Measuring corruption in Africa: The international dimension matters - - PowerPoint PPT Presentation

Measuring corruption in Africa:

The international dimension matters

AFRICAN GOVERNANCE REPORT IV 2016

Francis Nguendi Ikome, Ph.D Chief, Governance and Public Sector Management Section, Macroeconomic Policy Division UNECA Johannesburg 20th February 2017

1) Key messages 2)Econs governance, institutions, corruption and structural transformation 3) Perception-based indices & their inadequacies in measuring corruption 4)Critical review of non-perception-based measures/mixed indices of corruption 5)International dimensions of corruption 6)Conclusions and Policy recommendations

PRESENTATION ORGANIZED IN SIX SECTIONS

AFRICAN GOVERNANCE REPORT IV

Key Messages

1. Corruption has many facets and is often conducted in secrecy, which makes it difficult to measure in a precise and objective manner. 2. Definitional ambiguity of Corruption affects rankings and cross- country comparisons. 3. Corruption indices have grown exponentially, to raise awareness among policymakers and the general public. 4. The types and quality of data make corruption measurement difficult, given that objective data are difficult to obtain.

AFRICAN GOVERNANCE REPORT IV 2016

• 5. There is need to move beyond present indicators to

assess corruption within a broader African governance context.

• 6. Survey bias towards one group of society over

another, undermines the quality

• f

the measurement outcome.

• 7. Measuring types of corruption and their occurrence

(without aggregation) can provide a better picture

• f corruption.
• 8. Any measurement that does not take into account

the international dimension would be incomplete.

Key messages (cont…)

AFRICAN GOVERNANCE REPORT IV 2016

PART 1 Economic Governance Institutions, Corruption and Structural Transformation (ST)

Good governance remains a key requisite for Africa’s ST

• Principles of good governance have been articulated by many players

(UNDP 1997, NEPAD 2003 & re-affirmed in Agenda 2063).

• Good governance facilitates the interaction between the public sector and
• ther actors in the economy. There is a positive correlation between good

governance and economic growth (Engjell, 2015)

AFRICAN GOVERNANCE REPORT IV 2016

Economic governance impacts a country’s structural transformation

• Good economic governance entails: public financial

management & accountability; integrity

• f

the monetary and financial system; and an adequate regulatory framework (ECA 2002).

• Economic

governance is mainly about public institutions with capacity to manage resources efficiently; formulate, implement and enforce sound policies and regulations.

• Economic governance institutions have an overall

effect and influence on the quality of economic governance and ultimately on structural transformation

AFRICAN GOVERNANCE REPORT IV 2016

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Corruption is a governance challenge & an impediment to Africa’s Development

• Grand corruption – esp’ in extractive sectors - is a major

governance challenge & an impediment to development in Africa.

• Weak

governance institutions exacerbate corruption, threatening prospects for structural transformation.

• Poor accountability, weak audit and oversight institutions and

influence from the executive are some of the underlying institutional deficiencies (AGR I)

• Yet, measures of the magnitude of corruption in Africa often

neglect the institutional & external dimensions.

AFRICAN GOVERNANCE REPORT IV 2016

PART 2 Perception-based indices of corruption are inadequate for measuring corruption in Africa

Measurement Methodology Critique

Control of Corruption Index (COC) Data source: Combines different sources & surveys, depending on availability Survey informants: business leaders, general public and country analysts.

• Does not use primary data
• Only Measures corruption from a

public sector perspective. Corruption Perception Index (CPI) Data source: Country surveys Survey Informants: Public officials (misuse

• f public power for private benefit (bribery
• f public officials, kickbacks) or strength of

anti-corruption policies)

• Irregular country coverage
• Narrow definition of corruption,

cannot capture trends since sources of survey and countries change each year. Global Integrity Index (GII) Data source: Surveys assess both de jure & de facto corruption prevention measures. Survey Informants: independent social scientists, researchers and investigative journalists.

• Does

not measure the full magnitude of corruption

• Only focuses on the effectiveness
• f anti-corruption policies.

