Inside Nigeria’s expanding bandit economy: How criminal networks built a billion-naira war chest

Maureen Aguta

 

Nigeria’s worsening insecurity crisis is being fuelled by the rise of highly organised criminal networks commonly referred to as “bandits”—groups that security analysts now describe as one of the most sophisticated and financially empowered non-state armed actors in West Africa.

 

Although often portrayed as rag-tag militias roaming rural communities, multiple security sources, local officials, and investigative reports paint a very different picture: a decentralised network of armed groups controlling resource-rich territories, taxing communities, running illicit mines, and moving millions through regional and international smuggling channels.

 

A Multi-Billion Naira Shadow Economy

 

Security analysts estimate that some bandit factions operating across Zamfara, Kaduna, Niger, Katsina and parts of the North Central generate billions of naira monthly from a mix of illegal mining, extortion, kidnapping-for-ransom, cattle taxation and arms trafficking.

 

Illegal Gold Mining: The Financial Engine

 

Investigations in Zamfara and Kaduna suggest that some of the most lucrative gold sites are under militant control, with individual commanders reportedly earning tens of millions of naira daily from ore processing.

 

Local sources say some gangs forcibly conscript villagers as labourers, giving the groups steady manpower, cheap labour, and uninterrupted access to gold deposits.

 

Direct Export Networks

 

Security briefings have warned that certain syndicates now bypass domestic middlemen entirely, moving raw gold through smuggling routes to markets in North Africa and the Gulf.

According to intelligence sources, couriers travel through Niger Republic and other Sahel crossings to the UAE, where gold is sold directly in cash-heavy markets—minimising traceability and maximising profit.

A Parallel Taxation System Across Rural Nigeria

 

Just like extremist networks in the Sahel—such as JNIM and the Macina Liberation Front—bandit factions in northwest Nigeria have established quasi-governance systems in territories beyond state control.

Residents in several rural communities report paying taxes that range from modest levies to large “security fees” running into tens or hundreds of millions of naira, depending on the size of the town and farming outputs.

 

Cattle markets are another flashpoint. The lucrative livestock sector, a billion-naira economy across the Sahel, is now aggressively taxed by armed groups. Analysts compare the trend with Mali, where extremist networks reportedly earn over $1 million monthly from cattle taxation alone.

 

Kidnapping for Ransom: A Major Revenue Stream

 

Perhaps the most documented source of funding is kidnapping-for-ransom.

While the targets range from schoolchildren to traders and commuters, the most profitable operations involve high-value abductions—wealthy businesspersons, politicians, and foreign workers.

 

Similar patterns exist in Mali, where JNIM is believed to have earned more than $50 million in ransom payments over five years, helping the group expand recruitment, arms purchases and political influence.

 

Security officials warn that Nigerian gangs are adopting the same playbook.

 

Every ransom paid, analysts say, strengthens the financial capabilities of criminal networks, allowing them to acquire more sophisticated weapons, fund logistics, and challenge overstretched security forces.

 

A Growing Threat to National Security

 

The scale of funding—combined with the groups’ access to regional arms markets from Libya, Sudan, Algeria and the Sahel—has emboldened militants and strained Nigeria’s security architecture.

 

Some commanders reportedly purchase ammunition “by the bowl,” costing up to ₦1 million per container, indicating a steady flow of sophisticated weapons and an alarming level of liquidity.

 

Comparisons are also being drawn with the M23 movement in eastern Congo, which finances its operations through control of coltan mines. A single coltan site in North Kivu reportedly generates $1 million monthly for the militia—mirroring the extractive economy now emerging in Nigeria’s north.

 

“They Cannot Be Defeated Militarily Alone”

 

Islamic cleric Sheikh Ahmad Gumi—one of the few figures who has engaged directly with some bandit factions—has repeatedly argued that a purely military approach cannot defeat these groups.

Security strategists warn that no insurgency funded at this scale collapses solely through force; economic disruption, territorial recovery, local engagement, and cross-border coordination are required.

 

For now, the shadow economy continues expanding, deepening insecurity, impoverishing rural communities, and threatening to overwhelm the state’s capacity to restore control.

The longer the criminal economy thrives, analysts warn, the more entrenched these armed networks become—and the harder Nigeria’s war against insecurity will be.