Political Economy of Corruption - Excellent Article
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The attached article appeared in the South African press this week about corruption but really gives a great insight into the political economy of public expenditure especially when things go wrong. In this case, it is not even clear that what happened would constitute corruption in the formal sense and this speaks to a lot of the problems we face as donors. So for example, when we commit money at the ministerial level in partner countries we often walk into a power structure that encourages sycophantism and the unofficial need to demonstrate political allegiance to superiors. In this culture, there is an incentive for junior staff to divert project resources to political causes that benefit senior officials; this incentive often plays itself out even when there is no formal connection or instruction between the junior staff and senior officials.
If a junior staff diverts project resources without explicit instructions to a political imperative that does not benefit him or her directly, it is almost impossible to make the case that this is corruption even though it is a clear diversion of resources that is not checked through a formal audit process.
I hope you find the article as interesting as I did:
http://www.mg.co.za/article/2013-07-05-00-nkandla-an-orgy-of-kowtowing
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These are clear signs that the project objectives are not aligned to the power structure and the internal logic of change within the country. It happens. Often. As donors and beneficiaries have a different logic of incentives and decision-making, outcomes depend on power, influence, and reputation.
The decision-makers should make it clear in a formal and informal way that the project is important. In order to achieve this, the project has to be marketed and communicated in a professional way. If not, it might be implemented, assuming that the donor organization provides the finance, but the results will be automatically disappointing, even if not reflected in the formal reporting procedures. In these cases donors are part of the solution as part of the problem, creating as much or even more damage as they provide assistance. One can only guess what is worse in these cases, corruption or poor-designed donor projects.
The article indicates a clear luck of check and balance. Creating it is a historic and very demanding process. There is no receipt for abstract solutions.