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African countries and varieties of corruption

African countries and varieties of corruption

Silvio Baró, CEAMO, in Ceprid
June 18th 2007

Ever since they were first promoted by the industrialized nations and international bodies, much analysis of the spread of neoliberal economic policies has tended to focus on the fact that these countries and international bodies limit themselves to criticism of State intervention in the economy, to stressing its modification and to ensuring a leading role for private enterprise.

Nonetheless, these analyses tend to evade other important aspects of neoliberal thinking, such as the deprecation of State activities in under-developed nations or their dismissal as inefficient and corrupt.

While the first phase of the application of neoliberal economic policies concentrated on economic aspects (eliminating fiscal deficits, balance of payments, controlling inflation and so on), in their second phase, institutional matters began to receive attention.

For that reason, towards the end of the 1980s and the beginning of the 1990s, neoliberal ideologues introduced the concepts of transparency and good governance, aspects that would become important pre-requisites for countries who wanted "certificates of good conduct" from the industrialized nations and the Bretton Woods institutions with a view to obtaining loans and other benefits.

These issues pointed to a transition in neoliberal policies from their prototypes to others much deeper, or "second generation", which, as well as influencing the design of the economic policies to be applied, go still further since, as well as influencing those designs, they also go on to rearrange the institutional structures of the nations being "advised".

The philosophy lending legitimacy to these ideas argued that for economic reforms to succeed, driven by structural adjustment programmes, it was necessary for government's workings to be transparent and efficient.

As luck would have it, the introduction of ideas of transparency, good governance and the fight against corruption came into vogue at a time when "donor fatigue" supposedly began to appear, owing to the alleged refusal by the peoples of Western countries to continue stumping up money destined to enrich the bank accounts of a group of corrupt leaders.

While it may be true that some reports and studies revealed the misuse of aid disbursements in under-developed countries made by some leaders, Africans among them (we should remember the case of Mobutu Sese Seko), the reality is somewhat more complex.

The amounts of external aid were falling both in absolute and relative terms not just through "donor fatigue" but also because those resources were needed urgently for use by the industrialized nations themselves for (a) the re-industrialization of their economies so as the better to prepare them for sharp international competition and (b) to attend to national or regional objectives such as preparaing the economies of the European Union (EU) for the arrival of the Euro or for expanding the Union among other objectives.

The issue of anti-corruption - undoubtedly noble but conveniently manipulated - was exploited to legitimize moves by industrialized nations tending to reinforce economic reforms in under-developed countries in general and in African countries in particular.

This is the context in which the non-governmental organization Transparency International (TI) appeared, setting itself a series of aims difficult to object to, (1) but it is also the moment in which some Western theoretical conceptions "discovered" the phenomenon of the corrupt without the corruptor.

If one pays attention to the studies carried out by TI the main corrupt countries are always the underdeveloped countries and above all those in Africa. These stand out from this NGO's ranking for 2006 covering a total of 163 countries, 38 of them African of which 33 (or 85%) were placed in the first 70 and 6 African countries were placed among the 10 most corrupt. (2)

In the last few years one notes an increase in the importance given to the issue of corruption and the implementation of measures against it. In that regard one must note the anti-corruption measures undertaken by the World Bank (WB) such as its Good Governance Policy approved in November 1999 and the Extractive Industries Transparency Initiative (EITI) launched by the British government during the World Summit on Sustainable Development in 2002 in South Africa. (3)

The EITI proposes that income from exports of oil, gas, minerals and other natural resources be made public and used for development. (4)

The sponsors of these moves often justify them arguing the negative record of some African governments on transparency and mismanagement of government income, but also noting the significant increased income received by some countries for their oil, mineral and other exports.

