In a country where people care more about their own success than making the country better, corruption tends to grow. When individual achievements matter more than what’s suitable for everyone, corruption is at work – like in the personal, group, or even spiritual settings. Surprisingly, even in places of worship, if personal growth is more important than everyone growing together, corruption is already there. It’s okay to want personal success, but if you’re only focused on beating others, corruption might be creeping in. This could be because of the people around you or because you’ve been influenced by the environment. I always tell people you cannot be praying to buy a car and build a house when the environment is in chaos, you will be the target for the poor or those still struggling.
Corruption remains a pervasive issue that affects nations, individuals, and organizations on a global scale. In recent times, discussions surrounding the profound implications of corruption have gained prominence, shedding light on its far-reaching consequences. This article delves into the multifaceted impact of corruption, with a focus on the economic, social, and organizational dimensions. Drawing from a United Nations (UN) report on corruption’s staggering costs and its link to conflict, this article examines its implications for nations, individuals, and organizations, emphasizing its detrimental effects on African countries and their people. Furthermore, we explore the definition of corruption, elucidating its various forms and manifestations.
Understanding the Enormous Costs of Corruption
A significant starting point for our exploration lies within the comprehensive UN report, which states that corruption has resulted in a colossal cost to the global economy, amounting to over $2.6 trillion or 5% of the global GDP (UN, 2018). This staggering figure raises critical questions about the destination of these immense financial resources. Unquestionably, a substantial portion of these funds can be attributed to African and other developing nations, where corruption has taken root and thrived. Research has consistently demonstrated a direct correlation between a country’s corruption levels and its developmental status, as well as the prevalence of poverty within its borders. The impact of corruption can be seen all over Africa, where funds meant for community or state development are directed to the personal pockets of some select few, while those projects suffer from stagnation or lack of funds.
Corruption and Conflict: A Complex Relationship
The UN report also underscores the intricate link between corruption and conflict. This connection between two seemingly disparate issues points to the destabilizing effects of corruption, which can exacerbate existing tensions and fuel conflicts. The representative of the United States emphasized this connection, highlighting how corruption’s unchecked growth permits transnational crime and drug trafficking to flourish. This, in turn, triggers mass migration and poses significant challenges to regions and the global community. Notably, historical instances like the “Arab Spring” serve as poignant reminders of the role corruption can play in sparking widespread protests and uprisings.
Corruption’s Stranglehold on African Nations
A closer examination of corruption’s impact on Africa unveils a distressing reality. Corruption has been a key factor in hampering the growth and development of many African countries. This often occurs with the complicity of external actors seeking to protect their interests. While corruption exists globally, the Western world’s foundation built on principles of trust, justice, and national interest has mitigated its impact to a considerable extent. African nations, plagued by deeply entrenched corruption, have struggled to realize their full potential, as misappropriated funds and resources hinder progress and exacerbate social inequalities. A portion of the corruption in Africa can be linked to Western influence aiming to maintain control over their investments and interests.
Defining Corruption: Unravelling Its Many Facets
To comprehensively address corruption, a clear understanding of its manifestations is essential. Corruption takes the form of offering, giving, or soliciting benefits to influence the actions of individuals in positions of authority. These actions can involve direct or indirect attempts to manipulate decisions, often resulting in fraudulent practices or the evasion of legal requirements. Benefits exchanged in corrupt transactions can encompass various forms, including monetary bribes, facilitation payments, kickbacks, inappropriate gifts, sponsorships, and other direct or indirect considerations.
The 3-Main Impact of Corruption especially on Africa
- Economic Impact
- Social and Human Impact
- Organization Impact
Economic Impact: Corruption’s far-reaching implications extend to economic realms, where its detrimental effects are starkly evident. According to estimates from the World Economic Forum, global corruption amounts to a staggering $2.6 trillion or 5% of the global GDP. This not only undermines economic efficiency but also contributes to reduced equality and unfavourable business environments.
