Corruption Could Cost Nigeria N79trn In GDP Losses By 2030 | Independent Newspapers Limited
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Corruption Could Cost Nigeria N79trn In GDP Losses By 2030

Tin Can Island Port
Posted: May 23, 2016 at 7:08 pm   /   by   /   comments (0)

Kirk Leigh

Treating corruption with kid gloves could ultimately cost Nigeria a whopping N79.62 trillion or $407.9 billion in Gross Domestic Product (GDP) if steps are not taken to check the vice, according to a new report by consulting group, PwC.

The amount is only $168 billion less than the current GDP level, which is projected to grow to over $1 trillion in 14 years when Nigeria is expected to figure as one of the biggest economies in the world.

The projected GDP level is arrived at by summing the current GDP level of $568.5 billion and the study’s estimated GDP addition by 2030, which is $534 billion.

According to the study, ‘Impact of corruption on Nigerian economy’ “the results show that corruption in Nigeria could cost up to 37% of GDP by 2030 if it’s not dealt with immediately. This cost is equated to around $1,000 per person in 2014 and nearly $2,000 per person that lives in Nigeria by 2030.”

The study estimated the losses in Nigeria since the onset of democracy in 1999 up to 2014 and the possible gains by 2030 by comparing Nigeria with Ghana, Colombia and Malaysia on Corruption Perceptions Index scores, respectively, within five years of introducing anti-corruption policies, and gains from these lower levels of corruption for ten years.

Further on the methodology, PwC says, “the cost of corruption estimation is based on the dampening effects of corruption on Nigerian GDP from using the IMF paper calculations.

“Our simulations have a twofold effect on Nigeria’s corruption perceptions index scores and GDP: a gradual increase in the Nigerian CPI score over 5 years so that the Nigerian CPI score is equal to that of the comparison countries by year 5. During this time period, Nigerian GDP slowly gains from gradual improvements in CPI.

According to the study, corruption is associated with poor public finance management and provision of public goods, it encourages tax avoidance, resulting  in a lower tax base for government revenue collection, estimating Nigeria’s tax revenues at 8% of GDP, which is the lowest for comparison countries.

Corruption, the study says, allows for government expenditure in vested interest rather than public interest, therefore, resulting in a lack of provision for public goods such as infrastructure for businesses and education and healthcare for households.

Still cataloguing the cost of corruption to any country, PwC says it is associated with erosion of talent in public institutions and therefore, government effectiveness. It encourages hiring based on nepotism, cronyism and patronage, not merit, therefore reducing the quality of the public institutions.

In corrupt countries, there is unnecessary bureaucracy, creating further opportunities for bribes; therefore, enforcement of contracts and property rights is weak, the study noted.