AN ECONOMETRIC, ANALYSIS OF THE IMPACT OF CORRUPTION ON NIGERIA ECONOMY
ABSTRACT
This research examines the impact of corruption on Nigerian Economy. It portrays a cursory investigation on the observed effects of corruption on different sectors - Public, Private and Foreign Sectors of the Nigerian Economy.
In order to achieve a well detailed result, an econometric analysis was employed to test the relationship between the dependent variable and independent variables. Tests like the ordinary least square regression was carried out to evaluate the long run impact of corruption on some selected sectors of the economy between 1979 and 2009. The findings of the study made it clear that corruption have both negative and positive impact on the growth of the economy. However, the negative impact of corruption, on the various sectors outweighs the positive, which is in line with previous empirical studies/findings. (project topics final year project topics and research materials )
Finally, the study reveals that corruption is a serious impediment against the proper functioning of the Nigerian economy and suggests that to have a healthy economy, the following should be put in place: restructured legal system, periodic private and public audit, re-orientation programmes, better remuneration of workers as well as involvement of religious and non-governmental organizations in the process.
TABLE OF CONTENT PAGE
TITLE PAGE
CERTIFICATION
DEDICATION
ACKNOWLEDGMENT
ABSTRACT
TABLE OF CONTENTS
CHAPTER ONE
1.1 INTRODUCTION
1.2 STATEMENT OF THE PROBLEM
1.3 THE AIM AND OBJECTIVES OF THE STUDY
1.4 THE RESEARCH QUESTIONS
1.5 STATATEMENT OF RESEARCH HYPOTHESES
1.6 THE RESEARCH METHODOLOGY
1.7 THE SIGNIFICANCE OF THE STUDY
1.8 THE SCOPE AND LIMITATION OF THE STUDY
1.9 THE DEFINITION OF BASIC TERMS
l.10 THE ORGANISATION OF THE STUDY
CHAPTER TWO
2.1 INTRODUCTION
2.2 DEFINITION AND CONCEPT OF.CORRUPTION
2.3 CORRJPTION AND DEVELOPMENT: A REVIEW OF LITERATURE
2.4 CORRUPTION AND ITS IMPACT ON NIGERIAN ECONOMY
2.5 CONDITIONS FAVOURING CORRUPTION IN NIGERIA
CHAPTER THREE
3.1 INTRCDUCTION
3.2 CORRUPTION IN NIGERIA
3.3 THE STRUCTURE OF CONTROLLING CORRUPTION IN NIGERIA
3.4 ROLES OF CORRUPTION FIGHTING AGENCIES IN NIGERIA
3.4.1' ECONOMIC AND FINANCIAL CRIMES COMMISSION (EFCC)
3.4.2 NIGEHIA FINANCIAL INTELLIGENCE UNIT (NFIU)
3.4.3 INDEPENDENT CORRUPT PRACTICES AND OTHER RELATED
OFFENCES COMMISSION
3.5 FAILURE OF CORRUPTION FIGHTING AGENCIES /COMMISSION
CHAPTER FOUR
4.1 METHODOLOGY
4.2 METHODS OF ESTIMATION OF ANALYSIS
4.3 MODEL SPECIFICATION
4.3.1 ECONOMETRIC MODEL SPECIFICATION
4.3.2 A PRIORI EXPECTATION
4.3.3. SPECIFICATION BIAS
4.3.4 LIMITATIONS OF THE STUDY
4.4 SPECIFICATION OF DATA
4.5 EMPIRICAL RESULTS AND INTERPRETATION
CHAPTER FIVE
5.1 SUMMARY OF FINDINGS
5.2 RECOMMENDATIONS
5.3 CONCLUSION
BIBLIOGRAPHY
CHAPTER ONE
1.1 INTRODUCTION
The history of corruption is as old as the world because ancient civilization have traces of widespread 'illegality and corruption', Thus, Lipset and Lenz 2000 noted that "corruption has been ubiquitous in complex societies from ancient Egypt, Israel, Rome and Greece down to the present."
Corruption is believed to be endemic in modern governments and it is not peculiar to any continent, region, or ethnic group. This does not mean that the incidence and magnitude of corrupt activities are the same in every society. Some countries are, obviously more corrupt; yet others have better plans in managing corrupt activities. Obviously, Nigeria is not one orthose countries with a better handle on corruption, despite its unending corruption commissions and all the noise made by every administration on the efforts to transform the nation into a corrupt free society.
The focus of this study is on corruption in Nigeria with a view to effectively managing the challenges in the society. The magnitude of corruption witnessed in the country in the past administrations was alarming and it does not look \ like the present administration of President Goodluck Ebele Jonathan would be different from that of his predecessors, Late Umaru Musa Yar'adua and Chief Olusegun Obasanjo.
