1
Commodities and Conflict in Africa
Professor Ochuno
4 February 2016
Blood Oil in Nigeria
Nigeria is a country rich in natural resources with an extensive network of federal and
corporate relationships that bring in billions of dollars of revenue each year. Yet, the local
communities lack access to clean water, electricity, and other basic infrastructures. Furthermore,
the Nigerian Oil industry is consistently ranked as one of the least transparent and corrupt
entities in the world. As such, I argue that the initial discovery and subsequent extraction of Oil
in the 1950’s is largely responsible for the country’s extreme poverty, environmental
contamination, and ultimate failure as a democratic state.
Nigeria was initially colonized by the British because of its strategic geographic location
and its resource-rich landscape. However, it wasn’t until nearly half a century after its
colonization that commercially viable quantities of oil were discovered by the Shell-British
Petroleum Company in 1956. At this time, Shell had already been granted a monopoly in oil
exploration in the region by the British Crown. Still, numerous international oil companies
sought to exploit the untapped oil reserves and flocked to Nigeria bringing massive quanitities of
international investment to the undeveloped country. In 1860 Nigeria was granted Independence
from Britain and officially established the Republic of Nigeria. However, intense ethnic
regionalism and competition made it difficult to unite Nigeria’s people under a unified
constitution. The early development of Nigeria as a independent country was characterized by
numerous military coup d’etats that shifted federal power from one region to another. (Klieman
2012)
2
It wasn’t until the first oil boom in 1964-1965 that regional tensions rose to a level that
could conceivably lead to civil war. The majority of the oil reserves during this time were
located in the Niger Delta in the eastern region of the country. Early on, the federal government
tried to stay out of the oil industry. Their only point of contract was the collection of revenue by
the means of royalties and profit taxes. Those revenues were then allocated in this fashion: 50%
to the region of origin, 20% to the federal government, and 30% to the remaining regions in
proportion to their population (Klieman 2012). Consequently, the eastern region was poised to
accrue large increases in revenue compared to its regional competitors. Many of the early
military coups were the direct result of Northern mistrust of the eastern region and its successful
economic prospects. They feared that oil revenues in the eastern region could give them too
much authority in the federal government and cause ethnic and regional supremacy. In 1967 the
ethnic and economic competition among the regions led to a Nigerian Civil war between the
federal government and secessionist eastern region, renamed Biafra. But the civil war wasn’t
simply a result of civil unrest and was later found to be largely caused by corporate greed and
decent on behalf of the oil industry. (Klieman 2012)
As ethnic tensions were rising pre-civil war, the Oil companies in Nigeria were in the
midst of a six-month battle with the Petroleum Profits Tax Ordinance (PPTO) of 1966-1967
(Klieman 2012). The ordinance included contracts with the Nigerian federal government that
outlined a “most favored African nation” clause, which established that if better terms were
negotiated with another country on the continent, Nigeria would receive those same terms with
its oil industry conglomerates. In 1965, Libya passed a tax policy that if adopted by the Nigerian
government would increase federal revenue from oil by at least 50% (Klieman 2012). According
to the allocation system, the majority of the revenue increase would go back to the already
3
prosperous oil-producing eastern region. Minority share oil companies believed that this was a
measure brought upon by Shell in an effort to get rid of competition in the area. They were
correct; Shell had been negotiating with the federal government for over a year to get the new
profit tax law passed. The minority oil companies immediately sought out high Nigerian
Government officials to rationalize that this law would discourage international investment and
cause numerous oil wells to dry up (Klieman 2012). In 1966, the Libyan Tax Policy was adopted
by Nigeria, but unlike the claims of Gulf, Tenneco, and other minority oil companies, foreign
investment and oil production steadily continued to climb. But the Oil companies didn’t stop
there. In early 1967 numerous articles appeared in Nigerian newspapers making the tax policy
public news. Articles such as “Review That Tax Law Please: Oil Monopoly in Nigeria – A
question of Time” published under an alias reported inaccurate information to the public stating
that the new profit tax law would only benefit the eastern region and even proclaimed that it
could, “lead to the closure of many oil wells, accelerate unemployment difficulties, … and create
unrest in the Rivers and Mid-West areas.” These public statements spread rapidly throughout the
country and surged mistrust in the North and Midwest, while simultaneously creating a sense of
self-sufficiency in the East (Ista Man 1968). In July of the same year Biafra officially seceded
from Nigeria and kick started the three-year civil war (Khan 1994). So it wasn’t only civil unrest
that caused the unitary government to crumble, but the combination of the corporate tax lobby,
and blind politics by the political elite. In fact, General Ojukwu of Biafra later admitted that the
key motivation for pursuing secession and ultimately civil war was solely to determine the
recipient of oil revenues.
