By Angus Gillespie

Despite emerging from the murky shadows within Nigeria just a dozen years ago, Boko Haram has quickly earned itself an infamous reputation for being one of the most callous and violent radical Islamist groups in African history.  In fact, it’s already been tagged a terrorist group by western countries such as the United States.  Over the past 12 to 15 months, Boko Haram has unleashed a massive wave of violence, fear and chaos throughout the northern African country – so much so, that it’s know seen by many as having a noticeable impact on the way the country operates, and by extension, is hindering its economic well being to a widening degree.

Founded in 2002, Boko Haram is an ultra extremist Islamic cult focusing primarily on the edict that Western education is forbidden. Military operations were launched in 2009 to support their cause in creating an independent Islamic state. It also has roots that can be traced to the northern part of Cameroon and parts of Niger. The Boko Haram leadership has international connections to Al-Qaeda.

Suspected Boko Haram militants have killed dozens of Nigerians in recent weeks and there is no sign of the violence abating. In one attack, gunmen disguised as soldiers fired on a crowd in a church compound. The radical sect is known for attacking churches, schools, and police stations. Tourists are also considered fair game. Violence linked to the Boko Haram insurgency has resulted in an estimated 12,000 killings since 2002, although that figure has gone up considerably since 2009 when the group began to heavily arm itself as a militia.

Making matters worse for the Nigerian government of Goodluck Jonathan is that some of the attacks come amidst reports some army generals have been aiding the rebel militants, on the belief that a national coup is going to take place.

Nigerian media sources have reported that as many as 10 generals and five other senior military officers have already been tried before the courts for supplying arms and information to Boko Haram. However, at least one Nigerian military spokesman called the reports “falsehoods”.
This contradicted Interior Minister Abba Moro said it was “good news” that the army had identified soldiers who were undermining the fight against the insurgents, and that it sent a strong message to other serving officers.

Boko Haram has waged an increasingly bloody insurgency since 2009 in an attempt to create an Islamic state in Nigeria.

One small town that has been hard hit by the violence is Attagara, where the village church came under attack leaving at least 20 people dead.

Nigeria’s government has been facing mounting pressure both at home and abroad to do more to tackle the group and bring about the release of more than 300 schoolgirls kidnapped by the group on April 15.

President Jonathan originally declared a state of emergency in May of last year in the three northern states where Boko Haram is, and has been, most active – Borno, Adamawa and Yobe.

Boko Haram retaliated by stepping up its bombing campaign in cities and launching mass attacks on small towns and villages.

Media correspondents in those regions say that since the infamous kidnapping of more than 300 schoolgirls, the attacks have become an almost daily occurrence. The campaign to free the girls that began in their home village has now gone global, with the U.S., Canadian and British governments offering support to help with the rescue. It’s believed about 55 girls have managed to escape their captors since being taken hostage in April.  The government has ruled out swapping the girls for detained insurgents associated with Boko Haram.

President Jonathan has promised to address the poverty that helps fuel the uprising — but only once the insurgency is put down. The World Bank says two-thirds of 170 million Nigerians struggle in poverty in Africa’s biggest oil producer.

Despite the fact there is so much poverty and lack of widespread education, Nigeria remains Africa’s largest economy – thanks in large part to the massive oil reserves that are often exploited by international corporations. That said, to put things into perspective, only about 3% of the world’s oil supply is found in the country.  More recent successful business sectors have included the likes of banking, telecommunications and a burgeoning film industry. Agriculture and services have also been two traditional economic staples for the country, although neither has shown much in the way of expansion over the past 10 to 20 years. To its credit, the country has also been diversifying the core economic drivers away from energy and agriculture. The nation’s GDP is now $490 billion, just shy of the economies of countries like Norway and Sweden.

When an organization managed to get the president of the country to declare a state of emergency, it stands to reason it has the ability to unwieldy a tremendous amount of damage on the country, be it through violence or economic crippling.

Economic Impact

Since Boko Haram emerged from the shadows about four years ago, once armed militarily, one of the first obvious economic concerns was the almost immediate drop in foreign direct investment (FDI), with the concern being whether the government had the wherewithal to deal with the serious insurrection and stave off the many decades of political instability the country has faced. According to the World Investment Report (WIR) 2013, FDI flows into Nigeria dropped by 21% in just one year — from $8.9 billion in 2011 to $7 billion in 2012. The loss of $1.9 billion for a country in desperate need of money – such as Nigeria – was a staggering blow.

