THE Mercury editorial (April 7) on Nigeria’s overnight 57 percent increase in Gross Domestic Product using a “rebasing” technique misses the point: “Nigeria will attract more investment now that it is number one, probably diverting some of it from South Africa, which is struggling to get the investment it needs.”
But what if more extractive investment by offshore multinationals results in higher GDP but lower national wealth? Nigeria is Africa’s largest economy but its fastestshrinking if measured by wealth, which I take to incorporate depletion of oil, degeneration of land and departure of financial flows offshore.
What is wealth? In addition to financial assets, productive machinery, real estate and “human capital”, even the World Bank concedes we should add “natural capital” – untapped oil and minerals, forests and agricultural land.
Here we can spot the difference between bogus “Africa Rising” rhetoric as GDP increases thanks to raw materials exports, and Africa crashing in terms of fast-shrinking wealth, especially in resource-cursed countries like Nigeria and South Africa. To fail to acknowledge the distinction between GDP and wealth is to ignore women’s unpaid labour, pollution, social ills and other variables. Economists don’t seem to care about these.
The biggest of these GDP-blind factors in Africa is the depletion of natural resources, which when mined or drilled out are only counted as GDP credits on the income accounts, but not as debits, as they should be since a source of future income is now gone.
It’s as if you have family jewels locked away but your drunkard nephew steals the key, sells the jewels for a song and boozes away the proceeds. Abuja has seen lots of drunkard-nephew types exercising power, aided and abetted by multinational corporations like Shell.
Nigeria shrinks because natural capital is being stripped out of the Niger Delta by foreign oil companies without the compensating investments resource-rich Norway, Canada and Australia can brag, because their mining and oil companies are headquartered at home there.
The Bank’s 2011 book The Changing Wealth of Nations provides comparative data: in 2005 (when oil averaged $50/barrel), the average Nigerian lost $280 – or 140 million Nigerians lost a net $39 billion – because the depletion of natural resources far outstripped the income gains from exploiting petroleum.
In 2005, each South African lost $245 of wealth on average, and four other oil-stained African countries had higher per capita – albeit lower absolute – wealth shrinkage than Nigeria: Equatorial Guinea, Angola, Chad and Mauritania. This was not a one-year fluke, it amplified a trend the Bank observed for at least a decade earlier: “Wealth in Nigeria declined by 15 percent.” What can be done? There is an obvious case from the standpoint of climate change to “leave the oil in the soil”, to avoid the looting, but justice would demand that in compensation the North pay a climate debt to ordinary Nigerians, not venal politicians running the state. The group Environmental Rights Action makes this case.
The outflow of wealth was slowed decisively five years ago, when activists of the Movement for the Emancipation of the Niger Delta (Mend) sabotaged pipelines so often that by the end of 2008 oil production was cut to half the level of the year before. Along with the extremist movement Boko Haram, Mend has created intense battlefields in Nigeria. But being the “number one economy in Africa” means relying for GDP growth upon extraction and the social and ecological violence that goes with it. If that is worth emulating in South Africa, as The Mercury suggests, well then, get the guns primed for more Marikanas.