Corruption as the cause of nigeria’s economic recession

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ABSTRACT The research seeks the linkage between corruption and economic recession in Nigeria. The finding of this research has shown that corruption in Nigeria has a direct effect on the current economic backwardness of the country. It was revealed that corruption is one of the greatest obstacles to the development of the Nigerian economy as it has brought about high level selfishness, misallocation, diversion and improper allocation of scarce resources. In this, there is a review of relevant literature, an adoption of a theoretical framework which is the public interest theory. This shows that when public fund is being used to satisfy private interest, the purpose to which such fund would have been used for is aborted, thereby resulting to economic recession. The causes of recession as well as corruption are examined and how corruption affects economic recession in Nigeria. At the end, the researcher suggested some way forward for the Nigerian economy.

? INTRODUCTION Nigeria is one of the countries in Africa that loses billions of dollars yearly because of corruption. She was ranked the second most corrupt country in the world in 2004 (Obu-Olu, 2008). In 2005 and 2008, Nigeria was ranked 13th and 17th respectively out of 146 countries by transparency internationals corruption perception index (TICPI). Although the 2007 ranking placed Nigeria as 32 most corrupt country out of 147 countries by TICPI, corruption still remains a serious problem in Nigeria (Shehu, 2006). Corruption is not a Nigerian word but an English word laced with western ideas, the concept behind it is found in other cultures. Corruption is one of the dare devils that stares humanity in the face. It is also a global problem with certain destructive tendencies in the third world countries like Nigeria. The term serves as the spring board to under development in Nigeria. Most political, economic and social problems in the count4y emanate from corruption which manifest in many ways such as lack of accountability, inadequate funding of programs, diversion of public resource to private ownership, ethnicity, lack of competence and efficiency, thereby culminating to a poor economic structures, leading to the current state of economic recession in Nigeria. In Nigeria today, it is just a few families that can boost of 3 square meals a day, wear good clothes or enjoy the basic necessity of life, such as water, good health facilities, electricity and good road network. Hence, everyone takes to corruption no matter ones owns small capacity as a way of making up or balancing the prevalence inequality which in one way or the other contribute to the economic recession. Corruption transcend nearly every structure of the Nigeria society, the situation is so bad that corruption has been institutionalized to a point where it almost passed for official policy in both public and private sector of our National life. In the course of my research I shall examine the linkage between the corruption and economic recession in Nigeria and prescribed the way forward.

? DEFINITION OF TERMS CORRUPTION: Corruption is the misuse of public power (by elected politician or appointed civil servant) for private gain. Corruption is an improbity or decay in the decision-making process in which a decision-maker consents to deviate or demands deviation from the criterion which should rule his or her decision-making, in exchange for a reward or for the promise or expectation of a reward, while these motives influencing his or her decision-making cannot be part of the justification of the decision. Corruption is a form of dishonest or unethical conduct by a person entrusted with a position of authority, often to acquire personal benefit.[1] Corruption may include many activities including bribery and embezzlement, though it may also involve practices that are legal in many countries.[2] Government, or ‘political’, corruption occurs when an office-holder or other governmental employee acts in an official capacity for personal gain. RECESSION: A recession is when the economy declines significantly for at least six months. That means there’s a drop in the following five economic indicators: real GDP, income, employment, manufacturing, and retail sales. People often say a recession is when the GDP growth rate is negative for two consecutive quarters or more. But a recession can quietly begin before the quarterly Gross Domestic Product reports are out. A recession is a business cycle contraction which results in a general slowdown in economic activity.[1][2] Macroeconomic indicators such as GDP (gross domestic product), investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). ECONOMIC RECESSION: Economic recession is a period of general economic decline and is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. Generally, a recession is less severe than a depression. The blame for a recession generally falls on the federal leadership, often either the president himself, the head of the Federal Reserve, or the entire administration.

