Working Paper
Incentive Structure, Civil Service Efficiency and the Hidden Economy in Nigeria

Successive governments in Nigeria have introduced reforms aimed at improving the efficiency and effectiveness of the civil service. Still, the service remains inefficient and incapable of reforming itself, let alone the rest of the economy. Corruption has become an endemic feature of public sector activities, with the oil booms and busts distorting the incentive structures of civil servants and other agents in the economy. It is estimated that the ‘hidden’ economy now comprises the bulk of economic activity.
To turn the tide will demand the creation of an efficiency-based incentive scheme that links reward to performance. Political interference in the daily operations of the civil service needs to be minimised if the confidence of the public service is to be restored. Wage incentives are also important in raising morale. An underpaid civil service will not be able to perform its ‘patriotic duty’.