Impact of Corruption in Nigeria

Impact of depravation in NigeriaCORRUPTION AND ITS clashing ON INTERNATIONAL BUSINESS IN DEVELOPING COUNTRIES(NIGERIA AS A CASE STUDY)(FEBRUARY 2014)Abstract degeneration is no news in the earthly concern to daylight. We croupe see rotting in our daily lives, let tot bothy in our ancestryes and the panache economies as a alone wrap up with turpitude e real day. That is why discussing screw upion and seeking ways on how to deal with it in Inter democracyal phone line is inevitable.I chose Nigeria as a subject study for obvious reasons I am Nigerian and unarguably Nigeria is the whale of Africa vast in its natural resources simply regrettably Nigeria is still battling with put exemptness which is crumbling our already distressing tribe and taken a toll on our International line of descent relations pushing potential communication channel and festering further away.This paper seeks to attempt to guide why subversion is preponderating in develop countries, its im pact on International seam in developing economies and possible recommendations.I pull up stakes first start by giving you a brief picture into Nigerias biggest export and afford an attempt to analyze putridness itself.IntroductionInternational line of credit is every commercialised transaction between two or more(prenominal) countries and the end of the private business is to receive profits while the establishment is incite by profit or political reasons (Daniels, Radebaugh, and Sullivan 2007). Business has become more global, trading has become easier with different regional trading blocs. This only encourages companies and economies to p conductge in International Business to boost its economy. Several economic theories show how countries competitiveness with early(a) and Nigeria certainly has an Absolute Advantage in the anele sector.Nigeria is a land with diverse and enormous mineral resources equivalent rough- sleep with oil, coal, zinc, semi-precious ston e and gold to name but a few. Nigeria exports petroleum, petroleum products, umber and rubber. Nigeria is in any case rich with long human resources hence a great destination for business.The sudden harvesting of Oil in the 1970s led Nigeria to the abandonment of its strong agricultural and light manufacturing bases in favor of an dehydrated dependence on everlasting(a) oil. Oil and gas exports account for more than 95% of export earnings and everyplace 80% of federal government revenue.However, the success story in the sector has lead it and then furthermost making Nigeria, the United States largest trading partner in sub-Saharan Africa, supplying 8% of U.S. oil imports which is half of Nigerias daily oil production .The sphere is also the fifth-largest exporter of oil to the United States.Nigeria is a member of the functional strongness Agreements in the earthly concern Organization of Petroleum Exporting Countries (OPEC), and its current crude oil production averages over 1 million place per day with oil reserves ar estimated to be 36 billion barrels natural gas reserves are over coulomb one million million cubic feet. (Source 21 Feb 2012 http//www.nigeria.gov.ng/index.php/2012-10-29-11-05-46/economy)Table 1.1 Nigeria Economic Overview 2014Nigeria Economy OverviewRegionsub-Saharan AfricaIncome CategoryLower middle incomePopulation168,833,776GNI Per Capita (US$)1,430City coveredLagosDoing Business 2014 RankDoing Business 2013 RankChange in Rank147138-9Doing Business 2014 DTF(% points)Doing Business 2013 DTF(% points)Improvement in DTF(% points)46.6246.330.29(Source 21 Feb 2014 http//www.doingbusiness.org/ entropy/exploreeconomies/nigeria/ ) corruptnessThe mankind is a chain, one link to an new(prenominal) Maltese Proverb, and with the rapid stride of globalization and the increase in the volume of International trade and investment funds, coupled with ongoing incorporated s messdals, has escalated the importance of issues relating to Corr uption, Corporate Social accountability (CSR) and Politics (Rodriguez et al, 2006).As foreign firms expanded into, and new firms were born within, developing and transition economies governments, managers and scholars grew more aware of the magnitude of corruption and the need to pull in and address it.Corruption has been described by several authors using very fancy words but keeping it simple it is a wrongful act that affects the well-being of the rules of order. Corruption ab drops power for private gain and it affects everyone who depends on the integrity of people in a leadership position.It can be manifested with bribery, il profound gratuity, extortion, conflicts of interest, kickback, and corporate espionage and through commissions/fees (Source 21 Feb 2014 http//www.sfo.gov.uk/briberycorruption/briberycorruption.aspx)In overt tallyices several ardent writers relate corruption with the continuous malicious use for self-financial gain but this is not exclusively the ca se because corruption also exists inboth (small and large) private enterprises and their gains arise because of embezzlement, conflicts of interest, abuse of power, exploitation, bribery and fraud. (Sikka, 2008).Corruption in Developing CountriesUnfortunately, it is not news to our ears that Nigeria is headed to being completely undone by corruption if continuous political campaign to curb it is not act vigorously. Well, Im of the opinion the root cause of the present Nigerian corruption problem is the overarching crude oil economy and politics over the years.Transparency International is has efficiently made available a Corruption Perceptions Index (CPI) which ranks countries and territories based on how corrupt their public sector is perceived to be. The scale