B009THJ1WI EBOK

by Young, Crawford

  A passion for steel mills as emblem of high modernity was then well-nigh universal, and Mobutu was captive to its enchantment. This project dated as well from colonial planning boards, and at first glance it seemed appealing. Several large and rich iron ore deposits had been charted far upriver near Banalia, Isiro, Luebo, and Ubundu. Some poor coal deposits also had been discovered in distant regions. An Italian consulting firm, SICAI, produced feasibility reports containing lyrical visions of the import substitution impact and linkage effects, developmental shibboleths of the day. Investors were skeptical; market prospects and production cost estimates were dubious. Italian contractors financially linked to SICAI offered contractor-financed turnkey construction. Mobutu, trumpeting the technological triumph, committed the state to the $250 million cost.

  Construction began in 1972, and the mill came on line in 1975. The illusions of the feasibility study at once became evident. There was no possibility of securing the immense capital required to develop the domestic iron deposits; the mill had to operate with imported scrap. The site chosen was at an inconvenient distance from the river and bulk shipping facilities. Production costs proved to be $660 per ton, rather than the $450–480 promised by SICAI, which was eight times the cost of imported steel. The low-quality product of the was eight times the cost of imported steel. The low-quality product of the mill drew few customers; actual output never exceeded 10% of the 250,000-ton capacity. Maluku virtually ceased operation by 1980 and was shuttered soon after.

  The far more ambitious second phase of the Inga dam, with a fourteen-hundred megawatt capacity, required a market that would be provided by planned substantial mining expansion in Katanga to utilize its power. This in turn necessitated the companion project of an eighteen-hundred-kilometer-long direct current transmission line, then the world’s longest. At the time, the technology for creating so long a direct current line was not proven and had the major disadvantage of severely limited possibilities for supplying regions along the route. The initial bid by American contractors was only $260 million, but cost overruns eventually pushed the cost close to $1 billion. The commitment was made in 1973, with a promised completion date of 1977; however, the power line came on line only in 1982, well after initial payments on the loan were due. The total cost of Inga 2 and the Inga-Katanga power line was nearly $2 billion, or almost half what had become a crippling external debt. However, beyond the immediate rents he garnerned from the contracts, the project had an irresistible attraction for Mobutu: with a flick of his finger, he could darken the sometimes restive and even secessionist province of Katanga.57

  To make an unhappy situation worse, by the time the power was available, the prolonged slump in copper prices had led to the abandonment of a giant mining project at Tenke-Fugurume, not far from Lubumbashi, where exceptionally rich ore deposits were to be exploited by an American-led consortium stitched together by New York diamond merchant Maurice Tempelsman. Planned expansion by the state mining giant, the Générale des Carrières et des Mines (Gécamines), had likewise been delayed, and ever-increasing presidential diversion of Gécamines’s revenues for Mobutu’s use began to corrode its production infrastructure; the corporation was starved of resources required for maintenance and yet was charged with responsibility for most of the social institutions in the mining towns. Army looting and expulsions of many of its skilled Kasaien workers in 1991 further corroded Gécamines. The Tempelsman consortium abandoned site development by 1976 after having sunk $200 million. In 1994 copper output fell to 35,000 tons from its 1985 peak of 471,000 tons. By that time, only 18% of the Inga capacity was being utilized.58

  In the fullness of time, the indisputable potential of the Inga project may be fulfilled. By the turn of the century, some of its power was sold to Zambia. Also, whispers were heard of a giant $80 billion thirty-nine thousand mega-watt giant Inga; transmission technology has advanced to make power export as far as South Africa or even Egypt thinkable. By 2007, active South African interest was widely reported; Inga now provides electricity both to the Southern Africa Power Pool and the Central African Power Pool in the north. At that time, the World Bank granted $296 million to rehabilitate Inga 1 and 2, now operating at only 40% of capacity because of poor maintenance.59 Meanwhile, by 2010 contracts for a forty-five-hundred-megawatt Inga 3 were under negotiation.

