THE EFFECT OF TERRORISM ON THE SURVIVAL OF BANKS IN NORTH WEST NIGERIA 2003 to 2013

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ABSTRACT
This research was carried out to empirically address the effect of terrorism on the survival of banks in north-west Nigeria (2003-2013). The objectives of the study were; to determine how the level of government’s anti-terrorism spending affects the availability of loan to business and ascertain the degree to which Boko Haram activities affects the profitability of bank in North-west Nigeria. Orthodox theory was used for the study. Two research questions and two research hypothesises were used in the study. Ordinary Least Linear Regression Analysis method was adopted for the study and data covering 2003 to 2013 was used for the study. EVIEW statistical tool was employed to run the least square regression analysis. The research was conducted using secondary data gotten from CBN statistical bulletin and factfish.com and other sources The data gathered covers Government Spending on Security (GSS), Bank Loans to Private Sector (BLPS), Boko Haram Killings (BHK), and Return on Assets (ROA) within the period under review (2001-2013). The findings indicate that; Government anti-terrorism spending affects the availability of loan to businesses. The activities of Boko Haram have no significance on the profitability of bank in the North-west Nigeria. Based on the findings the researcher recommended among others that; (a) Government should find ways of reducing the incidence of terrorism by improving on the standard of living of the masses this will help in discouraging social deviants and support for terrorism by the youths. (b) Government should put in place polices that help the companies affected by terrorism. Such policies can be soft loans, tax holidays to help rejuvenate their business. (c) Banks should take proper assessment of places they wish to cite their branch so as not to invest in places that are prone to terror attacks.(c)The government should create a better enabling environment to encourage foreign investors who come in and invest in the economy. (d) National orientation should be carried out vigorously to better educate the masses on the need to embrace peaceful resolutions to issues rather than taking on arms.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Terrorism affect firms, their physical assets, the lives of their employees, their knowledge base and their reputation. Terrorism did not start with the attack on the World Trade Centre in New York 2011, neither is terrorism limited to spectacular acts (Schelling, 1991).
The effect of terrorists activities on business development has increased tremendously in Nigeria and there is a banal version of terrorism with a long historical record for attacking special social groups, government, public utilities, and indeed firms. The business development in Nigeria is becoming unstable as the weight of terrorism has threatened every aspect of the economy including banks located at the affected areas and this has sent the development of business in the economy/Nigeria on a downward slide (Emeka, 2011).
Terrorism in general term refers to the international destruction of resources in particular physical assets and knowledge assets (that is, the lives and knowledge of one individual or one group of people). Terrorism is caused by a combination of political, economic and institutional factors. (Sonubi, 1993, Otobo, 1983, Owoye, 1991); according to Akpan, et al, (2012); terrorism reduces foreign Direct Investment and hinders business development.
Another consequence of terrorism is that reduction on the total capital stock of a society, loss in worldwide trade. For example, based on data from 200 countries over the period 1960-1993 one study showed that “a doubling in the number of terrorist incident (a rise by 100 percent) is associated with a decrease in bilateral trade by about 6 percent” (Nitsch and Schumacher, 2002:5) even if adjusted for alternative causes of violence such as political instability or military conflict.
Terrorism though widespread is not found in all countries, neither is terrorism a stable features in the business world. The cost of destruction of lives and property and national productivity are directly affected while there are long term, indirect cost of reducing and curbing the menace, the human cost, the amount of lives wasted in the process. Not all country’s, firms, state, faces the same risk in form of being singled out as targets for terrorist attacks, and not all country’s, firms, state occupy the highest position in the ranking of “worthwhile” are target all the time. There is a subtle but crucial interaction between management strategies and a terrorist groups decision on what, whom, how and now often to attack. Only by analyzing the interaction between firms operating in international market and the rationale of terrorist groups, strategic variables can be singled out that help the management to systematically respond, if not anticipate terrorist hazard.
