#BringBackOurGirls Africa Boko Haram Nigeria

Nigeria,where oil has become a curse

By Tom Burgis

Fabric design illustration by Jan Kallwejt©Jan Kallwejt
The chief of the border post let out another long sigh. “On attend.” The wait had already lasted hours. Not for the first time I was at the mercy of a temperamental fax machine. I was trying to cross the Nigerian border with its northern neighbour, Niger, in 2010. Someone in the visa section of Niger’s embassy in Nigeria had neglected to send some document to headquarters to authorise my visa, and faxing it over was proving complicated. I sat on the stoop of the border post, looking out over the scorched terrain that leads up to the Sahara. The sun was melting the horizon to a shimmer. “On attend.”Whiling away the morning beside the taciturn border chief offered me an opportunity to observe one of the few effective institutions in this part of the world: the smuggling racket. Dozens of trucks were queueing to cross from Niger into Nigeria. Their contents seemed harmless enough: many contained textiles and clothing bound for the markets of Kano and Kaduna, northern Nigeria’s two main cities. Weapons and unwilling human traffic cross Nigeria’s northern border covertly. But the flow of counterfeit Chinese-made textiles has grown so voluminous that it would be impossible to keep it secret, even if secrecy were required to ensure its safe passage. All the same, most of the shipments go through under cover of darkness. Those who control the trade engage in highly organised “settling”, or bribing, of the border officials, smoothing the textiles’ transit.

http://www.youtube.com/watch?v=8Ogh2dYJdAI

The Nigerian stretch is the final leg of a 10,000km journey. It begins in Chinese factories, churning out imitations of the textiles that Nigerians previously produced for themselves, with their signature prime colours and waxiness to the touch. By the boatload they arrive in west Africa’s ports, chiefly Cotonou in Benin, a tiny country beside Nigeria whose major economic activity is the transshipment of contraband. At the ports the counterfeit consignments are loaded on to trucks and either driven straight over the land border between Benin and western Nigeria or up through Niger and round to the border post with its taciturn chief. The trade is estimated to be worth about $2bn a year, equivalent to about a fifth of all annual recorded imports of textiles, clothing, fabric and yarn into the whole of sub-Saharan Africa.

Smuggling is a long-established profession here. Before colonial cartographers imposed the frontier, today’s smuggling routes were the byways of legitimate commerce. The border marks a delineation of what used to be British and French territory in west Africa, but no natural division of language or ethnicity exists. People on both sides speak Hausa, a tongue in which the word for smuggling, sumoga, strikes a less pejorative note than its English equivalent. The textile-smuggling bosses are the oligarchs of the northern borderlands. For those in their pay, they can be generous benefactors.

Not being a roll of fake west African fabric, I was not a priority for processing. Eventually the border chief’s phone rang. Off we trundled, past trucks with “Chine” daubed on the side, a brazen reference to their cargo’s origin. Another name went unrecorded, that of the trucks’ proprietor. Few dare to speak it openly here. But further to the south, where the truckloads of counterfeit textiles have helped to wreak economic destruction, I had heard it whispered a year earlier.

 . . . 

I had been living in Nigeria for less than two weeks when I arrived in Kaduna in the middle of 2009. The city is the gateway between the Christian south and the northern half of the country, an expanse that stretches up to the border with Niger and largely follows Allah. Kaduna lies in the turbulent Middle Belt, prone to spasms of communal violence when patronage politics, dressed in the garb of religion or ethnicity, turns bloody.

On a stifling Sunday morning a friend took me around Kaduna’s central market, a teeming grid of wooden booths. Many of the stalls were selling clothes. Some bore the misspellings that are counterfeiters’ inadvertent trademark: “Clavin Klein” read one shirt label. Others carried the equivalent of the appellation d’origine contrôléebadges that French vineyards and cheese makers append to their produce. “Made in Nigeria” the labels declared. But they were fake too. Aike, a young trader from the east, told me he stocked up on bogus labels when he went north to Kano to replenish his supplies of lace. “Mostly everything is made in China,” explained another trader selling jeans.

70% of Nigerian government revenue is generated by the sale of crude oil and natural gas

At Raymond Okwuanyinu’s stall I found rolls and rolls of the coloured fabric that is used for fashioning a popular style of billowing trousers. Here there was no attempt at subterfuge. Raymond told me it was a matter of simple economics. Nigeria may be the largest source of African energy exports, but it generates only enough electricity to power one toaster for every 44 of its own people. Billions of dollars assigned to fix the rundown power stations and the dilapidated grid have been squandered or pilfered. A privatisation drive in recent years has raised some tentative hope of improvement, but for now Nigeria produces only half as much electricity as North Korea.

