Vice President, Prof. Yemi Osinbajo, at the Presidential Villa, Abuja over the weekend received a report titled Impact of Corruption on Nigeria’s Economy from PricewaterhouseCoopers (PwC)
The PwC team led by Mr. Uyi Akpata, Country and Regional Senior Partner West Market Area, said that the report centred on the ways corruption had impacted the Nigerian economy over time, adding that PwC believes that the work provides robust evidence and impetus for reducing the phenomenon in Nigeria.
Akpata stated that “the results of the study show that corruption in Nigeria could cost up to 37 per cent of Gross Domestic Products (GDP) by 2030 if it was not dealt with immediately. This cost is equated to around $1,000 per person in 2014 and nearly $2,000 per person by 2030. The boost in average income that we estimate, given the current per capita income, can significantly improve the lives of many in Nigeria”.
Five steps where used in the report to estimate Nigeria’s cost of corruption. The first step was to examine over 30 studies to understand the way that corruption affects GDP in Nigeria. The study was obtained from international organisations including the OECD, IMF, DFID and Transparency International and Nigerian academics affiliated with universities published by other academics across mediums such as journals, articles and PhD publications among others as well as in-house studies assessing the health of the Nigerian economy such as the World in 2050 publication. The IMF study was selected to estimate impact of corruption on economic growth.
The second step was to identify the impact of corruption on economic growth using the IMF study, which estimates that the impact of 1 point change in the corruption index results in a 1.2 percentage point change in economic growth per annum. The study’s methodology – calculating impact on growth when a country moves from its own rank to another country’s rank on the corruption index was also used.
Transparency International’s Corruption Perceptions Index (CPI) was also used as a proxy for corruption; this dataset defines corruption as the ‘abuse of public office for private gain’ and the index was categorized into three parts; Grand corruption, Petty corruption and Political corruption.
The fourth step in the report created 3 scenarios that show the lower levels of corruption that Nigeria could have achieved in the past and can achieve in the future while the fifth step calculated the impact of corruption on economic growth and output for each scenario.
According to Dr Andrew S Nevin, (PhD), PwC Chief Economist and co-author of the report, PwC formulated the ways in which corruption impacts the Nigerian economy over time and then estimated the impact of corruption on Nigerian GDP, using empirical literature and PwC analysis.
“We estimate the ‘foregone output’ in Nigeria since the onset of democracy in 1999 and the ‘output opportunity’ to be gained by 2030, from reducing corruption to comparison countries that are also rich in natural resources. The countries we have used for comparison are: Ghana, Colombia and Malaysia”, he said.