Nigeria’s deepening security crisis is morphing into something more structured and economically consequential as armed groups are now consolidating a parallel system of taxation across key agricultural belts, trade routes and logistics corridors.
A new report by SBM Intelligence warns that bandits and insurgents are no longer content with ransom payments and sporadic raids. Instead, they are embedding themselves into local economies—taxing farmers, controlling markets and levying traders—raising the risk of lost state revenue and higher consumer prices for Nigerians.
According to SBM’s West Africa Security and Political Economy weekly report covering 3 to 9 April 2026, the shift marks the emergence of what could become a shadow governance system, particularly in rural and conflict-prone regions where state presence is weak.
In Shiroro, Niger State, violence has taken on a strategic economic dimension. According to SBM, the killing of more than 60 people by a faction linked to bandit leader Dogo Gide was not merely retaliatory, but designed to reshape control of farmlands.
“The mass killing of over 60 people in Shiroro… is a strategic move… to clear buffer zones before the planting season,” SBM security analysts wrote in their latest report released April 11, 2026. With farmers fleeing, “this displacement… will likely lead to a total abandonment of sorghum and yam cultivation… as farmers choose survival over tillage.”
Long term, the security intelligence firm projects that “these terrorists will likely move to consolidate control over rural road networks to demand farming levies, ensuring that any successful harvest this year remains under their direct economic taxation,” the report said.
Such developments are beginning to trickle down the supply chains as traders see reduced output from Shiroro, and SBM notes that this could trigger a “spike in the price of yams and grains in markets like Minna and Abuja by June”.
Further evidence of this evolving model can be seen along the Zumba–Kuta road, also in Niger State. With security forces largely absent, bandits are gradually formalising their control of movement and trade.
“The total absence of security personnel… will likely encourage the bandits to set up permanent checkpoints… to tax the few brave traders still moving goods,” SBM noted.
Bandits extend economic capture across regions and Nigerian borders
The report revealed that the pattern of launching violence first, then economic capture is now spreading to multiple regions.
In the north-west, traders in Sabon Birni, Sokoto State, are operating under what amounts to an informal taxation regime. Bandits loyal to a local kingpin have seized control of trade corridors linking Nigeria to the Niger Republic.
“The business ecosystem here is suffering from a predatory tax where merchants must pay… to move their goods, or risk having their entire stock seized,” SBM analysts wrote. The result is a gradual shutdown of commerce, as “the fear of being kidnapped… outweighs the need for profit”.
Markets that once served as vital hubs for livestock and textiles are now at risk of desertion, with traders avoiding transactions altogether.
A similar trend is emerging in Kebbi State, where a new armed faction known as the Mamudawa group is targeting the riverine economy in Shanga. The group’s objective, SBM notes, is not simply territorial expansion, but revenue generation.
“The Mamudawa… are likely in Kebbi to establish a new levy zone over the lucrative onion and fishing trades in Shanga,” the report said, adding that they are expected to “start demanding taxes from every boat and truck moving goods through the LGA in the coming month”.
This has immediate implications for food prices and investment. Suppliers are already reluctant to enter the area without armed escorts, raising costs for farmers and disrupting irrigation-backed agricultural projects.
Economic disruption extends further to North-east with killing of senior officers
The north-east presents perhaps the clearest example of how insurgent groups are targeting national infrastructure to build revenue streams. Along the Damaturu–Maiduguri corridor, a critical supply route into Borno State, attacks by Islamist militants have intensified.
SBM describes the killing of a senior military officer and the overrunning of a brigade base in Benisheikh as a turning point. “When a base of this size is overwhelmed… it tells logistics companies that the road is no longer under state control,” the report noted.
The strategic intent, however, goes beyond military disruption. “The frequency of these attacks shows that ISWAP has moved… to a sustained offensive aimed at breaking the military’s hold… likely in an attempt to turn the state’s main supply route into a permanent insurgent-taxed zone.”
In effect, insurgents are seeking to control not just territory, but the flow of goods—food, fuel and construction materials—into major urban centres.
Flour, cement, other items to become more expensive
This has ripple effects across sectors. SBM warns that the insecurity along the corridor could delay investment in projects such as agro-industrial processing zones, while also forcing a suspension of night-time transport and creating bottlenecks in the movement of goods.
“If the road remains a combat zone, the cost of everyday items like flour and cement will likely double,” the report said.
Beyond the direct economic impact of rising food inflation, analysts point to a broader risk: the erosion of state authority in areas where armed groups are increasingly seen as the de facto regulators of trade and movement.
The report highlights how, in several locations, the absence of rapid government response has left communities to navigate a hybrid system where both state and non-state actors exert influence. In some cases, this has triggered mob violence and localised conflict, further destabilising already fragile markets.
The implications for public finance are also significant. As informal taxation systems expand, the government risks losing revenue streams in agriculture, trade and transportation, sectors that are already under pressure from inflation and currency volatility.
For consumers, the cost is likely to be passed down the chain. Farmers paying levies, traders navigating illegal checkpoints and transporters factoring in security risks all contribute to rising prices in urban markets.
What emerges from SBM’s analysis of Nigeria’s security situation is a picture of an economy under siege, not through outright territorial conquest, but through incremental terrorist control of the systems that underpin daily life.
Unless reversed, the trend could entrench a dual economy in which official structures coexist with—and are gradually undermined by—armed networks that tax, regulate and profit from insecurity.
For policymakers, the challenge is no longer just restoring order, but preventing the institutionalisation of a parallel system that, once embedded, may prove far harder to dismantle.
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