Corruption is Africa's Greatest Enemy: The Nigerian Example

Distinguished ladies & gentlemen, I am not entirely sure if it is an honour or privilege to address you on the subject of corruption being Africa's greatest enemy.

However, I express my gratitude to the organisers of this event providing me with an opportunity to share with you some of the views that I have on this subject. I hope that at the conclusion, I will be in a position to say that I am honoured to be presented with this opportunity and more importantly that you have honoured me by listening to me for the duration of my presentation.

Introduction

Many distinguished writers have quite eloquently described the concept of corruption. David Bayley describes corruption as... "a general term covering the misuse of authority as a result of considerations of personal gain which need not be monetary". Herbert Werlin describes corruption as a... "diversion of public resources to non-public purposes" and Harsch describes corruption as involving "... outright theft, embezzlement of funds or other appropriation of state property, nepotism and the granting of favours to personal acquaintances and their abuse of public authority and position to exact payment or priviledges". John Mbaku explains that in all, corruption allows inefficient producers to remain in business; encourages governments to pursue perverse economic policies and provides opportunities to bureaucrats and politicians to enrich themselves through extorting bribes from those seeking Government favours. He continues:-

"first, corruption distorts economic incentives, entrepreneurship and slows economic growth."

These definitions encapsulate a number of technical descriptions of corruption. Those familiar with the concepts in a theoretical sense would have come across general definitions such as bureaucratic corruption; political corruption and institutionalised corruption. As I am speaking from the Nigerian perspective, it is likely that I will, from time to time, liberally lace this presentation with illustrations from Nigeria. Let me give you the most commonly understood definition of corruption in the form of a joke, details of which many of you may have come across in your experiences. Once in Nigeria, there was a contract advertised for the building of a bridge connecting two very well known towns. Tenders for the job were received from far and wide. In the end, 3 contractors were short listed. The first was a German company. Germans have a sterling reputation in Nigeria for their engineering industry. Their representative arrived, armed with technical drawings and models to explain his work. His presentation took 1 hour. In the end, he offered to the do the job for the equivalent of $1 million. The officials of the Federal Ministry of Works thanked him for his presentation and he left. The second presentation was done by the Representative of a British based company. He attended, again amply armed with technical drawings and models. His presentation took 1 ½ hours and he offered to the job for the sum of $2 million. Both bids were exceptional. The Tenders Panel could have stopped there and then and still made the right decision. They could not imagine how anyone could better that bid. The German company's bid barely shaded it simply because it was the more cost effective one. The third bid was from a Nigerian contractor. He turned up with no drawings; no models and indeed nothing to explain the basis of his design. The members of the panel were astonished. They were intrigued to know how he was going to provide details that would compete with those of the other two companies. They asked him to make his presentation. He explained that whilst the other presentations were going on, he had taken an advantage position in the section of the building that allowed him to see all what was going on. He explained that he fully endorsed the plans and proposals made by those before him, but that he had a better idea. They looked in anticipation. He tendered for the job at the sum of $3 million. This tender was significantly higher than the other two and he was asked to explain. In response, he stated:-

"one million dollars for you, members of the panel, one million dollars for me and we will pay the German company one million to do the job".

That, ladies and gentleman is one of the most commonly understood definitions of corruption especially in the continent of Africa.

Why does it happen?

There have been a variety of explanations offered for the prevalence of corruption in Africa. These include but are not limited to the following:-

Absence of commitment to public service;
Incompetence/inefficiency;
Perverse and chronic poverty;
Extremely high levels of material deprivation;
Inequality in the distribution of states resources ["in this case, the notional sharing of the national cake"];
The existence of defective cultural norms ("you scratch my back, I scratch yours");
The clash between traditional and cultural norms (In fact, many Africans will tell you that "corruption" is a foreign - even English – word.)

