Abstract

The study ascertained the effect of cost of conflictand insecurity challenges that has ravaged the growth process of Nigeria's economic well-being from 19862017. The thrust was to examine the effect of the cost of conflict on Nigeria's Gross Domestic Product (GDP) and inflation rate. Data were collected from the publication of Central Bank of Nigeria (CBN) statistical Bulletin for various years and World Bank Indicators. Ex-post facto research design was employed and 19862017were the periods covered. The data collected were subjected to both descriptive and inferential statistics. Descriptive statistics was used to describe the variable set of the study and the result showed that Nigeria spent more resources in peacekeeping and internal security in recent times, correlation test indicated there was multicollinearity among the variables, Variance Inflator Facto(VIF) test showed there was no multicollinearity among the variables, the Shapiro-Wilk W normality test revealed that the errors were not normally distributed, Ramsey regression specification test indicated that the model for the study was well specified, and Breuch-Pagan/cookWeisberg test revealed no heteroskedasticity problem in the model. Finally, multiple regression test analysis was employed to test the hypotheses. It was discovered that the cost of conflict has significant effect on GDP but has insignificant effect on inflation rate. Based on these findings, it was recommended that the Government should have strengthened security and encourage more Foreign Direct Investment (FDI) into the country to boost economic growth, adequate attention should be placed on increasing productivity and revenue base of the country to reduce the inflation rate in Nigeria.