Taking back our services Rooting out corruption in the service delivery sector – lessons for Egypt By Rebecca Zausmer & Dixie Hawtin Global Partners and Associates, March 2012 Table of Contents 1. Introduction ........................................................................................................................ 3 2. The shape of corruption in the service delivery sector ...................................................... 4 2.1. Public service sector susceptible to corruption ...................................................................... 4 2.2. Types of corruption vary between countries and sectors ...................................................... 4 2.3. Actors drive corruption ........................................................................................................... 5 3. Corruption in service delivery, the corrosive effects ......................................................... 7 3.1. Financial costs ......................................................................................................................... 7 3.2. Quality of services ................................................................................................................... 8 3.3. The gap between rich and poor .............................................................................................. 8 3.4. Human development and economic growth .......................................................................... 9 3.5. Trust in government................................................................................................................ 9 3.6. Integrity of society ................................................................................................................ 10 4. Transparency and accountability in service delivery. ...................................................... 11 4.1. Steps towards transparency in service delivery ................................................................... 11 4.2. Transparency initiatives cannot happen in a void ................................................................ 15 4.3. The case of Uganda ............................................................................................................... 16 6. Conclusion: the future challenges .................................................................................... 18 7. Bibliography ...................................................................................................................... 19 2 1. Introduction Before Egypt’s Revolution, promises of social equality and human development were undermined by a corrupt and powerful elite whose focus was profiteering rather than ensuring the well-being and prosperity of the Egyptian people. One of the biggest challenges facing Egypt’s new government is how to reverse this trend. The delivery of basic services – health, education and water –is often the most tangible link between citizens and their government; it forms the basis of the citizen- government compact.1 In countries like Egypt transitioning to democracy, therefore, service delivery should be a priority of any government hoping to build citizens' trust and secure future votes. More importantly, though, providing citizens with health, education and water services is a central duty of any government. Such services are fundamental to the well-being of a population and so have an important impact on productivity. In this way, public services play a considerable role in a country's social development and economic growth. As such, the state should ensure that its citizens have universal and equal access to services by acting as financer, regulator and overseer of service delivery.2 Today, health, education and water services make up around a third of public money spent in many countries around the world.3 By its nature, however, the service delivery sector is highly susceptible to corruption and abuse. This is mainly due to the large amounts of money and the different groups of actors involved. And the poor and marginalised - being most in need of basic services - are most affected when these services are abused. The financial costs of corruption in service delivery are striking, but the effects go far beyond these. The diversion of resources impacts the quality of services available, so undermines the health, literacy and productivity of a society. It widens the gap between rich and poor, perpetuating cycle of poverty. Corruption eats away at the integrity of a society and becomes ingrained in social and cultural norms. And it can reduce citizens' trust in their government and undermine government legitimacy. This paper explores the types of corruption that are common in the service delivery sector worldwide, and the impact that this corruption has. Transparency and accountability initiatives have a key role to play in efforts to root out corruption in service delivery. As such, the paper goes on to outline steps which governments can take to increase transparency and accountability in service delivery, drawing on successful examples and experiences from the Global South. Finally - using the case study of the education sector in Uganda - the paper argues that transparency and accountability initiatives alone are not enough to stamp out corruption. They must take place alongside broader reforms, and their success is highly dependent on a number of related and external factors, the extent of political will. These experiences provide important lessons for Egypt during its transition phase. 1 Twaweza, 2011. "Service delivery", in The Transparency and Accountability Initiative, 2011. Opening Government, p. 73 2 Pavanello, S., and J. Darcy, 2008. Improving the provision of basic services for the poor in fragile environments, p. 7 3 Twaweza, 2011. in Transparency and Accountability Initiative, 2011, p. 73 3 2. The shape of corruption in the service delivery sector 2.1. Public service sector susceptible to corruption A combination of factors makes public service delivery highly susceptible to corruption and fraud. First, large amounts of public money are involved in order to effectively service an entire population. Second, there are a number different levels and processes involved in each service delivery sector - from the policy-making level to the local government level; from allocation and distribution of grants, to procurement of Box 1: Definition of corruption equipment, to frontline provision of services for example through schools and hospitals. Third, at Corruption is defined as the abuse of each level, there is also a complex set of actors public office for personal gain. and interactions that drive the system. This combination provides infinite opportunities for actors to abuse the system for personal gain. 2.2. Types of corruption vary between countries and sectors Part of the difficulty of rooting out corruption in service delivery lies in the fact that types of corruption vary across countries, and across sectors. Not only do factors such as the wealth or size of a country matter, but also whether a country operates using a centralised or decentralised mode of government; whether services are outsourced to the private sector; what proportion of the national budget these services make up and so on. Specific service delivery sectors differ themselves in terms of the structure, regulation, budget size, and actors involved. All of these factors at the country and sector levels create unique environments and ways in which corruption can play out. At the general level, however, there is a common distinction in terms of the scale of corruption with ‘petty’ corruption and ‘grand’ corruption happening in most contexts. Petty corruption tends to involve small payments to facilitate what are normally routine or necessary actions. As an illustration, in the water sector this could involve getting a water connection or speeding up the process of having repairs done, or it could be an employee supplementing their own salary by helping to install illegal connections. Petty corruption tends to involve low level staff and relatively small amounts of money. When the levels of petty corruption are aggregated, however, a very different picture emerges as discussed further below. Grand corruption on the other hand involves large transactions and typically implicates those involved in management and allocation of resources: politicians, senior public officials, and contractors. It occurs mainly in relation to large contracts particularly in infrastructure projects and equipment procurement.4 4 Transparency International, 2011a. Forms and effects of corruption on the education sector in Vietnam, Transparency International, p. 8; and Gonzalez de Asis, M. et al, 2009. Improving Transparency, Integrity, and Accountability in Water Supply and Sanitation: Action, Learning, Experiences, World Bank, pp.12-14 4 Corruption varies between sectors Box 2: Corruption in the education sector can based on the nature of the sector itself. Box take a variety of forms 2 illustrates the types of corruption that have . Embezzlement and misappropriation of been found to exist in education sectors. budgets allocated for education: In most What emerges in education however, is very countries, education systems tend to be different from the corruption practices in state run and as such there is scope for health or water services. In the health sector substantial 'leakages' of funds because of the forms of corruption include: illegal considerable size of education budgets.