The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth. Tom Burgis
that journalists seeking sensational stories and charities looking to tug at donors’ heartstrings distorted its image. The prescriptions were as various and contradictory as the diagnoses: slash government spending to allow private businesses to flourish; concentrate on reforming the military, promoting ‘good governance’ or empowering women; bombard the continent with aid; or force open African markets to drag the continent into the global economy.
As the rich world struggled with recession, pundits, investors and development experts began to declare that Africa, by contrast, was on the rise. Commercial indicators suggested that, thanks to an economic revolution driven by the commodity boom, a burgeoning middle class was replacing Africa’s propensity for conflict with rampant consumption of mobile phones and expensive whisky. But such cheery analysis was justified only in pockets of the continent. As I travelled in the Niger Delta, the crude-slicked home of Nigeria’s oil industry, or the mineral-rich battlefields of eastern Congo, I came to believe that Africa’s troves of natural resources were not going to be its salvation; instead, they were its curse.
For more than two decades economists have tried to work out what it is about natural resources that sows havoc. ‘Paradoxically,’ wrote Macartan Humphreys, Jeffrey Sachs and Joseph Stiglitz of Columbia University in 2007, ‘despite the prospects of wealth and opportunity that accompany the discovery and extraction of oil and other natural resources, such endowments all too often impede rather than further balanced and sustainable development.’4 Analysts at the consultancy McKinsey have calculated that 69 per cent of people in extreme poverty live in countries where oil, gas and minerals play a dominant role in the economy and that average incomes in those countries are overwhelmingly below the global average.5 The sheer number of people living in what are some of the planet’s richest states, as measured by natural resources, is staggering. According to the World Bank, the proportion of the population in extreme poverty, calculated as those living on $1.25 a day and adjusted for what that wretched sum will buy in each country, is 68 per cent in Nigeria and 43 per cent in Angola, respectively Africa’s first and second-biggest oil and gas producers. In Zambia and Congo, whose shared border bisects Africa’s copperbelt, the extreme poverty rate is 75 per cent and 88 per cent, respectively. By way of comparison, 33 per cent of Indians live in extreme poverty, 12 per cent of Chinese, 0.7 per cent of Mexicans, and 0.1 per cent of Poles.
The phenomenon that economists call the ‘resource curse’ does not, of course, offer a universal explanation for the existence of war or hunger, in Africa or anywhere else: corruption and ethnic violence have also befallen African countries where the resource industries are a relatively insignificant part of the economy, such as Kenya. Nor is every resource-rich country doomed: just look at Norway. But more often than not, some unpleasant things happen in countries where the extractive industries, as the oil and mining businesses are known, dominate the economy. The rest of the economy becomes distorted, as dollars pour in to buy resources. The revenue that governments receive from their nations’ resources is unearned: states simply license foreign companies to pump crude or dig up ores. This kind of income is called ‘economic rent’ and does not make for good management. It creates a pot of money at the disposal of those who control the state. At extreme levels the contract between rulers and the ruled breaks down because the ruling class does not need to tax the people to fund the government – so it has no need of their consent.
Unbeholden to the people, a resource-fuelled regime tends to spend the national income on things that benefit its own interests: education spending falls as military budgets swell.6 The resource industry is hardwired for corruption. Kleptocracy, or government by theft, thrives. Once in power, there is little incentive to depart. An economy based on a central pot of resource revenue is a recipe for ‘big man’ politics. The world’s fourlongest-serving rulers – Teodoro Obiang Nguema of Equatorial Guinea, José Eduardo dos Santos of Angola, Robert Mugabe of Zimbabwe, and Paul Biya of Cameroon – each preside over an African state rich in oil or minerals. Between them they have ruled for 136 years.
From Russia’s oil-fired oligarchs to the conquistadores who plundered Latin America’s silver and gold centuries ago, resource rents concentrate wealth and power in the hands of the few. They engender what Said Djinnit, an Algerian politician who, as the UN’s top official in west Africa, has served as a mediator in a succession of coups, calls ‘a struggle for survival at the highest level’.7 Survival means capturing that pot of rent. Often it means others must die.
The resource curse is not unique to Africa, but it is at its most virulent on the continent that is at once the world’s poorest and, arguably, its richest.
Africa accounts for 13 per cent of the world’s population and just 2 per cent of its cumulative gross domestic product, but it is the repository of 15 per cent of the planet’s crude oil reserves, 40 per cent of its gold and 80 per cent of its platinum – and that is probably an underestimate, given that the continent has been less thoroughly prospected than others.8 The richest diamond mines are in Africa, as are significant deposits of uranium, copper, iron ore, bauxite (the ore used to make aluminium), and practically every other fruit of volcanic geology. By one calculation Africa holds about a third of the world’s hydrocarbon and mineral resources.9
Outsiders often think of Africa as a great drain of philanthropy, a continent that guzzles aid to no avail and contributes little to the global economy in return. But look more closely at the resource industry, and the relationship between Africa and the rest of the world looks rather different. In 2010 fuel and mineral exports from Africa were worth $333 billion, more than seven times the value of the aid that went in the opposite direction (and that is before you factor in the vast sums spirited out of the continent through corruption and tax fiddles).10 Yet the disparity between life in the places where those resources are found and the places where they are consumed gives an indication of where the benefits of the oil and mining trade accrue – and why most Africans still barely scrape by. For every woman who dies in childbirth in France, a hundred die in the desert nation of Niger, a prime source of the uranium that fuels France’s nuclear-powered economy. The average Finn or South Korean can expect to live to eighty, nurtured by economies among whose most valuable companies are, respectively, Nokia and Samsung, the world’s top two mobile phone manufacturers. By contrast, if you happen to be born in the Democratic Republic of Congo, home to some of the planet’s richest deposits of the minerals that are crucial to the manufacture of mobile phone batteries, you’ll be lucky to make it past fifty.
Physical cargoes of African oil and ore go hither and thither, mainly to North America, Europe and, increasingly, China, but by and large the continent’s natural resources flow to a global market in which traders based in London, New York and Hong Kong set prices. If South Africa exports less gold, Nigeria less oil, or Congo less copper, the price goes up for everyone. Trade routes change: the increasing production of shale gas in the United States has reduced imports of Nigerian oil in recent years, for example, with the crude heading to Asia instead. But based on the proportion of total worldwide supply it accounts for, if you fill up your car fourteen times, one of those tanks will have been refined from African crude.11 Likewise, there is a sliver of tantalum from the badlands of eastern Congo in one in five mobile phones.
Africa is not only disproportionately rich in natural resources; it is also disproportionately dependent on them. The International Monetary Fund defines a ‘resource-rich’ country – a country that is at risk of succumbing to the resource curse – as one that depends on natural resources for more than a quarter of its exports. At least twenty African countries fall into this category.12 Resources account for 11 per cent of European exports, 12 per cent of Asia’s, 15 per cent of North America’s, 42 per cent of Latin America’s, and 66 per cent of Africa’s – slightly more than in the former Soviet states and slightly less than the Middle East.13 Oil and gas account for 97 per cent of Nigeria’s exports and 98 per cent of Angola’s, where diamonds make up much of the remainder.14 When, in the second half of 2014, commodity prices started to fall, Africa’s resource states were reminded of that dependency: the boom had led to a splurge of spending and borrowing, and the prospect of a sharp fall in resource rents made the budgets of Nigeria, Angola and elsewhere look decidedly precarious.
The resource curse is not merely some