Guns, Goods and Governance: Illicit Economies and the Foundations of Insurgent Rule

Sat in Abuja contemplating the persistent levels of violence spread across northern Nigeria (from high rates of crime and kidnap-for-ransom to militancy in the North-East and a metastasising banditry problem in the North-West), an official conceded: ‘most of time it is confusing, . . . [stakeholders] lack the understanding to properly categorise these conflicts and identify [appropriate] interventions’. A resident in Yobe was blunter: ‘bandits, criminals or terrorists? It doesn’t really matter; they’re all the same people’.

Both were interviewed as part of RUSI’s recently concluded ‘OCTA’ programme, an investigation into grassroot perceptions and experiences of conflict spanning tracts of Nigeria and Mozambique, that captures the overlap and interplay between discrete modes of insecurity. Amid numerous examples of violence and vulnerability – extremism, gangsterism, state abuses and street thuggery – conflations in labels, language, tactics and membership repeatedly blurred organisational boundaries. The aesthetic and methodology of Boko Haram’s offshoots, for instance, seemed to converge with those of rural bandits, leading respondents to describe ‘creeping signs’ of ‘jihadisation’ – black flags, religious tropes and Islamist chants – among criminal outfits in Kaduna, Katsina and Zamfara. Terrorist, insurgent and gangland ‘brands’ – Islamic State West Africa (ISWAP), Jama’tu Ahlis Sunna Lidda’awati wal-Jihad (JAS), Lakurawa and Ecomog to name a few – were likewise adopted, shed or re-invented when convenient, leaving individual affiliations fairly flexible. In northern Mozambique, the picture appeared even more hazy, with illicit flows of arms, minerals, timber, ivory and narcotics persisting (to varying degrees) across territory held by Ansar al-Sunna but without evidence of direct complicity.

In many ways, OCTA demonstrates the difficulty of mapping the scope, scale and dispensation of such conflicts and their ‘shadow economies’; a partial symptom of research constraints (poor access, insufficient sampling, limited trust and security restrictions) and imperfect information among local stakeholders. That said, this confusion does yield other insights, with the fungibility and fluidity of armed groups and their sundry interactions with surrounding populations raising important implications for state and non-state governance. While different forms of violence clearly have their own drivers and dynamics, they co-exist within a shared social ecology, a wider system conducive to militant mobilisation. At the same time, these settings create transient distinctions between licit and illicit activity in the public imagination, while exposing the uncomfortable reality that stability and prosperity are not always synonymous. War can create new markets, commodity chains and informal industries that perpetuate violence while sustaining community coping mechanisms and survival strategies. Occasionally, criminal economies can even become pacifying in themselves, eliciting ‘developmental effects’ that many see as beneficial, if not preferable, to an absent or rapacious state.

Kings and Kingpins

This alludes to a complex and under-appreciated relationship between militancy, criminality and legitimacy. Insecurity often enables and incentivises eclectic forms of ‘rebel rule’, conditioning the appetite and ability of insurgents to appease local needs – basic services, order and some semblance of ‘normality’. Moving beyond Nigeria and Mozambique, al-Shabaab (al-Qaeda’s franchise in Somalia) offers an instructive example, having imposed ‘semi-territorial’ control over ostensibly government-run areas for years, extorting businesses and exerting judicial, administrative and social management via mobile courts and proto-statal institutions. A lattice of isbarros (checkpoints) not only regulates Somali movement and commerce but bolsters a narrative of ‘efficiency’, with commuters casting the group’s roadblocks as ‘safe’, cheap and predictable compared to those of the federal army. The returns – possibly ranging from $100 million to $2.2 billion annually from tolls, taxes, real-estate and shell companies – are an exercise in profit-maximisation as well as the basis of a rudimentary social contract; a ‘counter-sovereignty’ project benefiting from the ‘carefully choreographed image’ of satisfying community preferences. Crack-downs on economic crime – brigandage, burglary and theft – subscribe to a similar logic, consolidating al-Shabaab’s ties to mercantile elites and prominent social networks while suppressing any threat to their monopoly of violence. In dismantling and replacing local protection rackets, the morality police - Jaysh al-Hisba - effectively package exploitation within ‘symbolic vocabularies, visuals, and sounds’, using the pretence of ‘law enforcement’ to cultivate cash and compliancy.

