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

Definition of Terms

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

Banks Affected in Yobe State

Aim, Scope and Hypothesis

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,”

Presentation

and Analysis

of Data

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

Biodata ClassificationSection A

Table 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.

Frequenc

y PercentValid

Percent

Cumulative

Percent

Male 64 64.0 64.0 64.0

Female 36 36.0 36.0 100.0

Frequency Percent Valid PercentCumulative Percent

21- 30 yrs 27 27.0 27.0 27.031- 40 yrs 51 51.0 51.0 78.041 - 50 yrs

22 22.0

22.050 – 60 yrs

- - -

61yrs & above

Total 100 100 100.0

Frequency PercentValid

Percent

Cumulative

PercentValid 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

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.

FrequencyPercen

tValid

PercentCumulative

PercentO level - - - -  OND/NCE

4 4.0 4.0 4.0  BSc/HND

62

62.0

62.066.0  

MSc/MBA

34 34.0 34.0 90.0  

100  Total 100 100.0 100.0  

Frequency PercentValid

PercentCumulative

PercentValid Islam 34 34.0 34.0 34.0

Christianity

66

66.0 66.0 100.0

Traditional

- -

-Others

- -

Total 100 100.0 100.0

Frequency

Percent

Valid Percent

Cumulative

PercentValid Middle

mgr 30 30.0 30.0 30.0

Senior mgrLower mgr

2545

25.045.0

25.045.0

55.0100.0

Total100 100.0 100.0

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.

Frequency Percent

Valid Percent

Cumulative Percent

1-5 yrs 42 42.0 42.0 42.0  6-10 yrs11-15 yrs

4018

40.018.0

40.018.0

82.0100.0  

Total 100 100.0 100.0  

Awareness of SituationSection B

Awareness of Situation Cont’d

Quantitative Analysis1. 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.

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

Strongly Agree 67 67.0 67.0 67.0

Agree 22

22.0 22.0 89.0

Indifferent

4

4.0

4.0 93.0

Disagree 5

5.0

5.0

98.0Strongly disagree

2 2.0 2.0 100.0

Total 100 100.0 100.0

Frequency Percent

Valid Percent

Cumulative

PercentValid Strongly

Agree77 77.0 77.0 77.0

Agree 12

12.0 12.0 89.0

Indifferent1

1.0

1.0

90.0

Disagree 6

6.0

6.096.0

Strongly disagree

4 4.0 4.0 100.0

Total 100 100.0 100.0

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.

Frequency Percent

Valid Percent

Cumulative Percent

Valid Strongly Agree

33 33.0 33.0 33.0

Agree 21

21.0 21.0 54.0

Indifferent

20

20.0

20.0 74.0

Disagree

20

20.0

20.0

94.0

Strongly disagree

6 6.0 6.0 100.0

Total 100 100.0 100.0

Frequency Percent

Valid Percent

Cumulative Percent

Valid

Strongly Agree 27 27.0 27.0 27.0

Agree 48

48.0 48.0 75.0

Indifferent12

12.0

12.0

87.0

Disagree 10

10.0

10.097

Strongly disagree

3 3.0 3.0 100.0

Total 100 100.0 100.0

Quantitative Analysis5. 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.

Frequency Percent

Valid Percent

Cumulative Percent

Valid

Strongly Agree 33 33.0 33.0 33.0

Agree 21

21.0 21.0 54.0

Indifferent 10

10.0

10.0

64.0

Disagree 20

20.0

20.0 84.0

Strongly disagree 16 16.0 16.0 100.0

Total100 100.0 100.0

Frequency Percent

Valid Percent

Cumulative Percent

Valid

Strongly Agree 34 34.0 34.0 34.0

Agree 50

50.0 50.0 84.0

Indifferent6

6.0

6.0

90.096.0

Disagree 6

6.0

6.0100

Strongly disagree

4 4.0 4.0

Total100 100.0 100.0

Quantitative Analysis7. 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.

Frequency Percent

Valid Percent

Cumulative

PercentValid Strongly

Agree33 33.0 33.0 33.0

Agree 21

21.0 21.0 54.0

Indifferent

10 10.0

10.0

64.0

Disagree

2020.0

20.0

84.0

Strongly disagree

16 16.0 16.0 100.0

Total 100 100.0 100.0

Frequency Percent

Valid Percent

Cumulative Percent

Valid Strongly Agree

43 43.0 43.0 43.0

Agree 44

44.0 44.0 87.0

Indifferent

4 4.0

4.0 91.097.0

Disagree 6

6.0

6.0

100

Strongly disagree

3 3.0 3.0

Total 100 100.0 100.0

Quantitative Analysis

Frequency Percent

Valid Percent

Cumulative

PercentValid Strongly

Agree47 47.0 47.0 47.0

Agree 34

34.0 34.0 81.0

Indifferent

3

3.0

3.0 84.0

Disagree

10

10.0 10.0

94.0100.0

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.

Frequency Percent

Valid Percent

Cumulative

PercentValid Strongly

Agree67 67.0 67.0 67.0

Agree 22

22.0 22.0 89.0

Indifferent

4

4.0

4.0 93.0

Disagree

55.0

5.0

98.0

Strongly disagree

2 2.0 2.0 100.0

Total 100 100.0 100.0

Quantitative Analysis11. 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.

FrequencyPercent

Valid Percent

Cumulative

PercentValid Strongly

Agree13 13.0 13.0 13.0

Agree 11

11.0 11.0 24.0

Indifferent52

52.0

52.0

76.0

Disagree

1515.0

15.0

91.0

Strongly disagree

9 9.0 9.0 100.0

Total100

100.0

100.0

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.

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.

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:

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.

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.

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.