The petroleum-based economy of Nigeria, long hobbled by political instability, corruption, and poor macroeconomic management, is undergoing substantial economic reform following the restoration of democratic rule in 1999. Nigerias former military rulers failed to diversify the economy. The economy has overdependence on the capital-intensive oil sector, which provides less than 25% of GDP, despite providing 95% of foreign exchange earnings, and about 65% of government revenues. The largely subsistence agricultural sector has not kept up with rapid population growth, and Nigeria, once a large net exporter of food, now imports some of its food products. In 2006, Nigeria successfully convinced the Paris Club to let it buy back the bulk of its debts owed to the Paris Club for a cash payment of roughly $12 billion (USD)
Nigeria??™s economy is struggling to leverage the country??™s vast wealth in fossil fuels in order to displace the crushing poverty that affects about 57 percent of its population. Economists refer to the coexistence of vast wealth in natural resources and extreme personal poverty in developing countries like Nigeria as the ???resource curse???. Nigeria??™s exports of oil and natural gas??”at a time of peak prices??”have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80 percent of Nigeria??™s energy revenues flow to the government, 16 percent cover operational costs, and the remaining 4 percent go to investors. However, the World Bank has estimated that as a result of corruption 80 percent of energy revenues benefit only 1 percent of the population. In 2005, Nigeria achieved a milestone agreement with the Paris Club of lending nations to eliminate all of its bilateral external debt. Under the agreement, the lenders will forgive most of the debt, and Nigeria will pay off the remainder with a portion of its energy revenues. Outside of the energy sector, Nigeria??™s economy is highly inefficient. Moreover, human capital is underdeveloped??”Nigeria ranked 151 out of 177 countries in the United Nations Development Index in 2004??”and non-energy-related infrastructure is inadequate.
From 2003 to 2007, Nigeria attempted to implement an economic reform program called the National Economic Empowerment Development Strategy (NEEDS). The purpose of the NEEDS was to raise the country??™s standard of living through a variety of reforms, including macroeconomic stability, deregulation, liberalization, privatization, transparency, and accountability. The NEEDS addressed basic deficiencies, such as the lack of freshwater for household use and irrigation, unreliable power supplies, decaying infrastructure, impediments to private enterprise, and corruption. The government hoped that the NEEDS would create 7 million new jobs, diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. A related initiative on the state level is the State Economic Empowerment Development Strategy (SEEDS).
A longer-term economic development program is the United Nations (UN)-sponsored National Millennium Goals for Nigeria. Under the program, which covers the years from 2000 to 2015, Nigeria is committed to achieve a wide range of ambitious objectives involving poverty reduction, education, gender equality, health, the environment, and international development cooperation. In an update released in 2004, the UN found that Nigeria was making progress toward achieving several goals but was falling short on others. Specifically, Nigeria had advanced efforts to provide universal primary education, protect the environment, and develop a global development partnership. However, the country lagged behind on the goals of eliminating extreme poverty and hunger, reducing child and maternal mortality, and combating diseases such as human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and malaria.
A prerequisite for achieving many of these worthwhile objectives is curtailing endemic corruption, which stymies development and taints Nigeria??™s business environment. President Olusegun Obasanjo??™s campaign against corruption, which includes the arrest of officials accused of misdeeds and recovering stolen funds, has won praise from the World Bankcitation. In September 2005, Nigeria, with the assistance of the World Bank, began to recover US$458 million of illicit funds that had been deposited in Swiss banks by the late military dictator Sani Abacha,.
The menace of corruption leads to slow movement of files in offices, police extortion tollgates and slow traffics on the highways, port congestion, queues at passport offices and gas stations, ghost workers syndrome, election irregularities, among others. Even the mad people on the street recognize the havoc caused by corruption – the funds allocated for their welfare disappear into the thin air. Thus, it is believed by many in the society that corruption is the bane of Nigeria. Consequently, the issue keeps reoccurring in every academic and informal discussion in Nigeria. And the issue will hardly go away!
Corruption is found in democratic and dictatorial politics; feudal, capitalist and socialist economies. Christian, Muslim, Hindu, and Buddhist cultures are equally bedeviled by corruption. And corrupt practices did not begin today; the history is as old as the world. Ancient civilizations have traces of widespread illegality and corruption.
In addition, corruption is a behavior which deviates from the formal duties of a public role, because of private [gains] – regarding (personal, close family, private clique, pecuniary or status gains. It is a behavior which violates rules against the exercise of certain types of [duties] for private [gains] – regarding influence (Nye, 1967). This definition includes such behavior as bribery (use of a reward to pervert the judgment of a person in a position of trust); nepotism (bestowal of patronage by reason of ascriptive relationship rather than merit); and misappropriation (illegal appropriation of public resources for private uses (Banfield 1961). To the already crowded landscape (Osoba 1996), adds that corruption is an anti-social behaviour conferring improper benefits contrary to legal and moral norms, and which undermine the authorities to improve the living conditions of the people.
