The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth

The crude began to flow in 1956, four years before independence from Britain. Almost immediately it started to ruin Nigeria. Two-thirds of the newfound oil reserves lay within the territory that secessionists claimed for themselves when they declared the Republic of Biafra in 1967, raising the stakes in the standoff between the ethnic blocs vying for power in the young nation. Between five hundred thousand and 2 million Nigerians died in the civil war that ensued, many from starvation. Nigeria remained whole, but any hope that it might rise as a black star to lead an independent Africa dissipated as dictator followed ruinous dictator. Instead, it became a petro-state, where oil accounts for four in every five dollars of government revenue and capturing a share of the resource rent is a life-and-death struggle.

The Niger Delta, the maze of creeks where the River Niger reaches the sea at Nigeria’s southern edge, proved to be a prodigious font of crude. Along with the offshore discoveries that followed, it made Nigeria a major supplier of oil to the United States and the fourth-biggest source of European oil imports. Few countries can claim to be so vital a source of the basic ingredient of the world’s oil-fired economy. Nigeria’s stocks of natural gas, estimated to be the eighth-largest on the planet, have scarcely been tapped, but they already account for one in every twenty cubic feet that the European Union imports.

The insidious effects of oil have permeated outward from the brutalized, despoiled and destitute Niger Delta. I had been living in Nigeria for less than two weeks when I arrived in Kaduna. 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 used to form part of an Islamic caliphate that the jihad of Usman dan Fodio founded two hundred years ago. 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 contrôlée badges 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.

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 forty-four of its own people. Billions of dollars assigned to fix the rundown power stations and the dilapidated grid have been squandered or pilfered. A privatization 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.3

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.4 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 $2.2 billion a year, compared with local Nigerian production that has shrivelled to $40 million annually.5 A team of experts working for the United Nations concluded in 2009, ‘The Nigerian textile industry is on the verge of a total collapse.’6 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.

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 United Nigerian Textiles plant were firmly shuttered. Jagged glass topped the high walls, and a lone security guard kept watch, protecting the machinery within on the minuscule chance that it would someday whir into action again.* 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 twenty years,’ he said. ‘Back in the seventies 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 impoverished inhabitants had retreated into their ethnic and religious identities. ‘Kaduna is now a tale of two cities,’ said the priest. ‘This side of the river is Christians; the other is Muslims.’

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 ghettoes 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 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 realized 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 globalization. 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 whose fortune is thought to run to billions, 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.7 ‘He is shrewd,’ a northern leader who knows him told me. ‘He knows how to make money.’

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 percent illicit – but the locals do the smuggling,’ the consultant went on. There are, he said, sixteen 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 globalized economy.

Mangal’s network of warehouses and agents stretches to Dubai, the Gulf emirate where much clandestine African business is done, and beyond into China and India. ‘You put it in his warehouse, and he will smuggle,’ a top northern banker told me. ‘He controls the import of everything that requires duty or is contraband.’

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. He is said to charge a flat fee of 2 million naira (about $13,000) per cargo, plus the cost of goods.8 In 2008 Mangal was estimated to be bringing about a hundred 40-foot shipping containers across the frontier each month.9

Mangal’s fortunes have risen and fallen with Nigeria’s procession of dictators. When democracy – and, notionally, the rule of law – returned in 1999, he needed allies in the new order. He found one in Umaru Yar’Adua. The People’s Democratic Party, the affiliation comprising most of Nigeria’s political elites that would dominate the new dispensation, had chosen Yar’Adua to be the governor of Mangal’s home state, Katsina. Several northern leaders, businessmen and government insiders told me Mangal was one of the most generous funders of Yar’Adua’s two successful gubernatorial campaigns, in 1999 and 2003.

The master smuggler’s political largesse did not make him entirely immune, however. 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 was told, according to a consultant who was involved in lobbying the president, that Mangal was ‘the kingpin’. 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.10 El-Rufai told me he reached an agreement with Yar’Adua, the beneficiary of Mangal’s generous campaign funding and his political protector, and the smuggler would endeavour to transform himself into a legitimate businessman.

El-Rufai recalled 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.’ Mangal told El-Rufai that he had a fleet of six hundred trucks plying the trade routes. He promised to switch into refined petroleum products, another time-honoured money spinner for Nigeria’s politically connected trading barons. But the illicit textile trade continued, and Mangal’s operations remained under scrutiny. Nigeria’s Economic and Financial Crimes Commission, traditionally nothing more than a vehicle for settling political scores, had gained some teeth and a degree of independence under an energetic fraud-buster called Nuhu Ribadu. It began to take an interest in Mangal.11 But then the gods of Nigeria’s petro-politics smiled on the smuggler once again.

When Obasanjo’s attempts to change the constitution to allow himself a third term as president were thwarted, he sought to maintain his influence from behind the scenes by plucking Yar’Adua from the obscurity of Katsina to be the People’s Democratic Party candidate in the 2007 presidential elections – tantamount, given the party’s dominance, to handing him the keys to the presidential palace. Mangal contributed to Yar’Adua’s presidential campaign, along with other backers who had also attracted the attention of the anticorruption squad. Not long after Yar’Adua took office they got their payback. Ribadu was forced out, and the anticorruption unit’s teeth were pulled. ‘The moment Yar’Adua became president [Mangal] had a blank cheque,’ El-Rufai, whom Yar’Adua also cast into the wilderness, told me. It was another death knell for the north’s textile industry.

