Addressing corruption in fragile states: what role for donors?

2. Implementation phase

The starting point – early victories and enforcements

In order to get positive momentum the entry point for a strategy must be carefully considered. Evidence from countries such as Nigeria point to the need to secure some significant and highly publicised early victories – the conviction of figures thought to be untouchable and the cleansing of rough institutions.

The focus and outcome of policies and programmes should be to make corruption a high-risk and low-reward activity. The probability that corrupt officials will be detected, investigated and prosecuted must be made credibly high. Only when corrupt elements calculate that the risks seriously outweigh the rewards will corruption be controlled.

Sending a signal to all the actors that it is not “business as usual” is what development partners have been asking for but seldom get. The debate as to whether one should proceed at all without clear evidence of a serious intention to fight corruption. It will be argued in this paper that the nature of engagement must reflect the levels of trust between the government and the development partners.

Bangladesh may serve as an example to the difficulties involved. It has been hard to get a clear indication that the authorities are serious about fighting corruption, so that the development partners have focused on thinking long term, being patient and so on. This can easily become a nice fluffy pillow that leads to the preservation of the status quo.

So even though we would emphasise the non-interference of donors we find the international community is so deeply involved in fragile states that it is not unreasonable to demand a serious attack by the government on well connected individuals and partisan institutions in order to ensure that those sacrificed are not only political opponents. To get to this point the international community must stand together, using all its diplomatic clout and not being afraid of linking these demands to promises of better relations and more development assistance. The standard reply by authorities in fragile states to counter such demands is the claim that they are too weak to do much. This is in most cases a false statement. If you ask ordinary people in the same countries they will tell you that the authorities are much more powerful than meets the eye. Key concessions to ask for are:
 

• When investigators and prosecutors literally fear for their own security as is the case in Palestine, the first step will be to secure key people and institutions.

• When this is secured the second step is see convictions or at least removals of key spoilers of anti-corruption reform in politics and in public administration

• Increasing dissemination of and access to critical government information, such as budgets, public expenditure and revenue.

• Increased transparency in major procurements, including the active and informed involvement of civil society as a watchdog.

• Increased transparency of political party and campaign finances.

• Decreased use of public resources for political campaigning.

• Public declaration of assets, particularly of elected officials and key political appointees.

The starting point seems to be clear. Countries urgently need a wake-up call in the form of some high profile prosecutions/convictions, and equally important is the dissemination of an information key to corrupt officials. Then development partners will have to support reform that can bring back confidence and hope in the population and belief the public service. Demand should ultimately and ideally come from within.

Build systems and national capabilities

Addressing corruption in difficult partnerships is indeed a multi-level game and donors must merge an immediate response with a long-term approach to building capacity and improving national systems. Caution is needed as the history of anti-corruption has shown that corrupt elites see no problem in managing a simultaneous process of reform and plunder.

Mozambique can serve as an example. The international community has moved on to the massive task of reforming the country’s civil service without pausing to see whether anyone is taking on political and grand corruption. Nigeria, on the other hand, serves as an example of the opposite situation. Here we find prosecutions and a positive growth in expectations and trust but little follow-up in terms of building systems and more sustainable reforms.

If analysis shows that there is room for administrative reform the questions are where to start and what matters most in preventing corruption? The short answer according to O’Donnell is that “it depends” – on where corruption is most pervasive, whether leadership exists to address it, whether priority should be given to types of corruption that more directly impact on security, economic or political objectives at hand, and so on. These will always be context-specific decisions.

• Often the biggest fraud, in monetary terms, lies in the area of public procurement.

• For the investment climate, corruption in the courts and legal system, undermining contract enforcement and property rights, is of particular concern.

• From the perspective of political legitimacy, the reputation and trustworthiness of the head of state matters as well as corruption in the agency most visible to the public – the police (especially traffic police).

• For building public trust, tackling corruption in the institutions where people interact with the state most closely and are at their most vulnerable is imperative to reform. Our prime concern is the health, education and justice sectors. 