In 1973, after over 2 million deaths, the Nigerian Military defeated Biafra and readmitted
the eastern regions back under its rule (Khan 1994). In an effort to join the Organization of the
4
Petroleum Exporting Countries (OPEC), from 1971 to 1979 Nigeria underwent intense
nationalization of the Oil industry. To be admitted into OPEC a country must have over 51%
ownership of all oil production. Nationalization occurred simultaneously with the 1970’s global
oil boom. The federal government incrased its investments in oil related infrastructure and
divested other economic sectors such as agriculture, creating a crippling dependence on federal
oil revenue. During the course of oil nationalization, Gowon, head of the Military Government,
and his predecessors established the beginning of political patronage systems tied to federal oil
revenue (Soyinka 1996). But as corruption increased, the people of Nigeria disconnected
themselves from the military regime and called for democratic elections. In 1979, the military
head of state was replaced with Shehu Shagari, the candidate of the National Part of Nigeria and
the Second Republic of Nigeria was born (Soyinka 1996).
When the Second Republic was created in 1979, oil revenue accounted for 96% of the
federal government’s revenue from exports, but only made up 27% of Nigeria’s GDP (Manby
1999). The over investment in oil and divestment from other key economic sectors by the federal
government set the tone for prebendalism to curse Nigerian Society. Prebendalism is the term
coined by Richard Joseph which refers to the Nigerian phenomenon in which officials in all
levels of public office used their positional authority to gain access to public resources to service
their own material needs and the needs of their subordinates (Joseph 2013). This criminal
misallocation of public funds had three different lasting consequences on the country. First, it
created a large economic gap between the minute political elite and the common man. No longer
was the federal government funding programs for local farmers and agricultural subsidiaries. In
turn, the rich were getting richer, and the already poor sustenance farmers were becoming
poorer. Second, it created a large national debt. Public officials were siphoning oil revenue into
5
private bank accounts, meaning that little of the money was being churned back into the
development of future oil extraction and the federal government was forced into large contracts
with the oil companies such as Shell (Khan 1994). Third, it created a corrupt and unhealthy
competition for public office that made stability and democracy unattainable. This kind of
dysfunctional governance and entitlement by the Nigerian political elite mirrored that of the
lords of feudal Europe. (Joseph 2013)
A number of practices by both the Oil companies and the federal government facilitated
the existence of prebendalism. It all started in the 1960s when the first oil boom occurred. In an
effort to downplay the speculation of oil revenues by the Nigerian people, oil companies
purposefully undershot projections of production. They then reported these low projections to the
Nigerian govenrment. At the same time the Nigerian government wanted to be conservative in
their own projections that were to be released as public data, so they also released artificially low
projections too Thus, the data for oil numbers was both inconsistent and severely lower than it
should been. This practice of opacity, or lack of transparency, allowed for the first political elite
to start taking public funds for themselves. (Klieman 2012)
Evolving from these prebendal practices was a desperate sense of mistrust, abuse, and
helplessness on behalf of the Nigerian people. Their communities are the homes of hundreds of
oil wells and extraction facilities that produce millions of barrels of oil each day, yet they have
no roads, access to clean water or electricity, their children are starving to death, and those who
survive early life will likely die due to contaminated water from oil spills. Furthermore, because
of the environmental pollution from oil spills, local farmers and fishers can no longer rely on
their trade and must either work in the oil wells or face unemployment. Since the 1990’s their
have been numerous conflicts between ethnic militant groups and both the federal government
6
and oil companies (Soyinka 1996). Violence and kidnappings have been tactics widely used by
the militant groups in an effort to change institutionalized exploitation by the oil companies. No
matter how much of a fight the locals have put up, they simply can’t compete with the unlimited
monetary resources of the oil tycoons. Many have taken matters into their own hands by stealing
oil from pipes in the Niger River and refining the stolen oil in makeshift refineries in the
Nigerian jungle. It is believed that nearly 400,000 barrels are stolen each day (Hanson,
D’Alessandro, & Owusu 2014). And the money that comes from the black market trade of
refined oil goes directly into funding the ethnic militant groups of the Niger Delta.
