Friday, October 17, 2014

'Un-Cooking Africa's Books,' technology alone can't solve because there isn't enough valid data to mine-National Geographic

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10/16/14, "Un-Cooking Africa's Books," National Geographic, Pooja Bhatia. "Accounting issues plague countries like Nigeria."

"In April, Nigeria revised its books. Overnight, GDP nearly doubled, and Nigeria shot past South Africa to become the continent's largest economy.

This wasn't gimmickry or dodgy accounting. According to Nigerian officials, it was a correction—one that's likely to be repeated in developing countries around the world. Just last month, Kenya recalculated its GDP upward, to the tune of 25 percent.

The episodes highlight what those in the development world have known for decades and mostly ignored: Africa has a data problem. A big data problem. Official GDP figures for most African countries, even relative powerhouses like Angola, are dramatically understated—literally off base, for they're measured against baselines so old they're obsolete. Nigeria was calculating its income against a baseline set in 1990, which meant it undervalued fast-growing sectors like telecom and movies.

Developing countries aren't alone in their accounting woes—even wealthy economies must revise their GDP calculations—but theirs are likely the worst. World Bank data indicate African countries have the weakest statistical capacity in world. And the stakes of "Africa's statistical tragedy" are quite serious. We don't really know continental vaccination rates, or how many kids go to school in, say, Rwanda. Most important, we don't know whether the approximately $150 billion spent annually in development aid is actually helping.

These stakes will shift as aid-dependent countries transition to emerging markets, experts say. Against lowballed GDP figures, key investor metrics like national growth tend to be overstated. To compensate for higher risk, businesses in developing markets must offer higher premiums. Expect a good deal of confusion and inefficiency as Ghana, Nigeria and Kenya enter capital markets. (See: US and China fight for Africa)

"Data in Africa is becoming more and more important, and it's likely to become more contested," says Morten Jerven, an economic historian and author of Poor Numbers: How We Are Misled by African Development Statistics and What to Do About It (2013). The book argues that Africa's income and growth accounting is awful, few admit it's awful, and that most economic decisions regarding Africa—aid or investment—are ill- or misinformed. "More than half the rankings of African economies up to 2009 may be pure guesswork," Jerven wrote.

Mostly, this is a problem of capacity, not intention. Demand for Africa's data is surging, and the continent's national statistics offices—some of them musty one-man affairs with marginal electricity—haven't kept up. A July report from the Data for African Development Working Group found that most national statistics offices in Africa lack reliable funding and, in fact, depend on aid donors for their budgets. The aid donors are generally happy to fund their statistical priorities, like household surveys, but not so keen on national statistic "building blocks" like births and deaths, growth and poverty, and taxes and trade. Governments aren't stepping in. Still you can't insulate data from politics, the report argues. "To the extent that data is used to hold people accountable, it will be misreported," says Amanda Glassman, an author of the report and a researcher at the Center for Global Development, a think tank in Washington, D.C. Another study she co-authored this summer found that across Africa, when school administrators are paid by the pupil, they report higher enrollment rates. Surprise, surprise.

There are even rational reasons to lowball GDP, Jerven argues. The poorer you seem to be, the easier it is to score concessional loans from the likes of the IMF. And a low GDP can make governance look a lot better than it is: Donors are in the habit of using tax collections to GDP as an indicator of the state's health, and the lower the GDP looks, the better the ratio does.

"How on earth could it even pass that it took a quarter of a century for Nigeria to update its statistics? That was because nobody cared about the numbers. And if they did care, it made sense to look poor," says Jerven.

With the United Nations calling for a worldwide "data revolution," plenty of geeks are lighting up at the prospect of solving Africa's data woes. But technology alone won't fix it. There's not enough valid data to mine, for starters, and for all the hullabaloo around gadgetry, "we're not going to solve these problems by collecting satellite information," says Glassman, referring to the trend of using satellite data on light intensity to predict GDP. "New technology can make the system more efficient, but it doesn't overcome the perversions of misreporting." What's needed, she says, is the "kind of routine administration and data collection we take for granted."

