BusinessDay

Impact of growing insecurity on businesses in Nigeria

Nigeria, “the giant of Africa”, is deemed to be the nexus of the African trade and economic system – and rightly so. However, this quality is on the brink of collapse owing to the ever-increasing rate of insecurity in the country in recent times. Nigeria is presently plagued with heightened security crisis manifesting in the form of internal terrorism such as armed banditry, farmers-herdsmen clashes, kidnapping, local crimes, burglary, and insurgency. Unfortunately, while this is resulting in desperate loss of lives in their numbers, it is equally taking a toll on businesses and the country’s economy at large.

According to the National Bureau of Statistics (NBS), small and medium enterprises (SMEs) contributed 48% of GDP, accounted for 84% of employment and 96% of businesses within the last 5 years (2015-2020). As well, data from SBM Intelligence shows that between January and November 2020, there were 142 incidents of Boko Haram insurgency in the North-East region of Nigeria, with the exclusion of crimes in other parts of the country. The Global Terrorism Index puts Nigeria as the third most terrorized country in the world.

Read Also: Growing insecurity in Nigeria raises economic concerns

Now, we understand that the business value-chain is a balanced string of intricate processes that obey the laws of demand and supply, extending from producers to consumers. And this cycle must not be broken if we must achieve a stable economy. Thus, it is expedient to explore how insecurity has disrupted this delicate balance in Nigeria in recent years.

Firstly, many raw materials for food production obtained from the northern parts of the country are now in scarcity due to the high rates of insurgency, which leaves the lands bare and sees a mass exodus of farmers and traders alike, seeking safety for their dear lives and what is left of their families. The mindless destruction of lives and properties has greatly hampered the growth of businesses and hindered seamless communication due to the destruction of communication masts and other infrastructure, and destroyed acquired wealth, which is itself the principal means by which businesses are developed. Furthermore, the insecurity-related displacement of people also affects the mental well-being of business-minded individuals. Ideas and innovation are only possible on a higher or stable level of living, but the incessant rate of insecurity in most parts of the country has reduced many indigenes to levels of safety and survival – at which no entrepreneurial innovative thinking can happen.

Read Also: Rising insecurity amid humongous security votes

Human capital is a powerful force in any business process. With a population of over 200 million people, Nigeria ranks as the most populous African country, above Ethiopia and Egypt; however, there is an imbalance in the spread of labour. Many Nigerians are concentrated in relatively economically stable and safe states, most of which are located in the Southern and Western regions, but with the levels of available jobs being barely sufficient to meet up with the existing labour pool, how can those states satisfy the ever-increasing influx of people? It is, therefore, no surprise that the unemployed resort to vices that threaten peace and further increase the rate of insecurity. This is indeed a hydra-headed situation.

People need to earn a living to cover their basic physiological needs of food, clothing and shelter, as well as other comfort needs, but a dilemma ensues in times of crisis and uncertainty

According to Business Day, experts say that firms spend more money on security and logistics than they do on other business processes. Isn’t that very interesting? But then, how does this affect businesses in Nigeria? Following the laws of demand and supply, if the supply chain is cut or crippled, there will be less supply to satisfy the high rates of demand, leading to an increase in price. In addition, in a bid to mitigate the risk of loss, companies have to increase the price of their products and/or services in response to the increased cost of production. Is it then any surprise that inflation rates have been skyrocketing in recent times?

Data from Nairametrics shows that Nigeria’s inflation rate increased by 15.75% Year-on-Year in December 2020, hitting its highest figure in 3 years. Food inflation index also rose sharply by 19.56% in December 2020, caused by increase in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats. From these data, it is clear that food often suffers the first blow in terms of scarcity, and as earlier stated in preceding paragraphs, insecurity displaces people, making them abandon their properties (in the case of farmers, their farms), resulting in food loss, wastage and scarcity in society.

As consumers, the need for a peaceful and stable society is important for life. People need to earn a living to cover their basic physiological needs of food, clothing and shelter, as well as other comfort needs, but a dilemma ensues in times of crisis and uncertainty. Income that have originally been budgeted for basic living will in turn be used to protect and guard against insecurity, further reducing standard of living. On a larger scale, this reduction in demand due to low per capita income will disrupt the demand-supply balance.

Finally, it is worthy of note to conclude with recommendations on how to combat insecurity in Nigeria.

The world as we know it is transitioning to become a global digital space with the advancement of Science and Technology, Virtual and Augmented Reality, Artificial Intelligence, Big Data and Internet of Things. Therefore, leveraging technology to fight insecurity will greatly turn the tides positively. So, it is highly recommended that Nigeria’s security forces start to look in the direction of high-impact technology towards binding this demon of insecurity as quickly as possible. The losses of this menace are too grave to allow it to prolong any further; insecurity needs to be decisively dealt with fast!

As Professor Amitav Mallik submits in Stockholm International Peace Research Institute’s (SIPRI) Research Report No. 20 titled ‘Technology and Security in the 21st Century: A Demand-side Perspective’, “Throughout history, the evolution of war-fighting strategies has depended in large part on the level of technology available to warriors and leaders. Today, while basic human instincts remain much the same, technology has multiplied the human capacity to cause damage and destruction. Nations, like human beings, compete either by raising themselves to higher levels of techno-economic performance or by keeping others down, technologically and economically.”

This is what Nigeria must begin to do to internal terrorists. We must meet them with a combination of superior strategy and technology, while frantically devising measures to cripple their supply of technology and economic power. Our government must invest heavily and transparently in technology-powered combat weapons, such as out-power the opposition, as well as the equipment of manpower for competently deploying the weapons.

Whilst we cannot be specific in recommending what technology-powered combat devices and technology tools should be adopted, it is noteworthy that there is a myriad of options available and accessible; we only need the will and dedicated resources to get them. And if the government truly sees this evil of insecurity for what it is and the havoc it is wrecking on our economy and overall wellbeing, then no price is too high to pay to curb it – barring any further loss of precious human lives.

To conclude, Professor Amitav Mallik added in his SIPRI Research Report No. 20: “It is the combination of technology and strategy that has raised the United States well above the rest of the world, almost out of reach of even of the second-best.” It’s about time we learn to copy-paste what is working and producing enviable results for other countries.

Babayeju is a management and technology professional with over 20 years experience and expertise in business transformation, strategy & innovation, technology consulting, project, program & portfolio management, change management, learning and development.

Get real time updates directly on you device, subscribe now.