USAID: Remarks of Vivian Lowery-Derryck, Bureau for Africa, 9/21/2000

This is an archived USAID document retained on this web site as a matter of public record.

Remarks of Vivian Lowery-Derryck,
Assistant Administrator
Bureau for Africa
before the Committee on Foreign Relations Subcommittee on Africa, United States Senate
September 21, 2000

INTRODUCTION

Good afternoon, Mr. Chairman, I would like to thank the Committee for this invitation to testify on USAID anti-corruption efforts in Africa. We, along with other members of the donor community, view corruption as a major impediment to sustainable development in Africa. African civil society organizations, citizens, and governments themselves are also more and more willing to acknowledge corruption as a development issue - and one not merely a factor in trade relations.

With the Subcommittee's concurrence, I will address how corruption is a development challenge and how USAID is directing programs to help foster accountability, transparency, and good governance, thereby reducing the occurrence of corruption in Africa. We must realize, however, that progress in this area requires patience, persistence, and a willingness to stay the course with our African partners.

CORRUPTION AS A DEVELOPMENT CHALLENGE

In broad terms, corruption is the abuse of public office for private gain. It arises both in political and bureaucratic office and can be petty or grand, organized or disorganized. Systemic corruption in Africa typically occurs in public markets, the management of public companies, fiscal administration, customs, the justice system, and often within the military. There is also widespread petty corruption in the civil service, which most directly affects the public by forcing them to pay for government services that would otherwise be free. Whereas corruption in the private sector undermines economic growth but may not affect political development, public corruption has a destabilizing effect on both political and economic systems.

Corruption undermines the foundations of sustainable development in all developing countries. Economically, corruption leads to the inefficient allocation of resources, raises the cost of investment, decreases investor confidence, promotes inequalities and inefficiencies in the private sector, raises the cost and decreases the quality of public-sector projects and services. The political consequences of widespread corruption, while less quantifiable, are no less real. Corruption contributes to a loss of confidence in the government and a general non-compliance with laws, undermines the legitimacy of elected officials and democratic values, diminishes the effectiveness of public policy, and impairs the power of public institutions. Indeed, political fallout from corruption creates a vicious cycle of more corruption, instability, weak institutions, and even more corruption.

The economic and political costs imposed by corruption fall heavily on African countries, already burdened by poverty, debt, disease, illiteracy, and political and economic instability. Moreover, in those countries experiencing widespread, systemic corruption, the burden is disproportionately borne by the poorest and most vulnerable of the population. Citizens are denied access to basic public services and suffer from the non-enforcement of the rule of law, including public safety standards, environmental protection policies, and even criminal codes. Corruption also directly contributes to the lack of public infrastructure, investment, education opportunities, and jobs which sustains the cycle of poverty endured by so many on the African continent.

These high costs of corruption, which Africans can ill afford are even further magnified in conflict situations. In cases of cross-border conflict or failed states, already weak state institutions are overwhelmed and regulatory oversight is severely compromised. The rule of law often is significantly, if not completely, undermined. Opportunities for corruption at all levels abound and often go undetected and unpunished. In countries in turmoil, like Sierra Leone, Angola, and the Democratic Republic of the Congo, large sums of money are amassed through arms sales, diamond smuggling, and drug trafficking. A demand for money laundering services thrives in such environments. Furthermore, violent conflict is more likely to erupt in countries plagued by endemic corruption as public dissatisfaction increases with the decline in the availability of services. The valuable investments of USAID programs in African countries, including our newly expanded initiatives to combat HIV/AIDS, are at risk if corruption--both as a development issue and a trigger for violent conflict--is not fully addressed.

The United States government, including USAID, has been at the forefront of the movement to bring international attention to the high costs of corruption and to galvanize the public and private sectors--in developed and developing countries alike--to give the issue the serious attention it merits. In February 1999, Vice President Gore underscored the importance of fighting corruption when speaking to participants from 90 governments who attended the First Global Forum on Fighting Corruption here in Washington. This meeting initiated an intense international effort to examine the causes of corruption and the practices that are effective to prevent or combat it. These important endeavors have continued with the planning for a Second Global Forum to be held next May in the Netherlands. Importantly, World Bank President Wolfensohn noted during last October's Ninth International Anti-Corruption conference in Durban, South Africa, that not long ago donors limited their discussions to improving transparency and accountability. Now donors and Africans themselves openly discuss corruption rather than cloaking it in terminology. As I will describe, USAID capitalizes on this favorable environment for fighting corruption by incorporating anti-corruption activities into our programs and forging partnerships with other U.S. government agencies, bilateral and multilateral donors, as well as African governments and regional institutions.

