Honesty about corruption best policy for aid agencies

Should we be supporting corrupt governments in the hope of making them less so, asks Joe Humphreys.

There may be growing acceptance of the need to tackle corruption in the developing world, and particularly Africa, but there is no consensus on how to achieve it.

That goes doubly so in Ireland where a venomous debate has been raging between Irish Aid, the development arm of the Department of Foreign Affairs, and the outspoken director of the aid agency Goal, John O'Shea.

Both agree that corruption is a problem but they couldn't be further apart from one another in the solution they envisage.

While Irish Aid advocates engagement with corrupt governments, in most cases right up to and including "budget support" – the practice of directly funding foreign treasuries, O'Shea opposes collaboration of all forms.

"I am opposed to the whole notion of government-to-government support," the Goal director says. "My ambition is to stop all money being channeled through governments which are guilty of human rights abuses and corruption."

O'Shea's argument has an intuitive appeal. His claim, moreover, that "the rank and file people of Ireland do not trust Third World governments" probably holds.

Yet there is a case to be made for giving aid to the governments of developing countries – governments which are almost inevitably corrupt, and, yes, also guilty of human rights abuses of varying degrees.

For a start, almost everything else has been tried without success. In particular, the traditional aid-giving strategy of establishing once-off infrastructural projects, or promoting "area-based programmes" to use the development-sector jargon, has produced little if anything of lasting value. Donors admit that such programmes tend to be unsustainable, while recipient governments complain of unnecessary duplications, bureaucracy, and competition between donors, each one of which is keen to have a flag on some project to show off back home.

Thus, there is a desire to try something different – and the current trend in donor behaviour couldn't be more so. Not only do the major international donors now generally agree that they must better coordinate their efforts but they tend to support an unprecedented level of engagement with Third World governments, over which they hope to use their individual and collective influence to effect change for the good.

The strategy currently in vogue is that of budget support, whereby money from different international donors is pooled under one local government-controlled fund purportedly aimed at reducing poverty or promoting development.

A report last month from the Organisation of Economic Cooperation and Development suggested that giving aid in this manner was more effective than funding specific projects, and no more prone to corruption. The study of seven developing countries, including Uganda, Rwanda, and Mozambique, found that budget support had " helped to strengthen planning and budget systems, making them more transparent and therefore accountable.

"It has also helped to prioritise areas of expenditure that target the poor like health and education."

In Mozambique, where E6 million of Irish Aid funding goes to budget support, the practice was said to have "contributed positively to conditions for economic growth and poverty reduction".

Some weaknesses in accountability were identified, however, and the report said that in some of the countries it studied " political risks had been under-estimated by donors".

Minister of State for Foreign Affairs Conor Lenihan, who will join President Mary McAleese on a three-country tour of Africa this month(June) – a tour that includes Mozambique, will draw comfort from such findings.

O'Shea, however, describes the OECD report as "nonsense".

He cites the fact that that Irish Aid, along with other international donors, has already placed a ban on budget support to Ethiopia because of that country's human rights record. He notes that if Ethiopia deserves to be blacklisted then other countries do too, among them Uganda - which he says has a government "infinitely more corrupt".

Actually, O'Shea is not alone in believing there is some muddled thinking at the heart of Irish Aid. One experienced aid worker in Tanzania who did not wish to be named remarked: "If I was giving budget support I'd give it to Ethiopia over Tanzania any day. At least in Ethiopia, the government has proper financial checks and balances."

Another veteran of the development field, Brendan O'Driscoll, who has been 15 years in Tanzania, and currently heads up a local government reform programme, says of budget support: "I really don't think donors have thought it through".

Such funding already consumes E10.4 million of the E26 m spent by Irish Aid in Tanzania. A further shift towards budget support will mean less resources are available for other – highly valuable - programmes in health, Hiv/Aids and governance currently supported by the Government agency, O'Driscoll argues.

"If money dries up from donors, will the (Tanzanian) government itself implement these reforms?" he asks of his own Irish Aid-funded project. "It would be hard to find any government in the world willing to spend money on reforming itself."

The Tanzanian experience also suggests donors may be overestimating the influence budget support gives them over the recipient governments. In 2001, the Tanzanian government was found to have spent (US dollars) $40 million on a dated air traffic system that could have been bought for a fifth of the price. Outraged at such wastage, the then British aid minister Clare Short complained to Tanzania, and even temporarily suspended some funding, but nothing changed and the funding ban was quietly lifted a short time later.

Such episodes are grist to O'Shea's mill. "Billions of euros have been poured into the continent (of Africa) and there is no appreciable improvement. The reason for that is that every single African country has been run by corrupt regimes."

Asked whether any African government had cleaned up its act enough to warrant government-to-government support, he replied: "Why should I go down that route? I am concentrating on seven or eight countries that my money and other taxpayers' money, is going into."

