This article was first published in 2012
Are we on the threshold of economic redefinition?
Boko Haram’s activity in Kano, Kaduna, Bornu, Yobe and Bauchi has changed the economic structure of the whole of northern Nigeria. Our research indicates that if the violence persists, development in that region will be tampered and the gap between the North and other regions will widen further.
The evidence and fast changing indices (in form of changing migration patterns, cost of insurance in the North, mass repatriation of funds, dearth in skilled labour etc) speaks volumes.
In economic terms, what the insurrection effects is a systemic distortion of existing economic patterns and structures in the Northern region.
Historically, each region in Nigeria compliments
the other. What the North lacks in access to the sea, the south
provides. The North wields 78 percent of Nigeria’s land which supports
most of Nigeria’s agriculture (food, cash crops and livestock).
The south-west’s terrain supports both domestic and international commerce and provides an import/export rout. While the South-South and some parts of the South-East wield Nigeria’s oil wealth.
If Boko Haram’s activities persist, this economic symphony will be altered significantly.
Changing patterns of migration
With increased intensity of bombings in the north, there was strategic mass movement of individuals from the most affected northern states especially in early 2012. This was accentuated by the uncertainties surrounding the fuel price crisis at the time.
The movements were of a strange kind since both southerners and Northerners simultaneously moved from Boko Haram strong holds. While Northerners moved from the North-East in hundreds many relocated either to safe parts of the North or South.
Migrating Southerners were mostly women and children (moving to the South-East) who were sent away to safety by their husbands. The men, mostly businessmen stayed behind to defend their livelihood.
As of now, there is no direct evidence that those who migrated on the back of increasing insecurity have returned to the states they fled. There is no doubt that if the crisis persists, there will be significant dearth in professionals, artisans and commercial professionals in the region.
A doctor at the University of Maiduguri teaching hospital told us that many professionals in the service sector and doctors have sort for transfer out of affected zones in the North. Some whose requests are not being honored and feel they cannot continue in the apprehension resign on the back of pressure from relations.
Those who remain do so because opportunities are few. One preliminary indication of the developing lacuna is that most vacancy announcements from the North (especially late last year) carried salaries; perhaps in an attempt to attract qualified individuals.
A new look for the mortgage business?
Rent in major metropolises in Kano, Bornu and Yobe reduced significantly as the crisis accelerated. This is normal as population depletes. But the situation is expected to be different in regions where forced migrants flee to.
There are a few possibilities, associated with the new pattern of migration. If the sect’s activities intensify in the next few months; fleeing families are bound to put more pressure on infrastructure in the South-West, South-East and South-South.
Lagos may be the most severely affected state considering the fact that most of those fleeing the north are more inclined to settle in cities that can support their businesses. If the patterns persist, cost of living in major southern cities and the value of properties will appreciate on the back of pressure.
Terrorism makes Northern roads less busy
One of the most affected sectors of the Northern economy is transport. The effect of Boko Haram is felt more by those involved in the transportation of passengers from the South to the North and vice versa. Whether it is the 13-seater passenger bus operator or the 59-passenger luxury bus operator, the woes cut across.
Before the onslaught, most operators made at least two trips per week, on their vehicles. But at the moment, they hardly make one trip per week. Indeed, the level of activity in road transport has reduced abysmally. As of now, it requires twice as much effort to get a 13-seater bus full of passengers these days. Clearly, fewer individuals are travelling northward.
Another factor that has slowed down transport business in the North is the presence of multiple check points, which were set up to ensure safety of passengers and goods in some parts of the north. The presence of security personnel reduced cases of Boko Haram attacks and armed robbery on major highways in the North but also increased travel time as passengers and their luggage are thoroughly checked at various points.
Before now, every trip (to and from the north) fetched a transporter operating a 13-seater bus about N40, 000. But with the current situation, owners of these buses have jacked up the amounts their drivers deposit per trip within the range of N45, oo0-N50,000 since only one trip is possible these days. This has mounted so much pressure on drivers who operate Northern routs.
