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Nigeria: Insecurity and its impact on business

Opinions among local entrepreneurs and international business leaders about Nigeria’s security challenges differ widely. On the one hand, many are not particularly, if at all, concerned, whether in Lagos or in the other commercial centres of Abuja and Port Harcourt. They expect business to continue as usual and for the threat resulting from militant group Boko Haram to subside after the elections in February next year.

Anna Rosenberg

Anna Rosenberg

Generally, Boko Haram is believed to be sponsored by a few political forces keen on influencing election results. Since President Goodluck Jonathan, a southern and Christian president, came to power the group’s terrorist activity has increased dramatically. Some believe that Boko Haram was able to emerge because traditional power structures were disrupted in many of the northern states after the central power shifted to the south.

On the other hand, some business leaders are deeply troubled by the rising violence because of its underlying dynamics.

“We don’t understand why Nigerians are blowing themselves up for a cause. It simply isn’t part of the Nigerian psyche,” a senior manager of a consumer goods company told me.

The head of marketing at a Nigerian bank echoed these sentiments, before adding: “The dynamics here are changing. Everything is getting more expensive because most of our food comes from the north, prices have been going up and what the average Nigerian earns is simply not enough anymore. I fear this may impact the balance here in Lagos, particularly as we get more refugees from the north. Our infrastructure can’t cope with it.”

Business impact

Experiences about the security threat’s impact on business also vary. As the owner of a distribution company explained: “In our annual sales meetings, one of our local representatives stood up and pronounced huge losses due to the instability in the north. In response, another representative exclaimed that his major customer sits in Borno State!”

Generally, the businesses that suffer most are consumer goods companies that sell low value, high volume products in the populous yet poor northern states. State-imposed curfews mean people don’t go out to buy things. Moreover, many traders in neighbouring Niger, Chad and Cameroon have ceased buying their products in bulk from northern Nigeria.

Businesses operating in affected areas are developing creative ways to address the challenges. “We just had to adapt to the environment. When Boko Haram destroyed the mobile phone masts, we couldn’t call our local representatives anymore. So we just invested in VoIP (Voice-over-Internet Protocol) technology which is a little more expensive, but now we can communicate frequently with our local representatives and business is flourishing,” the CEO of a fast-moving consumer goods distribution company told me.

A common enemy

While the threat resulting from Boko Haram is still geographically contained around the northern and central states, the country’s commercial capital has been spared. It is believed that those funding Boko Haram have business interests in Lagos they do not want to be undermined.

To capture the abundant commercial opportunities Nigeria has to offer, many businesses have, for the most part, refocused their attention to safer and more prosperous parts of the country. However, there is still concern that what led to the rise of Boko Haram is not just political manoeuvrings, but real socio-economic grievances which could incite insecurity in more stable places, if not addressed.

Some stress the need for the government to take action. Others are more patient and think that, as Nigeria is only now entering its fourth electoral cycle, more time has to pass for democratic processes to mature and correct disrupted traditional structures which are fuelling the power struggles lying at the heart of Boko Haram.

A few try to look at the situation with a typically positive Nigerian attitude. “In history, the unifying factors of nation states have often been the existence of a common enemy. We have that now, and it could help us focus less on what divides us as tribes and regions, but what unites us as a country.”

Anna Rosenberg is Head of Sub-Saharan Africa Research at Frontier Strategy Group, a Washington headquartered information services provider advising multinationals on doing business in emerging markets. Anna is currently on a research trip to Nigeria and Ghana, meeting representatives from local and international businesses, journalists and government officials. Follow Anna on twitter @anna_rosenberg

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