One argument is that obliging countries to make their accounts public would thwart the wish of some governments to adopt a rentier mentality and instead would force them to dedicate resources to solve their people's socio-economic problems. Governing elites are generally considered to use oil revenues not for productive use but to consolidate their power. (5)

The EITI was supported by the G-8 countries in their Evian summit of 2003 where a resolution was approved on corruption and transparency and in December of that year the World Bank endorsed it, arrogating to itself a role as a mechanism to put pressure on producer countries exporting oil, gas or minerals. Likewise, later, the International Monetary Fund (IMF) would also take on the role. (6)

An important boost to the EITI came from the African Development Bank (ADB), a body that backed it from October last year when current President Donald Kaberuka took part in EITI's International Conference in Oslo. (7)

Towards the end of 2006 a total of 22 countries (14 of them African) were members of the Initiative but it is striking that other associate members are the G-8, Norway, the IMF, the World Bank, The European Bank for Reconstruction and Development and the Organization for Economic Cooperation and Development (OECD) among others. (8)

Since voluntary incorporation into the EITI and the slow progress in meeting commitments undertaken by member countries was not in the interests of its sponsors (since "its principles go unimplemented precisely in those countries where they are most urgent") this lead both the IMF (with its Resource Revenue Transparency Guide) and the World Bank (with its Operation Evaluation Department (OED) Reports on Extractive Industries and Sustainable Development) to deploy certain measures aimed at forcing non-member countries to meet EITI standards if they wished to receive loans from those institutions among them those related to the Poverty Reduction Strategy Programmes (PRSP). (9)

In 2006, press reports covered the spat between the World Bank and the government of Chad over differences in the use of the country's oil income, although from recent reports it appears an agreement has been reached. (10)

Faced with the sparse results of its earlier anti-corruption policy, the World Bank decided to work out a new mechanism which was preceded by an announcement from (its recently found out to be corrupt president) Paul Wolfowitz who declared, "The World Bank is preparing for a battle against the biggest threat to development." (11)

This new measure, called "Strengthening the Bank Group's Engagement with Governance and Anti-Corruption" (document GAC, 5/9/2006), was presented in a meeting last September for discussion and approval.

The main elements contained in that document are very worrying because, among the new measures to combat corruption in under-developed countries, the World Bank is proposing to move beyond its usual technical activities to involve itself quite clearly in countries' internal political matters.(12)

Once this document is approved - which is very probable - under-developed countries in general and African countries in particular, will become subject to a new, much more stringent oversight mechanism, not just of their economic life but also of the workings of their political and institutional life from an international body whose mandate definitely did not, nor does, include those functions.

References:

(1) www.transparency.org.
(2) www.transparency.org The 2006 Transparency International Corruption Perceptions Index; The Top Ten: Most Corrupt Countries, 2006.
(3) DFID: The Extractive Industries Transparency Initiative, sitio web www.dfid.gov.uk .
(4) AfDB Endorses Extractive Industries Transparency Initiative (EITI), ADB Press Story, 16-10-2006.
(5) Wurthmann, G.: Ways of Using the African Oil Boom for Sustainable Development, African Development Bank Economic Research Working Paper Series, Economic Research Working Paper, núm. 84, March, 2006, www.afdb.org.
(6) World Bank: "WBG Endorses Extractive Industries Transparency Initiative", World Bank Press Release núm. 2004/180/S, www.worldbank.org.
(7) ADB Press Story, art. cit.
(8) Ibid.
(9) Wurthmann, G.: art. cit.
(10) Misanet/IRIN: "Preocupación del Banco Mundial por la propuesta de ley petrolera en Chad", 12-12-05 y "World Bank and Chad reach agreement, D + C, núm. 11, 2006, p. 339.
(11) Wolfowitz, P.: Conferencia en Yakarta, Indonesia, 11-04-06, citado por L. Martí: "The Fight against corruption: the World Bank proposal", ARI núm. 35, 2007, Newsletter del Real Instituto Elcano, núm. 33, www.rielcano.org.
(12) Martí, L.: art. cit.

*************

Silvio Baró is a researcher for CEAMO (Centro de Estudios de África y Medio Oriente) La Habana (Cuba).

Translation copyleft by Tortilla con Sal.

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