Corruption and dysfunctional state a toxic cocktail
Corruption in SA seems to have reached pandemic proportions. If that is our assumption, what is the nature of our current discourse on it?
In South Africa, there have been sporadic protests and widespread discussions on corruption. It is apparent that people are fed up with the level of corruption in government, especially about its procurement.
We are often reminded of a sad joke many of us have heard. It goes:
A Mozambican minister of transport visits his colleague in Portugal. On a helicopter ride over the centre of the country, the Portuguese minister points out to a bridge, a dam, a new road, and a flyover. For each infrastructure project, he pats his back pocket, grins and says “ten percent”.
A year later, the visit is reciprocated and now the Mozambican takes his Portuguese colleague on a helicopter ride. Flying over some ground, there is nothing to be seen: no flyover, no dam, no bridge, no freeway. The Mozambican laughs heartily, patting his back pocket, and says, “hundred percent”.
The joke, perhaps overstated, makes two points. The first and the obvious one is about the delivery: we find that the difference between the two countries is that in one country, things get delivered and the minister takes a percentage and in the other, nothing gets delivered and the minister (and the others) take everything. The second is that the story compares the width and depth of corruption in the two countries, pointing out that in the second county, it was widespread and had penetrated all levels.
Back to South Africa, can we assume that corruption as a phenomenon is at a comparable level to that mentioned in the story? Current discussions in the public domain seem to suggest that it may be so. Corruption in South Africa seems to have reached pandemic proportions. If that is our assumption, what is the nature of our current discourse on it?
In our context it is required that the public and activists take a firm stand and create pressure for change. However, much of the current discussion is at the level of accusations about which transaction is corrupt and who is corrupt. The mud-slinging is partly orchestrated by factions pointing fingers at one another. We are now where many countries on our continent have been for decades: “the other is corrupt” but little changes when the accuser assumes power.
Corruption and theft take place all over the world; they are not peculiar to developing countries. But there is something distinctly different about the way theft and corruption manifest in the developed and developing world. We have to realise that corruption is much larger than the incidence of bribery during procurement transactions.
In some of the developed world, direct corrupt influence in the procurement process has been largely minimised. The operations of institutions are relatively robust and transparent, and the opportunity for external interference is minimal once a purchase decision has been made.
Competition among suppliers, a free media, an alert and educated public, civil society activism and oversight structures help to keep everybody in check. However, there are still opportunities to influence earlier in the process: concerning the analysis of needs, design of solutions, choices of what to buy, etc. Mostly they are influenced by sectoral lobby groups at the policy and programme level.
It is, however, unlikely that the delivery process itself is interfered with. There is delivery generally, as per the specifications. The bridge is built, the trains are delivered, assets are maintained, etc. And as we would expect, many people who have had nothing to do with the procurement will benefit, some directly from the delivery itself, and others indirectly through a knock-on impact on related economic activities. In short, there is a multiplier effect that contributes to real social and economic developments.
On the other hand, in much of the developing world, the whole process, from beginning to end, is open to manipulation and can manifest in poor-quality delivery, no delivery at all, overpricing and substantial leakages. Thus, instead of producing a positive multiplier effect, it produces a negative multiplier effect. More is spent for less, and even that “less” comes with high maintenance and associated future problems.
This is perhaps the most damning aspect about government in South Africa today. We get reduced value for increased spend by the government and with almost no upside.
What do we do to address corruption as a phenomenon? Had corruption been noticed in one organisation we could have looked at the internal and external audit reports and instituted an investigation to find the exact corrupt transactions and addressed the root cause. But if the phenomenon is this widespread, we cannot bank upon this methodology to eradicate corruption. So, we have to find ways of addressing the issues on a larger scale. What do we do in a government setup where finalising accounts, closing audit findings and preparing annual reports are at best tick-box exercises?
Corruption is a national problem and should be seen and treated as one. It cannot be trivialised and be looked upon as a project to investigate a few corrupt contracts or transactions.
