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The answer to this query consists of two main sections. The first section lists over 10 short examples

• Demonstrating that the poor are very vulnerable to corruption and its impact
• Spelling out some of the specific negative effects that corruption can have on the lives of poor people.

Since the purpose of the exercise is to provide the enquirer with as many examples as possible to choose from, the examples are not sorted in any particular order but rather summarised in a standard format to allow the enquirer to group and use them as needed.

The second section (annex) lists some additional annotated papers and web resources that might be of further use.

Efforts have been made to draw on as diverse a range of sources as possible, which include not only TI but also CIET, World Bank, IMF, DFID, UNDP as well as national and other sources. Since the enquirer notes in the query that the purpose of the query is to use the answer to illustrate a forthcoming publication, we would like to draw attention to the fact that the enquirer would need to comply with the relevant copyright requirements of the various sources listed and acknowledge them, as and where needed. We hope that the information will be helpful and will be happy to provide any additional assistance as may be needed, including adjusting the examples to certain formats that might be more suitable for the use in your intended publication, should you provide us with more information on the publication and its needs.

Corruption and its impact on the poor: Examples

The impact of corruption on the poor and on poverty reduction processes has now been reasonably widely discussed. The effect of corruption on the poor can be gauged through both its direct impact (through, for example, increasing the cost of public services, lowering their quality and often all together restricting poor people's access to such essential services as water, health and education) and the indirect impact (through, for example, diverting public resources away from social sectors and the poor, and through limiting development, growth and poverty reduction). While this impacts negatively on most of the segments of the society, it is suggested that the poor are more vulnerable both in terms of being easy targets for being subjected to extortion, bribery, double-standards and intimidation as well as in terms of being hit by the negative and harsh consequences of corruption on country's overall development processes. So, in addition to the negative impact of corruption, there is also an element of disproportionality and inequality. The following short examples (drawing on research, studies and diagnostic tools) are set to demonstrate some of the negative and disproportionate impact of corruption on the poor.

Corruption affects income inequality and poverty
As well as affecting economic efficiency corruption can also have distributional consequences. This affects income inequality and poverty by reducing economic growth, the progressivity of the tax system, the level and effectiveness of social programs, and by perpetuating an unequal distribution of asset ownership and unequal access to education. These findings, based on various empirical analysis, hold for countries with varying growth experiences, at different stages of development, and using various indices of corruption (used to compare the correlation of corruption with real per capita GDP, Gini coefficient and quintile income shares, etc). In a cross-section of 37 countries, a significant impact of corruption on inequality was found, while taking into account various other exogenous variables. When controlling for GDP per head, this impact remains significant at a 10 % level. It was concluded that a deterioration in a country's corruption index of 2.5 points on a scale of 0 to 10 is associated with the same increase in the Gini coefficient as a reduction in average secondary schooling of 2.3 years. Researchers have also tested various instrumental variables to ascertain whether the relationship between corruption and inequality is not a case of reverse causality.

Source: Does Corruption Affect Income Inequality and Poverty? Sanjeev Gupta, Hamid Davoodi and Rosa Alonso-Terme, IMF working paper, 1998

Corruption is a core poverty issue as viewed by the poor themselves
Corruption emerges as a core poverty issue as a result of the participatory poverty assessments carried out within the framework of World Bank's Voices of the Poor initiative that brings together experiences of over 60,000 poor men and women around the world. Poor people engaged in the study reported hundreds of incidents of corruption as they attempt to seek health care, educate their children, claim social assistance, get paid, attempt to access justice or police protection, and seek to enter the marketplace.

Source: World Bank, Voices of the Poor Programme

Survey evidence indicates the lives of poor to be most affected by corruption Attitudes towards corruption and its impact vary substantially. Based on the results of the 2003 Global Corruption Barometer, corruption hits the poor hardest. Two out of five respondents on a low income believe that corruption has a very significant effect on their personal and family life. The same answer came from only one in four respondents on a high income. So, 41% of respondents on low income felt their lives were "very significantly" affected by corruption, as opposed to 27.5% of those on medium income and 25.4% of those on high income.

Source: Global Corruption Barometer 2003

Survey evidence indicates direct correlation between income levels and incidences of bribery encountered
The Kenya Urban Bribery Index results indicate that those with low-income are more vulnerable to corruption than those with higher income levels. Those on the lowest income reported a 74.4% incidence of bribery encountered and those on the highest income reported a 61.9% incidence. Similar comparisons exist for other social-economic categories, such as, for example, education and employment. The findings indicate that those likely to be poor (i.e. unemployed, those with low education, etc.) are more vulnerable to corruption than the better off socio-economic groups. Respondents with primary education and below encounter bribery in 75% of their interactions with public organisations, as compared to 67% for those with secondary school education and 63% for those with tertiary education. The unemployed encounter bribery the most (in 71% of their interactions), self- or family employees 68% of the time, the business and non-profit sector 61% of the time, and the public sector employees report encountering bribery in just over half (52%) of their interactions, significantly lower than all the other groups.

