My Beauty Best Teacher

Rina Okonkwo writes about the genesis of corruption in Nigeria:

When did corruption in Nigeria begin? In the words of a colonial government report of 1947, “The African’s background and outlook on public morality is very different from the present day Briton. The African in the public service seeks to further his own financial interest.” The colonial report concluded that only public opinion could deal with corruption. The problem was that there was no responsible public opinion to check corruption in Nigeria.1

From as early as 1947, commissions of inquiry were held to investigate cases of corruption. The purpose of the inquiries was to expose wrong -doing and to punish the culprits.

Today, we hear much of the rampant corruption at the local government level. As early as 1955, just seventeen months after the inception of Igbo-Etiti District Council in May 1954, the colonial government held an inquiry into the affairs of the Council. The inquiry judged that the “conduct of the Council’s affairs had become a public scandal.” The colonial officer who conducted the inquiry, FP Cobb, noted, “public indignation was widespread and strong.” 2 The public was outraged at the corrupt behaviour of their representatives.

The report on Igbo-Etiti District Council revealed that there was ‘systematic corruption” in the appointment and promotion of staff and in the awarding of contracts. Bribes of L80 to L100 were demanded for unnecessary appointments. The brother of the Secretary to the District Council was hired above a more qualified applicant. In one case, a man paid a L400 bribe to secure a post and was never refunded his money when he did not get the job.

Contractors routinely paid ten percent of the value of the contract as bribe. The contracts were not awarded to the lowest bidder or to the most experienced or competent persons. At the end of its first seventeen months of existence, the Igbo-Etiti District Council was L6000 in debt. There was great wasting of public money due to “gross dishonesty in handling council affairs.”3

The local government councils have continued to be notorious for corruption. Why do such grassroots organizations attract such widespread graft? The people are often not prepared to undertake public office. They have no training in the procedures and ethics of public service. They have minimal education. There is poor supervision of the affairs 9of the Local Government Councils. The history of corruption in local government councils can show no change for the better.

In 1956, the Foster-Sutton Tribunal investigated the Premier of the Eastern Region, Nnamdi Azikiwe for his involvement in the affairs of African Continental Bank (ACB). Under the code of conduct for ministers, a government officer was required to relinquish his holdings in private business when he assumed public office. The Foster-Sutton Tribunal felt that Zik did not severe his connections to the bank when he became a Minister. The Tribunal believed that Zik continued to use his influence to further the interests of ACB.

Zik, his family, and the Zik Group of Companies were the principal shareholders of the African Continental Bank. ACB loaned over L163, 000 to the Zik Group of Companies at low interest. The Zik group did not have to repay the loans until 1971. ACB was a distressed bank. The new registrar of banks in 1952 refused to grant ACB a license. Attempts to find partners for the bank in Britain failed because of the insolvency of the bank.
In the words of a colonial government official, “Were a UK minister to be involved in a series of transactions the result of which public funds were used to support an otherwise shaky institution in which he was directly interested, he would be forced to leave public life.”4 Why did not the colonial government prosecute Zik for his failure to observe the code of conduct for government officers? The colonial correspondence revealed that the government supported the NCNC as the only party to embrace national unity. Without Zik, the NCNC would collapse. The national interest of the country demanded that Zik continue as leader of the party.5

The Governor of the Eastern Region Sir Clement Pleass further observed, “The exercise of public power for private profit is established in the East.” “The aim of the colonial government was not to establish a standard of honesty in public life. Only time and education can do that.” “A number of sensible people realized that Zik had done harm in the East in the last two years, but the mass of the people, ignorant and uneducated, voted him back to power.”6

When Zik called for a general election in 1957, as an alternative to resigning in the face of the findings of the Foster-Sutton Tribunal, the people gave him their support. The Economist observed that Nigerians had a “sunny and tolerant mentality” towards corruption.7 The colonial officer hoped that “Eventually sufficiently honest and enlightened people will be thrown up to rebuild the prosperity and good government of the region.”8

Obafemi Awolowo, the first premier of the Western Region, was found guilty of corruption by the Coker Commission in 1962. In 1954, the Western Region Marketing Board had L6.2 million. By May 1962, it had to exist on overdrafts amounting to over L2.5 million. A loan of L6.7 million was made to the National Investment and Properties Co., Ltd. for building projects out of which only L500, 000 was ever re-paid. The Western Region Finance Corporation and the West Nigeria Development Corporation also received loans of millions of pounds, which were never re-paid. The Coker Commission found Awolowo responsible for the all the ills of the Western Region Marketing Board, and Awolowo “without a doubt has failed to adhere to the standards of conduct which are required for persons holding such a post.”9