Of course, rebel regimes display different methods and mechanics; even the practice, priorities and capacity between (and within) jihadist organisations diverge despite their close ideological affinity. JAS and ISWAP share the same genealogy but operate very differently; the latter mimics the trappings of an ‘IS-Central like pseudo state’ while the other is more akin to a loose cluster of ‘roving bandits’. Public responses also vary across time and place. In Somalia, satellite imagery of Jilib – and other insurgent-held towns – ‘indicate significant expansion in density and area since 2017’, suggesting al-Shabaab has gradually attracted local buy-in to their governance model (and coterminous criminality) by supplying some form of civic largesse and commercial brokerage that encourages an ‘interest in obedience’ among their host population. Conversely, the group faced unprecedented blow-back during the 2022 drought, when Hawiye militiamen – already suffering from food scarcity – violently resisted unrelenting levels of ‘tax-tortion’ and conscription. Shabaab’s ‘looting machine’ over-reached, (temporarily) inciting popular unrest.

Elsewhere, the relationship between insurgents and illicit markets can sow internal division. Take the Taliban, whose emerging role as a ‘protector’ of poppy farmers in 2006 has proved increasingly valuable. Participation in opium production not only enabled the group to exploit a web of contacts and collaborators - including government officials moonlighting as local kingpins - but, from 2018, encouraged prominent drug-barons to bet on regime change; a boon to the mullahs given Afghanistan’s ‘narco-economy’ (responsible for 6% to 11% of GDP in 2020). Supplementing revenue from coercive taxation, their involvement in trafficking became instrumental in sustaining the organisation’s military and administrative operations. But the arrangement was always contested, with the Taliban’s decentralised structure housing diverse attitudes over the manufacture and sale of narcotics and competition over the revenue. Following the capture of Kabul, friction surfaced between those more interested in gaining legitimacy among external actors (who contribute decisively to their budget) and others supporting segments of the Afghan population reliant on poppy cultivation. The eventual opium ban in April 2022 came as a surprise to many, but likely stemmed from this underlying dispute, reflecting a tension between profligacy and stability, especially after the group transitioned to a post-war footing.

Appreciating how these relationships fit within, and are transformed by, broader conflict systems is therefore important, as is analysing the resonance (and acculturating impact) of local norms, politics and social structures. The role of civilian agency, resource-constraints and exogenous variables (military pressure and economic sanctions) may similarly shape the disposition and direction of rebel governance, its reliance on criminality and the attendant impact on public popularity, all of which have implications for practitioners and policymakers looking to counter violent extremism, prevent conflict and champion peace. The difficulty remains collecting credible evidence on how these intersecting, ‘co-constitutive’ and shifting dynamics actually play out on the ground.

Lessons from the Tropics

An exception to this data shortage may perhaps be found further afield in contexts like Colombia, where new studies offer a valuable vignette of non-state armed groups, their diverse behaviours and underlying political economy and the associated consequences for peace-making. While Colombia is a middle-income (but highly unequal) country with a solid state, its internal conflicts provide profound lessons about insurgency, legitimacy and negotiation that may be relevant elsewhere.

FARC-EP’s Political and Social Legitimation

Spanning more than half a century, the struggle between the Revolutionary Armed Forces of Colombia – People’s Army (FARC-EP) and the Colombian state was marked by a pendulum swing in state policy between military counterinsurgency and attempted dialogue. The outcome – the 2016 peace agreement – underscores a critical, yet often underappreciated insight: the recognition of insurgents’ political legitimacy can be more effective in encouraging negotiation than unrelenting demands for their defeat. FARC-EP had embraced what it termed ‘the combination of all forms of struggle,’ simultaneously pursuing military confrontation and seeking political validation. Its strategy evolved over time, reflecting a deliberate effort to embed itself not just as an armed group, but as a political actor with a vision and a constituency. This dual pursuit of legitimacy – by force and by politics – shaped the Colombian state’s response, which oscillated between repression and dialogue.

The evolution of FARC-EP’s territorial control and legitimacy during Colombia’s armed conflict illustrates how insurgent groups can harness economic opportunity and governance functions to consolidate power. The rise of the coca trade enabled FARC-EP to deepen what can be called its attempts at ‘eudaemonic’ legitimation – acting as an effective guarantor of material support and order amid conflict. FARC-EP capitalised on the coca boom by establishing secure zones where economic stability could flourish, facilitating the group’s military expansion and political grip. In these areas, insurgents constructed social contracts, offering security, rudimentary social welfare and rule of law, taxed coca production, protected peasants from competing armed actors and maintained control.

