The Effect of Farmer-Pastoralist Violence on State-Level Internal Revenue Generation in Nigeria: A Modified Synthetic Control Analysis Approach

Nigeria’s ethnically and religiously diverse Middle Belt has experienced recurrent eruptions of violence over the past several decades. Disputes between pastoralists and farmers arise from disagreements over access to farmland, grazing areas, stock routes, and water points for both animals and households. Although relatively low in intensity, this form of violence is widespread, persistent, and arguably increasing in its incidence. This study seeks to answer the question: How has farmer-pastoralist conflict affected state internally-generated revenues (IGR)? The literature on the effect of violence on sub-national fiscal capacity is slim to none. We use a synthetic control approach to model how IGR for four conflict-affected states – Benue, Kaduna, Nasarawa, and Plateau – would have developed in the absence of violence. To account for the endogeneity criticism commonly leveled at such synthetic control analyses, we then use a fixed-effects IV model to estimate IGR losses predicted by the synthetic control analysis as a function of farmer-pastoralist fatalities. Our conservative estimates for percentage reduction to annual state IGR growth for the four states are 0%, 1.2%, 2.6%, and 12.1% respectively, implying that IGR is likely much more sensitive to conflict than GDP. In total, the four study states of Benue, Kaduna, Nasarawa, and Plateau are estimated to have lost between US$719,000 and US$2.3 million in 2010 US dollars, or 22–47% of their potential IGR collection during the period of intense.