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Impact of Boko Haram on Banking in Nigeria
- 1. Quantitative and Qualitative Analysis of the Impact of Boko Haram on the Banking Sector in Nigeria Contributors: Adeniyi Akofiranmi, Awodele Bola, Abe Bolanle, Onamuti Sanya, Ijeoma Chukwu, Frank Obel, et al
- 4. About Boko Haram • Boko Haram, is a jihadist terrorist organization based in the northeast of Nigeria • It was founded by Mohammed Yusuf in 2002 • The organisation is a Muslim sect that seeks to abolish the secular system of government and establish Sharia Law in the country •It propagates that interaction with the Western World is forbidden and it is also against the Muslim establishment and the government of Nigeria. • The group includes members who come from neighbouring Chad and Niger and speak only Arabic language. •Disruption of economic activity ( especially banking operation) in the Northern part of Nigeria • Deterioration of confidence associated with an attack can reduce the willingness to spend than to save in banks • Mass movement of individuals from the most affected northern states • Damage to communications system Origin and Ideology Impacts of Boko Haram Activity
- 6. Banks Affected in Yobe State
- 7. Aim, Scope and Hypothesis
- 9. Literature Review • Anthony, (2014) revealed that the sect have attacked commercial hot-spots like markets, parks, government agencies and even banks, in one of which they harvested N41 million, as recently revealed by the sect’s top shot, Abu Qada, currently in detention. • ALAWIYE writes on challenges being faced by the banks. Indications have emerged that some Deposit Money Banks in the country may close some of their branches in the North, especially those in Borno and Kano states, where attacks by the Boko Haram sect are crippling business activities. Our correspondent gathered from sources in the banking sector that branches in the north had continued to record losses due to poor patronage and decreasing business activities. (Excerpt from Punch Newspaper May 14, 2012. • Amuchie, (2012) stated that, last year alone, ‘Boko Haram’ struck 115 times and killed 550 people • Farouk, (2012) quoted “The attack on Kano is so significant because the city has always been the commercial centre of Western Sudan for the past 500 years, ever before the evolution of Nigeria. So, when you destabilize peace in Kano you threaten the foundation of economic and social well-being of the northern region,”
- 11. Presentation and Analysis of Data • The responses on the survey questionnaire were analyzed using SPSS version 11.0. Alpha (significance value) is set at 0.05, to test at the 5% level • First part of this analysis is for classifying the respondents based on their bio data • Second part is the descriptive analysis and interpretation of the findings. • Two hundred (200) questionnaires were administered and one hundred (100) were valid questionnaire returned, eighty (80) were partially filled and twenty (20) were not returned. • Questionnaire used for quantitative aspect Microsoft Office Word 97 - 2003 Document
- 12. Biodata Classification Section ATable 1: Gender Distribution • 100 respondents: 64.0% are Male and 36.0% are Female which means there are more male than female in the Nigerian banking sector. Table 2: Age Distribution • Majority of the employees belong to the productive age as a result of this the banking sector is expected to be productive Table 3: Marital Distribution • Among the respondents, 33.0% are single and the remaining 67.0% are married. Freq uenc y Percent Valid Percent Cumulati ve Percent Male 64 64.0 64.0 64.0 Female 36 36.0 36.0 100.0 Frequency Percent Valid Percent Cumulativ e Percent 21- 30 yrs 27 27.0 27.0 27.0 31- 40 yrs 51 51.0 51.0 78.0 41 - 50 yrs 22 22.0 22.0 50 – 60 yrs - - - 61yrs & above Total 100 100 100.0 Frequency Percent Valid Percent Cumula tive Percent Valid Single 33 33.0 33.0 33.0 Married 67 67.0 67.0 90.0 Divorced - - - 100.0 Total 100 100.0 100.0