? LITERATURE REVIEW Several scholars have had their take on how corruption affects economic recession in Nigeria. They all have their own distinct views on how corruption affects the economic recession. While some tend to support corruption as a necessary tool of manoeuvring by entrepreneurs, politicians and government, others posit it has adverse shock on societal living standard. Actually, there are controversies about the effect of corruption. Corruption is taken to operate as piece-meal reward to bureaucrats which motivates them to render public services. It also empowers investors to function by circumventing some rules and regulations. This view is attributed to the works of (Leff, 1964, Huntington, 1968, Lui, 1985, Kaufmann, 1997, Acemoglu and Verdier, 1998, Kaufmann and Wei, 2000). Their views are associated with the “Grease-the-wheel” theory. The protagonists of this theory are of the view that corruption and bribery economically benefit the society thus: (i) an efficient resources allocation system that equates demand and supply. It is believed that efficient and cost effective managers willingly pay up bribe and get the needed services and goods from source points, thereby improving resources allocation; (ii) people who are able to pay bribe escape from waste of time in obtaining goods and services in consideration of perceived advantages of such resources; (iii) more competitiveness of monopolistic industry can be achieved through bribery by instilling of fundamentals of competition for better resources allocation; (iv)with the aid of bribery, burdensome rules and regulations, inefficient organizational pattern and ineffective legal frame-work can be thwarted or evaded; and (v) more value is accorded to firms’ resources due to their higher cost associated with corruption. On the contrary, critics of corruption posit the devastating, inefficiency and selfishness associated with corruption by those meant to be at the helm of resources allocation. However, recent studies have opposed grease-the –wheels proposition by asserting that corruption brings rising, undue and flexible and restricted regulations of rules as public agents’ desire for additional chances to extort bribes; again the numerous independent corrupt individuals cannot individually regulate the entire process as taking bribe cannot accelerate efficiency neither does it retard progress. Consequently, bribe cannot enhance efficiency instead it raises inefficiency of allocation of resources. However, it is pertinent to note that the bribe giver may not be so certain of the Fulfilment of his desire by the receiver as no contractual agreement was reached. Firms who give bribe are not efficient in cost minimization and so sell their low quality output at high prices so as to recover cost incurred in bribery. This means the society paying for cost of corruption in form of high prices. Manpower may not be efficiently employed as the desire for a rewarding sector leadership by party acolytes may be associated with lack of requisite training and ability but mainly interested in personal gain as against efficiency and productivity. The adverse effects of that are borne by the society (Murphy, 1991; Bardhan, 1997; Kaufmann, 1997 and 2000). The opposers of corruption have shown that the perceived benefits of corruption are the canker worms that destroy the society. Treisman (1998) in his study of the causes of corruption: a cross-national study, found that countries that were more economically developed and those which are former British colonies were rated less corrupt. Those which have a federal structure were more corrupt. In other words economically developed countries were indeed associated with lower corruption. A country with larger gross national product (GNP) per capita has a lower corruption rating and vice versa for a country with lower GNP per capita. This result can be said to be an axiom given visible events in Nigeria, apart from the Transparency International Corruption Perception of various years, individuals’ perception and experiences of people about Nigeria. Nigeria is not economically developed but a federal country with a lower GNP and a British colony. Obayelu (2007) in his review of the effects of corruption and economic reforms on economic growth and development: lessons from Nigeria, found that there have been significant reductions in the level of corruption in the country through the introduction of government anti-corruption instruments. Besides, he found a negative correlation between levels of corruption and economic growth thereby making it difficult for Nigeria to develop fast. Aidt (2009) in his critical study of corruption, institutions and economic Aidt (2009) in his critical study of corruption, institutions and economic development, asserted that the evidence supporting the ‘greasing-the-wheels proposition’ is very weak and shows that there is no correlation between a new measure of managers’ actual experience with corruption and gross domestic growth. The study unravels a strong negative relationship between growth GDP per capita and corruption and so corruption is a likely source of unsustainable development. Gyimah-Brempong (2002) employed a dynamic panel estimator in analysis of panel data from African countries in his study of corruption, economic growth and income inequality in Africa. He found that corruption reduces economic growth directly and indirectly through fall in investment in physical capital; increased corruption is positively correlated with income inequality and the combined effect implies that corruption adversely affects the poor more than the rich in African countries. In a similar study, Ugur and Dasgupta (2011) reported that corruption has a harmful and real effect on growth in low income countries, but the direct impact of corruption on growth in low income countries (LICs) is small but negative (-0.7). So, the indirect effect through the public finance and human capital channels is relatively lower (?0.52 percent). The over-all effect of corruption on per capita gross domestic product growth in LICs is -0.59 percent. Ajie and Wokekoro (2012). in their study of the impact of corruption on sustainable economic growth and development in Nigeria using the method of ordinary least square, found among others, that weak institution of government; dysfunctional legal system; lack of transparency; high poverty/unemployment rate and political interference on the operations of anti-corruption agencies constitute the major causes of systemic corruption in Nigeria.

