Archive for the ‘Governance’ Category

Of corruption, aid and respect

Update 02/12/14: news link fixed

Grand corruption is one of the stories of the year across East Africa, with several countries enduring major scandals. I am with many others who assert that corruption is not necessarily the most important development issue to address. (China seems to have got impressively rich incredibly quickly despite being also pretty corrupt.) And even were you to want to address corruption as an economic development rather than justice/rule-of-law issue I think that endemic petty corruption is probably a bigger barrier to development than political grand corruption. Finally, donor threats to punish especially egregious scandals by withholding funds always come with the inevitable downside that the poorest get punished twice whilst having only the slightest impact on the guilty politicians.

But then you have stories like this, and I am reminded of how useless many developing countries are at investigating their own elites when it really isn’t that difficult. Duh! Of course they are, I mean this is political science 101, right? But here’s the jarring juxtaposition; the same political elites want us to simultaneously accept the following:

  1. Their countries are poor and need the help of a few $bn of Western taxpayers’ money.
  2. That corruption in their countries is hardly as bad as others make it out to be*, and anyway their law enforcement agencies lack the capacity to finger and then prosecute such few officials who may be guilty of sticking their hands in the cookie jar.
  3. Western donors are too bossy and guilty of neo-colonialism in their interference in supposedly internal affairs.

I don’t think Western donors do themselves any favours with their regular finger wagging, but honestly, do the corrupt local elites really expect the donors to show them the respect they so clearly feel they deserve when they carry on like that? It’s just cause and effect. Respect is earned.

* Ever heard the one about the smoke without a fire?

Advertisements

The joy and terror of total dysfunctionality

You have to marvel at the chutzpah of some government officials around here. Each day they commute into work only to spend most of their day seemingly reading the newspaper or out to lunch. Not such a bad gig if you can get it, even if the pay isn’t great! You can always top it up by demanding ‘express service fees’ to stamp the forms you’re supposed to stamp any way.

Except that presumably there must be a terrible nagging fear that, like a criminal trying to cover up his misdeeds, you will be eventually found out. Pity, then, the staff of the Ugandan National Seed Certification Service whom a World Bank evaluation adjudged to have a few shortcomings:

“The reality is that NSCS staff know that if the institution was granted autonomy, they would all be sacked.”

Ouch! But they need not worry too much, for, from my experience, should the donors ever prevail in persuading the Ugandan government to accept the prescription that the NSCS should be transformed into an independent body, the donors would feel morally obliged to support the newly autonomous parastatal by giving it a whole load a of (paid for) work even though they know its staff have not the necessary wherewithal.

Hat tip: to the marvellous new (and not the least bit boring!) Campaign for Boring Development. I just wish he would post a little less often, as I struggle to keep up.

Corruption myth flipped but still lands butter side down

“Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this ‘evil phenomenon’ is ‘most destructive’ in the global South, where it is a ‘key element in economic underperformance and a major obstacle to poverty alleviation and development’.

There’s only one problem with this theory: It’s just not true.”

So says Jason Hickel. He explains:

“According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. That’s a lot of money. But it’s an extremely small proportion – only about 3 percent – of the total illicit flows that leak out of public coffers. On the other hand, multinational companies steal more than $900bn from developing countries each year through tax evasion and other illicit practices.”

It is a good point, but here’s the thing: it’s not necessarily the amount of money stolen that matters. Since most of this money is stolen from government coffers this only materially harms a citizen of that country if the government would otherwise have spent the money on services to them. Round here, however, most people are pretty cynical; the government mostly spends money on itself (legalised corruption if you like) and is often pretty useless at actually delivering useful services.

But, as anyone who has spent significant time in the least developed countries will tell you, the bigger problem is the all pervasive, endemic petty corruption. I would wager that economic underperformance happens not so much because some official stole some money from the government, but because someone could not register their business without paying a bribe that they cannot afford; others die or are maimed in road accidents because the police accept small bribes on a daily basis to look the other way; the list goes on … I have no figures to back up this assertion, so could be wrong, and obviously some thievery does have direct economic consequences if it means a new road or power plant is not completed. On the other hand how many business investment opportunities are foregone with investors are put off by their inability to enforce basic contracts due to a justice system that is always on sale to the highest bidder?

Dr Hickel’s moral outrage is well directed. The scale of tax evasion by multinationals is truly disgusting. But it does not detract from the importance of developing country governments putting their own houses in order, and it would be a shame if the crusade against international tax evasion served as a fig leaf for inaction domestically. Alas I doubt a UN Convention will help much with that; real reform will only come when the citizens of these countries demand accountability for themselves.

Tree grab or land grab?

A bunch of smallish NGOs has released a report criticising REDD as apparently incompatible with human rights. Some of these guys have previous form on just about any conservation programme that engages with markets. They have some nice principled arguments, but in the here and now they are so far away from a workable, affordable solution, that they’re just not helpful.

That said I have plenty of sympathy for the people subjected to rights violations mentioned here. I guess you could lay the blame on REDD for motivating at least some of these land grabs, but here’s my concern: are they not fundamentally illegal any way? (Yes, governments will deploy various quasi-legal arguments in their support, but in many cases these are weak, and courts with more than a modicum of independence may well find against them.) Stopping REDD will not stop other land grabs, e.g. for logging, agriculture or mining.

