This paper investigates the impact of terrorism on economic activity in Africa, using nightlight emissions as a proxy for economic performance, for the 2000-2020 timespan. Εmploying a panel of African countries, we assess both the immediate and long-term effects of terrorist incidents on regional development. Our findings reveal that increased terrorist activity significantly reduces nightlight intensity, reflecting a substantial decline in economic activity. Notably, economic recovery is sluggish, with nightlight emissions remaining below pre-attack levels for 4 to 5 years after an incident. Utilizing robust econometric techniques, including two-way fixed effects and panel event study regressions, we provide strong evidence that terrorism disproportionately affects urbanized regions and areas with weaker institutional frameworks. Furthermore, the results remain robust when accounting for potential endogeneity through instrumental variable analysis. These findings underscore the need for targeted policy interventions to mitigate the economic consequences of terrorism in Africa’s most vulnerable areas.

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