The Socio-economic Impacts of Corruption

There are many definitions of the term ‘corruption’, with Transparency International terming it as the abuse or misuse of power or public office for private profit or gain[1]. From a legal perspective, corruption refers to the aberration from the rules or duties of public service. It is, however, difficult to identify corruption due to the numerous ways that it manifests itself[2]. Despite this, many international watchdogs have been able to classify corruption and identify the instances when it happens. Transparency International produces an annual list of corruption by state, with some of the least corrupt being Denmark and Canada, and on the other end of the list Nigeria. This paper delves into the nature, extent and socio-economic impacts of corruption in Nigeria. It also offers the political and socio-economic systems in place that make Canada and Denmark least corrupt.

Nature of Corruption in Nigeria

Nigeria has continually featured on the list of the six most-corrupt nations within 2001-2005. The nation then improved its ranking in the following years before eventually fallingnine spots in the 2010-2011 financial year[3]. Nigeria’s systemic corruption can be traced back to the colonial times when the British colonized the country. They used both direct and indirect rule to govern the nation. The local officials employed to oversee the newly colonized territories were mostly not indigenous to the regions they controlled and as such used their power and authority for personal gain and in strengthening their positions[4]. After independence, most of these leaders were elected as politicians and continued the cycle of corruption, as were the civil servants of the time. After the military took over governmental control in 1966 citing their desire to end corruption, it was expected that that they would implement measures to end the scourge. However, they turned out to be the most corrupt. The regimes that have come in after the nation returned to civil rule in 1999 have not been effective in ending the menace. Instead, they have aided in its proliferation.

All the three arms of government have been accused of engaging in corruption and critics state that despite the promise to eradicate corruption, there is a lack of political willpower to do so[5]. Diverse measures have been introduced to address the corruption monster including public sector reform; the establishment of anti-corruption enforcement agencies; and the sanitization of the financial services industry[6]. Despite these systems, there is widespread government failure in complying with the Fundamental Objectives and Directive Principles of State Policy as enshrined in Nigeria’s constitution. Non-transparency in governance, ineffective accountability frameworks, non-enforcement of penalties for corruption offenses, and inadequate public sector wages have helped in augmenting corruption in Nigeria[7].

Extent of Corruption

Corruption in Africa’s most populous nation permeates all levels of government and society- local, state and national governments, the judiciary, the civil society, and the military. The civil servants collaborate with government officials in embezzling public funds through crude spending decisions such as the provision of goods below market price like the subsidies on petroleum products and extra-budgetary accounts like an excess crude account[8]

Street level corruption is also manifest whereby bureaucrats use their discretion in implementing policies that have already been given to them by lawmakers[9]These politicians also use a flawed financial sector system to commit fraud. Between 2005 and 2007, it is estimated that politicians and state governors embezzled over US$250 billion that were hidden in offshore financial centers and western banks[10]. The leaders also use the state machinery to launder cash. The United Nations agency on Narcotics and Money Laundering states that within 1966-1999, corrupt leaders embezzled around $400 billion[11].

Businessmen and government contractors have also infiltrated the system of Nigeria’s endemic corruption. These contractors are usually obliged to pay about 10% of the contract money for contract award. In the end, these contractors either end up doing a shoddy job or not completing it. Other meansby which corruption manifests itself in Nigeria is the requirement for most businesses to pay “protection money”; favoritism and nepotism in hiring decisions; the use of public office for personal favors; and the tendency by police officials to collect bribes at checkpoints[12].

During the electioneering period, corruption is most rife. Politicians use illegal expenditure in vote buying and are funded using corruption money. Surprisingly, the religious leaders and aid officials have not been left out. These religious leaders utilize church funds to quench their greed for material things. Considerable literature also suggests that most of the donor funds go into private coffers. Access to international donor funds is perceived as one of the best means to get ahead[13]. All these factors have contributed to Nigeria maintaining a high Corruption Perception Index (CPI) of around 2.4 according to Transparency International.

Socio-economic Impacts

Perhaps the most tragic impact of corruption is the failure of Nigeria to attain its economic potentials despite its substantial natural and human resources. Corruption elicits inefficiency, soaring government deficits, and economic contraction and collapse that have aided in encouraging social upheaval and popular rebellion[14]. Most of the development money is stolen by Nigerian leaders and expatriated to be utilized in the development of other nations instead of Nigeria. When money for schools, hospitals, and other infrastructural projects is stolen, it only kills growth and drives business into a shadow economy.

The prevalence of corruption in the nation also drives away foreign direct investment (FDI). Banks and businesses lose money that precipitates business failure, unemployment, and economic instability[15]. Besides driving away investment, the corruption also leads to brain drain. Corruption breeds mediocrity, and capable hands who are not prepared to bribe to succeed move to places where they can be treated with dignity and honor.

