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Public Procurement Corruption: Causes, Remedies (1)

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This is a paper he presented in Port Harcourt at a forum organised by the Bureau of Public Procurement.

According to the Organization for Economic Cooperation and Development (OECD), “procurement is the process of identifying what is needed; determining who is the best person or organization to supply this need; and ensuring what is needed is delivered to the right place, at the right time, for the best price and that all this is done in a fair and open manner”

Public procurement procedures often are complex. Transparency of the processes is limited, and manipulation is difficult to detect. Few people becoming aware of corruption complain publicly, since it is not their own, but government money, which is being wasted. Governments at federal, state, and local levels, spend significant public resources on procurement. Procurement at all levels of government in developing countries like Nigeria typically constitutes about 45 percent of the total Gross Domestic Product (OECD, 2006). These expenditures are critical to enabling governments to deliver goods and services to citizens, but they are also extremely vulnerable to corruption.

For almost a decade now there has been a significant international focus on corruption as a threat to economic and human development. Several multilateral organizations, like the UN, the World Bank, the WTO and OECD, aims at fighting the problem. So far, however, the strategies to transform the alleged practices of a state administration from corrupt to honest and clean have failed in most cases. There are several ways to explain this persistence of corruption. The time it takes to curb the problem may have been underestimated. There may also be a failure in the adjustment of anti-corruption strategies to local conditions. And finally, the incentives to implement the necessary measures may be poor among politicians benefiting from the current system.

However, in countries where corruption is a common problem it tends to disturb the market mechanisms and impede economic development. Corruption in public procurement makes the officials or the politicians in charge, purchase goods or services from the best briber, instead of choosing the best price-quality combination. The result may be construction projects several times as costly as necessary, or the acquisition of goods not actually needed. Hence, when aggregated to a macro-economic level non-optimal choices of contractors can have noticeable effects on the economy.

Also the efforts of public officials to get into position for obtaining bribes may represent a significant cost. Gifted youth often prefer jobs in the bureaucracy instead of more scientific professions, the allocation of public funds may be biased in favour of capital intensive sectors at the expense of health and education, and laws and regulations may be introduced just in order to obtain bribes. Even worse, public sector corruption has a pervasive impact on the poor since it reduces the funding available for social services and distorts public choices in favour of the wealthy and powerful, resulting in larger income differences between rich and poor.

Corruption, as an illegal activity, is difficult to define exactly as different attitudes and customs prevail, for instance when it comes to gift-giving and bureaucratic integrity. However, this paper is mostly concerned about the clear-cut cases, where no doubt about the misuse of public office exists. This is usually the case when the following conditions are all met.

1.First, the act must be intentional and in conflict with the principle of objectivity in public service performance. This implies that the rule that is broken is precise and transparent.

2.Second, the person who breaks the rule must derive some recognizable benefit for him/herself, his family, his friends, his tribe or party, or some other relevant group.

3.Third, the benefit derived must be seen as a direct return from the specific act of “corruption”.

CAUSES

The logic of incentives makes it reasonable to assume that human greed explains most of the bureaucratic corruption. However, in many developing countries, where monthly wages for ordinary officials often are less than $100, the actual need may be an equally prevalent reason. In some cases these wages represent a capitulation wage. According to Besley and McLaren (1993) capitulation wage refers to a situation where the government “capitulates” because corruption is endemic and monitoring does not function. Thus, it makes no sense to revise salaries and the government pays very low wages, aware of the bureaucrats’ ability to manage on bribes and stealing. The bureaucrats’ demand for bribes is understandable under such circumstances. Nevertheless, it is observed in many countries that officials covering their economic need by the help of bribes do not stop when they reach an acceptable standard of living.

The supply side incentives may appear less obvious because bribes often represent a significant cost to a company. Preparing for a tender is a costly and time consuming process and the company may not trust their winning chances on legal basis alone. A bribe may thus ensure that the company obtains the government contract. Corruption may also help companies obtain a de facto monopoly situation, to retain business, to obtain secret information, to counterbalance poor quality or high price, to facilitate trade or investment, or to create demand for goods that otherwise would not have been purchased. Other motives may be to reduce political risk, to receive import licenses, to reduce taxes and attain special modifications of laws or just to induce government employees to perform their duties. Despite the secrecy in these cases, it is not difficult to exemplify incentives from the media and court cases.

