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2015

Culture of Corruption!

Last week I penned an article for Logbaby in which I stated that one of the issues stagnating Nigerian businesses, and as a result employment conditions in Nigeria, was “a culture of corruption”. This particular idea stuck out and so today I am advised to expand on it.


 I sent a package to Abuja last week- an innocent task but in Nigeria the devil. Below are the details.

{Normally I send packages by Way-Bill through a popular bus company, however when I got there this time I was approached by two men at the gate who asked me what I wanted to do, when I informed them that I came to way-bill a package, they told me that if done through the normal channels, it would not get to Abuja on that day but that I could hand it to the driver for a nominal fee.

Now, this idea is not new to me but it is interesting to highlight the ease with which even new customers are introduced to this great enterprise of corruption.

Coincidentally and upon paying the driver, I discovered that he had another customer waiting for him. Jovially questioning the customer, I discovered that for him this was routine. He never sends packages the right way, since for him using the driver affords a 60% discount.}

Now, let’s analyze the costs, 300 buses later, travelling across the great expanses of Nigeria and calculated at an average cost of ₦10,000 lost to driver infidelity and this luxury bus company loses ₦3,000,000 ($20,000) a day in revenue.

The problem here is that this behavior while legally wrong is not morally reprehensible in Nigeria. It is accepted as “normal” and its detrimental effects on legitimate enterprise is at a scale that has made corporate defense of such practices essential to survival.

It’s encroachment into the realm of “norm” and acceptance to the point that this driver may not even hide these actions from his wife, children or co-workers breeds A CULTURE OF CORRUPTION.

Deeply seeded in our society is an acceptance of financial impropriety, other than actual armed robbery, slick fraud is not disdained in Nigeria.

Many have written and continue to write on corruption as the bane of the issues stagnating Nigeria, so before I go further I wish to make it clear that I do not consider the Nigerian economy stagnant, neither do I count corruption as the top issue. I believe that we have so many issues as a nation that “issues” should be a class studied alongside Mathematics, Geography and English in Nigerian, primary, secondary and university institutions. That said I approach these articles with integral economic visualization seeking only to identify the true effects of a thing and staying clear of political leanings, personal opinions and unfounded theories.

Corruption, as we have found at LIVEN Capital, represents only one of the problems facing Nigeria and businesses today, it cannot even be included on a list of issues contributive to business failures in Nigeria. At LIVEN we consider the Top 3 Issues facing business in Nigeria to be Products, Capital and Personnel. Corruption is some of the reasons for deficiencies in each of these but by itself it cannot qualify as causation for failure.

However, in running LIVEN Capital there is nothing I consider more pressing to the issue of human resources management than corruption. Here we see internal corruption as more detrimental to business growth than the corrupt society at large, even still, when treating corrupt practices internally we take full view of the society’s impact on the social psyche of the individual.

A Culture of corruption is not a curse of the God’s it is a symptom of a morally decrepit society, it is a sign of an employee who is a burden, it is a recipe for business failure, and again The God’s Are Not To Blame, especially not in this country where the most corrupt of us all owns an encyclopedia sized bible.


Definition:

Corruption has 3 main classifications the first is; Decay - as in moral decay; the second is Alteration; the third idea and the most relevant to this article is “The Abuse of power and access for the purposes of fostering illegal and otherwise unaccepted proceedings.”

How it works:

I was told a story about how someone needing a promotion in the Nigerian civil service took a test and after passing the test was told that her result can only move from one desk to the other (in the same office) for a fee of ₦2000 per desk, so that it can eventually arrive at the office of the overall head who can approve her promotion. In the end this lady owing to her religious believes refused and the next week found that her result was missing. A few thousands later and it was “found”.

This scenario plays out in all sphere of Nigerian society adding complexity to simple activities and increasing the cost of living.

If it happens in your office then as the C.E.O, Governor, Manager or Supervisor you will never get to see the right people because they will refuse to “pay to play” and you will see all the wrong people because they would have connived with your staff. For staff in an organization it seems a reasonable benefit to make the quick cash but one must realize that the growth of an organization is the only way careers can be sustained and promotions maintained. If in the end the company fails to grow owing to your corruption, so will you pay, tenure and career attainments.

