Bureaucratic corruption and market access : the case of smallholder farmers in Nigeria

Abstract

This thesis addresses the question of how bureaucratic corruption affects the market access of smallholder farmers in Nigeria. In this context, two sub-questions investigated where such corruption occurs and what transmission mechanisms can be observed. To answer these questions, 12 expert interviews were conducted and analysed using the qualitative content structuring of Mayring. This material was supplemented with current research, and theoretical foundations of principal agent and transaction cost theory. The results indicate a strong negative effect of corruption on market access, either directly or indirectly. It affects the resource base and technology of smallholder farmers due to their dependency on government services, where corruption results in unequal treatment, the resale of resources at market prices and negative consequences for the quality, availability and access to services. Unequal treatment in the public service provision and moribund institutional settings, particularly in terms of road infrastructure, contribute to skewed power relations between smallholders, their competitors and market intermediaries resulting in a strong impediment for market functionality. Particularly the smallholders’ competitors use corrupt payments to gain advantages, while smallholders are deprived by corruption from a variety of opportunities. Market functionality is further impaired by extortionary practices on markets contributing to the deterring nature of such payments, which also occur in formalisation procedures and during transportation and heavily constrain the smallholders' market orientation. Relevant corrupt practices occur in governmental offices, banks, distribution centres as well as on farms, markets and roads. The transmission mechanisms where found to include three levels. The strategic or policy formation level, the operational or implementation level as well as the tactical level, which include personal interactions with bureaucrats. The former usually result either in lost opportunities or even detrimental effects on farmers, while the latter generates costs aggravated by power imbalances between extortionist and smallholder farmer.