Corruption and the Investment Climate in Nigeria

Abstract

The poor and the rich engage in corruption for different reasons. Corruption reduces effectiveness of investment due to theft of public funds initially budgeted for achieving realistic economic growth. Corruption imposes additional costs on growth process as it diverts scarce resources away from viable investment. It increases the degree of uncertainty and risk associated with investment and drives away new investment. This study analysed the consequences of corruption on investment in Nigeria. Data on the study were analysed using the Ordinary Least Square technique. The study reveals that low Corruption Perception Index ranking on Nigeria, which implies high level of corruption, leads to low investment and thus low economic growth in Nigeria. This study suggests application of anti-corruption policies on all and sundry to raise the degree of transparency and accountability in governance which in turn will lead to higher CPI ranking, higher degree of openness, higher investment and economic growth.