Truck and Barter

Council of Foreign Relations has got an interesting briefing on the World Bank’s new strategy relating to corruption;

“In April Wolfowitz called corruption a chief threat to development in poor countries, saying it distorts markets, lowers investment, and "encourages people to apply their skills and energies in nonproductive ways." He has made anticorruption a major theme of his first year as president and vowed to set in motion a country-by-country process to attack the problem. The moves come at a time of increasing scrutiny of the bank's own role in corruption. A recent study by U.S. News & World Report quotes analysts as saying more than 20 percent of the funds disbursed by the bank each year may be wasted through corrupt practices. A Northwestern University professor, Jeffrey Winters, says his research found nearly 100 billion dollars of World Bank funds have been squandered by corruption over the years. The bank rejects these claims and says it is difficult to calculate how much of its funds have been distorted by corruption.

But experts say there is a clear correlation between corruption and stagnant growth on the world's poorest continent: Africa. The African Union has said corruption costs the continent $148 billion per year. The Heritage Foundation says two World Bank entities provided nearly $70 billion [in 1995 dollars] in development assistance to 48 countries in sub-Saharan Africa between 1980 and 2002. But at least twenty-three of those countries experienced negative growth in gross domestic product (GDP) in that period. Bruce Rich, an expert on multilateral banks for the organization Environmental Defense, says the World Bank's problems stem from a failure to ban corrupt contractors and companies from its programs and investigating fraud by government officials. "I think you have to start somewhere and the bank can start by ensuring that its own loans are clean, which it didn't do in the past.”

The most recent Global Monitoring Report promises to be part of this effort quantify the fight against corruption and improve governance in poor countries.

“Governance and corruption often are used synonymously. But they are quite different concepts—and conflating them can be very damaging. Public sector governance refers to the way the state acquires and exercises the authority to provide and manage public goods and services—including both public capacities and public accountabilities. Corruption is an outcome. It is a consequence of the failure of any of a number of accountability relationships that characterize a national governance system—from a failure of the citizen-politician relationship (which can lead to state capture) to a failure of bureaucratic and checks and balances institutions (which can lead to administrative corruption). Fighting corruption requires strengthening governance system across its core dimensions.”

A French journalist in the press conference on the Report asked the following question;
“You highlight how important it was to fight corruption and how important was good governance. I'm wondering why the World Bank gave this decision point to Congo while there was plenty of evidence that the country was stealing oil and steel monies through sham companies in the Bahamas and the British Virgin Islands.”