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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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TTP Trains Customs Agents, Freight Forwarders On Eto App 

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In a concerted effort to tackle racketeering and reduce inflated transportation costs in the Nigeria’s seaports, Trucks Transit Parks Ltd. (TTP) has trained Licensed Customs Agents and Freight Forwarders on the use of its Ètò electronic call-up system.
The training was held recently at Customs Processing Centre (CPC) Auditorium, Apapa, Lagos, in collaboration with the Nigeria Customs Service (NCS) and supported by the leadership of the Joint Association of Licensed Customs Agents and Freight Forwarders (JALCAFF), Apapa Command.
Speaking at the event, Comptroller Babatunde Olomu expressed appreciation to TTP for facilitating the training and emphasized the need for customs agents to take personal ownership of the Ètò booking process.
“I want to thank TTP for this impactful training. I encourage all customs agents to begin doing their own bookings directly. By doing so, they can take back power from the unscrupulous elements exploiting their lack of knowledge, selling tickets at highly inflated prices,” Olomu declared.
He noted that empowering agents with hands-on training was key to dismantling racketeering networks that have plagued access to the ports and frustrated efficient logistics processes.
Also speaking, the Chairman, Apapa Chapter of the Association of Nigerian Licensed Customs Agents (ANLCA), Chief Emeka Chukwumalu, said the engagement was critical to the ongoing push to reduce cargo transportation costs and ease business operations at the Apapa Port.
According to a freight forwarder, “The training is basically for us to have awareness of the operations of the Ètò call-up system through TTP. We also want to brainstorm on ways to reduce the high cost of cargo transportation in Apapa Port.
“This training opened our eyes to how simple it is to book tickets ourselves. We now know the right steps to follow and how to avoid falling victim to fraudsters.”
Earlier, Head of Operations at TTP, Mr. Irabor Akonoman, talked on common misconceptions about ticket pricing, reaffirming that the cost of Ètò bookings had remained consistent since its inception.
“The official price remains the same since inception. What people are paying higher amounts for is the manipulation by racketeers”.

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NECA Holds MSME Fair To Drive Growth 

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Towards strengthening small businesses and promoting a more supportive regulatory environment, the Nigeria Employers’ Consultative Association (NECA) says it will hold the 2025 edition of its flagship MSMEs Fair on Tuesday (May 6, 2025).
The event, themed, “Galvanising MSMEs for Economic Growth and Stability”, will take place at NECA House in Lagos.
According to NECA’s Director-General, Mr Adewale Smatt Oyerinde, the fair seeks to provide micro, small, and medium enterprises with essential tools, resources, and strategic networks to thrive in Nigeria’s challenging business climate.
He emphasised the vital role MSMEs play in national development, describing them as the “lifeblood of Nigeria’s economy.”
Oyerinde noted that the fair is designed to offer entrepreneurs practical solutions to navigate economic uncertainties, regulatory hurdles, and business scalability issues.
A major attraction of this year’s event is the keynote address by the CEO of FATE Foundation, Mrs. Adenike Adeyemi, a prominent advocate for MSME development.
She is expected to share transformative insights on innovative strategies for sustaining and growing small businesses in Nigeria.
A unique feature of the fair will be interactive sessions with key regulatory bodies. Entrepreneurs will engage directly with agencies responsible for licensing, compliance, taxation, and business registration.
NECA said these sessions aim to demystify bureaucratic processes and foster a more enabling business environment.
It also said the fair will provide a platform for entrepreneurs to exhibit their products and services, connect with potential investors, and explore new markets.
It added that participants would gain critical knowledge on digital transformation, access to finance, and strategies for sustainable business growth.
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· NECA stressed that the fair aligns with its broader mission of promoting enterprise development and economic resilience.
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· “By empowering MSMEs with the right support and information, the organisation aims to stimulate job creation, innovation, and long-term economic stability”, NECA said.
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· The 2025 MSMEs Fair is expected to attract a wide range of stakeholders, including financiers, tech experts, regulators, and industry leaders, all united in advancing the growth of Nigeria’s MSME sector.

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Over 2m Passengers Board Blue Rail Train – Commissioner 

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The Lagos State Commissioner for Transport, Mr Oluwaseun Osiyemi, says over two million passengers have been transported on the Blue Line Rail since its launch, while state-run buses move an average of 42,000 commuters daily.
Osiyemi, who disclosed this during the Year 2025 Ministerial press briefing held at the Bagauda Kaltho Press Centre, Alausa, on Tuesday, noted that the Lagos State Transport Policy, launched in May 2024, was now in its implementation phase, focusing on inclusivity, safety, affordability, and sustainability.
“On rail development, Phase One of the Blue Line (Marina to Mile 2) has served over two million passengers, with Phase Two (Mile 2 to Okokomaiko) in progress.
“Phase One of the Red Line (Agbado to Oyingbo) is now operational with eight stations and additional rolling stocks procured, while Phase two (Oyingbo to link Blue Line at National Theatre) is underway”, he said.
The Commissioner said in the state-owned bus operations, over 60 million commuters have been served since 2019, with daily ridership exceeding 40,000.
He also said plans were on to deploy new buses with Quality Bus Corridors under construction, adding that the Abule=Egba Bus Terminal had also been commissioned.
“For water transport, 15 locally-built Omibus Ferries have been launched and are in operation, with the Ijegun Egba Terminal now open.
“The OMI EKO project, in partnership with the French Development Agency (AFD), will deliver 25 terminals and 78 electric ferries.
“Over 280,000 passengers have used ferry services in the past year, and 12 boats have been upgraded to meet safety standards”, he said.
On road infrastructure and traffic management, the Commissioner said 49 junction improvement projects had been completed, including ongoing ones at Ikorodu, Iju, as well as Allen-Opebi-Toyin axis.
He added that solar-powered Traffic Signal Lights, road markings covering 67.9km, new medians, laybys, and 3,941 parking lots had also been provided.
Additionally, Osiyemi announced that the deployed Automatic Number Plate Recognition cameras had detected over 470,000 traffic violations and that the Vehicle Inspection Service issued over one million roadworthiness certificates.
He also said that the Lagos State Drivers’ Institute trained more than 32,000 drivers in the past 13 months.
The event marked the second anniversary of Governor Babajide Sanwo-Olu’s second term, showcasing major strides in the transport sector under the THEMES+ agenda.

Nkpemenyie Mcdominic, Lagos

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