(More) Comments, Please on My New Book on Aid, Donors, and Corruption

A year ago, I requested comments on a draft manuscript about corruption. Last week, we launched the resulting book: Results Not Receipts: Counting the Right Things in Aid and Corruption. I think the text was considerably improved by the comments process (and I hope the commenters agree). So I’m hoping the discussion can continue even though the book is now out.

Last week, Frank Vogl, a founder of Transparency International and long-time advocate and leader in the global fight against corruption, emailed me with a set of comments on the resulting book before the launch, and then raised many of his concerns during the book launch event. In the spirit of an ongoing discussion, I asked him if I could publish his written comments and he was kind enough to agree. They follow below.

Results Not Receipts: Counting the Right Things in Aid and Corruption is an excellent starting point for an important and overdue discussion.

Almost exactly 20 years ago (September 1997) ministers attending the World Bank-IMF joint “Development Committee voiced strong support in their communiqué for major actions by multilateral and bilateral development agencies, as well as by the IMF to promote governance and counter corruption.

Charles Kenny and CGD have gone far further than the reports mentioned above and challenged the core approaches of aid agencies in this area.

Since that time there have been a number of reviews about the ways in which the international community and official public institutions have implemented the Development Committee’s mandate. In September 2007, an independent panel chaired by Paul Volcker issued a report finding fault with the World Bank’s own integrity vice presidency. In 2008, the Bank’s Independent Evaluation Group issued a major report that found far-reaching problems in the ways in which the Bank had sought to counter corruption in its operations. A further IEG critical report was published in 2011.

But Charles Kenny and CGD have gone far further than the reports mentioned above and challenged the core approaches of aid agencies in this area. Millions of very poor people in many countries are what I call ‘double-victims:’ first they suffer because of corruption; second, they suffer because efforts by aid agencies to help them too often do no good and sometimes do harm. As Kenny asserts: “It is time for donor agencies to fundamentally rethink their anticorruption approaches.”

Results do matter and he argues that it is often the case that aid agencies spend so much resources—staff and cash—in bending over backwards to ensure that not a single cent of aid cash flows into corrupt hands that their impact on poverty alleviation is far less than it could be.

But the new book is insufficiently clear in articulating effective remedies. It falls short in fully explaining why the core approaches of the aid agencies are just wrong. In addition to Kenny’s points, the facts are that staff incentives at aid agencies are far greater in terms of shoveling out the cash, than waving red flags because of feared corruption; that aid agencies shy away from meaningful confrontations with governments over grand corruption and wrongly operate, as a result, as if widespread petty corruption is quite separate from grand corruption; and, the aid agencies are extremely reluctant to listen to and work with civil society in the most effective ways.

Kenny devotes considerable space in the book to a discussion of how best to measure corruption. To a degree, like so many others, he overstates the purposes and significance of Transparency International’s Corruption perceptions Index, which is a poll of 13 different polls, makes no claim to be more than a snapshot in time based on surveys. The CPI was originally designed to strengthen public awareness of the pervasiveness of corruption and that continues to be its prime objective.

In discussing aspects of measuring corruption, the new book fails to explore issues of income and wealth inequality. The 2013 report by the African Progress Panel, for example, researched why extreme poverty is so widespread in most of the 20 sub-Saharan African countries endowed with extractive natural resources. The analysis pointed to a good deal of waste and inefficiency, but also to corruption. Studies like this provide us with in-depth understanding of the impact and scale of corruption.

The more we anyalze public sector projects and programs, looking for funding discrepancies, searching for opacity in contracting, seeking weaknesses in project implementation, so more detailed pictures of the scale and impact of corruption emerge. Those most able to purusue such analysis are locally-based non-governmental organizations. Today, there are hundreds of such NGOs across the developing world. They have precise knowledge. They have the skills to engage citizens. They have demonstrated results, as many TI national chapters can attest and is evident by looking at the evaluations of scores of small projects funded and advised by the Partnership for Transparency Fund.

Aid agencies provide relatively small funding to NGOs—and it is decreasing. They rarely listen seriously to what they have to say in so-called “civil society consultations.” Many aid agencies are reluctant to agree to substantive monitoring of their projects by NGOs (this is a positive example).

The first sentence of this important new book in its Preface states: “Governance and corruption remain at the heart of discussion around global development.”

That may have been true a few years ago, but I do not think it is the case today. Part of the reason may be the recognition within aid agencies that curbing corruption is difficult, it does not yield results swiftly and it measurement is complicated. Part of the reason is that there has not been enough high-profile discussion of the inadequacies of the approaches that aid agencies deploy.

So Kenny’s book should be seen as a starting point for what needs to become a robust discussion. In the early 1990s, a few of us waged a campaign to convince the aid agencies to recognize that corruption is a problem in development and to ensure that curbing corruption becomes a meaningful priority for these agencies. Now, it is time to have a new and substantive set of initiatives—and I hope the aid agencies will be constructive partners with CGD and others—to look at all possible approaches to addressing the needs of the victims, especially those who live in acute poverty, so that their basic human rights are secured and that they can live in dignity.

I agree with much of what Frank says. And where I disagree, it is worth noting our comparative credentials on the topic. But here a few reactions:

• There certainly are a lot of incentives at donor agencies to “shovel out the cash”—I wonder if the receipts-monitoring process is in part a response to that incentive. While not particularly effective at reducing corruption, receipts monitoring precisely measures the shoveling. Results measurement (and in particular payment on results) is at least a distraction and at worst a positive block to getting cash out of the door.
   
• I do think inequality is linked to corruption—in particular in the broad sense of systems being stacked against the average person. Inequality is about equal between rich countries and poor, and I take this as evidence corruption in this broad sense is not simply a “problem of poor countries.” That even though straightforward bribery is far more common in poor countries than rich ones.
   
• I’d say that aid agencies are very focused on corruption, but very narrowly focused. They are spending a lot on financial and procurement oversight of their own projects and not nearly enough on tackling corruption at the country level.

Frank’s helpful and deeply informed reactions certainly demonstrate the benefit of an ongoing discussion. I’d be very grateful for any more reactions to the book, by email or below. And many thanks in advance!