, there were 142 incidents attributed to the Boko Haram insurgency in north-east Nigeria, an average of 13 a month.
“Insecurity remains one of the biggest issues affecting economic growth in Nigeria, particularly for the agricultural sector,” said Ayorinde Akinloye, an analyst at United Capital plc. “So, if the government is able to curb all insecurity challenges, we will definitely see growth in investments, especially in the North where poverty is elevated.”
The rise in insecurity also makes Nigeria one of the least peaceful countries in Africa and the world. According to the 2020 Global Peace Index (GPI) report, Nigeria occupies 40th position out of 44 countries in sub-Saharan Africa, and the country is ranked 147th globally.
The report attributed Nigeria’s deterioration in peacefulness to the Boko Haram insurgency in the North-East, which it said had led to the killing of 640 civilians in 2019, including other safety and security challenges.
Another report by the Global Terrorism Index released on November 27, 2020, stated that at least 1,606 people were killed in 125 fatal incidents, an average of 13 per incident, asserting that Nigeria is the third-most terrorised country in the world.
There have been suggestions from Federal Government-backed negotiators for bandits in the northwest to get amnesty as the price for Nigeria to get its peace, especially since amnesty deals have helped manage seemingly insurmountable non-state armed groups in the past.
For instance, in 2009, amnesty was extended to warring Niger Delta militants after a period of violence, human and revenue losses and this helped to restore fragile peace in the oil-rich region. However, this has been described to be unsustainable by experts as the rehabilitation of about 893 ex-Boko Haram fighters since 2019 has not put an end to insurgency.