- 13. Biodata Classification Cont’d Table 4: Educational Qualification • Majority the respondents possess first degree certificate. Table 5: Religion Distribution • 34% of the respondents are Muslim and the remaining 66% are Christians. Table 6: Managent Cadre • 30.0% of respondents are middle level manager, 25.0% of them are senior level manager and the remaining 45.0% are lower level manager. Frequency Percen t Valid Percent Cumulative Percent O level - - - - OND/NC E 4 4.0 4.0 4.0 BSc/HND 62 62.0 62.0 66.0 MSc/MB A 34 34.0 34.0 90.0 100 Total 100 100.0 100.0 Frequency Percent Valid Percent Cumulative Percent Valid Islam 34 34.0 34.0 34.0 Christ ianity 66 66.0 66.0 100.0 Tradit ional - - - Other s - - Total 100 100.0 100.0 Freque ncy Percen t Valid Percent Cumulat ive Percent Valid Middle mgr 30 30.0 30.0 30.0 Senior mgr Lower mgr 25 45 25.0 45.0 25.0 45.0 55.0 100.0 Total 100 100.0 100.0
- 14. Biodata Classification Cont’d Table 7: Length of Service • 42% of the respondents have spent between 1-5 years in the banking sector, 40% have spent between 6-10 years and the remaining 18% have spent between 11 and 15 years. Frequ ency Percent Valid Percent Cumulative Percent 1-5 yrs 42 42.0 42.0 42.0 6-10 yrs 11-15 yrs 40 18 40.0 18.0 40.0 18.0 82.0 100.0 Total 100 100.0 100.0
- 18. Quantitative Analysis 1. Bank domicile in the north have witnessed significant reduction in operation due to boko haram activities • • • 67.0% of the respondents strongly agreed that bank domicile in the north have witnessed significant reduction in operation due to boko haram activities, 22.0% agreed 4% were indifferent, 5.0% disagreed and the remaining 2.0% strongly disagreed. 2. Profits of your bank has been affected by boko haram insurgence • 77.0% of the respondents strongly agreed that profits of the selected banks have been affected by boko haram insurgence, 12.0% agreed, 1% were indifferent, 6% disagreed and the remaining 4.0% strongly disagreed. Frequ ency Percen t Valid Percent Cumulative Percent V al id Strongly Agree 67 67.0 67.0 67.0 Agree 22 22.0 22.0 89.0 Indifferen t 4 4.0 4.0 93.0 Disagree 5 5.0 5.0 98.0 Strongly disagree 2 2.0 2.0 100.0 Total 100 100.0 100.0 Frequenc y Percent Valid Percent Cumulati ve Percent Valid Strongly Agree 77 77.0 77.0 77.0 Agree 12 12.0 12.0 89.0 Indifferent 1 1.0 1.0 90.0 Disagree 6 6.0 6.0 96.0 Strongly disagree 4 4.0 4.0 100.0 Total 100 100.0 100.0
- 19. Quantitative Analysis 3. Your bank has lost fixed asset to insurgence •33.0% of the respondents strongly agreed that the selected banks have lost fixed asset to insurgence, 21.0% agreed, 20% were indifferent, 20% disagreed and the remaining 6.0% strongly disagreed. 4. Many staff in boko haram infested area have lost their lives or those of relatives • 27.0% of the respondents strongly agreed that any staff in boko haram infested area have lost their lives or those of relatives, 48.0% agreed, 12% were indifferent, 10% disagreed and the remaining 3.0% strongly disagreed. Freque ncy Percent Valid Percent Cumulative Percent Valid Strongly Agree 33 33.0 33.0 33.0 Agree 21 21.0 21.0 54.0 Indiffer ent 20 20.0 20.0 74.0 Disagre e 20 20.0 20.0 94.0 Strongly disagre e 6 6.0 6.0 100.0 Total 100 100.0 100.0 Frequenc y Percent Valid Percent Cumulative Percent Vali d Strongly Agree 27 27.0 27.0 27.0 Agree 48 48.0 48.0 75.0 Indifferent 12 12.0 12.0 87.0 Disagree 10 10.0 10.0 97 Strongly disagree 3 3.0 3.0 100.0 Total 100 100.0 100.0
- 20. Quantitative Analysis 5. Violence by boko-haram has adversely affected the revenue of your bank • 33.0% of the respondents strongly agreed that violence by boko-haram has adversely affected the revenue of the selected bank, 21.0% agreed, 20% were indifferent, 20% disagreed and the remaining 6.0% strongly disagreed. 6. Patronage by customers in areas affected by boko haram insurgence has greatly reduced • 34.0% of the respondents strongly agreed that patronage by customers in areas affected by boko haram insurgence has greatly reduced, 50.0% agreed, 6% were indifferent, 6% disagreed and the remaining 4.0% strongly disagreed. Frequenc y Percent Valid Percent Cumulative Percent Vali d Strongly Agree 33 33.0 33.0 33.0 Agree 21 21.0 21.0 54.0 Indifferen t 10 10.0 10.0 64.0 Disagree 20 20.0 20.0 84.0 Strongly disagree 16 16.0 16.0 100.0 Total 100 100.0 100.0 Frequen cy Percent Valid Percent Cumulative Percent Va lid Strongly Agree 34 34.0 34.0 34.0 Agree 50 50.0 50.0 84.0 Indifferent 6 6.0 6.0 90.0 96.0 Disagree 6 6.0 6.0 100 Strongly disagree 4 4.0 4.0 Total 100 100.0 100.0
