A new report by PriceWaterhouseCoopers, PwC, indicates that Nigeria will lose 30% of its GDP to corruption by 2030.
The report, titled “Impact of Corruption on Nigeria’s Economy” was presented to the Vice President Yemi Osinbajo at the Presidential Villa, Abuja by the PwC team led by Mr Uyi Akpata, Country and Regional Senior Partner West Market Area.
“Our 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 by 2030. The boost in average income that we estimate, given the current per capita income, can significantly improve the lives of many in Nigeria.” the PwC report said.
When President Muhammadu Buhari took over leadership in May 2015, he launched an anti-corruption drive to fight the menace that has caused the country a lot money through misappropriation or theft.
To arrive at these findings, PwC said they used several steps to report on the estimates on Nigeria’s corruption.
The professional services firm, said they examined “over 30 studies to understand the way that corruption affects GDP in Nigeria. They identified the transmission channels of corruption on economic outcomes. The study was obtained from International organizations including the OECD, IMF, DFID and Transparency International, Nigerian Academics affiliated with Nigerian Universities published by other Academics across mediums such as journals, articles and PhD publications among others as well as in-house studies assessing the health of the Nigerian economy such as the World in 2050 publication.”
They also reviewed the impact of corruption on economic growth to inform estimates of the link between the corruption perceptions index and GDP. This, the study showed was made possible through the International Monetary Fund study which indicates that the impact of 1-point change in the corruption index results in a 1.2 percentage point change in economic growth per annum. PwC used the study’s methodology- calculating impact on growth when a country moves from its own rank to another country’s rank on the corruption index.
The report revealed there are dynamic effects of corruption that affect the long run capacity of the country to achieve its potential. Channels through which this may occur include: “Lower governance effectiveness, especially through smaller tax base and inefficient government expenditure. PwC studies estimate Nigeria’s tax revenues at 8% of GDP, which is the lowest for comparison countries; Weak investment, especially FDI, as it’s harder to predict and do business; and Lower human capital as fewer people, especially the poor, are unable to access healthcare and education.”
PwC said: “We estimate the ‘foregone output’ in Nigeria since the onset of democracy in 1999 and the ‘output opportunity’ to be gained by 2030, from reducing corruption to comparison countries that are also rich in natural resources. The countries we have used for comparison are: Ghana, Colombia and Malaysia.”
Image Credit: Aseem Trivedi