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ILLUSTRATION OF TERRORISM AFFECTING BUSINESS: A CASE STUDY OF NIGERIA

 NAME: RIDDHI KASHYAP

Symbiosis Law School Hyderabad

INTRODUCTION

A business is an organization engaged in different kinds of commercial or professional activities. It can be a profit or non-profit organization. A business house is a private or public structure of business that deals with various companies or departments under it. The smooth functioning of business requires a healthy business environment and minimum risk. The risk factor should be of such a nature that is reasonable, foreseeable and easy to overcome. However, there are several nations infested with the threat of terrorism where the business environment is dangerous and confers several undesirable risks to the business enterprises.

The African countries are the remarkable examples of such nations. Nigeria is a developing country which has successfully raised several business enterprises, multinational and International Businesses. However, the rise of terrorist group popular as Boko Haram has incrementally marred the lives of people and hampered Small and Medium Enterprises. The destruction of lives and property through bombings, abduction, human slaughtering and kidnapping have led to a toxic business environment possessing challenges to local level business houses as well as investors of large scale. Areas of north east and places like Borno, Yobe, Adamawa and Maiduguri have seen abrupt shifts in business patterns. They have started employing more local and nearest people as compared to hiring from Southern parts of Nigeria.

International Businesses have become more vulnerable to terrorist targets as such multinational firms are protected with national level security and damaging them conduces to the better fulfillment of terrorism goals. As being Africa’s emerging economic country Nigeria has a tremendous market with companies like Nestle’, Heineken, Unilever, Nissan and many more. But the steep rise of Boko Haram and its control has hindered the country’s growth in the last few years. The very important Agriculture Business of Borno has been negatively impacted. Rearing of livestock and fish farming has dropped resulting to the loss of annual production and suffering of businessperson. Hence, from the foregoing, it could be stated that insurgents have given Nigeria a bad business shape and size with discouraged investors and a critical need of improvement in business and entrepreneurship. 

Several research works have been done by many professionals and scholars. Field research and empirical study has been performed where the state of Nigeria has been examined. However, the previous studies have mainly focused on the issues of terrorism infested in the country. But this research paper aims to establish how the business houses have been negatively impacted. Further, the readers will find that the paper is not restricted to any particular type of business. Rather, a wide parameter of business has been taken into consideration such as local business enterprise, small and medium enterprises and international business. The research paper will try to derive a pertinent conclusion and give recommendations (if any).

REVIEW OF LITERATURE

“Security challenges and the implications for business activities in Nigeria: A critical review” (Anagbogu, 2015)

This research paper has emphasized on different types of terrorism threat and security challenges for small and large business activities in Nigeria. The study has focused on the root causes of insecurity and various aspects of hindered business ventures. According to it, the unsecured environment is unattractive for business investments which ultimately results into loss. The potential business investment is hampered because of the terrorism threats which leads to negative business development and minimum progress. Another important area scrutinized in this research paper is about closure of existing business enterprises. The reason behind this is lack of security and peace in the business environment. The north of Nigeria, which is most affected by terrorism, has faced relocation and closure of enterprises because of the existing risk factor.

“Terrorist activities and foreign direct investment in selected African states” (Morrison, 2016)

In this research paper, the writer has tried to indicate the direct and indirect effects of terrorism-based business environments on foreign and direct investments. The focus has been on Africa’s five selected countries. Since the countries of Africa are in developing stage and FDI is an important source of income to such countries therefore a tensed business environment is not appropriate. It draws uncertainty to business models and constructs. Infrastructure damage, increased security costs, reduction in productive capacity and displacement of FDI are some direct consequences of terrorism infestation. Another aspect is related to the employment concern. The insecurity does not allow employees to work in a particular enterprise for a long period of time. They often shift their working patterns. Relocation is a common phenomenon in the business houses located in such nations.

“Terrorism and Business” (Frey, 2007)

Unlike many research papers, this paper does not highlight the threats or insecurities arising as a consequence of terrorism. Rather it talks about the methods of deterring it. This research paper has portrayed two important ways of deterrence which should be adopted by business houses operating in terrorist infested nations. Decentralization of business headquarters can be an effective way of proper functioning of business. There will always be an option for other quarters to work in substitute of another. This will enable smooth functioning of enterprises and reduce the loss incurred. Another proposed method is providing positive incentives on leaving terrorism. This approach is very different from anti-terrorism policies. The ideas presented here are very novel but unimplemented. However, such practices can be made practical with proper schemes and planning.

“Terrorism and International Business: A research agenda” (Steen, 2010)

This paper has tried to corelate the increasing terrorism practices with International Business. The writer perceives that there has not been much scholar work in the field of Internal business. Also, the instances of IB affected with terrorism is unremarkable. The difficulties related to global supply chain, distribution of goods, issue of human resources, performance and strategy of company, effects of terrorism on business organizations have been addressed. With the increase of multinational companies and globalization of market, the terrorism has also advanced itself and connected to various countries. This increased risk is also because of globalization and new technologies. The writer predicts that the danger of terrorism to business will increase incrementally in the coming years.

“An analysis of the impact of Boko Haram insurgents on business entrepreneurship environment in Nigeria” (Othman, 2015)

The paper presents the problematic scenario of Nigeria where business enterprises have been damaged to a great extent. The Boko Haram insurgents have negatively impacted on the local as well as larger business houses. The continuous attacks have created an ill-environment in the north east of Nigeria. This has resulted in closure of several banks, small enterprises etcetera. The paper suggests ideas to regulate the rising threats and ways to improve business environment and enterprises.