Even those lucky enough to be connected to a functioning cable face the maddening task of negotiating with what used to be called the National Electric Power Authority or Nepa (but known as Never Expect Power Anytime). It was rebranded as the Power Holding Company of Nigeria, or PHCN (Please Have Candles Nearby or, simply, Problem Has Changed Name). Most must make do with spluttering diesel generators. In a country where 62 per cent of people live on less than $1.25 a day, running a generator costs about twice as much as the average Briton pays for electricity.

The World Bank estimates that textiles smuggled into Nigeria through Benin are worth $2.2bn a year; local Nigerian production has shrivelled to £40m annually

The crippling cost of electricity makes Nigerian textiles expensive to produce. Raymond, the Kaduna trader, told me he could sell trousers made from Chinese fabric at two-thirds the price of those made from Nigerian fabric and still turn a profit. Hillary Umunna, a few stalls over, concurred. The government’s attempt to support the Nigerian textile sector by banning imports was futile, Hillary opined, his tailor’s tape-measure draped around his shoulders. “These things now,” he said, gesturing at his wares, “they say it is contraband. They can’t produce it, but they ban it. So we have to smuggle.”

The cheaper price of smuggled garments relative to locally produced ones was good news, superficially at least, for the traders’ hard-pressed customers but less so for the employees of Nigeria’s textile industry. “It is a pitiable situation,” said Hillary, apparently oblivious to his and his colleagues’ role in their compatriots’ downfall. “All the [textile factories] we have here have shut down. The workers are now on the streets.”

 . . . 

In the mid-1980s Nigeria had 175 textile mills. Over the quarter-century that followed, all but 25 shut down. Many of those that have struggled on do so only at a fraction of their capacity. Of the 350,000 people the industry employed in its heyday, making it comfortably Nigeria’s most important manufacturing sector, all but 25,000 have lost their jobs. Imports comprise 85 per cent of the market, despite the fact that importing textiles is illegal. The World Bank has estimated that textiles smuggled into Nigeria through Benin are worth $2.2bn a year, compared with local Nigerian production that has shrivelled to $40m annually. A team of experts working for the United Nations concluded in 2009, “The Nigerian textile industry is on the verge of a total collapse.” Given the power crisis, the near-impassable state of Nigeria’s roads and the deluge of counterfeit clothes, it is a wonder that the industry kept going as long as it did.

The knock-on effects of this collapse are hard to quantify but they ripple far into the Nigerian economy, especially in the north. About half of the million farmers who used to grow cotton to supply textile mills no longer do so, although some have switched to other crops. Formal jobs in Nigeria are scarce and precious. Each textile employee supports maybe half-a-dozen relatives. It is safe to say that the destruction of the Nigerian textile industry has blighted millions of lives.

85% of Nigeria’s textile market is now comprised of (illegal) imports

After I left Kaduna’s market my friend took me to meet some of those who had felt the industry’s collapse hardest. Sitting around on rickety desks in the half-light of a classroom beside the church where some of Kaduna’s Christians were loudly asking a higher power for succour, nine redundant textile workers poured forth their woes. Tens of thousands of textile jobs had disappeared in Kaduna alone, the mill hands told me. I had seen the factory where some of them used to work. The gates of the plant were firmly shuttered. Jagged glass topped the high walls, and a lone security guard kept watch, protecting the machinery within. No other living thing came or went, save for the yellow-headed lizards scuttling among the undergrowth.

Father Matthew Hassan Kukah looked pained as he recalled the day when the factory, Kaduna’s last, had closed its doors the previous year. The hymns from his Sunday service had subsided. Like Archbishop Desmond Tutu in South Africa, Kukah is a figure of moral authority in Nigeria — and shares with Tutu a subversive sense of humour in the face of adversity. Kukah’s voice needles the mighty as few others can. The demise of Kaduna’s textile industry had drained the life from the city, he told me, sitting in a sweltering office above his sacristy and dressed in a simple black vestment. “We’ve gone backward 20 years,” he said. “Back in the 1970s there were textiles, people were energetic. But that generation was not able to produce the young, upwardly mobile elite. That’s what their children should have been.”

Kaduna’s decline was only one symptom of Nigeria’s descent into privation, Kukah went on. The national political class had abandoned civic duty to line its own pockets instead. The social fabric had been rent. “As a result of the collapse of the state, everybody, from the president down, is trying to find his own power, his own security. People are falling back on vigilante groups.” Violence had become the tenor of life. “Everywhere in the world the ghettos are combustible. The north is an incubator of poverty.”

