I wrote this when i was doing my undergraduate and it still makes sense. Corruption undermines efforts of economic development. One of the most prominent objectives of the Millennium Development Goals (MDGs) adopted at the United Nations Millennium Summit in 2000 was to have member States halve their levels of absolute poverty by 2015. While some countries of the developing world have made sufficient progress towards achieving this goal - Botswana and Namibia - Lesotho looks unlikely to meet the target by 2015 if current trends continue. Indeed, two thirds through to the target year, the finance minister stated in the latest Budget Speech that achievement of Millennium Developmental Goals on poverty is not promising. One of the reasons why Lesotho will miss the 2015 target is because the growth rate in Lesotho continues to fall short of the 7–8 per cent necessary to achieve the MDGs target on halving poverty. The most prominent reason for the retarded growth is the fact that the politicians failed to mobilise domestic resources for development and depended on foreign aid and donor funds to finance government revenues. Funny though, when the development agencies decide to offer foreign aid to African countries, scores from the Transparency International’s Corruption Perception Index (CPI) surveys are always used to reflect the perceptions of business people and country analysts on the level of corruption. The most corrupt countries - scoring the least mark - are subject not to get any funding because corruption deters the returns of any investment. Ultimately, as Basotho, our long term goal of sustainable economic growth and alleviation of poverty reduction cannot be reached because of low scores of the Corruption Perception Index. It does not take a rocket scientist to figure-out that these goals cannot be achieved in an environment where corruption is rife. The obvious reason being that in a context of high degrees of corruption and uncertainty, fewer entrepreneurs – domestic and foreign - and development agencies will risk their money in a business venture or a public project where corrupt officials can lay claim to its proceeds. As a result the investment level in Lesotho stagnated and falling investment kills sustainable economic growth. Endemic corruption threatens the social benefit of public sector projects particularly those infrastructural projects funded by donors. In a corrupt environment, public contracts which should be awarded to those who can deliver on the best terms, in the best time, are given to those whose aim is to divert as much as possible to their pocket. Usually in countries like this, what ensue are lower-quality infrastructural projects and enfeebled public services offered by civil servants to add more injury to their retarded economic growth. Similarly, the allocation of government/donor spending suffers as corrupt officials are likely to choose projects not on the basis of social welfare but rather on the opportunities for extorting bribery and/or diverting funds. The bigger the project the greater the opportunities - projects whose exact value is difficult to monitor make it easier for the greedy to siphon funds. Using the CPI, Graf Lambsdorff found that a one-point improvement in a country’s score was correlated with an increase in productivity of 4 percent of GDP. This means that if Lesotho (ranked 3.5 out of 10 in 2010 CPI) were to improve its corruption score to that of Switzerland (ranked 8.7), its GDP could be 20 percent more and net capital inflow would increase by 3 percent of GDP. Studies have also revealed that corruption is widespread in countries that rely on foreign aid from the IMF, World Bank, Millennium Challenge Corporation etc. This is because “free money” supports rent seeking behaviour – the use of government authority to take and make money without any trade or production taking place - because foreign aid money is easily redirected or extracted through White Elephants. The White Elephants – underground projects done by government officials with a budget of an aid sponsored project – are usually done to “buy” voter confidence during the election run-up season. These immoral activities usually impede achievements of sustainable development which could reduce poverty directly and indirectly. This is how - suppose a politician steals money from certain public project, say block farming, and in attempt to win votes in his constituency he decides to crate a gravel road that needs to be rehabilitated not crated. Only to find out when it rains that his efforts made the road even worse than before. Not only did the gluttonous politician affect efforts of sustainable development (block farming), he also disrespected the villagers’ efforts to construct a road which could directly or indirectly reduce poverty. We all know of our other African “heroes” – Mobuto Sese Seko (Zaire), President Chiluba (Zambia), Emperor Bokassa, President Sani Abach (Nigeria) – whom did not deny their civil servants from relishing on foreign aid aimed for long term infrastructural projects. In Uganda during the 1990’s, rent seeking was so rampant that for every US$ 1 dollar of government spending on education, only 20 cents reached the targeted primary school. It would be nice if the stolen money was invested or spend domestically. It would increase domestic savings and ultimately the level of domestic investment by commercial banks on SMME as it the case in most Asian corrupt nations (Thailand). However, it is unfortunate, because unfettered money is exceptionally corrosive to economic growth and misallocates talent and labour productivity. The reason being that in a corrupt environment, the productive labour force (the better-educated) who should be the main economic agents, have drawn the productivity towards nefarious activities. This results in the so called brain-drain of the most principled economic agents, while the remaining (most principled) are drawn away to the private sector leaving their post to be filled by the less-educated who are potentially more vulnerable to graft on the nefarious activities. When it takes the form of tax evasion or claiming improper tax exemptions, corruption may bring about loss of tax revenue. By reducing tax collection or raising the level of public expenditure (through White Elephants), corruption may lead to adverse budgetary consequences. It may also cause monetary problems if it takes the form of improper lending by public financial institutions at below-market interest rates. When a public official raises the price of a public good, – demands M500 to grant a passport worth M100 – this leads to publics services being un-affordable to the poor who need them most. Let us, as citizens of Lesotho, cease corruptive behaviour because it undermines efforts made to strive to increase positive externalities for the poor that have a potential of reducing poverty. We as citizens need to halt providing bribery offers to public agents because the causation of corruption is bilateral. In my opinion a person who pays a bribe is as much more corrupt than the recipient(s) of the bribe. It is not only the government’s responsibility to stop corruption in Lesotho. The public needs to report these immoral activities as they affect the livelihoods of the poor. Corruption is the only barrier to achieving the Millennium Development Goals in Lesotho. expressionsatnul.blogspot/2011/08/strong-rand-could-have-negative-impact.html
Posted on: Thu, 04 Sep 2014 12:36:57 +0000
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