The national image of the country has also been tarnished. Nigeria has been involved in numerous cases of financial crimes thathave brought disrepute to the nation all over the world. Everywhere, Nigerians are regarded with suspicion, disrespect and scorn in all corporate dealings. Both honest and dishonest Nigerians are regarded with the same contempt, a thing that discourages the honest ones from engaging in genuine business.

Corruption has also led to adverse environmental impacts. International companies bribe their way into the nation where they engage in business without adherence to environmental laws. Nigeria is being utilized as a dumping arena for hazardous material that is harmful to the local populace. In the Niger Delta especially, oil corporations bribe public administrators to allow them drill without implementing the essential protection measures. Even where public health concerns are raised, they go uninvestigated[16]. It is clear that rampant corruption in Nigeria has had a lot of adverse socio-economic impacts.

Denmark and Canada’s anti-Corruption Determinants

Political Factors

Denmark and Canada have a myriad of political factors that lead to them experiencing low incidences of corruption, one of them being the institution and implementation of strong anti-corruption policies. Denmark has specific corruption policies with punitive consequences for offenders. Under Danish law, bribing officials that includes bribing officials, receiving bribes by officials, and the payment of ‘kickbacks’ is a criminal offense. In 2004, the Danish government ratified the “EU Directive on public procurement” which makes it criminal for companies to deduct expenses used in bribing officials[17]. In Canada, such laws include the Corruption of Foreign Public Officials Act (CFPOA). The two countries also have a comprehensive legal framework and an efficient judiciary[18]. The disclosure of budget information also closes the door to misappropriation of public funds. Government openness, anti-corruption policies, and a strong accountability and transparency mechanism thus lead to low levels of corruption in the two nations.

There is also political will in the two countries to eradicate corruption. The anti-corruption agency in Canada has significant power in the investigation and prosecution of graft offenders. Since 2011, it launched a crackdown on Canadian companies engaging in corrupt behavior involving foreign public officials, a crackdown that has seen over 35 corporations being investigated. Denmark also has a zero- tolerance policy on corruption as well as a code of conduct for public servants whereby it obliges ministers to publish information on their spending travels and gifts. The two countries also allow a lot of social activism and media freedom that aids in watching the political class and ensuring they do not engage in corrupt activities[19].

Socio-economic Factors

The two nations experience considerable economic freedom, with both of them being in the top ten in global rankings. Financial sector regulations and policies have a strong influence on the level of corruption. The two nations have a competitive financial sector that is efficient and supported by sound oversight. Financial sector corruption is also heavily prosecuted. The enforcement of contracts is also secure, and expropriation is highly unlikely. In addition, Canada and Denmark’s rule of law and property rights are well entrenched, making corruption unlikely and propagating FDI.

Both countries also exhibit fair working conditions, decent salaries, social security, pension schemes, and health arrangements. These factors ensure that the citizenry of both nations can afford a decent living and deter them from engaging in corrupt activities[20]. The possibility of living off one’s salary compounded by the fact that people are protectedupon falling ill or when fired also makes it easier to refrain from corruption. Both nations also experience high levels of economic growth and prosperity with stable businesses, making it very hard for corporations to engage in corrupt practices in order to acquire business. Social support is high, and it is the common perception by the populace in the two nations that the government is on their side. People thus fell no need to engage in corrupt activities. Improved socio-economic and political factors in the two countries over Nigeria thus make them some of the least corrupt nations.

Bibliography

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Chêne, Marie. 2011. “What makes New Zealand, Denmark, Finland, Swede and others “Cleaner” than most countries.” Transparency.org. December 7. Accessed May 11, 2015. http://blog.transparency.org/2011/12/07/what-makes-new-zealand-denmark-finland-sweden-and-others-%E2%80%9Ccleaner%E2%80%9D-than-most-countries/.

Costa, A. M. 2008. “Anti-Corruption Climate Change: It started in Nigeria.” The Eagle Watch (EFCC Training and Research Institute) 2 (5): 7-10. Accessed May 12, 2015. http://www.unodc.org/unodc/en/about-unodc/speeches/2007-11-13.html.

Cule, Monika, and Murray Fulton. 2005. “Some implications of the unofficial economy–bureaucratic corruption relationship in transition countries.” Economics Letters 89 (2): 207-11. http://EconPapers.repec.org/RePEc:eee:ecolet:v:89:y:2005:i:2:p:207-211.

Ganzeboom, H. B., P. M. De Graaf, and D. J Treiman. 1992. “A standard international socio-economic index of occupational status.” Social science research 21 (1): 1-56. Accessed May 12, 2015. https://pure.uvt.nl/portal/files/856435/Standard.pdf.

