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Wednesday, June 3, 2020

Tackling corruption in sub-Saharan Africa:

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From an economic perspective, there are some basic principles that apply across countries and can boost governance, such as strengthening laws, improving government effectiveness, and shoring up fiscal and anti-corruption institutions.

In countries such as Botswana, Chile, Estonia, and Georgia that have managed to lower corruption, multiple factors contributed to their success. These include political will, measures to reduce corruption opportunities (such as cutting red tape and lowering trade barriers), measures to constrain corrupt behavior (such as an independent judicial system or a strong anti-money laundering framework), and improved fiscal institutions (with greater transparency and controls).

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Building expertise and empowering employees in institutions designed to fight corruption will improve their prosecution capability and bridge the gap between public opinion and the court of law. Corruption prosecution cases often fail when governments lack adequate legal capacity. Enhancing corporate governance and a system of checks and balances, particularly through a better governance structure for state-owned enterprises, will also help.

Institutional reform takes time, but more rigorous enforcement of existing regulations would be a step in the right direction.

Digitalization is opening up new ways of fighting corruption by providing governments with new platforms for engaging with citizens and entrepreneurs. It also promotes greater transparency and accountability by facilitating access to information. Many African countries are using this opportunity to improve service delivery and governance in a variety of ways.

In the area of taxation, for example, electronic processing of tax submissions, refund payments, and customs declarations saves time and lowers costs—as well as reducing corruption opportunities. Data analytics make risk-based auditing possible, allowing for faster processing of tax claims.

Digitalization can also improve spending efficiency. Biometric technologies and electronic payment systems are helping cut bureaucratic inefficiencies, better target people in need, produce fiscal savings, and facilitate the delivery of benefits. People are using digital payments—for example, for school fees—to reduce the scope for fraud and corruption by bypassing public officials.

Digitalization can also make procurement more transparent, inclusive, and efficient. Centralized procurement can reduce conflicts of interest and abuse, including at the level of state-owned enterprises, provinces, and local governments.

Concrete benefits
What exactly would this governance dividend mean for the people of sub-Saharan Africa? Better governance and less corruption would result in more revenue for the government, more efficient use of this revenue, increased private investment and job opportunities, and more money to spend and invest in services vital to long-term development, such as health and education. We would expect it to bear fruit in a few different ways:
? Enhanced revenue collection through improved tax compliance. Customs and revenue authorities are better able to combat smuggling and illicit flows when tax officials adhere to strong governance principles. Citizens are more likely to pay their taxes when they trust the effectiveness of government spending.
? More efficient government spending thanks to stronger budgetary processes. Good governance reduces the risk of harmful shifts in government spending toward items subject to graft (white elephants, for instance).
? Improved developmental outcomes and social inclusion. More revenue overall means governments can spend more on their people. Improved governance is likely to benefit the poor disproportionately as they rely more on social services. And increased spending on education and health supports economic and social inclusion and reduces vulnerability.

The continent is at a turning point, reflecting a confluence of factors. A young population with access to real-time information through digitalization and open-access data is demanding transparency and accountability from elected officials. Moreover, to attract foreign investment and integrate with the global economy, countries will need to adhere to good governance principles. Irrespective of the path countries choose to improve governance, the dividends that result will be significant and worth pursuing. Good governance is more relevant than ever.
Imf.org

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