- 21. Quantitative Analysis 7. Projects funded by your bank in affected areas are at risk • 33.0% of the respondents strongly agreed that projects funded by the selected bank in affected areas are at risk, 21.0% agreed, 20% were indifferent, 20% disagreed and the remaining 6.0% strongly disagreed 8. Operating Cost has gone up due to increased security budget • 43.0% of the respondents strongly agreed that operating Cost has gone up due to increased security budget in the selected banks, 44.0% agreed, 4% were indifferent, 6% disagreed and the remaining 3.0% strongly disagreed. Frequen cy Percent Valid Percent Cumulat ive Percent Valid Strongly Agree 33 33.0 33.0 33.0 Agree 21 21.0 21.0 54.0 Indiffere nt 10 10.0 10.0 64.0 Disagree 20 20.0 20.0 84.0 Strongly disagree 16 16.0 16.0 100.0 Total 100 100.0 100.0 Frequ ency Percent Valid Percent Cumulative Percent Valid Strongly Agree 43 43.0 43.0 43.0 Agree 44 44.0 44.0 87.0 Indifferen t 4 4.0 4.0 91.0 97.0 Disagree 6 6.0 6.0 100 Strongly disagree 3 3.0 3.0 Total 100 100.0 100.0
- 22. Quantitative Analysis Frequen cy Percent Valid Percent Cumula tive Percent Valid Strongly Agree 47 47.0 47.0 47.0 Agree 34 34.0 34.0 81.0 Indiffere nt 3 3.0 3.0 84.0 Disagre e 10 10.0 10.0 94.0 100.0 Strongly disagree 6 6.0 6.0 Total 100 100.0 100.0 9. Some braches have been shut down due to boko haram activities • 47.0% of the respondents strongly agreed that some braches of the selected banks have been shut down due to boko haram activities, 34.0% agreed, 3% were indifferent, 10% disagreed and the remaining 6.0% strongly disagreed 10. Employee Transfer requests have increased tremendously due to insurgence • 67.0% of the respondents strongly agreed that employees’ transfer requests have increased tremendously due to insurgence in the selected banks, 22.0% agreed 4% were indifferent, 5.0% disagreed and the remaining 2.0% strongly disagreed. Frequenc y Percent Valid Percent Cumulati ve Percent Valid Strongly Agree 67 67.0 67.0 67.0 Agree 22 22.0 22.0 89.0 Indiffere nt 4 4.0 4.0 93.0 Disagree 5 5.0 5.0 98.0 Strongly disagree 2 2.0 2.0 100.0 Total 100 100.0 100.0
- 23. Quantitative Analysis 11. Employee turnover has increased in your bank due to book haram activities • 13.0% of the respondents strongly agreed that employee turnover has increased in the selected banks due to book haram activities, 11.0% agreed, 52% were indifferent, 15% disagreed and the remaining 9.0% strongly disagreed. Frequency Perc ent Valid Percent Cumulati ve Percent Valid Strongly Agree 13 13.0 13.0 13.0 Agree 11 11.0 11.0 24.0 Indifferent 52 52.0 52.0 76.0 Disagree 15 15.0 15.0 91.0 Strongly disagree 9 9.0 9.0 100.0 Total 100 100. 0 100.0
- 24. Qualitative Analysis Interview Guide 1. Briefly give us an account of how Boko Haram insurgency has adversely affected your bank in terms of profitability 2. How has activities of Boko Haram affected your level of profit compare to when there was non. 3. What are your coping/surviving strategies Responses to Question 1 • Most customers have closed their accounts and have relocated to a safer place because of fear customers hardly come to the banking hall • Branches in the affected areas have been shut • Huge demand and withdrawal of fixed deposits • Insurgency has adversely affected the profitability of the banks in the sense that there is decline in profit margin as a result of insecurity; • Monthly profit of the selected banks in the affected area has hit a record drop and still go down continually Responses to Question 2 • All the respondents agreed that insurgency badly affected their profit. Responses to Question 3 • Engaging the military for effective security • Encouraging internet banking • Gifts an other incentives to attract customers and potential ones.