HOW USAID ADDRESSES CORRUPTION

USAID addresses corruption by first ensuring that its own programs are transparently administered. The Agency has demanded accountability within its development programs since its inception. Within USAID, we have instituted numerous checks and balances to ensure our funds are used for their intended purpose and audits are routinely conducted by our Inspector General's Office.

As a part of its development assistance strategy for Africa, USAID has championed good governance practices for well over a decade. As corruption has become a more visible issue in development and is being more openly discussed, USAID has been able to tackle the issue more directly. We are convinced that, with the advent of this new openness and willingness to confront corruption issues on the part of our African partners, civil society can have a significant effect on a government's will to enact and sustain anti-corruption reforms.

We have learned several critical lessons from our past experiences in the global and regional fight against corruption. We have learned that:

Government regulation and enforcement activities alone are insufficient anti-corruption strategies;
Corruption is a universal problem, but each country's corruption challenge is shaped by its own particular circumstances and requires a tailored approach to successfully combat it;
Achievements of anti-corruption reform programs - economic and social - are vulnerable to non-democratic regime changes and to the conflicts that are often generated by those changes;
Civil society must be engaged as a critic of existing corruption and as a watch- dog against emergent corruption; and
Donors must work together against the "culture of corruption" and coordinate our anti-corruption efforts.

Based on what we have learned in the past, USAID has developed a two-track response to the problem of corruption in Africa, as well as other regions:

Firstly, we work to change the environment in which the public and private sectors interact. Our programs are designed to minimize opportunities for corruption and to change the incentive structures that often encourage corrupt behavior. Corruption is likely to flourish where public officials have wide authority, little accountability, and work within a distorted incentive framework. USAID's responses to corruption seek to address this imbalance by:

Supporting legal and regulatory reform to reduce a government's involvement in areas better handled by the private sector;
Streamlining government procedures to reduce the opportunities for corruption;
Improving accountability mechanisms; and
Introducing incentives that will encourage officials to act in the public interest.

Secondly, we support efforts to mobilize public support for change. We recognize that an empowered citizenry is the best safeguard against corrupt officials at all levels, and the best guarantee of the sustainability of our programs. Therefore, we work with civil society and the private sector to raise awareness about the problems that corruption poses to development and to society in general. USAID missions promote active engagement by all sectors of the public in:

Monitoring government activities;
Advocating changes in attitudes and practices;
Raising awareness about the costs of corruption;
Decreasing tolerance for corrupt behavior and changing the expected norms of ethical behavior; and
Raising public awareness about citizens' rights, entitlements, and responsibilities.

USAID ANTI-CORRUPTION RESOURCES

USAID's democracy and governance and economic growth sectors both include anti-corruption measures as part of their larger program activities in bilateral missions as well as through regional initiatives.

Our democracy and governance programs emphasize the transparency and accountability of governments through increased local government and citizen participation in decision making, more effective and independent legislatures and judiciaries, and enhanced civilian control over the military and police forces. USAID programs have trained judges and court administrators to prevent tampering with records and reduce delays in hearing cases, worked with national assemblies to create ethics committees and codes of conduct for public officials, and supported the media in developing skills in investigative journalism. USAID also provides technical assistance and training to audit institutions in order to increase fiscal accountability and improve capacity to detect and prosecute the misappropriation of funds.

In addition, since its inception in 1997, the Africa Bureau's leading economic growth activity and Presidential Initiative, the Africa Trade and Investment Program (ATRIP), has concentrated heavily on regulatory reforms that will reduce the opportunities for the solicitation of bribes from private businesses. Major goals of the program include: removal of regulatory red tape, improvements in the commercial laws and processes, establishment of transparent, pro-competitive regulatory bodies, and reform of the tax and customs systems that currently give too much discretion to individual officials.

