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DFID and the risk of corruption

October 20, 2011

The UK parliament’s Public Accounts Committee has warned that the amount of UK aid funding at risk of corruption will increase, as it targets more fragile and conflict-affected countries while increasing aid spend over the next two years. In response, the Department for International Development (DFID) reported it has a zero tolerance approach to corruption, and that only £1,156,000 (or 0.016% of spending) was lost to corruption in the 2010-11 fiscal year.

This unbelievably low figure, along with the statement about a zero-tolerance approach to corruption, are illustrative of a problem inherent when democracies provide aid to governments and other institutions in fragile or conflict-affected countries. On the one hand, you have transparently accountable donor governments trying to do the right thing. This entails – among others – transferring large amounts of funding, sometimes tens of millions of pounds per year, to the relatively untransparent and less accountable institutions of poor countries, as part of an attempt to strengthen their capacity and to provide much-needed services to their citizens. At its best, this approach allows DFID simultaneously to provide health and education services to millions of people at relatively low cost; to help governments build their technical, planning and service delivery capacity; to ensure a high degree of local ownership of aid programmes; and to strengthen the hand of citizens in those countries by building in accountability mechanisms – complaints and ombudsman systems, local management committees, the involvement of MPs and local councillors, parent-teacher associations, patient feedback mechanisms, etc. – into the service delivery models it supports.

On the other hand however, even when mechanisms for citizen involvement are built into DFID’s aid programme design, it is frankly inevitable that large percentages of aid money go astray (much more than the 0.016% figure). If you ask a citizen of Uganda, Kenya, Zambia, Ghana or India (by no means all seen universally as “conflict-affected countries”) whether her government funds are safe from theft and misuse by civil servants and politicians, you’ll get a resounding “no” in response. She knows what she is talking about, because she deals with them regularly. When DFID’s funds are handed over to such governments in support of public service delivery programmes, it is not merely a “high risk” that some will be misused or stolen: it is a virtual certainty. Only the amount will differ from one location to another, and from one programme to another. Funds go missing in several ways, but it is not all about personal theft. It is very often quite systematised. When civil servants steal money they are frequently required to share a significant proportion with their bosses, some of which may go to the ruling political party’s election fund; other times the money is used to buy political support within a patron-client system. And of course some stolen money also goes to pay the school fees and medical costs of underpaid public sector staff… It is impossible for donors to prevent this by placing their accountants in the system – that has been tried, and has failed.

The point is, that if DFID is to sustain such a high annual budget, and is to continue targeting progressive changes in fragile and conflict-affected countries, it really has no choice but to fund their governments directly. (Unless it provides funds to multilateral organisations and trust funds, which ultimately do the same). There are no other institutions in such countries with the capacity to spend and report on such high sums of money. And it makes little sense to create parallel service delivery systems for services which governments typically and traditionally are meant to provide. But when funding these governments it is certain (not just a risk) that some of the money will go missing.

The problem is, a very superficial story about aid and development has been told to parliament and civil society in the supposedly accountable and transparent UK over the years – by NGOs, campaigners and governments alike. This narrative has glossed over the truth about corruption – pretending it is an exception, rather than a rule, and seeing it as an anomaly, rather than a central feature of the way governance actually works in fragile contexts.

The current government is thus in a very difficult position: it has quite rightly decided to maintain a large and UK strong aid programme. And it has also quite rightly decided to focus most of this on the most difficult, fragile and conflict-affected places. But these are the very places whose governance systems are the most marked by a lack of transparency, and whose leaders are held accountable not for equitable service delivery but for keeping their own factions in power and their friends and supporters in funds and business opportunities. Ergo, the most likely places where UK taxpayers’ contributions will be used for something other than what was intended.

So, does the UK government come clean and ditch the idea that it has a zero-tolerance approach to corruption? Does it start to create a new compact with its taxpayers about the risk of theft and about whether this risk is acceptable as a price of building local capacity for transparent, accountable and delivery of critically needed services? Or does it continue to bury its head in the sand as successive governments have done for years? The risk of maintaining the latter course may be becoming much higher than the more obvious risk that, in coming clean, it will create unmanageable headlines in the Daily Mail, and turn even the Westminster and London elite against aid.

I strongly believe that the UK should continue to be a generous aid provider, and should do so in ever more intelligent ways. But I fear our ability to do this is being undermined by the half-truths which those of us involved in aid tell ourselves and others about how things actually work. The PAC’s questions and conclusions about DFID and corruption are therefore an opportunity to be seized, not ducked. As Margaret Hodge MP, Chair of the PAC said, the inability to understand mismanagement and fraud risks undermining DFID’s ability to fulfil its larger mission. It really is time to come clean about how things work in fragile and conflict-affected countries, and conversations in parliament and in our media would not be a bad place to begin.

What this also means of course, is that the likes of DFID and the multilateral organisations through whom it channels about 30% of its aid money need to become more adept at understanding and working within the corrupt systems they support,  to promote not just better service delivery but also a more transparent and at times fractious relationship between recipient governments and the citizens whose interests they are supposed to represent. And thus a more transparent and less corrupt governance. This is the kind of thing for which UK parliamentarians should be holding DFID to account, on behalf of the citizens they represent.

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2 Comments leave one →
  1. October 20, 2011 1:42 pm

    Well, the CSR last year nailed the coffitn shut: DFID will channelled at least 30% of its ODA to “failed”/fragile states. Since it is the only ring-fenced department, it may be the only one amongst FCO, MOD and others to ight UK security. Then, ODA is no longer development assistance.

  2. Maggie O'Brien permalink
    October 21, 2011 1:24 am

    No easy answers but pretending the problem isn’t there helps no one. One possible approach must be for DFID to engage with grass roots anti corruption campaigns – wouldnt it be refreshing if those fighting corruption were given a role in monitoring spend? In conflict ridden states this wouldn’t work but in India? It just might.

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