A friend from Nigeria, which appears on these pages for the wrong reasons all too often, visited us this week. He gives a face and a voice to the human cost of his country’s terrible twins, red tape and corruption.
The statistics are bleak. An entrepreneur starting a new warehouse business in Nigeria will spend at least 350 days obtaining necessary licenses and permits, completing required notifications and inspections, and securing utility connections. If the business gets off the ground, the entrepreneur will need to make at least 35 separate tax payments every year, and spend a staggering 1,120 hours preparing, filing, and paying his or her annual taxes, compared to 183 hours on average in the OECD (roughly speaking, the world’s 30 most developed economies). Imports for the entrepreneur’s business will require 46 days, compared to 10.4 in the OECD. Exporting a product will take 26 days, almost three times longer than the OECD average. It’s no wonder Nigeria ranks 147th out of 179 countries on Transparency International’s Corruption Perception Index.
The economy can’t move forward, and real people like our friend and his young family are victimized. Schools deteriorate, electricity is an occasional luxury, roads are ruled by bandits. Far worse, new generations of Nigerians — a country of more than 140 million people — come to believe their condition is unchangeable. They gradually see themselves the same way many foreign business people do — the ones who show up with a business plan based on nothing more than greasing the system at every opportunity. An irony, our friend says, is that he gets things done simply by making sure the paperwork is in order and treating regulators and bureaucrats with a normal measure of respect. It takes patience, he says, but the strategy has never failed in nearly ten years of professional life.
In 1976, a year before the U.S. Foreign Corrupt Practices Act became law, A. A. Sommer, Jr., a Commissioner of the Securities and Exchange Commission, said we should ponder the harm to a country and its citizens when payments land in the pockets of corrupt officials instead of the national treasury. “This is surely a dimension that most people have not considered, and yet, I think is a most important one for it may well involve an ethical consideration that is perhaps more meaningful and more important than the legal problems associated with the bribe itself.”
As we listen to our friend talk about the damage corruption inflicts on ordinary people in Nigeria, Commissioner Sommer’s words come to mind, and we’re reminded again why the FCPA matters.
View the World Bank’s “Doing Business Project” Here.