THE ENEMY WITHIN: CORRUPTION AND ITS IMPACT ON DEVELOPMENT
4.4 Impact of Corruption on Development
We have seen in Chapter 1 that one of the consequences of corruption is hampering development. We have even cited examples from some African countries. Here, we shall be focusing on the impact of corruption on development in Nigeria mainly. It has been acknowledged that corruption has negatively impacted on the country’s development. For instance, Vision 2010 states that although corruption is a world-wide phenomenon, its level in Nigeria has negatively impacted on the country’s development and external image. Corruption appears to have become a way of doing things, though it is resented by a significant number of people who are hopeless in the face of weak and selective application of sanctions (Vision 2010 1997: 9, 58).
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The President is the immediate past Governor of Katsina State in Northern Nigeria where he served two 4-year terms consecutively (1999-2007).
Leakage of public funds as an effect of corruption in Nigeria is conspicuous. It is not known, and it may not be possible to know, exactly how much has so far leaked. As at 1984, “knowledgeable observers…estimated that as much as 60 percent of the wealth of [the] nation [was] regularly consumed by corruption” (Achebe 1984: 40). This percentage is believed to have risen to 70 by 2002. According to the former EFCC Chairman, Nuhu Ribadu, about 70 percent of the nation’s income used to go to waste and corruption until 2004 when it dropped to about 40 per cent due to control on the central government (The Boston Globe
2004). The claimed reduction may not however be correct because he assumed that corruption was only prevalent at the state and not the central level during Obasanjo’s term. Events which unfolded after the departure of Obasanjo indicate that corruption existed also at the centre.
If the estimates of the percentage of the resources lost to corruption range between 40 and 70 per cent it would be reasonable to assume that more than half of the country’s resources have gone down the drain. This assumption is supported by the recent disclosure made by the Executive Director United Nations Office on Drugs and Crime, Dr Antonio Maria Costa, that before the return of democratic rule in 1999, past corrupt Nigerian leaders had stolen and stashed away in foreign banks about $400 billion of the country’s wealth (Leadership 14/11/07)! This figure excludes what the leaders stashed within the country and the leakage caused by petty corruption.
It may make economic sense to argue that corruption may not necessarily be anti-developmental if the money is kept in the country since it would trickle down to the people in various ways such as bank loans, job creation through industrialisation, etc. But the fact that this huge sum of stolen public money (i.e. $400 billion) is stashed away in foreign banks suggests that such argument cannot stand. The figure is not, nor does the source claim that it is, exhaustive. According to recent World Bank estimates, approximately 80 percent of Nigeria’s oil revenues are concentrated in the hands of 1 percent of the population, and some 70 percent of the country’s wealth is held abroad (Khakee 2008). It is safe to conclude therefore that corruption has cost Nigeria about the
equivalent of its total earnings from oil exports between 1970 and 2007 which we put in Chapter 2 as about $572 billion.
The amount of developmental work some of these monies could do is amazing. On the Posts and Telegraphs Department scam during the Second Republic (already mentioned), for instance, Achebe (1984: 39) estimates that the yearly loss therefrom (N600 million) could build two additional international airports like the Murtala Mohammed Airport Lagos; or buy three refineries; or build a dual express motorway from Lagos to Kaduna;68or pay the salary of 10,000 workers on grade level 01 for forty years!
Similarly, it will be shocking to learn that the total amount of money which 28 public officers of the Second Republic only were made to forfeit by the Buhari Tribunals (N42, 499,413; $5,985,654; and £532,000) as we saw in Table 4.3 represented more than what the Federal Government projected for secondary education per year;69more than twice the amount it allocated for adult education for five years;70 and about 1/6 of what the whole states of the federation projected for the health sector in a year.71
A clear case of corruption as antithetical to development could be seen in how the repatriated Abacha loot of N65 billion from Switzerland were utilised in five target sectors of the Millennium Development Goals (MDG) by the Obasanjo regime in cooperation with the World Bank. The money was allocated to the power sector (to generate power for economic activities), works (to build priority economic roads), health, basic and secondary education, and water. As a matter of fact, the money, which was about the cost of the 2003 MDG federal budget, was largely responsible for the huge increase in capital expenditure in the 2004 MDG federal budget. In a letter to the Ambassador of Switzerland to Nigeria dated January 9, 2005, the Federal Ministry of Finance explained that
68The distance between these two cities is 635 kilometres. 69
Under the Fourth National Development Plan (1981-1985), out of its total capital expenditure projection of N2.45b on education, the Federal Government allocated N202.680m for secondary education for the 5 year period (Fourth Plan: 259).
