About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Tuesday, September 29, 2015

Putting corruption in perspective

Stealing public funds. About 80,000 children die of preventable diseases each year in Uganda because public officials have stolen money for immunization


Two weeks ago, I said on the NTV News Night show that the existence of corruption in a country does not automatically impede its ability to develop, thereby letting loose the dogs of intellectual (actually mostly emotional) war on twitter, with some accusing me of endorsing corruption. Yet many successful countries had high levels of corruption during their transition from poverty to riches.

In 1996, the most successful nation, South Korea, arrested two of its former presidents – Chun Doo-hwan and Roh Tai-woo. Both admitted to having stolen more than $650m (about Shs2.3b) each while in office and offered to refund part of the money. Why did South Korea develop in spite of the leaders being thieves?
It is understandable when people think corruption undermines development. There was a lot of corruption in Mobutu’s Zaire that corresponded with state and economic failure. This leads people to confuse such correlation with causality. And it sounds like common sense.

However, a lot of common sense is actually common nonsense. As the Nobel laureate in economics Robert Solow said, just because the tire is flat does not mean the hole is at the bottom. Development is too complex a process to be reduced to a single cause.

To avoid being misunderstood, let me state clearly that I hate corruption. It is morally repugnant. For example, 80,000 children die of preventable diseases each year in Uganda. So in 10 years you have death of 800,000 children, the scale of the Rwanda genocide. This is unacceptable. And often, it is because public officials have stolen money for immunisation.

So morally, we all must stand in angry and determined resistance to corruption. But we need to be clear that we are dealing with a moral issue and not a growth impediment. What is morally wrong is not necessarily injurious to development.

The case study

Let me take an extreme on morality and development. Mass murder is a horrible human wrong but it does not stop economic development. The world’s richest nation, USA, grew rich while exterminating native Americans. This is not to say the genocide of native Americans is what caused America’s transformation.
Rather it is to underline the point that economic development is not a moral process. A country can develop economically in spite of its leaders and elite being venal and sadistic. The history of the West’s rise to global dominance is littered with war, exploitation and repression at home and genocide and oppression of colonised peoples abroad.

Therefore, if corruption undermines development in Africa, we need to establish the specific form in which this happens. Prof William Easterly has a persuasive argument in his book Elusive Quest for Growth, comparing Indonesia under Gen Surhato (which was corrupt but performed well economically) with Congo under Gen Mobutu Sese Seko (which was corrupt and its economy virtually collapsed).

He argues that corruption is harmful when decentralised but unharmful (or beneficial) when it is centralised. Prof Mushtaq Khan makes an almost similar argument comparing South Korea under Gen Park Chung Hee and Pakistan under Field Marshal Mohammed Ayub Khan in his paper, A Typology of Corrupt Transactions in Developing Countries. However, both arguments are speculative and their illustrations are suggestive but not conclusive.

The historian-philosopher Will Durant said the present is the past rolled up for action; the past is the present unrolled for understanding. So let us peep into history to illuminate the present. Most of what we call corruption today was only codified so by Western nations (Europe and her offshoots in Australia, New Zealand and North America) over the last 100 years or so.

And this was mostly after these countries had transformed from poor agricultural societies to rich industrial nations. Many of the practices classified as “corrupt” today were actually normal and/or legal during the West’s intense period of economic transformation. We cannot for sure say they facilitated transformation. But it is clear they did not impede that process.

For example, using public office for private gain was perfectly normal and legal in all Western nations in the mid to late 19th century, in some countries up to the early 20th century. Most politics was organised around prependalism that is, public officials sharing government revenues with friends, relatives and supporters.
The “spoils system” (where elected officials would reward their supporters, friends and relatives with government jobs and public contracts) did not end in America until the 1930s. In the UK up to the late 19th century, one could buy a military commission.

Economic transformation led to the emergence of new social groups, which began to make new demands upon the state. This restructured the basis of state legitimacy from repression and patronage to service delivery. But this process was gradual. It got to where we see today after these nations became rich, with government revenues able to provide a large basket of public goods and services to most citizens.

The changes

The new political demands altered the governance structures of those societies making old forms of governance obsolete, and the practices that had been normal and legal were made corrupt. The works of Max Weber and Karl Polanyi illuminate this point.

Therefore, low levels of corruption are a consequence not a cause of development. History suggests corruption accompanies transformation, acting like flies on a cattle carcass. This point is best made by Samuel Huntington argued in Political Order in Changing Societies. He argues that corruption tends to be low in poor traditional societies. It then grows during a nation’s intense period of modernisation and subsides when the country graduates to wealth.