Of the reasons that I set out, three stand out for specific mention namely:-

Perverse and Chronic Poverty: Along with land, its natural resources and most importantly oil, Nigeria is a nation that is blessed with a vast amount of resources. Since oil was struck in 1958, it is suggested that over $300 billion worth of oil has been produced and sold by the country yet within the same country, 70% of its population live on less than $1 a day . 91% of its population live on less than $2 dollars a day. 54% of the population have access to improved sanitation. 62% of the population have access to an improved water source. The life expectancy of both sexes is in the region of 52 years . Nigeria's debt portfolio, a subject that has been very much in the news recently, hovers somewhere perilously in the region of $40 billion. On 26 July 2005, the President, Chief Olusegun Obasanjo, in addressing the Nigerian National Assembly, explained that in 1970, Nigeria owed $570 Million. By 1979, it had risen to $3.2 Billion. In 1985, it was $18.5 Billion. In 1995, it had grown to a staggering $34 Billion. Reducing briefly in 2002 to £30 Billion, it now stands at $39.9 Billion. But for its income, Nigeria's living conditions place it squarely within the Heavily Indebted Poor Countries sphere. The bulk of these debts have arisen by dubious borrowing and ossified interest payments from late/delayed payments. Servicing these debts has created deprivation which, in turn, manifests itself in poverty. The cloak of poverty, it has been suggested, induces such self- preservatory responses, driven not only by the sheer desire to survive but also by consummate greed, such that traditional, moral norms of decency are completely abandoned. Corruption in many respects is a direct result of need and want.
Extremely High Levels of Material Depravation: Flowing from the effect of poverty is the absence of state infrastructure to meet basic needs. This deprivation, generally occurring as a consequence of corruption, often leads the absence of functional and productive infrastructure and decimates the mechanics for delivery of health, education and social services. The result is that citizens resort to the illegal practice of corruption in numerous disguises in a bid to embellish infrastructural needs. The corruption that engenders this process often arises because allocated resources are diverted by those responsible, for their own personal gain.
Inequality in the Distribution of State Resources: - In Nigeria, this is commonly described as "sharing the national cake". It has manifested itself in numerous forms and is presently evidenced in concepts understood as "rotation"; "federal character"; "Zoning"; and lastly, "Resource Control". This has formed the subject of various forms of dialogue, confrontations and battles. The most devastating consequence of conflict in Nigerian political history, the Nigeria/Biafra War which claimed something in the region of 1 million lives had at its root, the issue of the distribution of Nigeria's national resources. Tribal conflicts that have arisen since then have also been driven by the unequal distribution of state resources. The violence in the Niger Delta area is a direct consequence of what the indigenes in the oil producing area have asserted is the deprivation of the benefits of resources from their own soil. Resource control has given rise to one of the most engaging litigation in history of Nigerian jurisprudence, a case called the Attorney General of Abia State and 35 others –V- Attorney General of the Federation, commonly called the "Resource Control Case". Equal distribution of our state resources would have gone some length to reducing the deterioration that the cancer of corruption has brought about in the Nigerian Social ethos.

The Consequences of Corruption

The World Bank estimates that $1 trillion dollars is paid in bribes and expended in corrupt practices throughout the world. The African Union estimates that the continent loses as much as $148 billion dollars a year. This figure is assumed to represent as much as 25% of Africa's GDP, the direct effect of which increases the cost of goods by as much as 20%, deterring investment and holding back development . Mallam Nuhu Ribadu, the Chairman of Nigeria's Economical and Financial Crimes Commission states that £220 billion of oil revenue was squandered between independence from the United Kingdom in 1960 and the return of the Civilian Rule in 1999. The vast proportion of this was lost to the country through corrupt practices. It may be helpful to cite this sum in proper perspective by explaining that British Aid to Africa for 2004 amounted to £720 million. If the United Kingdom spent that sum annually, it would take this country 300 years to spend that kind of money, a feat accomplished by the nation of Nigeria in approximately 42 years! An illustration of the degree of this practice is evident in what has commonly come to be understood as the Abacha loot. The surreptitious nature of corruption makes it difficult to put forward credible statistics but it is suggested that the amount of money purloined from Nigeria by or with the aid of General Abacha and his family amounts to a sum in excess of $4 billion. I will return to this later.

The biggest victim of this level of thieving is the common man. Corruption has been described as a crime against humanity solely because of its direct impact on ordinary people; people who have exercised no choice in the creation of circumstances that continue to affect them adversely from day, to day, to day.

Its Direct Effect

The consequences of corruption are numerous. The diagnosis of its effect is even more far reaching. The following represents some of its more pronounced effects:-