Critics of O'Shea say his uncompromising stance overlooks differences between Third World states, and perhaps even reinforces racial stereotypes about "corrupt Africans".

Can, for example, Tanzania and South Africa be spoken of in the same breath? Whatever about the former, the latter is a "relatively non-corrupt society", according to Hassen Lorgat, head of Transparency International's South African section. A former trade unionist, and activist against apartheid, he is acutely aware of the fact that "corruption did not start in South Africa in 1994" with the end of white-only rule.

He is far from a cheerleader for the local government, claiming "the innate character of all governments – socialist and capitalist – is to steal". Nonetheless, he says, the new South Africa deserves some credit for establishing an anti-fraud squad, known as the Scorpions, which has targeted among other the deputy president Jacob Zuma, as well as establishing an anti-corruption peer review mechanism along with other African states - something which neither the EU, nor Nato, has considered doing.

"The framework is potentially a progressive one," he says of the Nepad (New Partnership for Africa's Development) review process, which is focusing on Kenya and South Africa this year.

Ironically, one of the main difficulties with the process is getting civil society groups, including trade unions and other lobbyists, to engage with the government. "The peer review is in part the reshaping of Africa and it gives us some chance of indigenous solutions. We shoot ourselves in the foot by rejecting it," says Lorgat.

In Tanzania, there are also signs of progress, not least in the number of independent media outlets and campaigning organizations springing up. Most operate without major interference from the government, although one education lobby group was recently banned for being too outspoken.

"You can't compare us with Kenya or Uganda," says David Mbulumi, a senior journalist with The Citizen, one of Tanzania's most vibrant privately-owned newspapers. "There is no intimidation of journalists. People being arrested is very rare."

In fact, the main obstacle to a thriving independent media in Tanzania appears to be not so much state oppression but lack of resources. Newspapers can afford to pay reporters only about E5 for a major front-page story, something which discourages serious investigative journalism.

Irish Aid in Tanzania is trying to improve media standards by promoting a journalists' award scheme. It also funds civil society groups working on what it calls the "demand side" of governance. However, all of this, along with "supply side" investments, would come to an end if O'Shea's policy prevailed – for he believes Ireland has no role to play promoting "good governance".

"Why are we talking about this big picture? We are little Ireland. Why don't we take one country and do one thing in that country – build schools, clinics, well and develop an expertise in that area? That is the way we would do away with corruption," he says.

His argument has drummed up popular support for diverting more money to Irish non-governmental organizations (NGOs), like Goal. Yet O'Shea himself admits that the project-based approach of NGOs has produced disappointing results in the past. "The fact is that getting aid to the poor of the Third World is one of the hardest things to do," he says. "John O'Shea doesn't have the answer. Nor does John O'Shea believe NGOs can do the job."

Is O'Shea guilty of some muddled thinking of his own? He is convinced about what won't work but he is not so sure what will. "If this job was handed over to the entrepreneurs rather than the diplomats it could be done," he claims. But where is the proof? And how would you go about handing over Ireland's aid budget to "entrepreneurs" who would presumably work for NGOs?

The fact is NGOs also run the risk of encountering crooks - perhaps not the "big man" in government but his equivalent in the towns and villages where they work. NGOs are also not immune from internal fraud. In fact, some organizations have both lost money to corruption and allowed those responsible to hop from one NGO to another by refusing to prosecute - for fear of attracting negative publicity.

"NGOs need to take responsibility to ensure that corrupt individuals do not get recycled in our sector – and it happens", says Andrew Fitzgibbon, Concern's director of operations in Tanzania. "People are right to ask, 'Where is the accountability in our sector?' Some excuse it (corruption) more in NGOs because we are 'trying to do good'. But that's no excuse."

Concern is one of a number of aid agencies which has introduced specific policies aimed at identifying and dealing with internal fraud. Cooperation between agencies, however, is almost non-existent, albeit in Tanzania the heads of local NGOs recently agreed to meet to discuss measures aimed at combating corruption in the sector, including the possible drafting of a personnel blacklist.

Perhaps what is missing from the corruption debate, then, is a degree of honesty – both from the Government and NGOs. Development work is a risky business. There is a chance of your money going missing. You may on occasion have to appease some undesirable characters – be it at government or local level – to get things done. And there is no guarantee at the end of the day that your efforts will reduce either corruption or poverty.

That is the truth of it but neither Irish Aid nor Irish NGOs – most of which have stayed shamelessly silent during the corruption debate – will say it. Their fear is that the public will be less willing to support their work.

But surely the greater risk lies in misleading the public for if and when some Irish money goes missing, as it almost inevitably will, either at governmental or NGO level, the damage to trust will be hard to repair. And watch then how donor fatigue sets in.