Nigeria is losing as much as ₦7 trillion every year to insecurity, a burden that is weighing heavily on the economy, weakening growth, and pushing up prices, according to a recent publication by the Central Bank of Nigeria (CBN).
The report, titled Bullion Vol. 50, No. 1 (January – March 2026), released recently by CBN, puts the total annual cost of insecurity at between ₦6.5 trillion and ₦7.0 trillion, about 3.5 to 4 per cent of the country’s Gross Domestic Product (GDP).
It shows that violence, conflict, and instability are not just security issues but also major economic threats to investment, production, and public finances.
Rising Costs, Shrinking Investments
The report shows that government spending on security has risen sharply in recent years, stating that defence and security allocations increased from about ₦968 billion in 2020 to over ₦1.5 trillion in 2024.
This heavy spending, the report notes, is limiting the funds available for critical sectors such as infrastructure, education, and healthcare.
At the same time, insecurity is driving away investors as foreign direct investment inflows dropped from $3.3 billion in 2019 to about $1.9 billion in 2023.
This decline reduces the inflow of capital and technology needed to grow the economy and improve productivity.
Beyond money, insecurity is damaging Nigeria’s workforce, the report stated, highlighting that more than 10 million children are out of school due to insecurity, while healthcare facilities have been destroyed in many areas.
These setbacks weaken the country’s long-term economic prospects by reducing the quality and productivity of its labour force.
Agriculture Hard Hit
The agricultural sector, which supports about 70 per cent of Nigerians, has been severely affected by farmer-herder clashes, banditry, and insurgency.
According to the Food and Agriculture Organisation, agricultural output in affected areas has dropped by 15 to 20 per cent due to insecurity. This translates to an estimated annual loss of about ₦2.8 trillion.
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In states such as Borno State, Yobe State, and Adamawa State, prolonged insurgency has forced farmers off their land, leaving large areas uncultivated. Millions have been displaced, increasing the need for costly humanitarian support.
Oil Sector Revenue Bleeds
Nigeria’s oil industry is also suffering major losses due to pipeline vandalism, illegal bunkering, and sabotage.
Crude oil production has fallen from an average of 2.1 million barrels per day in 2015 to about 1.3–1.4 million barrels per day between 2023 and 2024.
The Nigerian Extractive Industries Transparency Initiative estimates that crude oil theft alone costs the country about $1.8 billion every year.
These losses reduce foreign exchange earnings, cut government revenue, and weaken the country’s financial position.
₦7tn Loss Broken Down
The report provides a detailed breakdown of the economic cost of insecurity. Agricultural losses account for ₦2.8 trillion annually, while direct security spending stands at ₦1.5 trillion.
Infrastructure damage is estimated at ₦850 billion and humanitarian costs for displaced populations at ₦420 billion.
In addition, crude oil theft accounts for about $1.8 billion in losses, while the decline in foreign investment represents about $1.4 billion in forgone capital.
How Insecurity Fuels Inflation and Low Growth
The report explains that insecurity is creating a “stagflationary” situation—where economic growth slows while prices keep rising.
According to the report, disruptions in farming and oil production reduce the supply of food and energy.
This, it stated, pushes prices higher while also limiting overall economic output, and as a result, GDP growth remains weak even as inflation stays elevated.
This situation makes it harder for the central bank to manage the economy. Measures to control inflation could further slow growth, while efforts to boost growth may worsen price pressures.
Root Causes of Oil Theft and Conflict
The report links crude oil theft and broader insecurity to deeper structural problems.
It stated that these include widespread poverty and unemployment, which push people into illegal activities, as well as weak governance and poor oversight that allow such practices to continue.
It also points to land disputes and ethnic tensions in resource-rich areas as key drivers of instability, especially in regions where oil theft and sabotage are common.
The CBN’s latest report paints a clear picture: insecurity is not only a safety concern but also a major economic crisis, draining resources, limiting growth, and making it harder for Nigeria to achieve stability and development.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X