The absurdity of Cameroon’s Paul Biya

This is from the organized crime and corruption reporting project (OCCRP):

An investigation supported by the Organized Crime and Corruption Reporting Project (OCCRP) gathered information about the president’s travels from 35 years of editions of the daily government paper, the Cameroon Tribune. They show that, over that time, Biya has spent at least four-and-a-half years [abroad] on his “brief private visits.” This total excludes official trips, which add up to an additional year. In some years, like 2006 and 2009, Biya has spent a third of the year out of the country.

And here is a breakdown of Biya’s destinations over the last three and a half decades. It is almost as if Biya is a colonial governor of Cameroon, a Fanonian caricature.

Paul-Biya-Chart-A2

How does Biya pay for all this travel (estimated to be at least $185m in total)?

….. According to the International Monetary Fund, more than $300 million of the revenue of Cameroon’s national oil company in 2017 was not accounted for. The president has oversight over the company, whose oil sales, according to a leaked US diplomatic cable published by WikiLeaks, have historically been used as a slush fund.

Needless to say, the fascination with Geneva leaves little time for Biya to actually govern.

When Biya lands in Yaoundé, he also meets his government — at the airport. Formal ministerial councils are organized infrequently, every year or two at the most. But while Biya has used public funds to sustain a bureaucracy of 65 ministers and state secretaries, he mostly governs by decree or through a handful of laws sped through a rubber-stamp parliament.

Biya signs a flurry of acts between each of his trips. For example, in 2017, he signed a dozen laws — the entire legal output for that year – in a couple of days. It took him just three days to sign the entire year’s decrees.

Strong leadership can make a big difference in states with weak bureaucracies. But unfortunately for Cameroon, for 35 years it has been saddled with both an absentee landlord of a president and a barely coherent public service.

An enduring puzzle is why Cameroonian elites haven’t moved to come up with a more economically efficient means of keeping Biya in power and luxury. For instance, they could make him King, and have him sign decrees whenever he likes, but also have a Prime Minister that is responsible to a parliament and accountable to the people. Not that this would magically improve the quality of governance, but at a minimum, would likely introduce coherence within the public service (unless, of course, all of Cameroon’s elites simply want to appropriate public resources and spend their time in Geneva).

A response to this might be that elites in Cameroon are actually fine, constantly scheming and fighting for favor with Biya and access to governance rents.

But this still leaves open the question of why they wouldn’t want a more predictable means of accessing governance rents — that is not subject to the whims of Biya (who shuffles and jails ministers with wanton abandon). In any case, an elite-level collusion outcome — like the one described above — would create opportunities for the expansion of the pie beyond just oil and other natural resource sectors.

All to say that we should probably be spending more time exploring the seeming lack of elite-level political innovation across Africa (and Political Development more generally).

Hundreds of South African Mercenaries Fighting Boko Haram

The New York Times reports:

Hundreds of South African mercenaries and hired fighters of other nationalities are playing a decisive role in Nigeria’s military campaign against Boko Haram, operating attack helicopters, armored personnel carriers and fighting to retake towns and villages captured by the Islamist militant group, according to senior officials in the region.

The Nigerian government has not acknowledged the presence of the mercenaries, but a senior government official in northern Nigeria said the South Africans — camped out in a remote portion of the airport in Maiduguri, the city at the heart of Boko Haram’s uprising — conduct most of their operations at night because “they really don’t want to let people know what is going on.”

This does not look good for the $2.3-billion-per-year Nigerian military. It also shows a complete lack of tact on the part of the Goodluck Jonathan administration. I mean, how hard could it have been to launder the South African mercenary involvement through some AU joint task force?

The way I see it, the problem here is not that Nigeria is using foreign fighters (even the mighty U.S. uses mercenaries, and as Tolu Ogunlesi writes in FT, the tide is turning against Boko Haram). The problem is in how they are being used. Is their use short-circuiting accountability chains between Nigerians affected and their government? How is it affecting civilian-military relations? And what will be the long-run consequences on the professionalization of the Nigerian military?

The Anatomy of Tax Evasion in Africa

Africa Confidential has a great piece analyzing leaked documents from PwC, the professional services firm, showing the various arrangements that enable multinational companies to evade taxes in Africa. You can read the whole piece here (gated).

  • One of the measures PwC advised multinationals to take was to create a wholly-owned Luxembourg-based subsidiary which would hold the rights to intellectual property used by the rest of the group. The rest of the group would then pay licensing fees to the Luxembourg-based subsidiary which, by agreement with the authorities, would be granted tax relief of up to 80%……
  • A second tax avoidance mechanism simply involved the companies becoming incorporated in Luxembourg. In 2010, Luxembourg concluded an agreement with several companies of the Socfin (Société financière) agribusiness group, which was founded during the reign of Belgian King Leopold II by the late Belgian businessman Adrien Hallet. The companies chose Luxembourg as their base and made an agreement under which their dividends were subject to a modest 15% withholding tax, a lower figure than those in force where their farms are located (20% in Congo-K and Indonesia, 18% in Côte d’Ivoire).
transfer-pricing

The art of hiding profits

Altogether, Socfin subsidiaries in Africa [in Sierra Leone, Nigeria, Liberia, Cote d’Ivoire, and Cameroon] and Indonesia produced 123,660t. of rubber and 380,770t. of palm oil in 2012. The combined turnover of its main African subsidiaries reached €271 mn. in 2013. The list also includes the 100%-owned Plantations Socfinaf Ghana Ltd. (PSG) and Socfin-Brabanta (Congo-Kinshasa). Socfin also holds 88% of Agripalma in São Tomé e Príncipe and 5% of Red Lands Roses (Kenya).

  • A third mechanism involves cross-border lending within a group of companies. Companies registered in Luxembourg are exempt from tax on income from interest.

According to the Thabo Mbeki High Level Panel report between 1980 and 2009 between 1.2tr and 1.4tr left Africa in illicit flows. These figures are most likely an understatement. Multinationals, like the ones highlighted by Africa Confidential, accounted for 60% of these flows.

Alex Cobhan, of the Tax Justice Network, has a neat summary of the various components of illicit financial flows (IFFs) and how to measure them. He also proposes measures that could help limit IFFs, including: (i) eliminating anonymous ownership of companies, trusts, and foundations; (ii) ensuring that all bilateral trade and investment flows occur between jurisdictions which exchange tax information on an automatic basis; and (iii) making all multinational corporations publish data about their economic activity and taxation on a country-by-country basis.

Alex Cobham blogs here.

Reason for African Petro-Rulers to be Worried

Africa’s petrorulers (heads of state of Angola, Cameroon, Chad, Congo-Brazzaville, Equatorial Guinea, Gabon, Ghana, Nigeria, South Sudan, and Sudan) may be headed for tough times later this year. According to a piece by (Steve Levine) over at FP, Saudi Arabia – the world’s leading oil producer – is considering flooding the global oil markets with the aim of sticking it to the Russians and Iranians. Saudi action of this nature could lower prices to as low as US $40 a barrel from the current $83.27.

With the exception of Ghana and Cameroon, such a drop in oil prices would almost certainly lead to political unrest in the rest of Africa’s oil producers. Sudan and South Sudan are already facing huge revenue shortfalls due to a dispute over the sharing of oil revenue.

More on “The Coming Oil Crash” here.