The major reason for bribery in public contract assignment, however, is probably because everyone believes that everyone else is involved in such kind of business. Losing a contract because a competitor bribed the officials must be very frustrating. This problem of hidden information is reflected in the way that all the companies involved pay a bribe even if they would be better off with no corruption (prisoner’s dilemma). Hence, the companies that bribe public officials seem to forget the negative externality they impose on other firms, as well as the worsening of their economic environment. For the company involved there are several common drawbacks related to bribery. One is the information about the bribery in hand of the public officials, information applicable to hit the reputation of enterprises, the multinationals in particular. A problem is also enforcement that a bribing company has no judicial guarantee of obtaining what it has paid for (unless the courts are corrupt as well). And, once a company has established a corrupt relationship it may be confronted by unexpected demands for additional payments. Ending a corrupt relationship is often difficult because of the risk of menaces, violence and other criminal activities. Apart from this, close connections to the government may imply a risk in case of political and governmental changes.

Adebowale, is the Managing Partner, Proactive Projective Limited.

 

Seun Adebowale

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FG Begins South-West Tour To Promote New Cooperative Bank

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The Federal Government has launched the South-West zonal engagement and ministerial advocacy tour on the Cooperative Bank of Nigeria share capital mobilisation, sensitisation and cooperative sector digitalisation.
 Reports say the initiative was launched through the Federal Ministry of Agriculture and Food Security.
According to reports, the advocacy tour, organised by the ministry’s Federal Department of Cooperatives, began on Monday in Lagos.
Speaking at the event, the Minister of State for Agriculture and Food Security and Supervising Minister of Cooperative Affairs, Dr Aliyu Abdullahi, said the initiative was part of President Bola Ahmed Tinubu’s Renewed Hope Agenda.
Abdullahi described the exercise as a strategic effort to reposition the cooperative sector as a key driver of inclusive economic growth, financial inclusion, enterprise development, food security and national prosperity.
“Today represents a defining moment in our collective determination to reposition the cooperative sector as a major driver of inclusive economic growth, financial inclusion, enterprise development, food security and national prosperity,” he said.
The minister noted  the modern cooperative movement in Nigeria originated in the South-West following the 1934 Strickland Report, which led to the enactment of the Cooperative Societies Ordinance of 1935.
According to him, the decision to commence the sensitisation and share capital mobilisation tour in the region is symbolic, as it marks a return to the roots of cooperative development in the country.
Abdullahi said the advocacy tour was a direct outcome of resolutions reached at the 8th Regular Meeting of the National Council on Cooperative Affairs held in Abuja in March 2026.
He said the council approved the Renewed Hope Cooperative Reform and Revamp Programme, a comprehensive framework designed to strengthen the cooperative sector and align it with the administration’s goal of building a one-trillion-dollar economy.
“The reform programme focuses on seven strategic pillars, including governance reforms, cooperative financing and the establishment of the Cooperative Bank of Nigeria, digitalisation, capacity building, value chain development, inclusion of youths, women and persons with disabilities, and strategic partnerships,” he said.
He said the establishment of the Cooperative Bank of Nigeria and the digitalisation of the cooperative sector were the two major transformational initiatives under the programme.
“The Cooperative Bank of Nigeria is aimed at rebuilding a strong cooperative financial system capable of supporting cooperators, farmers, artisans, traders, SMEs, youths, women and persons with disabilities with accessible and affordable financial services,” he said.
Abdullahi emphasised that the proposed bank would be government-enabled but not government-funded.
“Government is not establishing the bank as an owner, nor will it rely on Treasury Single Account funds.
“The role of government through the FMAFS is to provide policy support, stakeholder coordination, regulatory facilitation and an enabling environment under the Renewed Hope Cooperative Reform and Revamp Programme,” he said.
Also speaking, the Lagos State Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs Folashade Ambrose-Medebem, reaffirmed the state government’s commitment to cooperative sector transformation.
She described cooperatives as critical tools for promoting inclusive growth, grassroots productivity, food security, financial inclusion and community wealth creation.
Ambrose-Medebem said Lagos State would continue to support reforms and collaborate with stakeholders to ensure the successful implementation of the Renewed Hope Cooperative Reform and Revamp Programme (2025–2030).
“Together, let us build a cooperative ecosystem that is modern, transparent, digitally enabled, financially inclusive and globally competitive.
“Let us build cooperatives that not only mobilise savings, but also mobilise prosperity,” she said.
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Customs Impound N2.35bn Cocaine, 15 Trailers of Rice

