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Nigeria would lose $534 billion to corruption – Int’l Auditors

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Osibanjo

While most Nigerians live in poverty, millions would be spared if officials stopped pilfering from the public purse. That is the conclusion of a multi-national accounting firm assigned to assess the impact of corruption on Nigeria’s economy.

Whistleblowers sometimes try to estimate how much cash has gone missing from Nigeria’s public purse. In 2014 a respected former central-bank governor lost his job after claiming that $20 billion had been stolen. But this captures only a small share of the damage done by corruption.

Professional services firm, PricewaterhouseCoopers (PwC) at the weekend presented a report titled Impact of Corruption on Nigeria’s Economy to the Vice President, Prof. Yemi Osinbajo, at the Presidential Villa, Abuja.

They compared Nigeria to three other resource-producing countries that are somewhat less corrupt than it, though by no means squeaky clean: Ghana, Malaysia and Colombia. PwC concluded that Nigeria’s’s economy, which was worth $513 billion in 2014, might have been 22% bigger if its level of corruption was closer to Ghana’s, a nearby west African country.

By 2030, they said, in a press statement made available to Elombah.com, the size of Africa’s biggest economy should triple in real terms come what may. Yet if Nigeria manages to reduce corruption to levels comparable to Malaysia (itself hardly above suspicion: its prime minister recently had to explain how almost $700 million had made it into his bank account), its economy could be some 37% bigger still. The additional gain would be worth some $534 billion (adjusted for inflation), or about as much as the economy is currently worth. If it does nothing to change then the cost of corruption in Nigeria would amount to almost $2,000 per person a year by 2030, PwC reckons.

According to an international news magazine, some of this damage is visible. When public cash—most of which comes from oil pumped in the southern Niger delta—is siphoned off, investment in health, education and roads suffers. But corruption also affects the economy in more surreptitious ways. Public institutions often hire the family and friends of the boss rather than the best candidates. In turn those institutions become more inefficient and deliver less of what they are meant to, whether it is education or roads. In addition countries where corruption is high attract less foreign investment. They have higher prices, and lower tax bases. Nigeria’s tax-to-GDP ratio is only about 8%, compared with more than 25% in South Africa. Given rampant theft, many people are reluctant to pay their taxes on the ground that the money will just be squandered.

This may in part explain why, despite its oil wealth, there is a rising share of Nigerians who are classified as below the poverty line. A survey of living standards (using data from 2010, the most recent figures available) suggested that 61.2% of the population lives in absolute poverty, an increase of over six percentage points on the previous figures from 2004. At least 25m people who should have been lifted into low- or middle-income still reside below the breadline thanks to “excess corruption”, says Andrew S. Nevin, PwC’s chief economist in Nigeria. 

Last year Muhammadu Buhari, the president, swept to power on the votes of Nigerians who have had enough. Since then, anti-fraud agencies have arrested senior politicians and sidekicks accused of embezzlement, and new corruption bills have been put before parliament. “Ending the impunity is about political will, because those benefiting most are among the ranks of the leaders,” says Samuel Kaninda, the co-ordinator for west Africa at Transparency International. Cleaning up Nigeria will be an Herculean task. But the rewards are equally fabulous.

In the words of The Economist, power corrupts. So too does a resource-rich economy, like Nigeria’s, where easy access to oil revenues opens the door to palm-greasing. Of 168 countries surveyed by Transparency International, an anti-corruption group Germany, in its annual Corruption Perception Index, Nigeria ranks 32nd from the bottom.

The much bigger question is where Nigeria could be if its politicians and officials were a little more honest.

An answer has now come from economists at PricewaterhouseCoopers (PwC). 

The PwC team led by Mr. Uyi Akpata, Country and Regional Senior Partner West Market Area, said that the report centred on the ways corruption had impacted the Nigerian economy over time, adding that PwC believes that the work provides robust evidence and impetus for reducing the phenomenon in Nigeria.

Akpata stated that “the results of the study show that corruption in Nigeria could cost up to 37 per cent of Gross Domestic Products (GDP) by 2030 if it was not dealt with immediately. This cost is equated to around $1,000 per person in 2014 and nearly $2,000 per person by 2030. The boost in average income that we estimate, given the current per capita income, can significantly improve the lives of many in Nigeria”.


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