It is undeniable that the oil industry has profoundly affected the development and growth
of Nigeria as a nation. Since its initial discovery in 1956, the black gold in the Niger Delta
generated a competition for oil wealth that perpetuated Nigeria’s economic dependence on the
oil industry and crushed other economic sectors, particularly agriculture. Prebendal practices by
the members of the political class in Nigeria produced a fundamental disconnect between the
local farmers, the political elite, and the oil industry, leaving the majority of the country in
extreme poverty. Lack of regulation and transparency has allowed for environmental
contamination from oil spills and oil vandalism in the Niger Delta. Lastly, by exploiting identity
politics and the value of the commodity the oil industries increased regional and ethnic tensions
amongst the Nigerian people to further their own economic agendas. Reckless behavior on behalf
of both the oil companies and the Nigerian government meant civil war was unavoidable and
political instability the norm.
7
Works Cited
Hanson, K. T., D'Alessandro, C., & Owusu, F. (2014). Managing Africa's natural resources:
Capacities for development. New York: Palgrave Macmillan.
Manby, B. (1999). The price of oil: Corporate responsibility and human rights violations in
Nigeria's oil producing communities. New York: Human Rights Watch.
Joseph, R. (2013). Prebendalism and Dysfunctionality in Nigeria. Retrieved February 04, 2016,
from https://africaplus.wordpress.com/2013/07/26/prebendalism-and-dysfunctionality-innigeria/
Klieman, K. A. (2012). U.S. Oil Companies, the Nigerian Civil War, and the Origins of Opacity
in the Nigerian Oil Industry. Journal Of American History, 99(1), 155-165.
Khan, S. A. (1994). Nigeria: The political economy of oil. Oxford: Oxford University Press for
the Oxford Institute for Energy Studies.
Soyinka, W. (1996). The open sore of a continent: A personal narrative of the Nigerian crisis.
New York: Oxford University Press.
[Ista Man], “Review That Tax Law Please: Oil Monopoly in Nigeria—A Question of Time,”
West African Pilot (Lagos), Jan. 17, 1968.
Getting to the heart of the matter: Sierra Leone, diamonds, and human security
Smillie, Ian
Social Justice; Winter 2000; 27, 4; ProQuest
pg. 24
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Privatizing war in Sierra Leone
Reno, William
Current History; May 1997; 96, 610; ProQuest
pg. 227
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Diamond exploitation in Sierra Leone 1930 to 2010: a resource curse?
Author(s): Sigismond Ayodele Wilson
Source: GeoJournal, Vol. 78, No. 6, Special Issue on Theorizing the GeoWeb (2013), pp. 9971012
Published by: Springer
Stable URL: http://www.jstor.org/stable/24432639
Accessed: 12-09-2017 21:41 UTC
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GeoJournal (2013) 78:997-1012
DOI 10.1007/sl0708-013-9474-1
Diamond exploitation in Sierra Leone 1930 to 2010:
a resource curse?
Sigismond Ayodele Wilson
Published online: 24 February 2013
© Springer Science+Business Media Dordrecht 2013
Abstract This paper uses the resource curse hypoth
Keywords Diamond exploitation ·
esis to explore diamond exploitation in Sierra Leone
Resource curse hypothesis · Resource blessing ■
during the period 1930-2010. Focusing on national
Patrimonial politics · Diamond governance ·
and local level analysis, it examines whether theSierra
net Leone
impact of diamond exploitation was a 'resource curse'
or 'blessing' during four time periods: colonial and
early post-independence era, the APC era, the civil
war period, and post-war era. The paper argues thatIntroduction
the
net impact of diamond exploitation in Sierra Leone has
Diamond exploitation has been an essential facet of
not been constant; rather it has changed between
Sierra Leone's economic and political life since the
resource blessing and curse over different major
of diamond extraction in the 1930s. How
periods of Sierra Leone's history and at local inception
and
ever,
it
also
fuelled a civil war (1991-2001). Struggles
national scales since inception of diamond exploita
over
access,
control
and utilization of diamonds have
tion. This paper illustrates that during the period
been evident since the start of diamond mining (Reno
1968-1992 patrimonial politics undermined official
1995).
