Boko Haram leader, Abubakar Shekau, has declared Gwoza town, seized by his men last Thursday, as a caliphate.
The terrorist who made the declaration in a video obtained by AFP on Sunday, said his group would not leave the town.
“Thanks be to Allah who gave victory to our brethren in (the town of) Gwoza and made it part of the Islamic caliphate,” Shekau said in the 52-minute video.
“By the grace of Allah, we will not leave the town. We have come to stay,” he added.
In a July video, Shekau voiced support for the leader of the Islamic State militants Abu Bakr al-Baghdadi, who in late June declared himself “the caliph” and “leader of Muslims everywhere.”
The AFP said there was no indication from Shekau in the latest video that he was associating himself with Baghdadi whose Sunni Muslim fighters have taken over parts of Iraq and Syria.
The report said it was not clear if Shekau was declaring himself to be a part of Baghdadi’s call or if he was referring to a separate Nigerian caliphate.
In the 19th century, a Sokoto caliphate was proclaimed across most of modern day northern Nigeria and was considered separate from other Islamic kingdoms, such as the Ottoman Empire.
There was no indication that Shekau was actually in Gwoza for the filming and his whereabouts remain unknown but he vowed that his fighters would keep control of the area.
The United Nations humanitarian office earlier this month confirmed reports that Gwoza was under rebel control.
Boko Haram is also believed to be in control of other areas near Gwoza in southern Borno, as well as large swathes of territory in northern Borno and at least one town in neighbouring Yobe state.
Experts have described Boko Haram’s gains in recent weeks as unprecedented, saying the group was closer than ever to achieving its goal of carving out a strict Islamic state across northern Nigeria.
But many analysts believe the military still has the capacity to reverse the insurgents’ advance.
A major offensive launched when emergency rule was declared in May last year appeared to put the militants on the defensive, flushing them out of their strongholds.
But critics say top brass failed to sustain the pressure and allowed the Islamists to retake some of the areas they had abandoned.
A lack of adequate weapons for troops sent to fight the well-armed rebels has hampered the counter-insurgency and some soldiers last week refused to deploy to Gwoza without better gear in an apparent mutiny.
After Shekau’s 25-minute speech, the video shows militant fighters on pick-up trucks firing rocket-propelled grenades and other heavily armed insurgents firing weapons as they walk calmly along the road.
The footage appears to show them taking over a military base, stealing weapons and hundreds of rounds of ammunition as well as fuel cans.
In one frame, a fighter stands on top of a tank, waving the Islamists’ black flag.
The AFP reports that the end of the video depicted scenes of grisly executions, similar to those released by IS in recent weeks.
In one scene, about 20 men in civilian clothing are shown with their hands tied behind their backs and lying by the roadside before they are shot at close range.
A second shows two men, whom Shekau said disguised themselves as women to escape the town, beaten to death with shovels. Two others similarly dressed are shot beside what appears to be a trench full of bodies.