0:00:00.933,0:00:02.533
So in 2011,

0:00:02.557,0:00:04.717
someone broke into my sister's office

0:00:04.741,0:00:07.635
at the university[br]where she teaches in Nigeria.

0:00:08.277,0:00:12.522
Now thankfully, the person was caught,[br]arrested and charged to court.

0:00:13.182,0:00:14.863
When I get into court,

0:00:14.887,0:00:18.268
the clerks who were assigned[br]to my sister's case informed her

0:00:18.292,0:00:20.759
that they wouldn't be able[br]to process the paperwork

0:00:20.783,0:00:22.429
unless she paid a bribe.

0:00:23.035,0:00:26.324
Now, at first she thought[br]it was part of a practical joke.

0:00:26.348,0:00:28.716
But then she realized they were serious.

0:00:28.740,0:00:30.629
And then she became furious.

0:00:30.653,0:00:35.741
I mean, think about it: here she was,[br]the recent victim of a crime,

0:00:35.765,0:00:38.737
with the very people[br]who were supposed to help her,

0:00:38.761,0:00:41.131
and they were demanding a bribe from her.

0:00:41.906,0:00:44.090
That's just one of the many ways

0:00:44.114,0:00:47.532
that corruption impacts[br]millions of people in my country.

0:00:48.252,0:00:50.049
You know, growing up in Nigeria,

0:00:50.073,0:00:53.646
corruption permeated[br]virtually every element of the society.

0:00:54.182,0:00:58.701
Reports of politicians embezzling[br]millions of dollars were common.

0:00:59.463,0:01:02.011
Police officers stealing money

0:01:02.035,0:01:05.573
or extorting money[br]from everyday hardworking citizens

0:01:05.597,0:01:07.195
was routine practice.

0:01:08.214,0:01:11.950
I felt that development[br]could never actually happen,

0:01:11.974,0:01:14.261
so long as corruption persisted.

0:01:15.279,0:01:16.940
But over the past several years,

0:01:16.964,0:01:20.412
in my research on[br]innovation and prosperity,

0:01:20.436,0:01:25.149
I've learned that corruption is actually[br]not the problem hindering our development.

0:01:25.794,0:01:26.945
In fact,

0:01:26.969,0:01:30.860
conventional thinking on corruption[br]and its relationship to development

0:01:30.884,0:01:35.965
is not only wrong, but it's holding[br]many poor countries backwards.

0:01:36.827,0:01:38.730
So, the thinking goes like this:

0:01:38.754,0:01:41.056
in a society that's poor and corrupt,

0:01:41.080,0:01:45.473
our best shot at reducing corruption[br]is to create good laws,

0:01:45.497,0:01:47.020
enforce them well,

0:01:47.044,0:01:50.940
and this will make way for development[br]and innovation to flourish.

0:01:51.631,0:01:53.123
Now, it makes sense on paper,

0:01:53.147,0:01:56.319
which is why many governments[br]and development organizations

0:01:56.343,0:01:59.068
invest billions of dollars annually

0:01:59.092,0:02:02.736
on institutional reform[br]and anti-corruption programs.

0:02:03.354,0:02:06.571
But many of these programs[br]fail to reduce corruption,

0:02:06.595,0:02:08.900
because we have the equation backwards.

0:02:09.729,0:02:14.221
You see, societies don't develop[br]because they've reduced corruption.

0:02:14.965,0:02:19.360
They're able to reduce corruption[br]because they've developed.

0:02:20.034,0:02:23.840
And societies develop[br]through investments in innovation.

0:02:25.156,0:02:27.266
Now, at first, I thought[br]this was impossible.

0:02:27.290,0:02:29.078
Why would anyone in their right mind

0:02:29.102,0:02:32.535
invest in a society where,[br]at least on the surface,

0:02:32.559,0:02:35.070
it seems a terrible place to do business?

0:02:35.094,0:02:38.042
You know, a society where[br]politicians are corrupt

0:02:38.066,0:02:39.656
and consumers are poor?

0:02:40.390,0:02:42.085
But then, the more I learned about

0:02:42.109,0:02:45.536
the relationship[br]between innovation and corruption,

0:02:45.560,0:02:47.879
the more I started[br]to see things differently.

0:02:49.073,0:02:52.048
Here's how this played out[br]in sub-Saharan Africa

0:02:52.072,0:02:55.286
as the region developed[br]its telecommunications industry.

