He said good governance, which entailed transparency, accountability and rule of law, remains the best way to start the process of ridding the world of terrorism.
Buhari made his position known in a statement he delivered at a Global Leaders' Summit on Countering ISIL and Violent Extremism, organised by President Barack Obama on the sideline of the 70th United Nations General Assembly in New York.
He said while military action was not enough, it was however capable of stemming the tide and reversing the process of recruitment, movement and effective operation of foreign terrorist fighters and their associated radical extremists.
He said while Nigeria notes the efforts being made by the UN and the international community to tackle ISIL, a lot more needs to be done.
Buhari said, "Nigeria notes with satisfaction, the efforts of the United Nations and the rest of the international community to contain ISIL. We certainly need to do more.
"We need to take military action combined with effective border security, intelligence collection and sharing, and vigorous policing action.
"These alone may not suffice, but they can certainly stem the tide and reverse the process of recruitment, movement and effective operation of foreign terrorist fighters and their associated radical extremists.
"In order to put in place the critical components of an effective approach to countering ISIL and eventually defeating it, we must address the threat from the source."
Buhari added that, "We must find a way to prevent young people from turning to terror in the first place. And the young people that turn to violent extremism do not exist in a vacuum – they are often part of communities and families and are lured into the fold of barbaric and nihilistic organisations, somehow, through a misguided appeal to their worst fears, expectations and apparent frustrations.
"While addressing the causes of this attraction and how to deal with them, we should pay close attention to other manifest factors that may not be tangible but can be crucial.
"Good governance, which entails transparency, accountability and rule of law, remains the basis on which we should kick-start the process of ridding the world of the menace of terrorism and violent extremism.
"The international community will be required to work together to deter and disrupt illicit financial flows from nations with weak anti–theft structures to other parts of the world."
The President said where such funds were identified, the victim state should be assisted to recover them expeditiously.
He said member states need to address local socio-economic grievances by formulating policies that would ensure broad-based transformation through job creation, equalisation of opportunities and expanding access to social services.
He added that African leaders also needed to rededicate themselves to uphold the mandate of the African Union Peer Review Mechanism, and other good governance initiatives that they have adopted in the region, to encourage conformity with political, economic and corporate governance values.
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