Industries can prosper in conflict-affected Lake Chad Basin

Job creation is vital to countering Boko Haram, and successful business practices in the region point the way.

Published on 05 September 2022 in ISS Today

By

Akinola Olojo

Teniola T Tayo

Protracted conflicts cause far-reaching damage to the social, economic and political affairs of affected areas. They create a negative reinforcing loop because they make it difficult to deal with the underlying causes of the problem.

Violence in the Lake Chad Basin has been fed by the relative deprivation of communities who face insufficient jobs, low incomes and inadequate public services. Providing jobs through private sector investments in industrial activities could help resolve the conflict by depleting the recruitment pool of Boko Haram’s factions.

But the ongoing clashes make this difficult to achieve. Violent extremism directly threatens the assets and operations of industrialists who do business in conflict zones. For instance, the factory of cement conglomerate Lafarge in north-east Nigeria was attacked by Boko Haram in November and December 2014.

Unsafe transport routes also make the movement of assets risky and may dampen demand for produced goods by customers too afraid to use certain roads. Problems of market access affect both the movement of raw materials and finished goods.

Providing jobs could help resolve the conflict by depleting Boko Haram’s recruitment pool

Emigration, death or displacement in conflict zones present another challenge by reducing the capacity of the labour force. Since the crisis started in 2009, 2.8 million people in the Lake Chad Basin have been forced to leave their homes. This means that industrialists may struggle to find locals to fill jobs at different skill levels, making it difficult to boost the incomes of communities.

The ongoing conflict also means governments may divert resources to military activities, often at the cost of public investment in infrastructure and development needed for private sector growth. This could affect spending on public education or the building and repair of roads, for example.

It is also true that businesses can fuel conflicts. They can create new tensions in the competition for jobs or resources such as land. Extractive commercial practices can have the same effect, adding another layer to the hostile environments that communities face. Companies can also inadvertently strengthen violent groups when their assets are captured during attacks. Boko Haram members procured dynamite and vehicles during the assault on the Lafarge plant.

These problems haven’t prevented the establishment and running of large commercial enterprises in north-eastern Nigeria and other parts of the Lake Chad Basin. Some have found ways to make their operations more resilient.

In 2018 Coca-Cola opened a new bottling facility in Maiduguri and has plans for expansion

In November 2018, Coca-Cola opened a new bottling facility in Maiduguri, Borno State – an expansion of the production plant established in 1983. When the ongoing conflict threatened its distribution network, the company adapted by limiting distribution to Maiduguri, which is considered safer than other parts of Borno. Traders must travel to Maiduguri to receive supplies, which although not ideal, has enabled operations to continue without interruption. Coca-Cola has even indicated plans for expansion.

A similar approach was employed by Unilever, a large fast-moving consumer goods company. It shifted from using a few large-scale distributors for its products to multiple smaller operators located in relatively stable areas in the north-east.

Many corporations operating in the Lake Chad Basin pay security escorts to protect people and goods in transit – pushing up operational costs. One member of the Nigerian Mobile Police (MOPOL), the paramilitary arm of the Nigeria Police Force, is paid around N3 000 (US$ 7) a day for such services. Moving one person can take up to six MOPOLs, in a lead-and-follow formation. Armoured vehicles are also needed, which range from US$150 000 to US$450 000.

Some of these strategies mirror tactics used by small businesses in the region. The increased costs don’t always justify actualised revenue and may force companies to close. In other cases, the risky investment pays off. Unilever told the Financial Times in 2018 that the north-east was one of its fastest growing businesses in Nigeria. A recent report by Pierrine Consulting asserts that northern Nigerian consumers spend about N322 billion (US$761 million) on personal care products every month.

Due to increased security costs, governments should provide business relief through tax incentives

The Lake Chad Basin can be made more attractive to large businesses. One recommendation is to create secure industrial zones, where clusters of factories are safeguarded to enable uninterrupted operations. Industrial assets would be protected via a partnership between government and the private sector.

Transport routes also need to be secured. Although the region’s governments may not have the resources to secure all roads in and between their countries, identifying and focusing on those with higher trade traffic is worthwhile. This could boost cross-border trade, which has declined substantially due to the Boko Haram crisis.

Investment promotion efforts should be honest about the region’s security risks but use examples of companies operating in the area to show that they are surmountable. Governments must also recognise the increased security costs for businesses and provide targeted relief through tax incentives.

There’s no doubt that the private sector has a significant role in stabilising and reducing fragility. However, governments must create an enabling environment and ensure that all actors work together. If companies take their business elsewhere due to spiralling costs, the loss of jobs will heighten fragility in already vulnerable areas.

Strategies for industrial development in the Lake Chad Basin should therefore be built on the lessons learned by existing companies. There should be a focus on sectors such as food processing that may have more immediate supply and can employ lower-skilled labour, which is abundant in the region. The high demand for fast moving consumer goods is an opportunity to be used.

Another strategy is to work in more stable areas in the hope that by stimulating the local economy, the net of stability widens. And by treating businesses as peacebuilding actors, their operations can become more conflict sensitive and won’t worsen a bad situation.

The Regional Strategy for the Stabilisation, Recovery and Resilience of the Boko Haram affected Areas of the Lake Chad Basin Region recognises the role of the private sector. Now the task is to leverage the benefit of business and industry to improve livelihoods.

Teniola Tayo, Fellow, School of Transnational Governance, European University Institute and Akinola Olojo, Project Manager, Lake Chad Basin, ISS Regional Office for West Africa, the Sahel and the Lake Chad Basin, Dakar 

Image: © Adapted from DipoTayo/Wikimedia Commons

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