WEBVTT

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So in 2011,

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someone broke into my sister's office

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at the university
where she teaches in Nigeria.

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Now thankfully, the person was caught,
arrested and charged to court.

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When I get into court,

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the clerks who were assigned
to my sister's case informed her

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that they wouldn't be able
to process the paperwork

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unless she paid a bribe.

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Now, at first she thought
it was part of a practical joke.

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But then she realized they were serious.

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And then she became furious.

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I mean, think about it: here she was,
the recent victim of a crime,

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with the very people
who were supposed to help her,

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and they were demanding a bribe from her.

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That's just one of the many ways

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that corruption impacts
millions of people in my country.

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You know, growing up in Nigeria,

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corruption permeated
virtually every element of the society.

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Reports of politicians embezzling
millions of dollars were common.

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Police officers stealing money

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or extorting money
from everyday hardworking citizens

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was routine practice.

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I felt that development
could never actually happen,

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so long as corruption persisted.

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But over the past several years,

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in my research on
innovation and prosperity,

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I've learned that corruption is actually
not the problem hindering our development.

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In fact,

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conventional thinking on corruption
and its relationship to development

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is not only wrong, but it's holding
many poor countries backwards.

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So, the thinking goes like this:

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in a society that's poor and corrupt,

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our best shot at reducing corruption
is to create good laws,

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enforce them well,

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and this will make way for development
and innovation to flourish.

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Now, it makes sense on paper,

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which is why many governments
and development organizations

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invest billions of dollars annually

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on institutional reform
and anti-corruption programs.

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But many of these programs
fail to reduce corruption,

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because we have the equation backwards.

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You see, societies don't develop
because they've reduced corruption.

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They're able to reduce corruption
because they've developed.

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And societies develop
through investments in innovation.

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Now, at first, I thought
this was impossible.

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Why would anyone in their right mind

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invest in a society where,
at least on the surface,

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it seems a terrible place to do business?

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You know, a society where
politicians are corrupt

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and consumers are poor?

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But then, the more I learned about

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the relationship
between innovation and corruption,

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the more I started
to see things differently.

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Here's how this played out
in sub-Saharan Africa

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as the region developed
its telecommunications industry.

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In the late 1990s,

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fewer than five percent of people
in sub-Saharan Africa had phones.

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In Nigeria, for example, the country
had more than 110 million people

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but fewer than half a million phones
in the whole nation.

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Now, this scarcity fueled
widespread corruption in the industry.

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I mean, public officials who worked
for the state-owned phone companies

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demanded bribes from people
who wanted phones.

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And because most people
couldn't afford to pay the bribes,

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phones were only available
to those who were wealthy.

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Then an entrepreneur named Mo Ibrahim

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decided that he would set up
a telecommunications company

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on the continent.

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Now, when he told his colleagues
about his idea, they just laughed at him.

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But Mo Ibrahim was undeterred.

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And so in 1998, he set up Celtel.

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The company provided affordable
mobile phones and cell service

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to millions of Africans,

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in some of the poorest and most corrupt
countries in the region --

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I mean countries such as Congo, Malawi,

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Sierra Leone and Uganda.

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You see, in our research,
we call what Mo Ibrahim built

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a "market-creating innovation."

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Market-creating innovations transform
complicated and expensive products

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into products that
are simple and affordable,

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so that many more people in society
could access them.

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Now in this case, phones were expensive

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before Celtel made them
much more affordable.

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As other investors --
some of his colleagues, actually --

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saw that it was possible to create
a successful mobile phone company

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on the continent,

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they flooded in with billions
of dollars of investments.

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And this led to significant
growth in the industry.

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From barely nothing in 2000,

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today, virtually every
African country now has

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a vibrant mobile
telecommunications industry.

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The sector now supports
close to one billion phone connections,

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it has created nearly four million jobs

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and generates billions of dollars
in taxes every year.

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These are taxes that governments
can now reinvest into the economy

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to build their institutions.

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And here's the thing:

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because most people no longer
have to bribe public officials

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just to get a phone,

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corruption -- at least within
this industry -- has reduced.

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Now, if Mo Ibrahim had waited
for corruption to be fixed

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in all of sub-Saharan Africa
before he invested,

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he would still be waiting today.

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You know, most people who engage
in corruption know they shouldn't.

