Economic Implications of Peace: Nigeria’s Potential for Prosperity

Nigeria’s economic potential has long been hindered by internal conflicts, hindering the nation from achieving its optimal economic growth. The impact of these conflicts was particularly evident when Nigeria rebased its economy in 2013, witnessing a significant increase in gross domestic product (GDP) from $270 billion to $510 billion. However, this figure has since declined to just below $435 billion, reflecting the adverse effects of ongoing instability.

While global fluctuations in crude oil prices contribute to Nigeria’s economic uncertainties, the lack of peace in various regions of the country also bears a significant share of responsibility. Prolonged violent conflicts, such as the farmer-pastoralist clashes in the Middle Belt region, have not only devastated local communities but have also led to a substantial reduction in economic activities.

These resource-based conflicts have impeded market development and economic growth by destroying productive assets, reducing production, preventing trade, deterring private sector investments, and eroding trust among market actors. According to a research conducted by Mercy Corps, a global humanitarian aid organization, Nigeria stands to gain up to US $13.7 billion annually in total macroeconomic progress in a scenario of peace between farmers and pastoralists in key states.

Reductions in farmer-pastoralist conflict are estimated to be worth up to 2.79 per cent of Nigeria’s officially reported GDP annually. States affected by these conflicts have experienced a significant loss of taxes, with an average reduction of 47 per cent in Internally Generated Revenue (IGR) through 2012.

The potential benefits of peace were analyzed through an Input-Output (I-O) analysis, categorizing them into direct, indirect, and induced macroeconomic gains. The direct impact includes increased jobs, wages, and output, while the indirect impact encompasses jobs, wages, and output derived from the production of intermediate goods serving as inputs to the affected sector. Induced benefits reflect the ripple effects caused by the first two impacts.

The sectors with the most to gain from farmer-pastoralist peace, as measured by direct losses, include crop production, food and beverage, and livestock. When considering total losses, including direct, indirect, and induced losses, the industries that stand to benefit the most are crop production, livestock, and trade. Other sectors that would benefit significantly from sustained peace include food and beverage industries, wage-earners, chemical products manufacturing, petroleum products industries, manufacturing, financial services, and textiles.

This analysis underscores the far-reaching effects of farmer-pastoralist conflicts on the Nigerian economy, impacting not only directly affected communities but also sectors with minimal direct participation in the conflict. Achieving and sustaining peace in conflict areas could lead to significant economic gains, improve the value of the labor market, and positively affect industries beyond the immediate conflict zones.

While these findings focus on a specific conflict, they shed light on the broader truth that many other parts of Nigeria would be more economically viable in a peaceful environment. Beyond economic considerations, the federal government could also save substantial resources currently allocated to maintaining peace in conflict areas.

Addressing the country’s security challenges requires smart policies and a commitment to long-term solutions. The economic impact of violence extends beyond current activities, affecting future generations. A 2019 report by UNICEF and other institutions estimated the economic impact of violence against children in Nigeria at USD $6.1 billion, equivalent to about 1.07 percent of the country’s GDP.

In light of this, the National Orientation Agency, tasked with communicating government policy and promoting patriotism and national unity, should emphasize the impoverishing effects of conflict. Encouraging a collective understanding that conflict hampers economic prosperity is crucial for fostering peace and creating a conducive environment for sustained development.

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