In a compelling critique that challenges prevailing academic narratives, seasoned journalist and retired civil servant Uddin Ifeanyi asserts that corruption is far from an “overrated” factor in Africa’s persistent underdevelopment. Instead, he posits it as a fundamental impediment, particularly evident in the Nigerian context, that cripples economic growth despite theoretical frameworks suggesting otherwise. While development economics often highlights crucial elements like robust health and educational services, a skilled workforce, low agricultural taxes, prudent fiscal management, and stable domestic prices as catalysts for attracting capital, Ifeanyi meticulously unpacks how deep-seated corruption routinely undermines these very foundations.
Referencing Indermit Gill, the World Bank Group’s chief economist and senior vice-president for development economics, who in a recent *Economist* article underscored the importance of “a healthy and educated workforce, good business regulations, adequate infrastructure for transport and energy, and stable macroeconomics that encourage private savings and investment,” Ifeanyi argues that these laudable goals become well-nigh impossible to achieve in an environment rife with corrupt practices. If corruption truly didn’t matter as much as some commentators on the continent believe, then these development benchmarks would be within reach. However, as Ifeanyi points out, the reality on the ground, especially in Nigeria, presents a starkly different picture. The sheer scale of corruption renders the efficient allocation of scarce resources an uphill battle.
Consider, for instance, the arduous process of establishing a new “greenfield” business in Nigeria. Entrepreneurs are often confronted by a bewildering multiplicity of authorising agencies, each presenting its own hurdle. From dealing with the notorious “ọmọ onílé” – the local land touts or community gatekeepers demanding illicit levies – to navigating the labyrinthine corridors of state land ministries and various other governmental agencies requiring sign-offs, the journey is fraught with unofficial costs. These “off-balance sheet” expenses are not merely an inconvenience; they significantly inflate operational costs even before a business can legitimately commence, making it tough to compete.
Beyond the formal-informal regulatory bottlenecks, anecdotal evidence from several quarters paints an even more disturbing picture. Persons of influence, often referred to as “power brokers” or “godfathers” in our local parlance, are increasingly demanding equity stakes in nascent startups. While one might logically assume their representation on a new business’s board would be a welcome boon, Ifeanyi clarifies that these influential individuals typically expect these shares to be allocated without any financial contribution. In one particularly telling account, such influential figures claimed sufficient shares in an as-yet-unestablished business to effectively oust the original “prime mover” – the visionary behind the venture – at its very first annual general meeting, stifling innovation and genuine enterprise.
The cumulative effect is profoundly detrimental. It is hardly surprising that countless entrepreneurial efforts to establish businesses in Nigeria either flounder at the initial stages or, if they manage to launch, are burdened by cost structures that preclude profitability in the conventional sense. Such businesses often only survive through “government forbearances”—essentially concessions, bailouts, or special favours that divert much-needed public funds away from critical productive investments. These diversions starve essential infrastructure projects such as road construction, power supply initiatives, and educational institutions of vital funding, significantly impeding an economy striving to industrialise and diversify beyond its primary revenue streams. The direct consequence is lower GDP growth than potential, trapping the nation in a cycle of underdevelopment.
Moreover, by prioritising influence and access over merit and efficiency, corrupt practices inadvertently favour local businessmen with strong connections over foreign investors, unless the latter also manage to cultivate “friends in high places.” This pervasive “settlement culture” does not just breed increasing uncertainty and higher transaction costs; it fundamentally discourages long-term planning and investment, both domestic and foreign, crucial for sustained economic expansion.
International bodies like the World Bank often estimate that corruption can cost developing countries between 2 to 5 per cent, or even more, of their Gross Domestic Product (GDP) annually. However, Ifeanyi highlights clear evidence that the indirect growth losses attributable to corrupt practices over decades can be substantially larger. For a country like Nigeria, even a conservative 3 per cent annual GDP loss due to corruption translates into a staggering long-term income deficit, eroding potential wealth and hindering national progress. By defining corruption too narrowly, primarily in financial terms, we inadvertently “pull its teeth,” diminishing its perceived impact. The broader reality involves systemic governance failures, regulatory environments being hijacked by industry operators, and institutions that are ostensibly designed to serve the welfare of the populace instead becoming instruments for insiders. All these ills stem from individuals with influence relentlessly pursuing and reinforcing their access to illicit rent, whether through transfers from public coffers to poorly managed private enterprises, or through the insidious transfer of resources from the poor to the politically exposed.
Ifeanyi then poses a critical question: Which is the greater problem? The colossal loss of government revenue resulting from businesses being pushed into the informal sector, tax evasion facilitated by bribery, customs fraud, under-invoicing, and pervasive oil revenue leakages? Or the exacerbated inequality and widespread poverty that our society endures because corruption effectively functions as an unjust “tax” on the poor and small businesses, funnelling the proceeds of this levy directly into the pockets of politically connected elites?
He concludes that the answer, in a practical sense, matters little. The verdict is definitively in: Corruption renders an economy inherently fragile. It critically worsens insecurity, not just through direct crime but by eroding government legitimacy, fuelling widespread public angst, and inadvertently encouraging informal or outright criminal alternatives. By making light of, or understating its significance in discussions about economic growth and development in economies like Nigeria, we risk normalising corrupt practices, allowing them to morph into a deeply ingrained cultural burden – a phenomenon that, tragically, may already be upon us.
Uddin Ifeanyi, a journalist manqué and retired civil servant, shares his insights on critical national issues.
Originally sourced from Premium Times. This article has been rewritten for our readers.
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