One thing I've noticed about the economic system in the United Kingdom is that it is structured in such a way so as to keep the cash circulating within the system. There is nothing to suggest that the economies of other industrialised countries aren't structured along a similar pattern. In countries like Naija on the other hand, there is no way to prevent large amounts flowing out. On the contrary, the incentives are more in favour of taking out the cash to 'protect' it.
Yesterday a man died. His name was Suharto, and he was once the undisputed leader of the world's largest Muslim population. His regime was a brutal military dictatorship (over a million killed in his 31 years in power), which like a lot of brutal military dictatorships that began in the 1960s found friends in the Western world because of a tough 'anti-communist' stand. He was also 'popular' for stealing from his country incredible sums of money totalling somewhere between $15 and $35 billion. However, he would probably be remembered for the fact that during his rule, Indonesia experienced rapid economic growth and industrialisation, and was in fact along with South Korea, Hong Kong and Singapore one of the 'Asian Tigers' of the 1990s.
This brings us to something that has been on my mind a little while, corruption.
Corruption can simply be defined (dictionary.com) as the use of a position of trust for dishonest gain. This definition aptly applies not only to Suharto, but to so many other leaders who have straddled the world of politics. I could name names, but that would distract from the issue I really want to talk about. You see, the accepted view, one which is encouraged by groups such as Transparency International, is that corruption retards development. Suharto is/was a glowing example of how wrong that view can be. Another example would be Augusto Pinochet, former dictator of Chile. My personal observations of politics in the United Kingdom also convinces me that this notion is wrong. Having observed the various scandals in this country, and the way government is run, I have come to the conclusion (perhaps inevitably) that corruption doesn't necessarily retard economic development, and being economically developed doesn't automatically remove corruption.
Back to the example of Suharto, it is well worth noting that he came to power at about the same time, and ruled his country for about the same length of time as Mobutu Sese Seko in what is now the DRC. In that 30 year period, Mobutu stole 'just' about $5 billion from his country, a country that is far richer than Indonesia in terms of resources, while as I stated earlier, Suharto stole somewhere in the region of $15 - $35 billion, 3 - 7 times what Mobutu did. If corruption automatically made a country poorer, then Indonesia should have been in such a state that (Zaire) would look like paradise, but the reality is that during that 30 year period, Indonesia's Human Development Index rose by a factor of three, while Zaire's fell by a factor of three.
It would be a lot easier for everyone if corruption automatically equalled under-development as Transparency International would like us to believe, but the reality is that it doesn't. We have earlier defined corruption, now let us define the most basic component of corruption, a bribe. A bribe is simply defined as anything given or serving to persuade or induce. Kids for example can be given a bribe in order to make them read their books. That doesn't make the bribe bad. We heard about the case of Siemens attempting to win contracts in Nigeria by paying hefty bribes. While I accept that such actions are unethical, I would say that if Nigeria gained from the contracts, then they may just be necessary. In the West such things happen in 'more sophisticated' manners such as fully paid holidays, the minister's children being sent to expensive schools fully paid for by the company looking for a contract, or get handsomely rewarded after office for services rendered whilst in office. In our case, our politicians want to see the raw cash in their foreign bank accounts, and both sadly and unfortunately, in most cases do not see the need to render the services to the people which the swore to render. Therein lies the difference.
I think that organisations such as the World Bank are using the whole anti-corruption cry as a smoke screen to distract from the failure of policies such as SAP which they 'recommended' to our admittedly daft rulers. They knew that our leaders were corrupt, and were siphoning large amounts to vaults in Western Europe, but did nothing about it. And that act of hypocrisy rendered even the most well meaning of the 'Structural Adjustment Programmes' meaningless and useless. For me the answer to our problems in countries like Nigeria is to follow the example set by corrupt leaders such as Suharto and Pinochet, and keep (at least the bulk of) the loot at home. If a bribe is deposited in a bank in Zurich, there is no way it will contribute to the Nigerian economy. It would be unavailable for investment, hence it can't create jobs and it won't as a result create more income for more people. It would only accumulate interest for the recipient of the bribe. The difference between Suharto's Indonesia and Pinochet's Chile on the one hand, and Mobutu's Zaire and Babangida's Nigeria on the other, is that in the case of the former, the bulk of the looted public funds stayed at home, was invested at home, created jobs at home, and helped lift people at home out of the poverty cycle. In the latter case, the money was DHLed to the West. It is my belief that as humans we probably can't avoid corruption (result of our flawed nature). So in countries like Nigeria, the focus should be on finding ways to strengthen our banking sector even more so that our leaders would feel confident enough to leave their loot in the Nigerian system.
Juve watch
Now that the international madness is all but over, we can return to club football. Juve's 2008 finally kicked into gear yesterday and poor Livorno were at the end of a 1-3 home drubbing. The win put some daylight between us and Fiorentina in fourth place. Enjoy the highlights of the game.
