...proponents of the good governance agenda see it as a worthy goal not only in and of itself but also as a means through which to impact a variety of other outcomes, particularly economic growth and development. It is clear that the opposite, that is, the absence of, good governance implies bad governance.
It’s only logical to start from the parent of good governance, which is governance. On this, after synthesizing various sources including the UNDP and the IMF, what has emerged is that governance refers to the exercise of economic, political and administrative authority to manage a country’s affairs at all levels, which comprises mechanisms, processes and institutions through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations and mediate their differences. In other words, it is the process by which public institutions conduct public affairs and manage public resources. At a programmatic level, it is easy to see the relationship between governance and economics as we know that governments maintain the legal and social framework, provide public goods and services, redistribute income, mitigate externalities, and attempt to stabilize the economy through diverse monetary and fiscal measures. As a UN agency pointed out, the concept of "governance" is not new. It is as old as human civilization.
Now, coming to good governance, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) has advanced eight principles as a guide, namely: Participation, Rule of Law, Transparency, Responsiveness, Consensus oriented, Equity and inclusiveness, Effectiveness and efficiency, and Accountability. As popularly rendered, participation in the concept of good governance here is an opportunity for everyone to voice their opinions through institutions or representations. In addition, everyone, without exception, has the right to freedom of association and expression. Governments need to have good laws, institutions and processes in place to ensure accountability, stability, equality and access to justice for all. This ultimately leads to respect for human rights and the environment. Without any doubt, transparency is a fundamental element of abolishing corruption. This is because transparency promotes accountability and provides information for citizens about what their government is doing. Transparent governance is important to local governments and the communities they serve because corruption threatens good governance, leads to the misallocation of resources, harms public and private sector development, and distorts public policy. Responsiveness simply dictates that institutions respond to their stakeholders within a reasonable time frame. Consensus-oriented is demonstrated by an agenda that seeks to mediate between the many different needs, perspectives, and expectations of a diverse citizenry; consensus-oriented decision-making ensures that even if everyone does not achieve what they want to the fullest, a common minimum can be achieved by everyone which will not be detrimental to anyone. It mediates differing interests to meet the broad consensus on the best interests of a community; these exist where everyone has opportunities to improve or maintain their well-being. This means that all members of society, especially the most vulnerable, are taken into consideration in policymaking, and no one feels alienated, disenfranchised or left behind; Effective and efficient governance is critical to the well-being of any country. Effectiveness refers to fulfilling the required task rightfully, and efficiency is fulfilling these tasks in the most economical way in terms of resources and time. Finally, and on accountability, in terms of ethics and governance, is equated with answerability, culpability, liability, and the expectation of account-giving. All put together, in theoretical formulation, good governance ensures that political, social and economic priorities are based on broad consensus in society and that the voices of the poorest and the most vulnerable are heard in decision-making over the allocation of development resources.
From the foregoing, we see that governance has three legs: economic, political and administrative. In this vein, the Council of Europe has offered a short but informed definition of good governance as “the responsible conduct of public affairs and management of public resources” and goes further to unpack the condensed offer by listing “12 Principles of Good Governance”, mostly in alignment with the UN version shared above.
Analyzed from the corporate, and organizational angle, despite general consensus, Rachel M. Gisselquist, in the 2012 article on a UN platform, entitled: “Good Governance as a Concept, and Why This Matters for Development Policy” asserts that ‘good governance’ is an extremely elusive objective: it means different things to different organizations and to different actors within these organizations. To the United Nations Office of the High Commissioner for Human Rights (OHCHR), while there is no internationally agreed definition of 'good governance', it may span the following topics: full respect of human rights, the rule of law, effective participation, multi-actor partnerships, political pluralism, transparent and accountable processes and institutions, an efficient and effective public sector, legitimacy, access to knowledge, information and education, political empowerment of people, equity, sustainability, and attitudes and values that foster responsibility, solidarity and tolerance. In summary, good governance relates to the political and institutional processes and outcomes that are necessary to achieve the goals of development. The true test of 'good' governance is the degree to which it delivers on the promise of human rights: civil, cultural, economic, political and social rights. The key question is: are the institutions of governance effectively guaranteeing the right to health, adequate housing, sufficient food, quality education, fair justice and personal security?