Blaming REDD is a bit like blaming world food markets for agricultural expansion, and betrays the fundamentally anti-markets stance of these critics. Better, I think, to tackle the underlying governance failings that lead to such abuses than to confuse the issue with an attack on REDD, which otherwise can deliver a lot of good to the world. I had the same thought a few years ago when biofuel production briefly menaced this part of Africa: no need for a dedicated biofuels policy if you implement your own land laws properly.

Aid as democracy enabler?

Whilst on the subject of disagreeing with Angus Deaton*, I re-read Chris Blattman’s commentary recently. Blattman made an interesting point about aid supporting the emergence of democracy in post-conflict situations such as Uganda and Liberia where Blattman has worked. The basic sense of his argument, that aid money helped those countries get back on their feet having chosen a proto-democratic path, seems clear enough. Clearly the link is not automatic: recent events in South Sudan show that just having lots of aid money around does not ensure a steady upward path, but I am more than happy to buy the basic idea, that, other things being equal, aid would help and potentially help quite a lot with the transition.

This line of reasoning can easily be extended. Just as the presence, even if largely wasted, of a big aid programme can provide cover for small local NGOs to do good things (I’ve seen cases of this), so maybe the promise of aid money can provide some cover to would be democratizers. I.e. at the margin, the presence of Western donors with deep pockets might plausibly increase the attractiveness of democracy to poor country elites (obviously the same cannot be said of the Chinese). Probably impossible to prove, but it is one of those enticing thoughts that you can see politicians grabbing on to.**

On the negative side of the ledger, the incentive value of lots of aid money would be paradoxically lower when accompanied by strong anti-corruption measures. But on the positive side such an incentive could be seen as the first step on a whole ladder of rising levels of cash support for good behaviour such as I’ve mused about before. It’s never going to happen, of course, and even in the case of democracy, I am sure all parties would deny the cash offer was anything as grubby as a bribe. But if Deaton is concerned with the theoretical undermining of the social contract caused by aid, then this is a nice theoretical riposte.

Next week, back to the messy real world in which bribes are paid all the time, even if they’re not called bribes …

* On the subject of international development aid. He can keep his intellectual authority status on other bits of development economics.

** I guess the Neo-Cons under Bush did exactly that!

Messy reality beats philosophy

Catching up on my listening as well as my reading included enjoying the Xmas time edition of Development Drums that was an interview with Angus Deaton in the wake of his recent book the Great Escape that, amongst other things, severely criticises international development aid. I would recommend a listen to the whole thing*, but here is a grossly simplified summary of the key exchanges (which start from about 40mins in):-

Deaton: Aid should be spent for the benefit of poor people, but not in poor countries, as, in the long run at least, aid spent there will always undermine the social contract (we elect you and pay our taxes, we expect half-decent leadership in return).

Barder: What about Anti-RetroViral drugs (ARVs) used to fight AIDS? Surely that is a massive improvement to millions of poor peoples’ wellbeing that was achieved through aid?

Deaton: Well, yes, so I would allow that kind of an exception, but I would announce that this programme of support will expire in ten years time,  allowing time for the people to force their government into funding it instead.

Oh dear! Two very obvious problems with this solution:

  1. It won’t work. Aid dependency is far too entrenched. The donors would be blamed not the local political leaders. That might fit with Deaton’s philosophical argument, but isn’t much use in the real world.
  2. Why 10 years? Why not add on another 10 and make it 20 years? I’ve got a few more exceptions I can think of … Where, in other words, do you draw the line when back on the slippery slope? You will always find someone with a well marshalled argument to draw the line that little bit lower.

Surprisingly Barder never explicitly tests Deaton on those two points, but he does tie him in a few knots with other thoughtful probing, before Deaton remembers that a big part of the ARVs success story was achieved by lobbying (especially by the Clinton Foundation and their army of bright, young things) in rich countries to get Big Pharma to reduce their prices, i.e. it satisfies his requirement about where aid money should be spent. That wouldn’t, however, entirely get him off the hook, as I suspect many of those reduced cost ARVs are still being paid for with donor money.

All of which is a bit of a shame, because apart from that Deaton makes a number of very good points, and much of his criticism of international aid is valid and insightful. But, as many academics are wont to do, by keeping his argument (in this case) strongly rooted in philosophical (some might say ideological) foundations, he fails to grapple with the messy politics and complexity of the real world. Also ironic, as, according to Owen Barder, Deaton is known for careful treatment of data.

* And British listeners can enjoy a nice little audio pun at the end!

Anti-corruption efforts: perfecting the art of isomorphic mimicry

UNDP has launched a portal on Anti-Corruption for Development. (To distinguish it from anti-corruption efforts that are anti-developmental??) It includes an anti-corruption poster for REDD programmes that, I am sure, is guaranteed to reduce rent-seeking and improper uses of funds.

Anti-corruption commissions and their ilk seem to me to be one of the worst uses of aid money out there. Because they almost never deal with the politics they only ever address a few low level symptoms (disposable scapegoats) and abysmally fail to tackle causes. And yet they are legion, and probably persist now quite happily without donor money, both for the sinecures they provide, and because, from time to time, they may be politically useful to chastise the opposition. Are anti-corruption commissions therefore the pinnacle of isomorphic mimicry? I think it could be so.

How about a Cash on Delivery solution? $10,000 for every successful prosecution (where the accused have had a fair chance to defend themselves), rising to $100,000 and $1million for more senior officials. Make the bounties high enough and in themselves they may even start to provide an incentive against corruption, because even if the current government are not inclined to follow through, the next one might be …

%d bloggers like this: