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The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa's Wealth Paperback – May 3, 2016
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The trade in oil, gas, gems, metals and rare earth minerals wreaks havoc in Africa. During the years when Brazil, India, China and the other "emerging markets" have transformed their economies, Africa's resource states remained tethered to the bottom of the industrial supply chain. While Africa accounts for about 30 per cent of the world's reserves of hydrocarbons and minerals and 14 per cent of the world's population, its share of global manufacturing stood in 2011 exactly where it stood in 2000: at 1 percent.
In his first book, The Looting Machine, Tom Burgis exposes the truth about the African development miracle: for the resource states, it's a mirage. The oil, copper, diamonds, gold and coltan deposits attract a global network of traders, bankers, corporate extractors and investors who combine with venal political cabals to loot the states' value. And the vagaries of resource-dependent economies could pitch Africa's new middle class back into destitution just as quickly as they climbed out of it. The ground beneath their feet is as precarious as a Congolese mine shaft; their prosperity could spill away like crude from a busted pipeline.
This catastrophic social disintegration is not merely a continuation of Africa's past as a colonial victim. The looting now is accelerating as never before. As global demand for Africa's resources rises, a handful of Africans are becoming legitimately rich but the vast majority, like the continent as a whole, is being fleeced. Outsiders tend to think of Africa as a great drain of philanthropy. 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. But who received the money? For every Frenchwoman who dies in childbirth, 100 die in Niger alone, the former French colony whose uranium fuels France's nuclear reactors. In petro-states like Angola three-quarters of government revenue comes from oil. The government is not funded by the people, and as result it is not beholden to them. A score of African countries whose economies depend on resources are rentier states; their people are largely serfs. The resource curse is not merely some unfortunate economic phenomenon, the product of an intangible force. What is happening in Africa's resource states is systematic looting. Like its victims, its beneficiaries have names.
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About the Author
- Publisher : PublicAffairs; Reprint edition (May 3, 2016)
- Language : English
- Paperback : 368 pages
- ISBN-10 : 1610397118
- ISBN-13 : 978-1610397117
- Item Weight : 10.9 ounces
- Dimensions : 5.55 x 1.5 x 8.2 inches
- Best Sellers Rank: #159,840 in Books (See Top 100 in Books)
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For starters, corruption is mistakenly believed to reign supreme in every country on the African continent. (There are 48 nations in Sub-Saharan Africa, with a combined population of more than 800 million.) Of course, it’s true that some African countries rank very low on Transparency International’s “Corruption Perceptions Index” (CPI) — after all, Somalia merits the very lowest score, with Sudan and South Sudan not far above it — but only Eritrea and Guinea-Bissau rank at all close to them. In between them are many other countries: Middle Eastern, Central Asian, Caribbean, South Asian. And three Sub-Saharan African nations rank in the top third of the 175 countries in the CPI: Lesotho, Namibia, and Rwanda, with Ghana close behind. Ghana scores better than Greece, Italy, and several other European nations.
Second, corruption in Africa is viewed as intractable. It’s widely believed that nothing can be done about it. Nonsense! One of the largest and most potent sources of the cash that fuels corruption is foreign aid. Institutions like the World Bank, USAID, and other national and international agencies direct most, if not all, their support to governments. This, despite the obvious evidence on the ground that a huge proportion of this aid goes straight into the pockets of the ruling elites. If foreign aid were doled out more selectively to community-based organizations, local agencies, and NGOs with grassroots operations, the picture might be very different. As things stand, only a trickle of foreign aid gets to the people who need it most: the poor.
Lastly, and most significantly, too many observers characterize African corruption as a uniquely African phenomenon that grows out of ethnic rivalries and the failure of European colonists to establish stable native governments. Those factors, while present, are only part of the story. Equally, if not more, consequential is the role of foreign investment — principally from China, the US, and Western Europe — in exploiting the continent’s abundant resources, often paying through the nose for the privilege. Corruption is a two-way street: briber and bribee need each other. And those Western investors include some of the world’s biggest US- and European-based multinational corporations — most prominently, Big Oil and the major mining companies. Chinese companies are even worse because they’re not constrained by legal restrictions at home. Prominent foreign aid cheerleaders like Jeffrey Sachs of Columbia University do the African people no favors by advocating huge increases in official aid, rationalizing that some of it will actually do good. Just ask the first ten Africans you meet on the street in Lagos or Nairobi or Luanda. Unless you happen to run into a member of the privileged elite, you’ll get an earful about Western-enabled corruption.
The Looting Machine spotlights this two-way street, with an emphasis on commerce. The role of foreign aid receives little attention. The principal source of corruption in Africa, Burgis contends again and again, is its wealth of natural resources: oil, gas, gold, diamonds, copper, iron, and many other materials essential to the rich nations’ consumer economies. Citing an analysis by McKinsey, he reports that “69 percent 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.” This is one of the most tragic consequences of what economists refer to as the “resource curse.” Burgis asserts that “An economy based on a central pot of resource revenue is a recipe for ‘big man’ politics.”
