Many people believe the existence of
multiple institutions for accountability in public procurement provide checks
and balances on the process. This belief is born of the efficacy of such checks
and balances in Western democracies rather than an objective study of how they
work in a poor and polarised society like Uganda. Many Ugandans think Western
systems of accountability can be introduced here and they perform as they do in
rich nations. This copy and paste approach makes a bad situation worse.
It is good to learn and borrow from the
good practices of others; so Africa does not need to re-invent the wheel. But
it is also important to appreciate the unique social configurations that shape
our policies and therefore adjust foreign systems to our circumstances or
introduce completely different institutional innovations to address our
problems. Uganda has myriad institutions to check abuses in public procurement:
PPDA, IGG, Attorney Generals Chambers, contract committees in every ministry
and public body, parliamentary oversight committees. Yet rather than check
corruption, they tend to accentuate it.
Many studies show that corruption per
se does not impede economic growth and development; rather, it is the specific
form it takes that shapes its developmental impact. I feel bad to admit this
truth because corruption is a morally repugnant thing. But be that as it may,
in 1995, ex-president Roh Tae Woo of South Korea was arrested for corruption.
He admitted to accumulating a personal fortune of US$ 650m while in office.
This was just a tip of an iceberg. It turned out that there had been a lot of
corruption in South Korea during its period of industrial transformation.
So why didnt corruption impede transformation
in South Korea and Indonesia but destroyed the economy of Marshal Mobutus
Zaire? New York University professor, William Easterly in his book The
Elusive Quest for Growth argues that corruption is corrosive when it is
decentralised (i.e. when there are many bribe takers and their imposition of
bribes is not coordinated among them). However, corruption is less negative
when it is centralised (i.e. a government leader organises all corruption
activity in the economy and determines the share of each official in the
ill-gotten proceeds).
Easterly uses the common pool problem:
multiple roadblocks by soldiers in Mobutus Zaire. Each soldier at the roadblock
is an individual predator, without taking into account the effect of his
actions on other soldier-predators. The wealth of the travellers is a common
resource that all of the independent thieves try to appropriate. Easterly
argues that the bribes demanded will be higher as each soldier-thief tries to
get as much revenue from the hapless traveller as possible before other
soldier-thieves get it. Under such circumstances, the total theft rate will be
higher.
This is the problem with corruption in
public procurement in Uganda. The myriad bodies to check corruption in public
procurement in Uganda are the equivalent of soldiers at roadblocks in Zaire; we
have many bribe takers whose theft is not coordinated among them. Thus, an
investor awarded a contract by the ministrys contract committee runs the risk
of losing it on a petition to PPDA if his rival supplies a better bribe there.
Equally, the one who has been approved by PPDA could lose it if their rival
petitions the IGG. This creates a lot of uncertainty over rights to property
granted by government hence negative incentives for investment. This is one
reason why increasingly, only Kamikaze investors look up our country for
investment.
Therefore, the only way an investor can
be secure with the allocation of a given right is by trying to bring on board
all bodies with power over his/her tender: Attorney Generals Chambers, IGG,
PPDA, the ministry contracts committee, State House, parliament, etc. The
transaction costs (the time and effort taken in coordinating all these bodies
to arrive at a common agreement) of security on a common agreement among all
these institutions are very high. And since each of these centres of power
demand a cut from the deal, the financial costs inflict a heavy toll on the
hapless investor. That is why tendering deals that meet all procedural rules in
Uganda are very expensive.
Now, let us remove these decentralised
layers of control and introduce a highly centralised form of corruption (Gen.
Suhartos Indonesia). Easterly argues that in a corrupt Mafioso, one leader
seeks to maximise the take from the corruption network as a whole. This leader
has a vested interest in his victims prosperity because he knows that stealing
too much will cause his victim to take evasive action, a factor that will lower
the total bribe collections. So the bribe tax-rate will be lower at all the
collection centres in order to maximise the total take of the system. Such
corruption is less damaging to growth. The lesson is that for corruption to
have less damage, you need a structure of incentives that makes corrupt leaders
solicitous of their victims prosperity. Removing multi centres of control in
poor countries seems the solution.
With the decentralised corruption we
see in Uganda, many public officials are corrupt but the state is incompetent
to apprehend them. The likelihood that someone will be punished for corrupt
behaviour is positively related to the strength of state enforcement and
negatively related to the number of corrupt officials. This means that even if
the state prosecutes some corrupt officials, the likelihood of being caught is
very low; there are too many corrupt officials from whom to choose when the
state decides to prosecute. So, the thieves steal with impunity.
There can be a legitimate argument that
these multiple institutions of control over public procurement merely reflect
the actual fragmentation of power within Ugandas polity. In other words, they
are consequences, not causes of decentralised power, and with it decentralised
corruption. This means that even if we removed them at an official level,
effective power over procurement would remain decentralised. Informal factions
within the state and inside State House itself would vie for tenders in similar
fashion. But this should only make us think of the right institutional
innovation to achieve better, albeit incremental change in public procurement.
amwenda@independent.co.ug
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