Saturday, October 23, 2021

    How Nigeria’s $1 Billion Arms Fund Will Be Spent By ‘Tope Oriola

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    Naija247news Editorial Team
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    President Muhammadu Buhari recently approved $1 billion for
    procurement of security equipment. Many concerns were expressed about
    the announcement.

    These included the approval of such colossal sum by the president
    without authorization by the National Assembly, and the rationale
    behind such huge expenditure to combat an organization that the
    government claimed had been “technically defeated”. Some were
    concerned that the money was simply Buhari’s re-election budget
    masqueraded as funds for arms. Of course, the cynicism of many
    Nigerians stemmed from a telepathic understanding that the fund might
    be embezzled by an assorted selection of parasites in governments. The
    situation is in fact much more complex and the actors more

    The arms market constitutes less than one percent of global trade but
    contributes 50 percent of corrupt deals in the world, according to a
    US Department of Commerce report. One study shows that up to 15
    percent of money spent on weapons were bribe payments. Such payments
    are technically not legal in most countries but are categorized under
    “consultancy fees” or “commission” in several others. In a country
    like Nigeria, averagely smart officials and their business partners
    will likely get away with it. Transparency International estimates
    bribe payments in the arms industry to be worth $20 billion per annum.
    Therefore, Nigeria’s $1 billion extra-budgetary arms fund is a small
    part of a larger global oasis of corruption. Tope Oriola Sahara

    A study by Morris Szeftel demonstrates (and this is no comfort) that
    countries like Russia, France and Italy lose larger sums to defence
    industry corruption although such corruption on the African continent
    tends to be more damaging to socioeconomic development and political

    How will Nigeria’s $1 billion arms fund be spent? We can make a number
    of intelligent hypotheses based on available evidence from studies on
    arms procurement in Africa and around the world as well as evidence
    from Dasukigate.

    First, the equipment will likely be bought from third parties rather
    than directly from manufacturers. Therefore, Nigeria will pay more per
    unit. Second, used weapons will likely be acquired instead of new
    ones. This keeps alive the carousel of corruption since we will need
    (earlier than usual) another budgetary allocation for the same or
    similar equipment. Consequently, Nigeria can expect to mint new
    criminal millionaires.

    The latter will come from four categories of persons: A small number
    of top military officers, defence ministry officials, the famed
    “cabal” in the presidency and arms dealers (local and foreign).
    To be fair, this is not a particularly Nigerian phenomenon.

    Sanjeev Gupta and his colleagues have linked the phenomenon to the
    intense competition among arms manufacturers and dealers, which leads
    to willingness not to play by rules. Other factors in the scholarly
    literature include the fact that defense procurement is often
    concentrated in a small number of state officials and the market for
    military equipment tends to have a small number of producers and

    Therefore, the arms money will be spent in a market that is far from
    competitive. Considering that defence spending is generally opaque, as
    it is treated as a matter of national security, more opportunities
    exist for corruption.
    We may also add a small but significant detail: Many military
    equipment are highly technical in nature. This implies that only a
    small number of people — military or civilian — understand what they
    mean and how much they truly cost. For instance, how many officials in
    the Ministry of Defence or the Defence Headquarters know the
    difference, degree of tactility or inter-operativity of the following
    types of drones MQ-9 Reapers, RQ-7 Shadows, RQ-4 Global Hawk and
    AeroVironment Wasp IIIs? The National Assembly might be totally
    hopeless even if it were not dysfunctional in exercising oversight on
    such purchases. The equipment may be over-priced under extremely
    technicist and fancy names.

    The analysis above presupposes that arms are actually purchased. One
    basic form of corruption in arms procurement is simply not buying any
    arms. Nigeria is one of the global leaders in this area. Recall that
    several former service chiefs are currently facing corruption trials.
    One of those is former Chief of Air Staff, Air Marshal Mohammed Umar
    Dikko, facing charges of fraud amounting to approximately N9.7billion.
    One prosecution witness said that he “personally” gave Dikko
    N558.2million per month from November 2010 to September 2012,
    according to a statement by the EFCC.

    Dasukigate offers insight into the penetralia of defence corruption in
    Nigeria. Those who shared the $2.1 billion arms fund come from an
    eclectic mix of backgrounds: Politics, media, military, traditional
    institutions and the clergy. The scandal began from the president, who
    seemed to have approved the funds without oversight. Categories of
    persons charged with receiving the arms money included 17 serving and
    retired senior military officers. At least 241 companies were alleged
    to have been involved. My analysis of a presidential statement issued
    on Dasukigate suggests a huge turnover in the Permanent Secretary and
    Director of Finance and Accounts at the Ministry of Defence.

    These two positions are lucrative; Nigerians should be on the lookout
    vis-à-vis the new arms fund. Of the 12 indicted civil servants in
    Dasukigate, 10 were from the Ministry of Defence. Three of the
    officials from the Ministry of Defence had served as Permanent
    Secretaries while five had served as Directors of Finance and Accounts
    at the Ministry of Defence. This is no coincidence. Consequently,
    Dasukigate is an exemplar of what may happen to the current arms

    However, let us assume that the $1 billion is truly for arms purchase.
    Many of the purchased equipment will have a shorter lifespan than
    anticipated due to poor maintenance culture. For instance, Nigeria’s
    Aerostar drones bought from Israel in 2006 were quietly rotting away
    in 2014 when needed to assist with the rescue of the Chibok girls.

    A May 2014 Reuters report quotes an Israeli source: “We did receive an
    inquiry from them (i.e. Nigerian officials) about spare parts, but it
    never turned into a deal. I wish it had… (The drones) are probably
    parked in a yard somewhere”. The report estimated that each drone
    would have cost between $15 million and $17 million. Nigeria relied on
    drones from the US and the UK for reconnaissance immediately after the
    Chibok kidnapping.

    Nigeria would be fortunate to have 50 percent of the funds actually
    spent on tangible weapons and equipment. How’s that possible? The
    bidding process is rarely open, 15 percent is routinely spent on
    commission, 15 to 20 percent often goes to overpricing by third party
    “sellers”. State officials may also add five to ten percent in
    addition to the price offered by third parties. Miscellaneous or
    logistical spending may take up to five percent.

    This includes first class or business class travel, 5-star hotel
    accommodation as well as estacode for some government officials. The
    deals are rarely concluded in a single meeting; therefore, there may
    be multiple travels by several officials responsible for arms
    You may also add to that embezzlement of 10 to 15 percent of money
    designated for maintenance.

    Maintenance costs are usually (but not always) factored into arms
    deals. Consider that the March 2018 $1.076 billion arms deal between
    the US and Saudi Arabia included $300 million for spare parts for
    military vehicles and $106 million for helicopter maintenance,
    according to an al-Jazeera report. That was over 37 percent of the

    Embezzlement of maintenance budget tends to be routine in the
    developing world. Maintenance costs are inserted into subsequent
    budgets with few people aware or recalling that it had already been
    included in the initial purchase. Poor maintenance means restarting
    the process described above.

    These are conservative estimates depending on the government’s
    brigandage and complicity at the highest level. It is simple
    arithmetic. Nigeria would be fortunate to have real value for 50
    percent of the total arms budget.

    It is the nature of two beasts: The peculiarities of the defence
    industry as a cesspool of corruption everywhere in the world and the
    particularities of Nigeria, one of the world’s most corrupt states
    with expensive elite.

    Follow ‘Tope Oriola on Twitter: @topeoriola

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