“Impact of terrorism on agricultural Business in Borno state, Nigeria” (Ayinde, 2018)

Borno state is situated in north east region of Nigeria where agriculture is the main business for livelihood. However, the rise of insurgence groups has destroyed the market of Borno resulting into low annual production and income. The people have consequentially displaced themselves. This has resulted in loss of socio-economic activities. The enterprises involved in agribusiness have failed in terms of profits. Agriculture business requires a large are of land which were taken over by the terrorist groups resulting in loss.

“An Examination of the Impact of Terrorism on Small and Medium Scale Enterprises’ mortality Rates and Standard of Living in the Northern Region of Nigeria” (Nurudeen, 2014)

This research paper is focused on the degradation of Small and Medium scale Enterprises. SMEs are the sources of daily used products. Affecting them can result into poor standards of living. Attack on SMEs have led to disruption of profit, low employment, waste of assets which have further harm the national interest of the country. The writer has portrayed the importance of small and medium enterprises in a country which is under development. Also, the mortality rate of business houses has been discussed.  

OBJECTIVE AND METHODOLOGY

The researcher was given one of the indispensable topics related to business studies. The title of the research paper clearly reflects its relevancy and importance in practical approach. The researcher has minutely analyzed the elements of business and terrorism and corelated them with the help of several resources. This research paper has been framed after analyzing previous works published by different scholars and academicians. The method of research has been purely qualitative and involves reliance upon secondary sources present online on different websites. The researcher has used online databases for searching articles and reports. After going through the relevant journal articles and reports the following research objectives has been framed:

1. To examine how business houses are distorted in nations engrossed with terrorism.
2. To study the types of business affected by terrorism practices.
3. To identify the security threats faced by small and local businesses due to Boko Haram insurgents in Nigeria.
4. Determine the influence of terrorism on foreign investors in Nigeria.

The researcher will try to achieve the objectives mentioned above and draw a viable conclusion after proper analysis. Suitable recommendations (if any) will be given at the end of this research paper.

FINDINGS, ANALYSIS AND OBSERVATION

After analyzing several research papers, articles and journals the researcher has observed that nations infested with terrorism provide an unwanted dangerous risk to the business houses operating there. Business risks are always a threat to the profit but in cases where there is a continuous threat of terrorism the enterprises can have huge loses. They can also face problems of closure and relocation.

The case taken here highlights the status of Nigeria which has been destructed by the Boko Haram insurgents from a long period of time. It was seen that the northern region is evidently hampered. Most of the business enterprises have faced permanent closure, relocation, loss of employment and reduced number of customers. It was observed that people are gradually shifting from the north side of the country. This is clearly because of the rising danger. Local people are threatened and stopped from buying stuffs from local small enterprises. Another important aspect is loss of assets. Business organizations have faced infrastructure losses along with other loss. The cost of doing business has increased consequentially. The budget allocated for security is over shadowing all the other departments. This is a huge price paid by most of the business organizations.

Another remarkable affect can be seen on the international business running in such nations. Business of such large scale require connections with other countries, a heavy global supply chain and strong distribution channels. However, the factor of terrorism is a risk to IB. Widespread networks are heavily interrupted by it. This results into economic loss of business organizations and poor market reputation. Since terrorism is a national threat therefore governmental interruptions can be a major problem for business houses. The reduction in number of investors is a very common negative impact of terrorism. Such business risks reduce the business credibility and does not attract investors.

Nigeria is a developing country. This is one of the main reasons behind incremental loss and damage of business houses. Developed countries have established ways and means of tackling such threats. However, it is very challenging for a developing country to sort out such risks and incur growth and profit.

CONCLUSIONS AND RECOMMENDATIONS

After going through all the data including journals, articles and reports, the researcher has come to a conclusion that running a business organization or entity depends upon many factors. A favorable environment is very necessary for smooth functioning of any business house. Risks like terrorism create a dangerous business environment which hampers entities in many ways. It was seen that business enterprises of all the level and scales very hampered because of the imminent danger of terrorism. Domestic as well as international business was negatively affected. It can be derived that loss of customers, relocation of business entities, shutting down of enterprises, loss of income, reduced investors, degraded market value, reduction in global supply chain are the direct impacts of terrorism on business. These issues are of national importance and thus require a governmental approach in eradicating such threats. However, business organizations can decentralize their headquarters. This will help in more organized functioning. Work will be divided considering the imminent threat. This will avoid situations of shutting down of enterprises. Also, it is derived that problems of this kind are of national importance. Therefore, business organizations can raise this issue to the concerned leader of nation.

References

Anagbogu, T. (2015). Security challenges and the implications for business activities in Nigeria: A critical review. Journal of policies and development studies, 157-168.

Ayinde, R. (2018). Impact of terrorism on agriculturl business in Borno state. APSTRACT, 117-124.

Frey, B. S. (2007). Terrorism and Business. ISSN, 1-21.

Morrison, T. (2016). Terrorist activities and foreign direct investment in selected African states. Equatorial journal of finance and management sciences, 16-29.

Nurudeen, Z. Y. (2014). An examination of the impact of terrorism on small and medium scale enterprises. International Journal of Innovation and Applied Studies, 1400-1407.

Othman, M. F. (2015). An analysis of the impact of Boko Haram insurgents on business entrepreneurship environment in Nigeria. Academic Journal of interdisciplinary studies, 37-44.

Steen, J. (2010). Terrorism and international business: A research agenda. Journal of international business studies, 826-843.