THEORETICAL FRAMEWORK: Having carefully and painstakingly reviewed the topic of the study, it became imminently imperative that a theoretical framework must be adopted which will serve as a guide in describing, analyzing, interpreting and predicting phenomenon. This theoretical guide will also serve as an arbiter in legitimizing the review. In the course of this research, I shall employ the PUBLIC INTEREST CENTRED PERSPECTIVE as my theoretical basis. The proponents of this perspective believe that corruption is in some way injurious tp or destructive of public interest. They see corruption has constituting a betrayal of trust, especially in democracy where public office is held in thrust of the people. It emphasizes the deleterious effect of corruption on development, insisting that whether in the private or the public sphere, corruption results in the abuse and misuse scarce resources that significantly affect an entire economy through multiplier effect. The Nigerian situation has shown that the misuse of public fund that would have been used to execute life changing policies by politicians to satisfy their selfish interest has generated to the current economic recession. This theory justifies the extent to which mismanaged funds through corruption cripples the Nigerian economy, which tantamount to economic recession.

HISTORY OF CORRUPTION IN NIGERIA The trend of corruption in the first republic of Dr. Nnamdi Azikiwe and Tafawa Balewa level of corruption period which has maintain until 1975 but this does not mean that there was atom of corruption but quantifies corruption as a very low and does not affect so much the social life, but which as this stage almost everything could be achieve without extortion. At this time, political leaders who has been marginalized economically by the discriminating economic policy of the colonial period or regime used to the state power accumulation and these has little experience of entrepreneurial activities and little or low capital. But due to the in effectiveness of the probe panel then much was not recorded of their corrupt practices. Meanwhile in the Second Republic or castrated by Shagari’s administration, the president address the participant in the graduation ceremony of the senior executive course of the Nigerian institute of policy and strategic studies (NIPSS) at Kuru, near Jos on October 29th, 1983 and lamented that he was dismayed to understand that corruption, fraud, smuggling are not only being institutionalized but are in fact becoming a business pursuit in the country. The account of corruption in the public would file the archives if recorded. Corruption was evidence in the payment of large mobilization fees before any work began. As a result of these, many projects were abandoned half way. The federal capital authority and the disappearance of naira worth building materials from Nigeria National supply company. More so, there was a sudden outbreak that gutted the ministry of affairs, the 37 story building at Lagos, headquarters of Nigeria external telecommunication and federal capital development authority in Abuja, when the establishment were under investigation of corruption and fraud. It seems the fire was deliberately set in other to cover up corruption and fraud. (Tariola, 2001:157). Corruption existed during the colonial era, the military regime and even the other civilian regimes in Nigeria but none of such regimes has witness the level of economic down town that is prevalence in this regime, maybe because the level of corruption in this period where not to the existence in these regime, there by leading to the current economic recession.