- 25. Discussion • Considering the data analysed above it is obvious that Boko Haram’s activity in Kano, Kaduna, Bornu, Yobe, Adamawa and Bauchi is gradually changing the economic structure of the whole of northern Nigeria • Ever since the activities of the militant group ‘Boko Haram’ assumed horrendous dimension, the loss of properties with commercial value and forfeited local and foreign investment have been a song of nunc dimittis for the domestic economy. It is clear there are no criteria to quantify the loss to the economy. • The selected banks (Zenith bank, Sterling bank, Gtb, Diamond, First bank, Access bank, UBA and Unity Bank) for this study have been forced to review their operational hours to begin from 9.00am to 12.00 noon as against the normal operational period of 8.00am to 4.00pm • Customers especially traders, find it very difficult to deposit their daily proceeds in the banks due to the limited banking operational hours that are no longer in their favour, this has seriously affected • This situation has the damaging consequence of giving signal to the international community that Nigeria is not a safe and secure place and as such not suitable for investment and business activities. In that case, foreign firms and entrepreneurs would decline to invest and this is particularly important in view of the efforts being made to create the desired atmosphere to attract foreign direct investment.the profit of these banks.
- 26. Effect of Insurgency on Banking Industry in Other Parts of the World • Terrorism in US : Attack on the world trade centre led to disruption of trading infrastructure such that the banks were not able to trade in the market. Even though the attack was not directly on a bank, however, the impact of this attack was felt by the Bank of New York as the world’s largest custodian and settlement bank. • Impact of 9/11 on financial market and world’s economy: Results explored that emerging markets returns are decreasing. it is found that overall emerging markets have significant signs of volatility but the impact is not volatile throughout. • Insurgency in Iran : The impact of terrorism is enormous and has disrupt the whole economy of this country. • Insurgency in Cuba:
- 27. Suggestion and Recommendation to Nigeria Authority • Security should be seen as everybody’s business • Seek better understanding of the underlying causes and dynamics of the insecurity in the country with the aim of providing effective conflict prevention and management strategies. • Need for intelligence gathering and surveillance so that law enforcement agents could be proactive and reasonably predict potential crime with near perfect accuracy rather than being reactive • Devote more attention to security intelligence, capacity building to meet the global best practice standard and acquisition of modern technology. • Use of Computer-based Closed Circuit Television cameras in public places especially in Abuja to monitor and record events that take place in a particular location • Government at all level should not compromise in enforcing the law • There should be an institutionalized approach rather than the episodic and reactive response adopted by the government at the aftermath of attacks.
- 28. Advise to Players in the Banking Industry • Relocation : it is advisable for management to relocate to a peaceful location near- by that is safe enough for operations to go on without any form of hindrance or harm to resources • Pressurized the Government to Negotiate: find a lasting solution to the yarning’s and agitations of the aggrieved group. This had been the strategies of the seven sisters in the oil industry. • Peaceful persuasion of the warring group to embrace peace : mass media (Radio, television, internet, mobile phones ) broadcasting in the local dialect to send messages and also appeal to the warring group on the need to embrace peace • Using of local opinion / religious leaders : persuade the warring group to embrace peace and come to the negotiation table for dialogues • Tackling the root cause of the conflict: Finding and tackling the remote cause of the conflict can help in professing lasting solution to the conflict. • Infiltrate the ranks of the terrorist group : This has been a veritable tactics employed by opponents to win wars.
- 29. References • Amuchie, M. (2012), Boko Haram: What cost for the Northern Economy, Business Day. • Anthony A. (2014) “Implication of Boko Haram Terrorism on National Development In Nigeria”, Vol. 5(16) • Baiyewu, L. (2012) “Boko Haram, Bad Signal to Foreign Investors, Sunday Punch, January 12. • Bartolotta, C. (2011), “Terrorism in Nigeria: the Rise of Boko Haram”, The Whitehead Journal of Diplomacy and International Relations. • Brück, T., & Wickström, B. A. (2004, April). The Economic Consequences Of Terror: A Brief Survey. Households In Conflict Network , P. Working Paper 03. • Cook, D (2011), “The Rise of Boko Haram in Nigeria”, Combating Terrorism Centre, Retrieved on 15-11-2014. • Eme, O.I, et al (2012), “Activities of Boko Haram and Insecurity Question in Nigeria, AJBMR Vol. 1 (9). • Ezema Obianuju (2013), “ The Socio Economic Impact Implication of Boko Haram Insurgence in Nigeria • http://www.punchng.com/business/financial-punch/north-boko-haram-attacks- cripple-banking-operations/ Retrieved on 18-11-2014.