Economic Root Cause Analysis on Boko Haram

Table of Content

I. Introduction        

II. Bringing into Context        

History        

Defining Terrorism and Poverty        

III. Previous Literature        

IV. Hypothesis        

V. Nigeria’s Economy        

VI. Boko Haram – Foundation and Ideology        

VII. Data and Empirical Framework        

VIII. Multi-variable cross-sectional regression analysis        

IX. Conclusion        

References        

Appendix        

I. Introduction

Nigeria, the most populous country in Africa, is the continent’s largest economy with a GDP of US$ 514.97 in 2014. Despite the strong economy, Nigeria counts to the less developed countries of the world. How can it be that a country’s GDP continues to increase exponentially, the population however remains struggling for basic needs? This increasing poverty is followed by a continous movement towards violence in form of terrorism. Since the start of the 21st century, a radical Islamist movement has formed itself to a terrorist group, nowadays called Boko Haram. This insurgency has affected negatively the economy and the society, killing thousands of civilians. Years of research and investigation has argued between the reasons and roots of Boko Haram, as well as the cause, of the continuous expansion of the group, receiving constantly more support. Contrary to the often referred religious motive, this study investigates the socio-economic drivers that cause the constant violence in this country. This paper focuses on the crisis of development and the relationship that exists between poverty, unemployment, inequality and the occurrence as well as perseverance of terrorism. Furthermore, this study suggests that due to the root causes, terrorism has to be effectively tackled by changes in the political and economic structure of the country.

II. Bringing into Context

History

In this chapter a brief inside will be given to certain moments of the history of Nigeria, which are of major importance to the economy and ideology of the country.                                 Around the 11th century the first kingdoms and dynasties were formed. In the north there was the Hausa kingdom and the Borno dynasty and in the south the Oyo and Benin kingdoms (BBC News, 2015). During the following centuries these city states would adapt the Islam, especially the northern regions. This history of Islamic prominence escalated in the 18th century when the Jihadist Usman Dan Fodio, from the Fulani tribe, created the Sokoto Caliphate. The caliphate expanded to northern Nigeria, parts of southern Nigeria, Niger, Benin, and Cameroon (Thomson, 2012). The empire was regarded as a religious community, with the Sharia law strongly enforced. It was seen as the apex of Muslim civilization, uniting the region, fighting corruption and creating prosperity. The Sultan even encouraged education for women, prior than many other countries. The standard of living improved during these years in Nigeria. In 1903, West Africa’s most powerful region until that moment dissolved under British colonialism. After the colonization a country that consisted of 350 different ethnic groups was divided in three regions: the Yoruba in the west, the Hausa-Fulani in the north and the Ibo in the east (Asuelime & David, 2015). Yoruba was a tribe mainly engaged in cocoa cash crops, exporting most of his harvest. The Ibo tribe was the most influenced by the British, likewise focused on the foreign market. The Hausa-Fulani region however resisted against the British and upheld an independent economy, relying on groundnuts (Asuelime & David, 2015).                        During the following years the open-economies of the Ibo and Yoruba regions flourished, while the north became isolated by the economic change. The wealth gap that we encounter nowadays has its roots in the division made by the British. By drawing borders with little importance given to ethnic or religious history the expected result should be discordant political behavior.                                                                                 

The 20th century shaped Nigeria not only geographically, but politically and economically.  On October 1st 1960 the Federation of Nigeria, ruled till then by the British, achieved independence, due to the general movement of the population. In the following years there were several attempts for a republic in Nigeria, hindered by an internal crisis in the population. The ethnic diversity and the increasing interest for oil evolved to a civil war in 1967 and several coup d'états afterwards (Adam Vaughan, 2011).                                         In the 1970s Nigeria became a world leader in oil production, and her oil revenues accounted for most of the GDP (Gould & Kapadia, 2009). With the oil crisis in 1973 Nigeria was infected with the Dutch Disease.  The term Dutch Disease was defined in the 1970s in the Netherlands, after large natural gas resources were found in Groningen. It describes a causality that results from the discovery of generally natural resources, in the case of developing countries mostly oil. The natural resources attract foreign direct investment concentrated in one sector, appreciating the currency. The outcome is an adverse balance of payment; exports become more expensive (Otaha, 2012). Other sectors like the agriculture and manufacturing one become less profitable and crowded out. The consequence is higher inequality, since only few elites profit from the oil-sector.                                                                         This is what happened in Nigeria in the 1970s. The first oil crisis in 1973 and the following crisis in 1979 boomed the economy of Nigeria. The oil resources appeared as a blessing, however, increasing the independence on the oil sector, which made risks more volatile, maintaining an unvaried economy, depending not only solely on oil, but on the market price of oil and the world economy. Hossein Mahdavy, an Iranian scholar, published in 1970 the "Patterns and Problems of Economic Development in Rentier States: The Case of Iran”, from where the Rentier State Theory is developed. This theory holds that rentier states, which are countries that depend on external investment, generally have a different relationship between government and population. These states are less likely to be democratic and tend to attract more conflicts, than countries that rely more on taxation of their citizens (Mahdavy, 1970). This theory enlightens how Nigeria developed after both oil crises into a country driven by oil revenues, neglecting the needs of the citizens for decades.