Combating Corruption in West Africa
For a market to exist, you must have demand and supply, or someone willing to buy and someone willing to sell goods or services. For corruption to exist, you must have someone willing to bribe and someone willing to take a bribe. I am going to discuss how, in West Africa, the demand side of corruption (public sector) and the supply side of corruption (private sector) operates. The public sector has fostered a system where the private sector is forced to partake in corruption in order to be successful. As a result, the steady demands for bribers from the public sector has created an atmosphere within the private sector that creates pressure for corruption as a way to get ahead.
In Guinea, Sierra Leone, Nigeria, the Ivory Coast, Liberia, and Ghana, which have an abundance of natural resources, businesses in the private sector often are forced to look for ways to buy political favors so that, among many bidders, they are the ones granted access to these resources. Therefore, contracts, licenses or permits in the mining, agriculture, construction, energy, and housing sectors are often awarded to companies that pay the highest bribe instead of companies that are the most efficient and qualified.
In a region where almost everything is imported, from staples to textiles and high-tech goods, a company, for example, could ask the government to grant it a monopoly status to import a certain good or service by promising attractive kickbacks in exchange. A company could also ask for an exemption from paying an import tax, which is the main tax base in the region. It is difficult to collect other taxes (such as business tax, value added tax, estate tax, social security contribution tax, income tax etc.) due to the large informal economy which exists in the region, accounting for an average of almost 70 percent of GDP. Nigeria, Ghana, Senegal and the Ivory Coast, whose economies are more formal, collect more taxes from businesses. However, most of those tax revenues are embezzled before even reaching the national treasury. In Sierra Leone, Guinea-Bissau, Niger, Burkina Faso, Mauritania, Mali, Togo, Benin, Guinea, Liberia and Gambia, whose economies have suffered greatly from being largely informal, many companies are required to pay bribes to avoid paying taxes.
Since governments are the main consumers in the West African economies, procurement is also an area where corruption is very lucrative. In many cases, companies promise to pay kickbacks if granted contracts to supply governments with certain goods or services, that are often overpriced and of poor quality.
Also small businesses, which are the main employers in the region, spend large amounts of money to bribe government officials and civil servants. The demand for store space at market buildings or shopping malls (built by the city or town councils) has steadily grown over the years, especially in Senegal, Ghana, the Ivory Coast, and Nigeria. Often, small or retail businesses are forced to bribe city or town council officials in order to secure store space at a new shopping mall. As a result, many businesses that have vowed to be free from corruption find it difficult to invest in the region. You have only two options: refuse to invest or endorse corruption as a common business practice.
Corruption has hampered social and economic development in a region where the majority of people struggle every day to meet the high cost of basic necessities (food, clean water, electricity, education, health etc.). It is also undermining security in a zone where some countries have suffered greatly from terror attacks. This is a shared problem and all stakeholders in the region, including international organizations, local businesses national anti-corruption commissions, governments, non-governmental organizations, civil society organizations, and the media must work together to come up with a framework or system that could bring about more transparency and accountability in all institutions.
The region must also rid itself from shady businesses involved in cross-border crimes, including money laundering, drug trafficking, arm smuggling, and human trafficking. Finally, economic development efforts in the region must aim at making the economies more formal so that transaction and tax records could be traced more easily. Currently the private sector operates within a system that rewards bribery and cutting corners. In order for effective change to occur in the region, the public sector needs to take a proactive role to boost the formal economy, and the private sector will respond to better incentives with greater integrity.
Abubakar Jalloh is an economic journalist from Sierra Leone based in Senegal.