of 0 100, in the CPI is a s follows 0 indicating that a country is perceived as passing corrupt and 100 indicating it is perceived as very clean.Please note the countries perceived as very clean and where those countrie s originate from compared to those perceived as highly corrupt further stressing my view that developing countries are highly corrupt payable to the economic conditions thus affecting business. (Source 21 Feb 2014 http//www.transparency.org).Copy of CPI2013_GLOBAL_WithDataSourceScores.xlsNigeria is at 144, dreadful expression past tables in the Transparency International website in 2004, Nigeria was at 90. The last country on the list is an African one, Somalia. This goes without saying. If you look at the economic situation in Somalia, it is obvious. The poorer the nation the higher the corruption. But how can there be a balance? A nation of necessity Foreign Direct Investment to boost its economy. The Porter Diamond speculation (Daniels et al 2007) which naturally should answer boost a nation whitethorn not work in a developing country like Nigeria, according to this theory companies development of international competitive product depends on their success in their home count ry, this theory is not feasible in most developing economies, these countries need foreign investors to tick off companies to harness the demands of the nation but with corruption as one of the factors affecting International Business, how will be nation grow strong enough to combat it?Sadly, Nigeria has no excuse for its failure so far, at present the problem of corruption issues has been saddled in into the laps of three government bodies Economic and Financial Crimes commission (EFCC) Independent Corrupt Practices Commission (ICPC) and the Code of Conduct Bureau (CCB), with weensy or no success considering Nigeria is still travel below the worlds Confidence Interval year on year, so how can International Business be seamless? You can also vex current shocking details about bribery/corruption in Nigeria on bribenigeria.com.Wont a corporation or nation rather deal with an other(a) continent with a lower corruption issue than invest or trade with a nation who is know for corrup tion? If I were to answer, my answer will be no.I believe that developed countries in the world nurture a break dance advantage over the fight against corruption because developed countries do not face the several challenges that developed countries face, so third world countries or developing countries like Nigeria, still pose a long way to go.Multinational Corporations interest in fighting Corruption in International BusinessIt has been argued that governments and host communitiesmay be interest in eradicating poverty, promoting education, health care andhuman rights, but corporations may not necessarily share such goals. They areessentially private judicature and are required by law to prioritise the welfare ofthe shareholders (capital) higher up other stakeholders (Sikka, 2008). Corporations todayshould to conduct their operations responsibly with accountability to widersociety and legitimise their affable power corporations may acknowledge some cordialresponsibilities, but they most often times cant horse the systemic requirement to increase profitsand dividends to the upbeat of capital.Businesses and organizations are set up to create wealthiness, and so far it is a very highly telling tool for doing so. No defineations, whether legal, ethical or moral limitare set to what or whom corporations can exploit to create wealth for themselves and theirowners. According to Sikka (2008), such practices seems to be partof the enterprise culture that persuades some(prenominal) to believe that bending the rules forpersonal gain is a sign of business acumen (pg. 270). Competitiveadvantages is considered to be an entrepreneurial skill, especially when competitivebusiness surround link profit and market shares with meeting global businesstarget.We see that the use of bribery and inducement to secure competitive advantages is originally amatter of executive discretion rather than any legal or moral compulsion. It has beenargued that this discretion may be used to improve directors since their remunerationis influenced by the level of profits and return to capital. Markets therefore conservepressure on companies to generate ever increasing profits and returns as capitalismdoes not provide any guide to upper limits of accumulation (Sikka, 2010). Companiescan generate additional returns for finance capital, not only through competitiveadvantages on products and services, but also through bribery and otherinducements to secure government contracts which are the big and guaranteed revenue even though payments are delayed .In an attempt to satisfy the corporategoal unfortunately everybody else is put at risk.Generally, the codes of business conduct include statements rejecting the payment or sufferance of bribes, collusion, pressure or illegitimate favour, either directly orthrough third parties whether public officers or private individuals but are often not respected. Y their involvement in corrupt practices and other anti-social pra ctices cannot therefore bereconciled with their business codes of conduct (Sikka, 2008, 2010 Otusanya, 2012).Environmental upthrow and threats to their reputation are managed by publishing corporate social responsibility (CSR) statements and code of conduct that promise ethical behaviour, improvement of economic and social infrastructure and quality of life of all stakeholders (Phillips, 2003 Sikka, 2010).Looking at it critically even if one organization restrains itself, the superior profits of competitors and business environment