It’s no accident that the resource curse finds its fullest expression in Africa: the continent accounts for 13 percent of the world’s population and just 2 percent of its cumulative gross domestic product, but it is the repository of 15 percent of the planet’s crude oil reserves, 40 percent of its gold, and 80 percent of its platinum — and that is probably an underestimate.”
The scope of the corruption this cornucopia of resources makes possible is difficult to comprehend. For example, “When the International Monetary Fund examined Angola’s national accounts in 2011, it found that between 2007 and 2010 $32 billion had gone missing.” That’s billion with a “B.” And this, in a country of just 21 million people — a population roughly equivalent to that of Sao Paulo, Seoul, or Mumbai.
If you want to gain perspective on poverty, war, and corruption in Africa, read this book.
The emphasis in The Looting Machine is on those countries Burgis knows well: Angola, Nigeria, Congo, with less intensive reporting from several other nations.
Tom Burgis has worked for the Financial Times in Africa since 2006, covering business, politics, corruption, and conflict. On his LinkedIn page, he describes his reporting as encompassing “Oil, mining, terrorism, the arms trade, corporate misconduct, intelligence, money-laundering, the underbelly of the global economy, forgotten warzones, tales of the human soul.” He is currently the Investigations Correspondent for the Financial Times, no longer limited to Africa.
In a nutshell, the resource curse sets in a cycle of economic addiction through an upward revaluation of the currency in “resource-rich” countries. The decay of the local manufacturing and agriculture sectors that results from their non-competitiveness in the global economy increases the dependency of the “addicted” countries on natural resources. The well-connected local elite monopolizes the “economic rent” that the resources business generates, creating an apartheid between them and the rest of the population. This looting machine cannot work properly without the well-understood complicity of foreign governments and companies eager to put their hands on this bounty, preferably on the cheap. China has not many lessons of morality to receive from the West that too often shines through both its hypocrisy and cynicism. Furthermore, while the resources business is capital-intensive, it is not labor-intensive. Finally, any infrastructure that pre-existed the extraction and export of these raw materials gets neglected in the process.
To his credit, Mr. Burgis is not all gloom and doom about the future of Africa. The author highlights that for all their shortcomings, South Africa and Botswana have developed a viable manufacturing sector within their borders. These exceptions prove the rule that the Dutch disease blocks the path to industrialization across Africa, resulting in the specialization of many Africa’s “resource-rich” countries in remaining poor.
This is a great book about the inequalities in Western and Chinese business in Africa. If you need to understand the continent, this is a nice book to start with.
Top reviews from other countries
This excellent book tells the stories of how natural resource-rich sub-Saharan countries are being systematically looted by their kleptocrats, ruling classes, and beyond all foreign companies and some unscrupulous individuals. This book is the result of investigative journalism at its finest, and the product of a scrupulous analysis. I highly commend the author for being so courageous and having produced such a revealing book. A must-read book for anyone who wants to understand why, since the colonization by Western powers, the sub-Saharan continent has been watching the rest of the world marching on the path of progress and prosperity while it remains stuck conflicts and problems of all sorts.
I highly recommend this must-read book, along with the other excellent book titled China's Second Continent by Howard W. french.
After having read this book, one can only come to the conclusion that black Africa, with its states artificially created by Britain, France and Portugal, and rotten with ethnic conflicts and corruption, will continue to be poor for the foreseeable future despite its enormous reserve of valuable natural resources. The culture of patronage and corruption that characterizes these societies will ensure that the concentration of power and wealth in the hands of foreigners and the ruling classes will continue unabated. After you have read this book, you will feel a deep sense of hopelessness and immense pity for the populations of these states who are so miserable and powerless in the face of the systematic looting perpetrated by their own ruling classes, and in particular so unashamedly by Western and now Chinese corporations. To ad insult to injury, some of the looting is done with the help of the IMF, the World Bank and its IFC division. One has to wonder how a continent, let alone a state, can fight against such formidable forces? How can a country develop economically, let alone technologically, if its ruling class is solely preoccupied with its own enrichment and self preservation, in the absence of true democracy or any real and effective opposition.
After a century of Western colonization that had done nothing for the development of these states, maybe the only hope left is that the recent massive Chinese immigration and influx of Chinese aid and investments will bring deep and permanent structural ethnic and cultural changes to these societies, and finally help to lift this content out of misery; like what successive waves of Chinese immigration have done for most Southeast Asian countries over the previous centuries, which has recently enabled a number of them to become economic tigers in their own rights. The effect will be a gradual phase out of foreign influence (Western, Israeli, Lebanese and Indian), to be replaced by Chinese capital and human resources. Thanks to the accelerated pace of change that we are experiencing nowadays, I predict that this mutation will materialize after only two or three generations of inter-racial marriages between the Chinese immigrants and the local populations, instead of a couple of centuries as it has taken before for Southeast Asia.
Or, maybe the sub-Saharan continent will end up being the Mine of the World, when China and most of Asia will remain the Factory of the World, while the West consolidates its role of the Financier and Consumer of the World. We saw the Division of Labor in action in the 19th and 20th centuries, now in the Global Village of 21st century the division of labor is split between continents in a tightly-coupled Supply Chain