The cost of controlling and managing violent crime and terrorism in Nigeria has really been very expensive (institute for security studies threat, 2013). Nigeria as a nation-state is under a severe internal socio-economic and security threat. As a more general level, the threat has social, economic, political environmental dimensions. Each of these dimension has greatly affected the nation’s stability, and can be traced to the ethnic militia armies, ethnic and religious conflicts, poverty, terrorism, armed robbery, corruption economic sabotage and environmental degradation (Ilutoye, 20000). In Nigeria for instance, it’s inadequate to mention terrorism in Nigeria with reference to the activities of Boko Haram, a terrorist group which has taken responsibility for most of the attacks in some part of the country. The increase in terrorist activities has, by most analysts ratings, complicated the Nigerian business climate and made it investors unfriendly. The impact of these nefarious activities on Nigerian economy has been intense so much so that the minister and Deputy Chairman of National Planning Commission ( NPC) Dr. Shamsuddeen Usman, says in a remark that terrorist activities of the group have created a lot of distortions in the economic activities in the northern region. These groups have perpetrated several bombing that have killed millions of innocent citizens of both private and public properties worth of billion of naira. This derives from their bid to make people in the North West/East geo-political zone of Nigeria to embrace their view on Islamic Nigeria code and education. The World Bank Investment Climate Assessment Report for the 2011 fiscal period indicates that the Nigerian business environment in spite of the ongoing reform remains hostile. According to the report, investors are losing 10 percent of their revenue as a result of the hostile investment climate, poor quality infrastructure, crime, insecurity and corruption, all these are affecting Nigerian’s business environment from developing.
The predominant threat and security challenging in the area are emendating from un-abating attacks on Nigerian citizens, banks, public and governmental installations, kidnapping and destruction of properties.
All these effect of Boko Haram activities are serious crime against the Nigeria, state, which has threatened its business environment, national security and socio-economic activities. This has posed great challenges to the development of business activities in the country. Disrupted economic activities of any kind in the three state where they held sway (such as Maiduguri which is the capital of Borno, Kaduna, Jos).
This situation has made it impossible for the citizens in that part of Northern Nigerian to carry on their legitimate businesses. It is also scaring foreign investors out of the country. This project then attempts to investigate the impact of terrorism on the business development.
1.2 Statement of the Problem
The high level of terrorism and violence in Nigeria by the fundamentalist group (Boko Haram) has heightened fears among the populace and the international community has eaten deep into our economy and as a matter of fact, the hostility has gone beyond religious or political coloration. The insurgency has introduced a terrorist dimension, hitherto unknown, into the criminal space in Nigeria. Series of bombings have been carried out by the sect, as well as taking hostage of innocent citizens. Even the United Nation building in Abuja was not spared in the bombing.
It is inevitable that the economic impact of terrorism would be more felt in unsophisticated non-cultural low-income economies than they would be felt in highly advanced, diversified industrial economies. On the state of the country, when people feels insecure, their appetite to invest, to buy or rent from the product of investment reduces; and that is why all over the world, any country that radiates an environment of insecurity naturally repels investment initiatives from both the international community and it’s own local investors. Hence, crime is a threat to the economic, political and social security of a nation and a major factor associated with under-development; because it discourage both local and foreign investments, reduces the quality of life, destroys human and social capital, damages relationships between citizens and the states, thus undermining democracy, rule of law and the quality of the country to promote development (Adebayo, 201 3b).
The acts of terrorism has created widespread insecurity across northern Nigeria. Increased tensions between various ethnic communities, interrupted development activities, frightened off investors, and generated concerns among Nigeria’s Northern neighbours. Thou several meetings, summit, conferences etc. have being held in a bid to curb the menace in the country but all to no avail. Also apart from the fact that meetings have been held, the federal governments have spent millions of naira in making sure that security is brought back to the country but that has never worked.
The costs of crime are tangible and intangible, economic or social, direct or indirect physical or psychology, individual or community. In fact, it is from the cost that the consequences of crime are derived. The cost of crime can be incurred as a result of actual experience of criminal activities, when there is physical injury, when properties are stolen, damaged or destroyed. As a consequence of the prevalence of crime in society, the demographic composition may be altered through mass movement of people from crime-prove areas to areas perceived to be relatively crime –free. This can also lead to brain-drain and other socio-economic problems. When the pillar of national security is weak, the structure quivers and send sensations to the occupiers and potential occupiers of such structures. This is the case with the Nigeria entity, where insecurity and unrelenting violence by the groups in the country have continued to pose a threat to the nation’s economy and investments.
