Some donor interventions, like supporting public financial management, seem to help combat corruption. Others are ineffective.

Opinion by Aled Williams in Development Today.

Corruption is an age-old societal problem and a difficult nut to crack in affluent democracies often considered to be mostly corruption-free. It is even harder for donor governments to promote anti-corruption goals in foreign countries, although doing just this has become a priority for aid donors.    

The 1990s was a watershed era for anti-corruption from a development perspective. Transparency International (TI) began in 1993, its Corruption Perceptions Index (CPI) launched in 1995, and the World Bank President spoke of the “cancer of corruption” on economic growth in 1996. The consensus was that corruption could be tackled by combining formal institutions (anti-corruption agencies modelled on success stories from Hong Kong and New South Wales), normative legal frameworks (the OECD Anti-bribery Convention of 1999, the UN Convention against Corruption of 2003), and aid conditionality (suspending budget or sector support). In spite of these innovations, we saw little actual progress in tackling high levels of corruption in many aid recipient countries beyond formalities and commitments.

FLIMSY ASSUMPTIONS

Development practitioners and researchers alike went back to the drawing board. At least two things happened as a result.

Systematic analysis of the evidence for the effectiveness of donor-supported anti-corruption interventions took off, and many starting questioning the theoretical assumptions behind these interventions. The results made grim reading. Evidence for the effectiveness of anti-corruption interventions was sparse, and major assumptions made on flimsy grounds. Although there was fairly strong and consistent evidence for the effectiveness of public financial management reforms in addressing corruption, evidence for the anti-corruption effects of budget support was both weak and contested. And there was fairly clear evidence that support to anti-corruption agencies was actually ineffective. Much theory-focused soul-searching ensued.

Development practitioners and scholars, frustrated with the mismatch between formal goals and the actual realities of development aid, began publicly calling for a more “grown-up” conversation about corruption and development. Anti-corruption could not solely be about technocratic approaches. The political character of corruption and its potential solutions were also important. Formal “zero-tolerance to corruption” policies of aid donors, while understandable and laudable, risked retrenching the anti-corruption agenda to being primarily about protecting donors’ own funds. In a value-for-money era, if aid donors were to focus mainly on their own internal integrity and anti-fraud systems, what could they achieve on anti-corruption in aid recipient countries?

POST-PANAMA PAPERS

Corruption then rose to near the top of the global policy agenda with the release of the Panama Papers in April and the UK Prime Minister’s Anti-Corruption Summit in London in May 2016. Government leaders in donor countries began saying corruption - far from being a development-policy-only issue - is a global challenge requiring coordinated responses in all jurisdictions.

Practices, policies and standards in one location in the global economy influence outcomes in others, especially for the poorest and most vulnerable members of our societies. Opportunities, for example, to invest corrupt wealth in London property offer an outlet for illicit financial flows from developing countries that harm efforts to improve tax receipts to pay for health and education. Addressing - and more importantly prosecuting - the corruption that undermines development is therefore not just a task for aid donors. Public prosecutors, the private sector, industry regulators, financial intelligence units, parliamentary committees, investigative journalists, sectoral ministries and central treasuries in individual countries all have roles to play.

Still, some aspects of the “anti-corruption for development” agenda lie largely under the control of aid-providing governments. The internal organization of donors’ development cooperation seems to matter for anti-corruption outcomes and there are calls for donors to begin taking a more proactive “corruption risk management” approach to programming. New evidence from anti-corruption research is awaited that may provide further guidance on how specific combinations of anti-corruption interventions can be used to good effect in various aid delivery contexts.

Donor countries’ foreign and economic policies must also be part of this agenda. Innovative anti-corruption practice in aid programming needs to be supported by policy coherence at home. Making a dent in corrupt practices is not necessarily about spending more money or instigating new aid programmes. It is also about how well the anti-corruption aims set for development assistance align with our other national priorities. This goes beyond “mainstreaming anti-corruption” in development assistance. Donor countries need to get their own houses in order and address those aspects of our property and commodity markets, financial institutions and foreign investments that facilitate corruption in developing countries.