CORRUPTION AND REFORMS IN NIGERIA: THE OBASANJO ADMINISTRATION’S REFORM PACKAGE

By 1999 when the Obasanjo administration assumed office, corruption had become pervasive and had eaten deep into the entirefabric of the Nigerian society. Indeed, there are many unresolved problemsin Nigeria, but the issue of the upsurge of corruption is troubling. And the damages it has done to the polity are astronomical. Surveys of nations by Transparency International, aBerlin-based non-profit organization, rank Nigeria among the most corrupt countries in the world. In 1999, Nigeria was ranked the second most corrupt country in the world. 


In 2000, it was ranked the most corrupt country in the world. In 2001, 2002 and 2003, Nigeria was ranked the second most corrupt country out of the surveyed countries. From 2005 to 2007, Nigeria ranked the eight, twentysecond, and thirty second most corrupt among the surveyed countries. By 2008, Nigeria’s rating had significantly improved her rating since the 2007 index Nigeria ranked 121 out of 180 countries. 

The Nigerian system, the product of more than forty years of mismanagement, ethnic strife, military misrule, and political instability, provided a conducive setting for corruption to flourish. Control mechanisms were ineffective, and prospects of detection and prosecution were weak. The government’s control and near domination of the economic sphere provided limitless opportunities for Nigerians who operate without any sense of accountability to seek rents with impunity (Oko, 2002). Corruption flourished in Nigeria mainly because no government credibly and honestly committed itself to fighting it. Neither civilian nor military regimes could stop corruption because each administration, in differing ways and to varying degrees, exemplified the pervading culture of public service: an amoral obsession with using public office for private gain. After several decades of military rule, Nigeria’s democratic institutions had become weak and ineffective. 

A major challenge that faced the Obasanjo Administration was how best to ensure genuine restoration of democracy and good governance in Nigeria and eradication of corruption. Weak and battered institutions, poor culture of accountability and transparency, abuse of human rights and the neglect of the majority of the population created an environment in which reforms had been difficult. Faced with the tragic consequences of underdevelopment, which was propelled and sustained by dictatorial regimes and inept civilian governments, the country was challenged to induce qualitative transformation of the Nigerian economy and society. On his second coming in 2003, President Obasanjo embarked on a comprehensive programme of reforms in the economic, political and administrative sectors of the Nigerian polity. The reform agenda of the Obasanjo administration was well articulated in the National Economic Empowerment and Development Strategy (NEEDS). NEEDS is often touted as Nigeria’s own alternative to the Structural Adjustment Programme of the World Bank/IMF and focuses on Medium Term Economic Development and Poverty Reduction Strategy. 

In articulating the need for reforms in Nigeria, the NEEDS document identified a number of reasons in this regard: Nigeria has the potential to become Africa’s largest economy and a major player in the global economy by virtue of its rich human and material resource endowment. But much of its potentials have remained untapped, and if previous trends continue,Nigeria runs the risk of not meeting the internationally agreed Millennium Development Goals (MDGs) by 2015 and the development challenges remain largely daunting. Macro policy was highly circumscribed by the soaring inept but highly volatile and unsustainable public sector spending, and a typically high volatility of major macroeconomic aggregates. 

Fiscal decentralization proved an enduring challenge to effective macroeconomic stabilization and efficient public finance management in Nigeria. There was also the lack of policy coherence between the states and the federal government, and even among the various agencies of the federal government. The traditional instruments of economicmanagement, the National Plan and Budgeting processes had been rendered ineffective. Poverty in Nigeria was deep and pervasive with an estimated 70 percent of the population living in poverty. The prevalence of poverty had great regional, sectoral and gender disparities. Other social indicators were under pressure: income inequality in Nigeria was quite high; unemployment was threatening social cohesion, security and democracy; and the imminent HIV/AIDS epidemic was a potent time bomb waiting to explode and with potential dire consequences for productivity in the economy.

Furthermore, therewere persisting cases of social exclusion and discrimination against women which hampered their ability to fully contribute their potentials to the development of the economy. Despite efforts to promote private sector-led, competitive market economy framework, there was still the fundamental challenge of transition from statism and rent-seeking in an economy dominated by the public sector. The deep vested interests which profit from the system proved resilient. The perception of an over-bloated and inefficient public service became one of the key problems; another was the evidence of weak institutions and persistent implementation failures. 

The above features were legacies of decades of corruption and mismanagement, especially during the military administrations. In the context of an oil producing economy (with rents from oil as easy source of government revenue), a culture of rent-seeking developed. Government readily became an instrument for instant acquisition of wealth and therefore distorted the incentive to work and to create wealth in the private sector. With government as the major source of patronage and rent-seeking, the fight forpublic office became a matter of life and death. All these created an incentive framework that did not reward private enterprise, transparency and accountability. 

