Thinking Aloud: “The Looting Machine”

Apr. 23, 2015 by Darius 

Earlier this week, I saw British journalist Tom Burgis discuss his new book The Looting Machine: Warlords, Oligarchs, Corporations, and the Theft of Africa’s Wealth.

Burgis began by telling the story of the Nigerian textile industry.  A few decades ago, Nigeria’s textile industry, famous for incorporating beautiful traditional designs, supplied not only Nigeria but much of the region as well.  It employed 300,000 textile workers, mostly in northern Nigeria, as well as providing a livelihood for thousands of other Nigerians, from cotton farmers to dye workers and beyond.  Today, Nigeria’s textile industry is dead.  The economy of northern Nigeria is moribund.  Although imported textiles are actually illegal in Nigeria, smuggled textiles now command a 90% market share.  One man is largely responsible for killing Nigeria’s textile industry and turning what had been a zone of relative prosperity into “an enormous zone of poverty”: a politically connected smuggling lord named Dahiru Mangal.  But Mangal couldn’t have done it without complicit Nigerian politicians, Chinese counterfeiters, and an international apparatus that Burgis came to call “the looting machine.”

Burgis talked about a form of the well-known “resource curse,” a phenomenon that affects many resource-rich countries, known as “Dutch disease” (so named because the Netherlands was the first country in which it was noticed).  Dutch disease occurs when a government begins exploiting natural resources on a large scale, causing a rapid inflow of foreign currency and a decline in manufacturing exports and agriculture.  For example, in Nigeria, during the 1980s and 1990s, oil exports went through the roof, and as a result of the oil exports, Nigeria’s currency became overvalued, severely harming exported goods other than oil.  Furthermore, the Nigerian government began deriving an ever larger portion of its funding from oil sales rather than taxes.  As a result, government accountability and responsiveness to the people – the voters and taxpayers – dried up, and spending on public goods, like infrastructure and health care, fell drastically.  As Burgis said, the resource curse does not simply apply to one region where the resource is.  It applies to the whole country.  The shuttered textile industry in northern Nigeria “has felt the curse of oil as much as the delta,” where the water and land are tainted by decades of pollution related to oil extraction.

According to Burgis, governments across Africa pursue the prize of a natural resources windfall, which would bring an enormous amount of rent money, despite the fact that historically, said rush of money has been massively destabilizing and has almost always ended up doing more harm than good.  Burgis used the analogy of a lottery ticket: if you offer a lottery ticket worth a million dollars to someone with hungry kids, no job, and a hole in the roof and explain that it’s almost certain that with the lottery money “you’ll end up in rehab, buy a fast car and crash it, you’ll get divorced, everything will go wrong” and at the end you’ll be broke, that person is still going to want that lottery ticket.

Despite the “Africa Rising” narrative, Burgis cautioned that in many areas, not much has changed.  While coastal Africa is starting to move beyond resources in its economy, most of the interior is not.  Although rent money now accounts for a smaller share of GDP in many African countries, troublingly, the share of income governments derive from resource rents has not appreciably changed.  To Burgis, the continued reliance on resource rents to fund government “breaks that contract between ruler and ruled.”

Going forward, Burgis said the most important thing to do is simply to enforce existing laws.  The US and Europe have strong anti-corruption laws, as do most African countries.  These laws are ignored today.  Additionally, anti-corruption campaigns can be strengthened by shifting the burden of proof.  Currently, prosecutors must show the money trail leading into the pocket of a corrupt official.  Burgis suggested changing laws to force officials to justify their lifestyles.  He also pointed to the need for more countries to grow value-added jobs tied to the extraction industries (as Botswana has done) and, critically, for greater transparency in ownership of offshore companies.  He made the point that although the looting machine necessarily makes uses of the “shadow states” and “parallel governments” of unofficial but well-connected individuals within African countries, the structure of the looting machine is overwhelmingly outside of Africa, dependent on networks of shady middlemen, offshore banks, and shell corporations to connect people like Dahiru Mangal, the Nigerian smuggler, to the global economy and transfer and hide the ill-gotten assets.

Finally, Burgis felt it was important to change the terms of the debate outside of Africa to focus not on official amounts of development aid going into Africa but on the fortunes being “filched” from Africa every year.  As Burgis said, because the structure of the looting machine is largely outside of Africa, it is up to those outside Africa to dismantle it.

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2 Responses to Thinking Aloud: “The Looting Machine”

  1. Pingback: Thinking Aloud: “The Looting Machine” Excerpt on Tax Dodges | Not What You Might Think

  2. Pingback: Thinking Aloud: “The Looting Machine” | Not What You Might Think

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