The former mill hands among Kukah’s congregation and Kaduna’s Muslims shared in that poverty: buying food, let alone paying the school fees that even the dilapidated state-run schools charge, was a daily trial. The mill hands told me they had tried to hold a demonstration outside the state governor’s house, but the police had blocked them. The federal government had repeatedly promised to bail out the industry, yet little assistance had been forthcoming. The more clear-eyed workers realised that, in any case, the game was up. Even if they could get the factories running again, Chinese contraband had so thoroughly captured the market that it would be impossible for the Nigerian operations to compete. And there was something that had accelerated the mill hands’ consignment to the trash can of globalisation. Shuffling their feet and looking warily around for anyone who might be eavesdropping, the men murmured a single word: “Mangal.”

Alhaji Dahiru Mangal is a businessman, a confidant of presidents, a devout Muslim and a philanthropist whose airline transports Nigerian pilgrims to the annual hajj in Mecca. He also ranks among west Africa’s pre-eminent smugglers.

Growing up in Katsina, the last outpost before Nigeria’s frontier with Niger, Mangal received little formal education. More cosmopolitan Nigerian businessmen speak of him with a mixture of snobbery, envy and fear. He got his start as a teenager in the 1980s, following his father into the import-export business, and he swiftly made the cross-border freight routes his own. “He is shrewd,” a northern leader who knows him told me. “He knows how to make money.”

Nigeria has everything: fertile land, great natural wealth, an abundance of intelligence and ingenuity . . . But oil has sickened its heart

In the shadier corners of the workshop of the world Mangal found the perfect business partners. “The Chinese attacked at the heart of the industry: the wax-print and African-print segment,” a consultant who has spent years investigating — and trying to reverse — the slow death of Nigerian textiles explained to me. During the 1990s Chinese factories began copying west African designs and opening their own distribution branches in the region. “This is 100 per cent illicit — but the locals do the smuggling,” the consultant went on. There are, he said, 16 factories in China dedicated to churning out textiles with a “Made in Nigeria” badge sewn into them. For a time the Chinese material was of a much lower quality than Nigerian originals, but that gap narrowed as Chinese standards rose. The Chinese began to take control of the market, in league with Nigerian vendors. Mangal acts as the facilitator, the conduit between manufacturer and distributor, managing a shadow economy that includes the border authorities and his political allies. Like many others who profit from the “resource curse”, he plies the hidden byways of the globalised economy.

From his base in Katsina, Mangal arranges the import of food, fuel and anything his wealthy Nigerian clients might desire. But the staple of his operation is the textiles that have helped kill off the local industry. The details of the alleged smuggling operation are drawn from interviews with northern Nigeria politicians, officials, businessmen and textiles consultants in Abuja, Katsina, Kano and Kaduna between 2009 and 2013. Mangal is said to charge a flat fee of N2m (about $13,000) per cargo, plus the cost of goods. In 2008 Mangal was estimated to be bringing about 100 40ft shipping containers across the frontier each month.

Around 2005 Olusegun Obasanjo, the former military ruler then embarking on his second term as elected president, decided to do something about smuggling and the damage it was causing to the textile industry. Obasanjo dispatched Nasir el-Rufai, a northern-born minister with a reputation as a reformer, to try to get Mangal to clean up his act. El-Rufai told me that Mangal asked him, “Why does Obasanjo call me a smuggler? I just do logistics. I don’t buy any of the goods that are smuggled. I’m just providing a service.” (I tried unsuccessfully to arrange an interview with Mangal. He did not respond to questions I sent to his representative.)

 . . . 

Mangal and the rest of northern Nigeria’s crime lords can trace their hegemony — and the abandoned textile workers their strife — to the discovery of oil in the Niger Delta. In 1959, three years after Royal Dutch Shell struck oil in commercial quantities in the Delta, the company sank another well by the village of Slochteren in the northern Netherlands, in partnership with Exxon of the United States. They discovered the biggest gasfield in Europe. A gas bonanza followed. It was not long, however, before the Dutch began to wonder whether the discovery had truly been a blessing. People outside the energy industry started losing their jobs. Other sectors of the economy slumped, following a pattern that The Economist would, in 1977, diagnose as “Dutch Disease”.

What happened in the Netherlands was not an isolated outbreak, even if a prosperous European country was better placed than many to withstand it. Dutch Disease is a pandemic whose symptoms, in many cases, include poverty and oppression. The disease enters a country through its currency. The dollars that pay for exported hydrocarbons, minerals, ores and gems push up the value of the local currency. Imports become cheaper relative to locally made products, undercutting homegrown enterprises. Arable land lies fallow as local farmers find that imported fare has displaced their produce. For countries that have started to industrialise, the process goes into reverse; those that aspire to industrialise are stymied. Processing natural commodities can multiply their value four hundredfold but, lacking industrial capacity, Africa’s resource states watch their oil and minerals sail away in raw form for that value to accrue elsewhere.

In Africa, Dutch Disease is chronic and debilitating. Instead of broad economies with an industrial base to provide mass employment, poverty breeds and the resource sector becomes an enclave of plenty for those who control it. Measured as a share of the overall output of the combined African economy, manufacturing has fallen from 15 per cent in 1990 to 11 per cent in 2008. Telecoms and financial services have boomed, but the path to industrialisation is blocked off.

