Corruption is widespread and a pressing issue in Nigeria President Buhari launched an anti-corruption drive after taking office in May 2015. Corruption affects public finances, business investment as well as standard of living. The impact of corruption is pervasive and feeds through to the economy via the following channels:
• lower governance effectiveness, especially through poor fiscal revenue and expenditure;
• weak investment, especially FDI, as it’s harder to predict and do business; and
• lower human capital as less, especially the poor, are able to access healthcare and education
SMEs and foreign investors find it more difficult to deal with corruption In Nigeria, big companies are able to access essential goods and services like electricity and water by leveraging their balance sheets. Whereas smaller firms cannot afford these and rely on the government for provision but corruption weakens public fund management and public goods provision. In addition, corruption:
• threatens property rights, discouraging investment that requires high capital expenditure as businesses are unwilling to place high capital at risk; and
• is associated with lower technological transfers as foreign companies are unable to protect intellectual property.
Corruption could cost Nigeria up to $534bn by 2030 We estimated that corruption could cost Nigeria up to 37% (or $534bn) of its GDP potential by 2030 if it’s not dealt with immediately. As we describe in our publication ‘Impact of corruption on Nigerian economy’ from January 2016, this cost is equated to around $1,000 per person in 2014 and nearly $2,000 per person that will live in Nigeria by 2030.