Source: Kenya Urban Bribery Index

Corruption affects the poor by diverting resources and holding back development
A report by the African Union, presented before a meeting in Addis Ababa in September 2002, estimated that corruption costs African economies in excess of 148bn dollars a year. This figure, which includes both direct and indirect costs of corruption, i.e. resources diverted by corrupt acts and resources withheld or deterred due to the existence of corruption, is thought to represent 25% of Africa's GDP and to increase the cost of goods by as much as 20% deterring investment and holding back development. Most of the cost, the report says, falls on the poor.

Source: BBC, 18/09/2002 (origin: African Union report)

Corruption impacts the poor through public service delivery
"Corruption is a crime against the poor above all", declared Claire Short in this UK Parliament's Select Committee on International Development Report. DFID conducted participatory poverty assessments in 23 developing countries. These consistently showed that corruption reduced the access of the poor to basic services. They provided evidence that unofficial payments were often needed for health, education and other services and that some people went without services as a result. They also demonstrated diversion of resources as essential medicines and supplies went missing. In many countries where the justice system was affected by bribery, the poor were unable to obtain the protection of the law and in some cases were threatened by those who should protect them.

Source: UK Parliament web resources, International Development Committee Publications, 2001 Report

Corruption affects poor's basic livelihoods
In Rajasthan, minimum wages, which were part of a drought relief programme organised by the state, were hardly ever paid due to mismanagement, corruption and the deliberate obstruction of access to information held by local officials responsible for the programme's administration. As a result, workers demanding payment of their minimum wages were repeatedly told that no evidence of their work existed, and that as a consequence they would not be eligible for payment. The money went instead into the pockets of bureaucrats who had been copying names from electoral rolls, including those of dead people, or receiving payment for material never supplied.

Source: The Right to Information: Facilitating People's Participation and State Accountability, Aruna Roy, Nikhil Dey, 10th IACC paper, 2001

Corruption can affect poor's political choices and participation
The custom of providing a service or favour in return for political loyalty is known as clientelismo in Mexico. This trade of services for votes is often the major way that the poor acquire land, housing, and local infrastructure - demonstrates a Mexican example. The communities of the poor are run by local leaders who act as brokers between the people and the major political parties. Some 80 percent of the respondents in the area of Mexico City stated that they engaged in clientelismo politico to get their houses and urban services (water, electricity, street paving, etc.). Yet, despite widespread participation in this system, it is generally resented. One man interviewed in Mexico City said, "I don't like politics, nor the ties that come with it... I think no one is interested; they do it to get something, to give something, the house to the children, such as myself. But they have to participate because in so doing they are able to obtain things." It is this clientelismo, and the deep distrust and disrespect for government which go with it, coupled with excessively low salaries, little opportunity for remunerative employment, and poor quality public services (health and education), that explain much of the cause of poverty in Mexico, as voiced by the poor of that country.

Source: State Institutions in Voices of the Poor: Can Anyone Hear Us? Deepa Narajan, Raj Patel et al, World Bank / Oxford University Press, 2000

Corruption affects poor's access to health services
An independent survey of the quality of maternity health services for the urban poor conducted by the NGO Public Affairs Centre found considerable damaging evidence of corruption in all the maternity hospitals run by the Bangalore City Corporation. These maternity hospitals represent the city's only decentralised set of health facilities that are accessed by relatively low-income women. The survey revealed that the poor pay huge amounts of extortionary money in their interactions with the public maternity hospitals. The average patient in a maternity ward run by the city corporation pays Rs 1,089 (approximately US $22) in bribes to receive adequate medical care. A further 61 per cent of the respondents were forced to pay for medicines, though public policy clearly mandates that they be given free of charge.

Source: Maternity Health Care for the Urban Poor in Bangalore: A Report Card, Sita Sekhar, Public Affairs Centre, June 2000. Find the survey at
http://www.pacindia.org

Corruption affects poor's access to health and support services
Corruption in health care services is common across many regions, and poor people with serious conditions have no choice but to comply in order to obtain the care they need. For example, in Macedonia, most of those interviewed stressed that 'nobody wants you to come with empty hands.' Ordinary services presuppose small gifts (coffee, candies, drink and similar items), but value goes up as the value of the requested services increases. In general, the opinion prevails that in Skopje hospitals a patient has to pay about 2000 to 3000 German marks for one operation. (Macedonia 1998).