Exacerbating Poverty – corruption impairs self care. It discourages endeavour and strips the human soul bare of desire and drive to work, never mind excel. It encourages the abandonment of merit as a medium or yard stick of determining excellence. It impairs personal development, an attribute that is directly responsible for measured growth amongst individuals. It encourages the spread of ailments and disease by its deprivation of access to agents of containment and remedy. It is indisputable that poverty has a direct relationship with increased crime rates. This compromises personal security and directly affects the quality of life, all round.
Retarding infrastructural developments – the absence of funds means that necessary infrastructural development is arrested. Physical structures required in order to deal with issues of social development cannot be embarked on for lack of funds. Those that are erected, where attempts are made to erect them, are often adversely affected as corruption ensures that their costs often spiral out of control. Those that are completed are neglected. Corruption induces the degeneration of a maintenance culture.
Brain drain – Home Office statistics appear to suggest that there have been over 2 million applications from people bearing Nigerian nationality in the United Kingdom. The late 70's and 80's witnessed an exodus from Nigeria, the like of which is unknown in its entire history. The Nigerian population in the United Kingdom amounts to approximately 3% of the country's current population. This number does not include 2nd or 3rd generation Nigerians who are or have become British. Of that proportion, a large majority of the Nigerians have acquired experience from academia and work which, if applied to the issues and circumstances in their home country, would significantly enhance the development of Nigeria. Many are discouraged from return for some of the reasons that have been dealt with elsewhere in this presentation. Added to those would be poor conditions of work and uncertain career paths. The brain drain is likely to continue for many a year to come. This situation is a direct effect of corruption.
The "Debt trap" – reference has already been made to Nigerians debt situation and the recent relief granted by the G8 countries to Nigeria. This accommodation was accomplished with some persistent, astute persuasion. One of the key factors that was urged in favour of Nigeria was that of the sums borrowed, a large proportion of the funds were never received by the country. In other words, although the borrowers were Nigerian in context, those funds never reached Nigeria or, for that matter, Nigerians. They were effectively distributed in the name of and under the guise of instructions given by leadership at the appropriate times when the funds were secured. The audacious argument that was put which, in all respects, had every degree of truth in it was that some of Nigeria's leaders were responsible for ensuring that the funds (or accommodation as it may be) not only did not reach the shores of the country where they were destined for, but were, in the process, diverted to private accounts. As President Obasanjo said on 26 July 2005 that between 1999 and 2002, the principal arrears on the debt was $4.45 Billion but that late interest was $5.15 Billion. The debt situation has become a life sentence for many a borrower. Nigeria is no exception. Corruption in this vein is and will continue to represent an arch enemy of the development of Nigeria in its direct effect.

Some Solutions

Political Will – Fighting corruption is very difficult because the entrenched interests are often too powerful and too amorphous to be identified . For years, discussion about debt relief in the context of constituting mechanics for fighting corruption were stifled by the absence of a keen interest by Government of 1st World economies to take a more active role. The countries in the West flatly declined to assume the significant role that was necessary to check the ravaging effect of 1st degree corruption which was savaging African economies. Various Western economic cities became havens for stashing proceeds of corruption. Switzerland was notorious in its welcome of proceeds of corruption. It was subsequently to be overtaken, sadly, by our own City of London which came to be described as the "laundry of choice" . It is common knowledge that at the time when Nigeria initiated the process of recovering the monies removed by the Abacha family, the government of the United Kingdom was distinctly unhelpful. Let me illustrate this by reference to the Hansard of the House of Lords debate on this particular subject on 13 December 2000.

Baroness Williams of Crosby: What Government agencies investigating the laundering of Nigeria's state funds by former president Abacha in the United Kingdom and when it will report.

The Parliamentary Secretary of State Home Office (Lord Basam of Brighton): My Lords, the Government take very seriously any claims that money launderers have exploited financial institutions in the United Kingdom. The Financial Services authority is investigating allegations of possible laundering of the legally obtained Nigerian state funds in the United Kingdom. The Serious Fraud Office is gathering evidence on behalf of the Swiss Government in relation to those funds. Because of the very sensitive nature of those enquiries, I am afraid that I cannot give your Lordship any further information about them nor, sadly indicate when they are likely to be completed.

Baroness Williams: My Lords, the House will be aware that recently Nigeria has moved from the military dictatorship to the re-establishment of democracy under President Obasanjo. Can the minister confirm that as long as April the democratic Government of Nigeria asked the Home Office, under the Mutual Services Agreement, to investigate the laundering of Nigerian money through British Banks? Can he also confirm that in October, the Financial Services Authority say that it would investigate the issue; that in November, the Serious Fraud Office say that it would investigate the issues; and that from April to this day, the Government of Nigeria have received no return of that money, there have been no criminal proceedings and they have no evidence of what has happened to some $230 million that the country badly needs?

Lord Bassam: My Lords, I fully recognise the seriousness of the case made by the Noble Baroness. I am not in a position to confirm or otherwise on the comments that she has made. However, what is transparently obvious is that letters of request are communications between two states and relate to matters that are subject to criminal investigation and proceedings. Such matters are always dealt with confidentially.

Lord Tomlinson: My Lords, is my noble friend aware that the concern expressed by the Baroness, Lady Williams, is widely shared by other sides of the House? The consequence of an 8 month delay in being able to say anything publicly on the matter could well be the funds that are the subject of enquiry could be moved. Can the minister give the house an assurance that the funds are secure where they are and that the delays in this long drawn out enquiry – an enquiry from a friendly Head of State will not lead to those funds disappearing?