In economics, therefore, the concept of "good governance" serves as a model to compare ineffective economies or political bodies with viable economies and political bodies. The concept centres on the responsibility of governments and governing bodies to meet the needs of the masses as opposed to select groups in society. Kemal Dervis, in a 2014 commentary on “Good Governance and Economic Performance” makes the instructive point that, “it is the nature of governance that determines whether people deploy their talents and energy in pursuit of innovation, production, and job creation, or in rent-seeking and lobbying for political protection”. This is where the role of economists in government acquires significance because economists have their ideologies-consciously articulated or muted but they are reflected in the kind of policies they proffer: pro or anti-people. Hence, proponents of the good governance agenda see it as a worthy goal not only in and of itself but also as a means through which to impact a variety of other outcomes, particularly economic growth and development. It is clear that the opposite, that is, the absence of, good governance implies bad governance. For illustration, an example of poor governance manifests in terms of corruption, implementation of unfair policies, and deception. Bad governance, like good governance, has its consequences.
Effect of Governance Quality on Economic Performance
The World Bank was evidently on track in 1989 when it declared that 'a crisis of governance’ underlay ‘the litany of Africa’s development problems, effectively marking the rise of good governance to a dominant conceptual status in the development vocabulary. Good governance at all levels is fundamental to economic growth, political stability, and security — a key factor for overall development. Put in simple terms, good governance leads to improved economic benefits.
Kemal Dervis in a March 13, 2014 piece, “Good Governance and Economic Performance”, noted that: Recent events point once again to the importance of good governance and responsive political systems. After all, it is the nature of governance that determines whether people deploy their talents and energy in pursuit of innovation, production, and job creation, or in rent-seeking and lobbying for political protection. Oftentimes, good governance is equated with democracy but there is this thorny issue as to how exactly democracy is linked to economic performance, an issue highlighted by Kemal Dervis when he pointed to the fact that China’s long-lasting success is sometimes given as a counterexample to the importance of good governance for economic performance. The Chinese example certainly calls into question a strong correlation between multi-party democracy and economic growth. Maybe we should pose and answer the question: What is democracy? Dervis’ observation is instructive, noting that: Democracy is of course something valuable in itself and can be desired independently of its effect on economic growth. But, in the context of economic performance, it is important to emphasize that there is a huge difference between dictatorial regimes, where a single individual monopolizes all power – à la Mubarak or Syrian President Bashar al-Assad – and China, where there has been competition and contestability within a large communist party. And it is the party, operating as a fairly inclusive and meritocratic institution, not an autocratic leader that has governed in the post-Mao period. For now, we ignore the inappropriate lumping of regimes as we note the ideological bias of the writer in particular against the Syrian leadership.
In 2018, four Chinese intellectuals, Jiandang Liu, Jie Tang, Bo Zhou and Zhijun Liang-writing on “The Effect of Governance Quality on Economic Growth: Based on China’s Provincial Panel Data”, made the point that Since the early 1980s, China’s economy has maintained rapid growth, with an average annual growth rate of more than 9%. Per capita GDP (gross domestic product) has increased from lower than $300 in 1978 to over $8000 in 2016, which implies that China has finished a great transformation from low-income to upper-middle income. During this period, China has actively promoted reform in all fields and improved local governance quality a great deal. The zero tolerance for corruption in that country inevitably points to a unique quality of their system.
Corruption in the Equation
As well known, in poorly governed countries, corrupt bureaucrats and politicians baldly hinder development efforts by stealing aid contributions or misdirecting them into unproductive activities. Besides, corruption poses a significant threat to security and stability. It undermines democracy, diminishes the rule of law, and hinders social and economic development by diverting much-needed investments from welfare and infrastructure to the pockets of corrupted individuals. Indeed, widespread corruption can lead to general public dissatisfaction towards State institutions, and disillusion with the government, which can result in unrest and instability. As I pointed out in the Paper presented at the 2014 NES conference, titled, “The Nigerian State: Corrupt, Corrupting and Collusive in Undermining Economic Development”, corruption is pervasive and significant around the world; it is estimated that in developing and transition countries alone, the private sector bribes corrupt politicians and government officials up to US $40 billion annually. According to the World Bank, developing countries could use the estimated bribery of US $40 billion to provide first-line treatment for 240 million people- with HIV/AIDS for a full year and build around 50 million clean water connections for households. Yet, due to the secrecy of corruption in most cases, the true costs of crime are never known and expectedly exceed the estimates above.