• Corruption in border agencies (border police, customs, immigration) is often of concern to international security and trade specialists but it also undercuts public revenues.

• Citizens may not pay much attention to whether corruption is predictable or arbitrary, but this is tremendously important to firms.[1]

Where state institutions are weak, it is likely that donors will share the goal of strengthening them. However, attempting to carry out a large number of activities at once, thus spreading limited human, financial and institutional capital over a range of tasks simultaneously, will lead to failure. Consequently, a process of mapping out all the current activities, limiting the number of interventions, prioritising and making a logical sequence to take account of existing institutional capability, as well as mobilising additional capacity should be the starting point.

The World Bank task force on Low Income Countries Under Stress recognises that, given low capacity and other constraints, reforms must be chosen that meet the least resistance and that offer quick pay-offs to groups that are potential constituencies for further reform. Asset declaration by public officials is one such visible reform area. However experience show from Uganda and Albania that the effectiveness of such enforcement mechanism is hampered by lack of capacity. So no demands should be put on national systems that would be impossible to meet in the short term.

The World Bank Annual Review of Development Effectiveness 2006, chapter on Strengthening Public sector Accountability[2], notes that it is important to balance technocratic reforms with coalition building across a broad spectrum of affected interests. It is noted that “this may require incremental changes, identifying reform opportunities that are politically acceptable, and creating momentum. In Senegal for example, building political consensus and taking a gradual approach made the difference between successful and unsuccessful regulatory reform in different sectors.”

Partner governments should also be encouraged to undertake reforms to bring national systems up to assessment standards. This includes diagnostic reviews to identify weaknesses, and comprehensive action plans to strengthen capacity, embedded in national strategies. Donors and partners could form specialised joint cross-cutting groups, analogous to SWAps, to help design and implement action plans, and ensure they are reflected in donor assistance strategies. This would indicate to partners that reform may not always be threatening, but rather offer an opportunity.

Simultaneously with calls for concrete and visible action, the donors must start a parallel process of helping countries to build up effective, accountable financial management systems for raising and using public resources and improving fiscal planning. Without such systems in place it will be impossible to repair the fractured relationship between state and society and to track eventual progress.

Build public trust

The last two points underscore an issue often neglected in the haste to do something in chaotic fragile states, namely, that of building trust in society. Interpersonal trust and trust in government institutions are key determinants for reducing corruption in fragile states. People who have faith in others and encounter a functioning civil service are more likely to endorse strong standards for ethical behaviour. The logic is that if public officials are corrupt, people will assume that others are as well. In order to function in such a society citizens engage in corrupt acts even though they think that they are morally wrong. Transitional countries are particularly hard hit as state capacity breaks down and some groups visibly experience rapid social mobility, signalling that the only way to prosper is to engage in corruption.

The ethics of public officials and the design of political institutions are central as they signal what kind of “game” is being played in society. Corruption in the health, education and justice sectors is most important as these are the arenas where citizens most often interact with the state, and it is here that they are most vulnerable. A significant problem with low interpersonal trust is that it is so hard to change.

When reforms are undertaken and early results come in it is imperative that donors help to publicise even small successes in order to demonstrate that reform is actually possible, and in that way to start building trust.  In fact having an effective communications strategy is of great importance. The draft World Bank Anti-Corruption strategy recommendation is equally relevant for other parties:

“The communications plan must provide for consistent messages to be conveyed to all relevant stakeholders: government officials in the implementing agency; contractors, suppliers, and consultants who may be involved in bidding on the project; members of civil society affected by the project; and (as appropriate) the local press. The role of the media may be especially important if the plan includes the use of publicity—both positive and negative stories—as a tool for reducing the level of fraud and corruption in Bank projects. The objective would be to highlight both noteworthy achievements in quality, cost-effectiveness, and sustainability, as well as any incidents of alleged collusion, fraud, or corruption. Further, feedback from each of the groups noted above will enhance the positive impact of these communications.”[3]

Where possible, align support with local policies and systems

In fragile states, donors find either little to align to, or multiple policy frameworks with unclear and highly politicised interrelationships. Donors must make sensible choices about which framework to align to, or help authorities to reconcile these different policies.