Victor E Dike 2003(CEO, Center for Social Justice and Human Development (CSJHD) in his article 'Managing the Challenges of corruption in Nigeria' identified the forms of corrupt activities in Nigeria to include political corruption, bureaucratic corruption, electoral corruption, embezzlement and bribery, Political corruption, which takes place at the highest levels 'of political authority, is a 'corruption of greed'. It affects the manner in which decisions are made, manipulates and distorts political institutions and rules of procedure. Bureaucratic corruption which occurs in the public administration is the 'low level' and 'street level' corruption which the citizens encounter daily at places like the hospitals, schools, local licensing offices, encounters with the police, tax offices, e.t.c.
Electoral corruption includes purchase of votes, undue disenfranchisement, promises of office or special favours, coersion, intimidation and interference with freedom of free election.
It is apparently evident that corruption is not peculiar to Nigeria but it is a viable enterprise in Nigeria because the system does not have the reliable apparatus to trace and prosecute the 'big politicians’ that engage in grand thefts. This point to the fact that those in power are to be blamed more for corruption than the common people who are often pushed into corrupt behaviours in their struggle for survival. For example, we recall that Chief Olusegun Obasanjo made a 'financial deal' with the family of Late General Sani Abacha who looted the nation. But he fired Mr. Vincent Azie (the then acting Auditor-General) whose audit report indicted the executive, legislative and judiciary branch of government for improper accounting practices. The Abacha deal and Azie's case show that Chief Obasanjo does not have the will to fight corruption in Nigeria. Also, the administration' of President Yar'adua failed to prosecute anybody in the Obasanjo administration over the non execution of the power projects that has engulfed billions of naira (Saturday Punch 22ml November, 2008).
From the foregoing, one of the identified and agreed factor that has accounted for our low rate of economic growth and development since independence in 1960 is corruption.
Being a developing nation with potentials' and resources at our disposal, the term corruption was not pronounced due to our value base system, availability and affordability of the basic means of life, good administration that ensure proper planning and allocation of national resources in the 1960's.
However, the advent of military in politics, misplacement of priority, abandonment of agricultural system as a result of oil boom, improper allocation/misuse of oil revenue, embracement of mediocrity and nepotism, wealth accumulation attitude, fall in the standard of living, increase in unemployment and high poverty rate; corruption crept into our system. It has gained acceptable ground that people now see it as an acceptable norm, thereby eaten deep into all Nigerian even children. Corruption comes in multifarious forms with its detrimental effects, which have resulted in the low rate of economic growth and development. Government has shifted effort and funds that should have been for development to fighting corruption.
In the world today and even in Nigeria, corruption cannot to totally eliminated but it call be reduced to the barest minimal. At this juncture, one can however boldly say that Nigeria will be among the super powers of the world, if corruption is minima as it is the bane to our development.
1.2, STATEMENT OF THE RESEARCH PROBLEM
From every perspective, corruption or corrupt practices has to do with fraudulent activity especially siphon funds that are meant for the general populace for one's consumption, Right from the beginning, corruption has been a vermin that has been killing and discouraging Nigeria from moving up of welcoming new innovations. From historic point of view, Nigeria government has been left in the hands of those who only care for themselves, putting aside the yearnings of the entire populace. Gone are the days when merits, ability, honesty and transparency, as understand has meaning in Nigeria and this was then actually helping the country to move up. The likes of Pa Awolowo, Dr. Azikiwe, General Murtala Muhammed, Tunde Idiagbon (all of blessed memory) would never be forgotten in the history of Nigeria for being leaders with proven records of achievement. After these great people, what we have is the helm of affairs. The e of politicians in Nigeria arena are bunch of criminals, crooks who have in one way or the other indulged in mischievous activities. One would wonder therefore, why crime, corruption, poverty, and religious violence have become the fasted growing industry in Nigeria and this has made our hard earned democratic government worthless.
'To the best of my little knowledge, the primary concern of reasonable, caring and competent leader should be the .welfare of his followers. But in Nigeria, the case is different and so far, while our leaders pay lip service to fight corruption and poverty reduction, they wallow in self-adulation, sycophancy, and never seem to be tired of asking for more benefits for themselves. It is no wonder; then that Nigerians feel no sense of patriotism as our leaders appear insensitive to the plight of the masses. Imagine, corruption is now a serious Nigerian phenomenon and it has critically hobbled and skewed Nigeria development to the wrong side. Where does this come from? One does not need to ask as the whole sorry development emanates all the way from Aso- Rock, the neat of power.
Government at the central level is the vessel that is leaking from the top and Aso-Rock and other government parastatals and departments are the main fountain where corruption takes its source. This is the reason why one would continue to wonder why Obasanjo should be deceiving the whole world by claiming that he is going to put an end to corrupt practices during his regime (1999-2007) by using the leadership of the EFCC as a tool in sending his enemies to places they never believed they would serve months of their lifetime. Though theEFCC game worked for him and he had glory but can one believe that the whole thing was self motivated and was all programmed?
