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Fighting Poverty and Corruption

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Fighting Poverty and Corruption Division 42 Sector Project: Development and Testing of Strategies and Instruments for the Prevention of Corruption Fighting Poverty and Corruption Integrating the Fight Against Corruption into the PRS Process – Analysis and Recommendations for Development Cooperation Division 42 Sector Project: Development and Testing of Strategies and Instruments for the Prevention of Corruption Fighting Poverty and Corruption Integrating the Fight Against Corruption into the PRS Process – Analysis and Recommendations for Development Cooperation Eschborn 2004 The Team of Authors: Dr. Walter Eberlei, Project Manager, Research Assistant at the Institute for Development and Peace (INEF), University of Duisburg-Essen, email: [email protected] Dipl.-Ökon. Bettina Führmann, Research Assistant at the Institute for Development and Peace (INEF), University of Duisburg-Essen, email: [email protected] The work also incorporates inputs from several of our colleagues in five countries (see footnotes at the beginning of the country studies), and Gertrud Falk, who until December 2003 was a Research Assistant at the INEF. Since then she has worked for the non-governmental organisation FIAN in Herne. Publisher: Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH Postfach 5180, 65726 Eschborn Internet: http://www.gtz.de Division 42: Sector Project: Development and Testing of Strategies and Instruments for the Prevention of Corruption Editing: Birgit Pech, Melanie Wiskow Responsible: Bernd Hoffmann Eschborn 2004 Table of Contents Table of Contents Preface 3 1. Executive Summary 4 2. Introduction 5 2.1 Corruption – an Obstacle to Poverty Reduction? 5 2.2 The PRSP Process – an Opportunity to Fight Corruption? 9 2.3 Structure and Methodology 12 3. The Fight Against Corruption as a Component of the PRS – Quantitative Overview 14 3.1 Procedure 14 3.2 Results of the Quantitative Desk Study 16 4. The Fight against Corruption as a Component of PRS – Results of Case Studies 19 4.1 Ethiopia 19 4.1.1 Corruption Prevention in Ethiopia 19 4.1.2 Corruption Prevention in Ethiopia’s PRSP 20 4.1.3 Overall Assessment 22 4.2 Ghana 22 4.2.1 Corruption Prevention in Ghana 22 4.2.2 Corruption Prevention in Ghana's PRSP 23 4.2.3 Overall Assessment 26 4.3 Cameroon 26 4.3.1 Corruption Prevention in Cameroon 26 4.3.2 Corruption Prevention in Cameroon's PRSP 27 4.3.3 Overall Assessment 30 4.4 Nicaragua 30 4.4.1 Corruption Prevention in Nicaragua 30 4.4.2 Corruption Prevention in Nicaragua's PRSP 31 4.4.3 Overall Assessment 33 4.5 Zambia 33 4.5.1 Corruption Prevention in Zambia 33 4.5.2 Corruption Prevention in Zambia's PRSP 35 4.5.3 Overall Assessment 37 5. Comparative Evaluation of the Quantitative and Qualitative Results 38 1 Table of Contents 5.1 Problem Analyses in the PRS: Is Corruption a Cause of Poverty? 38 5.2 Strategy Formulation: The Fight Against Corruption as an Explicit Element of the PRS? 42 5.3 Anti-Corruption Strategies and Corruption Prevention in the Studied PRS 45 5.3.1 Institutionalised Strengthening of Transparency and Accountability 45 5.3.2 Strengthening the Public Finance Management System 46 5.3.3 Civil Service Reform 48 5.3.4 Rule of Law 50 5.3.5 Strengthening the Role of Actors Outside the Executive 51 5.3.6 Improved Donor Coordination 53 6. Recommendations for Development Cooperation Action 54 6.1 Support of PRS Processes 56 6.2 Strengthening Preventive Corruption Control in the PRS Context 58 6.3 Policy Dialogue with Partner Countries 61 6.4 Policy Dialogue with Other Donors 63 Annex: Overview of Good Practices and Interesting Cases 66 References 72 2 Preface Preface The Practical Guides cover the topics: By diverting scarce public resources intended for development, corruption is a major Public Finance Management obstacle to poverty reduction and growth. At Public Administration at the National and the same time, democratic consolidation Local Level processes are put at risk. Judiciary Education System Corruption jeopardizes the success of long- Resource Allocation (Water, Forestry, term initiatives in every area of development. Land) Therefore, preventing corruption is a cross- Privatization cutting task. Analytical Instruments for Anticorruption Measures. Corruption is an omnipresent phenomenon. Two comprehensive studies examine: Our field-staff employees are familiar with its manifestations and harmful effects. But there Fighting Poverty and Corruption - is a demand for analytical instruments and Integrating the Fight against Corruption practical recommendations on how to into the PRS - Process incorporate anticorruption measures in Corruption and Gender. sectoral fields. We thank for the contributions of many Therefore, the Federal Ministry for Economic colleagues in-house and in the field, the Cooperation and Development has authors of the studies as well as their commissioned the sector project „Prevention commentators, colleagues from academia, of Corruption“ to develop practical guides and and many others who contributed