Economic and finance experts say that the bombing campaigns of the militant Boko Haram sect are causing incalculable damage to the nation’s economy
These days, Inuwa Tijanni, a major distributor of tin and sachet milk at Sabongari Market, Kano, is permanently on edge, ready to close his shop at any sign of trouble. Tijanni’s siege mentality, typical of other residents of Kano, started since the dreaded Boko Haram sect launched its first attack on the city in January 2012. Before then, the bombing campaigns of the dreaded group were limited to some parts of the nation’s North-east, especially Maiduguri, the capital of Borno State. But the sheer magnitude of the attack on Kano, the once vibrant commercial nerve centre of not only the North but also neighbouring countries like Chad, Republic of Niger and northern Cameroun, has left Tijanni and indeed other traders and businessmen in the ancient city nearly desolate. The attack has scared away many customers who travel from different parts of the country and beyond to Kano to buy bulk textiles, leather, groceries and other items for retail in their states.
Apart from Sabongari Market, other markets that have become almost deserted following the attack are the Kanti-Kwari International Market, the biggest textile market in the country, and the Abubakar Rimi International Market in Sabongari where such items as sugar, rice, spaghetti, and other food items are sold wholesale and retail to buyers who come from all parts of the country, especially northern states. Tijanni lamented that the Boko Haram crisis has taken a heavy toll on businesses in the city as customers no longer visit the city as they used to. Many traders who go to Kano to buy goods are now afraid because of the stories they read about the activities of Boko Haram in the city. “Some are afraid to even open their shops and those of us who open our shops are always on edge, ready to close shop at any sign of trouble. So it is very frustrating now; business is very low and people are not coming to Kano the way they used to come,” he told the magazine last week. He said this has affected the volume of sales recorded in all the major markets. Also, the numerous military and police checkpoints in the city, according to him, have slowed down business.
It is the same experience in other states in the North that are strongholds of the militant set. Already, most markets in Maiduguri are now deserted, especially markets and shops along major roads in the city. Bomb explosions have been a daily occurrence along major roads in the city since 2009 when the crisis started. Bukar Manman, a shop owner in Maiduguri Monday Market, said many traders have relocated to other parts of the city or outside the city due to the unending explosions. Their relocation became imperative, because the market lost many of its customers. Many shops have also remained closed in other markets in the city, especially those belonging to non-indigenes. Manman said many non-indigenes have left the city, and that it is taking its toll on business in the state capital. The story is the same in Damaturu and Potiskum, two major towns in Yobe State that have been repeatedly attacked by Boko Haram. Traders say many residents, especially non-indigenes, have left the towns and this made business dull.
Losses incurred by traders and businessmen are only an aspect of the incalculable damage the activities of the terrorists are causing the economy generally. Now, this has a spiral effect on the national economy, because apart from southerners who are forced to return home, some northern youths who are uncomfortable with the spate of insecurity there are also parts of the influx to the South.
The result is that the already overburdened infrastructure in the southern part of the country is already being clogged. Whereas economic development in the North is practically being held down at the moment, there is hardly any sector of the economy that is not feeling the heat. For instance, apart from the estimated loss of more than 935 of the country’s human capital between 2009 and 2012 alone, according to a recent report by the Human Rights Watch, HRW, Nigeria’s foreign direct investments, FDIs, have also shrunk significantly. A World Investment Report of the United Nations Conference on Trade and Development estimated that the domestic economy has so far lost a whopping N1.33 trillion FDI to the activities of Boko Haram.
However, some experts told the magazine that the figures are too conservative, noting that the activities of the group have become almost a daily occurrence, making it difficult to quantify the loss in FDI inflows in monetary terms. Boniface Okezie, president, Progressive Shareholders’ Association of Nigeria, argued that when the loss in human capital is added, the figure is indeed mind-boggling and far more than what is currently bandied by some people. He said that the huge loss by the economy is fallout of fears created in the minds of prospective foreign and local investors by the sustained bombing campaign of Boko Haram. “At present, no serious investor, foreign or local, would risk his life or money by investing in the country particularly in the North, and this is dragging the economy down the drain.”
Okezie noted that in this regard, the capital market, which serves as the barometer for measuring the growth or otherwise of the economy, is bleeding. According to him, the activities of the dreaded Boko Haram have scared away investors from the nation’s capital market and, by extension, the domestic economy. The quantum of losses to the country, he said, could easily be measured by the recurring daily huge losses at the stock market. “A lot of foreign investors have stayed away from the market. They are usually afraid of any place where there is a crisis and this has greatly affected the stock market as you can see in the value depreciation,” he stressed.