diamond exploitation and significantly contributed
to While the net impact of diamond exploitation
was generally positive at the onset of mining, a
a pendulum shift in the net effects of diamond
of resource blessing; it was later trans
exploitation from resource blessing to curse. manifestation
The
formed into a resource curse. For the purpose of this
study shows that the net effect of diamond exploitation
paper, 'resource blessing' refers to the prudent utili
was: a resource blessing (especially at the national
zation of diamond revenues for socioeconomic devel
level) prior to 1968; more of a resource curse during
opment at national (the state) and local (mining
the APC era; a full blown manifestation of the curse
levels; while resource curse refers to a
during the civil war period; and that governance ofcommunity)
the
negative paradoxical relationship between natural
diamond sector has improved sufficiently in post-civil
resource
wealth and socioeconomic performance
war Sierra Leone to start the gradual transformation
of
(Ross 1999; Auty 2001). Issues such as patrimonial
diamonds to resource blessing, at national and local
politics, informal diamond mining and smuggling, and
levels.
rampant corruption, especially during the reign of the
All People's Congress (APC) from 1968 to 1992,
S. A. Wilson (Η)
Rogers State University, Claremore, OK, USA
e-mail: swilson@rsu.edu
significantly contributed to a declining role of dia
monds in economic development (Reno 1995; Rosen
Ô Springer
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998
GeoJournal
1973). In other
manifestation
(2013)
78:997-1012
words, such practice
of a resource curse
post-war period has witnessed
diamond exploitation towards
national and local levels. diamond exploitation change over time in relation to a
a
a
t
r
Diamond exploitation in Sierra Leone has been given resource curse or blessing? The paper utilize
considerable scholarly attention. Numerous works have significant eras namely: the colonial and early p
examined how diamond exploitation fuelled and pro- colonial periods; the APC era (1968-1992); the civil
longed Sierra Leone's civil war, a manifestation of the period; and the post-war era. These four periods
'resource curse' (Davies 2000; Kabia 2008; Le Billon selected because they signify major changes in d
2008), while others have pinpointed mechanisms to governance that resulted in resource curse or blessin
mitigate the 'curse' in post-war Sierra Leone and to national and/or local levels. Such analysis is importa
utilize 'diamonds for development' (Le Billon and in that it demonstrates a nuanced understand
Levin 2009; Maconachie 2009; Temple 2008). Earlier resource curse or blessing over time that can
studies such as Van der Laan (1965), Reno (1995), and future change in diamond management in Sierra L
Zack-Williams (1995) utilized political economic The study utilizes secondary data (including gov
frameworks to examine diamond exploitation in Sierra ment reports and documents) to examine te
Leone. Van der Laan (1965) underscored the economic variation between primarily 'resource curse o
reasons for, and effects of a number of policies and ing' impacts of diamond exploitation in Sierra
action of actors during the period 1952-1961. Reno over the past 80 years.
(1995) discussed how corruption, patron-client net- The paper argues that the net impact of di
works of state and non-state actors as regards control and exploitation in Sierra Leone has not been con
utilization of diamond resources, and informalization of rather it has changed between resource blessin
the economy led to the creation and perpetration of a curse over different major periods of Sierra Leon
'shadow state' and ultimately state collapse. Zack- history and at local and national scales since in
Williams (1995) underlined how merchant capital and of diamond exploitation. This paper will illustrate
capitalist relations and mode of production benefited during the period 1968-1992 patrimonial po
immensely from artisanal mining [described as pre- undermined official diamond exploitation and
capitalist modes of production] to the disadvantage of icantly contributed to a pendulum shift in
artisanal miners. effects of diamond exploitation from resource blessing
Although a number of frameworks have been used to curse, and that governance of t
to investigate diamond exploitation in Sierra Leone, has improved sufficiently in
especially the recourse curse, hardly any attempts have Leone to start the gradual transf
utilized the 'resource curse' hypothesis to critically to resource blessing, at nationa
examine temporal changes between pre-dominantly The organization of the rest
'curse' or 'blessing' impacts of diamond exploitation follows. The next section disc
in Sierra Leone, over an extended period (nearly a tion and the resource curse. T
century). This can also inform potential future changes. assessment of diamond exploita
Unlike other studies in which the resource curse is niai and early post-colonial pe
usually portrayed as a uniform acting politico-eco- predominantly resource blessi
nomic phenomenon at the national scale (Lujala et al. and local levels. Next the pap
2005; Sachs and Warner 2001 ), or as unchanging over exploitation during the reign of
time (Le Billon 2005; Ross 1999), this study examines to show that the net effect of dia
spatially differentiated processes and impacts of dia- more of a resource curse, especial
mond exploitation at multiple scales including This is followed by diamond
national, regional and local levels over four major eras ultimate manifestation of resour
within an 80-year history of diamond exploitation. diamond management in post-c
This paper therefore adopts the resource curse reveal the gradual transformatio
hypothesis to examine its historical and contemporary tation to resource blessing, and
£) Springer
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GeoJournal
(2013)
Minerals
and
78:997-1012
the
999
resource
precious
cu
minerals
i
Extensive scholarly work on the
demonstrated that developing co
natural resources (especially oil and
tend to have poor economic grow
compared to resource-poor countri
Humphreys et al. 2007; Sachs an
Through quantitative analysis of
country data, studies found that e
of mineral-dependent countries
countries
fell.
