The impact of Islamist terrorism on Africa's informal economy: Kenya, compared with Ghana and Senegal

Sub-Saharan Africa emerged in the past years as global epicentre of Islamist terrorism. The impact of terrorism on the economy has a negative bearing on the formal and a positive effect on the informal sector. Among other things, this is due to the poorly diversified development economies of African countries and the class-specific impact of terrorism on welfare. This concerns not only a drop in sales, income and employment and rising transaction costs in the affected sectors, but also increasing poverty, hunger and hardship for the poor and needy. Transnational terrorism amplifies both the negative and the positive effects. African countries that have suffered severely from these attacks include Somalia, Kenya, Nigeria, Mali, Burkina Faso, South Sudan, Libya and Egypt. But even West African countries such as Ghana and Senegal which have been spared so far from terrorist attacks, the menace is growing, and economic effects are already tangible. Since the informal sector, i.e. the shadow economy with all its ambivalent facets, including cross-border crime, is still dominant in many African countries, especially in West Africa, this sector is of particular importance. It is still one of the largest in the world. The fight against Islamist terrorism is not just a military issue. In the economic sphere too it should be fought at its roots. Since most of the African poor live in and from the informal sector, which is also a breeding ground for criminal activities such as human trafficking of all kinds, money laundering and terrorists, they suffer the most from the negative consequences. Terrorists' sources of funding often derive from the proceeds of illegal trade. The close ties between criminal and terrorist groups can undermine the very foundations of the republican state and weaken democratic institutions.