What The Latest Transparency International CPI Release Means For Nigerian Based Businesses.



Corruption perception index
Corruption perception index 


What Is Corruption Perception Index (CPI)? 

Corruption Perception index is a ranking across several countries depicting the perceived level of graft, found in the public sectors of a country. According to Wikipedia,  the CPI generally defines corruption as "the misuse of public power for private benefit." Also, as the abuse of entrusted power for private gain which eventually hurts everyone who depends on the integrity of people in a position of authority.

When government officials in a country  are extremely corrupt and launder the funds meant for the public to their private firms or personal interests, it constitutes corruption for the said country.

Corruption perception index is a record of statistics published by Transparency International which monitors about 180 countries of the world to determine  the perceived level of corruption or the corruption perception index.


How Is It Measured? 

The CPI is measured by a body called Transparency International (TI). Transparency International created the corruption perception index in 1995 and started publishing it annually from 1996. Since then,  it has published the CPI for about hundred countries, but then it soon began to reach across other African countries. Presently,  Transparency International publishes corruption perception index for over 176 countries.


How does the organization measure the corruption index of a country?

Transparency International have faced a lot of criticisms from various nations and companies on the notion that their CPI release are inaccurate. TI had always backed themselves up with the fact that the CPI score as the name implies, is a perceived rating and not a compulsory reality. The organization source their data by working with several civil society organizations, companies and government officials. They also rely greatly on public opinion.

The organization tries to get data on government spending... how funds are spent and at which sector of the nation.  They watch for any divergence of public funds to private ventures or for selfish interests. They also monitor the crime rate of countries, like terrorism, bribery,  graft and several other vices that constitutes corruption in a country.


Data Presentation.

When these information are gathered,  TI then ranks the countries on a scale of 0 to 100, these are called points. A high point indicates a corruption free nation, while low points indicates that corruption rates are very high.  In order words countries ranked on the 100 percent point indicates countries that are totally free from corruption, and countries ranked on the zero percent point indicate countries that are highly corrupt.



Nigeria Yesterday, Today, And.... 

On February 21, 2018, the anti-corruption watchdog released the latest corruption perception index for 2017. Nigeria had a big blow on the face as the country which purported to fight corruption found its place far behind the rankings. Nigeria ranked 148th out of 180 countries.

Why is it a big blow? In the 2016 CPI release, Nigeria was ranked at point 27 which saw Nigeria at the 138th position of most corrupt countries in the world. Then a new government came with the principal goal of fighting corruption, but unfortunately the CPI release for 2017 revealed otherwise. The nation hit a recent high of the 148th most corrupt countries in the world at point 28th. However, the Presidency and some foreign officials have argued that the perception was rather unrealistic as the government has fought tirelessly to recover looted funds and assets of the nation.


Animal Saga In Nigeria -- Nigeria And...

Recently in 2018, various media publishing companies have published somewhat incredible news.  Animals have been blamed on several occasions during the past three weeks for doing away with huge amount of money. We have a snake,  a chimpanzee, a dragon and more recently a fish on the list. This begs the question, what does the future hold for Nigerian businesses?  what is 'Nigeria and....?'

It should again be noted that the CPI release is only but a perception of a nation's corruption index. However, the release, whether falsified or true has a serious impact on the business structure and economy of the said nation.


What You Need To Know As A Business Or Company Owner In Nigeria. 

With each release of CPI, businesses all over the world are affected grossly, either positively or negatively depending on the stats. If you own a company or it's subsidiary in Nigeria then here is what you need to know may be happening to Nigerian based businesses this year.


Foreign Investments And International Trades May Dwindle.

It is only natural that Investors are protective of their funds,  and foreign companies crave an economy that thrives. The sole aim of a business is to maximize profit, so, if the odds are stacked against the investors,  they simply take their businesses somewhere else. A highly perceived rate of corruption in a country reduces investor's confidence. This means that foreign investors no longer consider their investments safe, consequently, they take their businesses somewhere they feel safe. As you may already know,  corruption can range from crafty board of directors to terrorist attacks on the company's resources. When the perceived corruption index of a nation is high,  investors anticipate the worst of their investments and would likely move to a safer investment platform.


Low Business Reputation.

Business ventures in the country may begin to experience lack of authority in the foreign market. Those of you in the game can testify that a business without a reputation is certainly not a business. A high Corruption perception index diminishes the reputation of businesses both in the local and foreign market. Local and foreign Investors will rather invest in highly reputed companies than get stuck with a company in which uncertainty breeds.


Shadow Economy Or Market.

The shadow economy is a state in which businesses in a particular country operate without government taxation. The business owners in this case knows that it is only natural for the government to raise taxes in a corrupt economy in order to compensate for illicit spendings. So they stay out of government taxation in order to avoid possible liquidation of its assets. The shadow economy also poses one more disadvantage, which is low remuneration of workers. This will grossly affect the standard of living in the country and bring about a backlash on the countries economy in general.


Inflation.

Studies have shown that inflation is inevitable in a corrupt economy. When corrupt practices looms a nation or it's business economy, corrupt officials can hike prices to compensate for the disturbance. The government raise taxes, and heavily taxed businesses will in turn inflate the prices of their goods and services and diminish the quality of products, which brings about a regression in the money value of the country and also high cost of living.


Inefficiency.

A high corruption perception index may result to inefficiency in running of business. Nigerian based businesses should watch out for a possible decline in the effective management of their ventures. As expected in any highly corrupt economy, more money will be pumped into looted areas to cover possible tracks while reducing lending and borrowing to companies. Therefore the ease of starting up and running a business greatly depletes. Embryonic business men may face huge challenge as starting a business may pose a lot of challenge due to lack of the needed funding.

Nigerian based businesses are therefore adviced to seek more sophisticated approach to business management in order to adapt to the impending regression that may occur in the business sector. In an economy such as this, it no longer matters how much money you have.  What matters is who you know and what you know.

This forecast also extends to other corruption striken countries like Somalia, South Sudan, Syria, Venezuela, and others. Companies and business ventures in this regions of the world should also watch out for the impending regression and employ better strategies to compete in the foreign and local market.

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About the author

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Leo Smile is a Nigerian Writer, blogger, and Online Entrepreneur. He has hosted many online courses in financial education and career advice. Leo is also currently working on revolutionalizing the business world especially in the area of startups. He is popularly known for his online course, How to start a business with little or no capital.

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