The monumental decline in FDI over such a short period of time sent ripple effects throughout the international community, creating a negative domino effect.  It’s a rock heading downhill that continues to gain momentum, and it will be up to Jonathan and his government not only to slow it down, but to stop it altogether, or it will begin all over again.

FDI into Nigeria has a direct impact on trade, while also ensuring progression of economic development to the south.  FDI inflow also supplements the available domestic capital by stimulating the productivity of domestic investments. Someone troublesome is the high codependency ratio between the inflow of FDI, the Nigerian oil sector, and the country’s GDP.

A scientific study found that a unit increase in FDI into the Nigerian oil sector will increase the country’s GDP by approximately 16 units. This shows that the Nigerian oil and gas sector, which is the mainstay of the economy, has a high rate of exposure to foreign direct investment.

Between the lack of jobs, and the increasing violence with the likes of terrorist groups such as Boko Harm, there has been a mass movement of Nigerian citizens looking to settle in areas not impacted by the violence.  The trouble is this: the areas not affected by the violence are most often areas that have nothing in terms of sustainable economic activity that would allow a person or a family to survive.  Living in the dangerous regions is where there’s hope for employment.

The rush to escape from the northern part of the country that has been hard hit is already affecting the profitability of businesses in the region.  It’s no reached the point where accredited banks have begun closing down some branches due to a huge decrease of economic activity. On top of that, a number of employees at these businesses are demanding to be reassigned to areas that are less volatile.

As noted many times before, a lot of the current problems with terrorist uprisings can easily be pinpointed to a lack of government leadership due to the constant political insecurity, and especially so in the northern region.

Once the banks and other businesses decide to pack up and move elsewhere, it leaves the region in a state of economic depletion, and one that won’t easily be regained. It’s always quicker destroying something than it is building it up.  The people of Nigeria are hoping President Jonathan’s government takes drastic action to bring about more stability in the country and soon.  Or, it will be a long road to recovery for a nation that can already ill afford this type of economic setback.

More than $21 billion of foreign direct investment poured into Nigeria in 2013, up 28% from the year before. The country does not want to see that slide backwards due to political instability and the onset of widespread violence.  The country has attracted the most foreign direct investment in sub-Saharan Africa since 2007, according to Ernst & Young. But all of that could be quickly eroded if the violence is not snuffed out.

Many financial analysts seem to be of the opinion that the impact on foreign investment will largely be determined by geography.  As example, investors may pull out funding from manufacturing and infrastructure investments in northern Nigeria, which has been ravaged by violence.  But the resource rich southern region has been spared from violence to this point. This could be one of the factors as to why Nigeria’s stock market has been seemingly unaffected by all the recent turmoil. The benchmark equity index has only declined about 1% since the kidnappings in mid April; so for all intents and purposes, it has been business as usual.

So just how bad is it in Nigeria? It is perhaps best summed up in a balanced report by an analyst with Ernst & Young.

“Nigeria epitomizes this almost bipolar view of Africa,” says Henry Egbiki, West Africa regional leader at Ernst & Young. “For many of us already doing business on the continent it is an exciting, dynamic, high octane growth market; for some others, often on the outside looking in, it seems chaotic, unstable, and uncertain. The reality is obviously less cut and dried than either of these extremes.”

The next 12 to 18 months will be critical for the government and how it responds to the upswing in violent outbreaks by radical groups such as Boko Haram.  Humanitarian groups and countries will be looking on from a human rights point of view, but you can also bet that the international investment community will be keeping a close watch as well.


Asime Nyide, known as DneinNuqer, is the insightful mind steering the helm at With a keen eye for business trends and a commitment to delivering cutting-edge insights, Asime curates a dynamic space where industry enthusiasts and entrepreneurs alike converge. Unveiling the latest market developments, strategic analyses, and thought-provoking perspectives, Asime Nyide fosters a community of forward-thinkers at, making it a go-to resource for those navigating the ever-evolving landscape of business. E-mail / Instagram