Proponents
of
this
p
this negative association to mec
revenue volatility, and the 'Dut
2001). The 'Dutch disease' is a slu
ofthe country's economy followi
from natural resource exports (L
is
so because countries divert their
dence to these few rich natural r
expense
reason,
of
the
other
Dutch
sectors
disease
of
the
appears
a
of the resource curse, not an alt
In addition to economic issues, p
perhaps a more significant role in
resource curse, especially for diam
demand make them less vulnerable to some of the conflict zone double the conflict duration. Collier and
economic uncertainty (price volatility) of other minerals Hoeffler (2000) advanced economic explanations for
(Bannon and Collier 2003; Mehlum et al. 2006). While the onset of civil war by suggesting that natural
robust institutions can mitigate the perverse incentives resources serve as economic attraction for belligerents
that resource booms create, considerable amount of who mainly out of greed (and less so of grievance)
cross-national literature demonstrates that natural may decide to challenge the state to access, control and
resources can be a curse, rather than a blessing, for manage resources. Other scholars pinpoint gover
countries that lack strong governing institutions nance issues (including state strength and capacity) as
(Robinson et al. 2006; Ross 1999; 2001). Indeed, mineral major mechanisms associating oil/mineral exploita
rents "may create dysfunctional patronage and rent- tion and violent conflict (Ron 2005; Fearon 2005).
seeking behavior, political and private capture, which While there are divergent views as to whether precious
significantly reduce development prospects" (Kolstad minerals are primarily responsible for the cause of
and Wiig 2009:5321). Moreover, few political and war, there is consensus amongst scholars that they
economic elites amass economic wealth, while a majority played a dominant role in the protraction of violent
of the population does not, thereby creating high levels of conflicts as was the case in Sierra Leone (Le Billon
inequity between the rich and poor (Ross 2007; Zulu and 2008; Lujala et al. 2005). Yet for a more nuanced
Wilson 2012). In general resource-curse studies focus on understanding of the causal linkages it is necessary to
political dysfunction at the cross country/national level, also discuss processes that led to resource curse
yet it is necessary to also examine resource governance at impacts at the local (mining community) level
the local level to determine whether a micro aspect of the (Arellano-Yanguas 2011 ).
resource curse is evident (Arellano-Yanguas 2011; Despite an apparent consensus about the resource
Maconachie and Binns 2007b). curse hypothesis, it has come under scrutiny. It is
The political geography of the resource is another argued that the notion of the resource curse is flawed
dimension of the resource curse debate. Le Billon due to methodological problems, especially the fact
£) Springer
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1000
Geo
Journal
(2013)
78:997-1012
Exports
£ 000
that much of the literature is based on J
cross-country
cooo
5000 — Exports
— »
data,
and
the
use
of
inadequate
p
resource endowment (Brunnschweiler and Bulte 2008; 4ooo
Ross 2006). There are also problems of identifying
causal mechanisms linking resources to outcomes due
to the large sample of countries investigated and
complexities surrounding resource abundance and
negative socioeconomic outcomes.
