1. CORRUPTION VS.
GOOD GOVERNANCE
How International Business Can Improve for
Nigeria

2. Plan of Study
 Corruption Good Governance
 Reputable sources
 Primary research
 Major NGOs
 Transparency International
 Global Integrity
 World Bank

3. Topic:

4. Nigeria

5. 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

6. 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?

7. 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

8. 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

9. Corruption Perceptions Index
(CPI)

10. Global Integrity Index
0
10
20
30
40
50
60
70
80
90
Overall Score
U
SA
Bulgaria
C
osta
R
ica
Ecuador
Tanzania
N
igeria
Lebanon
Country
Global Integrity Index 2007

11. Worldwide Governance Indicators
(WGI)

12. 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 credit
Protecting
investors
Paying taxes
Trading across
borders
Enforcing contracts

13. 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

14. 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?

15. 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

16. 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

17. 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

18. Findings: Institutions and
Securities
 Common themes among all definitions,
applicable to Nigeria, will address the
corruption problem as well as stimulate
Rule of law
Accountability
Transparency
Participation
Property Rights
Regulation

19. 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?

20. Findings: Impacts of Corruption
 Costs higher
 Threatens stability
 Skews development
 Uneven playing field
 Harms reputation and trust in the state
 Deters investment

21. 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

22. 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

23. Conclusions

24. Potential Policy?
 Simplify complex tax
system & customs
 Increase
privatization
 Encourage
democratic
processes: free
press, auditors
 Increase
transparency
 Accountability
 Focus on incentives,
prevention, &
reforms