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The Nigeria Customs Service (NCS), Federal Operations Unit (FOU) Zone ‘A’, Ikeja, has impound Cocaine Substance valued at ?2.35 billion alongside 15 trailer-loads of foreign rice and a wide range of contraband across the South-West.
This was disclosed to Newsmen during a press briefing in Lagos by Controller of the Unit, Comptroller Gambo Aliyu,
Aliyu revealed that the seizures were made over an eight-week period, underscoring intensified enforcement efforts.
According to him, operatives foiled 473 smuggling attempts within the period, leading to the confiscation of 8,794 bags of 50kg foreign rice, 22 used vehicles, 328 bales of used clothing, and 31,705 litres of Premium Motor Spirit (PMS).
He said other seized items include a Mercedes-Benz vehicle and various food products such as poultry, vegetable oil, spaghetti, and sugar.
Aliyu clarified that the rice displayed at the briefing represented cumulative interceptions made at different locations and times across the zone.
“All the rice you see here are accumulative of seizures carried out at different places, at different times, and through different interdictions,”
Beyond the economic implications, the Comptroller emphasized the social cost of drug trafficking, warning that narcotics continue to destroy families and fuel criminal activities.
“It may surprise you to know that many homes are broken due to drugs.
” Our mandate is to cut off the supply chain, and that is exactly what we are doing,”.
Similarly Customs operatives at the Gbaji outpost intercepted a 71 year-old suspect along the Lagos-Abidjan corridor with 6.35kg of cocaine concealed in a Toyota Highlander.
The drugs, comprising both powdered and crystalline forms, were valued at ?2.35 billion.
Under a special enforcement drive, codenamed “Operation Hawk,” the unit also seized 3,340 parcels of synthetic cannabis, popularly known as “Ghanaian loud,” weighing 1,540kg.
 The substances, along with three suspects, have been handed over to the National Drug Law Enforcement Agency (NDLEA) for further investigation and prosecution.
In a related operation, officers intercepted four cylinders of mercury hidden in a vehicle along the same corridor. Aliyu described the substance as hazardous and subject to international regulation.
Overall, the Duty Paid Value (DPV) of the seizures stands at approximately ?5.5 billion, reflecting the scale of enforcement activities.
 Additionally, the unit recovered ?97.7 million through Demand Notices issued on under-declared consignments.
Aliyu reaffirmed the Service’s commitment to deploying modern technology—including geospatial intelligence, drone surveillance, and real-time tracking—to strengthen border security and clamp down on smuggling networks.
CHINEDU WOSU
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Dangote,  Nicolai Tangen To Partner In strategic sectors

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Chief Executive Officer of Norges Bank Investment Management, Nicolai Tangen ( manager of the world’s largest sovereign wealth fund) has expressed interest in partnering with Dangote Group to expand investments across Africa, particularly in strategic sectors such as power, energy, renewable energy, agriculture, fertiliser and cement.
This was made known during a meeting of Chief Executive of Dangote Group, Aliko Dangote  with Nicolai Tangen, the manager of Norwegian investment institution (with assets estimated at about $1.9 trillion) .
Also present at the meeting were Svein Tore Holsether, Chief Executive Officer of Yara International, and Terje Pilskog, Chief Executive Officer of Scatec, a global renewable energy company.
The engagement reflects growing international investor confidence in Africa’s industrial and infrastructure potential, as well as the increasing role of indigenous conglomerates such as Dangote Group in driving large-scale economic transformation across the continent.
Industry observers say the proposed collaboration could create significant opportunities for investments in critical sectors linked to energy transition, food security, industrialisation and infrastructure development.
The Norwegian sovereign wealth fund, regarded as one of the world’s leading institutional investors, has in recent years increased its focus on emerging markets, with Africa seen as a major frontier for long-term investment and value creation.
Analysts believe a partnership between Norges Bank Investment Management and Dangote Group could unlock substantial capital flows into infrastructure and industrial projects across Africa, helping to accelerate economic growth and regional integration.
Nkpemenyie Mcdominic, Lagos
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