Insecurity, development, trade and taxation
19th March 2018By Thomas Cantens, Head of the WCO Research Unit
This text is inspired by experience gained in field studies undertaken in Sub-Saharan Africa since 2000 and anthropological research conducted over a period of 18 months in seven border areas that can be considered “fragile,” namely in Tunisia, Libya, Jordan, Sudan (Darfur), northern Mali and the borderlands of Lake Chad (Chad, Niger and Nigeria), where religious armed groups are operating. It argues that development donors should look into how to support borderland economies and address wealth circulation rather than poverty.
The question of how to address insecurity, associated with that of how to fight terrorism, has become global, but the mechanisms behind the creation of insecurity are still very local: insecurity is often generated by armed groups that are locally rooted, and become transnational organizations by attracting foreigners to join them and by embodying an ideology that inspires militants around the world. Another concept that also has a very local dimension is that of development.
Both concepts, security and development, are inextricably linked, and since the end of the 1990s donors have dedicated an increasing amount of public money to supporting development programmes related to conflicts. Since the 2000s, there has been a shift in the security-development nexus, towards protecting the societies of donors. The United Kingdom’s (UK) public aid agency, for example, explains in its 2015 strategic document that its “aid budget will be restructured to ensure that it is spent on tackling the great global challenges from the root causes of mass migration and disease, to the threat of terrorism and global climate change, all of which also directly threaten British interests”. This is only one example among others.
This linkage between security and development has very gradually turned into a global doctrine connecting the global and the local, linking violence to migration and poverty, along the lines of the following three main assertions: (1) in less developed countries (LDCs), security, military and police policies are necessary, but are insufficient for eliminating insecurity; (2) underdevelopment leads young people to engage in violence, when armed religious groups turn to violence; (3) those who do not engage in violence at the local level head to the countries of the North, where they then represent a triple threat – an economic threat (informal competition on the labour market), a social threat (exclusion), and a security threat (certain migrants may be terrorists or may turn to violence because of the difficult living conditions they experience in Europe).
The second assumption is problematic. In viewing recruitment by armed religious groups first and foremost through the lens of an economic rationale, and seeing violence only in terms of the atrocity of the acts, we often overlook the ideological and emotional aspects bound up with the commitments individuals make to armed groups. We are wrong if we believe in an economic determinism of violence. We are wrong because this can only lead us to doubt the moral capacity of poor people to renounce violence and overestimate the political capacity of some of the ‘non-poor,’ those we describe as ‘local elites’ and in whom aid agencies currently invest.
We know that many insurgencies are not just revolts by the poor. If they were, these revolts would have led to the systematic pillaging of rich people’s properties. Poor people die because of terrorism too. Boko Haram militants bomb rural markets and camps housing internally displaced people. The data available on the role of employment in conflict situations has not pointed to a decisive role played by employment policies in crisis resolution and prevention. As far as motivation is concerned, studies have been carried out on former members of armed religious groups in Afghanistan, Iraq, Kenya, Mali, the Philippines and Somalia, as well as on Boko Haram fighters. The results are similar: the crucial role of the family and close friends in recruitment, alongside feelings of vengeance and anger against the excesses of national army soldiers, injustice, the desire for radical political change and the sense of group belonging. In other words, ideology and political emotions – as Martha Nussbaum recently maintained in her political theory – are the principal drivers that lead people to join and remain in these armed religious groups.
These studies can undoubtedly be criticized: the words of these former fighters are applicable to them alone, and it could be argued that it is tempting for them to explain their past actions by accounts that show them in a positive light rather than simply being motivated by gain. This is all highly possible, but the opposite, i.e., that they may be sincere, is also possible.
Many transnational armed groups occupy borderlands: Boko Haram militants are located in the borderlands of Lake Chad across four countries (Cameroon, Chad, Niger and Nigeria), while al-Qaeda in the Islamic Maghreb (AQIM) groups and others were originally operating in northern Mali, which forms a vast borderland with Algeria, Mauritania and Niger. Armed groups were also operating at the borders of Libya and Syria, crossing the borders to attack Jordanian and Tunisian cities or the infrastructure of their border agencies and their civil servants. In our research in Lake Chad, we evaluated borderlands as representing around 28% of the area, but accounting for 50-70% of incidents and deaths.
The cost of insurgency can be high for traders whose property, cargo and trucks are looted, and sometimes destroyed, with drivers kidnapped and their relatives held to ransom by insurgents, when insurgents do not simply tax trade flows. However, blocking the border is not a solution. All State responses to insurgency in borderlands entail a cost for traders, and sometimes this cost is not quantified and remains invisible to the central government and to donors. The risk, then, is that some military victories can become economic defeats.
How to think about development in these regions
Development often offers a strange alternative to young citizens of LDCs: local development may offer the promise of being able to stay in their native countries, but some development projects and proposals – creating a pond for animals, for example – are not nearly as enticing as the idea of travelling to foreign countries, despite the high risks and dangers associated with the journey.