Although the natural resource curse is prevalent in
3500
3000
2500
2000
1500
1000
500
0
^ ^4 ^4 ^
fP'
^ 4^ 4^4^4 ^4 ^
SSA it is not ubiquitous as a few countries ^
have
4 4
4 4 ^4 ^
4 4
4
Year
utilized mineral exploitation to enhance economic Year
growth. Botswana and Namibia exemplify
Fig. 1
Sub-SahValue of diamond
Fig 1 production
Value ofindiamond
the colonialproduct
era.
aran African (SSA) countries where minerals
Source·.
are
Saylor
a Source·.
(1967). Note·,
Saylor
no data
(1967).
available
Note·,
for the no
period
data
1941-1945
(World1941-1945
War Π)
resource blessing. Good governance, an
efficient
(World War Π)
regulatory system, a joint corporate-government ven
ture, and the geographic concentration of diamond
deposits (point resource) are primarily responsible for smooth exploitation of diamonds
Botswana's success (Taylor and Mokhawa 2003).1 economic interests (Greenh
The aforementioned discussion elucidates nuanced discovery of diamonds in Kon
understanding of the resource curse with regards CGOSL granted exclusive minin
economic, social, political, and spatial explanations Leone Selection Trust (SLST),
associated with the resource curse/blessing. In general British-owned Consolidated
it is difficult to definitively determine cause and effect (CAST). CAST was to pay 27.5 %
of resource curse, thus many of the studies show (later increased to 45 %) and a
associations. The challenges of measuring the mineral rent to the Protectorate M
resource curse at national/cross-national level under- (Saylor 1967; Van der Laan
scores the need to also exam felt impacts at local levels tation was economically benefic
where resource extraction takes place. Moreover, accounted for 56 % of the cou
resource curse/blessing is not constant: it is subject anc^ transformed state s bud
to temporal change. Such an understanding of the surplus up to World War II (S
resource curse enhances the analysis of how diamond 'n ^'8· ' > va'ue °f diamond e
exploitation in Sierra Leone has demonstrated pre- million from 1949, fluctuated
dominantly 'resource blessing' or 'curse' impacts at rose s^arP'y from 1959 to 19
national and/or local levels during four eras, within a 1948-1952 the SLST paid the
period of 80 years. (van dm Laan 1965). In 1960, the company paid
£1.139 million as taxation to the government and also
made indirect contribution to the national economy by
Diamond exploitation in colonial and early spending about £720,000 on salaries and wages a
postcolonial periods, a resource curse? £670,000 on local purchases (SLST 1961). Thus, fr
a macroeconomic perspective, diamond exploitation
Diamond exploitation during colonial rule: 1930 was a resource blessing to the CGOSL.
to 1960 Moreover, due to mounting political pressure from
the first set of elected indigenes to the
From the onset the colonial government of Sierra council a revised mining
Leone (CGOSL) enacted legislation geared towards *ax 'ncreases on SL
industry profit tax amounted to 60 %
11Botswana'
Botswana's
s diamonds
diamonds
are minedare
by Debswana—a
mined bypartnership
Debswana—a partnership
2 The Mineral
between
between
De Beers
De Beers
and theand
government
the government
of Botswana inof
which
Botswana
in Ordinance
which of 1927 vested control of all minerals
each
has 50%
shares.
each
has
50% shares. in the Crown (Laws
in the
of Crown
Sierra
(Laws
Leone
of Sierra
1946).
Leone 1946).
Ô Springer
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GeoJournal
(2013)
78:997-1012
1001
Government's additional revenues w
the period 1951-1953 (Van der Laan
annual mining rent payable to the P
Benefits
Trust
Fund
increased
from
£
and Kono and Lower Bambara Chief
District received annual grant of £1
respectively (SLST 1966). These poli
resulted in mineral revenue increas
socioeconomic development at natio
levels.
in
Though
national
the
mid-1950s.
corporate mining was very
level, it also contributed to
development
employment,
in
mining
communitie
infrastructure,
and
social
number of local employees increased
1942 to 3,500 in 1960 (Saylor 1967).
