11th International Anti-Corruption Conference, Seoul,South Korea, 26-29 May, 2003Workshop 5.6: Corruption and Donor Policies and Practices
Aid and Corruption:A Wormâs-Eye View of Donor Policies and PracticesBrian CookseyAppendix 1 Aid and Corruption in UgandaThroughout the nineteen-nineties, Uganda was a star performer in policy reform and poverty reduction, and consequently benefited from large commitments of multilateral and bilateral aid.In recent years, there has been growing evidence of strain in the relatively harmonious relations between the Ugandan government and donors. The main issues of contention have been the growing military budget, poor tax collection performance, lack of democratic transparency and accountability, and political corruption.The military budget is said to be $122, but it may be considerably more. âNon-essentialâ expenditures were slashed by over a quarter to free up more money to pursue the 17 year old civil war in Northern Uganda with the Lordâs Resistance Army and the continued presence of the Uganda Peopleâs Defence Force in the Democratic Republic of Congo.Ugandaâs presence in DRC is ostensibly for national self-protection, more plausibly in order to farm out control of the trade in natural resources, including the valuable coltan, to military cronies and potential rivals.Military procurement has suffered from instances of grand corruption, including cases involving the Presidentâs brother Salim Saleh. Museveni has made no secret of his own joint ventures with a local Asian businessman, Sudhir Ruparelia.The Uganda Revenue Authority has been the object of a Commission of Enquiry into corruption, the results of which are yet to be published. The report is said to document the activities of âTeam Fiveâ that represents State House interests in the URA.There are question marks over the Reformed Central Tender Board - whose expatriate head left the country suddenly in unexplained circumstances - and the feasibility of the assets verification exercise for leaders upon which the Inspector General of Government is currently (2003) embarking. (At least 16,000 forms have to be verified, including the assets of âleadersâ at the lowest levels of government).There is a growing perception among donors that GoU is not really committed to anti-corruption policies or greater political pluralism.Not all the blame should be heaped on the Ugandan side. There is evidence that too much aid reduces rather than enhances local commitment to reform. Aid cannot buy reforms, and beyond a certain level, more aid becomes counterproductive, including the growing risk of corruption.Donor involvement in anti-corruption and other governance initiatives reflects their concern with achieving wider policy objectives - poverty reduction, effective planning and budgeting, investment and economic growth - as well as assuring value for their taxpayers´ money.The move away from projects to programme support increases the risk of the misuse of donor funds. The apparent absence of political will raises fundamental questions concerning the long-term justification for a large aid programme. Continued heavy military expenditure in a context of increasing aid dependency raises the question of the diversion of government resources from development to destructive purposes.The poor performance of the URA raises a similar question: does massive financial aid serve as a disincentive to tax collection? Does it facilitate the corrupt funding of the political process by private sector actors? Finally, does aid itself serve as an incentive to corruption?Despite a delay, the World Bank lent Uganda $150 million in support of the GOUâs anti-poverty programme, a few weeks in advance of the Consultative Group meeting with donors scheduled for May 2003.Since aid cannot ´buyâ good policies, the leverage that aid affords donor agencies is limited and generally insignificant. In Uganda and elsewhere, past donor assistance to anti-corruption efforts had not been particularly effective. Bilateral donor concerns with corruption seem to be on the increase, and the prospect of an eventual reduction in aid as a result of continued âbad governanceâ is real.On April 16, Irish ambassador to Uganda, Mairtin O'Fainin, demanded the immediate publication of the âjunk helicopterâ report and the findings of the commission of inquiry on the alleged plunder of the DRC resources, and that appropriate follow-up action be taken.âAs a budget support donor, we have keen interest in ensuring that the accountability systems of government run efficiently and in atransparent manner. Corruption has been, and still remains, a major concern for us and for other budget support donors,â O'Fainin said.At the same meeting, President Museveni said the Leadership Codeshould be revisited to encompass lower cadre staff. He urged the public to join the government in the âfight against corruptionâ.Donors would be understandably reluctant to pull the plug on budget or balance of payments support if external shocks - rising oil prices, falling prices for exports - were to further undermine the economic progress that Uganda has achieved to date. Although Museveni is no longer the darling of the donors, he is unlikely to suffer a significant reduction in aid commitments, which reached $800 million a year in the late 1990s.Source: Cooksey 2003e, BBC Monitoring Service 17 April 2003
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