REASONS WHY PEOPLE ENGAGE IN CORRUPTION IN NIGERIA There exists a myriad of linkages to corruption in Nigeria. A phenomena or social disorder does not just come to being from thin-air, as there exist some catalyst that triggered its existence. Such is that corruption in Nigeria that came to be being through a social disorder. It is disheartening to know that 25% of the federal spending is on the National Assembly. It is estimated that a senator gives about 4million per day. This to some extent can lead to some corruption. Also in Nigeria public office is usually seen as the easiest means of accumulating private wealth by public office holders for this mere fact, people contest elections so that they can get to power and accumulate the wealth that was meant for everybody. In a society where a political power is used a means for economic and financial enrichment, class antagonism becomes the other of the day. The government inability to enforce the developmental policies also leads to corruption. Policies formulated in Nigeria are always seen to be weak and the government in some instance do not have the impetus to accomplish and see to the execution of these policies. Consequently, poverty is another great catalyst of corruption. The quest for development has been one of the contending issues in the Nigerian polity. Majority of the population of Nigerian are in deep poverty and these to a great extent endanger corruption. The oil booms that the country experienced in the 1970’s did not change the economic capabilities of the people. The economic problem was heightened with the level of unemployment, leading to the increase crime corruption. THE REASON FOR ECONOMIC RECESSION IN NIGERIA Corruption has been wheel on recession. Hence, it is general seen as a major cause of recession. The economy of Nigeria has been pushed to the drains and this; to a large extent affect socio-economic and political lives of the people. Poor economic planning is often seen to be associated to Nigeria’s recession. The government has been to determine and plan it economy to the extent that the proper economic life of the people will be sustained. Such is a case where the plans of the government are not executed and implemented the way it was supposed to be. When corrupt leaders divert from the normal way things supposed to be done to do things the way it will satisfy their selfish ends, economic backwardness is always the case. Any government who fails to plan is inevitably planning to fail. Like Nigeria, the current recession could be traced to a budget delayed and to the exchange rate policy. Every government always have life-change projects but when such projects are poorly planned for, its attainment becomes impossible. Similarly, when there is existence antagonistic policies that are conflicting to each other, recession is in evitable. Where these exist, there is bound to be recession. This is because of high interest rate, high tax rate are tied to the monetary policy measures. But the government instead, informs the public it is adopted and expansionary budget deficit. Another major cause of recession in Nigeria is the inflation rate. When the government bans the importations of certain essential agricultural product like rice, without considering gestation periods or a replacement, recession becomes inevitable. There is untold hardship as rice which was a major food in the country is hard to come by and the little available becomes costly and unaffordable. All these issues and many more culminate to bring about the current economic hardship and backwardness in Nigeria. HOW CORRUPTION BRINGS ABOUT ECONOMIC RECESSION IN NIGERIA As was complained by the acting chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu on this issue, he said that the current economic recession in Nigeria is occasioned by the corrupt leadership of the country. Corruption has come to be a part of the Nigerian polity as it has sunk deep into the people. It is an aberration, yet it being upheld by the people as a tradition as generations upon generations have inherited it as a part of their culture. No wonder even the least persons in the country exhibits the heinous act without any fear. The level of corruption in the country affects the social, political and economic life of the country, mostly the economic aspect where it has a direct repercussion on the current economic recession. The menace of corruption has, in various ways, stifled the realization of policy objectives, thereby paralyzing and jeopardizing the good intentions of policy makers and the progress of the country, Nigeria. The problem of growthlessness in Nigeria has, among other things, stemmed from greed, lack of essentials of living and unguaranteed future. Nigeria, as a developing economy, is seriously lacking in capital requirement for development. Many cannot afford two square meals daily due to improper and insufficient allocation of resources. The few available resources which are supposed to be well allocated in the 774 local government areas are frequently being diverted to personal use, thereby denying the people of better living standard that is expected. Hence, majority of Nigerians are living in abject poverty while few Nigerians are very wealthy to the international standard. Ogbulie (2013) points out that because government has failed in making available those needs that will reposition people to live a better life, it is difficult to terminate corruption. So, in an attempt to tackle those needs by self, people resort to strategizing on how to fraudulently secure present and future needs and as such, it is only when the basic needs of people are guaranteed by the public managers of resources that many Nigerians can opt for a decent life devoid of corruption. Corruption in Nigeria has stifled industrialization and infrastructural provision. No meaningful development can be achieved without short, medium and long-term industrialization strategies. The problem of allocated resources not fully employed in certain establishments or targets as budgeted, due to corruption, retards productivity and resources utilization, thereby tying Nigerians in the vicious circle of poverty. Obayelu (2007) notes that the importance of infrastructure for economic growth and development cannot be over emphasized. The poor state of electricity, transport and communications is a major handicap for doing business in Nigeria. This situation is reflected in deficiency of sufficient power supply, good road net-work, poor school environment, lack of learning facilities, improperly equipped health centres, among others. Most Nigerians have willingly or unwillingly left the country owing to dissatisfied with the situation of things in the country. Nigerian professionals are scattered in European and Asian countries. The inability of the government to make the country conducive for people to put in their best has compelled a good number of Nigerians to travel abroad and they are not willing to come back. This was so rampant during the military regime. The Presidential Committee on Brain Drain, which was set up in 1988 by the Babangida administration between 1986 and 1990, estimated that Nigeria lost over 10,000 academics from tertiary institutions alone. Total estimates, including those who left public, industrial and private organizations, are over 30,000. 64% of Nigerians in the United States, aged 25 and older, have, at least, a bachelor’s degree. The 1993 UNDP Human Development Report indicated that more than 21,000 Nigerian doctors were practicing in the United States alone while Nigeria continuous to suffer from shortage of doctors. All these people l eft the country because the government failed to take care of the people and was busy pursuing selfish interest. Eboh and Uma (2009) point out that the adverse effect of brain drain is enormous given that quality manpower has the potency to eradicate or drastically reduce poverty. Income of a household is a function of members’ skill and ability to function. Aggregate per capita income depends on individual’s per capita income. Professionals usually go with their skills; entrepreneurial ability and capital creating disequilibrium that in multiples affect economic development.