members also benefited from health
56,000 patients (of which 42 % were
workers) were treated annually at th
hospital (SLST 1966). With regards ro
ment, the SLST stated that "company
opened up large areas in Kono and Lo
(SLST 1966:4). Although it can been
company concentrated on roads that
mining
activities,
primary
responsibilities
it
assisted
included
the
the
C
d
physical infrastructure. In the area o
company offered scholarships to st
grants were used to build seven prim
corporate mining towns (SLST 1966). Th
mining was regarded as a blessing f
communities. most license plots (Rosen 1973). Consequently, many
Mining communities and non-local counterparts natives interesting in mining had to
also derived economic benefit from an informal license holders with modicum b
channel—illicit diamond exploitation. Illicit diamond though the CMS was estab
exploitation was aided by influx of West Africans and economic opportunities for loca
entrepreneurial Lebanese referred to as strangers, in contracts to indigenes to mi
the early 1950s that acted mainly as buyers and sion (areas with marginal proven
financiers of illicit mining activities (Leighton 1974). to the company, some chief
Although local people initially received five shillings sions. The scheme stipulated that
per stone, higher outputs resulted in meaningful of the mining area nominate c
earnings (Hayward 1972). Illicit mining boosted local 1966). However, such provisi
economies of towns and villages in diamondiferous avenues for paramount chie
areas, especially in Kono, Kenema and Bo Districts awarded contracts to relatives a
(Greenhalgh 1985). It was also aided by rent seeking
3 Only thosethat
belonging
the Kono
ethnic group
were regarded
activities of chiefs who permitted more strangers
3 to
0nly
those
belonging
to the Kono e
as natives.
paid them significant sums of money for
permission to Μ natiVes.
trade (Rosen 1973). This was in spite of the4 The
fact
that
4 council
xhe was
elected
council was giv
elected
district
given the district
task of administer
ingof
the MADA
program. ing the MADA program.
the SLST paid chiefs £50 to ensure control
migrants
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1002
GeoJournal
('supporters')
exorbitant
(2013)
who
amount
78:997-1012
subsequently
(Rosen
1973).
s
Th
cases elucidate how corruption amongst district To summarize, although the socioeconomic bene
authorities and weak and/or inept local institutions fits of diamond exploitation were unevenly distrib
undermined significant economic impact of diamond uted, the net effect of diamond exploitation was more
exploitation on a majority of locals. of a blessing than a curse, especially at the national
At the national level, policy changes following the level. At the national level, the government benefited
establishment of the Diamond Corporation of West immensely from mineral revenues, except for the mid
Africa (DICORWAF), a subsidiary of DeBeers, aug- 1950s when official diamond revenues fell due t
mented official diamond sales. DICORWAF stabi- massive illicit exploitation. The SLST and diamond
lized diamond prices and reduced export duty from 7.5 dealers (mainly Lebanese and West Africans) a
to 4 % (Van der Laan 1965). Diamond traders and acquired considerable wealth from diamonds. How
diggers found out that the price paid by the central ever, mining communities (with the exception
buying office was influenced by price changes in the chiefs) derived moderate socioeconomic benefit
international market and therefore sold most diamonds the form of social services, infrastructure and incom
to the buying office. Consequently, smuggling was
reduced to about £1-2 million per year since 1959
unlike the £10-15 million worth of diamonds smug- Diamond exploitation during the APC era: 1968
gled between 1954 and 1959.5 This is an illustration to 1992, a resource curse?
that with proper policies, smuggling can be reduced to
low acceptable levels and resource revenue can be a Diamond exploitation under Stevens' patrimonial
'blessing' at the national level. rule
Diamond production and revenue utilization The inception of Sia
during the initial years of independence about policy changes in d
which were detrimental to the national
Increasing production and value of diamond exports at the embryonic stage o
independence in 1961 within extant policy framework threatened as he faced
enhanced national economic performance. Official chiefs and their clie
Diamond production valued at £15.9 million in 1961 Leone Peoples Party
rose to £21.8 million in 1964.6 During the period Province. A number of
1968/69, carats purchased by the GDO increased from acquired wealth from
863,804.00 valued at £11.7 million to 1,102,884.50 the status quo. Yet, th
valued at £15.6 million (Government of Sierra Leone in order to consoli
1970). Corporate payment to the government was ment of diamond expl
significant. In 1963, SLST paid about £2.5 million as the local to the natio
income tax and diamond industry profit tax. It also ment maintained de
invested and spent about £2.2 million annually on the military junta i
other fields of economic development in Sierra Leone, shifted the level of co
including physical infrastructure food subsidies for the local to the national
workers, and medical and health services (Golfa of assigning mining li
1989). In the late 1960s official diamond exports Ministry of Mines (A
peaked with average production valued at $250 1995). This change al
million (1995 dollars) constituting 20 % of GDP and structure of land t
60 % of foreign exchange earnings (Davies 2008). additional revenue from
While this centralization of diamond con
55
Report
Report
of the Mines
of
Department,
the Mines
Sierra Leone,Department,
1962, pp. 4-5.