It often seems as though the international community is less concerned with a lack of willingness to fight corruption than with a lack of capacity for implementing reform. Donors have tools for dealing with this low capacity and are always willing to provide capacity themselves. Where political will or capacity is lacking, the standard reaction is to move to state-avoiding activities which place little emphasis on policy and systems alignment. This often results in the setting up of parallel institutions, which jeopardises the long-term development of indigenous state institutions. Donors bent on achieving quick successes have bypassed the budget process, parliament and local government institutions and have circumvented the state in order to deliver services, build highways, construct schools, and so on.

In post-war and disaster situations a reliance on non-state actors is needed in the initial phase, but we find that even in more functional systems donors are over and over tempted to go around even semi-functional national systems and award performance based contracts to firms and NGOs. One extreme example of this is Mozambique, where donors once let an international company take over the running of the customs administration. In Bosnia, too, we find that the reform of the customs administration has been extremely donor driven. Questions can be raised about the sustainability of these efforts.

The 2006 World Bank Annual Review of Development Effectiveness[4] has again underscored this point “Development interventions are more likely to generate sustainable results when the local beneficiaries have authority and responsibility for financing and operating them. In the education sector, for example, empowering communities to manage education funds has increased parental involvement in schools and brought improvements in facilities and teacher attendance, although there is little evidence yet that it has improved educational quality.”

While some emergency situations may force development partners into taking overall responsibility, they, together with the international NGOs providing relief, must not stand in the way of fostering country ownership by taking over the whole supply chain of development. The same concern should be raised over the development partners’ focus on harmonisation and direct budget support. Although welcome in efficiency and effectiveness terms, donor harmonisation appears to have concentrated the overall power and influence of donors at a country level, thereby crowding out other stakeholders, including CSOs.

Another more practical concern is an insistence by some donors on having their “flag” waving over every bridge, road, hospital and school they support. In order to facilitate a development process leading to increased public trust, it is the government’s efforts that should be highlighted. Budget support is positive in theory because it is supposed to force donors to be hands off. In effect, people need to see a functioning national state that takes care of their needs in a non-discriminatory way. Basic, yes, but in many fragile states donors have taken over responsibility for the running of the state.

The agreed aim under the current aid regime is for partner countries to assert ownership through a clear, results-based medium-term agenda, and for aid to be completely aligned to this agenda at the country level. The hope is that this will happen by having partner governments set priorities in national development frameworks such as Poverty Reduction Strategies (PRSs) and in some cases through Direct Budget Support.[5]

These processes are meant to be broad and inclusive but have ended up being oriented to donors/national elites, and in most cases they do not have a strategy for engaging or building public trust. The Joint Evaluation of budget support has pointed out that in the interests of downward accountability one could establish tripartite forums between government, donors and CSOs to share information and discuss the aid relationship (underlying principles, funding levels and allocations, disbursement triggers and conditions, and so on) [6]. We would add that for this to be effective efforts must be made to involve the population, for example on local committees which decide how resources should be distributed.

Donors must not become obsessed with making sure that all the most critical issues of the moment are included in planning in order to get national systems up to a certain level. It is more important to give careful consideration to how and by whom the contributions are designed and planned, and to assess whether there is true ownership in place. The critical point is to find commitments and the right incentives for change in the pillars of the state, especially the executive and judicial institutional pillars.

This PRS alignment model relies on the existence not just of comprehensive technical capacity, but also of a clear national development ‘vision’ advanced consistently by political actors who have internal legitimacy and external credibility. Such circumstances do not exist in many fragile states, or even in a few more stable contexts where national priorities are not yet visibly and coherently focused on development. In these cases, donors must develop unified planning frameworks like those we have seen in Sudan, Liberia, East Timor and Haiti. Joint efforts should converge on identifying a vision and strategy which, over a reasonable transition period, foster national systems that can take the lead in the planning and implementation of policies in a transparent and effective manner.

