By Catarina Santos

Introduction

Since 2007, Nigeria has attracted the most foreign direct investment in Sub-Sahara Africa due to its well-developed legal and banking systems. However, Boko Haram’s spread of violence to regions where oil and gas are extracted is now intimidating investors. Economically empowering youth is a key piece in this puzzle: the private sector needs a workforce, and youth need employment opportunities as an alternative to joining insurgent groups. Although radicalized Nigerians have not yet reached European or American cities, the potential for global economic impact from terrorism in Nigeria deserves attention. This article discusses the importance of the private sector’s involvement in fighting Boko Haram in Nigeria and recommends that the private sector focus on engaging in the northeast region of the country. The private sector should provide capacity building in various skills, especially sustainable agriculture practices; support youth education; and provide financial grants in areas that government programs have not reached.

Background

According to the 2015 Global Terrorism Index, from 2014-2015 Nigeria recorded the largest increase in terrorist activity in the history of the world, with a 300 percent increase in fatalities. Previously, Boko-Haram’s activities were centered in the northeast region, safeguarding the natural resources located in southern Nigeria. However, a Brookings report highlighted the violence is expanding to commercial areas such as the capital, Abuja. Thus, in addition to increasing security threats from Boko Haram, Nigeria is facing its worst economic crisis to date, with the economy expected to shrink by 1.8 percent this year.  The rise in violence scares investors who fear that instability could jeopardize profit and infrastructure. In response, the Nigerian government is trying to mitigate Boko Haram’s activities but is not addressing a key component of the group’s growth and sustainability: the youth who have the potential to be radicalized.

Nigeria is the largest economy in Africa and plays a central role in shaping the continent’s political agenda and trade.  Domestic instability in Nigeria is spilling over into weaker countries, creating a domino effect and increasing the number of displaced Nigerians abroad. The crisis in Nigeria has been exacerbated by dropping oil prices and a slowed economy. Additionally, when 100 million people are living under the poverty line at $1.90 a day, and 1.2 million people are internally displaced, education inevitably becomes a secondary priority. For all of these reasons, it is important for the global community to acknowledge that Nigeria is a developing country trying to manage huge amounts of wealth, human capital and a rise in regional extremism. Public-private partnerships (PPPs) can provide expertise and the capacity building opportunities to help the Nigerian government.

Limitations of the current response

The Nigerian government fights Boko Haram from a security perspective without addressing the attraction that the extremist group holds for the nation’s largest demographic, its “youth bulge.” Youth (Nigerians ages 15-24 years old) make up 19.38 percent of the total population. As long as the government and the global community ignore the substantial number of disenfranchised youth in Nigeria, Boko Haram will have plenty of willing fighters. Currently, reducing poverty and developing the northeast region is secondary in the government’s list of priorities. It is largely an unexplored and underdeveloped region, where private sector activities could benefit both the local population and businesses.

The epicenter of the insurgency – Borno and Yobe states – have high poverty rates and have always been governed by opposition parties. This leaves them marginalized in terms of benefitting from federal projects, depending on which political party is in power. The situation is worsening as the economy is not providing jobs or incentives for higher education, which leave the youth uneducated and without subsistence.

In the meantime, the leaders of tomorrow are being equipped with guns rather than books and jobs. Empowering youth as they enter the job market can be accomplished in different ways, but considering the high levels of corruption in Nigeria, providing petty cash might not be the best solution. Equally, creating jobs alone will not fix the problem long-term given that literacy rates are still low in Nigeria, with only 66 percent of youth able to read and write. Moreover, literacy rates have decreased from 56 percent in 2004 to 47 percent in 2014, especially in the north of the country as a direct result of Boko Haram’s activities. Given these realities, Nigeria should focus on extending education to the northeast region. As part of that education, the country should provide vocational skills training through partnerships with the private sector.

Importance of providing alternatives to youth

International efforts to address violent extremism in Africa led to a United Nations Development Program (UNDP) report in November 2015 that identifies which factors can lead to radicalization. Nigeria was identified as one of the epicenters for radicalization, and youth as the demographic to target to prevent radicalization. Youth are more susceptible to strong leadership messages by Boko Haram, as membership provides them with a cause to fight for and a sense of belonging and power.

UNDP’s report builds a framework that identifies international stakeholders and types of activities that should be pursued in different countries according to their needs. Improving the socio-economic opportunities for youth was identified as one of the nine main goals. , the UNDP will seek to implement projects that “include skills-building, entrepreneurship, employment and other livelihoods opportunities targeting at-risk youth.” So far $5.2 million has been pledged to youth projects in partnership with other international organizations. UNDP has stepped in as the Nigerian government needs support to fight radicalization and develop its human capital.