exert pressure to explore ways of matching or transcend that,thus the tendency to increase profits through corrupt practices as a means of gaining competitive advantages remains embedded within the corporate enterprise culture. In the end, it is a means to an end or we all want to make money some would say.Impact of Corruption in the International Business worldWithout a doubt corrupt use hinders development, contributes to the depletion of the public purse and distorts markets, furthering hindering local and Foreign Direct Investment. The growing of a nation depends on the redistribution of its wealth since the middle class and poor benefit is much greater than the affluent, who loss out of the re-distributional process. Countries suffering from corruption cannot implement sound re-distributional policies and are not expected to take benefit from sustainable economic development despite engaging upon economic growth from time to time for some reason or the other. No country or company would like to engage in business with falling economies.Another pitfall is it becomes a way of life. Corruption is like a way of life in Nigeria, from the secretary that sits at the office expecting to aim a gift before passing the cheque for signature to our leaders who can only award contracts by our wonderful saying if you help me, I go help you ( *pidgin face which means if you scratch my back, I scratch yours).There are other things to con sider, for instance the level of poverty. Nigerians do not know any way out. Word on the street, is you have to be smart, so you can survive. And survival here is relative. The danger of this is that is rubs off on the nation as a whole. Our image and reputation is ever taunted. Business people need to find out if they need to cut corners before making an investment in Nigeria and need to know the military personnel at the top before the contract is awardedIt ridicules the pattern of open and fair competition hence the continual decline of the economy.*Pidgin English is the low class English spoken on the streets in Nigeria compendiumInternational Business as stated earlier involves all commercial transactions, private and governmental, sales, investment, transportation that takes place between two or more countries for developing countries to find a way to curb corruption to its borderline it must first start from the sectors and the leadership. Not forgetting that the various m odes of entry ranging from Imports and Exports, tourism Transportation, Licensing and Franchising, Turnkey Operations, Management Contracts, Direct and Foreign investments need to be rid of corruption (Daniel et al 2007).In the case of Nigeria, it makes sense that any effort to eradicate corruption in must start with the oil sector, because of its encompassing effects on other sectors of the economy and move immediately to harnessing other natural resources, focus on production of resources that the economy has demand for thus providing job opportunities for several people. Secondly, the law enforcement would need to sanitize its own subdivision because it is a pity that in developing countries they are the most corrupt. Im not confident of the efficacy of the sanctions and restitution imposed and how is it been effective handled, however if sanctions from those found guilty of corruption can also be re enforced.Finally, as also noted earlier, unfortunately it has become a way of life. The biggest step will be sensitization. The media and institutions of learning will have to collaborate to ensure these morals are instilled. A full thunder media campaign on the effects, combined with tutorials in classes will surely make an impact. The earlier an individual realizes that it is not a norm, the better. People should not accept or give bribe and not cut corners the better for the whole society.Corruption can be tackled, it may take forever but with collaboration and eyes on the bigger picture when purely looking at it from a business perspective, it is indeed wiser to build a good reputation that bring a lifelong investment than engage in activities that will only provide solutions for short term needs.References/BibliographyDaniels, Radebaugh and Sullivan (2007) International Business Environments and Operations, 11th Edition.Olatunde Julius Otusanya, Sarah Lauwo, Gbadegesin Babatunde Adeyeye (2012)A Critical Examination of the Multinational Companies Anti-C orruption policyin Nigeria (Accountancy and Public Interest 2012). (Online journal 9th Feb 2014 http//visar.csustan.edu/aaba/Otusanya2012.pdf)Otusanya, O. J. (2011b) Corruption as an prohibition for Development in DevelopingCountries A Review of Literature, ledger of Money Laundering Control, 14 (4)387-422.Phillips, R. (2003) Stakeholder Theory and Organisational Ethics, San FranciscoBerrett Koehler.Rodriguez et al (2006) Three Lenses on the Multinational Enterprise Politics,Corruption, and Corporate Social Responsibility, Rensselaer Working document inEconomics, No. 0608 New York.Sam Ejike Okoye. How to tackle corruption effectively in Nigeriahttp//www.gamji.com/article4000/NEWS4930.htm (9 Feb 2014)Sikka, P. (2008a) Enterprise Culture and Accountancy Firms The New Master ofcosmos, Accounting, Auditing and Accountability Journal, 21(2) 268-295.Sikka, P. (2010) Smoke and Mirrors Corporate Social Responsibility and Tax dodge, Being Paper Presented at Essex Accounting Centre, Esse x BusinessSchool, University of Essex, UKhttp//www.essex.ac.uk/ebs/ query/working_papers/WP2010-5%20PS%20CSR%20and%20Tax%20Avoidance%20Revised%20April%202010.pdf. (9 Feb 2014)Udelove (2010) Why Nigeria Is Referred to as the Giant of Africa. 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