Understanding the Context: AAF reviews U.N. Report “Measuring Corruption In Africa”

Understanding the Context: AAF’s Review of the U.N. Report entitled “Measuring Corruption In Africa: The International Dimension Matters”, by the United Nations Economic Commission For Africa, March 2016

 

By Peter O’Brien*

Economics and politics experience fashion changes at a pace that makes clothes designers envious. And, like the designers garments, some of “today’s problems” are resurrections of yesterday’s, cast in a different context. In the present decade, the buzzword across the globe has been “corruption”. It is thrown mostly at governments, though the already voluminous yet still rapidly mounting evidence of consistently corrupt practices by international firms, whether in finance or manufacturing, indicates that the private sector is at least as adept as anyone else, maybe more so.

In its Fourth Report on African GovernanceGovernance Review UNECA, the UNECA makes the invaluable contribution of seeking to stand back a little from the frenetic international competition in constructing corruption indices, from the “naming and shaming” game that has characterized recent years, and to place the issues in Africa within the political and institutional contexts of the countries of the continent. In so doing, UNECA performs a major service. As is often the case with significant studies, the Report is careful to begin at the beginning and immediately remind us of some basic truths.

The UN Convention Against Corruption does not attempt to define what it is. Why not? Because it is too polyvalent and evolving a phenomenon to make a single definition particularly useful. These features, polyvalence and rapid evolution, of corruption are especially striking in contemporary Africa, where transformations of the economic structure, the institutional landscape, the political environment, and the technological opportunities are such that any one-dimensional, static approach is condemned to irrelevance. This understanding, in turn, emphasizes that no “one size fits all” method will be of much use either in describing the challenges facing any particular African country nor in shaping the most helpful policies to meet those challenges.

The Report stresses that our expectations of how institutions and individuals should behave are altering very fast. This implies that to talk about “what is legal” is nowadays an outmoded way of grasping reality. Everybody is aware that the law permits all kinds of behavior that society at large does not sanction. The chasm between legality and ethics is large. In Africa, as elsewhere, civil society groups are seeking to close it while private enterprises in particular are using the law as refuge. African countries must use their own cultures and mechanisms to ensure that the law/ethics dichotomy does not worsen. This observation is especially pertinent when we reflect how in practice the international community is tackling corruption today.

The overwhelming emphasis seems to be on the design and implementation of tighter legal régimes, along with the use of technology and institutional structures to make corruption more difficult and/or costly to do. This is in essence a knee jerk reaction (KJR). Each time a gap is identified, and cases are found where corruption is occurring, a new KJR happens, with tighter laws, new procedures and so on. The game gets played at a higher level of sophistication, with higher financial and other resource costs, and presumably higher rewards for successful deception. It would seem that the KJR method has been adopted in the OECD context not only because of the technologically and legally sophisticated nature of most corruption there, but also because of the near collapse of ethical standards (indelibly described almost a decade ago by the Lebanese/French author, Amin Maalouf, in his now classic “Le Dérèglement du Monde”).

Does this approach make sense in the African context (or, for that matter, in other contexts)? The answer is probably yes and no. In certain instances the investment associated with a new KJR may pay off, in others not.  Yet it may also be possible to devise clever incentives, market based or otherwise, that encourage actors in Africa to behave in non-corrupt fashion. This is not so much a question of “rewarding honesty” as of highlighting the immense social and economic advantages, the stimulus to development, that can come from shaping an environment where all start to focus on the common good, as opposed to the individual gain. In policy terms, this is the kind of challenge that African countries may in fact have a comparative advantage in meeting.

The actors in corruption chains are many and varied. They encompass private and public bodies, profit making and not for profit institutions, local and international. Hence the governance challenges reach well beyond matters confined to governments. At one and the same time as African countries and institutions need to strengthen their capabilities, doubly so given the speeds of transformation across the continent, the numerous foreign groups operating in and with Africa need to reinforce the struggle against corruption rather than add to the problems. That reinforcement can come not only through the “passive” route of not deliberately creating corruption opportunities, but through the “active” channel of helping Africa to assess better its own special vulnerabilities and then find custom- made means of tackling them. As of now, we see plenty of “method mimicry” in which African countries import institutional methods used in OECD countries, as if the same sets of issues had to be solved. Some of this is useful – but it leaves plenty of territory uncharted.indices

Foreign private and public actors can both contribute. Overseas Development Assistance (ODA) exceeds 10% of GDP in 16 countries of the continent, while the Africa wide average is still as high as 2.7%. Whether that ODA Is bilateral or multilateral, whether it is project oriented or program oriented, the scope for improvement is large. Foreign companies, either those already present or new investors, must ensure that their business practices are much superior to what they have been. Non-profit associations must clean up their act. FIFA, an organization notorious for corruption, has a bad record in Africa. On 13 May it took the unprecedented step of electing a Senegalese lady, with no prior experience in the soccer world, as its new head of global oversight. Let us hope that this positive sign is a good omen for the future.

Just as there is a powerful international dimension to corruption in Africa, so there is an important segment which is cross border corruption (CBC). Given that the continent is seeking to bring together the numerous trading blocs and regional integration schemes into a single process, regulation and control of CBC will become increasingly significant. The Report demonstrates that, from a recent data base which has identified close to 1100 cases of CBC in the world, almost 24% of such cases occur in Africa. Most such cases involve appreciable amounts of money and, in all likelihood, serious economic impacts. They are in the realms of what the Report identifies as “Grand Corruption” and/or “State Capture”. No doubt the third category of “Petty Corruption” might contribute to CBC at the level of issuing licences or similar administrative measures. Nevertheless, CBC mainly relates to big issues.

The UNECA Report does not itself propose fresh measures of corruption. It steadfastly and sensibly refuses to engage in more compilation of indices. Indeed, it is at pains to underline the growing unease with many well-known measures. For instance, it notes that the inventor of the standard Corruption Perception Index, Johan Graf Lamsdorff, sought even as far back as 2009 to persuade Transparency International that the CPI was no longer especially helpful save as a means of ranking countries with regard to public sector related corruption.

Instead, UNECA shines the light on the need to examine policy towards corruption in the context of Africa’s complex patterns of development and its place in the world economy. This method requires plenty of hard work, with specific country analysis supplemented by attention to the CBC risks and the dangers of importing corruption through ODA, FDI and several other external channels. But that hard work will surely bring its rewards. It will be part of the ongoing struggle to create an encompassing and participatory development process in which the benefits of growth are far more equitably shared than has been the case till now. That process is one which can be sustainable, and will not be subject to the vagaries of fashion.

 

Peter OBrien* About the author: Peter O’Brien is economics & trade advisor to Africa consulting boutique Pr1merio. With over 30 years’ international expertise in economic and financial analysis, trade negotiations, and deal making, Peter O’Brien has advised governments, NGOs, and private clients on economics, policy, and diplomacy matters. Peter has worked worked in all regions of Africa, providing advice to clients ranging from South African conglomerates to Ethiopian government ministries.  A native of Ireland, Peter is fluent in English, French, Spanish, Portuguese, Italian and German.

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