Sierra Leone, 1962, pp. 4-5. expected to b
66Report
Report
of the Mines
of Department,
the Mines
1932-1963,
Department,
Sierra Leone;
1932-1963, Sierra Leone; growth and develop
and
Quarterly
Statistical Bulletin, No.
3 (1964).
and
Quarterly
Statistical
Bulletin, No. 3 (1964). the pre-Stevens e
â Springer
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GeoJournal
(2013)
78:997-1012
1003
governance, overt patrimonial rule,
decline and ultimate collapse of cor
resulted in a precipitous economic d
1978, the APC stage managed a so-cal
which
transformed
Subsequently,
it
the
country
suppressed
into
a
and/or
tion politicians. The government's uno
of smuggling resulted in the theft of
of SLST diamond. For instance, on Nov
the company's entire monthly produ
$3.4 million was stolen, allegedly on
Stevens and his close ally Jamil Said
influential Lebanese businessman (S
2000). Such actions deprived the
stantial official mineral revenues
political
and
negative
private
capture
implications
on
of
cou
and
diam
national
(Kolstad and Wiig 2009). negative implications for development.
Nonetheless, the APC government transformed the At the local level, Stevens' patrimonial rule
SLST to a quasi-national company, the National mined local development goals of the 1973 Coo
Diamond Mining Company (NDMC) in 1970 in order five Contract Mining Scheme (CCMS). This s
to ensure that the country obtained the greatest allowed the setting up of private mining ope
economic benefits from corporate mining. Total taxes within the NDMC concession (Fithen 19
from NDMC (income tax, surtax, and diamond initiative was presented as a concession to local m
industry profits tax) constituted 70 % of net profits. In practice the diamond fields opened up were la
The government also obtained 51 % of the remaining shared among APC elite and their allies as a
profit as a form of dividend (Golfa 1989). Therefore, compensation for unflinching party loyalty. Ben
the quasi-national mining parastatal was a major ties included pro-APC chiefs in diamond prod
contributor to fiscal revenues accounting for $60 areas and government officials such as perm
million dollars (3.6 % of GDP) in 1974 (Davies 2008). secretaries, ministers and members of parliament,
While such financial gains from nationalization of of whom owned plots in other persons' nam
corporate mining could be regarded as a resource Williams 1990). While rezoning of land for CC
blessing as they boosted government coffers at the economically beneficial to top APC stalwarts a
national level, Stevens' ulterior motive was to find associates and strengthened Stevens' under
avenues for compensation of his senior stalwarts and economy; it was a liability to ordinary peo
cronies. Stevens therefore established a network of lacked political connections to be an entrepre
informal markets, the 'shadow state' in order to control the CCMS. Such practices are what Kolstad an
the diamondiferous districts, especially Kono (Reno (2009) refer to as dysfunctional patronage a
1995; Zack-Williams 1999). By reconfiguring the seeking behavior. Furthermore, the governmen
patronage network, Stevens gained control of diamond military rigorously suppressed diamond poachin
revenues and greater political security which were two common illicit outlet thereby worsened e
essential ingredients for his patron-client (patrimonial) opportunity for the ordinary miner (Levin 20
form of governance. Patrimonialism is 'a form of the CCMS program benefited APC party st
political order where power is concentrated in the while many ordinary miners were increasing
personal authority of one individual ruler.... The State is ginalized due to deprivation of access to legal an
their private property, and the act of ruling is conse- alluvial mining.
quently arbitrary'(Thompson 2004:115). Mismanagement of diamond corporations
An essential element of his patrimonial rule was the 1980s led to ultimate collapse of corporate mini
patron-client relationship in which APC politicians and significant national economic implicatio
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1004
GeoJournal
(2013)
78:997-1012
«•«Sales
Sales(Le
(Lemillion
million
Lebanese with the support of a few highly influential
HiHTaxation
"•«Taxation (Le
(Lemillion
million
political figures in government was very lucrative in
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