Despite the fact that the Nigerian economy has been pointed out to be fantastically corrupt, the economy grew pretty well under the alleged corrupt administration and it is shrinking under the current administration which is said to be corrupt free. Does this mean that corruption (you chop, i chop, we chop syndrome) is beneficial? Hmmmm...

Well, in simple terms, money is a catalyst for growth, especially hard currency. Even when lavishly spent, money is beneficial to somebody. When judiciously and well expended, it could also result in significant benefits to all. I have painted certain examples below to capture these impacts. In the end of it, given Nigeria's perculiar situation, one person never loses out from the benefits of corruption. Find out below.

Take this simple example
Nigeria decides to emback on a grand-breaking project which will improve power supply and road networks only. The project is to cost a whooping N4bn and with its completion in the next 1 year will see the economy’s growth soar. Provision was made for it in the budget and upon signature by the President, everyone was hopeful. More money literally means increase in the demand for goods and services, businesses would thrive and a few new employments. Finally!!!
What Then Happens?

Scenario 1: Full Diversion of Fund to Private Pockets
A. Everything is outside
Nigeria embarks on a project worth N4bn. The N4bn was diverted into private pockets and the project was not carried out. The funds were shipped out of Nigeria to a bank it Cayman Island. The funds were loaned to borrowers who needed it to establish new business and expand already existing businesses. None of the borrowers plan investing in Nigeria.

Impact on Nigerian Economy: Zero. Infrastructure remains dilapidated
Impact on Foreign Economy: More funds N4bn to pursue growth

B. Everything went outside, some came in
Nigeria embarks on a project worth 4bn. The 4bn was diverted into private pockets and the project was not carried out. The funds were shipped out of Nigeria to a bank it Cayman Island. The funds were loaned to borrowers who needed it to establish new business and expand already existing businesses. N2bn was also loaned back to Nigeria to also fund new businesses, improving employment.

Impact on Nigerian Economy: economy grows due to N2bn in new investments and new jobs. Infrastructure remains dilapidated
Impact on Foreign Economy: More funds N2bn to pursue growth

C. Everything was inside the banking system
Nigeria embarks on a project worth 4bn. The 4bn was diverted into private pockets and the project was not carried out. The funds found its way into the Nigerian Banking system. The banks were able to use it to issue loans to borrowers who needed it to establish new businesses and expand already existing businesses. N2bn on local inputs and N2bn on foreign inputs.

Impact on Nigerian Economy: economy grows due to N4bn in new private sector investments and new jobs created through the private sector. (Infrastructure remains the same). Infrastructure remains dilapidated
Impact on Foreign Economy: capital goods industry sees growth and increase employment due to imports from Niigeria

D. Everything in private houses in Nigeria: Funds Consumption Only
Nigeria embarks on a project worth 4bn. The 4bn was diverted into private pockets and the project was not carried out. To avoid it being tracked in the Nigerian Banking System, the funds were moved in cash to private houses and were in such format spent in the Nigerian economy. The N4bn was used to fund consumption spending. N2bn on locally produced goods and N2bn on imported goods.

Impact on Nigerian Economy: Local producers in the economy see uplift in business activities by N2bn and are happy. Lead to few new jobs being created in those existing businesses (in the short-term and not necessarily capacity expansion excepted the rip-off continues). It will also lead to inflationary pressure. Infrastructure remains dilapidated
Impact on Foreign Economy: Foreign producers see increase demand from Nigeria leading to increased output and more jobs created in their firms.

E. Everything in private houses in Nigeria, Funds Consumption and Investment
Nigeria embarks on a project worth 4bn. The 4bn was diverted into private pockets and the project was not carried out. To avoid it being tracked in the Nigerian Banking System, the funds were moved in cash to private houses and were in such format spent in the Nigerian economy. The 2bn was used to fund private business investments and N2bn on consumption spending. N1bn each on local inputs/produce and N1bn on foreign inputs/produce
Impact on Nigerian Economy: Due to N2bn new investments, employment improves and the economy grows. Due to N1bn consumer spending, local producers benefit from improved demand and smile to the bank (without necessarily expanding capacity in the short-term). Infrastructure remains dilapidated
Impact on Foreign Economy: N2bn in input and finished produce imports will lead to increase in employment and productivity.

F. Everything in private houses in Nigeria, Funds investment only
Nigeria embarks on a project worth 4bn. The 4bn was diverted into private pockets and the project was not carried out. To avoid it being tracked in the Nigerian Banking System, the funds were moved in cash to private houses and were in such format spent in the Nigerian economy. The N4bn is used to fund new investments. N2bn in local inputs and N2bn on foreign inputs.
Impact on Nigerian Economy: N4bn in private investments leads to increasing employment and economic growth. Infrastructure remains dilapidated
Impact on foreign economy: Capital goods industry of foreign country sees increased output and employment with N2bn imports from Nigeria

Scenario 2: Partial Diversion of Funds, Incomplete Project
Nigeria embarks on a project worth N4bn. The N2bn is put into the project while the balance N2bn is diverted into private pocket. The project is not completed as a result and the economy doesn’t see the benefit of the money spent. The N2bn diverted is used to fund private business.

Impact on Nigerian economy: N2bn spent on the project increases incomes of Nigerians which leads to increase in consumer demand for N1bn of local industries and N1bn of foreign produce. Investment in new businesses leads to new employment and economic growth. Infrastructure remains dilapidated (them for leave am as e dey before)
Impact on foreign economy: Increase employment and increase output due to demand from Nigeria

Scenario 1α and 2β: Year 2, Corruption Fight
Government and a few citizens who are not beneficiaries of the corrupt economy) are not impressed by the non-execution or incomplete execution of project even with all the funds being approved. At the beginning of year 2, she launched a thorough investigation into how the funds were spent and everyone went jittery. No funds were release until the end of the investigation 6 months later.

Impact on the economy: Every suspect went jittery and cut unnecessary spending and the rate of free money in the economy crashed. In fact, everyone who was a beneficiary of the loot calmed down in their investments as the direction of the finances was being traced. (Market no dey- Money is not flowing says the market woman). Consumer demand for goods and services declined. Local industries were battling with declining sales and were forced to cut some jobs for the main time till the economy picks up. Because no fresh money had been pumped into the economy to stimulate consumption and investment, the economy’s growth declined and everyone was blaming the government for the hardship.
Impact on Foreign Economy: Since demand (both consumption and investment) in Nigeria was dropping, their industries also suffered decline and had to look for new markets for their outputs.


Scenario 3: Zero Diversion of Funds, Efficient Project Implementation
Nigeria embarks on a project worth N4bn. All the funds were efficiently utilised and the project was a success.
Impact on Nigerian Economy: the N4bn spent on the project increases income of Nigerians which leads to increase in consumer demand for N3bn and investment demand for N1bn as the investment environment becomes favourable due to the new infrastructure. More investors from outside and within are also motivated to bring in funds to enjoy the benefit of the new infrastructure which will ease the cost of doing business and make for more profitable ventures. New investments of N3bn from private sector add more jobs and output grows.
Impact on Foreign Economy: Capital and finished goods industry see growth in output and employment due to increasing demand from Nigeria.


The explanation pattern chosen takes into a lot of assumptions to simplify understanding. This may not be the eventual result in real life situations but it points out certain key points that are first line results. Would factor in more assumptions soon enough for the benefit of economist analysts and scholars who would generally question results. I would also be glad if assumptions are suggested and flaws are pointed out.