Sixteen metal scavengers from a displaced persons' camp in Bama found the bomb while digging for scrap on Monday in the bush on the outskirts of town.
"The bomb exploded as they were pushing it in a cart toward the town, killing 13 and seriously injuring three," Babakura Kolo, a leader in a local anti-jihadist militia, said.
Kolo said the ordnance had apparently been dropped in 2015, when the military bombed jihadist positions during operations to retake Bama from Boko Haram.
"It was dormant for seven years and buried in the sand but they managed to dig it out, not knowing it was a bomb," said a second militia leader, Bukar Grema, who gave the same toll.
Boko Haram seized Bama in 2014 when they took over swathes of territory in northern Borno and declared a Caliphate.
Residents who had fled the town returned three years later, with many of them living in displaced camps as the town was substantially destroyed during the fighting to retake it.
Jihadists have been targeting scrap collectors, accusing them of spying for troops and the militia fighting them.
Last month IS-linked Islamic State West Africa Province (ISWAP) fighters killed 10 scavengers in Goni Kurmi village near Bama where they had gone looking for metal, a week after they killed 23 collectors in nearby Dikwa district.