Corrupt practices in states such as Nigeria, Libya and Iraq are providing fertile ground for extremists, the NGO's British branch said in a report.
"Corruption is the most powerful weapon in the armoury of violent extremism," it said in a 44-page report entitled "The Big Spin".
The report said extremist groups drew on public anger at the abuse of power as a means to radicalise and recruit. They also use corrupt officials and their links to organised crime to facilitate financial and arms flows.
Corruption also hollows out state institutions that should keep extremist forces in check, the report said.
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Air strikes against the likes of the Islamic State group in Iraq and Syria are "woefully insufficient" in building long-term stability, which requires accountable governments, the monitor said.
"Radical movements like ISIS thrive when people lose all faith in those in power -- when officials profit from the misery of the many, when the police exploit rather than protect, and when economic opportunity is skewed in favour of the connected few."
Islamic State seeks to portray itself as a countervailing force for for political integrity and reliable public service delivery, the report said.
"Too many Western governments focus on seeking to influence or moderate the behaviour of corrupt autocrats because they see them as an alternative to instability," it said.
"But in the end, corrupt governments are the architects of future security crises."