The First Republic, with Zik as the President, was marked by widespread corruption. Government officials looted public funds with impunity. Federal Representative and Minister of Aviation, KO Mbadiwe, flaunted his wealth by building a palace in his hometown. When asked where he had gotten the money to build such a mansion, KO replied, ”From sources known and unknown.” Minister of Finance Chief FS Okotie- Eboh responded to charges of accumulation of wealth by government officers by quoting from the Bible, “To those that have, more shall be given. From those that do not have, shall be taken even the little they have.”10

Azikiwe did not surround himself with men of good character. Chinua Achebe maintained that the political thought of both Awolowo and Azikiwe was based on politics for material gain. Achebe quoted from the autobiographies of the two men to show that making money and living well were primary goals in life for both our nationalist leaders. “If we were a more discerning people, we should not have trusted them with our lives even in the fifties and sixties.”11


The popular acceptance and even admiration for corruption was highlighted in Chinua Achebe’s novel about the politicians of the First Republic, A Man of the People. “The people had become even more cynical than their leaders and were apathetic into the bargain. “Let them eat,’ was the people’s opinion . . . It may be your turn to eat tomorrow.” 12

From Foreign Policy Magazine comes this article "The Top 10 Stories You Missed in 2009". It has pictures and in depth analysis, but here is a handy summary of the top five stories for you:

1. The Northeast Passage Opens for Business. Good (lower cost of transporting goods around the world) or bad (an omen of the mystical cult of Global Warming), this does raise the importance of the Arctic Ocean, which is now accessible to exploration and development. This may be the cause of rising tensions between Russia and the US.
2. Iraq's New Flashpoint. Iraq's Arab and Kurdish populations are at odds with one another in the Nineveh region, not because of oil, but because of a large Kurdish population in this area, which is outside of the autonomous Kurdish region. Neither side has turned to violence- yet.
3. A Hotline for China and India. You only put in a hotline between world leaders when you are afraid that miscommunication may result and someone may make an unwise decision to nuke the other. The key to this conflict is the Himalayan region of Tawang, which is in India but China claims was part of Tibet (which is now part of China). The area has been increasingly militarized, and the Indian military documented 270 border violations and almost 2,300 cases of "aggressive border patrolling" by the Chinese in 2008.
4. A New Housing Bubble? More than any other factor, ill-advised speculation on U.S. real estate set off the global financial crisis. But even after millions of foreclosures and secondary effects ripped through economies around the world, a new housing bubble is forming again, for the same reasons the first did- Democratic pressure on banks to give everyone a home loan, Democratic pressure on banks to be nice about credit scores, Democratic 'stimulus' money for home sales, and Democratic pressure on banks to keep interest rates low and print money. Be prepared for Democratic policies such as these destroying the world's economies again sometime soon.
5. The ‘Civilian Surge' Fizzles. A major part of the strategy in dealing with terrorism and failed states was a surge in civilian personal from the State Department and USAID, but it turns out, those agencies have failed to deliver, and now the military is trying to meet that commitment too.

Paul Collier writes:

The loot-seeking elites that control parts of Africa illicitly send capital out of the region to the tune of $20 to $28bn per year. Illicit money flows are hard to quantify, but this is the new estimate by Raymond Baker of the NGO Global Financial Integrity, the most careful and ingenious study to date. Capital flight of this magnitude is roughly equivalent to the entire aid inflow to the region, so closing it would generate a similar resource transfer to doubling aid. One side-effect of the financial crisis is that aid commitments will be at the front of the queue for spending cuts. For example, in the vice-presidential debate it was the only Democratic spending pledge that Joe Biden suggested might be rethought...[continue reading]

Arah Childress writes in the WSJ:

Democracy is making gradual gains in sub-Saharan Africa. The trend is driven by a cadre of activists, armed with little more than determination and cheap cellphones, who are outmaneuvering Africa's ruling strongmen...The democratic gains across sub-Saharan Africa come amid the fastest economic growth the region has seen in three decades. Foreign investment is flooding in on the back of soaring prices for the oil, metals and minerals that are plentiful across the continent. The boom, coupled with the region's democratic progress, offers some hope that after a period of post-colonial turmoil, sub-Saharan Africa may be slowly emerging into a more peaceful and prosperous era.[continue reading]

The Ft reports:

Gulf-based private and public equity fund managers have this year shifted some of their vast wealth from Asia and the Middle East/North Africa region to the world’s poorest region: sub-Saharan Africa. These portfolio flows to a half-dozen countries have been accompanied by direct investment in property and other sectors...The Gulf push into the sub-Sahara reinforces pioneer efforts, notably by Saudi Arabia’s Prince Alwaleed bin Talal whose Kingdom Holdings created a $125m joint venture in 2004 with New York-based Zephyr Investment for African private equity. Its best-known success was a $20m stake in the pan-regional mobile provider Celtel, which was later acquired at a hefty premium by Kuwait owners. The prince has joined HSBC in a separate dedicated vehicle.
As petrodollars head towards these locations, western wealth advisers who have shunned them may re-examine their assumptions and consider participation a viable emerging market option.