8 comments:
brilliant analysis on the whole corruption thing. challenged conventional thinking and i think your conclusion is spot on. by the way, i think it is already happening in nigeria. the stronger banks and stock market are taking in a lot of stolen money from nigerians.
this also raises questions about the logic is Yardy's obesession with due process. he cancels good contracts because they were obtained in a corrupt manner, thereby harming nigerian in many more ways
yardy is not just following 'rule of law' but the 'letter of the law' to that very letter - overcompensation for several things, not least nigeria's unfortunate reputation for being easily corruptible and taking things too far. if you don't know how to follow the rules, then you'll never learn how to bend them rather than just break them.
great analysis, chxta - i like what you did with it. i've heard the words before, but such conclusions tend to be hushed on this side of the world more often than not. you're absolutely right, though - it's the same logic that explains why people here can have such huge lotteries - it gives the illusion of individual wealth, but at the end of the day, the state gets it all back, leaving just a small portion for average citizens to share.
Omo, I go tuk sey wetin u fit sabi... I go skatta dis awa Brokun laik Bull for Bare market. E be laik sey ACN wake u comot from ya e-hibernation o! I no go fit lie, bifor-bifor I enta Naija as JJC, I leave comot wif Football Fever! Chei
E go beta for Africa.
Kontinue to dey shyne ya eye.
I think Baba Iyabo is already way ahead of U ...
Chxta,
I think you are dead wrong. Forget about the ethics.Corruption is bad for development. I give you two reasons.
1)Corruption makes people lose faith in due process.It gives an incentive to shortcut the system and as a result leads to the failure of economic policies. Example 1. For as long as Nigerian banks were minting money round tripping, there was no incentive to increase their assets (level of credit).
Example 2. Government bans importation of an item to protect local industry and attract new ones. But instead,it becomes easier to either smuggle the banned items or to get a waiver by settling persons in high office. So after years of giving incentive to local producers of rice, we still have nothing to show.
2)Corruption leads to loss of faith in the equity system. And that is why even embezzled funds are spirited away Look at all the politicians who invested locally and tell me what happened to their wealth. I once was at a conference where I saw Jerry Gana complaining bitterly about his failed bank. Obasanjo was said to be broke already before becoming president the second time. Jakande, at a point could not pay the salaries of his staff. And Saraki's Societe De Generale bank went south. The policians were not afraid of prosecution but they have learnt that if they invest locally, their employees will steal them broke and there will be no legal means to protect their investments. There is no honour amongst thieves. So they take their loot abroad.
Now to the question of why Indonesia,Korea, Mexico etc have growing economies in spite of their level of corruption . The answer is the nature of the corruption.
Soyinka, I think, explained it in you must set forth at dawn. Even Jeffrey Archer wrote a story to show how it works in "A quiver full of arrow", I think.
In Asia, corruption is a by- product of development activities. In Africa, development is a by-product of curruption activities.
These asian countires are at the stage where Nigeria was when the first coup took place. The days of the 10 percenters.When a contract is given, a corruption tax is paid. Yes, it is more expensive but at least things get done.
On the other hand, nowadays, we are familiar with blind looting ala Abacha style. The roads are not repaired.The National ID card is not provided. The census result never gets used. Even during elections, polling booths are no longer provided. But the appropriate budget allocations are made, using the above mentioned heads and funds are disbursed. Because, in the first place, the intention was to share the money. If any positive development takes place (maybe a road out of 1000 gets tarred in time for the photo-oppurtunity), it is just a by-product of corruption.
Kiibaati methinks you are a victim of the convention that has been pushed forward by Transparency International and other similar groups, and I would give you a very solid example. The United States is the world's biggest economy, and the world's richest nation. It is also ranked as number 20 on Transparency International's current Corruption Index (I think that ranking is flawed). If the level of corruption is automatically tied to development, then by rights the US should be about the twentieth most industrialised country, not number one. On the same table, India is ranked as the 72nd most corrupt country, but it is developing at a faster rate than Italy (rank 41), and the recent scandals in the Italian government leaves no one in doubt as to the level of rot there, I mean, 37 prime ministers in 62 years is hardly a sign of stability especially when you consider that no less than 30 of the 37 have had serious allegations of corruption levelled against them.
1)Corruption makes people lose faith in due process.It gives an incentive to shortcut the system and as a result leads to the failure of economic policies. Example 1. For as long as Nigerian banks were minting money round tripping, there was no incentive to increase their assets (level of credit).
Example 2. Government bans importation of an item to protect local industry and attract new ones. But instead,it becomes easier to either smuggle the banned items or to get a waiver by settling persons in high office. So after years of giving incentive to local producers of rice, we still have nothing to show.
2)Corruption leads to loss of faith in the equity system. And that is why even embezzled funds are spirited away Look at all the politicians who invested locally and tell me what happened to their wealth. I once was at a conference where I saw Jerry Gana complaining bitterly about his failed bank. Obasanjo was said to be broke already before becoming president the second time. Jakande, at a point could not pay the salaries of his staff. And Saraki's Societe De Generale bank went south. The policians were not afraid of prosecution but they have learnt that if they invest locally, their employees will steal them broke and there will be no legal means to protect their investments. There is no honour amongst thieves. So they take their loot abroad.
