Sahel fuel smuggling and terrorist taxation: How ECOWAS subsidy
reform created a Jihadist revenue haven along the Niger–Nigeria border (Magaria–Jibia Axis)

After the ECOWAS-backed abolition of Nigeria’s premium-motor-spirit (PMS) subsidy in
June 2023, the pump-price gap between Nigeria and Niger widened overnight from 0.23 to
0.71 USD litre−1. Using a difference-in-differences design that exploits (i) 400+ border
checkpoints (Clingendael 2022 GIS), (ii) 13 241 ACLED road-block events 2020-24, and
(iii) monthly NBS price panels 2010-24, we show that jihadist taxation revenue on the
Magaria–Jibia corridor increased by 0.9–1.4 USD million per month (≈ 18 % of IS-Sahel’s
estimated budget). A structural gravity model calibrated to OECD-SWAC trade elasticities
implies that a 0.10 USD litre−1 price gap raises the probability of an Islamist checkpoint by
6.3% (SE 1.7, p<0.01) in PPML and 8.9 % (SE 2.4, p<0.01) in IV-2SLS, the latter implying

an upper-bound revenue gain of USD 1.4 million per month. A partial-equilibrium counter-
factual indicates that reinstating a targeted 0.30 USD litre−1 “border-zone subsidy” would

cost Abuja 54M USD yr−1 but deprive insurgents of 11M USD yr−1— a 5:1 cost-denial
ratio. We provide the first quasi-experimental evidence that a commodity-price shock
directly increases terrorist tax revenue, and show that a temporary border-zone subsidy can
claw back 80 % of this income at one-fifth the cost of military surges.