Prof Chris Blattman wrote one of the most nuanced and thoughtful articles in The Independent in 2012. He posited that if you think X (in our case corruption) is an issue you should give top priority, you need to believe two things: a, it matters a lot for development and b, there is something you can do about it. Blattman, relying on many cross-country studies of corruption over the years concluded that the alleged harmful effects of corruption are minor, and there may be little we can do to change it.

I would take Blattman’s argument further and make an even more controversial proposition that even if it were true corruption is harmful to economic development, perhaps it survives because it serves other roles. For instance, by bringing elites from different ethnic groups together around “loot” of public resources, corruption may be politically integrative in a poor country. This means eliminating it, even though morally appealing, could be politically destabilising.

In this case, it is possible the political returns from corruption (national integration) may exceed its economic costs (slow growth) – and this may be the reason many poor countries remain mired in it.
Now I am aware this is a highly controversial proposition so I have a few caveats. First, we need to remember Leo Tolstoy’s observation that all happy families are alike but every unhappy family is unhappy in its own way.

All rich countries may be alike, but each poor country has its own social configurations. What works for Kenya may not work for Rwanda. For example, I think the unique social-political configuration of Rwanda today makes corruption highly destabilising, the more reason the government there fights it. But I suspect corruption may be the glue holding ethnically diverse nations such as Nigeria, DRC, and Kenya together. Here is why.

The major feature of the postcolonial state in Africa is that nearly all these countries were crafted via colonial conquest from a hotchpotch of ethnic groups ignorant of each other or hostile to and jealous of one another. For most of the colonial period, they were governed as “tribes” each under its own “customary law.” At independence, this hotchpotch of tribes over a given geographical area all of a sudden became a country. But the people lacked a common national consciousness and elites lacked a common agreement on basic national goals. 

How Africa’s leaders sought to mold a new national consciousness gives an insight into the value of corruption and patronage.

All governments need legitimacy. The founding fathers of African nations rode on the wave of national independence, relying on their role in the struggles against the colonial state for legitimacy. This could not last long because they had made promises that independence would deliver an array of public goods and services to everyone. The problem was that the state they inherited lacked the institutional capacity to serve that role.

But more critically, it lacked sufficient revenues to finance the promises they had made. So after independence, they had to design new strategies of political survival and state consolidation. Nearly all of them came to rely repression to maintain order and patronage to secure elite consent. This was because these two were affordable and cost effective compared to service delivery.

This year, the US government (federal budget plus state and city budgets minus federal grants) will spend $27,800 per person. This makes it possible for the US to rely on service delivery for legitimacy that is, it can afford it. In the 2015/16 Budget, Uganda government plans to spend $150 (about Shs536,000) per person. There is corruption and wastage in Uganda. But in the wider sense, our country is too poor to provide an array of public goods and services elites expect. 

Poor countries cannot depend on service delivery for legitimacy because they cannot financially afford it. There are poor countries that have succeeded in building state legitimacy on service delivery – Cuba, post genocide Rwanda and the state of Kerala in India – but these are rare exceptions.

Secondly, we forget that the concept of governmental legitimacy based on the delivery of public goods and services in the West is a recent development, beginning in the late 19th century and consolidating after World War 11. This process was gradual in the West, coming of age after the state had developed enormous institutional capabilities on the one hand and high government revenues on the other. For most of Western history, the legitimacy of the state and its government was largely based on the divine right of kings to rule, the charisma of individual rulers and the ability to make war.

The forces in Africa

And Africa, like Europe in the late 19th century and early 20th century, is going through a period of intense social and economic change, producing new social forces like an increasingly large and educated middle class and sizable business class. The new social forces are demanding new sources of state legitimacy and reliance on corruption for legitimacy is being challenged.

However, many nations of Africa are still saddled with a large peasantry, holding onto primordial ties to identity. So the new political demands are colliding with old social practices. This is the creative tension that propels and restrains change, allowing society, as Edmond Burke reminded the revolutionary French, to change their traditions gradually so as not to recklessly upset social order. And as Burke said, tradition is the memory of a people; insanity is the loss of memory.

Hence as Africa’s institutional capacity grows, and as the reach of the state expands and government revenues increase, we are seeing a gradual shift from patronage to service delivery. Post genocide Rwanda has made the most dramatic shift from patronage to service delivery in the blink of time, providing a lesson to the rest of Africa. For most countries this process is gradual perhaps because they did not go through the process of social shredding that rapidly destroys entrenched interests and old forms of social control that Rwanda underwent during the genocide.

Those making the argument against corruption are not wrong. They represent what we need to work towards. And neither are the leaders who are presiding over it evil people. They represent what is affordable for now. Both sides constitute the creative tension that allows our nations to grow and change.

This Article was published in The Daily Monitor Saturday, August 29 2015.

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