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I mean, the public officials
who were demanding bribes from people

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to get phones

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and the people
who were paying the bribes --

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they knew they were breaking the law.

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But they did it anyways.

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The question is: Why?

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The answer?

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Scarcity.

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See, whenever people would benefit
from gaining access

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to something that scarce,

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this makes corruption attractive.

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You know, in poor countries, we complain
a lot about corrupt politicians

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who embezzle state funds.

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But in many of those countries,
economic opportunity is scarce,

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and so corruption becomes
an attractive way to gain wealth.

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We also complain about
civil servants like police officers,

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who extort money from everyday
hardworking citizens.

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But most civil servants
are grossly underpaid

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and are leading desperate lives.

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And so for them, extortion or corruption
is a good way to make a living.

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You know, this phenomenon also plays
itself out in wealthy countries as well.

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When rich parents
bribe university officials --

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(Laughter)

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When rich parents
bribe university officials

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so their children can gain admission
into elite colleges,

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the circumstance is different,

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but the principle is the same.

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I mean, admission
into elite colleges is scarce,

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and so bribery becomes attractive.

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The thing is,

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I'm not trying to say there shouldn't
be things that are scarce in society

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or things that are selective.

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What I'm just trying to explain

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is this relationship
between corruption and scarcity.

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And in most poor countries,
way too many basic things are scarce.

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I mean things like food,

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education,

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health care,

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economic opportunity,

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jobs.

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This creates the perfect breeding ground
for corruption to thrive.

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Now, in no way does this
excuse corrupt behavior.

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It just helps us
understand it a bit better.

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Investing in businesses
that make things affordable

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and accessible to so many more people

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attacks this scarcity

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and creates the revenues for governments
to reinvest in their economies.

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Now, when this happens
on a countrywide level,

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it can revolutionize nations.

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Consider the impact in South Korea.

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Now, in the 1950s,

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South Korea was
a desperately poor country,

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and it was very corrupt.

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The country was ruled
by an authoritarian government

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and engaged in bribery and embezzlement.

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In fact, economists at the time
said South Korea was trapped in poverty,

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and they referred to it
as "an economic basket case."

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When you looked
at South Korea's institutions,

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even as late as the 1980s,

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they were on par with some of the poorest
and most corrupt African countries

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at the time.

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But as companies like
Samsung, Kia, Hyundai

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invested in innovations
that made things much more affordable

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for so many more people,

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South Korea ultimately became prosperous.

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As the country grew prosperous,

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it was able to transition
from an authoritarian government

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to a democratic government

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and has been able to reinvest
in building its institutions.

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And this has paid off tremendously.

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For instance, in 2018,

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South Korea's president
was sentenced to 25 years in prison

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on corruption-related charges.

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This could never have happened decades ago
when the country was poor

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and ruled by an authoritarian government.

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In fact, as we looked at most prosperous
countries today, what we found was,

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they were able to reduce corruption
as they became prosperous --

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not before.

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And so where does that leave us?

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I know it may sound like I'm saying
we should just ignore corruption.

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That's not what I'm saying at all.

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What I'm suggesting, though,

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is that corruption, especially
for most people in poor countries,

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is a work-around.

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It's a utility

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in a place where there are fewer
better options to solve a problem.

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Investing in innovations that make
products much more affordable

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for many people

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not only attacks this scarcity

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but it creates a sustainable
source of revenue

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for governments to reinvest
into the economies

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to strengthen their institutions.

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This is the critical missing piece
in the economic development puzzle

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that will ultimately
help us reduce corruption.

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You know, I lost hope
in Nigeria when I was 16.

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And in some ways, the country
has actually gotten worse.

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In addition to widespread poverty
and endemic corruption,

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Nigeria now actually deals
with terrorist organizations

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like Boko Haram.

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But somehow, I am more hopeful
about Nigeria today

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than I have ever been before.

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When I see organizations
investing in innovations

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that are creating jobs for people

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and making things affordable --

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I mean organizations
like Lifestores Pharmacy,

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making drugs and pharmaceuticals
more affordable for people;

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or Metro Africa Xpress,

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tackling the scarcity of distribution
and logistics for many small businesses;

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or Andela, creating economic opportunity
for software developers --

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I am optimistic about the future.

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I hope you will be, too.

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Thank you.

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(Applause)