Even though some of these definitions of corruption have been around for over decades, the recent development in Nigeria where discoveries of stolen public funds run into billions of US Dollars and Nigeria Naira, make these definitions very adequate and appropriate. Corruption is probably the main means to accumulate quick wealth in Nigeria. Corruption occurs in many forms, and it has contributed immensely to the poverty and misery of a large segment of the Nigerian population.
The Nature and Characteristics of Corruption
Some studies have taken a holistic (broader) approach in the discussion of corruption by dividing it into many forms and sub-divisions. These are:
i) Political Corruption (grand);
ii) Bureaucratic Corruption (petty); and
iii) Electoral Corruption.
Political corruption takes place at the highest levels of political authority. It occurs when the politicians and political decision-makers, who are entitled to formulate, establish and implement the laws in the name of the people, are themselves corrupt. It also takes place when policy formulation and legislation is tailored to benefit politicians and legislators. Political corruption is sometimes seen as similar to corruption of greed as it affects the manner in which decisions are made, as it manipulates political institutions, rules of procedure, and distorts the institutions of government (NORAD, ch.4, Jan. 2000; The Encyclopedia Americana, 1999).
Bureaucratic corruption occurs in the public administration or the implementation end of politics. This kind of corruption has been branded low level and street level. It is the kind of corruption the citizens encounter daily at places like the hospitals, schools, local licensing offices, police, taxing offices and on and on. Bureaucratic petty corruption, which is seen as similar to corruption of need, occurs when one obtains a business from the public sector through inappropriate procedure (see NORAD, ch.4, 2000).
Electoral corruption includes purchase of votes with money, promises of office or special favors, coercion, intimidation, and interference with freedom of election [Nigeria is a good example where this practice is common. Votes are bought, people are killed or maimed in the name of election, losers end up as the winners in elections, and votes turn up in areas where votes were not cast]. Corruption in office involves sales of legislative votes, administrative, or judicial decision, or governmental appointment. Disguised payment in the form of gifts, legal fees, employment, favors to relatives, social influence, or any relationship that sacrifices the public interest and welfare, with or without the implied payment of money, is usually considered corrupt (The Encyclopedia Americana, 1999).
Other forms of corruption include:
A) Bribery: The payment (in money or kind) that is taken or given in a corrupt relationship. These include kickbacks, gratuities, pay-off, sweeteners, greasing palms, etc. (Bayart et. al 1997, p.11).
B) Fraud: It involves some kind of trickery, swindle and deceit, counterfeiting, racketing, smuggling and forgery (Ibid. p.11).
C) Embezzlement: This is theft of public resources by public officials. It is when a state official steals from the public institution in which he/she is employed. In Nigeria the embezzlement of public funds is one of the most common ways of economic accumulation, perhaps, due to lack of strict regulatory systems.
D) Extortion: This is money and other resources extracted by the use of coercion, violence or threats to use force. It is often seen as extraction from below [The police and custom officers are the main culprits in Nigeria] (Bayart et. al 1997, p.11).
E) Favoritism: This is a mechanism of power abuse implying a highly biased distribution of state resources. However, this is seen as a natural human proclivity to favor friends, family and any body close and trusted.
F) Nepotism: This is a special form of favoritism in which an office holder prefers his/her kinfolk and family members. Nepotism, [which is also common in Nigeria], occurs when one is exempted from the application of certain laws or regulations or given undue preference in the allocation of scarce resources (NORAD, ch.1, ch.2 & ch.4, Jan. 2000; Amundsen, 1997; Girling 1997; also see Fairbanks, Jr. 1999).
For effective control of corruption in Nigeria, the society must develop a culture of relative openness, in contrast to the current bureaucratic climate of secrecy. And a merit system (instead of the tribal bias, state of origin and nepotism or favoritism, which have colored the landscape) should be adopted in employment and distribution of national resources, etc. More importantly, the leadership must muster the political will to tackle the problem head-on (see report on Second Global Forum on Fighting and Safeguarding Integrity, May 28-31, 1999). Regardless of where it occurs, what causes corruption or the form it takes, the simple fact remains that corruption is likely to have a more profound and different effects in less developed countries, than in wealthy and developed societies. This is due to a variety of conditions, which cannot deviate significantly from the nature of their underdevelopment (Nye 1967). Because of the corrosive effects of corruption in national development, and given the relative limited resources or poverty in the region, Africa, and indeed Nigeria, can least afford to be corrupt.