And then there's the coming tide of investors, lured by Africa Rising. More and more, says Jerven, countries don't want to look poor. They want investment, and they want to be able to offer investors lower risk and lower returns. These days, says Jerven, when Ethiopia's rulers want a new dam, they don't beg the World Bank for project finance. They float a bond and go to big commercial banks instead. That opens up an interesting possibility: Private investment could introduce rigor and resources into statistics infrastructure.

When Jerven's book was published in February 2013, before Nigeria's rebasing, Jerven hoped it might gain notice at think tanks and universities. But the first query he got about his book came from the private sector: Standard Chartered Bank. "They wanted to know just one thing: What is the GDP of Nigeria?""

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More on Nigeria:

Nigeria's oil theft racket involves everyone: "crooked politicians, security forces, oil industry personnel and oil traders....Officials and private actors disguise theft through manipulation of meters and shipping documents....Proceeds are laundered through banks and businesses in African states, as well as the U.S., Britain, Switzerland, India, Singapore and the Persian Gulf."...

10/18/13, "Nigeria's booming oil theft racket costs $1B a month," upi.org, Port Harcourt, Nigeria

"Royal Dutch Shell is selling off four of its onshore Nigerian oil blocks because of the constant theft of large volumes oil from its pipelines, officials said.
The move highlights the West African state's growing battle with criminal syndicates that are stealing an average of 100,000 barrels of crude a day. That costs the continent's second largest economy after South Africa up to $1 billion a month, a criminal enterprise on an industrial scale that officials say rivals the narcotics trade as the world's most lucrative crime.

Oil industry officials and community workers say this massive theft of Nigeria's key resource involves crooked politicians, security forces, oil industry personnel and oil traders.

There are also militant groups operating in the oil-rich but impoverished Niger Delta, a labyrinth of swamps and creeks that provide cover for the complex network of crime.

"There's a sophisticated organization," says Philip Mshelbila, Shell's chief of communications in Lagos, Nigeria's commercial capital. "Clearly it's not just local. There has to be a wide network."

Mela Oforibika, a lawyer and head of the delta community of Bolo in southern Nigeria that's the center of the oil theft network, asserts that the military is paid off by crime syndicates.


"The pay-off system to the armed forces and police ... is well organized ... Most army have a lifestyle that you can't explain," he said.

Stealing oil from pipelines or other facilities is known as "bunkering." Officials say it's now so pervasive, in the delta particularly, that there's little interest in trying to stamp it out. And, with the fix supposedly running all the way up to senior levels of government, there's little political will to do anything despite the ruinous economic impact the oil theft has in a deeply corrupt country long torn by tribal, regional and religious rivalries.

Since Shell, which pioneered Nigeria's oil business, started production from the Oloibiri field in 1958, other majors like Exxon Mobil, Texaco and Gulf Oil have moved in.

Nigeria historically was Africa's foremost producer, although Angola, further south down the Atlantic coast, is now producing more crude oil.

In recent years, Nigeria's onshore production has been slipping, in large part because of "bunkering," but also because the older fields are running down.

Initially, most of Nigeria's production was onshore, 75 percent in the 1970s, But now offshore wells are overtaking the land-based fields and deepwater drilling is now predominant -- and harder to steal from.

Because of the oil theft, Nigerian production is running 400,000 barrels per day below its capacity of 2.5 million bpd.

The damage inflicted by the oil thieves has forced some companies in the delta to shut down pipelines for long periods.

On Oct. 10, Shell closed its Trans-Niger pipeline, capable of pumping 150,000 bpd to the giant refinery at Bonney, because it had been holed so many times by thieves. 


It's one of the most sabotaged pipelines in the world and that was the third shutdown in four months.

High oil prices in recent months, usually around $100-$110 a barrel, have blunted the impact of the oil thievery. Oil and gas account for around 70 percent of the country's revenues. 

But Nigeria's not out of the woods yet, and is unlikely to be despite some expansion in non-oil sectors such as telecoms and construction.

A recent report by the Royal Institute for International Affairs, a London think tank, said Nigeria's oil is being stolen not just from the pipelines, but tank farms, export terminals, refinery storage, ports and even wellheads.

