Resource revenues and state formation

By Onno Blom

In “War and State in Africa’ Herbst argues that much of the lack of state formation in Africa can be contributed to lack of warfare in the past. He finds that war allows the state to collect significantly more taxes with greater efficiency and less public resistance, and that war is the only thing that forces governments to do so. The formation of a strong state, with inclusive institutions based upon taxing, will thus only emerge in foresight of warfare. Herbst concludes that because there has never been large scale interstate warfare in Africa, state formation has lagged behind.

Although the mechanisms that Herbst poses might have worked in Europe, they certainly will not act in the same way in most of contemporary Africa. The main reason for this is Africa’s comparative high dependency on natural resources. For example, government revenues are made up of resource exploitation for 90% for Equatorial Guinea, and 80% for Congo, Angola, Nigeria and Chad. Unfortunately, if most revenue comes from resources, governments would likely get their funding for war from those institutions as well: these sectors have large vested interests which the government takes into account. Moreover, a marginal increase in a large sector provides the same benefits as a large increase in a small sector, while an increase in exploitation of natural resources is easier to realize than setting up inclusive institutions based upon taxation, especially for a government with expertise in the first. Thus, after and during the war, only extractive institutions are created and the state continues to be weak: a state reliant upon the power of its resources instead of taxation of its people does not act in the interest of its population, and this creates institutions which slow down development.