For example, Gupta et al. (1998), in their paper “Does Corruption Affect Income Inequality and Poverty”? Li et al (2000), Hendriks et al. (1998), and Johnston, M. (1989) Corruption, Inequality, and Change argue that corruption increases income inequality through several channels. First, to the extent that corruption decreases economic growth, which is more likely to increase the income share of the poor than the rich, it increases income inequality and poverty. Second, corruption leads to a bias of the tax system in favor of the rich and powerful, thus making the effective tax system regressive (Hendriks et al. 1998), which implies that the burden of the tax system falls disproportionately on the poor.
A potential link has been suggested between corruption levels, poverty rates, and a nation’s gross domestic product (GDP), with Africa often cited as an example. While some argue that higher corruption can impede economic growth, leading to an increase in poverty and a decrease in GDP, the relationship is multifaceted and influenced by a range of factors like governance, education, healthcare, infrastructure, international trade, and other elements that collectively shape a country’s economic and social landscape, however, I believe corruption plays a major role. Corruption influences policies, processes, and critical decision that affects human life when people are induced or moved by personal gain.
In African countries, the notional tax system is not regressive. However, corruption allows the rich and powerful to escape their tax obligations, hence the tax burden falls almost exclusively on the poor. Corruption leads to the concentration of assets among a few wealthy elites. Because earning power depends, to some extent, on resource endowment (including inherited wealth), the rich are able to use their wealth to consolidate their economic and political power further.
Social and Human Impact: Corruption’s corrosive influence seeps into the fabric of societies, inflicting social and human costs. It fosters a culture of mistrust, erodes social cohesion, and perpetuates inequality. Vulnerable populations are often hit the hardest, as resources meant for their welfare are siphoned away through corrupt practices. Furthermore, corruption can impede the delivery of essential services, exacerbating poverty and hindering human development.
As individuals shift their attention from the advancement of their nation to their own personal growth, the foundation of their value system starts to erode. This shift in focus results in a transformation of their objectives, with personal gain overshadowing their regard for human well-being. This shift is especially evident when observing instances where political leaders in African nations allocate substantial resources to benefit themselves, rather than investing in projects that foster national development. The prioritization of personal security has even surpassed the importance of national security, as demonstrated by their inclination to assign themselves generous health allowances. This enables them to seek medical treatment abroad, instead of contributing to the enhancement of local healthcare facilities that could benefit the entire population. The pervasive presence of corruption further exacerbates societal inequalities by creating distinct socioeconomic classes, ultimately deepening the divide between the affluent and the underprivileged.
Organizational Impact: Organizations, both public and private, are not immune to corruption’s grasp. Corrupt practices within institutions compromise their integrity, tarnish their reputation, and impede growth. Rampant corruption can lead to a lack of investor confidence, decreased foreign direct investment, and hindered economic progress.
When corruption permeates a nation’s institutions, its effects on organizations within the country are profound. Transparency vanishes, giving way to a lack of fairness and equity. The principles of a level playing field erode, and the market becomes driven by those who can offer the most money. Enterprises find themselves allocating additional resources to accomplish tasks, as their profits are diminished by the need to pay bribes. The quality of work and overall productivity decline, as nearly everything can be acquired through monetary means, undermining healthy competition and fostering monopolies.
Moreover, funds that the government collects in the form of taxes for growth and development are diverted toward granting personal favours to individuals
The impact of corruption on nations, individuals, and organizations is profound and far-reaching. The UN report’s revelations regarding the exorbitant financial costs of corruption serve as a wake-up call for concerted global efforts to combat this menace. The link between corruption and conflict underscores the urgency of addressing corruption to ensure global stability. In the African context, corruption’s devastating effects have hindered progress and perpetuated inequalities, highlighting the need for tailored solutions. By defining corruption’s various forms and understanding its diverse impacts, societies, and institutions can work together to forge a future that is free from the corrosive effects of corruption. As we navigate the complexities of corruption’s influence, a united front against this scourge offers hope for a more just, equitable, and prosperous world.
Lawrence is a Cards, Payments, Project Management and Sales Expert with over 16years in the Financial Sector. He is passionate about Excellence, Leadership and Innovation, currently chasing interest in digital Payment solutions, blockchain technology, financial Inclusion & tech startups.
Author of the book, Discover, Develop, Deploy
Lawrence has founded several businesses including a Licensed Fintech in Nigeria. He loves writing and sharing knowledge with his audience.
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