"Officials and private actors disguise theft through manipulation of meters and shipping documents," the study observed. 


"Proceeds are laundered through world financial centers and used to buy assets in and outside Nigeria, polluting markets and financial institutions overseas, and creating reputational, political and legal hazards."

Much of the stolen oil is loaded on barges and small ships in the delta's creeks and carried to tankers offshore in the Gulf of Guinea, where it's taken to neighboring countries in West Africa, or further afield to Brazil, China, Singapore, Thailand, Indonesia and the Balkans where it's processed by international crime syndicates.

RIIA says the proceeds are laundered through banks and businesses in African states, as well as the U.S., Britain, Switzerland, India, Singapore and the Persian Gulf."

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Half of Nigeria's oil revenue has disappeared via theft and corruption:

April 2009, "Has globalization failed in Nigeria?" Yale.edu, Michael Watts

"Since 1960, over $600 billion in oil revenues has flowed into Nigeria’s coffers; it represents an opportunity unavailable to much of the developing world. These petrodollars could have been spent pro­duc­tively, could have transformed agriculture, laid the foundation for an effective public education system, pro­vided much-needed infrastructure. Yet, according to the World Bank, of that $600 billion, $300 billion has simply disappeared into overseas bank accounts through theft and corruption."...

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"Public office is so lucrative that people will kill to get it. Nigeria has 36 state governors, 31 of whom are under federal investigation for corruption."
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8/8/2013,  "A country so corrupt it would be better to burn our aid money," UK Daily Mail, Michael Burleigh


"Nigeria is not quite the most corrupt country on earth. But according to Transparency International, which monitors international financial corruption, it is not far off — coming a shameful 172nd worst among the 215 nations surveyed. Only countries as dysfunctional, derelict and downright dangerous as Haiti or the Congo are more corrupt.

In theory, Nigeria’s 170 million-strong population should be prospering in a country that in recent years has launched four satellites into space and now has a burgeoning space programme.

Moreover, Nigeria is sitting on crude oil reserves estimated at 35 billion barrels (enough to fuel the entire world for more than a year), not to mention 100 trillion cubic feet of natural gas.

It also manages to pay its legislators the highest salaries in the world, with a basic wage of £122,000, nearly double what British MPs earn and many hundreds of times that of the country’s ordinary citizens.

No wonder the ruling elite can afford luxury homes in London or Paris, and top-end cars that, across West Africa, have led to the sobriquet ‘Wabenzi’, or people of the Mercedes-Benz.

Yet 70 per cent of Nigerians live below the poverty line of £1.29 a day, struggling with a failing infrastructure and chronic fuel shortages because of a lack of petrol refining capacity, even though their country produces more crude oil than Texas.
 

And that poverty is not for want of assistance from the wider world.

Since gaining its independence in 1960, Nigeria has received  $400 billion (£257 billion) in aid — six times what the U.S. pumped into reconstructing the whole of Western Europe after World War II.

Nigeria suffers from what economists call the ‘resource curse’ — the paradox that developing countries with an abundance of natural reserves tend to enjoy worse economic growth than countries without minerals and fuels. 


The huge flow of oil wealth means the government does not rely on taxpayers for its income, so does not have to answer to the people — a situation that fosters rampant corruption and economic sclerosis because there is no investment in infrastructure as the country’s leaders cream off its wealth.
 
Corruption in Nigeria is endemic — from parents bribing teachers to get hold of exam papers for their children through clerks handed ‘dash’ money to get round the country’s stifling bureaucracy to policemen taking money for turning a blind eye.

It is at its most blatant, perhaps, in the oil industry, where 136 million barrels of crude oil worth $11 billion (£7.79 billion) were illegally siphoned off in just two years from 2009 to 2011, while hundreds of millions of dollars in subsidies were given to fuel merchants to deliver petrol that never materialised. 


Whether the country is ruled by civilians or soldiers, who invariably proclaim their burning desire to eradicate civilian corruption, it makes absolutely no difference.

The military ruled Nigeria between 1966 and 1979 and from 1983 to 1999, but if anything, corruption was worse when they were in charge since they had a habit of killing anyone threatening to expose them. 