More evidently and recently is the case of removing prior state governors of Ekiti and Osun who gained power through the back door truly as a result of bribing their way through theINEC resident commissioners in those states. One would say thank God the real governors have been reinstated but to what extent can one beat his or her chest that such things won't repeat itself in the 2011 elections.
As conclusive remark, worthy of note is that we can't get foreigners to come and invest in the country and help sustain an industrial promotion when reports on the rate at which corruption and mismanagement had eaten, deep into the roots of the country's economy is available for the world to see. Woe betides all those who perpetuate those fraudulent activities that dragged this country to this mess and for those who are doing all what it takes to draw the country out from this dungeon (corruption), one would say kudos and pray that the fight against this menace that has ripped this country off her glory will be won some day.
1.3. AIM AND OBJECTIVES OF THE STUDY
This project work sets to achieve the following objectives:
i. To examine how corruption has hampered the development of Nigerian economy
ii. To examine the impact of corruption on Foreign Direct Investment (FDI)
iii. To examine the causes of corruption on all Nigerian sectors
1.4 RESEARCH QUESTIONS
In the face of the economic, socio and political condition corruption has landed Nigeria, the following research questions will evolve:
a) ' Why have corruption fighting agencies and, policies put in place failed to tackle the problem of corruption in Nigeria?
b) What are the alternative means of tackling the problem of corruption?
c) Are these alternatives easy to come by and welcomed in Nigeria?
d) How can the hitch encountered in fighting corruption be addressed?
1.5 STATEMENT OF RESEARCH HYPOTHESES
The following hypotheses are kept in focus to act as my guide:
1. Ho: That there is no significant relationship between corruption and development.
HA: That there is significant relationship between corruption and development.
2. Ho: That there is no significant relationship between corruption and foreign direct investment
HA: That there is significant relationship between corruption and foreign direct investment.
3. Ho: That there is no significant relationship between the causes of corruption and all Nigerian sectors.
HA: That there is no significant relationship between the causes of corruption and all Nigerian sectors.
1.6 RESEARCH METHODOLOGY:
1.6.1 METHOD
The regression model will be used to test for the relationship between dependent and independent variables.
1.6.2 SOURCES OF DATA
This will be through secondary source of data generation and it will come from Articles in the dailies, library (i.e Text Books), Professional journals, write-ups, Economic and Financial Crimes Commission Act 2002, Independent and Corrupt Practice Commission Act 2000, seminar and speeches by Nigerians and non-Nigerians from the Internet,
1.6.3 STATISTICAL TOOLS:
The econometric analysis will be used to test for the relationship between dependent and independent variables.
1.7 SIGNIFICANCE OF THE STUDY
This is research work is expected to afford us with the opportunity of identifying to what extent the "Nightmare" corruption has hampered the growth and development of this country, Nigeria. This will be largely achieved through the information gathered from the above mentioned sources and the test to be later carried out using the specified model. His also expected as a matter of relevance that the paper work would give way to identifying what loopholes pave way for corruption in the country in any sector of the economy and what policy models or agencies are put in place towards ensuring that even though the menace can't be totally eliminated, it is drastically reduced to its barest minimum.
1.8 SCOPE AND LIMITATION OF THE STUDY'
The study will cover a period of thirty (30) years (1979 - 2009) showing the corrupt practice in both public and private sectors and how this has affected the country. This study is limited to a temporal scope of thirty years from 1979 to 2009; despite these, references were made to other countries.
This study was constrained by several factors including poor data, reluctance of concerned parties to give facts and figures and finance.
1.9 DEFINITION OF BASIC TERMS/CONCEPTS
Corruption: This is any immoral, illegal and unethical act committed against ones conscience.
EFCC: Economic and Financial Crimes Commission
ICPC: Independent Corrupt Practices and Other Related Offences Commission.
NFIU: Nigeria Financial Intelligence Unit.
CBN: Central Dank of Nigeria
Democracy: Government of representation by those elected by the citizens
Coup D'etat: A forceful way of taking over government under the military regime.
CSJHD: Center for Social Justice and Human Development
Regime: A term used to describe the system or mode of government practiced in a country at a particular period and time (e.g. Civilian or Military regime)
1.10 ORGANIZATION OF THE STUDY
In order to achieve the stated objective of this study~ the project will be divided into five chapters. Chapter one deals with brief outlook of corruption in Nigeria within the limit 1979 to 2009.
Chapter two on the other hand is the literature review. This is where the related literature will be reviewed thereby laying emphasis on theoretical framework and conceptual issues in order to produce a link between corruption and its impact on Nigeria economy. Chapter three will elucidate the structural composition of the study. Chapter four will deal with Research Methodology, Data Analysis and Interpretation of Results. Chapter five which will be the last chapter presents the summary, conclusion and recommendations.
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