? RECOMMENDATIONS Corruption is one the dare devils that stares humanity in the face. It is also a global problem with certain destructive tendencies in third world countries like Nigeria. Therefore, the following recommendations will help to eradicate corruption in our nation. 1. To curb corruption in Nigeria, the government should provide independent judiciary which will be responsible for penalizing the offenders. Even those who thought themselves “Above the law” having realized that they will be penalized by the system, they will not misbehave. 2. The mass media should not left out of the campaign. Ordinarily, the mass media are regarded as the watchdog of the government. The co-operation of the journalist, the press, radio and television operators, should be enlisted and particular roles be design foe them especially in propagating the content of the law and the ideas of the campaign 3. The political zeal to fight corruption has to be practically demonstrated beyond mere lip service. First, political leaders have to make themselves models of transparency, honest and accountability in government. It is when political elites screw political corruption that they can have the audacity to check bureaucratic (public service), as the two go to hand. The second leg is the genuine determination to implement the provision of the law. 4. Sycophants and praise singers in the Nigeria should be made to face the anti-corruption laws. 5. All allegations of corruption practices of the past should be duly convert gated and affected public officers must be made to face the warrant of the law, else the average Nigerian will just think the on-going crusade against corruption is a continuation of the rhetoric and sloganeering of the past. 6. In Nigeria, we rarely follow scandals to the end. People that perpetuate corruption always go free due to their position in the sorely as we witnessed in cases involving key officials of the national assembly. Appropriate punitive measures should be melted to corrupt officials. 7. The system that allows money to be siphoned out of the country at will, and for withdrawals to be made from the nations external reserves at caprices of an individual should be properly looked into in other to prevent further occurrence of such ills. 8. Religious leaders should Endeavour to lead exemplary life and speak out the truth at all time without fear or favour. However, the researcher believes that the above recommendations if followed, will eradicate hydra-headed corruption monster in Nigeria, thereby eradicating the current plight of corruption in the country.

CONCLUSION In Nigeria, since independence, series of reforms have been carried out in the public service so as to make the public bureaucracy more efficient and result oriented. However, the anticipated gains of such reforms have not been visible due to series of factors which include that of corruption. Whichever way one views corruption, particularly bureaucratic corruption, it involves a violation of public duty or deviation from high moral standards in exchange for personal pecuniary going. It is concerned with moral and dishonest acts. Accurately, it can be asserted that it is the duty and responsibility of evry good government to create their environment and set the tone for good and effective policies, including conducive business environment, protection of persons and properties in any society. The Nigeria government has been blamed properly. So, for not setting a conducive environment, economic and social development over the years, particularly at this time, when public security and safety has steadily become a major issue for citizens and corporate investors alike. Corruption additionally, has become a hot topic among citizens and investors both apparently risen, due in part, to a battered and depressed economy, and since, the discussion regarding corruption, has tended to be focussed or centred around the government or public sector component of the hydra-head corruption monster. Government has brought ways of combating corruption through some crude in Nigeria. The provisions are laid down in the constitution of the federal republic of Nigeria. These include the criminal code, probe panels and commissions, the anti-corruption tribunal, the anti-corruption acts and war against indiscipline and corruption conduct of bureau, independent corrupt practices and other related offence commission etc. It could be observed that the several crusade made by the government in order to curb corruption in the country has not been effective. More so, the EFCC and ICPC are not independent, they are being controlled by the executive and these have a major hindrance in the fight against corruption in Nigeria. Making corruption history is the surest way of making all the problems of Nigeria a history, especially the current economic recession.

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