Thursday, August 13, 2009

Nigerian Corruption Has Broad Impact

U.S. Secretary of State Hillary Clinton, in the continuation of her tour of African countries, continues to hit on the theme of corruption’s negative impact, telling Nigerian leaders this week that corruption has “eroded the legitimacy of the government and contributed to the rise of groups that embrace violence and reject the authority of the state.” Certainly that is true, because corruption in Nigeria has had wide-ranging impacts.

For example, Nigeria has been the target of counterfeiters peddling fake or poor quality drugs for nearly 30 years, endangering the health of untold number of citizens. According to an article written by Roger Bate and Thompson Ayodele entitled “Is War Against Bad Medicine Paying Off?”, healthcare workers in Nigeria have been reluctant to report fake drugs to the National Agency for Food and Drug Administration and Control (NAFDAC) or even refuse to sell them in many cases for fear of retaliation from the counterfeiters. Fortunately, NAFDAC has been able to reduce the incidence of fake drugs in Nigeria from 70% in 2002 to 41% currently.

Secretary Clinton said the record of the Economic and Financial Crimes Commission has not been so exemplary of late, which is stimulating disrespect for the government – such as in the oil industry. A team of accountants and tax experts assembled by the Nigerian newspaper THISDAY found a discrepancy of more than US$1.09 billion in the 2005 oil and gas industry report released under the Nigerian Extractive Industries Transparency Initiative. The team found oil company reports of payments that were not recorded by government agencies. The reporting by the Petroleum Products Marketing Company was found to be especially problematic with reporting measures inconsistent with accepted international standards.

Nigeria’s corruption has led to the rise and empowerment of armed groups such as the Movement for the Emancipation of the Niger Delta, which have disrupted the supply of Nigerian oil by as much as 900,000 barrels a day. A June attack by a small group of militants on a Royal Dutch Shell export terminal led to an immediate increase in the price of oil worldwide by 3.4% or US$2.33 a barrel the next day.

Corrupt practices and oil supply disruptions have prevented the Nigerian government from reaping the benefit of recent oil price increases. Therefore, both the Nigerians and the U.S. have a direct interest in cooperating through their bi-national commission to find a way to end the negative impact of corruption. Clinton’s warning about the consequences of corruption can no longer be ignored.

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