Fixing aid: we can’t turn off the tap at the first sign of corruption

Now chaps, do as I say, not as I do. DFID

Over the past 15 years, those working in aid have changed the way they talk about corruption. Detecting and measuring corruption when money is sent overseas has become a hot topic since the United Nations brought in rules on the issue in 2005. But for all the talk, less progress has been made than might have been hoped. A recent report from the Independent Commission for Aid Impact took aim at the Department for International Development in particular. Reports like these, however, do little to help the situation, in this instance largely because ICAI got the facts wrong.

Research makes it clear that where anti-corruption projects have been devised and funded, there’s little direct evidence of any return on investment. The message seems to be that you can’t fight corruption by fighting corruption.

Development agencies already face great difficulties as they try to deliver measurable results in some of the most conflict-ridden and chaotic regions of the world. The global economic crisis has put unprecedented pressure on governments to justify the money they spend on aid to their own electorates and, at the same time, to be sure that their aid money is not supporting corruption and bad governance.

In some countries such as Bangladesh, Haiti and Liberia, corruption is thought to cost at least half of each country’s GDP per person. Even in countries such as Iraq, Kenya and Egypt, where the cost is thought to be much lower, it has a significant effect on trust in government and society.

Necessary evil

To begin to tackle this problem, some aid money needs to be spent on anti-corruption work in countries where corruption is prevalent. Taxpayers need to understand why this matters, even in countries so distant from their own that it’s hard to imagine what possible domestic impact it could have if their government simply cut aid funding.

We need to be honest with the public. We need to say that aid is risky. It just is. Research I’m doing with colleagues at UCL and Birmingham, some of which will published soon by the OECD, suggests that as long as we are also able to tell success stories about how we fight corruption, those who support aid will continue to support it.

We need a better Plan B when we come head-to-head with corruption that is damaging an aid project. At the moment, the only two tools in the box seem to be either to shut down a country’s entire aid programme or to keep quiet about corruption and carry on funding it. Both have a negative impact on the poor in countries where aid is delivered.

Political and administrative pressure to spend budgets needs to end. If action is to be taken in the field against corruption – where aid workers are best placed to detect it and raise the alarm – it should be made absolutely clear that no individual, country office or development agency will suffer for doing so.

It should be possible to protect aid funds by not spending them, instead of knowing that the response to any underspend will be a cut in next year’s budget. This is a political problem, and it needs a political solution.

Meanwhile, other parts of the government turn a blind eye to offshore banking, offer lukewarm support to anti-bribery legislation and welcome corrupt money into property and retail markets with few questions asked. What kinds of mixed messages are our government sending when we say we’re “open for business” but don’t question where the money actually comes from? How does that affect DFID’s credibility in speaking out against corruption overseas?

Being more realistic

But even taking all of this into account, aid agencies, workers and funders simply haven’t worked hard enough to help the wider public to develop a less simplistic, black-and-white understanding of what corruption is.

In a country where public officials such as police, teachers, health workers and administrators whose work underpins a stable society can’t rely on their government to pay them on time, the thing we call corruption may be the only thing that stands between their families and destitution. “Petty” corruption - ostensibly the focus of the ICAI report - often isn’t about the rich stealing from the poor, but about the poor using what little power they have to gain something from those who are even worse off.

We should be supporting these countries in setting up governance systems that demand accountability and integrity from officials and politicians. If we help build the systems that support good, efficient service delivery we help reduce the market for corruption. The ICAI report says that DFID is already doing this rather well.

When we are delivering aid in some of the world’s most chaotic places, we need to be realistic. Will we demand the same standards of financial probity that public spending faces at home, or will we look at the context and ask ourselves what we can reasonably expect? After all, British businesses can fuel corruption in developing countries too, but the headlines rarely reflect this. DFID can do everything it can to protect its own funds, but it can’t eliminate corruption that cuts across entire countries. No one aid agency can.

We may all have to accept from time to time that even though corruption can be bad for development, there may be a political logic to it. We have to make an effort to understand that logic, and focus on how DFID and other agencies can better support domestically-driven reforms. These may not always scream out “anti-corruption”, because fighting corruption is a dangerous business. They may tackle issues donors don’t see as priorities, but a growing body of evidence suggests these are the reforms most likely to succeed.

We know that knee-jerk window-dressing projects, like setting up anti-corruption agencies, rarely work when imposed from outside, though they make good headlines. But if organisations like the ICAI continue to bash aid agencies without really understanding these challenges, we’ll only get more of the same.