Often defined as a general characteristic of a social, political, judicial, or economic system, corruption is nevertheless a complex behavioral trait of individuals who are endowed with power or authority. When the phenomenon becomes part of institutions, it causes them to underperform and limits their capacity to implement beneficial policies. Being widely spread in unstable, conflict-ridden environments and weaker democracies, corruption has an effect on the aid programs that are implemented in these nations. From instigating moral hazard to hampering long-term development, corruption can become a serious obstacle to development.
However, despite corruption being a serious obstacle, development aid is not always ineffective in corrupt environments. Even in nations where corruption is a problem, programs can still have positive effects. This is mainly due to creating aid initiatives that reduce the window of opportunity for corruption, increase openness, and support good governance in combination with increased pressure by donors for better transparency with regard to state agencies.
See also: What is development aid and why is it important?
What does corruption mean?
The abuse of authority for personal benefit is referred to as “corruption” and usually involves a wide spectrum of activities, ranging from collusion and bribery to misappropriation. In the development sector, it not only lessens the effectiveness of development aid but also reduces public trust in organizations, damages democratic systems, hastens divides in society, and pushes even more people into poverty.
Brief statistics on corruption and its impact
- It has been estimated that corruption and illegal cash flows cost the world economy US$3.6 trillion annually.
- About US$2.6 trillion goes missing every year through corruption and US$1 trillion is given in bribes which amounts to over 5% of the world’s gross domestic product.
- The United Nations Development Programme estimates that the amount of money wasted on corruption in developing countries exceeds that of the amount given for official development assistance by 10 times.
- According to estimates, illegal flows cost Africa over US$88 billion annually.
How does corruption impact foreign aid?
The ability of development aid organizations to carry out their missions and operate efficiently is seriously hampered by corruption on two levels: the practical and the philosophical.
The reference to the ‘philosophical’ impact refers to the way in which corruption destabilizes the moral and ethical foundations of development organizations that are often based on several principles, including accountability, openness, and the reduction of poverty.
See also: TOP-10 facts about foreign aid that you probably did not know
Marginalized groups suffer the most from the effects of corruption in the development sector since they are mainly dependent on foreign assistance. Their limited options also put them at risk of exploitation, such as being forced to pay for services that should be free. For example, a 2019 Transparency International report revealed that an astonishing 80% of respondents in the Democratic Republic of the Congo (DRC) have to make unofficial payments in order to use essential public services such as water facilities.
Let’s delve deeper into the problems that corruption creates in the development sector:
🔹 Shattered trust
In addition to the financial cost, corruption has a massive influence on people’s support for development initiatives. The ultimate success or failure of a project is highly dependent on the degree of community and governmental engagement.
When someone or something uses their position of authority for personal benefit, their actions may lead to a loss of trust among the general public which could then trigger a decline in community involvement and jeopardize the project’s success.
🔹 Reduced effectiveness
Corruption has the potential to greatly diminish the effectiveness of development assistance. Simply put, less money goes to the intended recipients – infrastructure projects, healthcare services, or educational initiatives – when aid funds are corruptly diverted for personal benefit.
For instance, the quality of education and opportunities for students suffer when development aid funds that are intended for the construction of educational facilities are misappropriated. One example of this was provided in a study published in 2023 which revealed that the management of tertiary education (universities, polytechnics, etc.) in Nigeria has been negatively impacted by a lack of funding as well as the mishandling and misappropriation of funds, with this having the greatest detrimental effect.
🔹 Impeded long-term development
Development assistance is intended to help to reduce poverty, improve living standards, and foster sustainable growth through financial grants, loans, and technical expertise but corruption (including embezzlement, bribery, and kickbacks) hinders these goals.
🔹 Weakened institutional performance
Even when funding is available, widespread corruption makes institutions less effective by not allowing them to carry out their work properly. Over time, those institutions with less effectiveness undermine economic progress. Corruption creates an unfair business environment, discourages foreign investment, and suppresses entrepreneurial activities.
When funds designated for vital public services are put to inappropriate use, it becomes more difficult for governments to carry out their obligations and satisfy people’s demands.
See also: Corruption compounds food insecurity in Africa’s Malawi
Corruption also undermines the rule of law which gives certain people with power unjustified advantages and allows them to function outside the boundaries of the law thereby undermining the basis of a just and equal society.
🔹 Moral hazard issue
Moral hazard can arise when donor nations or organizations consistently support corrupt regimes without enforcing any stringent anti-corruption measures. This means that while the recipient countries continue to receive foreign aid without any conditions imposed being upon them, those in authority may not feel compelled to address corruption.
🔹 Inequality in resource distribution
Corruption can seriously distort how resources are allocated, particularly when it comes to development assistance. Corrupt activities have the potential to redirect aid funds away from projects that could potentially benefit the majority of the population and towards those that benefit a smaller group of people. This could further amplify already existing socio-economic disparities in a community, region, or country.
Consequently, corruption can unintentionally widen the income gap rather than reduce it which may then lead to a decrease in societal trust in institutions.
🔹 Risk of aid dependency
Foreign aid, when not thoughtfully used, carries the risk of fostering a dependency culture within recipient nations. Corrupt authorities, being motivated by short-term benefits and personal wealth, may find it more convenient to continuously rely on help rather than invest in programs that foster an independent economy.
Can corruption be economically justified?
Although most experts agree that corruption hinders the development of the economy, some maintain that it may be economically feasible because it gives people a way to circumvent inefficient regulations and hurdles. Surprisingly, corruption could encourage economic growth by cutting transaction costs for businesses that strive to follow complex regulations and eliminating bureaucratic hurdles to market entry.
In certain nations that lack efficient governmental structures and governance systems, corruption can offset bureaucratic obstacles and institutional flaws by effectively ‘greasing the wheels’ of the economy. But …
When considering the long-term damaging effects of corruption on equality, economic development, and the general state of a nation’s institutional framework and government, this is not convincing.
There are instances when people believe that corruption is an inevitable part of critical circumstances, but this opinion is mainly due to opportunity. If opportunity is reduced, all the parties involved can contribute to reduce the prevalence of corruption.
Final word
Like a stealthy, toxic force that seeps into the very fabric of institutions, corruption causes them to underperform and limits their capacity to implement beneficial policies. The first thing to do to tackle the destructive character of corruption is to acknowledge its existence. Effective steps towards its elimination involve collaborative action by governments, international organizations, and members of civil society.
