Thursday, 6 November 2014

Aid watchdog report on petty corruption should not panic DFID into making [wrong] policy decision

The latest report from the Independent Commission for Aid Impact (ICAI) threatens to push British aid policy in the wrong direction.

Published last week, DFID’s Approach to Anti-Corruption and its impact on the Poor received a lot of media coverage, and, like, most public discussions in Europe on bribery and corruption in developing countries, the debate has been at times sanctimonious, alarmist and opinionated – and mostly devoid of evidence. The Sun newspaper published a brief piece suggesting that British aid is actively encouraging gangs of criminals to prey on poor people!

Readers should note at this point that the report was not investigating the possibility of corrupt use of British aid (this was the subject of an earlier ICAI earlier report - PDF), although this is not evident from some of the coverage. 

While ICAI cannot be entirely responsible for this media reaction, it did over-simplify the story and the background evidence; and exceeded its own terms of reference by making a strong policy case rather than carefully assessing alternatives. It looks like an effort to push British aid policy down one particular, narrow ‘anti-corruption’ track without a proper appraisal of the evidence.

The report only makes cursory mention of efforts being made to tackle corruption at the global level

Perhaps somewhat disingenuously, the report only gives a cursory nod to DFID’s – and the UK government more generally – current and extensive efforts to stamp out corruption at the global level. This includes financial and technical support for multilateral anti-corruption initiatives such as the implementation of the UN Convention Against Corruption; transparency and accountability initiatives, such as the Extractive Industries Transparency Initiative and the Medicines Transparency Alliance; and international efforts to combat illicit financial flows, such as the International Centre for Asset Recovery. It labels – and implicitly devalues – these as ‘indirect’ anti-corruption activities, although it is hard to see what is indirect about, for example, the measures coordinated by the Financial Action Task Force to reduce international money laundering.

So what was all the fuss about?

The report focused on routine so-called ‘petty corruption’ – that is, small payments made by poor people to the locally powerful in the penumbra of projects that DFID is funding. For example, the Commission were told that poor people have to pay bribes to get access to the benefits of projects in Nepal and it is alarmed that DFID is making no determined effort to identify and stamp out such activities.

Given limited resources to tackle endemic and deeply complex issues in the world’s poorest countries, ranging from malaria and Ebola, to bonded child labour, infant malnutrition, and sexual abuse of vulnerable women, amongst many others, should DFID’s current anti-corruption portfolio be expanded to “specifically target the everyday corruption experienced by the poor and educate the population about the ill effects of corruption”, as recommended by the Commission?  

The answer would depend in part on a thorough appraisal of DFID’s skills and comparative advantage, and should not be influenced by a missionary impulse to make DFID responsible for solving any problem affecting poor people in any country in which it operates.

Two good reasons why DFID should not be panicked into making a policy decision

  • Firstly, there is simply no evidence that DFID has the capacity or the comparative advantage to run such programmes effectively. In ignoring this issue the Commission comes close to contradicting itself. Indeed, it cites research by the U4 Anti-Corruption Resource Centre, funded by DFID, showing that “…there is little strong or conclusive evidence that the (anti-corruption) interventions that have been pursued have been effective”.

    If we don’t yet know how to do the job effectively, why pour money into it?

  • Secondly, if DFID were to allocate more resources to anti-corruption, why not consider the option that it is better placed to deal with corruption on a global scale – the activities that the Commission labels ‘indirect’?

    Since Britain is such an important global centre of financial, banking and legal expertise, it is a good place from which to try to stem grand global corruption. If the President’s Number One Son can no longer park his billions uncounted, unrecorded and untaxed in London, Luxembourg, Zurich or the British Virgin Islands, then he may not charge the Chief of Police such a high monthly rate for his post, and the police service might be under less pressure to squeeze everything they can from each poor person who crosses their path.    

The agreed goals of this review (PDF) were considerably more nuanced, and judiciously written to inform anti-corruption policymaking. Yet, ICAI over-stepped the mark in the way it has summarised its conclusions, and cannot be said to be behaving entirely responsibly toward the British public and Parliament. Additionally, managing large anti-corruption programmes in low income countries is now a rather big business.

If my taxes are to be spent on this, I would like to be sure that the decision was taken on the basis what works best for those in low income countries where DFID is working with, rather than a resource-intensive business opportunity.

Mick Moore is a Professorial Fellow at the Institute of Development Studies, and Chief Executive Officer of the International Centre for Tax and Development. An abbreviated version of this blog was published in the Guardian

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