A World Bank-initiated effort to reduce corruption in school funding in Uganda is widely, and rightly, celebrated for its results (click here and here for background). In the early nineteen nineties on average 87 percent of the monies the Ugandan central government budgeted for textbooks and other school supplies “leaked out” somewhere between departing the Finance Ministry and arriving at the school house front door. Yearly data revealed that 73 percent of the schools received less than five percent of the monies to which they were entitled, and only ten percent received more than half. The 1996 Bank project had an immediate effect on the rate of losses. By 1999 the government found schools were receiving on average 95 percent of what they were supposed to receive, and a 2002 World Bank study likewise showed a sharp drop in fund leakage.
The dramatic improvement is attributed to the enormous publicity the data on losses garnered. Parents were outraged and the government and donor agencies embarrassed. Within the development community, the Uganda Public Expenditure Tracking Survey, as the work to dig out and publicize the loss data became known, has been enormously influential, the story becoming a parable for how to fight corruption. A Uganda-like PETS project is now routinely prescribed for attacking corruption in public expenditures, and a Google search on “Uganda PETS” yields over 100,000 hits and returns some 20,000 citations on Google scholar.
But for all the attention the effort has generated, there is evidence that it may not have had any impact on the level of corruption in Uganda. It is possible that all it did was force those raking funds off the school fund program to turn elsewhere. The Uganda PETS thus may simply have displaced the corruption in the school funding program rather than ending it.
Evidence from the Uganda PETS pointed to those working in the then 33 Ugandan district governments, the entities that stand between the central government and the individual schools, as primarily responsible for the leaks. The central government sent the money for schools and other social welfare programs to these governments, and officials there divided the money up and passed it along to schools, health care clinics, and other lower level units of government. Although how the stolen funds were used remains a mystery, the best guess is that they supported local patronage networks. As Melissa Thomas, a long-time student of Uganda politics has observed, political power in the districts is wielded by a small circle of individuals connected through common schooling, marriage, friendships, shared ethnicity, and membership in the ruling party. Maintaining the power balance among these local elites is essential for keeping the peace and ensuring their continued loyalty to the party. It is also expensive, and thus it likely that some or all of the embezzled funds helped finance patronage networks.
One test of this conjecture would be what happened when the leak of school funds was plugged. If the stolen money was being spent on vice or luxury goods, one might have observed a sudden recession in the gambling, prostitution, and other industries dependent on discretionary spending as in China when it began to crackdown on corruption. On the other hand, if the money was oiling an essential part of the machinery of government, one would expect those responsible for keeping the machine running would find another funding source.
That appears to be what happened in Uganda. Coincidence with plugging the leaks in the school fund program was a sharp increase in the creation of new district governments, from 33 in 1990 to 80 in 2006. Each new district government provided a wealth of government jobs, of contracts to build and maintain buildings to house the new governments’ offices, and other opportunities for patronage.
So the Uganda PETS story may well hold a second lesson in addition to that of the power of information to curb corruption. It may also teach that it is not enough to identify a corrupt practice and then shut it down. One must also ask: why corruption here? What purpose does it serve? Otherwise, plugging a leak in one place may simply result in a leak springing elsewhere.
To be sure, if that were indeed what happened in Uganda, displacement may still have enhanced national well-being. An expansion in government employment surely is less harmful than denying primary students text books. But in any event the Uganda case still provides a bit of caution to corruption fighters: the importance of a thorough appreciation of what motivates corruption when devising a strategy to combat it.