Insecurity and inflation in Nigeria: a non-parametric causality analysis

This paper contributes to the limited empirical literature on the link between insecurity and inflation in Nigeria. Departing from previous studies that relied heavily on casual empiricism, normative discourse, or bivariate linear VAR models, our analysis utilizes the non-parametric causality approach to provide novel insights. Using this approach, the study found compelling evidence that insecurity significantly contributes to inflation in Nigeria. Conversely, there was no statistically significant evidence that inflation triggers insecurity in the country, contrary to findings in other regions. Food inflation emerged as the primary channel through which insecurity affects headline inflation in Nigeria. The results suggest that controlling inflation alone may not address insecurity; instead, strengthening security institutions, improving socio-economic standards, particularly for the youth, and employing community-driven approaches through traditional and religious institutions, as well as social dialogue with those experiencing deprivation, could be effective policy strategies.