AFRICAN GOVERNANCE REPORT IV 2016

Although very prevalent, perception-based measures of corruption have significant limitations

• Do not present a reliable picture of corruption in Africa. Data

reflects peoples’ perceptions and opinions (victimization surveys)

• These indices are underpinned by sample bias (survey

respondents are not homogenous)

• Ill-suited for cross-country comparisons over time due to data

constraints.

• Most data not useful for policy-reform and institutional building.
• Indicators do no capture the international dimension of

corruption.

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PART 3 Critical Review of Non-perception Measures and Mixed Indices of Corruption

• Several indices are credited for rigor, broad baseness

and objective approach. These are essentially composite indicators which combine fact-based surveys/data with perception-based surveys.

• These

indices provide periodical assessments

• f

governance, with a focus on corruption.

• The four indices reviewed include: The African Governance

Report (AGR); Ibrahim Index for African Governance (IIAG); Global Competitiveness Index (GCI); Country Policy and Institutional Assessment (CPIA)

AFRICAN GOVERNANCE REPORT IV 2016

Critical Review of Non-perception Measures and Mixed Indices of Corruption (cont…)

.

AFRICAN GOVERNANCE REPORT IV 2016

• Data source: ECA data + Country

Reports

• Methodology: National expert

surveys (sample size 100); Household surveys (2000 – 3100 per country); Desk research

AGR

• Data source: 33 external sources
• Methodology: Desk-based reviews
• f collated data, aggregated into a

composite index. The data for each

• f 93 indicators are put on a

standardized range of 0–100

IIAG

Limitations of Non-perception Measures and Mixed Indices of Corruption

Despite creating awareness of the governance challenge, there are major limitations in the methodologies of these indices:

• High likelihood of correlation of errors among the

sources used

• Do not measure what they purport to measure
• Lack transparency
• Suffer from sample bias
• Completely ignore the international dimension of

corruption which is attributed to the phenomenon of Illicit Financial Flows in Africa

• Not “actionable” for policy purposes

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The international dimension of corruption in Africa cannot be neglected.

• The international character of corruption in Africa

is linked to historical factors (colonial trading and political relations).

• Foreign assistance, sometimes, has worsened

democratic & bureaucratic performance resulting in high levels of corruption (Charron, 2011)

• Foreign aid channeled through governments’

consumption expenditure increases corruption (Asongu & Jell, 2013)

• Foreign assistance is an outlet by which the

political elite in recipient countries engage in rent-seeking behaviors.

Part 4 International Dimension of Corruption

AFRICAN GOVERNANCE REPORT IV 2016

Part 4 International Dimension of Corruption

AFRICAN GOVERNANCE REPORT IV 2016

• Cross-border corruption involving foreign firms has

escalated in Africa. From 1995 – 2014 out of 1,080 corruption cases in Africa, 99.5 % involved non-African firms (Escresa & Picci, 2015)

• Illicit Financial Flows are a significant component of

cross-border corruption

International Dimension of Corruption (cont..)

Entry Modes for Multinational Corporations in Corruption

AFRICAN GOVERNANCE REPORT IV 2016

Part 5 Conclusions and Policy Recommendations

Conclusions

• Africa needs improvement in overall governance performance,

e.g. through reforms in public financial management & anti- corruption initiatives.

• Good governance remains critical for structural transformation.
• Corruption in Africa is not exclusively the making of Africans.
• Current indices, which continue to rank African countries poorly,

are misguiding to policymakers and investors.

• Corruption indices misrepresent the contextual realities of

African countries

• The indices ignore the international dimension of corruption.

AFRICAN GOVERNANCE REPORT IV 2016

Policy Recommendations

i. Improve transparency and accountability (e.g. fiscal transparency and good public financial governance) in order to reduce corruption. ii. Enhance ownership & participation in development planning (multi-stakeholder participation, CSOs, media) iii. Build and strengthen credible governance institutions (e.g. accountability and oversight institutions). iv. African countries and partners should focus on approaches to measuring corruption that are fact-based with more objective quantitative criteria. v. Rethink the nature of development cooperation including prioritising combatting IFF and enhancing assets recovery vi. Improve regional and global governance architecture

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Thank You

http://www.uneca.org/ http://www.uneca.org/publications/

AFRICAN GOVERNANCE REPORT IV 2016