The management of a transport firm in Lagos which plies the northern routs submitted that apart from operating just a bus daily to Kano because of the crisis, the company had to reduce fares in order to attract passengers”. Therefore, instead of about N1.18 million income, they hardly even make N590, 000 daily.
Any change in Agric production?
Since the economy of northern Nigeria is heavily dependent on agriculture, it follows naturally that Boko Haram’s activities should impact negatively on the sector. But data from the National Bureau of statistics indicates the growing contribution of agriculture to gross Domestic product. This was corroborated by our research since we discovered that the campaign of Boko Haram has not had much effect on the supply of agric produce from the north.
Two reasons are responsible for this, firstly, Boko Haram’s campaign has not directly affected the sources of Northern agric produce (yam is mainly brought in from Benue, Nassarawa and Niger states, Onions and vegetables come from Kano and Sokoto). In Kano, and Niger states, the areas affected by Boko Haram’s attacks are essentially urban settlements whereas most farming activity takes place in rural areas. Apart from this, in the past few years, more people have embraced farming in the North.
When we visited Mile 12 market in Lagos, authorities at the market indicated that an average of 70 trucks supply farm produce to the market daily, most of the trucks are from the north. According to the market officials, the level of supply is even better now compared with same period last year. They further hinted that the reasons behind regular supply of farm produce, is the season, a truck load of yams now costs about N1.7 million as against N2.1 million same period last year.
When retail, wholesale, consumption and volumes are decimated
It follows naturally that with decimation of individuals comes a reduction in both volume and value of consumption. Crisis in the North has affected trade in commodities in a number of ways. First, traders especially expatriates are finding it more difficult to operate in the regions affected by sectarian violence.
A case in point is that the palm oil section of Funtua central, Funtua LGA, Kastina state was left empty in the wake of post election violence. In the same local government, the number of spare parts dealers has reduced. Generally, trade in states which are considered as flash points has generally declined.
A banker in Kastina State, who opted for anonymity, says “the number of spare parts dealers, mostly easterners, has reduced drastically. Sometimes we travel interstate for our car repairs he declared. The impact of this negative tide is felt by both indigenes and non-indigenes. Some major manufactures who supply products to the North have indicated that inventory and sales are slow in the North.
The changing face of banking up-north
The banking sector has suffered some of the worse attacks in the past few months. A banker manager told us that “The security situation in the North-Western region is relatively calm, but this does not rule out the fact that everyone, especially the non-indigenous residents, still live in apprehension daily”.
Months of intimidation has made most banks in Boko Haram strongholds cut down on hours of operation and increase security presence in their premises. The banks also have deleting fund flows. When we asked the bank manager questions regarding the effect Boko Haram’s threat has on their staff mix, he disclosed “we do not expect a major remix in the structure of our staff. Most banks have policies which concentrate indigenes in their regions”.
Telecoms’ new threat
In late February, when Boko Haram attacked Yobe State, it was reported that the telecommunications system was affected in some parts of the state. Immediately following the attacks, there was a break down in telecommunication in affected areas as many individuals could not connect with their loved ones.
The cost of providing telecoms services has increased in states where violence is more likely to occur. From our investigation, it was discovered that in those states, it is becoming more popular for special security arrangements to be made for telecoms engineers who operate in remote areas. This will affect bottom lines if the situation persists and also hamper the growth and development of the industry.
Violence in the affected northern states also has implications for insurance in the region, as premiums are higher. Because of the insurgency, it is much more expensive to insure cars, personnel and other machinery operating in Boko Haram strongholds.
An imminent change in GPS patterns?
The 6 states severely affected by Boko Haram’s insurgence account for about 19 percent of Nigeria’s Gross Domestic Product (GDP). As of 2011, the economies of the affected states had estimated Gross State Products (GSP) as follow Kano (N6,779.40bn), Kaduna (N5,124.60bn), Bornu (N2,486.4bn), Yobe (N852.60bn), Bauchi (N2,875.80bn) and Plateau (N3,41.20bn). But there is little doubt that their combined GSP which was about N18,460bn in 2011 will improve or even remain what it was by Full Year 2012.
written by me and one of my colleagues. This article was written in 2012 .