While the UNDP report offers a strong framework, Nigerian activist Hamsatu Allamin argues that any UN initiatives will have to be carefully thought through in the implementation stage. Allamin is from the northeast region of Nigeria, and herwork has helped women’s empowerment and extended to rural areas to contradict Boko Haram’s anti-western narrative. She raises important questions: Will the new UNDP strategy be led by corrupt politicians? Or by local civil society organizations with little or no capacity, or the national NGOs who some say are no better than the government? “Who leads so that the truly vulnerable could be reached – is the greatest challenge,” Allamin said in an email correspondence with CSIS. Alternatives from the private sector provide a greater chance of effective implementation and better management of funds.

The role of the private sector

Engaging with the private sector should be a natural step for the Nigerian government – Boko Haram’s activities have affected the private sector’s workforce, expansion plans, and profits. For example, between November 2014 and April 2015, Lafarge Africa, the largest Nigerian building solutions company, lost $7.9 million as a consequence of Boko Haram’s activities in the northeast. The company is expecting to invest $100 billion in business expansion in Calabar, but only if the security situation allows it. More businesses have had their production lines interrupted due to energy supply cuts and more generally due to the lack of manpower available for work in factories.

Ultimately, the private sector and the Nigerian government have a common goal: to improve the security of the country. The private sector can expand their business, which will provide jobs and training to keep youth from being recruited by Boko Haram, by using innovative financing models to increase the funds directed to the most rural areas. A mutually beneficial partnership between the Nigerian government and the private sector can train youth and enable human capital development, especially in the northeast region.

Regarding ongoing investment opportunities, thus far the private sector has focused mainly on infrastructure, including building roads and schools, but not in the northeast where they are needed the most. The UNDP reports investment is not targeted towards those at risk of engaging in violent extremism. The current business model engages largely with the Nigerian elite and has limited relevance to the average rural Nigerian. This has indirectly sustained corruption in the top layer of society. The government should make a compelling argument to attract more investment in the neglected regions of the northeast to boost economic development. Through PPPs, there can be investment in the construction of roads in the northeast that would employ local workers who have been unemployed or are currently displaced in that region.

Opportunities in the agricultural sector also deserve more attention; this sector still employs 70 percent of the total population. Companies that work in sustainable agricultural practices should equip local farmers with techniques and skills that that use local resources.

Challenges and Opportunities for Private Sector Engagement in Nigeria

While the security situation has scared off investors, the private sector needs to buckle down for the long term if they want to gain access to communities deprived of foreign investment. Businesses that want to have a sustainable impact in the regions where they operate should engage groups at risk and promote economic empowerment initiatives. However, thus far, the private sector has not been willing to engage in any PPPs to counter Boko Haram. This skepticism is largely due to the corruption that pervades local governments and the embedded political rivalries dating back to the independence that hinder development efforts in the northeast.

Past partnerships between companies and the Nigerian government have led to successful outcomes. For example, a  2014 MasterCard program provided Nigerians with national electronic identification (eID) cards featuring payment capabilities.  The Nigerian Identity Management Commission, in partnership with MasterCard and Access Bank Plc, successfully distributed 13 million eID cards to Nigerians, representing the largest rollout of biometric-based verification cards in the country. This project is expected to advance a cashless economy and promote inclusive citizenship, which will lead to economic growth, investment and trade. Another successful PPP was the renovation of the Cross State Hospital. The International Financial Corporation (IFC) advised and managed all the aspects of the PPP for the government of Cross River State in Nigeria, including the selection of private sector firms. After careful consideration, the IFC outlined what aspects of the hospital needed to be improved in order to upgrade public health services. With governmental funds and the expertise of international private firms under the close watch of IFC team members, the hospital was successfully reopened to the public in 2015. Further win-win solutions like this need to be explored in the turbulent northeast region.

Recommendations

First, to address at-risk youth the private sector has to invest in booming sectors where youth can find a job. The private sector should also facilitate greater access to formal financial services. A recruitment tool used by Boko Haram is providing loans. While microfinance has been a good tool for enhancing access to financial services for low-income households, this is not reaching rural areas in Nigeria. An alternative could be focusing on technology and in particular digital financial services, as Brookings has suggested. This could include mobile money, which “could help facilitate access to finance in these underserved areas.” This is an area where the private sector can invest with relatively low risk involved for their employees, as most of the work can be performed remotely. Next, the private sector should invest in projects in sustainable agriculture, infrastructure, and training opportunities for youth. These activities will provide economic alternatives that the state has insofar not been able to give its youth.

Finally, it is important to acknowledge the limitations of these recommendations. The main challenge is for the Nigerian government to convince private sector firms as to why they should invest in the northeast, given all the risks. While many corporations are motivated by corporate social responsibility and may respond to the goal of economically empowering youth, a large part of the case must demonstrate how this can be a significant business opportunity. By being among the first to invest in a region with very limited private sector engagement, companies can see returns to their bottom line in the long term.

Conclusion

Nigeria holds one of the fastest growing economies and populations in the world, but increasing radicalization in the northeast poses threats of instability to what could be the first African superpower.  It is important for all stakeholders, including the private sector, to support Nigerian stability and growth. As discussed in this article, Nigeria needs a development approach that will target the root causes of radicalization to counter Boko Haram and strengthen the business environment for foreign investors.