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CORRUPTION VS. GOOD GOVERNANCEHow International Business Can Improve for Nigeria
Plan of Study
Corruption Good Governance
Reputable sources Primary research Major NGOs
Transparency International Global Integrity World Bank
Topic:
Nigeria
Nigeria
Corruption perceived to be at high levels
Weak policies that deter investment
Political instability Weak infrastructure Complex tax
system
Large labor force Natural resources
(oil) Coast Line and
Ports String private
sector Lots of FDI
Cons Pros
Research Questions
What is corruption and how is Nigeria ranked?
What do businesses consider when deciding to invest in a country?
What have other countries done to combat corruption and improve good governance?
Findings: Corruption
State corruption is the misuse or abuse of entrusted power via legislation, mutual understanding or agreement for private gain.
Corruption can involve bribery, embezzlement, extortion, fraud, patronage (nepotism, cronyism), rent seeking and graft
Findings: Ranking Nigeria
Different organizations that rank countries on governance and corruption Transparency International Global Integrity World Bank
Nigeria’s ranks and scores are weak
Corruption Perceptions Index (CPI)
Global Integrity Index
0102030405060708090
Overall Score
USABulgaria
Costa Rica
Ecuador
Tanzania
Nigeria
Lebanon
Country
Global Integrity Index 2007
Worldwide Governance Indicators (WGI)
Findings: What Businesses Look For When Investing in a Country
Ease of doing business
Starting and closing a business
Dealing with licenses
Employing workers Registering
property
Getting creditProtecting investors
Paying taxesTrading across borders
Enforcing contracts
Comparative Study
Nigeria Federal Republic Independence: 1 Oct. 1960
(from UK) Population Growth Rate:
2.4% GDP- per capita (PPP):
$2,200 Malaysia
Constitutional Monarchy Independence: 31 Aug.
1957 (from UK) Population Growth Rate:
1.6% GDP- per capita (PPP):
$14,400
Botswana Parliamentary Republic Independence: 30 Sept.
1966 (from UK) Population Growth Rate:
1.5% GDP- per capita (PPP):
$14,700 Chile
Republic Independence: 18 Sept.
1810 (from Spain) Population Growth Rate:
0.9% GDP- per capita (PPP):
$14,400
Research Questions
What are the cultural perceptions of governance? Do the people feel the government is
corrupt? Do they feel it could do more to attract
international investment? Are the people interested in attracting more
FDI? What do business and international
organizations generally define as good governance? What institutions and policies are necessary
for international business and investment?
Findings: Cultural Perceptions Nigerians still perceive their government
to be corrupt Corruption has become an institution,
but not a cultural institution Citizens are not seeing improvements,
despite substantial oil revenues Calling for improvement of basic
conditions Unemployment Poverty Infrastructure
Findings: Attracting Business Government has been seeking
international investment: China, Libya, India
Many NMCs still unwilling to make risky investment
People and companies seek improvements: infrastructure, transparency, property rights, land use
Trade and imports vs. industry protection Benefits of FDI
Findings: Good Governance
Governance process of making and implementing decisions
Can be applied to all organizations: political institutions; local, national, international governments and corporations
Several organizations and institutions have developed guidelines for good governance
Findings: Institutions and Securities
Common themes among all definitions, applicable to Nigeria, will address the corruption problem as well as stimulate international confidence and investment
Rule of lawAccountabilityTransparencyParticipation
Property RightsRegulation
Research Questions
What are the impacts of corruption? How does corruption affect the investment
climate and international business? What are the economic and social costs
of corruption? What can be quantified? How far-reaching are the affects of
corruption? What is the economic potential of
Nigeria? With good governance, what kind of
investment could Nigeria expect to attract?
Findings: Impacts of Corruption
Costs higher Threatens stability Skews development Uneven playing field Harms reputation and trust in the state Deters investment
Findings: Costs of Corruption
Impossible to know exact cost Measure erosion of public confidence and gov’t
legitimacy? Possible to estimate magnitude of
corruption Bribes: $1 trillion of $30 trillion world
economy (World Bank survey, 2001-2002) Not counting embezzlement or fraud
President Abacha: $5 billion (Transparency International)
Also favors, presents, services Halve corruption = 400% increase in
income/capita Corruption = 20% tax on foreign investors
Findings: Economic Potential
Strong, large private sector Educated professionals Many foreign firms already present FDI greater than most other African
countries Many natural resources Lots of oil Trying to attract more FDI with incentives
Conclusions
Potential Policy?
Simplify complex tax system & customs
Increase privatization
Encourage democratic processes: free press, auditors
Increase transparency Accountability
Focus on incentives, prevention, & reforms