their time complementary studies. and attention. Dr. Mechthild Rünger initiated the project and put it on track, Ms. Birgit Pech These guides provide assistance to field-staff has brought it to a successful close. employees responsible for preparing or carrying out projects in the concerned sectors, or for promoting the topic of anti- corruption in the political dialogue. Your feedback and comments are important for us. Bernd Hoffmann Dr. Albrecht Stockmayer The paper „Korruptionsprävention als Director of Division Governance and Gender Querschnittsaufgabe“ (Mainstreaming Anti- State and Democracy Team Corruption) describes the analytical framework. Please do not forget to consult our homepage: www.gtz.de/governance/ 3 1. Executive Summary 1. Executive Summary Corruption is a cause of poverty in developing countries, and a constraint to successful poverty reduction. Working on this premise, the present study proceeds to explore whether, and if so how, the link between poverty reduction and the fight against corruption is included in the Poverty Reduction Strategies (PRS) of the poorest countries. The desk study of the PRS documents of 54 countries, and in-depth analysis of five country case studies, yielded seven key results. The most salient result was that the link between poverty reduction and good governance in general, and the fight against corruption in particular, is acknowledged almost without exception and integrated into the existing Poverty Reduction Strategies. Ninety percent of the 34 countries that have produced a Full PRSP address the issue of corruption in their strategies. Of the 20 countries that have so far produced only an Interim PRSP, no less than half address the issue. The picture is even clearer when the question raised is good governance in general. Only 6 out of the total of 54 countries make no mention of it in their PRS. Having said that – and this is the second key result – corruption is dealt with in a wide variety of ways. The treatment ranges from a passing comment, through vague and unspecific measures to fight corruption, and on to explicit and in some cases detailed strategies to fight corruption within the scope of the PRS. Thirdly: There is a yawning gap between the poverty analyses and the strategies built upon them. The number of countries that specify measures to combat corruption in their PRS is far higher than the number of countries that identify corruption as a cause of poverty in the obligatory poverty analyses contained in their PRS. One explanation for this would be the difficulties generally encountered in corruption analysis. This is compounded by the fact that different sets of actors are involved in the two distinct phases of poverty analysis and strategy formulation. Another possible cause is the pressure exerted by civil society actors and/or donors to incorporate anti-corruption measures into the strategy (though no pressure is exerted to link those measures to a rigorous analysis). Corruption is dealt with in detail in the poverty analysis in only 9 out of the total of 54 studied countries (i.e. in one in six countries). Furthermore, these nine PRS display clear weaknesses in the quality of the analysis, or in the strategy formulation (including institutional frameworks) built on the analysis. Fourthly: The PRS attach high priority to transparency and accountability. No less than 45 of the 54 countries include in their PRS measures for institutional strengthening of transparency and accountability, although the degree of concrete detail varies widely, and occasionally turns into mere platitudes. A fifth result relates to the issue of checks and balances. Only 55% of the PRS countries refer to an institutional strengthening of actors outside the executive. Parliaments fare particularly badly here. They are assigned a particular role in only eleven countries. Twenty-four PRS documents do mention a strengthening of the judiciary. Thirty-four of the 54 countries indicate an intention to strengthen the role of civil society. 4 1. Executive Summary Sixthly: Most of the PRS countries that mention the fight against corruption either seldom or not at all have so far put forward only an Interim PRSP. This reflects the major importance of civil society, because – unlike Full PRSPs – Interim PRSPs need not be prepared on a participatory basis. Where they were prepared in participatory processes, it was civil society actors who then introduced the issue of corruption into the consultations. Seventhly: In many PRS countries, significant efforts have been made in recent years to secure transparency, accountability and efficient use of funds in public finance management. This is most probably due to the strong pressure exerted by donors, who in many PRS countries contribute between 30 and 60% of national budget revenues. In summary, the results of the study leave no room for doubt that the PRS approach introduced five years ago offers key points of departure for the fight against corruption. Conversely, the fight against corruption is a precondition for the success of PRS.
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