WORLD BANK: 80% of businesses in Nigeria are run on bribe

Posted: August 13, 2012 in Business

The World Bank has said about 80 per cent of businesses in the country paid bribes to government officials on request to remain in business.

The bank stated this in its 2011 report on investment climate  in Nigeria, released on Monday.

The report said that one-third of micro-enterprises reported that “informal payments/gifts to government officials” were commonplace, suggesting that registered firms confront more requests for such bribes.

Also only 20 per cent of micro-enterprise firms reported having advance knowledge of the amount of the payment required to “get things done.”

Such uncertainty, according to the report, added to the challenge posed by informal payments, since the amount to be set aside were not planned for.

World Bank reported that informal payments/gifts represented approximately 1.2 per cent of annual sales for all micro-enterprises.

The report went on to state that micro-enterprises dealing in government contracts are expected to pay approximately 4.3 per cent of the contract value in order to secure it.

The bribes required to obtain contracts appear much small for services (3.9 per cent) than for manufactured goods (6.7 per cent), the report noted.

However, formal sector firms paid more for corruption: 47 per cent of formal firms claimed that informal gifts/payments were commonplace, compared to 33 per cent of micro-enterprises.

The report added that micro-enterprises have a greater mistrust of institutions than formal firms.

Indeed, 63 per cent of formal sector firms reported that the application of laws was not consistent and predictable, compared to 72 per cent of micro-enterprises.

In addition, 41 per cent of formal firms reported that they had advanced knowledge of informal payments/gifts, compared to 20 per cent of micro-enterprises.

The report studied business activities and investment potentials in 26 states namely: Adamawa; Akwa Ibom; Bayelsa; Benue; Borno; Delta; Ebonyi; Edo; Ekiti; Gombe; Imo; Jigawa; Katsina and Kebbi.

Other states covered in the report were – Kogi; Kwara; Nassarawa; Niger; Ondo; Osun; Oyo; Plateau; Rivers; Taraba; Yobe and Zamfara.

The World Bank Investment Climate Assessment report on Nigeria  identified corruption, access to finance, electricity outages, tax rates and gender inequality as the major constraints to investment in Nigeria.

Source: The Nation News



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