70The Federal allocation to adult education for the whole 5 years was N19m (Fourth Plan: 260). 71
The whole 19 States projected a total of N1573.576m on the health sector for the 5 year period (Fourth Plan: 280).
the money was programmed into and utilised in the 2004 budget the major objective of which was moving the country towards achieving the MDG. And that this was done partly in anticipation of the repatriated funds and in line with National Economic Empowerment and Development Strategy (NEEDS) programme (World Bank 2006). The government sustained the trend of expansive budget spending in the five sectors in the 2005 budget.
Figure 1 below shows a considerable difference between the 2003 and 2004 budgets and how the trend was maintained in 2005. The first 2004 bar included the repatriated funds while the second 2004 bar shows how the expenditure stood without the funds.
Source: World Bank 2006
And the following Table 4.4 shows how the allocation was made among the five Millennium Development Goals (MDG) sectors:
Table 4.4: Utilisation of Repatriated Abacha Loot
No. Sector Allocation, based on preliminary information (NGN bn) Funds Accounted for via Projects List (NGN bn) 1. Power
o/w: Rural Electrification Power Generation
21.70 21.94
8.10 13.84 2. Works
Priority Economic Roads 18.60 17.06
3. Health
o/w: Primary Health Care Vaccination Programs
10.83 10.84
2.02 8.82 4. Basic and Secondary
Education
o/w: Primary Schools Junior Secondary Schools Federal Govt Colleges
7.74 7.79 3.16 3.40 1.23 5. Water
Potable Water & Rural Irrigation
6.20 7.53
TOTALS 65.07 65.16
Source: World Bank 2006.
An interesting analogy could be drawn on the amount involved in the recent scandal involving the Speaker of the House of Representative and her Deputy. While N628 million contract was awarded for the unnecessary renovation of the official residencies of the duo, a similar amount (N686 million [about Euro 3.9 million]) was being used by the European Union to provide water and sanitation to twelve (12) towns and communities in Enugu and Jigawa States.72 The Scheme was to be executed through Water Aid, an international NGO under the theme “Closing the Gap: Improving Water Supply and Sanitation Provision for Small Towns in Nigeria”. It was expected that about 410,000 people would benefit from the scheme out of which 30,000 were considered to be in vulnerable situations (Thisday 26/9/07).73 Thus while foreign donors help Nigeria to move closer to achieving the MDG, some of its leaders work to distance it far away from such objective. Looking at cases like this one, one would agree with Osoba (1996) when he stated that:
72Three Local Government Areas would benefit from the scheme in each of the two states. In
Jigawa, the Local Governments are Gumel, Suletankarkar and Maigatari. In Enugu, they are Nkanu East, Udenu and Igbo-Etiti.
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This analogy was contained in a piece titled “Compare N686m with N628m” by Kayode Komolafe onThisday’s Back Page Extra of 26/9/07.
The fraudulent accumulation process has resulted, over time, in the progressive and phenomenal enrichment of Nigerian rulers (both civilian and military), the emptying of the national treasury and the indebtedness of the country almost to the point of bankruptcy: hence the critical dearth of resources for investment on the social, economic and overall cultural development of the masses of our people.
Corruption not only eats up the public funds locally generated like the oil money, it does not also spare funds provided by international development institutions for development projects. For instance, the Newswatch magazine revealed that “in about 18 years, the African Development Bank has poured N258 billion loans into Nigeria for various social service projects. Nearly all that money has gone down the drain” (in Gbefwi in Ayua & Guobadia 2001: 640-641).