To be sincere, unless I missed something fundamental, I think you made exactly the same point in (i) and (ii). It is a point that I answered in the article. Funds were spirited away from countries like Naija simply because our banking sector was not strong. It was a catch 22 situation. A weak banking sector riddled with fiscal indiscipline cannot handle large amounts of money, and in the case of Nigeria, it wasn't helped by the fact that the Central Bank (especially under Babangida) was more or less used as a piggy bank by the top brass. This mentality permeated down to the other 'regular' banks, and Saraki's SGBN for example was notorious for giving 'loans' to its owner, loans which came from depositors funds, and which the owner had no intention of paying back because they weren't being used for anything more useful than buying private jets, etc. Ditto Jerry Gana.
Now to the question of why Indonesia,Korea, Mexico etc have growing economies in spite of their level of corruption . The answer is the nature of the corruption.
The nature of corruption is in the definition. Let me reiterate: corruption is the use of a position of trust for dishonest gain. It doesn't get more complicated than that. Since that is the case, I would dearly love an explanation of how 'Asian corruption' is different from 'African corruption' or how it is different from 'European corruption'.
Soyinka, I think, explained it in you must set forth at dawn. Even Jeffrey Archer wrote a story to show how it works in "A quiver full of arrow", I think.
I haven't read Wole Soyinka's You Must Set Forth At Dawn, but I have read all 12 stories in Lord Archer's A Quiver Full of Arrows, hell I am looking at my copy right now, and I am trying hard to think of where he explained how corruption impedes development. Could you kindly explain? I'd appreciate it.
In Asia, corruption is a by- product of development activities. In Africa, development is a by-product of curruption activities.
Again, I'd really appreciate an explanation of this one. How can development be a by-product of corrupt activities when it is supposed to impede same? And how on the other hand will corruption not stifle the development activities which it is supposed to be a by-product of?
These asian countires are at the stage where Nigeria was when the first coup took place. The days of the 10 percenters.When a contract is given, a corruption tax is paid. Yes, it is more expensive but at least things get done.
On the other hand, nowadays, we are familiar with blind looting ala Abacha style. The roads are not repaired.The National ID card is not provided. The census result never gets used. Even during elections, polling booths are no longer provided. But the appropriate budget allocations are made, using the above mentioned heads and funds are disbursed. Because, in the first place, the intention was to share the money. If any positive development takes place (maybe a road out of 1000 gets tarred in time for the photo-oppurtunity), it is just a by-product of corruption.
I like to think that your treatise is based on the emboldened premise, which is faulty even at the best of times. You see, African countries became independent of colonial rule on average a decade later than their Asian counterparts. The Asians also began having coups on average a decade before Africans. So I'd like to know precisely how they have ended up being forty years behind us at this point in time. Using Nigeria as an example, in the days of the first republic, a contract was given, a 'corruption tax' was paid, but nothing was done. That was one of the things alluded to in Nzeogwu's speech given January 15, 1966. Using the examples I gave in the article, in Mobutu's Zaire, a contract was given, a 'corruption tax' paid, but nothing was done. On the other hand, in Suharto's Indonesia (and Pinochet's Chile) a contract was given, a 'corruption tax' paid, and something got done, else the contractor (if a local) was liable to be shot. Therein lies the difference.
Indeed, there are several developed countries with corrupt government officials, as the recent Abramov scandal in the US demonstrated so amply, and the Bribes for Honours scandal in the UK under Toni Bleh, and which tradition has been continued under his successor, Gordie Braun.
The thing is, though, that the Abramov scandal wouldn't even have merited a mention on page 27 of a Nigerian newspaper. I mean, a lobbyist holding several senators in his pocket? Go and call IBB and ask him how many he has in the House of Reps alone.
Another issue is that the crooks in those countries do not ship the loot abroad, but invest it back in the same economy they stole it from.
Corruption in Nigeria, however, does retard development, and has severly affected every facet of our national life. For instance, when I first got into uni, I had a conversation with a fellow I will not name here, and he said he wouldn't consider looting money if he was fortunate enough to obtain an office. The same dude's philosophy, after having witnessed Obasanjo's mindless avarice, now says he will do the same.
The Anti-Corruption "war" in Nigeria is also throwing up paradoxes daily. For instance, the EFCC recently jailed two brothers 12 ans 18 months respectively for attempting to defraud a white man of $300. The same EFCC gave Alamieyeseigha 6 months for looting hundreds of millions of dollars from the Bayelsa State treasury. What then is the message? That it is more heinous to steal from a foreigner than to impoverish your own people, or that if you're going to steal money, make sure it's a massive amount?
And the IMF and World Bank applaud these things daily
i agree with chxta that the problem with Naija's slow development is that our stolen funds were not kept in Naija. Another equally important thing that u sort of implied but did not state categorically is that, because of the levels of corruption and the way we (the hungry masses) applaude the thieves instead of stoning them, we need a good dictator if there is such a thing. I mean a dictator who in truly believes in Naija and wants her to develop. That way, if u agree to do a contract, whether u bribed your way to getting it or not, u better do the job perfectly or u will get shot. i tell u, Nigeria will develop overnight because the only thing Nigerians love more than anything else is life. If we can get such a leader, Nigeria will truly become the Giant of Africa.
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