Are we on the threshold of economic redefinition?
Boko Haram’s activity in Kano, Kaduna, Bornu, Yobe and Bauchi has changed the economic structure of the whole of northern Nigeria. Our research indicates that if the violence persists, development in that region will be tampered and the gap between the North and other regions will widen further.
The evidence and fast changing indices (in form of changing migration patterns, cost of insurance in the North, mass repatriation of funds, dearth in skilled labour etc) speaks volumes.
In economic terms, what the insurrection effects is a systemic distortion of existing economic patterns and structures in the Northern region.
Historically, each region in Nigeria compliments
the other. What the North lacks in access to the sea, the south
provides. The North wields 78 percent of Nigeria’s land which supports
most of Nigeria’s agriculture (food, cash crops and livestock).The south-west’s terrain supports both domestic and international commerce and provides an import/export rout. While the South-South and some parts of the South-East wield Nigeria’s oil wealth.
If Boko Haram’s activities persist, this economic symphony will be altered significantly.
Changing patterns of migration
With increased intensity of bombings in the north, there was strategic mass movement of individuals from the most affected northern states especially in early 2012. This was accentuated by the uncertainties surrounding the fuel price crisis at the time.
The movements were of a strange kind since both southerners and Northerners simultaneously moved from Boko Haram strong holds. While Northerners moved from the North-East in hundreds many relocated either to safe parts of the North or South.
Migrating Southerners were mostly women and children (moving to the South-East) who were sent away to safety by their husbands. The men, mostly businessmen stayed behind to defend their livelihood.
As of now, there is no direct evidence that those who migrated on the back of increasing insecurity have returned to the states they fled. There is no doubt that if the crisis persists, there will be significant dearth in professionals, artisans and commercial professionals in the region.
A doctor at the University of Maiduguri teaching hospital told us that many professionals in the service sector and doctors have sort for transfer out of affected zones in the North. Some whose requests are not being honored and feel they cannot continue in the apprehension resign on the back of pressure from relations.
Those who remain do so because opportunities are few. One preliminary indication of the developing lacuna is that most vacancy announcements from the North (especially late last year) carried salaries; perhaps in an attempt to attract qualified individuals.
A new look for the mortgage business?
Rent in major metropolises in Kano, Bornu and Yobe reduced significantly as the crisis accelerated. This is normal as population depletes. But the situation is expected to be different in regions where forced migrants flee to.
There are a few possibilities, associated with the new pattern of migration. If the sect’s activities intensify in the next few months; fleeing families are bound to put more pressure on infrastructure in the South-West, South-East and South-South.
Lagos may be the most severely affected state considering the fact that most of those fleeing the north are more inclined to settle in cities that can support their businesses. If the patterns persist, cost of living in major southern cities and the value of properties will appreciate on the back of pressure.
Terrorism makes Northern roads less busy
One of the most affected sectors of the Northern economy is transport. The effect of Boko Haram is felt more by those involved in the transportation of passengers from the South to the North and vice versa. Whether it is the 13-seater passenger bus operator or the 59-passenger luxury bus operator, the woes cut across.
Before the onslaught, most operators made at least two trips per week, on their vehicles. But at the moment, they hardly make one trip per week. Indeed, the level of activity in road transport has reduced abysmally. As of now, it requires twice as much effort to get a 13-seater bus full of passengers these days. Clearly, fewer individuals are travelling northward.
Another factor that has slowed down transport business in the North is the presence of multiple check points, which were set up to ensure safety of passengers and goods in some parts of the north. The presence of security personnel reduced cases of Boko Haram attacks and armed robbery on major highways in the North but also increased travel time as passengers and their luggage are thoroughly checked at various points.
Before now, every trip (to and from the north) fetched a transporter operating a 13-seater bus about N40, 000. But with the current situation, owners of these buses have jacked up the amounts their drivers deposit per trip within the range of N45, oo0-N50,000 since only one trip is possible these days. This has mounted so much pressure on drivers who operate Northern routs.
The management of a transport firm in Lagos which plies the northern routs submitted that apart from operating just a bus daily to Kano because of the crisis, the company had to reduce fares in order to attract passengers”. Therefore, instead of about N1.18 million income, they hardly even make N590, 000 daily.