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Ribadu, N. 2006. “Corruption: The Trouble with Nigeria.” Gamji.com. Accessed May 11, 2015. http://www.gamji.com/article 5000/NEWS5530.html.

Rkinga. 2013. “Why Denmark always finishes on top.” budapesttimes.hu. March 19. Accessed May 11, 2015. http://budapesttimes.hu/2013/03/19/why-denmark-always-finishes-on-top/.

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[1]International, Transparency. 2003. Transparency International Corruption Perceptions Index 2002. Working Paper, Berlin: Transparency International. Accessed May 12, 2015. https://www.transparency.org/research/cpi/cpi_2002/0/.

 

[2]Ocheje, P. D. 2001. “Law and social change; a socio-legal analysis of Nigeria’s Corrupt Practices and other Related Offences Act.” Journal of African Law 45 (2): 173-195. doi:10.1017/S0221855301001687.

 

[3]Akinrijomu, B. 2009. Slipping Back into Old Times. Swartz Creek, MI: Tell. Accessed May 12, 2015. http://www.ccsenet.org/journal/index.php/par/article/viewFile/26819/16359.

 

[4]Owolabi, E.A. 2007. “Corruption and financial crimes in Nigeria: Genesis, trends and consequences.” cenbank.org. Accessed May 11, 2015. http://www.cenbank.org/OUT/PUBLICATIONS/TRANSPARENCY/2007/TRANSPAR.

 

[5]Omisore, Bernard Oladosu. 2013. “Money, politics and corruption In Nigeria.” Journal of Public Administration and Governance 3 (1): 1-24. doi:10.5296/jpag.v3i1.3157.

 

[6]See note 3

[7]Tanzi, V. 1998. “Corruption around the World; Causes, Consequences, Scope and Cures.” IMF Staff Paper 45 (4): 555-594. doi:10.2307/3867585.

 

[8]Ibid

[9]Sandholtz, Wayne, and William Koetzle. 2000. “Accounting for corruption: Economic structure, democracy, and trade.” International studies quarterly 44 (1): 31-50. Accessed May 12, 2015. http://www.jstor.org/stable/3013968.

 

[10]Shehu, A. 2011. Corruption and Conflict in Nigeria; Implications for Peace, Security and National Development. Lecture, Abuja, Nigeria: Ministry of Foreign Affairs. http://www.fic.gov.gh/sites/SPEECH%20NOV%20%202012.pdf.

 

[11]Costa, A. M. 2008. “Anti-Corruption Climate Change: It started in Nigeria.” The Eagle Watch (EFCC Training and Research Institute) 2 (5): 7-10. Accessed May 12, 2015. http://www.unodc.org/unodc/en/about-unodc/speeches/2007-11-13.html.

 

[12]Akinrijomu, B. 2009. Slipping Back into Old Times. Swartz Creek, MI: Tell. Accessed May 12, 2015. http://www.ccsenet.org/journal/index.php/par/article/viewFile/26819/16359.

 

[13]Nguyen, V.K. 2010. The Republic of Therapy: Triage and Sovereignty in West Africa’s Time of AIDS. Durham: Duke University Press.

 

[14]Cule, Monika, and Murray Fulton. 2005. “Some implications of the unofficial economy–bureaucratic corruption relationship in transition countries.” Economics Letters 89 (2): 207-11. http://EconPapers.repec.org/RePEc:eee:ecolet:v:89:y:2005:i:2:p:207-211.

 

[15]Ribadu, N. 2006. “Corruption: The Trouble with Nigeria.” Gamji.com. Accessed May 11, 2015. http://www.gamji.com/article 5000/NEWS5530.html.

 

[16]Okoye, Ejike Sam. 2005. “How to tackle corruption effectively in Nigeria.” Gamji.com. Accessed May 11, 2015. http://www.gamji.com/article4000/NEWS4930.htm.

 

[17]Rkinga. 2013. “Why Denmark always finishes on top.” budapesttimes.hu. March 19. Accessed May 11, 2015. http://budapesttimes.hu/2013/03/19/why-denmark-always-finishes-on-top/.

 

[18]Chêne, Marie. 2011. “What makes New Zealand, Denmark, Finland, Swede and others “Cleaner” than most countries.” Transparency.org. December 7. Accessed May 11, 2015.

[19]Rose-Ackerman, Susan. 1999. Corruption and government: Causes, consequences, and reform. Cambridge: Cambridge university press.

[20]Ganzeboom, H. B., P. M. De Graaf, and D. J Treiman. 1992. “A standard international socio-economic index of occupational status.” Social science research 21 (1): 1-56. Accessed May 12, 2015. https://pure.uvt.nl/portal/files/856435/Standard.pdf.