Profound frustration with corruption and maltreatment is compounded by a sense of being voiceless and powerless to complain, since complaining may result in losing services altogether. In Pakistan, for example, a widow said, "If anybody complains or protests against this corruption, they are struck off the lists of all support services because it is the same Local Zakat Committee that recommends names for the assistance programs run by different Government departments". (Pakistan 1993).

Source: State Institutions in Voices of the Poor: Can Anyone Hear Us? Deepa Narajan, Raj Patel et al, World Bank / Oxford University Press, 2000

Corruption affects poor's access to education
Despite the pledge by the world's governments to make access to primary education universal and free, corruption and misuse of public resources remains one of the biggest barriers in achieving this fundamental human right. CIET International (Mexico based development NGO) has done social audits that highlighted petty corruption in primary education in Costa Rica, Nepal, Nicaragua, Pakistan and Uganda. According to the results, in Nicaragua, 86% reported they had to pay extra "contributions" to the teachers. One in ten children had to pay extra charges to teachers in exchange for an education in Uganda. Of the 47% of girls who managed to get into primary school in the Sindh province in Pakistan, nearly all reported unofficial demands for money ("for invisible things", as one girl said in a community discussion group around the social audit results in the province). The CIET social audits collected detailed information on school costs to households, which provided the basis for estimating levels of corruption and the specific target groups for those extra charges. As is often the case with petty corruption, it is not only those who can afford it who are asked to pay, but those who are thought to have no other options. The price tag put on the right to an education by petty corruption filters out those who need to access it most.

Source: CIET International media release, 1999

Survey evidence indicates corruption is a heavy burden on households
Series of surveys conducted in Bangladesh, India, Nepal, Pakistan and Sri Lanka among urban and rural households, sought to measure the incidence of corruption in public services deemed to be of particular importance to the poor: healthcare, education, power, land administration, taxation, police and the judiciary. The survey found that petty corruption was endemic in all sectors in all countries, with bribes imposing a heavy financial burden on South Asian households because of both the high frequency and the amounts paid. For example, in Pakistan, 92% of households using public education services reported the payment of bribes averaging 4,811 rupees (US$ 86) - compared to a gross national per capita income of only US$ 410 per annum.

Source: Transparency International, South Asia survey press release, 2002

Additional papers and web resources

State Institutions, in: Voices of the Poor: Can Anyone Hear Us? (Deepa Narajan, Raj Patel et al, World Bank/Oxford University Press, 2000)

This chapter discusses the effect of dysfunctional state institutions on the poor people through humiliation, exclusion and corruption. It includes case studies on, among others, access to health care and education, which contain real 'voices' of the poor on the effects of corruption on their lives.

Africa: Regional Overview of the Impact of Failures of Accountability on Poor People (Ahmed Mohiddin, Background Paper for the UN Human Development Report 2002. Read paper as pdf)

It is argued that good governance is an integral element in the creation of the enabling environment of peace, security, the rule of law, legitimacy and stability, in which sustainable human development can be promoted. This paper presents a regional overview of the impact of the failures of accountability of institutions of governance on poor people and disadvantaged groups.

Poverty and Corruption in South Africa: Government Corruption in Poverty Alleviation Programmes (Lala Camerer, in Costly Crimes: Commercial Crime and Corruption in South Africa, Monograph No 15, September 1997. Read paper as pdf)

Contrary to perceptions in some quarters that the effects of corruption are largely confined to the middle classes, the phenomenon - particularly in the public sector - has considerable impact on the poor. It is this aspect, which forms the subject of the study. The monograph, then, examines the way in which government corruption affects the poor. Because the topic spans such a vast area, only one field, social security, is examined in depth. That particular area is said to be chosen because: social security programmes, particularly pensions and other grants, are largely regarded as the state's primary attempt to alleviate poverty; social security programmes, particularly pensions, are known to have been hardly affected by fraud and corruption; and the problems surrounding the delivery of social security services to the poor characterise more general problems relating to the transformation and restructuring of government departments.

CIET, 1999: Corruption and System Leakage. Accountability Theme Sheets prepared for the 9th IACC, Durban.

These Accountability Sheets, which refer to the results of social audits conducted by CIET in a number of countries, cover examples of corruption and its effects on the poor in the police service, customs, health service, primary education, and the justice services.

Web pages and resources:

• In what way is corruption related to poverty? (part of U4 FAQ series)
  
  
• What impact does corruption have on poverty eradication? (part of U4 FAQ series)
  
  
• Corruption: consequences for the poor (part of U4 AC Training Course materials)
  
  
• Corruption, Poverty and Inequality (Stefanie Teggemann, World Bank topic page, last updated 2002)
  The page contains brief narrative analysis accompanied by recommended resources and readings on each sub-topic.