Any change in Agric production?
Since the economy of northern Nigeria is heavily dependent on agriculture, it follows naturally that Boko Haram’s activities should impact negatively on the sector. But data from the National Bureau of statistics indicates the growing contribution of agriculture to gross Domestic product. This was corroborated by our research since we discovered that the campaign of Boko Haram has not had much effect on the supply of agric produce from the north.
Two reasons are responsible for this, firstly, Boko Haram’s campaign has not directly affected the sources of Northern agric produce (yam is mainly brought in from Benue, Nassarawa and Niger states, Onions and vegetables come from Kano and Sokoto). In Kano, and Niger states, the areas affected by Boko Haram’s attacks are essentially urban settlements whereas most farming activity takes place in rural areas. Apart from this, in the past few years, more people have embraced farming in the North.
When we visited Mile 12 market in Lagos, authorities at the market indicated that an average of 70 trucks supply farm produce to the market daily, most of the trucks are from the north. According to the market officials, the level of supply is even better now compared with same period last year. They further hinted that the reasons behind regular supply of farm produce, is the season, a truck load of yams now costs about N1.7 million as against N2.1 million same period last year.
When retail, wholesale, consumption and volumes are decimated
It follows naturally that with decimation of individuals comes a reduction in both volume and value of consumption. Crisis in the North has affected trade in commodities in a number of ways. First, traders especially expatriates are finding it more difficult to operate in the regions affected by sectarian violence.
A case in point is that the palm oil section of Funtua central, Funtua LGA, Kastina state was left empty in the wake of post election violence. In the same local government, the number of spare parts dealers has reduced. Generally, trade in states which are considered as flash points has generally declined.
A banker in Kastina State, who opted for anonymity, says “the number of spare parts dealers, mostly easterners, has reduced drastically. Sometimes we travel interstate for our car repairs he declared. The impact of this negative tide is felt by both indigenes and non-indigenes. Some major manufactures who supply products to the North have indicated that inventory and sales are slow in the North.
The changing face of banking up-north
The banking sector has suffered some of the worse attacks in the past few months. A banker manager told us that “The security situation in the North-Western region is relatively calm, but this does not rule out the fact that everyone, especially the non-indigenous residents, still live in apprehension daily”.
Months of intimidation has made most banks in Boko Haram strongholds cut down on hours of operation and increase security presence in their premises. The banks also have deleting fund flows. When we asked the bank manager questions regarding the effect Boko Haram’s threat has on their staff mix, he disclosed “we do not expect a major remix in the structure of our staff. Most banks have policies which concentrate indigenes in their regions”.
Telecoms’ new threat
In late February, when Boko Haram attacked Yobe State, it was reported that the telecommunications system was affected in some parts of the state. Immediately following the attacks, there was a break down in telecommunication in affected areas as many individuals could not connect with their loved ones.
The cost of providing telecoms services has increased in states where violence is more likely to occur. From our investigation, it was discovered that in those states, it is becoming more popular for special security arrangements to be made for telecoms engineers who operate in remote areas. This will affect bottom lines if the situation persists and also hamper the growth and development of the industry.
Violence in the affected northern states also has implications for insurance in the region, as premiums are higher. Because of the insurgency, it is much more expensive to insure cars, personnel and other machinery operating in Boko Haram strongholds.
An imminent change in GPS patterns?
The 6 states severely affected by Boko Haram’s insurgence account for about 19 percent of Nigeria’s Gross Domestic Product (GDP). As of 2011, the economies of the affected states had estimated Gross State Products (GSP) as follow Kano (N6,779.40bn), Kaduna (N5,124.60bn), Bornu (N2,486.4bn), Yobe (N852.60bn), Bauchi (N2,875.80bn) and Plateau (N3,41.20bn). But there is little doubt that their combined GSP which was about N18,460bn in 2011 will improve or even remain what it was by Full Year 2012.
written by me and one of my colleagues. This article was written in 2012 .
Lovely write up...Kudos!
ReplyDelete