Benjamin Umoru
The Nigerian insurgency became active in 2009 and has become one of the most economically damaging conflicts in Nigeria’s modern history.
While its human toll is severe, the economic consequences, both immediate and long-term, are equally profound.
The violence has disrupted local production, weakened national revenue streams, discouraged foreign investment, increased the cost of living, adversely impacted on food security and created long-lasting structural obstacles to economic growth.
These effects continue to shape Nigeria’s macroeconomic stability and its future growth trajectory.
At the regional level, the insurgency has devastated the economies of Borno, Yobe, and Adamawa states in the Northeastern Nigeria.
Agriculture has been the dominant livelihood in these areas, but has been severely disrupted as farmers abandon fields due to fear of attacks, land mines, or kidnappings.
Key cash crops such as sorghum, millet, beans, and livestock have seen sharp declines in output, affecting the national food supply and widening Nigeria’s food-import bill.
Markets, workshops, roads, and storage facilities have been destroyed, leading to lower local productivity and reduced economic linkages with the rest of the country.
The displacement of over two million people has collapsed local labour markets and halted household earnings, replacing economic activity with heavy humanitarian dependency.
The insurgency has discouraged foreign investment in Nigeria. Investors weigh political, economic and security risks heavily when making decisions, and the persistent attacks, kidnappings, and destruction of infrastructure have contributed to Nigeria’s deteriorating risk profile.
While Nigeria remains one of Africa’s largest economies, foreign direct investment (FDI) has grown increasingly volatile over the past decade. The perception of insecurity combined with other economic challenges, has prompted foreign companies to delay expansion, demand higher returns to compensate for risk, or choose alternative countries for major projects.
Investors in sectors that rely on predictable logistics, such as agriculture, manufacturing, and construction, are especially cautious. Even companies not directly operating in the Northeast face higher insurance premiums, security costs, and disruption risks in national supply chains.
This reduction in investor confidence has meaningful long-term implications; lower investment inflows reduce capital formation, technology transfer, and job creation factors critical to Nigeria’s long-term competitiveness and diversification away from oil.
Additionally, foreign portfolio investors treat insecurity as a signal of broader governance weaknesses, which influences exchange-rate expectations and raises borrowing costs for Nigerian firms and the government. Cash flow and revenue generation have also been affected.
At the federal level, weaker investor confidence and insecurity-related business disruptions reduce taxable profits, lower the number of active enterprises, and shrink the base for corporate taxes, VAT, and PAYE contributions.
In the Northeast, state governments have lost substantial internally generated revenue because commerce, transport, and services have almost collapsed. Tourism, once modest but meaningful in certain northern regions, has disappeared entirely.
Furthermore, reduced agricultural output increases food prices and inflationary pressure, complicating monetary policy and further burdening households.
Long-term revenue prospects are also compromised.
Children in the Northeast have lost years of education due to school closures, attacks on students, teachers, and mass displacement. Notably Chibok Girls Abduction in 2014, the Dapchi Girls Abduction in 2018, the Kankara School Abduction in 2020, the Grenfield University Attack in 2021, have led to closures of many schools in the Northeast. Millions have been displaced, over 1400 students have been kidnapped, teachers killed, and over 1500 schools have been destroyed.
This loss of human capital will impede future productivity and reduce the region’s ability to contribute meaningfully to national economic output.
The insurgency has also discouraged infrastructural investment in the region, meaning roads, power supply, and industrial zones remain underdeveloped, further limiting future revenue generation for both the states and the federal government.
The conflict has forced the federal government to significantly increase defence and security spending, diverting funds that could have supported infrastructure, health, education, or industrial policy. Large allocations to the military and emergency relief programmes have reduced the fiscal space for capital investment, worsening budget deficits during years of oil-price volatility.
Public finances that should have been dedicated to long-term development instead go toward sustaining military operations in the Northeast and rebuilding destroyed communities.
Despite some military operations and regional cooperation through the Multinational Joint Task Force, the Nigerian government has struggled to stop the insurgency.
Several factors explain these failures. At the outset, the government underestimated the ideological strength, recruitment networks, and cross-border nature of Boko Haram & ISWAP Intelligence weaknesses, inadequate equipment, corruption in military procurement, and gaps in coordination between security agencies have reduced the effectiveness of counter-insurgency campaigns.
In some cases, heavy-handed security responses alienated local communities, undermining trust and discouraging the flow of intelligence needed to combat insurgent networks.
The government has also struggled to provide sufficient economic alternatives, rehabilitation programmes, and governance reforms in conflict-affected areas. Slow reconstruction, inconsistent support for displaced populations, and limited job creation leave fertile ground for radicalisation and criminal opportunism.
Weak protection of schools, limited accountability for both insurgent and state abuses, and slow judicial processes have further eroded public confidence.
If the insurgency persists, Nigeria faces the risk of long-term economic stagnation especially in the Northeast, widening inequality, persistent investor hesitancy, and escalating fiscal burdens. Future revenue generation will remain constrained as long as insecurity undermines productivity, human capital, and investor trust.
Umoru, a chartered accountant, writes from the United Kingdom
