Dealing with corruption —Syed Mohammad Ali


Political will is needed within donors as well as recipient countries for pursuing anti-corruption measures. An effective judicial system is vital for promoting domestic accountability

Misappropriation of development funds is a sad feature of aid to the developing world. The unacceptably high level of deprivation prevailing in the world today would not have existed if the billions of dollars of aid allocated every year for decades were being spent more judiciously.

In 2006 alone, leading donor countries gave nearly $104 billion in official development assistance to lower-income countries, a figure which is supposed to rise to $130 billion by 2010. Yet there are millions of people around the world who are too poor to have enough to eat, who have no access to clean drinking water, sanitation, or adequate health facilities. These deprived multitudes themselves lack adequate employment opportunities, and they cannot ensure a better life for their children either by educating them properly.

Aid can only help reduce deprivation if it is able to effectively support provision of basic services, which are a precondition to enabling poor people to strive for a more decent of life. In order to do so, however, it is critical to ensure that development resources are used for this intended purpose instead of being diverted by corruption. Unfortunately, corruption is perceived to be endemic in several of the top ten aid recipient countries including Iraq, Congo, Indonesia, Vietnam, and Pakistan.

When donors disburse huge amounts of funds without supporting partner countries in efforts to address embedded corruption systems, a larger amount of funds may end up being diverted through corruption. When aid is provided to corrupt systems, or to corrupt leaderships, which are usually beyond the purview of citizen oversight, it is particularly conducive to corruption.

Conflict, reconstruction and post-disaster contexts are quite vulnerable to misuse of aid. The reconstruction of Iraq is one example where corruption has extended into many spheres of public contracting, affecting both the countries associated with the reconstruction as well as worn-torn Iraq itself.

Corruption actually begins in donor countries when aid priorities are not based on the needs of the poor or a recipient country’s long-term national development objectives, but rather are influenced by domestic strategic interests. A majority of bilateral aid agencies continue to tie their aid so that the goods and services being delivered by it have to be obtained from the donor country itself, instead of the recipient country or even at internationally competitive rates.

Corruption within recipient countries can seriously undermine the achievement of intended results. Directly, it diverts a percentage of aid away from intended purposes and beneficiaries. Indirectly, it promotes the inappropriate use of aid. On-ground results suggest clear links between the quality of governance in recipient countries and positive aid outcomes.

Yet corruption not only hinders development interventions, it aggravates poverty in itself. Research conducted on the lives of poor people in developing countries clearly indicates how corruption has a direct detrimental impact on them. For a poor household, bribes extorted by the police or essential utility officials reduce their net income, which implies having to curb other expenditures, be they related to health, education or nutrition, ignoring which often compounds their deprivation.

Both donor and recipient countries recognise that aid cannot reach the poor unless corruption is countered at multiple levels and over a hundred countries have now ratified the UN Convention against Corruption. For donor nations, it is becoming evident that the achievement of the Millennium Development Goals may be seriously hindered if corruption is not tackled as an integral part of poverty reduction strategies. For recipient countries, the credibility of future aid flows will now depend on the ability of the aid system to show that it can address corruption.

Tackling corruption requires using a comprehensive and systemic approach. Organisations like Transparency International view corruption to be arising from breaks in a country’s ‘national integrity system’, which in turn requires focus on different structures like accountability and good governance. The inclusion of anti-corruption assessments and the use of accountability provisions have already become part of the guidelines for some donors. The World Bank has led the process of debarring firms found to have bribed government officials. A number of international financial institutions, multilateral agencies and bilateral donors, such as the European Commission, have put in place their own debarment procedures.

Technical solutions that reduce discretionary powers by tracking of public finances, for instance, can play a supportive role both in reducing opportunities for corruption and raising public expectations for improved public service delivery. Yet, corruption cannot be addressed as a purely technical issue to be resolved through technical solutions.

Political will is needed within donors as well as recipient countries for pursuing anti-corruption measures. An effective judicial system is vital for promoting domestic accountability. In addition, key oversight institutions such as an inspectorate general, public auditing bodies and similar watchdog agencies play an important role in ensuring accountability.

Given the fact that much of the development aid is in the form of soft loans that have to be repaid, it is necessary that aid is used to invest in the human capacity of developing countries. When this aid is squandered instead, it just leads to the mounting of accumulated debt. Greater transparency is therefore essential when it comes to revenues, budgets and donor contributions.

Accountability for judicious use of aid funds is not only the shared responsibility of donors and recipient governments but also a range of civil society organisations that should be watching over this process in both donor and recipient countries. Thus far, little information exists in terms of how much of the money taken from the pockets of taxpayers in a donor country reaches beneficiaries in a developing country. Even the basis of how projects are chosen or sectoral investments made is still not open for public scrutiny.

Such lack of transparency prevents assessment of exactly how recipient governments are utilising donor funding and for what purposes, whereas being able to do so is crucial to ensure that aid can effectively reach its intended beneficiaries.

The writer is a researcher. He can be contacted at ali@policy.hu

Source: Daily times, 7/10/2008

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