Corruption is generally regarded as one of the most serious obstacles to development. According to various works, evidence shows that corruption indicators are negatively correlated with important economic outcomes. For example, it is found to reduce economic growth, via reduced private investment; limits development, as measured by per capita income, child mortality, and literacy; it is even found to affect the making of economic policy. An obvious justification for focusing attention on corruption derives from the fact that corruption is not a victimless crime. As former British Secretary of State for International Development, Hilary Benn bluntly stated in 2006: In poor countries [corruption] can kill. Money meant for drugs for a sick child, or to build a hospital, can be siphoned off into overseas bank accounts or to build a luxury house. These are what the absence of good governance entails and they illustrate glaringly the economics of good/bad governance. A Nigerian academic has actually argued that “Corruption kills more than Malaria or HIV/AIDS in Nigeria [because], on a daily basis, people die in hospitals, crisis areas, and accidents due to corruption of leaders. Incidentally, on July 9, 2013, the British Broadcasting Corporation chose corruption for a highlight in its broadcast of that date, instigated by Transparency International’s Report on a poll which showed that corrupt practices have been on the increase worldwide. Thus, especially in less developed countries, corruption is seen as one of the reasons for underdevelopment and as we can see, corrupt societies tend to be less developed and socially and politically unstable. As summed up on Transparency International’s Anti-Corruption Help Desk on the subject, ”The impact of corruption on growth and inequality”, corruption has a corrosive impact on growth and business operations; it affects inequality and income distribution while also affecting the overall governance and business environment. More concretely:
- Corruption distorts incentives and market forces, leading to misallocation of resources.
- Corruption diverts talent and resources, including human resources, towards “lucrative” rent-seeking activities, such as defence, rather than productive activities.
- Corruption acts as an inefficient tax on businesses, ultimately raising production costs and reducing the profitability of investments.
- Corruption may also decrease the productivity of investments by reducing the quality of resources. For example, by undermining the quality and quantity of health and education services, corruption decreases a country’s human capital.
- Rent-seeking behaviour is also likely to create inefficiencies, fuelling waste of resources and undermining the efficiency of public expenditure.
It may surprise the reader to hear that some scholars have argued that some levels of corruption may encourage economic growth. It is also said that countries with lower levels of corruption still have efficient bureaucracies and enjoy better economic well-being. Thus, while it is often interpreted as having negative distributional consequences, others have argued that corruption has positive effects as it ‘humanises’ the workings of bureaucracy. The contentiousness of the subject lingers. What is beyond dispute, however, is that in the case of high level of corruption, most scholars agree that corruption has very harmful effects on economic and political development. For a fact, corruption in the public sector is the biggest obstacle to investment, causing a misallocation of valuable resources and subversion of public policies. Nigeria provides a valid insight into the imperatives of good governance, with its historic absence.
Governance in Nigeria
Google notes that there are roadblocks to a strong democracy in Nigeria at all levels of government. Conflict—triggered by political competition and communal, ethnic, religious or resource allocation rivalries—poses a major threat to democracy. Corruption pervades the daily lives of Nigerians. From an entirely different but nonetheless useful perspective, a study on: “Quality of Governance and Economic wellbeing: The Nigerian Experience“, published in Enugu State University of Science and Technology Journal of Social Sciences and Humanities of April 2020 edition conducted by a team of academics concluded that bad governance in Nigeria can be seen in poor policy formulation and implementation that discourages private sector development thus affecting economic wellbeing of the citizenry negatively. The study acknowledged a 2018 Brooking Institute report which showed that six Nigerians go into extreme poverty in every minute due to bad governance.
A team of researchers way back in 2012 writing through the medium, Accountancy Business and the Public Interest on “A Critical Examination of the Multinational Companies’ Anti-Corruption Policy in Nigeria” assembled evidence showing how Western countries have often provided the infrastructures that facilitate corruption in developing countries. Various sources have also exposed how companies, especially multinationals, are the biggest perpetrators using a sophisticated network of notional companies and corporate structures to facilitate corrupt practices in developing countries like Nigeria. To the extent that the resultant effect of these corrupt undertakings weaken the poor countries’ economies, to that level are their local collaborators who stand at the top of the Nigerian state apparatus, are guilty of colluding to undermine the economic development of their native economy.. Related to the foregoing is the fact that corruption and the transfer of illicit funds have been implicated in capital flight from Africa, with more than $400 billion being looted and stashed away in foreign countries. Of that amount, around $100 billion has been estimated to have come from Nigeria; the economics of the whole scenario is sobering. In effect, bad governance clearly carries far-reaching consequences. I come in peace, please.