Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2017Background of the Study According to Tanzi (1998) corruption has been a part of our societies for many
centuries, and this has been an issue that many political regimes have either tried to solve
or bury. Some political leaders come into power with the intention to fix the economy and
eradicate corruption as their primary goal. However, leaders end up making situations
worse for the economy because they lack the understanding of how sensitive corruption is
as a problem. Corruption has been in existence for many years, embedded in the roots of
our economic development, which is why countries that are highly corrupt are most likely
to experience slow development. The issue with fighting corruption is that when a leader
comes into power with the aim of building a better nation, the next leader may not
necessarily share the same vision. Hence, eradicating corruption in a country could take a
longer time than it has been in existence because there are several stages to it.
The popularly known definition of corruption is the misuse or abuse of power to
personally gain from it (Transparency International, n.d.). Corruption cuts across the public
and private sectors or institutions in the country from the highest levels to the lowest stages.
Corruption in any nation starts from the top, as high as in the presidential political parties
known as grand and political corruption, down to the lowest levels in government
institutions referred to as petty or bureaucratic corruption (Elaine Byrne, 2009). These
forms of corruption are fraud, bribery, extortion, embezzlement and nepotism. A clear
example of corruption starting at the highest level of an institution was during the Nkrumah
regime of Republic of Ghana.
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Ghana, once known as the Gold Coast is West African country formerly colonized by British. The country was led to independence by Dr. Kwame Nkrumah on the 6th of March,
1957. Ghana’s highest achievement was becoming the first country in the sub-Saharan
Africa to achieve independence from colonial rule (About Ghana, 2004). However, with
such great achievement came the root of corruption in the county.
Ghana had so much pride in becoming the first African country to escape colonial rule
and in obtaining higher living conditions, better educational facilities, and more skilled and
experienced workers than most other African countries. Consequently, Ghana was
supposed to be the model for the newly independent African states. The country however
failed, as Ghanaians were shown to be corrupt and inept (Werlin H. H., 1972).
According to Werlin H. H., (1972) corruption in Ghana started long before the country
gained its independence, but worsened during Dr. Kwame Nkrumah’s regime. Under
Nkrumah’s regime, corruption was acted as a requirement to meet certain roles, make a
gain or achieve an objective in society, that when not met could result to serious failure on
that person’s part. Corruption was not only practiced by politicians alone, but by powerful
people in the civil service, in commercial corporations, in political parties and so on. The
extent of corruption was severe in Ghana under Nkrumah’s administration that it was
documented by more than 40 committees of enquiry. The National Development
Corporation was set up in 1958 as a legitimate insurance business. However, to facilitate
the collection and handling of bribes, this same corporation became an avenue through
which commissions and other cash could be collected. Those resistant were effectively
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disallowed government contracts, thus it became necessary to bribe many levels of the
governing body to carry on a business
According to Werlin H. H., (1973) an American political scientist argues that the level
of corruption is more extensive and effective in developing countries because of the
condition under which the administrations are formed. There are no adequate measures for
coordination, criticism and control necessary for meaningful legislation. Thus, legislation
tends to be poorly formulated in developing countries. Nkrumah left Ghana with serious
balance of payments, starting with a considerable large foreign reserve fund of over 500millionatthetimeofindependence.By1966,thecountryhadanexternalpublicdebtofover800 million. Inflation was high between 1964 – 1965 causing a rise in price level to
30 percent, creating serious unemployment. A great deal of Ghana’s economic trouble
based on corruption is difficult to determine. Ultimately, the effect of corruption in Ghana
weakened the legitimacy of the regime.
Corrupt practices have the capacity to affect not just the country but the lives of millions
of people in that country. Corruption can be a voluntarily act or it can be imposed on
someone when it becomes a norm practiced in that society, as in the case of Nkrumah’s
regime. Corruption distorts labor markets, discourages investment, leads to misallocation
of resources and alters the distribution of income. Corruption does not affect everyone
equally in the society but has a larger effect on the underprivileged class. When the poor
are asked to pay bribes, it takes away a higher percentage of their incomes as compared to
similar payments by the high class. In this case, it acts as a regressive tax, when the low
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income earners carry a relatively larger weight than the high-income earners. Corruption
leads to poor delivery of public services such as health care and education. Such
deterioration affects the lower class because they may have to pay bribes to receive proper
services and because they are more dependent on the public amenities (Gale, 2008).Ashesi University Colleg