Support islands of integrity

In most fragile states, it will not suffice to follow the standard donor recipe of building an effective public sector with a meritocratic, adequately paid civil service, participative budgeting, transparency and competition in public procurement (e-procurement, for example), transparent fiscal reporting and so on.

Where no government strategies exist and where there is little interest in developing any, much less implementing what is agreed upon or signed up to, international actors should consult a range of national stakeholders and seek opportunities for intervention both within and outside the regime.

Surprisingly, the greatest neglect is of the former, where many reform-minded individuals are located. Practitioner experience shows that there will always be groups within the public sector, the governing party, different sectors and institutions, who can 'champion' anti-corruption or pro-accountability reform.

Where commitment is weak, there is at least the possibility of dialogue, even though implementation may be sluggish. Analysts often conclude that there is “no political will” for reform, but when such elements exist international actors have an important job in raising the standing of such champions by making sure that they command important resources. They must also be protected from arbitrary termination, relocations and so on.

Another concern is that donors often fail to identify sectors or institutions capable of being reformed in an environment otherwise characterised by pervasive corruption. One example is the education sector in Kenya, which has been left untouched by most donors even though the leadership is committed and the Ministry has many times over been able to prove that it is performing well. Rather than disengaging, increasing efforts to support these “islands of integrity” might lead other sectors and institutions to see the benefits of improving performance. Rather than allowing a hostile governance environment to lead to passivity, international actors should take action in a coordinated manner.

Some pessimists would argue, however, that if one supports an island of integrity in a sea of corruption it is only a matter of time before the rot spreads to all the sectors and levels within the system.

Organise stakeholders and losers

In countries with very little political will or capacity, an effective anti-corruption approach could emphasise the importance of horizontal accountability – of supporting autonomous accountability – to promote outside actors committed to AC reform. Experience in countries such as Uganda suggests that initiatives emanating from constitutional bodies, civil society and the media are likely to make more impact than largely executive-driven approaches.

Finding the appropriate balance between state and non-state capacity development is very difficult. The answer will to some extent depend on what the partners want to achieve. Support given only to non-state actors sends a strong signal that trust has broken down and that the donors would like to see change.  However, it might be premature and potentially destabilising to channel support only to civil society in countries where central government is weak and there is no state monopoly of power.

There has been a tendency among smaller bilateral donors to avoid politics and considerations of power in society. Even so, consideration should be given to the fact that all efforts to reduce high-level corruption are political. According to one influential report, “Local elites cannot be evaded or wished away… we know from decades of painful experience that benign neglect, indulgence, or isolation seldom loosens these groups’ hold on power.”[7]

If the goal is to facilitate change, the most effective tool is to organise the losers into a system against status groups and predatory elites. This would be an alliance not only of civil society but of all who stand to lose – churches, unions, the media and excluded sections of the private sector. At least one political party should be included. This would open a way into formal politics, and at the same time provide incentives for other parties to compete in proving that they are just as “clean”. It should be noted that if democrats and civil society fail to embrace the cause, then non-democrats, right-wing populists and Islamists will do so.

Ideally, the norms and standards this coalition stands for should be developed into a full political programme with elements such as the disclosure of wealth and funding by political parties, politicians, civil servants and magistrates. This would then set the agenda for the election campaign and provide a basis for the monitoring and exposure of the current government by other elements of the alliance. These strategies are most effective when states are under political and economic stress.

While building such a coalition is a standard prescription for regime change, it is not as straightforward as it is often thought to be. In the context of failed states, the problems of collective action are magnified: it is difficult to find local groups that will have the resources to exercise leadership in mobilising and managing a coalition. In many instances, the coalitions disband if no results are seen or as soon as donor funds dry up. Nevertheless, some donor groups are learning from these experiences and are experimenting with ways of providing seed money for coalition-building that can be converted into sustainable support.