Where it is prevalent like in Nigeria, corruption lowers work morale among public officials and instead of working hard to build the nation, they indulge in corrupt activities thereby impeding development. Honesty and living within one’s legitimate earnings become lost virtues. One could not agree more with NEEDS when it says that: “Nigeria’s legacy of mismanagement and corrupt governance has encouraged many people to seek ways of sharing the national cake instead of helping bake it” (NEEDS 2003: xiv).
The argument that corruption has the effect of stymieing the development of a nation is also re-echoed by TI as follows:
Corruption aggravates poverty. Surveys of the very poor in developing countries point to corruption as having a significant and detrimental impact on their lives…Corruption not only reduces the net income of the poor but also wrecks programmes related to their basic needs, from sanitation to education to healthcare. It results in the misallocation of resources to the detriment of poverty reduction programmes…The attainment of the Millennium Development Goals is put at risk unless corruption is tackled as an integral part of poverty reduction strategies… The growing global consensus on the importance of corruption as an impediment to development is reflected in the ratification of the UN Convention Against Corruption (UNCAC) (TI 2007).
Countries that are highly corrupt are bound to have their level of human development very low. Conversely, countries with low level of corruption
record a high level of human development provided there are available resources. Comparative research has shown that “reducing corruption from Indonesia’s level to South Korea’s in 1997-8 would have produced between a twofold and a four-fold increase in per capita incomes and decrease in infant mortality, as well as improvement in literacy of between 15 and 25 percentage points” (Kaufmann
et al2000 in Smith 2007: 180). That there is a strong correlation between human development as measured by UNDP’s Human Development Index (HDI) and levels of corruption is something generally agreed to: “as levels of corruption increase HDI levels decrease more and more precipitously” (Johnston 2002 in Smith 2007: 180).
A look at UNDP’s Human Development Index (HDI) along side TI’s Corruption Perception Index (CPI) would prove the above point. Countries topping the HDI list are the least corrupt under the CPI. As could be seen in Table 4.2, Botswana, Malaysia, Ghana, or even Venezuela and Indonesia have better corruption records than Nigeria and it explains why they have been able to achieve Medium Human Development Index (as we saw in chapter 2) leaving Nigeria at the bottom of the last category, the Low Human Development Index. Borrowing from the law of demand and supply in economics, we could formulate a law of development in the following terms, corruption and development standing in place of price and demand respectively:74the higher the corruption, the lower the development; the lower the corruption, the higher the development. The following chart depicts this law:
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The law of demand in economics states that “the higher the price, the lower the quantity demanded; the lower the price, the higher the quantity demanded”.
Figure 2: Law of Development
4.5 Conclusion
One could write volumes on corruption in Nigeria and its impact on development. The cases presented herein and others which have come to light are just tips of the iceberg. For one case of corruption that leaks out in one government department, there might have been hundreds or more undetected. Each case of corruption means that money which might have been utilised for development has been siphoned off for personal gain.
Like his predecessor, President Umaru Yar’Adua has promised zero-tolerance on corruption. He has recognised that the level of the country’s underdevelopment is a measure of its failure to optimise the use of its abundant natural resources. Having recognised this much, he made fight against corruption one of the 7-point agenda of his administration. At the Sixth National Seminar on Economic Crimes organised by the EFCC in Abuja in November
2007, he declared thus: “I vow before you this day that as President of this country, I will lead the fight against corruption. The fight against corruption is my fight” (Leadership14/11/07). It is the position of this study that corruption is merely a symptom of a larger disease. For an effective fight against it, it is necessary that factors contributing to it are identified. Lack of rule of law in practice, we argue, is one such factor. The level of corruption as we have seen in the foregoing discussions is spurred by absence of rule of law in practice. I say “in practice” because I argue that the Nigerian Constitutions have made adequate rule of law provisions. I shall examine these provisions in the next chapter.
CHAPTER 5
RULE OF LAW UNDER THE NIGERIAN CONSTITUTIONS: AN