The question is will it ever stop?, can we say that the Boko Haram menace could be understood. Their acts of terrorism have adversely affected the business and economic life of the nation and the effect is felt directly on the North-eastern and North-west parts of the country, where these acts are predominant and indirectly in the rest of the country. These acts of violence, have led to closure of
Many businesses that could not continue to operate due to insecurity of their investment.
Based on the foregoing this research intends to access the effects of terrorism on business development.
1.3 Objectives of the Study
The main objective of this study is to ascertain the extent to which terrorism affects the survival of banks in Northwest Nigeria.
The specific objectives are;
1. To determine how the level of government’s anti-terrorism spending affects the availability of loan to business.
2. To ascertain the degree to which Boko Haram activities affects the profitability of bank in North-west Nigeria.
1.4 Research Question
In this light, this study will be guided by the following research question.
1. To what extent does government’s anti-terrorism spending affects the availability of loans to businesses?
2. To what extent does the activities of Boko Haram affects the profitability of bank in North West Nigeria?
1.5 Research Hypothesis
Hypothesis One
Ho 1: Government anti-terrorism spending does not affect the availability of loan to businesses.
Ha 2: Government anti-terrorism spending affects the availability of loan to businesses.
Hypothesis Two
Ho 1: The activities of Boko Haram has no significance on the profitability of bank in the North-west Nigeria.
Ha 2: The activities of Boko Haram has significance on the profitability of bank in the North-west Nigeria.

1.6 Significance of the Study
The significance of this study is that it will act as a guide to the organization, future researcher and governments in their quest to quell the problem of terrorism (Boko Haram) as it affects the economy of the country. Result from the study will help organization and government to understand the factors that determine the scale of the cost of terrorism. Also judging from the fact that terrorism is currently a prevailing canker-warm and it’s very spontaneous and topical, this study will help to proffer solutions.
Moreso, this work, theoretically will be useful to writers, scholars, journalists etc. in order to add to their existing knowledge what they already know about terrorism and business development, particularly in Northwest Nigeria.
1.7 Scope of the Study
This study covers all the whole bank in North-west Nigeria.
Many business’ that could not continue to operate due to insecurity of their investment; based on the forgoing this research intends to access the effects of terrorism on business development.
1.3 Objectives of the Study
The main objective of this study is to ascertain the extent to which terrorism has affected the development of businesses in North-west Nigeria. The specific objectives are;
1. To determine how the level of government’s anti-terrorism spending has affected the availability of loan to business
2. To ascertain the degree to which boko haram activities has affected the profitability of business in North-west Nigeria.
3. To determine the extent to which the rate of boko haram killings has affected the supply of man-power to businesses in North-west Nigeria.

1.4 Research Question
In this light, this study will be guided by the following research question.
1. How has the level of government’s anti-terrorism spending affected the availability of loans to businesses.
2. To what extent does the activities of boko haram affect the profitability of businesses in North west Nigeria.
3. To what extent has the rate of boko haram killings affected the supply of manpower to businesses in North –west Nigeria.
1.5 Research Hypothesis
Hypothesis One
H0 1: The government anti-terrorism spending has not affected the availability of loan to businesses.
Ha 2: The government anti- terrorism spending has affected the availability of loan to businesses.
H0 1: The activities of boko haram have no significant effect on the profitability of businesses in the North-west Nigeria.
Ha 2: The activities of boko haram have significant effect on the profitability of businesses in the North –west Nigeria.
H0 1: The rate of boko haram killings has no significant effect on the supply of manpower on businesses in North West Nigeria.
Ha 2: The rate of boko haram killings has significant effect on the supply of manpower in North west Nigeria.
1.6 Significance of the study.
The significance of this study is that it will act as a guide to the organization, future researcher and governments in their quest to quell the problem of terrorism (Boko Haram) as it affects the economy of the country. Result from the study will help organization and government to understand the factors that determine the scale of the cost of terrorism. Also judging from the fact that terrorism is currently a prevailing canker-warm and it’s very spontaneous and topical, this study will help to proffer solution. More so, this work theoretically will be useful to writers, scholars, journalists etc. in order to their existing knowledge what they already known about terrorism and business development, particularly in North-west Nigeria.
1.7 Scope of the Study
This study covers United Bank of Africa and First Banks of Nigeria.

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