Tuesday, August 16, 2011

Tackling corruption is necessary for achieving aid effectiveness

By Emmanuel K. Dogbevi

For most developing countries, international development assistance (IDA) or aid is a very important component of national budgets without which a lot of development projects in health, education, water and sanitation, security, infrastructure development and transportation could not be achieved. Ghana for instance received as much as $1.2 billion in grants in 2009.

However, corruption remains one of the biggest means of revenue and income loss to developing countries.

While it is not easy to define corruption in one specific term, its different manifestations lead to loss of much needed money that otherwise could have gone to use in the public good or welfare of the majority. Corruption is an effective means of siphoning public funds into private pockets of individuals and companies.

A study by the World Bank says nearly $1 trillion is lost to corruption around the world every year.

The World Bank also says billions of dollars are lost through corruption in developing countries each year.

And for a continent like Africa that has an infrastructure financing gap of $35 billion per year, tackling corruption must be a priority. Ghana for instance requires $1.6 billion annually for its infrastructure development.

According to the World Bank, although the exact magnitude of the proceeds of corruption circulating in the global economy is impossible to ascertain, estimates demonstrate the severity and scale of the problem.

“An estimated $20 to $40 billion is lost to developing countries each year through corruption”, the Bank said in a report titled “Barriers to Asset Recovery” which was released Tuesday, June 21, 2011.

According to the U4 Anti-Corruption Resource Centre, 2007, 25% of the GDP of African states is lost to corruption. It adds that the amount lost to corruption each year totals $148 billion. And this amount it says covers the full range of corruption, from petty bribes to inflated public procurement contracts.

The World Bank, Star Report of 2007 also indicates that proceeds of corruption in bribes received by public officials from developing and transition countries are estimated to be between $20 billion to $40 billion per year, and this figure is equivalent to 20% to 40% of Official Development Assistance (ODA).

The devastating effects of corruption can be felt in poor quality of services in health, roads and education.

A Transparency International Global Corruption Report of 2006 estimates that 50% of health funds is lost to corruption. The report says this is the estimated percentage of allocated funds that do not reach health facilities in Ghana.

A UNDP report titled Accelerating Human Development in Asia and the Pacific released in 2008 says corruption accelerates the depletion of natural resources, notably primary forests and inshore fishing grounds, which many communities rely on for their livelihoods.

And citing an example, the report says the government of Indonesia has estimated that lost forest revenue costs the nation up to $4 billion a year or around five times the annual budget for the Indonesian department of health.

Corruption is also a major setback to achieving the Millennium Development Goals in many developing countries.

According to a Transparency International Report released in 2008, corruption raises the cost of connecting a household to a water network by as much as 30%, inflating the cost of achieving the MDG on water and sanitation by more than $48 billion or nearly half of annual global aid outlays.

It has been found that Ghana had met only 45% of the commitments it had pledged to improving water and sanitation in Washington DC in 2010 where the government pledged to invest $200 million a year in providing water and sanitation, which means that the country is still not going to meet its MDG target.

Corruption is a major hindrance to aid effectiveness and therefore, should be one of the issues that the 4th High Level Forum on Aid Effectiveness (HLF-4) in Busan, South Korea gives considerable attention to.

The principles of the Paris Declaration which stipulates Ownership, Alignment, Harmonisation, Results and Mutual Accountability can be effectively implemented if corruption is put on the radar.

The ideals of the Paris Declaration that it is now the norm for aid recipients to forge their own national development strategies with their parliaments and electorates (ownership); for donors to support these strategies (alignment) and work to streamline their efforts in-country (harmonisation); for development policies to be directed to achieving clear goals and for progress towards these goals to be monitored (results); and for donors and recipients alike to be jointly responsible for achieving these goals (mutual accountability) can effectively be reached if corruption is tackled.

In the same vein, the Accra Agenda for Action or AAA should also be pursued with zero-tolerance for corruption.

The AAA which takes stock of progress and sets the agenda for accelerated advancement towards the Paris targets, proposes the following three main areas for improvement:

Ownership – that countries have more say over their development processes through wider participation in development policy formulation, stronger leadership on aid co-ordination and more use of country systems for aid delivery.

Inclusive partnerships – which requires that all partners – including donors in the OECD Development Assistance Committee and developing countries, as well as other donors, foundations and civil society – participate fully.

Delivering results – that aid is focused on real and measurable impact on development.

With the counter-productive and development-eroding effects of corruption, the hard work of dedicated civil servants, citizens, honest governments and civil society in developing countries won’t amount to the money’s worth of donor countries and agencies, and development targets can’t be attained no matter how much aid money is given to developing countries if the canker of corruption is not tackled headlong.

The development of country systems and capacity development must factor the fashioning of anti-corruption mechanisms to keep an eye on the efficient and effective use of aid.

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