  The Inga project thus does produce some power, and at some future point it may become a crucial energy asset for the entire region. The Ajaokuta steel mill in Nigeria more closely resembles the Maluku part of the Inga scheme, differing only in the colossal amounts of state capital that it absorbed without ever producing more than token amounts of steel. The saga of Ajaokuta is an even more dispiriting instance of high modernity ambitions processed through prebendal state structures and predatory rulers.60 The Nigerian weekly Tell reported in 2006 that $10 billion in government funds had been sunk in Ajaokuta without a single ingot ever emerging.61 Repeated obituaries for the scheme have appeared, invariably followed by news of a miraculous rebirth, most recently in a 2010 campaign pledge by President Goodluck Jonathan to make revival of Ajaokuta a priority if he was reelected.62

  The dreams of a high-tech steel industry date from 1958, shortly before 1960 independence. The ideological perspective driving the commitment to steel development is well captured in an address by Paul Unongo, minister of steel development, to the Nigerian Institute of International Affairs on 24 July 1980: in his speech, he seeks to establish “the inevitability of Nigeria taking a stand in the comity of nations as an arrived nation that must recognize that the role of power broker which seems to be thrust on her by history and that of the indisputable representative voice of black mankind can only be effectively played through the acquisition of a legitimate, indigenous, recognized power status which is conclusively shown to be dependent upon or related to steel development. . . . [T]here is a definite correlation between steel development and national power.”63 At first glance, the dream of a powerful Nigeria undergirded by a major steel industry seemed possible; iron ore deposits were known, coal was mined at Enugu in eastern Nigeria, and the completion of the Kainji dam on the Niger River promised a power supply.

  Western corporations explored the possibilities in the early 1960s and concluded that a major steel mill was uneconomic. A disappointed federal government concluded that the former colonizer and his allies were bent on maintaining Nigerian dependence on the West by discouraging industrial development, a resentment deepened by Western refusal to provide arms when Nigeria faced a secessionist war with Biafra in 1967. The Soviet Union, attracted by an opening to influence with a major African nation, won Nigerian gratitude by generous provision of weapons to the federal army. Apparently the Soviets saw an opportunity to cement the new friendship with a key African state by participation in a showcase project; thus Nigeria found a partner for the steel venture.64 By late 1967, Soviet geologists and technicians were on the ground, prospecting sites for a major steel complex and exploring for further iron ore and coal deposits and ancillary inputs like limestone, manganese, and dolomite. In 1970, Teknoexport signed a contract to carry out geological surveys for another five years.

  Soviet mineral surveyors in 1972 discovered a major ore deposit sixty kilometers from the village of Ajaokuta on the banks of the Niger in Kogi state, in south central Nigeria. In 1975, the Soviet state enterprise Tyajpromexport made preliminary commitments to develop a proposal for an integrated steel plant eventually capable of producing 5.2 million tons of flat products and other steel output; a final contract was signed in 1979, with an initial $2 billion Soviet-provided loan capital; some Western firms were subcontracted for parts of the site development and construction. The completion date promised was 1983.65

  A few small steel plants treating scrap already existed; several other new steel mills were then envisaged as a key cornerstone of Nigerian development, scattered in different parts of the country ( Jos, Onitsha, Katsina) to meet the “federal character” test. Though some were actuall
y constructed and briefly operated at a fraction of capacity, only one has recently functioned, the Delta Steel Corporation, which limps along in Warri state after a decade of suspended operation. But the major showpiece complex was planned for Ajaokuta.

  Difficulties and infrastructure deficiencies at the site resulted in long delays; one key element promised by the Nigerian government, a rail link to Warri port needed to import the one million tons of coking coal required annually, was never completed, nor was the costly dredging of the Niger river to facilitate ship access to Ajaokuta. The existing Nigerian single-track narrow gauge railway could not carry large volumes of bulky cargo, and no extant line was close to the projected steel complex. The hopes for use of local raw material inputs mostly evaporated; the Itakpe iron mine project languished, and by 1983 all that remained on site was some rusting machinery. Other ores were inadequate, and Enugu coal proved unsuitable for coking, as did other deposits. The key element in the complex, a large blast furnace based on older Soviet technology, never went into production, though some of the ancillary facilities had small output. The sharp drop in oil prices after the 1979–81 boom brought acute foreign exchange shortfalls and made the volume of imported inputs difficult to finance. Some three thousand Soviet technicians and twenty thousand Nigerian workers were on site at the peak of construction; an entire residential town had to be constructed to house expatriate and Nigerian staff. The acute shortage of Nigerian technical personnel was not resolved by short training programs in the Soviet Union; frictions between Soviet staff and Nigerians were constant. Nigeria discovered to its dismay that the Ajaokuta commitment was never inscribed in Soviet five-year plans, a major impediment in a rigid centrally planned system. Further, by then the press was full of allegations of corruption in the many public contracts for site development and ancillary infrastructure.

  On several occasions, one or another impasse suspended site work. The target date for completion was repeatedly postponed: 1986, 1989, 1991. By this time, it was evident that technological advances in steel production elsewhere made the blast furnace increasingly obsolete. Press articles suggested that the eventual steel output might be of indifferent quality, and the world’s costliest, at least three times the price of imported steel.66

  Further, as the Soviet Union entered its death spiral in the late 1980s, work on the project was all but paralyzed. Still, the final rupture came only in 1997, when Tyajpromexport formally withdrew from the project, claiming that Nigeria had failed to keep its commitments and had not repaid the $2.5 billion debt accumulated over the two decades of sporadic construction. The facility, it was claimed, was 98% ready, but would still take three or four years to complete. In a murky series of transactions, the Russian contractor sold the unpaid debt for nineteen cents on the dollar in 1998; the debt came into the hands of a shell company controlled by the son of then dictator Sani Abacha. The Nigerian treasury eventually reimbursed the debt at 53% of par, yielding a tidy profit of over $400 million for the Abacha family. Some of the loot was recovered when Nigeria sued the financial companies holding the stolen Abacha funds, including Citibank, 2003.

  Ajaokuta appeared to rise from the dead in 2001, when a deal was announced with a little-known American energy company, SOLGAS; the firm pledged new investment of $1.2 billion in a metallurgical plant and $2.4 billion for a power station at Ajaokuta: by now Kainji dam was no longer a reliable supplier.67 The SOLGAS solution soon proved another illusion; a Nigerian Senate committee concluded the deal was a swindle, and that the company lacked the financial, managerial, and technical capacities to manage the concession. SOLGAS, the committee found, was a minor company that specialized in marketing small capacity generators and had no experience in the steel industry.

  By 2004, yet another player had emerged: Global Infrastructure Holdings, linked to the Indian Mittal family, replaced SOLGAS as holder of the Ajaokuta concession and the Delta Steel Corporation. SOLGAS, protesting the annulment of its contract, alleged that the Global Infrastructure deal was a conspiracy in which Gbenga Obasanjo, son of then-president Olusugun Obasanjo, played an integral role. Not long after, accusations flew that Global Infrastructure in turn was cannibalizing the plant and illicitly exporting the iron ore stocks at the site.68 Still, Ajaokuta Nigerian management announced on 24 April 2006 that the plant was 60% ready for operation, that personnel were still being paid, and that once the blast furnace was finished and the rail link completed, operation could begin.69 However, Nigeria canceled the Global Infrastructure contract in 2008 but resumed negotiation with the Mittal family in 2009, as a London arbitration court sifted through Global Infrastructure claims that it had invested $450 million.70 In 2010, renewed initiatives toward exhuming the project were reported; $500 million of new capital would be required.71

  But in reality the project remained moribund four decades after the first exploratory accords were signed. Nigeria specialist Peter Lewis visited the site in 2007 and saw no sign of activity.72 Earlier, in 2003, a visitor to Ajaokuta found a desolate scene: “An old weather-beaten signpost . . . proclaims ‘Ajao kuta Steel Complex: the path to true industrialization.’ The message is evidently lost on a couple of goats grazing absent-mindedly on the grassy slope dotted with remnants of discarded Firestone tires. . . . The empty concrete blocs of its township, the abandoned structures of communication facilities, and the still rolling mills stand exposed to the scorching sun and sand-carrying seasonal winds coming from the Sahara. They stand as silent monuments to the failed ambitions of Nigerian rulers to exorcise by fire and steel the demons of the colonial past.”73

