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Recorded at	June 06, 2019
Event	TED Salon Brightline Initiative
Duration (min:sec)	11:32
Video Type	TED Salon Talk (partner)
Words per minute	157.57 slow
Readability (FK)	37.57 very difficult
Speaker	Efosa Ojomo


1	00:12	So in 2011,
2	00:14	someone broke into my sister's office
3	00:16	at the university where she teaches in Nigeria.
4	00:20	Now thankfully, the person was caught, arrested and charged to court.
5	00:25	When I get into court,
6	00:26	the clerks who were assigned to my sister's case informed her
7	00:30	that they wouldn't be able to process the paperwork
8	00:32	unless she paid a bribe.
9	00:35	Now, at first she thought it was part of a practical joke.
10	00:38	But then she realized they were serious.
11	00:40	And then she became furious.
12	00:42	I mean, think about it: here she was, the recent victim of a crime,
13	00:47	with the very people who were supposed to help her,
14	00:50	and they were demanding a bribe from her.
15	00:53	That's just one of the many ways
16	00:56	that corruption impacts millions of people in my country.
17	01:00	You know, growing up in Nigeria,
18	01:02	corruption permeated virtually every element of the society.
19	01:06	Reports of politicians embezzling millions of dollars were common.
20	01:11	Police officers stealing money
21	01:14	or extorting money from everyday hardworking citizens
22	01:17	was routine practice.
23	01:20	I felt that development could never actually happen,
24	01:23	so long as corruption persisted.
25	01:27	But over the past several years,
26	01:28	in my research on innovation and prosperity,
27	01:32	I've learned that corruption is actually not the problem hindering our development.
28	01:37	In fact,
29	01:38	conventional thinking on corruption and its relationship to development
30	01:42	is not only wrong, but it's holding many poor countries backwards.
31	01:48	So, the thinking goes like this:
32	01:50	in a society that's poor and corrupt,
33	01:53	our best shot at reducing corruption is to create good laws,
34	01:57	enforce them well,
35	01:59	and this will make way for development and innovation to flourish.
36	02:03	Now, it makes sense on paper,
37	02:05	which is why many governments and development organizations
38	02:08	invest billions of dollars annually
39	02:11	on institutional reform and anti-corruption programs.
40	02:15	But many of these programs fail to reduce corruption,
41	02:18	because we have the equation backwards.
42	02:21	You see, societies don't develop because they've reduced corruption.
43	02:26	They're able to reduce corruption because they've developed.
44	02:32	And societies develop through investments in innovation.
45	02:37	Now, at first, I thought this was impossible.
46	02:39	Why would anyone in their right mind
47	02:41	invest in a society where, at least on the surface,
48	02:44	it seems a terrible place to do business?
49	02:47	You know, a society where politicians are corrupt
50	02:50	and consumers are poor?
51	02:52	But then, the more I learned about
52	02:54	the relationship between innovation and corruption,
53	02:57	the more I started to see things differently.
54	03:01	Here's how this played out in sub-Saharan Africa
55	03:04	as the region developed its telecommunications industry.
56	03:08	In the late 1990s,
57	03:09	fewer than five percent of people in sub-Saharan Africa had phones.
58	03:13	In Nigeria, for example, the country had more than 110 million people
59	03:18	but fewer than half a million phones in the whole nation.
60	03:22	Now, this scarcity fueled widespread corruption in the industry.
61	03:26	I mean, public officials who worked for the state-owned phone companies
62	03:30	demanded bribes from people who wanted phones.
63	03:32	And because most people couldn't afford to pay the bribes,
64	03:35	phones were only available to those who were wealthy.
65	03:39	Then an entrepreneur named Mo Ibrahim
66	03:41	decided that he would set up a telecommunications company
67	03:45	on the continent.
68	03:46	Now, when he told his colleagues about his idea, they just laughed at him.
69	03:50	But Mo Ibrahim was undeterred.
70	03:52	And so in 1998, he set up Celtel.
71	03:57	The company provided affordable mobile phones and cell service
72	04:00	to millions of Africans,
73	04:02	in some of the poorest and most corrupt countries in the region --
74	04:05	I mean countries such as Congo, Malawi,
75	04:08	Sierra Leone and Uganda.
76	04:12	You see, in our research, we call what Mo Ibrahim built
77	04:15	a "market-creating innovation."
78	04:19	Market-creating innovations transform complicated and expensive products
79	04:24	into products that are simple and affordable,
80	04:26	so that many more people in society could access them.
81	04:30	Now in this case, phones were expensive
82	04:32	before Celtel made them much more affordable.
83	04:36	As other investors -- some of his colleagues, actually --
84	04:39	saw that it was possible to create a successful mobile phone company
85	04:43	on the continent,
86	04:45	they flooded in with billions of dollars of investments.
87	04:48	And this led to significant growth in the industry.
88	04:52	From barely nothing in 2000,
89	04:54	today, virtually every African country now has
90	04:57	a vibrant mobile telecommunications industry.
91	05:00	The sector now supports close to one billion phone connections,
92	05:05	it has created nearly four million jobs
93	05:08	and generates billions of dollars in taxes every year.
94	05:13	These are taxes that governments can now reinvest into the economy
95	05:17	to build their institutions.
96	05:20	And here's the thing:
97	05:21	because most people no longer have to bribe public officials
98	05:24	just to get a phone,
99	05:26	corruption -- at least within this industry -- has reduced.
100	05:32	Now, if Mo Ibrahim had waited for corruption to be fixed
101	05:35	in all of sub-Saharan Africa before he invested,
102	05:39	he would still be waiting today.
103	05:41	You know, most people who engage in corruption know they shouldn't.