In summary, inappropriate development frameworks, poor and frequently changing policies and programmes, lack of clear development vision and commitment to the Nigerian project (as well as a citizenry that acquiesced to the patronage culture) were the major causes of Nigeria’s failed past. The foregoing analysis of the Nigerian economy is indicative of enormous challenges facing the Nigerian state and the urgency of fundamental stepsneeded to redress the legacies of the past. Among the many requirements for rejuvenating the economy was rapid and broad based growth which required Nigeriato do things in fundamentally different ways than in the past in order to break away from the low growth and poverty traps and the strangulating impact of corruption. T

he envisioned way out which the Obasanjo administration articulated in the government’s National Economic Empowerment and Development Strategy, (NEEDS) was to put in place various policies and projects aimed at turning around the fortunes of the country away from stagnation to that of a prosperous society. NEEDS’ ultimate goals are poverty reduction, wealthcreation, employment generation and value orientation, anchored on a tripod: creating an enabling environment for private sector growth; empowering the people to take advantage of new opportunities; and ensuring value for money in public service delivery. NEEDS is to be supplemented by SEEDS at the state level and LEEDS at the Local Government level. The first leg of the tripod was geared towards promoting private enterprise as the engine of growth of the economy. This was to be achieved by reducing the size of government, diversifying and deregulating the economy, intensifying infrastructural development, and promoting local resources and technology-based small and medium scale industrial base. The second leg of the tripod was empowering the people. 

To do this, the government intended to invest in the people through education and better health services, and rural development in national development. The third leg preached a new orientation to the conduct of government business in the country. Institutionalizing value for money in public service delivery presupposes smaller, stronger, better skilled and more efficient workforce. This underscored the need to operate transparent and accountable governance with the aim of taming the menace of corruption. This was to be achieved through intensification of privatization efforts; institutionalizing best practices in procurement process; making anti-corruption campaigns more proactive and making anti-corruption institutions more pragmatic and effective; reforming the public service and promoting budget discipline and disclosure. 

NEEDS was promoted as a home grown poverty reduction strategy aimed at wealth creation, employment generation, poverty reduction, corruption elimination, and general value re-orientation. Thiswould lead to the social and economic transformation of the country into sustainable, modern, competitive and prosperous economy. NEEDS was also supposed to be an instrument for making Nigeria the largest and strongest African economy, and a key player in the world economy. NEEDS was projected to be financed through the mobilization of domestic savings and Foreign Direct Investment (FDI) as well as Overseas Development Assistance (ODA). For its implementation, NEEDS would rely on public-private sector partnerships, including inputs from the donor community. The specific core reforms embarked upon by the Obasanjo administration can be categorized into five categories, as follows: Public Expenditure and Public Service Reforms; Accelerated Privatization and Liberalization; Fighting Corruption, Improving Transparency and Accountability; Macroeconomic Stability; Implementing a social charter; and Governance and Institutional Strengthening. Indeed, the government made efforts to cover a broad spectrum of national life in the general provisions of the NEEDS document (See Okonjo-Iweala, 2005; Soludo, 2007). 

The effective implementation of all these reforms was expected to impact positively on the macro-economy. With adequate enhancement of macroeconomic stability and the reduction in the level of corruption, capital was expected to be retained within the domestic economy with positive implications for investments locally. Generally, the arguments put forward by government in support of the reforms appeared logical. A nation that is so greatly endowed with human and material resources like Nigeria had no business ranking among the poor nations of the world, if leadership is focused in properly managing the economy’s affairs. There is no doubt that the Obasanjo administration tried to steer the Nigerian economy and its governance along what it regarded as a dynamic path. However, an appraisal of the broad groups of reforms indicates that the Obasanjo administration’s reform agenda, as earlier observed, imbibed by the neo-liberal and market economic development policies propagatedby the World Bank, the IMF and their subsidiary agencies, meant that since a majority of the impositions of these development policies such as currency deregulation, privatization, trade liberalization, market determined economic policies, anddependence on the free flow of direct foreign investment are perceived to be harmful to developing countries, the reforms could not automatically engender the transformation of the Nigerian state. 

Privatization in particular has become controversial in many parts of the world and has been rejected on account of its anti-people economic consequences. Given the history of failures of public enterprises in Nigeria, the programme on privatization was viewed with skepticism. There hasalways been the fear of lack of transparency in the disposal of government assets. In many cases, it was believed that proper asset valuation was not usually done and the eventual purchasers of the government enterprises and assets are deemed to be predetermined. Also, the use of the core-investor mode in the reform agenda appeared not to adequately spread the ownership of the privatized enterprise. Gross imbalances appeared evident, across the geo-political zones, on the ultimate origin of the core-investor. 

These issues were not addressed by the administration and have resulted in imbalances in the ownership of businesses and property in the country. This has implications for income distribution, national harmony and mutual peaceful co-existence of the various nationalities in the country. (See Aluko, 2007). A key feature of globalization is that it has increased the vulnerability of national economies to competition. Take the case of trade. Trade theory predicts that lowering barriers and opening up to trade leads to improvements in economic efficiency even though there may be distributional consequences. But for poor countries, these efficiency gains can often be purchased at the price of greater job insecurity, greater risk, and vulnerability to contagions. For instance, the textile industry in Nigeria, like that elsewhere in the globe, has been decimated by competition from China. Vast quantities of cheap textiles imported or dumped from China and South Korea have made it impossible for most Nigerian textile manufacturers to compete. Factories have closed down and jobs have been lost in the last few years.
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