Developers usually intervene in traditional fields like education, agriculture and health facilities. These actions are necessary, but development strategy focusing on borderlands should also look at how to support cross-border trade activities. In borderlands, trade and movement are part of people’s identity and activities. Supporting cross-border trade is obviously part of crisis resolution in borderlands, under the condition that it is accompanied by taxation. What matters is not so much poverty, but wealth, and as such the question of wealth and its circulation should be at the heart of the political projects supported by development actors.
This kind of project – governing wealth circulation – is more inspiring (particularly for the poor) than projects that address security only. The governance of wealth is a domain in which the State differentiates itself from armed groups (or, at least, should do so), through the principle of equality. Armed groups can provide security and development, in accordance with religious laws or rules that one can strongly dispute, but they are fundamentally unjust. In several areas, armed groups apply a harsher informal tax regime to economic operators who are unsympathetic toward their ideology or cause.
Literature is emerging on the positive role of the fiscal State in a crisis situation, but the question is more general than simply the ‘creation’ of taxpayers. First and foremost, it is a matter of the social legibility of wealth. A great deal is said about the poor, but there is a huge reluctance to identify the rich. We have maps of poverty, but land and property registers are not well developed, compromising the possibility of taxing property rents and inheritances. We encourage these countries to adopt value-added tax (VAT) or to introduce taxes based on new forms of consumption, such as mobile telephony, but personal income tax is hidden from view, and the quantifiable international face of wealth is not the individual, but the large corporation.
The International Monetary Fund (IMF) states this clearly: “the reforms undertaken most frequently with the assistance of the IMF up to 2005 focus on the introduction of VAT, the creation of a large corporation service and the tax registration of taxpayers”. Individual wealth is invisible. Donors such as the IMF, the World Bank and the Organisation for Economic Co-operation and Development (OECD) do not have an indicator clearly dedicated to the taxation of individuals. The indicator dedicated to the taxation of profits − taxes on income, profits and capital gains − groups together personal income, corporate profits and capital gains. Consumption taxes, which represent around 30% of tax revenues in OECD countries, stand at 50% in less advanced countries.
There are forms of wealth circulation that do not involve the creation of taxpayers. They appeal to the altruistic sense, which the first liberal thinkers argued, was shared by all, and which can be revived in the contemporary form of an ethic of “gifting.” The elites in Bamako originating from northern Mali contribute to the development of their villages or areas of origin. The same phenomenon, or a more amplified version, exists in Cameroon: the urban elites return very regularly to their villages to take part in local life, both politically and, especially, financially. Through city-based associations, the way they participate in rural life even provides a structure for their urban social life. In Mali again, Holder (2004) described processes for levying taxes and fines and awarding financial compensation in a district, independent of a tax administration.
It can be argued that taxation is a sovereign domain, but so is security, and in some countries populations have been asked to contribute to their own security by organizing militias or setting up a people’s defence force, as is the case in Cameroon and Nigeria, for example. It is not a bad thing for security to be a common task shared between citizens and the State, but it should also lead to a reappraisal of forms of taxation, since tax underpins the financing of security.
Ensuring that external support gains pace and reinforces what has already been done by people to make wealth circulate within society, and ensuring that it also underpins that which is ‘good’ (‘good’ in terms of tangible results such as the provision of clean water or the building of a school and good ethically – how it is obtained) should be the political project that donors support, rather than encouraging populations to settle in territories delimited by identities and dominated by traditional authorities who are supported by donors, for lack of better ambition to address wealth circulation rather than poverty.
A more complete version of this article was published in Volume 1 (2018) of the Global Trade and Customs Journal. It is available at www.kluwerlawonline.com.
 According to OECD statistics, the United States devotes 3% of its aid to conflict programmes (4% to education), the United Kingdom invests 4% (compared to 6-7% for education and health), Denmark 2% (compared to 5% for education, 2% for health and 5% for the environment). See http://stats.oecd.org/
 DFID & HM Treasury, “UK aid: tackling global challenges in the national interest” (2015)
 This conclusion is driven by recent field observations and interviews conducted with traders operating in Lake Chad in the course of 2017, in cooperation with Chadian and Nigerian Customs. See T. Cantens & G. Raballand, “Fragile Borders: Rethinking Borders and Insecurity in Northern Mali (2016)”. T. Cantens & G. Raballand, “Cross-Border Trade, Insecurity and the Role of Customs: Some Lessons from Six Field Studies in (Post-)Conflict Regions”, ICTD Working Paper 67 (2017).
 Corinne Deléchat, Ejona Fuli, Dafina Mulaj, Gustavo Ramirez & Riu Xu, “Exiting From Fragility: The Role of Fiscal Policies and Fiscal Institutions” (International Monetary Fund 2015).
 International Monetary Fund (2011), Tax Administration Reform in the Francophone Countries of Sub-Saharan Africa (1995–2010), IMF Working Papers
 OECD (2016), Revenue Statistics in Africa
 G. Holder, “La cité comme statut politique. Places publiques, pratiques d’assemblée et citoyenneté au Mali”, Journal des africanistes (2004)
 Edouard Epiphane Yogo, “La défense populaire au Cameroun: Une réponse pertinente contre Boko Haram” (Africaine d’Édition, Yaoundé 2015)