Calculating actual dollar figures that go towards fighting corruption is difficult since initiatives to improve transparency and accountability crosscut many of our programs. Governance activities in Africa that are specifically labeled and tracked as anti-corruption totaled $833,000 in FY 1999 bilateral assistance. That figure has nearly tripled in FY 2000. The number of countries with specific anti-corruption objectives in the democracy and governance sector has also increased from four to seven in a one-year period. On the economic growth side, USAID has funded more than 25 ATRIP activities, both bilateral and regional, that are expected to reduce opportunities for corruption in Africa. Total funding for this set of ATRIP activities reached $10.3 million in FY 1999 and will total approximately $15.8 million in FY 2000. However, we believe that freedom of speech, independent media, freedom of association, and free and transparent elections combine to lessen the impact of corruption in Africa. Therefore, when adding in all Africa Bureau regional programs and bilateral activities designed to improve accountability, transparency, and good governance more generally, the total USAID funds invested in fighting corruption in Africa is well into the tens of millions.

AFRICA ANTI-CORRUPTION PROGRAMS

I would like to highlight just a few of the many activities our overseas missions are implementing either through international non-governmental organizations, U.S.-based technical assistance, or other implementing mechanisms. First, however, I believe it is important to note that all of our Africa programs are coordinated with other donors and organizations working in the anti-corruption arena. No one organization or institution can shoulder all the responsibility for fighting corruption. Nor can anyone take all the credit for the many improvements made over the past few years in the quality of governance region-wide. USAID has been working closely, for example, with Transparency International, the Global Coalition on Africa, and the World Bank in the effort to curb corruption on the African continent. In addition, through the Consultative Group mechanism, we maintain a dialogue with other bilateral donors and African host countries on issues of importance to development, including corruption. Consultative group meetings provide a forum for frank discussion of the issues related to transparency and accountability, and enable the donors to engage host country governments in the issues of corruption affecting their development and the effectiveness of international aid. It has resulted in stronger anti-corruption efforts in a number of countries.

USAID and its partners work in some of the most challenging development environments including countries with long-standing, endemic corruption problems. For instance, Nigeria, one of the Clinton Administration's top four priority countries, recently dropped to the last position in Transparency International's Corruption Index, released September 13, 2000. Despite this ranking, however, positive prospects now exist to improve governance and the investment climate by fighting corrupt practices in the public and private sector. Nigeria's President Obasanjo has taken some bold moves including introducing an Anti-Corruption Bill, which signals a strong commitment to deal with one of Nigeria's most difficult development problems. USAID puts top priority on anti-corruption measures in its Nigeria program and will stay the course to help President Obasanjo build a broad commitment to transparency and accountability in his country.

Examples of USAID anti-corruption activities in Nigeria include the following:

The USAID mission in Nigeria is working to increase the transparency of government institutions, particularly focusing on the National Assembly and six state assemblies (one in each of Nigeria's geopolitical zones);
USAID is partnering with local Nigerian institutions to establish the foundation for a fair and competitive electoral system, including the development of a code of conduct for political parties;
At the local level, the USAID mission in Nigeria is supporting the work of Transparency International to develop a manual that will be used to train communities in the roles that they can play in fighting corruption; and
At the request of President Obasanjo, USAID funded the International Republican Institute (IRI) to sponsor a conference for 150 future cabinet ministers and senior administration officials last year, which produced key initiatives, such as the establishment of the Anti-Corruption Commission.

In addition to its Nigeria program, USAID supports a wide spectrum of anti-corruption measures in many other African countries. The kind of corruption targeted, as well as the results achieved, vary widely. The following are provided as illustrative examples of USAID-supported work in fighting corruption in Africa:

BENIN: The USAID mission in Benin has provided technical and institutional support to the country's Supreme Audit Institutions, both at the Chamber of Accounts of the Supreme Court and the Inspector General Office of the Ministry of Finance. As a result of their increased capabilities, the Supreme Audit Institutions have started, for the first time, to audit electoral campaign expenses and have developed a manual for transparent financial and procurement operations. In addition, the Transparency International chapter in Benin, supported by USAID, conducted an extensive anti-corruption awareness campaign during the parliamentary elections in March 1999. This included televised sketches, radio and television ads, comic strips in local newspapers, and a poster campaign.