104	05:46	I mean, the public officials who were demanding bribes from people
105	05:50	to get phones
106	05:51	and the people who were paying the bribes --
107	05:53	they knew they were breaking the law.
108	05:55	But they did it anyways.
109	05:57	The question is: Why?
110	05:59	The answer?
111	06:01	Scarcity.
112	06:04	See, whenever people would benefit from gaining access
113	06:06	to something that scarce,
114	06:08	this makes corruption attractive.
115	06:11	You know, in poor countries, we complain a lot about corrupt politicians
116	06:15	who embezzle state funds.
117	06:17	But in many of those countries, economic opportunity is scarce,
118	06:21	and so corruption becomes an attractive way to gain wealth.
119	06:25	We also complain about civil servants like police officers,
120	06:29	who extort money from everyday hardworking citizens.
121	06:33	But most civil servants are grossly underpaid
122	06:36	and are leading desperate lives.
123	06:38	And so for them, extortion or corruption is a good way to make a living.
124	06:46	You know, this phenomenon also plays itself out in wealthy countries as well.
125	06:51	When rich parents bribe university officials --
126	06:54	(Laughter)
127	06:59	When rich parents bribe university officials
128	07:02	so their children can gain admission into elite colleges,
129	07:06	the circumstance is different,
130	07:09	but the principle is the same.
131	07:11	I mean, admission into elite colleges is scarce,
132	07:14	and so bribery becomes attractive.
133	07:19	The thing is,
134	07:21	I'm not trying to say there shouldn't be things that are scarce in society
135	07:25	or things that are selective.
136	07:27	What I'm just trying to explain
137	07:29	is this relationship between corruption and scarcity.
138	07:33	And in most poor countries, way too many basic things are scarce.
139	07:38	I mean things like food,
140	07:40	education,
141	07:41	health care,
142	07:42	economic opportunity,
143	07:44	jobs.
144	07:46	This creates the perfect breeding ground for corruption to thrive.
145	07:51	Now, in no way does this excuse corrupt behavior.
146	07:55	It just helps us understand it a bit better.
147	07:58	Investing in businesses that make things affordable
148	08:02	and accessible to so many more people
149	08:05	attacks this scarcity
150	08:06	and creates the revenues for governments to reinvest in their economies.
151	08:11	Now, when this happens on a countrywide level,
152	08:15	it can revolutionize nations.
153	08:18	Consider the impact in South Korea.
154	08:21	Now, in the 1950s,
155	08:23	South Korea was a desperately poor country,
156	08:26	and it was very corrupt.
157	08:29	The country was ruled by an authoritarian government
158	08:32	and engaged in bribery and embezzlement.
159	08:35	In fact, economists at the time said South Korea was trapped in poverty,
160	08:41	and they referred to it as "an economic basket case."
161	08:46	When you looked at South Korea's institutions,
162	08:48	even as late as the 1980s,
163	08:50	they were on par with some of the poorest and most corrupt African countries
164	08:53	at the time.
165	08:55	But as companies like Samsung, Kia, Hyundai
166	09:00	invested in innovations that made things much more affordable
167	09:04	for so many more people,
168	09:06	South Korea ultimately became prosperous.
169	09:09	As the country grew prosperous,
170	09:12	it was able to transition from an authoritarian government
171	09:15	to a democratic government
172	09:18	and has been able to reinvest in building its institutions.
173	09:22	And this has paid off tremendously.
174	09:25	For instance, in 2018,
175	09:27	South Korea's president was sentenced to 25 years in prison
176	09:31	on corruption-related charges.
177	09:34	This could never have happened decades ago when the country was poor
178	09:38	and ruled by an authoritarian government.
179	09:42	In fact, as we looked at most prosperous countries today, what we found was,
180	09:47	they were able to reduce corruption as they became prosperous --
181	09:51	not before.
182	09:53	And so where does that leave us?
183	09:56	I know it may sound like I'm saying we should just ignore corruption.
184	10:01	That's not what I'm saying at all.
185	10:03	What I'm suggesting, though,
186	10:05	is that corruption, especially for most people in poor countries,
187	10:10	is a work-around.
188	10:12	It's a utility
189	10:13	in a place where there are fewer better options to solve a problem.
190	10:17	Investing in innovations that make products much more affordable
191	10:21	for many people
192	10:23	not only attacks this scarcity
193	10:25	but it creates a sustainable source of revenue
194	10:28	for governments to reinvest into the economies
195	10:31	to strengthen their institutions.
196	10:34	This is the critical missing piece in the economic development puzzle
197	10:38	that will ultimately help us reduce corruption.
198	10:43	You know, I lost hope in Nigeria when I was 16.
199	10:46	And in some ways, the country has actually gotten worse.
200	10:50	In addition to widespread poverty and endemic corruption,
201	10:54	Nigeria now actually deals with terrorist organizations
202	10:57	like Boko Haram.
203	10:59	But somehow, I am more hopeful about Nigeria today
204	11:03	than I have ever been before.
205	11:05	When I see organizations investing in innovations
206	11:09	that are creating jobs for people
207	11:11	and making things affordable --
208	11:13	I mean organizations like Lifestores Pharmacy,
209	11:16	making drugs and pharmaceuticals more affordable for people;
210	11:21	or Metro Africa Xpress,
211	11:23	tackling the scarcity of distribution and logistics for many small businesses;
212	11:28	or Andela, creating economic opportunity for software developers --
213	11:33	I am optimistic about the future.
214	11:36	I hope you will be, too.
215	11:38	Thank you.
216	11:39	(Applause)

Efosa Ojomo: Reducing corruption takes a specific kind of investment