Problem of corruption and lack of transparency in governance in Nigeria will cost the country 37 percent of its Gross Domestic Product (GDP) by 2030 if not tackled aggressively, a recently released report by PricewaterhouseCoopers titled ‘Impact of Corruption on Nigeria’s Economy’ says.
The report estimates that corruption costs the average Nigerian $1,000 in 2014. This loss is expected to balloon to $1,990 per Nigerian by 2030, if there is no conscious effort to reduce the effect of the scourge significantly.
Pitching the level of corruption in Nigeria with that of Ghana, the report concludes that the GDP of Nigeria would have been $113 billion higher in 2014 if the country had the same level of corruption as Ghana.
Using calculations from the IMF World Economic Outlook, Nigeria’s GDP could have been 22 percent higher in 2014 if it had reduced its corruption levels to that of Ghana’s. This would represent a GDP higher by $113 billion in 2014.
Corruption is a pressing issue in Nigeria, which has seen several government officials and public office holders being accused of embezzlement of funds meant for public use. From 1999, various anti-corruption campaigns have been championed by incumbent governments including the Economic and Financial Crimes Commission Establishment Act of 2004 and the Money Laundering Prohibition Act of 2004.
After assuming office in May 2015, the President Muhammadu Buhari-led administration launched a nationwide anti-corruption fight that has culminated into the recent Whistle Blowing operation by the Federal Government to encourage recovery of looted funds.
Just this week, the Federal Government recovered $151 million, N8 billion looted funds through a whistle blower policy instituted late 2016, the minister of communication, Lai Mohammed said. “The biggest amount of $136.7 million was recovered from an account in a commercial bank, where the money was kept under an apparently fake account name,” the minister told reporters in Abuja.
As a major part of President Muhammadu Buhari’s campaign during the 2015 presidential election, he promised a more radical approach to the anti-corruption fight.
According to the World Economic Forum, corruption is a global problem currently accounting for loss that comes up to $4 trillion annually. But Nigeria has been touted as especially corrupt with a former British Prime Minister refereeing to the country as “Fantastically Corrupt” in a conversation with Queen Elizabeth.
According to the PWC report, Nigeria’s GDP in 2030 can be 22 percent higher than previous projections if the country can fix its corruption problem to at least reflect the level of corruption in neighbouring Ghana.
The present government has adopted varying models in its anti-corruption fight with the implementation of the Treasury Single Account and recent inauguration of an Efficiency Unit by the Ministry of Finance to track government procurement across various sectors, according to sources familiar with the matter.
Corruption is defined and perceived across a spectrum of illegal payments and transactions such as brides, embezzlement, and money laundering among others, according to Transparency International. Corruption as it is in Nigeria cuts across a wide cadre from grand scales in high levels of government that distort policies and cripple the effective running of economic activities to petty, everyday abuse of entrusted power by mid and low-level government officials, in their interaction with citizens.
The effects of corruption is rippling as indicated by studies complied by the World Bank.
The ‘business as usual approach’ to doing business in Nigeria deters investments and innovation which results in poor fiscal revenue and expenditure, higher leakage through money laundering, and weak institutions.
As a result, inequity and poverty is exacerbated, economic growth is stalled and capital formation is lowered.
Nigeria’s tax revenues according to studies by PWC are estimated to be 8% of its GDP, the lowest amongst the four countries understudied – Ghana, Malaysia and Colombia.
Also threatened by high levels of corruption are foreign direct investments in the country as well as the ease of doing business for which Nigeria currently ranks 169 out of 190 on the World Bank ease of doing business index.
Higher corruption rates also mean high prices and increase in inflation. General well-being of citizens are also directly affected as public institutions are not properly funded and laden with bureaucracies associated with too many middlemen operating under the business as usual umbrella.
Comparing levels of corruption in Nigeria, Ghana, Colombia and Malaysia, the reports indicate that Nigeria’s GDP could rise to $534 billion in 2030 if corruption is addressed more radically. Nigeria’s current GDP stands at $568.5 billion and ranks 136 on the Corruption Perception Index (CPI) signalling very high corruption levels. Ghana ranks 61 on the CPI and currently has a current GDP of $38.65 billion.