  Inga and Ajaokuta are exemplary instances of the huge liabilities accumulated in the years leading up to the state crisis of the 1980s by the lure of high modernity pursued through gigantic development projects. In both cases, these projects accounted for a significant fraction of the external debts that by the 1980s so burdened the two countries. On projects of this magnitude, in Africa and elsewhere, the costs invariably far exceed the estimates, and the completion dates lag far behind those promised. Many of the parties involved—foreign contractors, political leaders, and others shaping the transaction—may benefit, but the state and society bear the costs. Far from liberating Nigeria from the bonds of dependency, the megaproject led to an unpayable external debt burden, which in turn compelled the country to turn to the London and Paris clubs of private and public creditors and plead for renegotiation of the terms. The invariable response was insistence on recourse to the tutelage of the international financial institutions, which imposed SAPs that were slow to provide relief. Thus the 1970s were a mediocre decade economically for Africa, and the 1980s a disaster. Per capita income growth was 0.8% per annum in the 1970s, then a negative 2.2% through the 1980s. Debt service alone consumed 25% of the African earnings from export of goods and services.74

  TABLE 5.1. African and Other Developing Areas Average Annual Growth Rates, GNP per Capita, 1965–89

  Average annual growth rate (%), GDP per capita, 1965–89 Average annual inflation rate, 1980–89 (%)

  Low and middle income 2.5 53.7

  Sub-Saharan Africa 0.3 19.0

  East Asia 5.2 6.0

  South Asia 1.8 7.9

  Latin America & Caribbean 1.9 160.7

  SOURCE: World Bank, World Development Report 1991 (New York: Oxford University Press, 1991), 205.

  CONFLICTING REGIME AND RULER LOGICS

  During the descent into state crisis, the conflicting logics of state, regime, and ruler came into sharp focus. Regimes shaped by a given ideological commitment might well pursue policies that undermined the interests of the state in its own stable reproduction. A range of economic policies driven by populist nationalism or Afromarxism are cases in point. Nationalizations of broad swathes of the economy committed the state to a scope of responsibilities that were beyond its capacities. High-risk giant projects, influenced by a regime belief that a development spectacular would reinforce its immediate legitimacy, saddled the state with long-term debt
commitments that unhinged its financial equilibrium. Agricultural politics shaped by a collectivist bent (state farms, obligatory cooperatives, government marketing monopolies) drove peasants to take evasive measures and disengage from the public economy.

  Regimes so structured as to preclude challenge or change responded only to the interests of a given ruling group in its own reproduction. Single-party monopolies, military domination, or neopatrimonial modes of governance were subject to degenerative processes over time that undermined the legitimacy of the institutions of government. By barring societal monitoring of its policy choices, the likelihood of major miscalculations was multiplied.

  The contradiction between reason of state and the operative logic of a personal ruler is even more sharp. The autocrat is very likely to employ an ethnic calculus in shaping his inner circle, above all in the security apparatus. With the coup as the sole mechanism for displacement of a personal ruler, conspiracy is sure to flourish, leading to a need for constant vigilance and a high order of trust in the fidelity of the entourage, especially those that control the means of forcible intervention.

  Robert Bates reduces the ruler’s survival calculus to three variables: the level of public revenue, the potential rewards through predation, and what he terms the “rediscount rate” of the leader. By this he means that if revenue suffices to provide for the modicum of security and prosperity that will assure social peace, then this modality of rule will be preferred. However, if a severe revenue shortfall is at hand, then a predatory capture of resources that can be seized by state power to meet immediate survival needs is likely.75 Naturally, the length of this volume in contrast to Bates’s succinct 174 pages implies a belief that the equation is a shade too simple. But it ably captures an important dimension of the ruler’s approach to survival.