The WSJ reports:

Unreliable power poses a major constraint on the region's economic development. Much of sub-Saharan Africa still operates largely on the margins of the global financial markets, isolating it from the economic turmoil buffeting the developed world. Booming commodity prices of the past few years, however, have made the region attractive to foreign investors. Now the electricity crisis is damping their enthusiasm.
"It's one of the biggest concerns for the business community," says Vivien Foster, the World Bank's lead economist on sustainable development in Africa

In reviewing Wangari Maathai's The Challenge for Africa and Zambian Dambisa Moyo's Dead Aid Francis Fukuyama argues that:

Both women see sub-Saharan Africa's fundamental problem not as one of resources, human or natural, or as a matter of geography, but, rather, as one of bad government. Far too many regimes in Africa have become patronage machines in which political power is sought by "big men" for the sole purpose of acquiring resources—resources that are funneled either back to the networks of supporters who helped a particular leader come to power or else into the proverbial Swiss bank account. There is no concept of public good; politics has devolved instead into a zero-sum struggle to appropriate the state and whatever assets it can control.

...both at least focus on the real core of the problem, which is the region's level of political development. In this realm, solutions are going to have to come from within the region itself. It is a positive first step for the discussion to shift away from what the outside world owes Africa and toward what Africans owe themselves.

We present the concluding part of Rina Okonkwo's article on corruption see part 1 here:

The military coup of January 15, 1966 was a direct response to the corruption of the First Republic. The popular support for the coup showed that people rejected corruption. Despite the brutality of killings of First Republic politicians, there was widespread rejoicing in the country for the acts. The assassinations of the Minister of Finance Chief FS Okotie-Eboh, who was notorious for flaunting his ill-gotten wealth, Premier of the Western Region, Samuel Akintola, nicknamed “rigging” and Ahmadu Bello, Sardauna of Sokoto, the Premier of the Northern Region, “whose wardrobe was the most elaborate in the world,” were applauded.13 The coup eliminated “the old brigade of politicians who were destitute of public spirit.” 14

The Ironsi government instituted a series of commissions of inquiry into affairs of the Nigeria Railway Corporation, the Electricity Corporation of Nigeria, Nigeria Airways, and the Nigeria Ports Authority. The report on the Ports Authority revealed that a number of ministers, including Okotie-Eboh, Ribadu, and R.Njoku had formed companies and used their influence to secure contracts.15 In Nigeria Airways, the minister, K. O. Mbadiwe had interfered with award of contracts to a company not registered in the register of companies. K.O. had gone against the board to send “Operation Fantastic,” the maiden flight of Nigeria Airways to New York. Friends and relations of the minister travelled free to New York. Many stayed on in the United States. Chief Dafe, the chairman of the board, was found guilty of hiring many unnecessary party workers in the airline. “Chief Dafe did not know the difference between Nigeria Airways and the party headquarters of the NCNC.” 16

Dr. Ikejiani, Chairman of the Nigerian Railway Corporation, was found guilty of misallocation of funds and disregarding the Board and recognized procedures of the NRC. When Ikejiani became the Chairman, he was in debt. Ikejiani left the NRC with a fleet of cars and buildings. The building of the Railway medical centre, which was estimated cost L75, 000, was inflated to L440, 000. The inquiry thought Ikejiani had diverted railway funds to build his private hospital. The architect for the medical center designed a building for Ikejiani in Lagos free of charge. The panel recommended that Ikejiani never again hold public office. 17

The zeal to punish the wrong doers of the First Republic died with the Gowon coup of July 1966. The politicians in detention were freed. Corruption increased. “Youths knew no other life than corruption.” “One could steal if he shared with those in the right places.”18

The coup of 1975 was an attempt to end corruption. Murtala Mohammed began by declaring his assets and asking all government officials to follow his example. Murtala instituted a series of probes of past leaders. The Federal Assets Investigation Panel of 1975 found ten of the twelve state governors in the Gowon regime guilty of corruption.
One of the exonerated military governors, Rotimi, was later appointed to head a commission of inquiry in 2000. The guilty persons were dismissed with ignominy and forced to give up property in excess of earnings.

