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Nigeria

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Nigeria

  1. 1. CORRUPTION VS. GOOD GOVERNANCE How International Business Can Improve for Nigeria
  2. 2. Plan of Study  Corruption Good Governance  Reputable sources  Primary research  Major NGOs  Transparency International  Global Integrity  World Bank
  3. 3. Topic:
  4. 4. Nigeria
  5. 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. 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. 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. 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. 9. Corruption Perceptions Index (CPI)
  10. 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. 11. Worldwide Governance Indicators (WGI)
  12. 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. 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. 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. 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. 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. 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. 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. 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. 20. Findings: Impacts of Corruption  Costs higher  Threatens stability  Skews development  Uneven playing field  Harms reputation and trust in the state  Deters investment
  21. 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. 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. 23. Conclusions
  24. 24. Potential Policy?  Simplify complex tax system & customs  Increase privatization  Encourage democratic processes: free press, auditors  Increase transparency  Accountability  Focus on incentives, prevention, & reforms

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