It is estimated that since 1960, about $380 billion  (£245 billion) of government money has been stolen almost the total sum Nigeria has received in foreign aid. 


And that even when successive governments attempt to recover the stolen money, much of this is looted again.
 
In essence, 80 per cent of the country’s substantial oil revenues go to the government, which disburses cash to  individual governors and hundreds of their cronies, so  effectively these huge sums  remain in the hands of a  mere 1 per cent of the Nigerian population.

Political power is universally regarded as a chance to reap  the fortunes of office by the ruling elite and its families and tribes.

The most egregious example was President Sani Abacha, a military dictator who ruled in the Nineties and accrued a staggering $4 billion (£2.58 billion) fortune by the time he died of a heart attack while in bed with two Indian prostitutes at his palace in the nation’s capital, Abuja, in 1998. Abacha’s business associates did nicely, too — one of them deposited £122 million in a Jersey offshore account after selling Nigerian army trucks for five times their worth.

Public office is so lucrative that people will kill to get it. Nigeria has 36 state governors, 31 of whom are under federal investigation for corruption.

In one of the smallest states, a candidate for the governorship occupied by one Ayo Fayose received texts signed by the ‘Fayose M Squad’ — and it was clear the ‘M’ was for ‘Murder’ when they stabbed and bludgeoned a third candidate to death in his own bed. 


By the end of its term of office, the British Government will have handed over £1 billion in aid to Nigeria
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Given the appalling levels of  corruption in that nation, this largesse is utterly sickening — for the money will only  be recycled into bank accounts in the Channel Islands or Switzerland

Frankly, we might as well flush our cash away or burn it for all the good it’s doing for ordinary Nigerians."


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7/5/12, "Mongolia’s task: avoid Nigerian resource curse," Reuters, Martin Hutchinson

"Current estimates are that more than $1 billion of oil per month is stolen from the Niger Delta fields and corruption remains endemic even under well-meaning President Goodluck Jonathan. Nigeria ranks 133rd on the World Bank’s Ease of Doing Business Index and 143rd on Transparency International’s Corruption Perceptions Index. True, high oil prices reversed 40 years of decline in living standards through 2000. And while GDP growth is slowing, it’s still expected to run at 6 percent to 7 percent this year. But with inflation in double digits and government expenditure budgeted to exceed revenue by 31 percent in 2012, Nigeria’s situation is unstable." 



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Bush admin. Nigerian ambassador (2004-2007) defends Hillary Clinton re: Boko Haram, says Bush admin. didn't think Boko Haram was terror group either:

 5/12/14, "Boko Haram Designation: John Campbell Flays Criticism Against Hillary Clinton," Leadership News (Nigeria), Abiodun Oluwarotimi 

"Former U.S. Ambassador to Nigeria, Mr. John Campbell, yesterday said that it was unfair to criticize former Secretary of State Hillary Clinton for not designating Boko Haram a terrorist group organization.

John Campbell, a notable critic of President Goodluck Jonathan’s administration, had served as the U.S. Ambassador to Nigeria from 2004 to 2007 under President George W. Bush.

While reacting to criticisms against Hillary Clinton for not naming the entire terrorist group a foreign terrorist organization, Campbell said he and other experts on Nigeria had also opposed the designation because Boko Haram was a “highly diffuse” group and the move could have limited U.S. options in dealing with it in the future.

The State Department has since designated Boko Haram as a terror group, and President Barack Obama has dispatched military advisers and law enforcement personnel to help in the search for the girls after Nigeria initially balked at asking for assistance.

But Campbell said that as the most populous country in Africa, Nigeria is often reluctant to ask for international assistance but that it must do so before the U.S. can step up its aid.

“For the U.S. to do anything, it requires the request and acquiescence of the Nigerian government. Nigerians look to help, not be helped, so this is a different set of circumstances for them,” he said.

The former US envoy to Nigeria said Boko Haram, which has threatened to sell the girls into slavery, noted that the sect wanted to destroy the Nigerian government because it was secular, stressing that it was likely that the captives had been split up and taken to different countries in Africa.

“It’s unlikely that all of them could be rescued,” he noted."

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