CORRUPTION AS A REMOTE CAUSES OF UNDERDEVELOPMENT IN NIGERIA A STUDY OF EBONYI STATE CIVIL SERVICES

Corruption has long been considered one of the most intractable obstacles to economic development in Africa. This uses evidence on tax collection in Africa to argue that government corruption was an unintended consequence of colonial policies which influence government institutions in Africa today. Lacking the administrative capacity to collect information on taxpayers, colonial administrations allowed local officials discretion in granting exemptions to taxpayers too poor to pay the tax. This created opportunities for corruption which affected the ability of colonial administrations to collect taxes and provide public services. This argued that once established, this system of informal negotiation and the opportunities for corruption, it made it difficult for both colonial and postcolonial African states to raise sufficient revenue from direct taxation to fund development initiatives and limited the credibility of the state among local communities.
The World Bank’s 1997 World Development Report argues that ‘an effective state can contribute powerfully to sustainable development and the reduction of poverty’. Corruption, though difficult to measure, is according to Besley ‘an important symptom of low quality government’ and remains one of the most intractable obstacles to economic growth and improvement in social welfare in the developing world. This focuses on what Hellman calls ‘administrative corruption’, or the use of private payments to public officials to distort the prescribed implementation of official rules and policies’. It uses evidence on colonial tax collection in Africa to argue that the emergence of corruption in local governance was an unintended consequence of colonial policies.
Lacking information on individual taxpayers, colonial administrations gave district commissioners discretionary authority to negotiate tax payment and exemptions at the local level. These semi-official bargains and negotiations were rarely monitored by the central government and created numerous opportunities for corruption on the part of local agents. Once established, this system proved difficult for colonial administrations and post-independence states to reform, hindering efforts by the colonial state to increase revenue collections and affecting the credibility of local government institutions. The colonial administrations which took charge in Africa at the end of the 19 century knew little about the territories they were to govern or the people who lived there. Ronald Robinson captured the administrative weakness of the colonial state nicely when he described colonial rule in Africa as ‘a gimcrack effort run by two men and a dog’ when colonial rule was established in East Africa, much of the territory ‘had been given no more than a cursory glance’. Protectorate had any significant international trade prior to the beginning of colonial administration. As Frankel notes, ‘while the hope for economic benefits was a potent factor in the scramble for Africa, the means to be adopted in realizing these hopes were not known, the resources necessary were not mobilized’. With constant budget deficits through the pre-World War I period, both administrations required subsidies from London to meet their expenses. As a result, both were under pressure to maximize local revenue collections. East Africa’s deficits were higher, partly reflecting the greater willingness and ability of the British government (as opposed to a Chartered Company) to invest in the establishment of governing administrations in their dependent territories. For both colonial administrations, eliminating their initial deficits meant raising additional revenue while also minimizing expenditure. Finding the balance between these two was difficult and the balance they struck influenced fiscal policy in both colonies through the rest of the colonial period and even after independence. As in colonies established earlier in Asia and West Africa, both administrations initially relied upon customs tariffs on imports. Customs tariffs are in some ways ideal taxes for the governments of developing countries. They are relatively easy to collect, particularly when international trade is conducted out of just a few locations. The costs of collections therefore tend to be relatively low. On the other hand, tariff revenue also relies on the value of imports, and countries with lower per capita incomes tend to import less. Imports, like exports, were limited in the early years of colonial administration, which meant that the potential revenue from customs tariffs was limited. Neither could collect sufficient revenue from taxes on trade to maintain even minimalist government administrations. As a result of these shortfalls in tariff revenue both imposed direct taxation on the African population from an early date. However, colonial officials were unsure whether their skeletal administrations could cope with the demands of collecting taxes on an individual level. Gardner describes the collection of direct taxes as ‘the real test of effective administration’ in colonial Africa. As they had little knowledge of the number of potential taxpayers or their capacity to pay, both relied on flat-rate taxes imposed on African dwellings (known as ‘hut taxes’) payable by either the owner or occupier. In East Africa, the collection of a hut tax was first imposed by the Hut Tax Regulations of 1901, which authorized a tax of ‘not more than 2 rupees per annum’ on ‘all huts used as a dwelling’ to be paid by the occupier. In that year the tax was collected only in parts of the provinces of Seyidie. Tanaland and Ukamba. This was extended to Nyanza Province in 1902 and to Jubaland, Naivasha and Kenia Provinces in 1903.The maximum tax rate was increased to 3 rupees within the provinces of Kisumu and Naivasha in 1902. Three Rupee maximum was extended to all huts throughout the territory the following year.
The collection of the tax from 1901 trailed by several years the introduction of direct taxation in neighboring British Central Africa Protectorate (later Nyasaland), where a tax of 6s was imposed from 1891. The Nyasaland tax was reduced to 3s in 1893 when Harry Johnston, the territory’s administrator, admitted that 6s was more than the cash wages which an African laborer would earn in two months. Officials in African states proceeded more cautiously in 1900, when the tax to be collected the following year was set at 3s per annum ‘in respect of every hut occupied by an adult male native and also on each hut occupied by his family or dependants’. In North-West Africa, a hut tax was first imposed by Proclamation No. 18 of 1901, which imposed a tax of1 payable annually. Collection of the tax was, however, delayed until a permanent administration was established. Collections began in 1904, when Proclamation No. 7 of 1904 superseded the 1901 legislation. The collection of the tax was extended only gradually across the territory. As an early memorandum on taxation in North-West Africa noted, 1t was not the intention of the Administration to impose a tax throughout the territory from this date or that the tax should be collected in full. The scheme proposed was that the collection should be made first in the more settled portions of the country and gradually extended as circumstances might appear advisable.’ In particular, colonial administrators were aware that flat-rate taxes imposed unequal burdens on taxpayers with different incomes. The incomes of the African population were generally based on some combination of subsistence agriculture, the marketing of agricultural produce, and wages from labour on the European farms or in mines. The contribution of any or all of these varied widely between individuals and was well beyond the ability of the colonial government to measure. In West Africa, this calculation was made even more complicated by the rapid economic changes which took place across east and central Africa during the two decades prior to World War I.
Administrators attempted, somewhat blindly, to anticipate this economic growth in setting tax rates, often overestimating the speed and depth of penetration of the economic transition predicted to take place under colonial rule