Overseas Aid: Reflections on Corruption

Overseas Aid: Reflections on Corruption

The British Government has ring-fenced its overseas aid budget at a time when most other areas of public expenditure are being cut. Critics wonder if the country is getting value for money and it is admitted that about one quarter of overseas development projects do not meet their objectives. Criticism focuses on two main factors: corruption and the tendency to supply disaster relief rather than to promote long-term development. This article reflects upon the ways in which corruption was manifested during a long career in overseas development, and so points the way to where reduction of losses might be made.

Corruption can appear in a foreign funded development programme through the petty and often spontaneous manipulations of junior staff or through the carefully planned long-term manoeuvres of managers and directors. The two categories can be described respectively as tactical and strategic. Tactical losses are small but can be numerous, while strategic losses are less frequent but can be very large.

Until the mid-1970s most overseas aid -funded development projects were managed by expatriate staff employed by the donor. Under these circumstances most losses to corruption came in the tactical category. The most common practices involved selling products or services in the local market at prices above those stipulated by the project management.

For example, when the Technology Consultancy Centre (TCC) of the Kwame Nkrumah University of Science and Technology (KNUST), Kumasi, Ghana, implemented a project to help the traditional glass bead makers of Ashanti improve the appearance of their products, it began importing ceramic pigments from the UK. Technically the project was very successful and the artisans demanded more and more of the pigments. Local traders took up the importation and the price to the artisans rose sharply.. Groups of artisans complained to the TCC director that affordable pigments were no longer reaching them. Sadly, some TCC staff were found to have diverted into the hands of the traders a large part of the material imported by the university and intended for sale directly to the artisans at ‘fair trade’ prices..

For more than ten years the TCC operated a soap pilot plant at the village of Kwamo near Kumasi. The purpose of the plant was primarily to train soap makers and entrepreneurs wishing to start a soap making business. At the same time soap was produced and sold to the local community during a period of scarcity. Throughout its life the plant was plagued by corruption, usually involving the theft of raw `materials and products. The university grew tired of constantly needing to replace staff and closed the plant in the mid 1980s. Reporting losses to the police was totally ineffective. In one instance, stolen raw materials were found in the bedroom of a soap plant operative. The case was heard at Kumasi High Court where a skilful defence lawyer completely outwitted the police constable prosecuting the case, and the case was dismissed.

Some overlooking of tactical corruption may be justified in that the perpetrators are members of the community the project is designed to help. The materials lost from the soap pilot plant found immediate use in local private enterprises and still helped to alleviate shortages of supply. In another example, in the early days of the Suame Intermediate Technology Transfer Unit (ITTU) in Kumasi, some pilfering of tools from the engineering workshops was tolerated because tightening security would have reduced access to the artisans the project was designed to assist. It was recognised that the tools would be put to good use in the neighbouring grassroots engineering workshops.

The really unacceptable face of corruption is strategic. While tactical corruption is connected with relatively small sums in the local currency, it is the flow of large amounts of hard currency into big development projects that excites strategic corruption. Taking over control of projects may involve plans that take several years to reach fruition; and the people who win control are those most adept at scheming rather than those best qualified to hold the position. One case reported to the author involved a project to promote cattle farming in the Brong-Ahafo Region of Ghana in the 1970s. The activity attracted a group of people who systematically made life so difficult for the expatriate manager that he resigned and the project was abandoned by the donor. No attempt was made to pursue the developmental activity; the group divided up the assets and went their separate ways. In relating this story the informant stressed that corruption of this sort rarely involved the continuation of project activity, but was usually focussed solely on liquidating assets. In such cases, no long-term benefits are provided to the community at large.

Some strategic corruption does involve the continuation of a project, at least in name if not in spirit. Here the objective is often to divert resources designated for field activities into a fund to construct head office accommodation or some similar large building construction. It is the award of large construction contracts that brings the opportunity to reap the biggest returns. In one case in Ghana, a fund of about half a million Euros budgeted to promote research in universities and Council for Scientific and Industrial Research (CSIR) institutes was converted into a fund for a building on the project headquarters compound. This diversion of resources involved collusion between the project director and an official at the Ministry of Finance and Economic Planning (MFEP) who together outvoted the technical adviser of the EU Delegation in Accra on the committee controlling the allocation of resources. This example also illustrates the extent to which donors have lost control of the use of their donations.

There is no doubt that much overseas aid is wasted and a large part of the waste ends up in bank accounts in Switzerland. The British Government expects that cuts to its budget in other areas at home will be largely made up by reducing losses through higher efficiency. The same should be expected in the case of overseas aid. A cut budget need not mean less benefits reaching the poorest of the poor provided that controls are imposed to prevent diversion of resources by those planning a quick route to riches.