2 February 2016

Nigeria: Corruption Will Cost Nigeria 30 Percent of GDP By 2030 - Report

A new study by professional services firm, PriceWaterhouseCoopers, PwC has shown that Nigeria will lose 30 per cent of its GDP to corruption by 2030.

Country and Regional Senior Partner, West Market Area, PwC, Mr. Uyi Akpata disclosed this when he led a PwC team to submit the report to the Vice President, Yemi Osinbajo at the Presidential Villa, Abuja.

Speaking on the report which was titled: 'Impact of Corruption on Nigeria's Economy' Akpata said: "The results of the study show that corruption in Nigeria could cost up to 37% of Gross Domestic Products (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."

According to PwC, "Several steps were used in the report to estimate Nigeria's cost of corruption. The first of which was to examine over 30 studies to understand the way that corruption affects GDP in Nigeria. The study was obtained from International organisations 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.

The IMF study was selected to estimate impact of corruption on economic growth PwC's Chief Economist and co-author of the report, Dr Andrew S Nevin, noted that PwC formulated the ways in which corruption impacts the Nigerian economy over time and then estimated the impact of corruption on Nigerian GDP, using empirical literature and PwC analysis.

He 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."

The report further noted that corruption is a pressing issue in Nigeria which affects public finances, business investment as well as standard of living. It listed three dynamic effects of corruption to 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 Foreign Direct Investment explaining that it's harder to predict and do business under such circumstances. Also affected is lower human capital as fewer people, especially the poor, are unable to access healthcare and education.

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