0:02:56.096,0:02:57.509
In the late 1990s,

0:02:57.533,0:03:01.676
fewer than five percent of people[br]in sub-Saharan Africa had phones.

0:03:01.700,0:03:06.632
In Nigeria, for example, the country[br]had more than 110 million people

0:03:06.656,0:03:10.060
but fewer than half a million phones[br]in the whole nation.

0:03:10.084,0:03:14.017
Now, this scarcity fueled[br]widespread corruption in the industry.

0:03:14.600,0:03:17.976
I mean, public officials who worked[br]for the state-owned phone companies

0:03:18.000,0:03:20.434
demanded bribes from people[br]who wanted phones.

0:03:20.918,0:03:23.653
And because most people[br]couldn't afford to pay the bribes,

0:03:23.677,0:03:26.409
phones were only available[br]to those who were wealthy.

0:03:27.314,0:03:29.668
Then an entrepreneur named Mo Ibrahim

0:03:29.692,0:03:32.986
decided that he would set up[br]a telecommunications company

0:03:33.010,0:03:34.197
on the continent.

0:03:34.721,0:03:38.903
Now, when he told his colleagues[br]about his idea, they just laughed at him.

0:03:38.927,0:03:40.736
But Mo Ibrahim was undeterred.

0:03:40.760,0:03:44.164
And so in 1998, he set up Celtel.

0:03:45.116,0:03:48.500
The company provided affordable[br]mobile phones and cell service

0:03:48.524,0:03:50.200
to millions of Africans,

0:03:50.224,0:03:53.815
in some of the poorest and most corrupt[br]countries in the region --

0:03:53.839,0:03:56.665
I mean countries such as Congo, Malawi,

0:03:56.689,0:03:59.448
Sierra Leone and Uganda.

0:04:00.401,0:04:03.847
You see, in our research,[br]we call what Mo Ibrahim built

0:04:03.871,0:04:06.493
a "market-creating innovation."

0:04:07.208,0:04:12.131
Market-creating innovations transform[br]complicated and expensive products

0:04:12.155,0:04:14.295
into products that[br]are simple and affordable,

0:04:14.319,0:04:18.093
so that many more people in society[br]could access them.

0:04:18.775,0:04:20.891
Now in this case, phones were expensive

0:04:20.915,0:04:23.739
before Celtel made them[br]much more affordable.

0:04:24.855,0:04:27.860
As other investors --[br]some of his colleagues, actually --

0:04:27.884,0:04:31.673
saw that it was possible to create[br]a successful mobile phone company

0:04:31.697,0:04:33.012
on the continent,

0:04:33.036,0:04:36.350
they flooded in with billions[br]of dollars of investments.

0:04:36.374,0:04:39.362
And this led to significant[br]growth in the industry.

0:04:40.187,0:04:42.593
From barely nothing in 2000,

0:04:42.617,0:04:45.407
today, virtually every[br]African country now has

0:04:45.431,0:04:48.153
a vibrant mobile[br]telecommunications industry.

0:04:48.756,0:04:53.222
The sector now supports[br]close to one billion phone connections,

0:04:53.246,0:04:56.453
it has created nearly four million jobs

0:04:56.477,0:05:00.978
and generates billions of dollars[br]in taxes every year.

0:05:01.002,0:05:05.136
These are taxes that governments[br]can now reinvest into the economy

0:05:05.160,0:05:07.285
to build their institutions.

0:05:08.114,0:05:09.632
And here's the thing:

0:05:09.656,0:05:12.792
because most people no longer[br]have to bribe public officials

0:05:12.816,0:05:14.310
just to get a phone,

0:05:14.334,0:05:18.874
corruption -- at least within[br]this industry -- has reduced.

0:05:20.469,0:05:23.707
Now, if Mo Ibrahim had waited[br]for corruption to be fixed

0:05:23.731,0:05:27.080
in all of sub-Saharan Africa[br]before he invested,

0:05:27.104,0:05:28.987
he would still be waiting today.

0:05:29.858,0:05:34.443
You know, most people who engage[br]in corruption know they shouldn't.

0:05:34.889,0:05:38.482
I mean, the public officials[br]who were demanding bribes from people

0:05:38.506,0:05:39.657
to get phones

0:05:39.681,0:05:41.736
and the people[br]who were paying the bribes --

0:05:41.760,0:05:43.551
they knew they were breaking the law.