Lord Bassam: My Lords, of course I share the concerns of the noble Lords. We are doing all that we can to ensure that those enquiries are expedited as quickly as possible. We have actively played our part in referring the request for the appropriate department. I can assure the house that we shall continue to pursue matters as rigorously as we can. However, such matters have to be dealt with confidentially.

Baroness Elles: My Lords, is the noble Lord aware that the Swiss Federal Banking Corporation has named and shamed 19 banks for handling Abacha cash? Credit Suisse is to be indicted for accepting large sums from the Abacha family. Why have the Government not acted fully on the request for mutual assistance? The Serious Fraud Office investigated only 3 of the bans implicated in the scandal related to the Abacha affair as a result of the Nigerian investigations. It is quite incomprehensible that Nigeria has been able to show that over $970 million has been looted from Abacha from Nigeria and that they have flowed through British Banks. Why has this not been revealed and why is the Government hiding the matter?

Lord Bassam: My Lords, the Government are not hiding the matter. As I have said, we have cooperated as fully as we can. The Financial Service Authority is actively involved. That is as a result of the request of the Swiss Federal Banking Commission's investigation. Swiss legislation is different from our won. As I said, we are looking at ways in which we can improve the quality of our legislation. That commitment was given as recently as last week in the publication of the White Paper by the Department for International Development. We entirely understand the concerns of the noble Baroness and we shall continue to play an active role in ensuring that those appalling scandals are not repeated in future.

It was to take 3 years before this assistance was given and in the end, has not culminated in the return of the funds. Approximately £1.3 Billion of the Abacha loot passed through 23 banks, 15 of whom were sanctioned or cited for complicity in and provision of inadequate services. Sadly, it took the callous, mindless and tragic occurrence of the terrorist action of 9/11 for Western Governments to change their positions. Predictably, measures taken were principally aimed at dismantling terrorist financing. Some of the measures put in play appear came to affect the receipts of corrupt practices by virtue only of the fact that this consequence was unavoidable to curtail terrorist financing. In other words, the net was unwittingly cast sufficiently wide enough to subsume the proceeds of the crime of corruption.

Specific attention must be paid by Western countries to allocating the resources to trace and investigate proceeds of corruption. The absence of complimentary measures of this nature will seriously undermine the quite elaborate and reassuring commitment to the amelioration of Africa's problem that is being undertaken elsewhere.
Increasing Aid – The current approach and attitude of the G8 countries under the leadership of the British Prime Minister must be complemented. Tony Blair suggests that the current package for Africa is the most detailed and ambitious package ever agreed by the G8. However, he stresses that this must be accompanied by significant improvements in standards of governance, transparency and accountability where necessary. For completeness, the projected overall increase of $50 billion a year is anticipated by the year 2010 such that Aid to Africa should rise to $100 billion a year and to nearly $130 billion in 2010. Cited amidst this Western generosity is a clear recognition that the Aid environment must be complemented, in many other respects and that, in the words of Tony Blair, in the end, only Africans can lead and shape Africa. That part of the covenant must come from us Africans.
Repatriation of Proceeds of Corruption – put in simple terms, the proceeds of corruption from Africa, where identified, must be returned. Those funds belong to Africa and must be returned from whence they ought to have come. Even if there were loans that did not reach Africa, they were taken in the names of African countries. Those countries have been servicing those loans from the time when they were borrowed. Without the funds being available, they would have been no target for its corrupt leaders. The use to which such funds cannot be over emphasised. Indeed, the repatriation of corruptly obtained funds is probably the single biggest compensatory relief available to those countries.

Conclusion

Is Corruption Africa's greatest Enemy? Typical of us Nigerians, I am tempted to answer the question with a question and in that vein, I would like to finish on a light note. A Nigerian politician of distinction once addressed the World Press. He was fielding questions from journalists. This press conference took place in the heat of the military dictatorship in Nigeria. One particular journalist troubled the Nigerian politician throughout the session with questions that had no direct relevance or bearing on the subjects being discussed. He repeatedly asked questions of his family; his involvement in the military Government before and so on and so forth. The Nigerian politician was becoming visibly irritated. Suddenly, the same irritating journalist asked the Nigerian Politician:-

"is it true that Nigerians always answer a question with a question?"

The Nigerian politician stopped so did every one else. He reflected on the question for a while and then blurted out – "Who told you that?" Is Corruption Africa's greatest enemy – Who says so?!

Ladies & Gentlemen, thank you very much for your time and patience.

Andrew Obinna Onyearu
28 July 2004