MOZAMBIQUE: The ATRIP program supported the Confederation of Mozambique's Business Associations in its efforts to reduce red tape and to provide an effective forum for the private sector to examine policy issues. This activity resulted in the passage of a new industrial law and revisions in the industrial and commercial licensing regulations that greatly simplified the registration process, and the transfer to a single agency of all responsibility for import and export controls. The Confederation has also worked to prominently display the new commercial and industrial licensing requirements to promote transparency and awareness of the rules for both government and business. These reforms will greatly reduce bureaucratic delays caused by bribe seeking.

In addition, with USAID support, the National Democratic Institute (NDI) conducted a civic education program throughout Mozambique designed to raise awareness about the rights and responsibilities of citizens in a democracy. Many participants soon put their newly acquired democratic skills into action and tried to make improvements within their communities. In Sofala Province, for example, participants wrote a letter to the District Office of Education complaining about the disappearance of funds the community had pooled for the construction of a school. The school administration was forced to pay the money back, and this encouraged the community to provide additional funds, which enabled the school to be built.

MALI: The USAID mission in Mali was involved in supporting regional workshops on "illicit taxes" that the custom and police levy from livestock exporters in Sikasso, Segou, Mopti, and Koulikoro. The workshops provided opportunities for livestock exporters and government officials to interact and jointly develop a plan for eliminating illegal taxes. As a result of these workshops, livestock exporters decided to create border livestock markets, which will tremendously cut down the opportunity for local officials to demand unwarranted payments that negatively affect export revenues.

KENYA: In the past, when emergency food aid was required in Kenya, there were two parallel emergency food programs - the Government of Kenya (GOK) system and the UN's World Food Program (WFP) and their implementing partners. The GOK system used to be highly corrupt with high losses and little or no impact, as the food aid went to too many districts and too many people for political reasons. However, as a result of a USAID-funded workshop facilitated by the Famine Early Warning System (FEWS) project staff, augmented by additional USAID and British-funded analyses, the GOK has made some dramatic changes in its emergency aid program by moving towards a more transparent and efficient community-based distribution system. The new system allows for district and divisional level decisions to be made locally, and PVOs have a much larger role in the allocation of all emergency food.

Targeting of households for food aid can now be done based on need rather than on political factors; while improved and transparent accounting procedures make unauthorized diversions harder. Kenya's remote Turkana District, the area hardest hit by the country's recent drought, demonstrates the improvements brought about by a new community-based food aid targeting system for the poorest households. During a recent visit to the region, observers noted that poor households were receiving a monthly distribution of up to twenty-two pounds of corn, dramatically more than the two pounds they received previously. The new targeting system provides a more accountable and transparent distribution mechanism to ensure than food aid goes to those most in need.

CONCLUSION

We continue to make strides to reduce corruption in Africa, although decreases in corruption are difficult to quantify. It is not easy to count the number of bribes not taken, or solicited. Spectacular results are not quickly available. However, since USAID began addressing systemic corruption several years ago, there has been progress on many fronts, including the degree to which citizens and governments are aware and engaged in fighting the corruption, the number of elected officials exposed to ethics training, and the depth and breadth of regulatory and judicial reforms in several countries. We should be heartened by those successes. Yet, we can only help support efforts that Africans themselves wish to undertake. The change must come from within and not be externally imposed. Corruption is a critical issue that requires diligent attention by African governments and donor partners to forestall its debilitating impact. We in the Africa Bureau will continue to work with other donors and with our African partners, as well as with multilateral and regional organizations, to ensure that the successes achieved thus far are sustained and expanded.

Finally, we all know that reducing corruption is a long-term process, as is the promotion of democracy and good governance. However, we are increasingly required to make difficult decisions regarding program funding due to reductions in democracy and economic growth resources. If we are to collaborate with the larger donor community in mutually supportive capacities, support our U.S. private sector in emerging African economies, protect our on-going assistance programs, and support Africans in their quest for sustainable development, the Administration's requested resources are needed. We have, we can, and we will make a positive difference, but the support of the Congress is absolutely necessary.

Thank you.

This is an archived USAID document retained on this web site as a matter of public record.