As Rick has discussed in a previous post, one common strategy adopted by donors seeking to engage in development and humanitarian work in countries with corrupt governments is to try to bypass national institutions. Instead, they direct their efforts towards the local level, engaging with communities, local leaders, and smaller-scale NGOs. Theoretically, this approach means the money passes through fewer hands, and there are therefore fewer opportunities for some of it to be skimmed off. Furthermore, donors may believe that local institutions are less corrupt or more easily subjected to (or more responsive to) monitoring by donors or other overseers. Donors may also opt for a local-oriented approach for reasons not related to corruption, like supporting projects that are more responsive to people’s actual needs, furthering community empowerment, and building institutions.

However, recent evidence from the Democratic Republic of the Congo (DRC) indicates that a local-oriented approach has its corruption-related drawbacks. Resources channeled through national political figures may have the potential to be stolen or misdirected for personal gain, but community-driven development programs are also vulnerable to elite capture. In fact, broader research has indicated that members of community development organizations—the very people with whom donors are partnering in hopes of side-stepping corruption—are more likely to pay bribes than non-members.  Furthermore, even when donor programs succeed in creating infrastructure, they tend to fail to improve local governance, accountability, or capacity.

Still, given the pervasive corruption in national governments (in the DRC and elsewhere), and the way those in power benefit from avoiding any meaningful action against corruption, the impulse towards local-side aid is understandable. What, then, are donors to do? Though it’s impossible to guarantee positive results, there are some steps that foreign governments and NGOs can take to mitigate the risk of the money targeted locally from being illicitly diverted:

• Transparency isn’t enough. A recent study in the DRC raised two concerns about the effectiveness of transparency and monitoring as a solution to the stealing of development funds. First, when Congolese villagers were told that the results of an audit of the development program would be shared with both international donors and the local community, they were less likely to believe the results would be shared with anyone than if they were just told that the results would be shared with one of those groups. This is admittedly an odd finding — perhaps a result of confusion, or of a sort of eye-rolling, “they’re just going through the list and won’t actually follow through” skepticism that villagers may have when they are presented with a plethora of monitoring steps. But if the finding is accurate, it suggests that more monitoring (or at the least, more explanation) may not necessarily be better. Second, being told about an audit did not deter people from stealing the funds; instead, they just got better at hiding how they did it. There’s some uncertainty as to the implications of this latter result for donors. Perhaps it means they shouldn’t announce the audit in advance but perform one anyway, hoping to catch people still using the easy-to-spot corrupt methods. On the other hand, the study has identified what seems to be a key way aid money is diverted in this context—exchange rate manipulation. If donors feel that, ethically or practically, they need to bring up the audit in advance, at least now they know what they should focus on it that audit. The problem with either secrecy or searching for exchange rate manipulation is that the money has still been stolen before one identifies the problem. Thus, it seems that some sort of enforcement mechanism for punishment (which would perhaps be a greater general deterrent than public exposure) and/or reimbursement is, for now, still necessary.  However, due to the corrupt and distrusted nature of the formal justice system, courts are unlikely to be effective in this regard.  Donors will have to look elsewhere, an idea that leads to…
• Don’t be afraid to get involved. As important as it may be to allow the people to define what matters to them and then follow their lead in terms of program goals, donors are sometimes at risk of being too hands-off. Some recent studies indicate that some local elites can be allies in the fight against corruption, but which elites fall into that category will vary from place to place. In one DRC village, when the community development organization—made up of church officials and chiefs—pocketed donor money, the donors brought the issue to a high-ranking local chief, who jailed several of the organization leaders and forced the return of the cash. In other places, the church was the donors’ best ally. With no universal guideline as to which local players are likely to help fight corruption, donors need to truly engage with the community, learn its politics, and be willing to lobby the right local leaders for assistance. Yes, playing local figures off of each other may seem to run counter to the community empowerment goal of most development and human rights activists. In the long run, though, such a strategy is more likely to be effective in assuring the money is spent well. Indeed, again focusing on the DRC specifically, one study found that 72% of the respondents, Congolese who had been involved with a particular community reconstruction project, thought that further involvement from outside organizations would have decreased corruption in the project.

Even as donors adopt these tactics to fight corruption at the local level, though, it’s important that they not stop there. There are a number of other tactics needed to make aid more effective, including greater coordination with other donors and longer-term time scales for grants. There are also bigger-picture corruption concerns, like security sector reform and the undervaluation of natural resources, that can only be tackled on the national level. Nevertheless, if donors are able to more successfully combat corruption, more of their resources will go to their intended projects, less of their money will be stolen and directed towards ends that run counter to their goals, and the sense of hopelessness that sometimes pervades international engagement with the DRC, and other developing countries, is less likely to set in.