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Oil has so corrupted Nigeria that, for those trying to make an honest buck, the outlook is dispiriting. Richard Akerele, a veteran British- Nigerian businessman from an old Lagos family whose latest endeavour has been to establish a new line of passenger suites at African airports, is of an almost unassailably cheery disposition. Yet even he is losing hope. “We have everything here, everything,” Akerele told me. “But our people are poor and our society is poor.” We were sitting at a waterside bar on one of the islands of uptown Lagos, Nigeria’s commercial capital. The sun danced on the waters that separate the wealthy islands from the heaving mass of humanity on the mainland, with its profusion of crammed yellow buses, its cacophony of Afrobeat and generators, its defiantly sharp-suited slum dwellers.

For Akerele’s generation there is something deeply poignant about what Nigeria has become. He was right — Nigeria has everything: fertile land, great natural wealth, universities that in the years after independence were the envy of Africa, an abundance of intelligence and ingenuity reflected in the ease with which Nigerian expatriates make headway abroad, prizewinning novelists and savvy businessmen. But oil has sickened Nigeria’s heart.

Back in the 1970s there were textiles, people were energetic. But they were not able to produce a young, upwardly mobile elite — what their children should have been

In Nigeria the sale of crude oil and natural gas generates about 70 per cent of government revenue; in newborn South Sudan the figure is 98 per cent. Taxes, customs receipts and revenues from the sale of state assets — the things on which industrialised nations rely to fund the state and that require the acquiescence of the population — matter far less than keeping the resource money flowing. Nigeria’s GDP recalculation in 2014 showed that, once taxes from the oil industry were stripped out, the government relied on the people for just 4 per cent of its income.

The ability of the rulers of Africa’s resource states to govern without recourse to popular consent goes to the heart of the resource curse. The resource business ruptures the social contract between rulers and ruled — the idea, shaped by political philosophers such as Rousseau and Locke, that a government draws its legitimacy from the consensual sacrifice of certain freedoms by the people in exchange for those vested with authority upholding the common interest. Instead of calling their rulers to account, the citizens of resource states are reduced to angling for a share of the loot.

325,000 of the 350,000 people once employed in Nigeria’s textile industry have lost their jobs

As a political economy took hold in Nigeria that was based on embezzlement and manipulating public office for private gain, government contracts for the upkeep of public goods that support industrialisation — a functioning electricity system chief among them — were diverted to the cronies of the rulers of the day. The pattern was the same as in Angola or Congo: the more Nigeria’s non-oil economy withered, the greater the impulse to embezzle, perpetuating the cycle of looting. The deterioration of northern Nigeria’s textile industry created new demand for imported clothes and fabrics, strengthening Mangal’s stranglehold on the market and throttling the indigenous industry’s chances of resuscitation. For the likes of Boko Haram, the northern Islamist terrorists linked to al-Qaeda who have proved more than a match for the security forces, the corruption of the state and the lack of economic opportunity serve as recruiting sergeants. From its heartland in the remote northeast, its fighters bombed cities and burned villages across the north.

The sheer scale of Mangal’s smuggling operation gave him sway over Nigeria’s northern borderlands, and many of the north’s senior politicians were, I was told, in his pocket. “So many people are benefiting from the [customs] service the way it is and they want to keep it like this,” Yakubu Dogara, a northern member of Nigeria’s national assembly who had chaired an inquiry into the customs service, told me. I asked him about Mangal’s role, suggesting he was at the centre of the smuggling operation. “Some of the perpetrators are well known,” Dogara said. “Even the customs know them. But they are not empowered to go after them.” He paused. “The person you have just mentioned is untouchable, untouchable.”

By funding Umaru Yar’Adua’s successful campaigns for governor of his home state, Katsina, and then for the presidency, Mangal had ensured he had a protector at the top of the rentier class that uses Nigeria’s oil to maintain its hegemony. Goodluck Jonathan assumed the presidency when Yar’Adua fell fatally ill in 2010, becoming the first son of the Niger Delta to hold the highest office. He knew better than to start picking fights with a smuggler who had proved himself a generous benefactor to the People’s Democratic party in the past.

Even if the day comes when Mangal’s smuggling empire topples, it would be a monumental task to salvage what remains of northern Nigeria’s textile industry, let alone return it to its former glory. It is the structure of an economy in thrall to oil, more than any one crime lord, that condemned those mill hands to penury. Nigeria has paid quite a price for the dubious honour of being the continent’s biggest oil producer.

Extracted from ‘The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth’ by Tom Burgis, published by William Collins on February 26 (and in the US by Public Affairs on March 24)

-FT

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