The economics of corruption: Why Buhari is losing the anti-graft war
If propaganda is a weapon of war, the Buhari administration has lost the public battle in its war against corruption. Instead of shaping public opinion, the government is losing the psychological warfare. Take the basic reputational issue of institutional integrity. The head of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, was indicted by the Department of State Service (DSS) for alleged malfeasance, and then his nomination as chair of EFCC was rejected twice by the Senate. But the president of the Senate, Bukola Saraki, is himself facing trials for alleged corruption. If a nation can’t have an anti-graft agency and a legislature that are irreproachable and led by men or women of unimpeachable integrity, how can it even begin to talk about tackling corruption?
Yet fighting corruption is not rocket science. Some countries, such as Singapore, have moved from being one of the most corrupt in the world to becoming one of the least corrupt simply by doing the right thing. There is a large body of knowledge, both theoretical and empirical, on the causes of corruption, its consequences and how best to tackle it. One field of study that has explored this subject systematically, rigorously and comprehensively is economics. Since, Susan Rose-Ackerman wrote “The Economics of Corruption” in 1975, more than 4,000 articles have been written on the causes, costs and control of the problem.
One can discuss ad infinitum the causes of corruption in Nigeria, and I will not do so. However, it’s worth noting that when it comes to the well-known causes of corruption, such as a bloated public sector and the embedded monopolistic and discretionary use of power in that sector, regulatory and institutional failure, lack of economic competition and the absence of the right incentive structure, particularly the right balance of punishment and reward, Nigeria is truly a basket case. The ground for corruption is so fertile in Nigeria that the failure to attack its root causes makes a mockery of the anti-graft war. A former British prime minister, Tony Blair, famously said that he would be “tough on crime and tough on the causes of crime”. But, in Nigeria, the government wants to be tough on corruption but not on the causes of corruption!
Where, for instance, is the radical public sector reform to sanitise and professionalise the civil service? Where is the political restructuring to decentralise governance and ensure, inter alia, greater accountability and, therefore, less corruption? And where is the antidote to the rentier economy that is a major root cause of corruption in Nigeria? Empirical studies have shown that countries that have carried out far-reaching economic, political, institutional and bureaucratic reforms are significantly far less corrupt than those have resisted change. As Albert Einstein famously said, “It’s insanity to do the same thing over and over again and expect different results”.
Which brings me to the anti-graft war: what are the conditions for its success? Well, economics gives us three powerful concepts to aid our analysis. These are: incentives, institutions and signalling. They are powerful tools for incentivising human behaviour. But, for simplification, I would assign everyday language to these concepts, and make the following proposition. To succeed, any anti-graft war must have three elements: first, political credibility; second, strong institutions; and third, strong public support. Any anti-corruption activity that lacks these elements is doomed to failure. Unfortunately that’s the problem with the Buhari government’s anti-graft war: it has serious credibility gap, its institutional underpinnings are extremely weak, and it lacks public support.
Take political credibility first. Of course, President Buhari and Vice President Yemi Osinbajo are men of impeccable personal integrity. Yet, when it comes to the prosecution of the anti-corruption war, there are serious concerns about their impartiality. There is a strong perception that the government’s anti-graft strategy is selective, partisan and one-sided. Buhari said in his Chatham House speech during the 2015 general election that “the corrupt will not be appointed into my administration”. But few Nigerians believe that his government is made up of saints; rather there is the feeling that, as the belated suspension of the secretary to the government of the federation, Babachir Lawal, suggested, the government and the EFCC are treating allegations of corruption against government functionaries with more levity than they do with those against opposition leaders.
Perception, of course, is not always reality, but in politics perception matters. And the truth is that perception of differential treatment is seriously damaging the political credibility of the anti-graft war. Every anti-corruption campaign must involve the same treatment of all players and constituencies. Instead of differential or selective treatment, it must be based on equal treatment or the principle of generality. Section 15(5) of the Constitution says “The State shall abolish all corrupt practices”. So, the anti-graft war should be a constitutional and not partisan campaign!
Which leads us to institutional quality. One of the approaches to tackling corruption is what Alberto Ades and Rafael Tella called “the lawyer’s approach”, that is, tough laws and tough enforcement of laws. But, in Nigeria, the institutions that could ensure the success of the “lawyer’s approach “are either corrupt or weak or both. The EFCC lacks investigatory and prosecutorial abilities. Why has there been no successful prosecution since the so-called anti-corruption war started? Instead, the government recently lost some highly-publicised and hyped cases. A high-quality and incorruptible judiciary is, of course, a powerful deterrent to corruption, but Nigeria doesn’t have such a judiciary. Not yet! And where is the legislature to pass stringent anti-corruption laws? Surely, not the current National Assembly, with several members and leaders facing corruption investigations or charges! In 2015, President Buhari set up the Presidential Committee on Corruption, chaired by Professor Itse Sagay. Two years on, the committee is moribund and has made no significant impact on strengthening the anti-graft regime in Nigeria.
But perhaps the biggest threat to the anti-graft war is the seeming lack of media and public support: public cynicism or indifference is so strong. Commentators regularly pooh-pooh the campaign because of its perceived bias and other flaws. Even this highly respected newspaper, BusinessDay, couldn’t resist the temptation recently to editorialise that there are circumstances when corruption could “have a positive effect on economic activities”, citing the examples of Indonesia and China. It was a surprising intervention but one that probably reflected frustration with the government’s blinkered approach to fighting corruption.
Yet, it should be said that while the “East Asian paradox” that Michael Rock and Heidi Bonnett postulated in a 2004 article may have shown correlation between corruption and economic growth, it did not establish unambiguous causality. Furthermore, the postulation has been debunked in subsequent research and, more importantly, by recent attitudes of the East Asian countries to corruption. Hong Kong and Singapore have probably the most draconian anti-graft regimes in the world. Today, China’s war on corruption has netted more than 100,000 officials, including high-ranking military officers and national leaders. As a writer puts it recently in the Financial Times, “The anti-corruption crackdown (in China) has worked … corrupt practices are now universally frowned upon”. The fact that the East Asian countries have turned their backs radically against corruption suggests that the “East Asian paradox” lacks explanatory and predictive powers as a theory.
The truth is that corruption, whether as “sand in the machine” to avoid cumbersome regulations etc, as “oil in the wheel” to obtain benefit, or as the looting of public funds by public officers, comes with huge economic costs and social consequences. The economics of corruption overwhelmingly favours tackling it. But anti-graft strategies and campaigns can never succeed without political credibility, strong institutions and public support. The Buhari government’s anti-graft war lacks these critical elements. Sadly, without them it will fail.
- Last week, I referred to one of the two candidates in yesterday’s French presidential election as Marion Le Pen. She is Marine Le Pen, leader of the National Front. My apologies.
Olu Fasan