Democratic revolutions should therefore not be encouraged without proper analysis. There is a danger that the glue that holds coalitions together [opposition to the regime] is not strong enough once the spoils of victory is to be divided and normal politics is to assume. Another problem often associated with broad movement are that they risk being transformed into vehicles of personal enrichment for leaders and cadres as we have seen with the ANC in South Africa. To date, anti-corruption popular revolutions have not seemed able to lead to lasting progress as they pre-empt political contention and weaken or co-opt civil society, leading to “thin revolutions” that cannot be sustained. 

Support civil society

Where political will is in question, donors support civil society to facilitate change at some time in the future. Much can be gained, however, from considering how civil society can be more practically integrated into supporting ongoing reforms in the public sector. An example would be linking civil society to oversight of the implementation of decentralisation processes or the reform of the health sector at a local level. The forthcoming DAC Policy Paper on Anti-Corruption (2006) highlights several examples that showcase the need to be flexible and adjust support to local circumstances. One such organisation is the Partnership for Transparency Fund (PTF)[8], an international NGO dedicated to helping civil society play an effective role in the design, implementation and monitoring of national anti-corruption programmes.[9]

Examples of activities supported by PTF include:

• supporting Argentina’s Center for the Implementation of Public Policies Promoting Equity and Growth (CIPEC) to work with six ministries in implementing the country’s Freedom of Information Act;
  
  
• supporting a pilot project in Costa Rica to map forest resources in an ecologically sensitive area and to use the map to develop an anti-forest corruption plan;
  
  
• assisting Transparency in India to work with the Delhi state government to establish and make effective Citizens’ Charters (brief public documents that provide the essential information that citizens need to know about the services or functions of a public agency), overseen by independent Ombudsmen;
  
  
• assisting Pakistan’s NEDIANS, an association of professional engineers, in working with the Karachi Water Supply and Sewerage Board to establish an Integrity Pact for the public tendering and implementation of a $100 million water supply expansion scheme, leading to estimated savings on the engineering contract of $2 million;
  
  
• supporting a media campaign in Nicaragua to reduce the highly excessive pensions and perks of retired presidents and top officials, leading to the introduction of new legislation;
  
  
• supporting Government Watch (G-Watch) of the Philippines Ateneo School of Government to monitor the Department of Education’s delivery of textbooks to schools, including a partnership involving 15,000 Boy Scouts and Girl Scouts and partnering with Coca Cola Company to assist in the delivery of textbooks to schools; and
  
  
• funding of a pilot project in Tanzania’s Mwanza Region to track local government expenditure on education and health services.

Other relevant initiatives are support for access to information, local participation and community empowerment, oversight by parent-teacher associations and user groups, and citizen involvement in the budget cycle at national and local levels, supported by public expenditure tracking systems. The Uganda Debt Network can serve as an example to an NGO that has done very good work in this area. Another would be the local chapter of TI in Kenya.

Another non-expensive strategy is to support religious communities. Such organisations and institutions do receive much less money than official development projects, but they are generally less short-sighted. In ex-Zaire, for example, Catholic missions were a kind of passive observer, sharing the fate of the poor, and did start to play an important role when official development aid was withdrawn and state institutions collapsed.

Many self-help structures in dissolving (failed) states are basic cells of integrity in a corrupt environment, and IFIs and development agencies should consider these structures as vehicles for changing attitudes. To this end, official development agencies need more freedom to conclude project agreements with non-governmental institutions. But leadership must come from civil society itself or government. There is a danger of the donors getting too far ahead.

However, the greatest care must be taken not to support NGOs set up solely to attract donor funding. In Palestine, hundreds of NGOs were set up in 2006, after the Hamas election victory, by Fatha supporters who could no longer access government funds.

Another powerbroker in many societies, often left out of plans to improve integrity, is the national and international business community. In a country such as Bangladesh, the challenge for the smaller donors is to identify the niches where their limited support can have an impact and to work in ways that will create private sector support and pressure for public sector financial management reform.  Procurement is an obvious area, as the private sector wants a level playing field with streamlined regulations and the breaking-up of monopolies. On the international front, there is significant support for transparency in the extractive industries.

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