INSECURITY AND ECONOMIC DEVELOPMENT IN NIGERIA

Abstract

Insecurity is one of the key issues in Nigeria as it affects all sectors of the economy there by hindering the desired progress in the country. This paper sets out to investigate the effect of insecurity on economic development in Nigeria from 1996 to 2021 using structural vector autoregressive (SVAR) model. The properties of the time series data were first checked by conducting the unit root tests, namely the Augmented Dickey Fuller (ADF) and Phillips Perron (PP) tests with a view to avoiding spurious regression. The results of unit root tests with trend and intercept indicate that the series are stationary at first difference. The results of the impulse response functions from the SVAR model and variance decomposition reveal that the response of insecurity to a one-unit standard deviation shock to economic development is negative and hence, insignificant; the results from variance decomposition reveal that insecurity accounts for more than 50% variations of economic development in Nigeria. Based on these results, the paper recommends that appropriate measures should be taken by the government to tackle the level of insecurity in the country. This can be achieved by intensifying efforts towards beeping up security by providing the security operatives in the country adequately with the required logistics to curb the menace.