New study reveals the scale and costs of maritime corruption

New study reveals the scale and costs of maritime corruption
Sam Chambers June 18, 2024 https://splash247.com/new-study-reveals-the-scale-and-costs-of-maritime-...

For over a decade, the Maritime Anti-Corruption Network (MACN) has gathered first-hand data to map the extent of maritime corruption in the port and maritime sector. While detailed accounts of the direct cost of corruption have been documented, a comprehensive assessment of its overall monetary impact on the maritime industry and wider society, including indirect costs such as extended vessel lead times and delays, has been lacking.

A new MACN study, developed by Danish consultancy QBIS, quantifies the dollar value of corruption for the private sector, government, and society, including hidden indirect costs from corrupt practices across the maritime supply chain. The study captures import costs from sea transport to the price to the end consumer, excluding profit, while considering hidden indirect costs from long lead times, delays, and corrupt payments.

Using Nigeria as a case study, the assessment seeks to understand the wide-reaching impact of maritime corruption on the industry and society. Assuming all bribery requests during vessel clearance are met without resistance from the private sector or government, corruption costs for importing food and bulk products into Nigeria exceed $162m per year, adding about 15% to total transport and logistics costs. Per shipment, the cost of corruption for bulk imports is, on average, $182,300.

With 63% of Nigerians, or 133m people, classified as multidimensionally poor, increased costs due to corruption are likely to reduce household demand and make essential goods less affordable for the average family. Based on this scenario, the cost of corruption adds about 1.5% to retail prices for grain and petrol. This results in less consumption and sales, negatively impacting GDP, tariffs collected by Customs, and job creation. The study claims maritime corruption results in an annual reduction in GDP of $204m; an annual reduction in revenue collected by Customs of $42m; and 235,000 fewer full-time equivalent (FTE) jobs due to reduced sales and economic activity.

The total economic damage of maritime corruption is likely to be much higher, the study warns. If similar costs of corruption apply to container imports, the economic damage of maritime corruption will more than double according to the study.