1. How does Nigeria rank globally in terms of corruption risks, and what are the most notable forms of corruption?
Corruption remains a persistent issue in Nigeria and therefore the country often ranks low on global rankings. On the TRACE Matrix, which measures business bribery risk, Nigeria ranks last out of 197 countries. This is consistent with other global rankings, such as a survey by the World Justice Project of individuals, legal practitioners and academics on corruption in government, which ranked Nigeria 97th of 102 countries. And according to the World Economic Forum’s 2014–2015 Global Competitiveness Index, Nigeria ranks 142nd out of 144 countries for diversion of public funds and 135th for bribes and irregular payments.
As a practical reality, corruption has become a serious impediment for those operating in the country. For example, a World Bank survey of managers and owners of business in Nigeria revealed that approximately 41 per cent of companies in Nigeria were expected to give a gift to obtain an import license, almost 36 per cent were expected to give a gift to obtain a water connection and 55 per cent were expected to give gifts to public officials “just to get things done.” Corruption also affects the daily lives of many Nigerians. According to Transparency International’s Global Corruption Barometer, for example, 81 per cent of respondents in Nigeria reported having paid a bribe to the police in the last year.
2. What are the top corruption risks for companies?
Companies operating in Nigeria should be aware of corruption risks at all levels of government. As the oil and gas sector continues to account for the great majority of the government’s revenue, high-ranking politicians within the government’s procurement process can most easily seek patronage. As part of the larger global Extractive Industries Transparency Initiative (EITI), however, Nigeria has established the Nigeria Extractive Industries Transparency Initiative (NEITI) – the goal of which is to achieve transparency in payments by extractive industries or companies, to governments and government-connected entities.
Petty corruption, such as facilitation payments, is also prominent, especially in Nigerian government agencies, which are slow, cumbersome and highly bureaucratic. One analysis done by the Maritime Anti-Corruption Network (MACN), for example, determined that a staggering 142 signatures were needed to clear cargo in the port of Lagos alone. In addition, more than 40 per cent of respondents to the 2014 World Bank Enterprise Survey stated that they were expected to give gifts in order to obtain an import license. In March 2015, 29 officers with the Nigerian Customs Service were arrested on corruption-related charges, including three superintendents accused of receiving USD $13,000 in bribes.
Despite the challenge posed by corruption, operating ethically in Nigeria is possible with the right approach. Companies that invest heavily in compliance resources set a strong ethical tone and are willing to think creatively in developing anti-bribery strategies have reported that they can indeed do business in the country without paying bribes.
The Nigerian government is taking additional action to improve the business environment. The Honorary International Investors’ Council launched the “Clean Business Nigeria Today” initiative in 2013, to integrate the private sector in government efforts to reduce corruption. The government has also established the Nigerian Investment Promotion Commission (NIPC) to provide licensing, permitting and related services to foreign investors in a streamlined, efficient and transparent manner. With the March 2015 election of President Muhammadu Buhari, Nigeria has further turned its focus on corruption, which President Buhari has called an impediment to economic growth and development. Buhari has taken a number of actions to curb corruption, including ordering audits of state institutions, such as the central bank and the NNPC, alleging that USD $150 billion has been stolen from Nigeria over the last 10 years.
3. What additional steps can companies take to reduce their exposure to corruption?
Companies can identify red flags by implementing strong preventative and detective internal controls, and by training local employees and intermediaries on identifying and responding to bribe demands. Companies will find that ordinary Nigerians are natural allies and will support their efforts as they, too, suffer from the high levels of corruption in the country. Red flags to consider when training employees include: identifying unusual payment schemes, involvement of unnecessary third parties in projects, and the approval of unfamiliar or unusual business expenses.
Establishing a strong tone at the top and conducting regular training are keys to creating the right ethical environment to reduce bribery risks in Nigeria. The company’s compliance program should be as deeply embedded as possible in its business, so that compliance becomes an essential component of the company’s operations in the country. Foreign companies should also perform an anti-bribery risk analysis of any third party they seek to engage.
Companies can also work with TRACE Certified companies, which have completed a rigorous due diligence process based on international standards, including training and continuous daily monitoring of international sanctions and enforcement lists.
4. What anti-bribery compliance support is available in Nigeria?
Companies operating in Nigeria may wish to coordinate with local counsel to make sure they understand local laws and regulations. In addition, the Canadian Trade Commissioner Service in Nigeria offers various forms of assistance, such as export counseling, strategic planning, market research, international contacts and trade leads, advocacy, reducing trade barriers, and trade events. There are also a number of non-profits in Nigeria focused on anti-corruption, like the African Network for Environment and Economic Justice, the Convention on Business Integrity, the Socio-Economic Rights and Accountability Project, and Integrity Nigeria.
5. What can be done if a company has been exposed to suspect behavior and practices?
The Economic and Financial Crimes Commission, a Nigerian law enforcement agency established in 2004, is tasked with fighting economic crime, and has opened several bribery-related investigations against foreign firms operating in Nigeria. Multinationals should proceed with caution, as they may face liability in both their home jurisdiction and in Nigeria for the same misconduct. Companies should have strong internal procedures aimed at identifying impropriety early-on, robust investigative teams to ferret out suspicious behavior and a strong commitment to implement remedial measures to address any gaps.