0:05:43.575,0:05:45.091
But they did it anyways.

0:05:45.638,0:05:47.404
The question is: Why?

0:05:47.967,0:05:49.322
The answer?

0:05:49.346,0:05:50.638
Scarcity.

0:05:52.128,0:05:54.748
See, whenever people would benefit[br]from gaining access

0:05:54.772,0:05:56.285
to something that scarce,

0:05:56.309,0:05:58.666
this makes corruption attractive.

0:05:59.642,0:06:03.668
You know, in poor countries, we complain[br]a lot about corrupt politicians

0:06:03.692,0:06:05.189
who embezzle state funds.

0:06:05.213,0:06:09.143
But in many of those countries,[br]economic opportunity is scarce,

0:06:09.167,0:06:12.878
and so corruption becomes[br]an attractive way to gain wealth.

0:06:13.986,0:06:17.472
We also complain about[br]civil servants like police officers,

0:06:17.496,0:06:21.027
who extort money from everyday[br]hardworking citizens.

0:06:21.860,0:06:24.691
But most civil servants[br]are grossly underpaid

0:06:24.715,0:06:26.706
and are leading desperate lives.

0:06:26.730,0:06:33.201
And so for them, extortion or corruption[br]is a good way to make a living.

0:06:34.241,0:06:38.435
You know, this phenomenon also plays[br]itself out in wealthy countries as well.

0:06:39.720,0:06:42.517
When rich parents[br]bribe university officials --

0:06:42.541,0:06:47.196
(Laughter)

0:06:47.220,0:06:50.128
When rich parents[br]bribe university officials

0:06:50.152,0:06:54.874
so their children can gain admission[br]into elite colleges,

0:06:54.898,0:06:57.177
the circumstance is different,

0:06:57.201,0:06:58.911
but the principle is the same.

0:06:59.360,0:07:02.254
I mean, admission[br]into elite colleges is scarce,

0:07:02.278,0:07:05.446
and so bribery becomes attractive.

0:07:07.938,0:07:09.116
The thing is,

0:07:09.140,0:07:13.172
I'm not trying to say there shouldn't[br]be things that are scarce in society

0:07:13.196,0:07:14.736
or things that are selective.

0:07:15.435,0:07:17.110
What I'm just trying to explain

0:07:17.134,0:07:20.891
is this relationship[br]between corruption and scarcity.

0:07:21.424,0:07:26.324
And in most poor countries,[br]way too many basic things are scarce.

0:07:26.348,0:07:27.990
I mean things like food,

0:07:28.014,0:07:29.383
education,

0:07:29.407,0:07:30.692
health care,

0:07:30.716,0:07:32.265
economic opportunity,

0:07:32.289,0:07:33.517
jobs.

0:07:34.522,0:07:38.677
This creates the perfect breeding ground[br]for corruption to thrive.

0:07:39.884,0:07:43.088
Now, in no way does this[br]excuse corrupt behavior.

0:07:43.112,0:07:45.998
It just helps us[br]understand it a bit better.

0:07:46.672,0:07:50.493
Investing in businesses[br]that make things affordable

0:07:50.517,0:07:52.999
and accessible to so many more people

0:07:53.023,0:07:54.740
attacks this scarcity

0:07:54.764,0:07:59.297
and creates the revenues for governments[br]to reinvest in their economies.

0:07:59.992,0:08:03.128
Now, when this happens[br]on a countrywide level,

0:08:03.152,0:08:05.335
it can revolutionize nations.

0:08:06.284,0:08:08.703
Consider the impact in South Korea.

0:08:09.822,0:08:11.302
Now, in the 1950s,

0:08:11.326,0:08:14.864
South Korea was[br]a desperately poor country,

0:08:14.888,0:08:16.557
and it was very corrupt.

0:08:17.513,0:08:20.675
The country was ruled[br]by an authoritarian government

0:08:20.699,0:08:23.496
and engaged in bribery and embezzlement.

0:08:23.858,0:08:29.526
In fact, economists at the time[br]said South Korea was trapped in poverty,

0:08:29.550,0:08:33.153
and they referred to it[br]as "an economic basket case."