The Belgore Inquiry investigated the “Cement Armada.” The Gowon government had imported sixteen million metric tons of cement at a cost of N557 million. Millions of Naira was lost in demurrage charges, as the cement rotted in the seas outside of Lagos. The ports were too congested to enable ships off-load their cargoes. The inquiry noted that the Ministry of Defence needed only 2.9 million tons of cement at a cost of N52million. The orders were inflated for private profit at great cost to the government.19

State governments held similar commissions of inquiry. Corrupt officials were dismissed with immediate effect and asked to refund the money they had stolen. Murtala was assassinated after only two hundred days in office. The Obasanjo regime did not show the same zeal in its prosecution of wrongdoers.

The Second Republic, under President Shehu Shagari, saw a resurgence of corruption. Shagari was ineffective in stopping the looting of public funds by the democratically elected officials. On December 31st, 1983, General Buhari led a popular coup with the aim of halting corruption. Buhari arrested the state governors and commissioners and brought them before tribunals of inquiry. All accounts of politicians were frozen.

In less than two years, Babangida replaced the reformist Buhari regime. The next fourteen years saw no serious attempt to stop corruption. Leaders found guilty in tribunals under Mohammed and Buhari found their way back to public life and recovered seized property. Wole Soyinka observed that for Abacha to launch a war against corruption was a “huge joke.”

The Third Republic has instituted numerous commissions of inquiry. The Oputa panel and the Akanbi Commission have investigated corruption. Yet all the commissions of inquiry and reports have not stopped corruption. The Transparency Index rated Nigeria the number two corrupt country in the world in 2001.

An historical look at corruption in Nigeria demonstrates that rhetoric against corruption does not end corruption. All the inspiring words of our leaders and journalists have not changed anyone. We have heard the most eloquent appeals and strongest language castigating wrongdoers to no avail. Azikiwe and Shagari were two excellent writers who did not act to stop corruption of their party members and colleagues.

From our survey of corruption in Nigeria, it would appear that change in Nigeria must come from the grass roots and not from the leaders. The British realized, as far back as 1947, that an educated, enlightened citizenry was the key to stopping corruption. Government could not legislate an end to corruption. Punishment of wrongdoers, while necessary, was not sufficient to stop corruption.

In his comparison of corruption in Nigeria and Britain, Ronald Wraith pointed to the need for education in good character and the importance of diffusion of wealth, power, and education in the society. There was need to build a tradition of disinterested public service. In Britain, responsible government began with the emergence of people who entered government service after they had amassed substantial wealth. They joined government, not to increase their fortunes, but to contribute to the country. When the people of Nigeria reject corruption, they will demand and receive good behavior from their leaders.

Although Obama might not view what is happening in the Middle East as all that important- he is going to basketball games and concerts and instead directing attempts to riot in WI- I think it is very important because the Middle East region sits on a very important resource- oil. So for fun, I put together a graph this morning to demonstrate the amount of oil production that is affected by the crisis in the Middle East. The graph shows oil production by country based on the most recent data I found in the CIA World Factbook, and shows each nation currently in crisis or about to be in crisis, and then the gray area represents all other nations not currently affected.

Any change in oil production likely will cause the price of gasoline to go up, and as you can see, a large percentage of the world's oil comes out of this affected region, although if Saudi Arabia stays stable, then the percentages is considerably less although still significant. In my amateur opinion, gas prices are going to rise, the economy will dip again, and Obama will react to this all by supporting our enemies and lowering our oil output. Here is the graph:

A recent study(PDF) on Financial Flows within West Africa made the following findings:

(1) presently, the aggregate value of these transactions may amount to US$2 billion annually in remittances from migrant laborers and perhaps as much as US$8 billion in trade settlements in the four countries.
(2) Overly restrictive government policies, the inconvertibility of the currencies in the region, corruption and traditional patterns have the effect of driving potentially legitimate business into the informal economy.
(3) Small and medium sized enterprises, in particular, have
difficulty gaining access to formal mechanisms and institutions that could normally provide business loans and financial settlement services. Concurrently, the region is vastly underbanked.
(4) Microfinance institutions and credit unions service a part of this informal market but they operate under financial regulations that make it difficult to service the full needs of their clients. The settlement of international transactions is particularly difficult.
(5) The use of technology may help provide options that will encourage greater use of formal systems

via West AfricanTrade Hub