THE ECONOMIC IMPACT OF INSECURITY ON BUSINESS OPERATIONS

Nigeria, Africa’s largest economy, is facing a daunting challenge of insecurity.

The country’s evolution from armed robbery to complex threats like kidnapping, terrorism, and cybercrime has worsened insecurity, particularly in the Northeast and Northwest.

This has significantly impacted businesses operating in Nigeria, making it essential to understand the economic impact of insecurity with a view to identifying strategies to mitigate its effects.

This was stated by the guest speaker, Mr. Andre Okonta, Chief Operating Officer of Protection Plus Services Limited, while speaking on the topic: “The Economic Impact of Insecurity on Business Operations” at the Nigeria-South Africa Chamber of Commerce (NSACC) January 2025 Breakfast Forum sponsored by Protection Plus Services Limited

According to Okonta, insecurity poses significant threats to businesses in Nigeria. These threats include looting and vandalism, disruption of business operations, increased costs, delays in supply chains, facility shutdowns, reduced foreign direct investment, and stifled business expansion.

The economic impact of insecurity on businesses is multifaceted. Looting and vandalism result in significant financial losses, while disruption of business operations leads to reduced revenue and operational efficiency. Increased costs, including higher insurance premiums, security measures, and repairs, further exacerbate the economic burden on businesses.

While explaining some of the causes of insecurity in Nigeria, which he noted are complex and multifaceted, added that corruption, unemployment, inequality, bad governance, marginalization, poverty, and poor justice systems are some of the underlying factors contributing to insecurity. Essentially, he observed, corruption is a significant challenge in Nigeria, with widespread mismanagement of resources.

Okonta reiterated that unemployment, particularly among young people, is a major concern, with many individuals turning to crime and violence due to lack of opportunities.

 “Inequality and bad governance are additional factors contributing to insecurity. The lack of access to basic services, such as education and healthcare, and the concentration of wealth and power in the hands of a few individuals have created widespread discontent and frustration.”

To mitigate the impact of insecurity, he emphasized, businesses must implement robust risk management frameworks, which includes developing and integrating thorough risk management strategies, enhancing physical security measures, obtaining comprehensive insurance policies, developing business continuity plans, enhancing employee training and support, and investing in technology to prevent cyber attacks.

In addition, businesses must also diversify their markets and supply chains to reduce reliance on high-risk areas. This includes identifying alternative suppliers, developing contingency plans, and investing in technology to enhance supply chain resilience.

On the role of government playing a crucial role in mitigating insecurity, Mr Andre Okonta said tackling security problems and governing in a way that fosters development; creating an economy with relevant social, economic, and physical infrastructure for business operations and industrial growth is essential. Eliminating corruption and providing gainful employment are also critical.

He further stated that the government must collaborate with the private security sector to enhance security measures and adopt the top-to-bottom approach to eliminate corruption. By working together. The government and private sector can create a safer and more secured environment for businesses to operate, driving economic growth and development in Nigeria.

The event, sponsored by Protection Plus Service Limited, was moderated by the Vice Chairman, Mr. Ajibola Olomola.