0:08:34.240,0:08:36.430
When you looked[br]at South Korea's institutions,

0:08:36.454,0:08:38.015
even as late as the 1980s,

0:08:38.039,0:08:41.939
they were on par with some of the poorest[br]and most corrupt African countries

0:08:41.963,0:08:43.210
at the time.

0:08:43.938,0:08:48.669
But as companies like[br]Samsung, Kia, Hyundai

0:08:48.693,0:08:52.425
invested in innovations[br]that made things much more affordable

0:08:52.449,0:08:54.633
for so many more people,

0:08:54.657,0:08:57.273
South Korea ultimately became prosperous.

0:08:57.925,0:09:00.682
As the country grew prosperous,

0:09:00.706,0:09:03.784
it was able to transition[br]from an authoritarian government

0:09:03.808,0:09:06.009
to a democratic government

0:09:06.033,0:09:10.429
and has been able to reinvest[br]in building its institutions.

0:09:10.453,0:09:12.688
And this has paid off tremendously.

0:09:13.698,0:09:15.660
For instance, in 2018,

0:09:15.684,0:09:19.640
South Korea's president[br]was sentenced to 25 years in prison

0:09:19.664,0:09:21.643
on corruption-related charges.

0:09:22.259,0:09:26.320
This could never have happened decades ago[br]when the country was poor

0:09:26.344,0:09:29.138
and ruled by an authoritarian government.

0:09:30.450,0:09:35.095
In fact, as we looked at most prosperous[br]countries today, what we found was,

0:09:35.119,0:09:39.172
they were able to reduce corruption[br]as they became prosperous --

0:09:39.196,0:09:40.695
not before.

0:09:41.910,0:09:43.580
And so where does that leave us?

0:09:44.673,0:09:48.815
I know it may sound like I'm saying[br]we should just ignore corruption.

0:09:49.259,0:09:51.031
That's not what I'm saying at all.

0:09:51.850,0:09:53.370
What I'm suggesting, though,

0:09:53.394,0:09:58.171
is that corruption, especially[br]for most people in poor countries,

0:09:58.195,0:09:59.490
is a work-around.

0:10:00.196,0:10:01.347
It's a utility

0:10:01.371,0:10:04.946
in a place where there are fewer[br]better options to solve a problem.

0:10:05.770,0:10:09.356
Investing in innovations that make[br]products much more affordable

0:10:09.380,0:10:11.139
for many people

0:10:11.163,0:10:13.376
not only attacks this scarcity

0:10:13.400,0:10:16.117
but it creates a sustainable[br]source of revenue

0:10:16.141,0:10:19.369
for governments to reinvest[br]into the economies

0:10:19.393,0:10:21.912
to strengthen their institutions.

0:10:22.497,0:10:26.215
This is the critical missing piece[br]in the economic development puzzle

0:10:26.239,0:10:29.561
that will ultimately[br]help us reduce corruption.

0:10:31.013,0:10:33.564
You know, I lost hope[br]in Nigeria when I was 16.

0:10:34.405,0:10:37.356
And in some ways, the country[br]has actually gotten worse.

0:10:38.105,0:10:42.280
In addition to widespread poverty[br]and endemic corruption,

0:10:42.304,0:10:45.189
Nigeria now actually deals[br]with terrorist organizations

0:10:45.213,0:10:46.915
like Boko Haram.

0:10:47.788,0:10:51.278
But somehow, I am more hopeful[br]about Nigeria today

0:10:51.302,0:10:53.009
than I have ever been before.

0:10:53.474,0:10:57.336
When I see organizations[br]investing in innovations

0:10:57.360,0:10:59.671
that are creating jobs for people

0:10:59.695,0:11:01.813
and making things affordable --

0:11:01.837,0:11:04.849
I mean organizations[br]like Lifestores Pharmacy,

0:11:04.873,0:11:09.253
making drugs and pharmaceuticals[br]more affordable for people;

0:11:09.277,0:11:11.413
or Metro Africa Xpress,

0:11:11.437,0:11:16.451
tackling the scarcity of distribution[br]and logistics for many small businesses;

0:11:16.475,0:11:21.602
or Andela, creating economic opportunity[br]for software developers --

0:11:21.626,0:11:24.372
I am optimistic about the future.

0:11:24.396,0:11:26.125
I hope you will be, too.

0:11:26.149,0:11:27.337
Thank you.

0:11:27.361,0:11:32.285
(Applause)