Impact of Maritime Security Threats on Nigeria Economic Growth

Abstract

Purpose – To determine how Nigeria’s economic growth is impacted by Maritime Piracy; and the influence of Maritime Kidnap Ransom on Nigeria’s economic growth.

Design/methodology/approach – The methodology adopted the use of secondary data obtained from the ICC-IMB Piracy and Armed Robbery against Ships Report and the Nigeria Maritime and Safety Administration [NIMASA], and employed econometric tools of stationarity, the ordinary least square tests at the 0.05 significance level, and error correction term.

Findings – The result of the findings indicate that both Maritime Piracy and kidnap/ransom had significant impact on the economic growth of Nigeria, in addition, had a negatively significant impact on gross registered tonnage. The error correction term [ECT] result indicates that there exists a negative statistically significant long-run impact of  piracy on economic growth proxy by RGDP with a convergence of 123.30% from the short-run to the long-run. Similarly, the ECT indicates the existence of negative statistically significant impact of the kidnap ransom on RGDP with a convergence factor of 124.41% .

Research limitations/implications –  the study covered limited number of years, (1998 -2020). However, the forecast based on the chosen period will prove relevant.

Practical implications –  1% rise in piracy activities in Nigerian waterways, will lead to a 0.02775% change in Nigeria’s economic output in the short-term, and 2.9654% decline in grt. Similarly, 1% rise in Kidnap-ransom, will result to 0.0315 change in RGDP and 4.1328% decline in grt. The speed of adjustment of 123.30% indicates that shocks emanating from the explanatory variable [PIRA] are adjusted to by the dependent variable [RGDP] at the rate of 123.30% over a year period. While for Kidnap/Ransom, the shocks emanating from this threat [KIRA], are adjusted to by the dependent variable [RGDP] at the rate of 124.41% over a year period.

Social implications – Some of the immediate consequences of these include fall in maritime trade and economic growth, loss revenue to the government, negative national publicity. Nigerian government should ensure the effective implementation and enforcement of relevant international conventions in her National and Domestic laws such as UNCLOS and SUA, 1988, as well as develop more international collaborations to combat Piracy such as Nigeria/Benin joint border patrol.

Originality/value – This study, apart from adding to current literature, utilized econometric analysis to profer practical solutions needed to minimize or eradicate maritime sea threats.