Development aid: A blind spot for EU anti-corruption efforts
The European Union needs to develop a coherent strategy and invest in tackling corruption outside its own neighbourhood.
The new study from the European Parliament Cost of Corruption in Developing Countries – How Effectively is Aid Being Spent? shows that addressing corruption through development aid is marginalised in the European Union’s overall anti-corruption strategy, despite a track-record of ambitious anti-corruption reforms in countries working towards EU membership. The EU could spend aid more effectively if it prioritised corruption control in developing countries. The first step would be to develop a clear strategy for supporting anti-corruption efforts – one that does not rely solely on audits and untargeted public financial management reforms. Less aid would be lost within EU programming if audits were complemented with other corruption prevention tools, and if the EU worked more actively to strengthen anti-corruption institutions and reforms in partner countries.
Implementing partners – a weak link in the aid delivery chain
The EU has a good institutional set-up for countering fraud in its own development aid operations. The European Commission for instance has well-designed guidelines for project cycle management, control and audits. However, from a development perspective it matters little whether funds are lost when they are managed by the donor organisation or by an implementing partner. In accession- and candidate countries, the EU frequently relies on partners such as the Council of Europe and the OECD to implement anti-corruption interventions. The EU often cannot use these trusted partners outside Europe and its periphery, where their aid programmes are usually implemented through NGOs, contractors or other multilateral donors – without a clear plan for due diligence, monitoring and evaluation.
No donor is an island – anti-corruption efforts are ineffective if national integrity systems are weak
Strong national integrity systems are important regardless of whether support is delivered by the EU itself, through implementing partners, or as budget support. The investments in corruption risk management should be proportional to the overall aid budget, regardless of the chosen mode of aid delivery. The EU currently provides little strategic guidance for staff on how to strengthen the integrity systems of partner countries. The EU should – jointly with other donors – support the establishment of strong local systems for corruption control. This includes central and local government systems on audits, procurement, and open budgets, but also social accountability mechanisms to enable watchdogs and citizens to check the state. Little of this is actually done.
Potentially large pay-offs for investments in corruption control
The EU needs more in-house expertise to effectively disburse the large amounts of funds, oversee the implementation of programmes and control how money is spent. More spot checks, random specialised audits, whistle-blowing systems and fraud checklists (red flags) would likely lead to less corruption.
The EU is lagging behind other donors on tackling corruption in aid. The good news is that the cost-benefit ratio of better corruption controls and support to anti-corruption reforms is bound to be high. Considering the current low level of investment in strengthening partner governments’ anti-corruption systems, the expected reduction in funds that are lost to graft or wasted would likely be substantial with increased investment. Less leakage will promote better development results.
(U4 advisors presented the study to the European Parliament´s Committee on Development, 14 July 2015: section 10 in this video)