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Q&A: Aid system 'part of the problem' in tackling corruption

Source: Thomson Reuters Foundation - Thu, 10 Feb 2011 11:25 GMT
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NAIROBI (AlertNet) – Critics of aid argue it's a waste of time giving money to societies with high levels of corruption because it is often stolen. But think tank head and author Clare Lockhart believes the aid community is part of the problem, and must put its own house in order.

Co-founder and chief executive officer of the Institute for State Effectiveness, Lockhart co-wrote the book Fixing Failed States: A Framework for Rebuilding a Fractured World, and featured in the journal Foreign Policy's list of Top 100 Global Thinkers in 2009.

She describes the humanitarian and development sector as an "aid complex", along the lines of former U.S. President Dwight D. Eisenhower's famous "military-industrial complex", implying that money and contracts flow between a network of individuals and institutions with a vested interest in the continued rolling out of aid.

In this system, aid groups implement thousands of small projects, many of them similar and not always efficient or effective. This, Lockhart argues, undermines the capacity of the state and weakens governance.

Q: Do you think corruption is a major problem for the aid system?

It is difficult for the international community to insist on transparent processes and good governance in fragile states if its own aid systems are corrupt and wasteful.

Problems range from multiple contracting layers and paying very high wages that leach capacity away from frontline jobs in the public sector, to setting up parallel systems, poor design of projects, unfinished projects and failure to track resources.

For example, the aid budget accounts for one fifth of all fraud enquiries in the European Union.

Q: What can be done to remedy this?

The "aid complex" has much work ahead to ensure its own processes are clean and effective first, before emphasising anti-corruption within the governments it works with.

Far greater transparency and better mechanisms for managing aid are required. These could include putting budgets of aid agencies online so that citizens can follow the money, and limiting the number of sub-contracts that can be passed down a chain.

More open, competitive procurement processes are needed with contracts advertised not only in capital cities but in local languages and in local media.

Greater distinction needs to be made between what NGOs should be doing - which could include cutting-edge policy solutions for the poorest segments of society, as well as advocacy and civil society support – and where the local construction sector would provide a more competitive service.

Q: Do you think aid donors have the right approach to dealing with corruption in developing countries?

The "aid complex" often part of the problem in countries rather than the solution.

Donors make two serious errors when exerting pressure on corruption and lack of accountability. Firstly, donors often do not understand, or accept as a starting point, the laws and rules that do exist (and often work quite well).

Building accountability should start by mapping the existing system and understanding how it works, rather than trying to parachute in people, laws and processes from other countries.

Secondly, the international community often fails to prioritise a coherent approach to transparency and governance. Instead it focuses on specific technical aspects, such as treasury and payroll, or bypasses the government altogether with thousands of small projects run under parallel organisations.

Q: What advice does the ISE give to people who are interested in tackling corruption?

The ISE provides support to leaders and managers in the public, private and civil society spheres to design their own transitions. We document cases of successful transformation to allow knowledge sharing. We also develop training courses and toolkits for development and change-management practitioners.

At the leadership level, there has been an important shift in recent years towards understanding the importance of dealing more systematically with problems of state fragility. Translating this into changed practices on the ground, however, still requires much work.

The ISE is working to bring the various elements of public finance together in "national accountability systems" to enhance transparency and accountability across government and society.

We advocate for a "compact" between the international community and governments through which goals are set jointly, domestic mechanisms are put in place to ensure implementation, and progress is monitored through collective reporting tools.

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