The Economics:

We estimate that corruption cost an average government establishment 60% of its budget, private enterprises 40% of their revenue. Furthermore, we estimate that an additional cost attributable to non performance and mediocrity affects government offices to the tune of 40% and individual enterprises by 20%. In essence, the financial costs to a government parastatal can be a complete waste of budget equivalent and supplementations from revenues leading to incredible profit loses. To a business, it add additional expenditure of up to 60%, which adds to the prices they charge customers and in effect puts a damaging beating on profit margins.

Further than the financial toll is the psychological toll which these inefficiencies, thieveries and stagnating practices take on the minds of entrepreneurs. In Nigeria the stories of dreams deferred often have more to do with the lack of trust worthy hands that to any other factor. For example, a friend of mine built a hotel recently, and since the hotel was 3 hours away from his home he visited the site once a week. Upon a visit he discovered that when he was not around the mixtures of products where altered as against the standard assigned, even though he buys the materials, in essence the construction workers where mixing the concrete in a way that allowed it to dry faster, so that they can do more work in a day, this at the expense of the buildings structural integrity. As a result this entrepreneur was forced to semi-move to the site of his building in order to ensure that the work was done right.

Imagine the frustration, he owes no one, he has provided materials and yet he cannot attend to other matters, he must now also become a construction worker. Many Nigerians get frustrated at the rampancy of such practices and quit the country entirely.

The net effect of a generally corrupt society is that from customs duties, to passing police check points, to getting fuel at fueling stations, to secretaries telling you if the boss is around, all costs money and presents an opportunity for fraud, leakages and inefficiencies. The cost to the Nigerian economy is unquantifiable, it is painful and for businesses it can mean life or death.

It is estimated that a building project in Nigeria cost 200% to 250% of the cost of the same project in South Africa, imagine the detrimental effects of such added costs on our ability as a nation to develop industries, adequate real estate and even for government to deploy good roads and infrastructure.

In Nigeria today we have a housing deficit of 16 million homes, in essence at the present cost of building a 3 story (8 sets of three bedroom flats) it will take 2 million buildings at a cost of ₦5 trillion ($31 billion) as opposed to the more reasonable ₦2.5 trillion ($15.5 billion) in South Africa – Imagine the savings.

$15.5 Billion can build 1 airport, 1 Sea Port, 1000 kilometres of road, water for a whole city and still sit on change. In the business arena it took less to build all of Dangote’s Cement Plants and Adenuga’s Globacom. Imagine the impact of these businesses in the lives of Nigerians, now imagine them withdrawn, it is hard to picture. Yet day after day millions of small businesses never get to try for lack of reasonable housing, inefficiency of document processes in licensing agencies, lack of electricity bordering on gross incompetencies and corruption in Nigeria’s National Electricity Company (formally known as NEPA - Now privatised) and worse still is the massive daily theft by employees, directors and associates.

Worst of all, this is acceptable behavior, it is expected, it is normal. Here are the lyrics from a Nigerian musician (M.I) depicting corruption in Nigeria, I believe he does a better job of bringing the matter home than my statements may.

In the video above the lyrics I reference below start 2 mins and 35 seconds into the video (2:35mins).

Chorus

Naija people, just surviving
Okada riding, police bribing
Pastor preaching, pay your tithings
School fees paying, food providing
Impure water, no electric

So much traffic, see the life is hectic
Sewage leaking, there’s air pollution
Rats are everywhere, no solution
Roads with potholes, people dying
All the bastards politicians lying
University, degree pursuing
Fuel scarcity, people queuing
Black market, petrol impurity
Armed robbery, there’s no security
Fuel prices, Niger delta
Religious crisis, then no shelter

Verse 3
Oga stop there

Abi u never see road block here
Na we be the police search and stop here

If you wan pass son gotta drop here
U no dey see gun abi u no well
If you form actor, u go go cell
See behind counter, no be hotel
You go do 3 nights before u go bail
But if you want move
You sef know wetin you suppose do

Do am quick quick make I no expose you
Nyem something make I hold or I’ll hold you
Hey Sergeant Collins, make you come check

Search am quick, search him bag and him pocket
Any exhibit wey we come get
Then alarm go blow on una trumpet


SOLUTIONS:

As always I am less concerned with the problem as I am with the solution. Often also I am concerned with solutions that can be readily employed by an enterprise to deal with the issues in Nigeria. But in this case I will say a little about the political and moral approaches because when it comes to corruption what you do in your offices can help but it is what happens in the streets and beyond your controls that hurts most.

