Corruption, Governance and Public Spending in Nigeria: Implications for Economic Growth

Abstract

The paper examines the nexus between corruption, governance and public spending and their aggregate effects on economic growth in Nigeria. It maintains that corruption is one scourge and social malaise that militates against good governance, using public spending as one of its conduits to slow down the pace of economic growth in Nigeria. It further traces the root-causes of corruption as well as its dimensions and contends that corruption which is an age–long phenomenon is ubiquitous, permeating the very fabrics of every society irrespective of whether it is a developed or developing nation and not taking cognizance of the economic system in practice, whether planned or market economy. The paper raises and attempts to answer the following research questions: Is there more corruption in Nigeria now than in the past? Is there any correlation between corruption, governance, public spending and economic growth? Does corruption impede governance and hence economic growth and development in Nigeria? To provide panacea to the aforementioned questions and to serve as a basis for sustainable policy action, the paper adopts a descriptive methodology based on analysis of stylized facts on corruption perception indexes, governance, public spending and some social and macroeconomic aggregates. The results indicate that corruption was endemic in Nigeria between 1996 and 2005 but witnessed a slight reduction between 2006 and 2012.The slight reduction notwithstanding, Nigeria is far from being perceived clean. This is due to the fact that between 2006 and 2011 Nigeria has CPI scores of less than 3 out of 10 and  27 out of 100 in 2012 which is far below 50 and ranks 139 out of 176 in 2012. Given this result, Nigeria cannot be perceived clean. The results show a clear correlation between corruption, governance, public spending and economic growth with adverse aggregate effects on economic growth and development in Nigeria. Which in concrete terms manifest in un-inclusive growth, as evidenced by rising incidence of poverty, unemployment rate, discomfort index, low capacity utilization, low level of investment among others. Since good economic performance is desirable by every nation, the paper made some recommendations aimed at engendering inclusive growth and development in Nigeria.