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 gas field 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.12 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 industrialize, the process goes into reverse; those that aspire to industrialize 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.13

A cycle of economic addiction sets in: the decay of the other parts of the economy increases the dependency on natural resources. Opportunity becomes confined to the resources business, but only for the few: whereas mines and oil fields require vast sums of capital, they employ tiny workforces compared with farming or manufacturing. As oil or mining suck the life from the rest of the economy, infrastructure that could foster broader opportunities – electricity grids, roads, schools – is neglected.

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 2008.14 Telecoms and financial services have boomed, but the path to industrialization is blocked off. During the very years when Brazil, India, China and the other ‘emerging markets’ were transforming their economies, Africa’s resource states remained tethered to the bottom of the industrial supply chain. Africa’s share of global manufacturing stood in 2011 exactly where it stood in 2000: at 1 per cent.15

There are pockets of Africa where manufacturing has taken hold, notably in South Africa, where platinum is used to make catalytic converters, and in Botswana, where a nascent cutting and polishing industry is retaining some of the value-addition process for diamonds. But far more common are sights like the defunct General Motors assembly plant that used to hum outside Kinshasa or the uptown Luanda supermarket that boasts eight varieties of tinned peas, none of them home-grown despite Angola boasting enough arable land to cover Germany. The commodity boom of the past decade that has had hedge funds and investment analysts salivating over Africa’s economic prospects might even have made matters worse for those outside the resource bubble. While Nigeria was recording annual gross domestic product growth of more than 5 per cent, unemployment increased from 15 per cent in 2005 to 25 per cent in 2011.16 Youth unemployment was estimated at 60 per cent.

A recalculation of Nigeria’s GDP in 2014, to take into account hitherto under-recorded booms in services such as telecoms and banking, made Africa’s most populous nation officially its biggest economy, surpassing South Africa. The statistical revisions did nothing to make Nigerians less poor, but it did halve the share of oil in GDP to 14 per cent. ‘The new figures show that Nigeria is much more than just an oil enclave,’ declared The Economist.17 ‘Nigeria now looks like an economy to take seriously.’

But 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. 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, Nobel Prize-winning novelists, and savvy businessmen. But oil has sickened Nigeria’s heart. Akerele, who worked for a while with Tiny Rowland of Lonrho, one of Africa’s most successful and contentious mining tycoons, knows better than most what the resources industry had done to his country and his continent.

One evening, when he and I were the last two still going at 3 A.M. after a merry evening attempting to skewer Nigeria’s ills, I asked Akerele what he foresaw for Africa. His expression, usually jovial, fell. ‘Africa will be a mine,’ he said, ‘and Africans will be the drones of the world.’

The electronics market at Alaba proclaims itself to be Africa’s biggest. It is a sprawling bazaar located close to the clogged road – known, improbably, as the expressway – that arcs through mainland Lagos where most of the city’s 20 million inhabitants live. On sale here are the trappings of a middle-class life: refrigerators and telephones, stereos and televisions. The traders are proud that they have brought the means for a comfortable existence within reach for more of their compatriots, not just the elite who used to be the market’s sole customers before Chinese-manufactured cheaper goods arrived. But, just as in the textile markets of the North, the omnipresence of foreign-made wares testifies to Nigeria’s near-total failure to develop a strong manufacturing sector of its own.

As I wandered through the stacks of white goods, one of the traders drew me aside. Okolie was fifty-nine. He had spent thirty years selling radios and working out how Nigeria’s petro-politics shapes the dynamics of supply and demand.

Business was slow just then, Okolie told me. It was May 2010: Greece was on the brink of defaulting on its debts, and I presumed the reason for the slowdown at Alaba was another symptom of the global economy’s travails. I was wrong. ‘Money is down,’ Okolie explained, ‘since the president is sick.’

Umaru Yar’Adua’s health had been weak since well before his elevation to the highest office. The state of the presidential kidneys was a favourite topic of conversation among taxi drivers and in the hotel bars where businessmen and politicians gathered. In the final weeks of 2009 Yar’Adua’s heart began to fail. He was rushed to Saudi Arabia for treatment, triggering political paralysis.

Alaba market was struggling because the patronage system had ground to a halt. It was a perfect illustration of what Noo Saro-Wiwa, the daughter of the executed Niger Delta activist Ken Saro-Wiwa, has called Nigeria’s ‘contractocracy’.18 The beneficiaries of the government contracts that spew Nigeria’s oil rent into the patronage system, both the favoured contractors and the officials and politicians they cut in on the deals, would, under normal circumstances, spend some of their dubious earnings in places like Alaba market. But Yar’Adua’s long illness and the ensuing power struggle meant that contracts were not getting signed. The outflow of the looting machine had been temporarily blocked. But Okolie was not overly concerned. Soon the contractocracy would resume normal service. The public goods the contracts were supposed to deliver would not materialize – the subsidized fuel would be siphoned off, the potholes would go unfilled, the lights would stay off – but at least the shadow economy would be moving again. ‘If the government gives money to the contractors, money will reach us,’ Okolie said.