FARC-EP’s decision to allow and regulate peasant cultivation of coca was more than just pragmatic – it reinforced their ideological project. By framing coca cultivation as part of a class struggle against an alliance of state elites, paramilitaries, landlords, narcotraffickers and foreign influence, the group wove economic survival into a narrative of resistance that resonated strongly with its rural base, many of whom experienced profound marginalisation and had few viable alternatives. In effect, FARC-EP came to operate as a legitimate authority, using revenue from coca and ransom kidnappings to fund governance functions as well as military campaigns. Land redistribution, informal economic regulation and efforts to address structural inequalities allowed the group to entrench itself in areas long neglected by the Colombian state. To this end, FARC-EP’s ability to mobilise and sustain support in a context of deep inequality and violence underscores how economic and social grievances, when left unaddressed by the state, can be channelled into insurgent agendas.

Total Peace?

FARC-EP is not the only armed outfit in Colombia to adopt this model of ‘eudaemonic’ legitimation. After the 2016 peace agreement, other armed groups quickly moved to fill the governance vacuum left by demobilised FARC-EP factions, violently competing to establish control over strategic territories. These included insurgent groups such as the Ejército de Liberación Nacional (ELN) and dissident FARC-EP factions, as well as a complex hybrid organisation remobilised from the ashes of paramilitarism, the Ejército Gaitanista de Colombia (EGC), which have employed similar strategies of ‘rebel governance’ to embed themselves in rural areas. By regulating illicit economies and providing employment, services and security for local communities where the state has failed, armed groups have been able to sustain their territorial control and diversify the revenue streams with which they finance their activities (regulation and taxation of coca cultivation and illegal gold mining, extortion over legal businesses, etc.).

Even groups that have typically been prescribed as more ‘profit-motivated’ such as the EGC have a governance dimension, drawing on the legacies of the old paramilitary rule to establish authority, on the one hand providing employment, keeping food prices down and distributing gifts to children and on the other imposing social rules, dealing out violent justice and regulating all aspects of economic and political life.

President Gustavo Petro’s (2022-present) exclusion of the EGC from political dialogue because of the organisation’s legal categorisation as an ‘high-impact criminal armed structure’ has been interpreted as an important oversight of his government’s plans to make ‘Total Peace’ with all of Colombia’s armed groups. This characterisation has limited the scope of the government’s negotiation with the group to reduced judicial sentences and retention of certain assets, rather than negotiation for political and social reform and qualification for amnesty under transitional justice mechanisms enjoyed by more conventionally politically motivated armed actors. This differential treatment overlooks the EGC’s role as a significant party to the armed conflict that exercises governance functions in vast swathes of Colombian territory and claims to represent the regional interests of the areas it operates in. It has also seemingly exacerbated the extent to which the EGC has sought legitimacy as a political actor through its rhetoric.

As a result, there are considerable challenges for peace. The outcomes – or lack thereof – of the Petro government’s early approach to ‘Total Peace’ served as an important lesson. Early attempts at ceasefire agreements signed between the Colombian government and national leaders of armed groups failed repeatedly, with violations largely driven by inter-group competition at the regional level, since armed groups are reluctant to cede territory to their rival entities. In this scenario, marked by the failure to address inequalities at the root of the conflict and the expansion of illicit crops, one demobilised faction will be quickly replaced by other armed actors to fill the governance void.

What Next?

In Colombia, peacebuilders looking to break this cycle will need to consider the factors legitimising armed groups at the local level, such as the benefits illicit economies regulated by armed groups bring to communities and the push and pull factors for recruitment into their rank-and-file. The Petro government has moved towards a more decentralised approach favouring regional pacts aimed at territorial peacebuilding. In Nariño department, for example, the Comandos del Sur, a breakaway faction of the ELN, signed a peace agreement with the government in April. The Comandos del Sur promised to disarm, while Colombian authorities committed to support voluntary illicit crop substitution programmes and invest in local infrastructure. Though the long-term effects of the agreement remain to be seen, this decentralised approach holds potential promise as an alternative model to peace, as long as local development is combined with reforms at a national scale addressing issues around marginalisation and inequality.

More broadly, the experiences in Latin America, alongside those in Sub-Saharan Africa and South Asia, reflect a need for more holistic responses to the political economy of conflict. The rigid typologies of policymakers have been subject to robust critiques by more recent academic research, and the old toolkits, strategies and priorities seem increasingly inadequate. In particular, the line between licit and illicit activity should be understood as porous and contested, challenging any assumed interdependence between stability, peace and prosperity. With violence creating or enabling new markets, industries and commercial circuitry that can, at times, have constructive effects deemed preferable to an absent – or avaricious – state, any future political and developmental programming must ensure they address the structural causes of illicit activity that so often underpin and perpetuate wider conflict systems.

© RUSI, 2025.

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