This is a sad development, because shortly after the last election, there were signs that Nigeria was about to be overwhelmed with foreign investments judging by the potential and the confidence that the somewhat stable polity had given to foreigners. But the best that has happened now is that foreign investors who are still interested in the country have adopted a wait-and-see attitude. The magazine learnt that many of them who had initially concluded arrangements to invest have jettisoned the idea, choosing to redirect their investments to other countries considered safe. Others simply put their efforts on hold.
The concern of not a few Nigerians and experts is that this is happening at a time recent developments in the local and international scenes appear to have positioned Nigeria as the preferred investment destination. For instance, while the successful general election of April 2011 and promises of great transformation by President Goodluck Jonathan’s administration boosted the confidence of investors, the Euro zone crisis and debt issue in the United States placed Nigeria on a higher pedestal to receive foreign investments. But insecurity in the country caused mostly by the activities of the Boko Haram has thrown a spanner in the works.
A more disturbing aspect of the damage caused by the Boko Haram insurgence is perhaps the rise in the number of internally displaced people. Although there is no official statistics on the number yet, there are fears that the crisis has created thousands of internally displaced people, mostly southerners fleeing from the affected northern states. The migrating southerners are mostly women and children moving to the South-east, South-south and South-west. The fear is that the cost of living in the major cities where fleeing southerners are more inclined to settle, particularly Lagos, has hit the roof. The value of property has also gone up, with residents in some parts of Lagos already shouting blue murder over increase in rent by as much as 50 per cent.
Indeed, no aspect of the nation’s economic life is spared the severe blow by the increasing rate of insecurity caused by Boko Haram. Currently, individuals, corporate organisations as well as all levels of government are devoting a large chunk of their budgets to security. In most states in the North and the Federal Capital Territory, FCT, Abuja, many churches, beer parlours, mosques, eateries, banks, government secretariats, agencies, and embassies, among others, are paying heavily to retain the services of security agents. Churches which have become targets of attack by Boko Haram now hire security outfits to man various entrances into the church during services. Ditto for eateries and banks. Some of those that still manage to open for business pay through their nose to guard their premises against possible attacks.
The federal government is no less scared. The security sector got the lion share of N921.91 billion, the largest sectorally, in the 2012 budget. The huge allocation to security means that other sectors considered critical to the survival of the economy such as health, power, agriculture, education, science and technology, and works, among others, suffered. For instance, the N400.148 billion voted for the education sector is said to be a far cry from the 26 per cent recommended by the United Nations Educational, Scientific and Cultural Organisation, UNESCO. Also, as important as power is, the sector got only N161.42 billion, while agriculture was allocated N78.98 billion. Other sectors got allocations far less than what was allocated to defence even when the country is not at war.
Okezie fears that with the prevailing security situation, the country may have already kissed the attainment of the much-touted Vision 20:20:20 goals goodbye. “I can tell you Nigeria’s dream of becoming one of the 20 largest economies in the world by year 2020 can never become true; it’s not achievable; its just on paper. And even if the Boko Haram insurgence and other security challenges in the country are over today, it will take us many years to recover from the damage.” His fears are not without foundation.
Many foreign investors who identified with the country’s rebranding campaign and had moved to invest and make the vision achievable have since beaten a retreat. Experts say the activities of the sect are fast spreading bad news to every part of the world to the effect that those who did not know Nigeria before the bombing now know the country as one of suicide bombers. In other words, the sustained bombing campaigns of the Boko Haram have completely eroded whatever little goodwill the country may have gained from the effort of Dora Akunyili, former minister of information and communications.
Regrettably, the tourism sectors, which gathered some momentum by riding on the back of the rebranding campaign, has suffered serious setback since the insurgency began. According to Olusegun Runsewe, director-general, Nigerian Tourism Development Corporation, the sector which generates approximately N80 billion annually, is now at a standstill as all economic activities in the value chain are being disrupted by the activities of suicide bombers. The aviation sector, which drives tourism locally and internationally, is not faring better either. Drastic reduction in passenger traffic to the North has so far left the aviation industry comprising airlines, aviation agencies; ground handling companies and other operators within the country’s aviation industry with heavy losses.
Although security agencies say they are working round the clock to contain activities of Boko Haram, there seems to be no end in sight yet to the challenge posed by the terrorist group. What is certain, however, is that by the time the crisis is over, it would take the economy a very long time to recover, considering the magnitude of damage it has suffered so far.
Additional report by Tajudeen Suleiman
