Former President John Dramani Mahama has said that there are at least three elements that are required for corruption to occur.
First, he said, someone must have discretionary power, which includes the ability to influence the formulation of regulations and administer them.
Second, he added, economic rent must be associated with discretionary power, primarily when higher rents are related to the misuse of discretionary power.
Third, when the governance or legal system offers a sufficiently low probability of detection or sanction for wrongdoing, he said.
Speaking in Lorin in the Kwara State of Nigeria on Thursday, June 22, 2023, as a Special Guest of the Nigerian Institution of Estate Surveyors and Valuers conference Mr Mahama indicated that the World Economic Forum estimates suggest that the global cost of corruption is at least US$2.6 trillion.
This, he said, equaled 5 per cent of the global gross domestic product (GDP).
The World Bank, he added, has also disclosed that businesses and individuals pay more than $1 trillion in bribes yearly.
“This being the case, the international community, and I am talking about development partners, international organisations, non-governmental organisations, academic experts, and professional bodies, continue to advocate an integrated and comprehensive approach to fighting corruption worldwide.
“Among the approaches and initiatives adopted by the international community are the United Nations Convention Against Corruption, the United Nations Convention against Transnational Organized Crime, the United Nations Declaration against Corruption and Bribery in International Commercial Transactions, the International Code of Conduct for Public Officials and Nationals, as well as International Codes of Conduct for Professionals. The African Union Convention on Preventing and Combating Corruption is another germane instrument.
“While these initiatives have had a variable impact at stopping illicit financial flows, definitely more needs to be done using all instruments available to the international community and individual nations in the fight against corruption. The advocacy of these international agencies and initiatives is highly commendable, especially as it relates to the pervasive and negative impact of corruption on economic growth and development of nations. Empirical evidence shows that because of its secrecy, corruption distorts incentives and market signals and aggravates economic distortions. This is because enormous productive resources, such as human talent, which should be channelled to constructive engagements, are diverted into rent-seeking activities for financial rewards and further into escaping detection and punishment,” he said.
He added “corruption hinders economic development, diverts investments from infrastructure, institutions, and social services, and undermines efforts to achieve other country-specific development goals and targets. Corruption also retards growth because bribes paid by investors to secure investment licenses, including building permits, increase the cost of doing business and, consequently, reduces the incentive to invest in a country.
“Corruption also has adverse effects on productivity. If the permits and licenses needed by innovators or new producers are obtained by paying bribes, that could impede the entry of new goods or technology onto the markets of many economies.
“Specifically, the impact of corruption in our nation states show that high corruption rates contribute to high inflation rates. Corruption-induced inflation contributes to high cash and unproductive capital inflows into an economy and leads to macroeconomic instability. These eventually impact microeconomic activities as prices of goods and services and the cost of living in general increase, culminating in labour agitation for commensurate increases in wages and salaries.
“The Central Bank is then compelled to respond with policies to help reduce inflation and achieve price stability. Some of these policies include monetary measures that increase the primary lending rates of banks through the base rates to induce low lending till the excess cash is mopped up from the system. This is certainly inimical to the growth of businesses that rely on credit to survive. This relates to SMEs in particular.”