Economics of Boko Haram

A crucial theme was clear through the discussions President Muhammadu Buhari had on Monday in Washington with both President Barack Obama and Vice President Joe Biden. It was about the need for PMB’s administration to combine military assaults with socio economic programs in its efforts at restoring lasting peace to the North East-the epicentre of […]

A crucial theme was clear through the discussions President Muhammadu Buhari had on Monday in Washington with both President Barack Obama and Vice President Joe Biden. It was about the need for PMB’s administration to combine military assaults with socio economic programs in its efforts at restoring lasting peace to the North East-the epicentre of Boko Haram insurgency. My interest was tickled by that because it is the subject matter of the topic of my research here at the University of Surrey’s Department of Economics entitled: ‘Is Boko Haram a Child of Economic Circumstances?’ This of course is not the first time the United States or other well meaning countries or individuals would make such recommendation, on the need for a special economic intervention to fight the problem from its very roots. Former Central Bank of Nigeria governor and now Emir Muhammadu Sanusi II of Kano, made the same recommendation only for such to be rejected by the immediate past government and a section of Nigerians who wrongly saw it as a way of short-changing them. Thus in order to find out the empirical evidence with a view to making a strong case for the need for a socio-economic packages/programs for the North East, I undertook a research to investigate whether or not Boko Haram has some economic undertones beneath the religious façade many tend to opportunistically feast upon and over-sensationalize . Let me briefly share some of my findings here. But first, a brief review of some literature on economics of conflicts.
With the 9/11 terrorist attacks, experts from various field of humanities have taken to exploring and understanding the phenomenon of terrorism through the lens of their distinct disciplines. Economists were not left out. Many peer reviewed papers seeking to understand terrorism from economic perspective have been written. Enders & Hoover (2012)’s work is remarkably distinguished in that they, unlike others, set out by decomposing terrorism into two categories: domestic and trans-national. This is vital because different types of terrorism may be caused by different factors or forces. After regressing data archived by START for the US Homeland security and using split sample and smooth transition (STAR) technique to allow for a non-linear relationship, Enders and Hoover found out that poverty has ‘a very strong influence’ on domestic terrorism. Its impact on trans-national terrorism was found to be small but still not insignificant. Atwood J. Brian (2003) also investigated the existence of links between poverty and violent conflict and found out that there indeed exist such links. Other researches abound establishing the relationship between violent conflicts/terrorism and economic factors and backing that up with scientifically verifiable evidence (see for instance Drakos and Kutan (2003),Pinotti P (2014), Aberdie & Gardeazabal (2003) and Soares R.S (2003))
The data for my research comes from the US Homeland security’s START database which has data on terrorism incidences in Nigeria from 1985 to 2013. Though the full length of the data includes entries from pre-BH era to 2013 plus the small sample size issue, which are not too encouraging, yet we can still gain some insight by using it especially if issues of data variations/variability can be handled very well. Towards that end and upon consultations with experts in the field, I merged number of incidences, fatalities and injuries together to have what I codenamed Terrorism Incidences and Intensity (TII). This is the dependent variable I regressed on economic indexes of unemployment, poverty, population and per capita GDP and its quadratic term as our explanatory variables. I did the check for robustness and found out that all the explanatory variables are statistically significant; their standard errors quite ok for tests. And the signs of all coefficients conform to a priori economic theories. Specifically, TII was found to be positively related to the trio of unemployment, poverty and population growth. TII’s relationship with per capita GDP is negative (because it was taken as a welfare measure) but the quadratic term returned a positive sign-signifying the turning point of continuous increase in GDP and TII consequent increase. Then, the issue of causality was raised and a Granger causality test was executed in Stata Software package and the result was that unemployment, poverty and population growth do indeed cause terrorism incidence and intensity and not vice versa.
With the above findings backed up by extremely high and above average North East regional economic indexes of poverty, unemployment and population growth, we can deduce that economic factors truly lie at the root of the problem in the North-East. Therefore while military response could cure the symptoms of the problem at hand, it must be pointed out that that is only in the short run. For us to foreclose the possibility of any