  • National Rebirth:

First, I believe that as a country we need a national re-orientation and re-education. One which inspires pride in the nation and a consciousness for our collective humanity. This is a solution that must be implemented by the society at large from churches to schools to institutions and corporations. The root of corruption is a disregard for the proper order of things and when men and women do not even know what the proper order should be, corruption is guaranteed.

I do not believe that the average police officer truly understands the net effect of his illegal road block on the price of the food he and his family eats, on the cost to his children’s education, on the cost to his house rent and on the cost on his personal security when he is out of uniform. If he and others like him were to understand the interconnectivity of things, corruption will be dramatically reduced. 

Most of what men do is as a result of the benefits they believe they incur, if they understand that there is no benefit to corruption but only the mere appearance of a reward then many will think before they act. 

  • Government Participation

 Secondly, I believe that the government of the day must implement efficiencies in the system, including modern checks and balances and sufficient consequences for any failure of an official to do the tasks assigned as assigned.

While I do not share the view that government is the cause of corruption owing to the fact that the government is merely Nigerians in civil service, I still know that as an organization the government represents the largest employer of labour, the largest enterprise by capitalization and is the most influential institution in Nigeria.

Corrections at the governmental level therefore would do wonders for the Nigerian society at large. In a year the cost of bringing in building materials from the port will drop, the cost of transporting them from one part of the country to a work site will drop, the cost of getting the police to arrest a thieving worker on the site will drop, the cost of processing building and land permits in the state ministry will drop and at the end of the day the total cost of building projects in Nigeria will no longer be 200% of their South African neighbors costs.

  • Enterprise solution

Finally and more importantly is the enterprise solution; and for this I suggest 3 solutions, they are the answer to this simple question;

The question is: How do I get my operation to a point where they are least affected by the corruption in the society? 

First - lead by example: At LIVEN Capital I make every effort to be the change I wish to see. It is important that I, as the Chairman/CEO, is indicative of success through integrity because men do not do things that are counter to their success. If I am seen thriving while maintaining integrity, others will embody that observation in their actions. At the core of the failure of most companies are cheaters who wish to tell others not to cheat them. It is quite easy to get effective people and keep them if you yourself exhibit discipline and strong ethics, it is also easier to coerce the inefficient worker when you as a leader exemplify efficiency.

Second - establish systems: Since human beings naturally wish to have life the easy way, lax policies and unclear performance expectations will create room for abuse. It is the duty of the bus company, for instance, to implement checks to ensure that corrupt drivers are discovered. It is the duty of the building developer to implement tests to ensure the quality of construction. While the level of corruption in Nigeria is massive, a laxity in systems perpetuates this ill to its maximum and cripples enterprises.

At LIVEN where most of our staff are thinkers, researchers and analysts, performance is hard to quantify. Yet we have robust measures for performance, on one occasion and/or more often than should be the case, I will answer office phone calls, manage the central email and use the social media channels all in a view to be aware of the lapses that can occur and to mitigate them before hand.

In one of my former companies I used to do my job from one persons desk once every 3 months, that is to say that I will take over an employee’s position in order to ascertain the work conditions, gauge efficiency and in essence grow my abilities as an administrator and to assess performance.

Finally - train: There is nothing more crucial to human resources management in Nigeria than the constant re-education of one’s work force. When I was preparing to return to Nigeria I had a conversation with a friend of mine who is an avid Nigerian businessman and this conversation underscored the need for re-education (training) of staff.

Me: My Oga how are you?

Friend: My brother I dey, my workers are working me!

Me: What do you mean?

Friend: Men, every time I get back from travelling everything is scattered here…

Me: But you have pretty good workers and they seem well organized every time I have been in your office.

Friend: Anyi let me tell you something ---- here is the gist of my story and I will quote him verbatim ----

“When a man has been peeing on the side of the road all his life and then one day you come and make a new law and tell him he can’t pee on the side of the road, he will say okay and he may not pee on the side of the road for a while, but one day he will be walking down the road with no one there and he will think to himself ‘men I need to piss’, all of a sudden, he will pull out his penis and begin to piss in the gutter. It is in his nature.”

The culture of corruption in Nigeria is an ingrained natural reaction to years of systematic moral decay and even among the best of us sometimes when we are on the expressway (highway) and knowing the police office will just delay us, we conveniently give him the ₦100 he is seeking and keep moving.

But you mustn’t, this culture can only die if we, one by one, choose to bear a 5 minutes delay, a missing file and other little inconveniences. 

The net effect of this sacrifice is a culture of integrity, it is obtainable, albeit hard.

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