The Disease of Corruption: How Distrust in Corrupt Governments Impacts Emergency Health Delivery

Corruption negatively impacts health outcomes. As noted in a previous post, corruption is associated with higher infant, child, and maternal mortality, overall poor health, the spread of antibiotic resistance, and many other problems. When we consider the reasons why corruption undermines health, the most obvious include things like theft or diversion of healthcare resources, or how demands for extra “informal” payments to healthcare providers can deprive poor communities of adequate care. There is, however, another important mechanism through which corruption undermines public health: corruption undermines trust in government and government-run services, which in turn can hinder effective health delivery and thereby escalate the spread of infectious diseases, especially in emergency situations like the recent Ebola crisis. Continue reading

Corruption in Health Aid: Escaping the Scandal Cycle

William SavedoffAmanda Glassman and Janeen Madan of the Center for Global Development, a Washington-based development policy think tank, originally wrote this post for CGD.  It is reprinted here with permission.

Health aid pays for life-saving medicines, products, and services in the poorest countries in the world. Funding for such uses needs to be smooth and uninterrupted. But when fraud is detected, funds are subject to sudden stops and starts—the result of a sequence of events set off by the scandal cycle in health aid depicted below. We examine this idea and offer ways to escape the cycle in a new CGD policy paper we summarize here.

The Scandal Cycle

 

To understand the scandal cycle, we looked at four cases of fraud and response involving the World Bank in India, USAID in Afghanistan, the Global Fund in Mali, Djibouti and Mauritania, and European donors in Zambia. While corruption is discovered in different ways, scandals tend to erupt when the press publicizes it or a funder reacts strongly. Once allegations are in the public eye, funders typically react by suspending aid. Then, they work with recipients to create action plans for improving financial management systems, and eventually resume funding.

This scandal cycle is, unfortunately, all too common. In May, the Global Fund published an investigation that tracked down $3.8 million in fraudulent expenditures at Nigeria’s Department of Health Planning, Research & Statistics. The Fund’s executive director issued a statement reaffirming the Fund’s “zero tolerance of corruption” policy, underscoring that the Fund had frozen disbursements to several Nigerian agencies, and calling for reforms to government control measures.

As with the cases we analyzed in our paper, the focus on fraud often comes at the expense of considering the scale of corruption and the impact of disruption on health programs. While $3.8 million is no small number, it represents less than one percent of the $889 million in grants to Nigeria that the Global Fund audited in a companion report on the Wamboo.org project. Furthermore, the impact of international support on improving health has been rather large; the Global Fund’s own statement indicates that international support has helped Nigeria reduce deaths from malaria by 62 percent since 2000.

Halting disbursements to health programs can have serious consequences for service delivery, health outcomes, and institutional development. In light of the scale of fraud and the potential health impact, is suspending aid an effective response? And without information on health impact, how would we know?

We argue that funders may be able to escape the scandal cycle—and reduce such disruptions—by paying greater attention to information on program achievements. Currently, funders pay a lot of attention to procedural issues. For example, a 2013 report from the Special Inspector General for Afghanistan Reconstruction (SIGAR) documented weak accounting systems at the Afghan Ministry of Health. Even though the report had no direct evidence of fraud and the health program was successfully delivering services, SIGAR recommended USAID suspend the program.

By contrast, the World Bank’s 2008 Detailed Implementation Review of the Indian health sector not only included evidence of procedural failures, such as bid rigging, but also documented results failures, like continuing high malaria rates and inoperative hospitals. If the World Bank and India had reported these results failures earlier, the cases where corruption was big enough to affect programs would have come to light much sooner.

We think results on service delivery, population health, and institutional development are the key piece of information that could change the dynamics of the scandal cycle. This kind of information can help funders communicate more effectively about why they are deciding to suspend or continue aid, set appropriate standards for when aid should be halted, and establish new funding mechanisms that make it more difficult to divert funds.

We recommend the following three steps to improve funder response:

  1. Communicate using results. When a scandal erupts, communicating the funder’s actions to control or prevent corruption to stakeholders, the media, and the broader public is important. But emphasizing whether health aid programs are achieving intended results is also an essential component of the communications strategy. If a program is achieving results, stakeholders and constituents would better understand a funder’s decision not to suspend aid when a scandal erupts (while investigating abuse and working with the recipient to address the problem).
  2. Differentiate responses by results. In addition to responding to corruption allegations (which typically come from whistleblowers), tracking program results could help funders detect corruption. If a program is falling short of achieving results, corruption might be a contributing factor and an investigation could help determine whether and how much. Moreover, results data would allow funders to determine whether corruption is—or is not—hampering program implementation, and to recalibrate anti-corruption controls accordingly.
  3. Disburse in proportion to results. Where feasible, paying for results in health could help ensure that funds are only paid out when results are achieved. This approach makes it harder to divert funds because payments only occur after the program’s impact is measured. In programs that pay for results, dishonest people can only skim off funds if they have been very efficient at generating impact. In practice, they are likely to simply set their sights elsewhere.

The Scandal Cycle

The Global Fund’s recent statement recognizes the importance of communicating the results of its health grants to Nigeria, but it doesn’t address whether it is helpful to suspend aid over a relatively small amount of fraud or lack of supporting documentation. Our paper encourages funders to incorporate information about program results into their risk management strategies so they can communicate better, detect corruption sooner, and make more considered choices about creating or responding to scandals.

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Yes, Corruption Is Bad for Development. No, Corruption Is Not a Western Obsession

Recently there has been a spate of commentary in the blogosphere that revives a set of tired old canards about corruption and development — the related claims (1) that the focus on corruption and governance in the development discourse is misplaced, because there isn’t a lot of evidence that corruption matters much for development, poverty reduction, etc.; and (2) that anticorruption is a fixation of wealthy, mostly Western countries, because it enables people in those countries congratulate themselves about their moral virtue and to look down on habits and practices in the poor, benighted South. Recent examples include Chris Blattman’s posts on his blog (here, here, and here), Michael Dowdle’s contributions to the Law & Development blog (here and here), and Jason Hickel’s post on Al Jazeera English, though there are others as well.

Sigh. Do we really need to go through this again? OK, look: Yes, there are still lots of unanswered questions about corruption’s causes and consequences, and its significance for various aspects of economic development. And yes, some anticorruption zealots have sometimes over-hyped the role of corruption relative to other factors. But the overwhelming weight of the evidence supports the claim that corruption is a big problem with significant adverse consequences for a range of development outcomes. And the evidence is also quite clear that the focus on corruption as a significant obstacle to development comes as much or more from poor people in poor countries as it does from wealthy Western/Northern elites.

A blog post is not the best format for delving into a very large academic literature on the adverse impacts of corruption. And so the posts to which I’m responding might be forgiven for generally failing to provide much evidence in support of their claims that corruption is relatively unimportant for development, and largely a Western obsession. But, let me at least take a stab at trying to move the conversation beyond unsubstantiated declarations to some assessment of the actual evidence, starting with the impact of corruption on development.

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