In that regard, it is worthwhile to understand the importance of systems and institutions in nation-building and progress. Peter Senge in his book The Fifth Discipline, famously said “when placed in the same [functioning] system, people, however different, tend to produce similar results”. That is the power of a large system – it has a desire of its own and manages events to that effect. So, just replacing corrupt individuals with good ones alone cannot solve the corruption issue that we are facing.
It is also true that the same person often behaves differently in different systems. A good example is what happens to a nurse who is employed in a public health facility and moonlights in a private hospital. The behaviour seems to change according to the requirement of the system.
In this context, we have to address the government system and make it behave fairly and effectively. At its aggregated level the system consists of the institutions, their interactions with one another and the population. At the operating level systems comprise people, policies, process, procedures reporting and review. In the popular book Why Nations Fail* the authors argue for building inclusive institutions and creating that small difference at the critical juncture to set the country on the economic growth trajectory. In this context, inclusive institutions are the ones that work for the benefit of all and not for a certain group of people.
Corruption: a symptom of a bigger problem
In an efficient and effective institution, normal operations are mostly well managed. Management identifies discrepancies, not because they are looking to identify malfeasance, but because efficient management identifies out-of-norms activities. Many irregularities, including corruption in procurement, surface in the process of managing the outputs of the institutions. It is a normal task for the management in functional institutions to understand the root causes for poor performance.
There are identifiable reasons as to why our government systems in South Africa are not robust enough and are susceptible to manipulation. We have had change after change after change but no real change in the management plan; leading to fragile institutions and systems.
Some of the factors that impacted on our public administration are:
- After 1994, many administrations were amalgamated. Overnight, that new public administration had to serve the whole of South Africa.
- The authority of the Public Service Commission is minimal. There was and is no effective centre for the public service.
- The new dispensation added provincial parliaments and a new tier of government to the existing two tiers, creating a complex governmental system.
- The legislatures failed to effectively hold the executive and the public service to account.
- In line with the “New Public Management” philosophy, South Africa, too, encouraged the contracting out of services without creating the capability to manage them. Ultimately, we have a bloated, inefficient public service AND a dependence on private-sector contractors.
We still could have managed the system well, but we let it drift to this dysfunctional level where the socioeconomic development and service delivery were no longer at the centre of public administration ethos. Centre stage was taken by power games and corruption. We suggest that we look at corruption in that light and understand what it has displaced as the central ethos.
We do not have institutions that are appropriately designed, staffed and managed. Many of our managers and leaders are not systemic. Even those who are honest are mainly event- and transaction-driven interventionists who invariably break existing systems. Even well-intentioned political and administrative interventions, when they are not designed with sufficient rigour, break the systems. In our view, this is what has happened in South Africa.
In addition, almost all South African state institutions suffer from the displacement of technical competence in the core business and the management of its operations. Instead, state institutions have hired and promoted layers of generalists. Many of these generalists are not systemic and have no incentives to learn the core businesses.
Broken institutions and systems mean that the normal flow of activities does not take place in a predetermined and predictable manner. Performance is erratic. These organisations mainly depend on intervening expeditors and supermanagers. There is a build-up of huge backlogs. Visibility of operations is impaired. Management is in continuous crisis mode. Increasing dysfunctionality in institutions and systems creates increased vulnerability to abuse, theft, fraud and corruption. Collusion between corrupt and self-serving internal and external interests becomes easier and will meet only limited resistance from the remaining pockets of integrity and good governance in the institutions.
There is a plethora of reports about the failures of our management systems and our actions. When many institutions are broken and dysfunctional, damning governance reports make no practical difference. Replacing individuals here and there is like shouting into the wind. It is very difficult to successfully fix selected subsystems. A corrupt procurement system in a dysfunctional institution cannot be easily fixed.
Make our institutions functional
The most powerful anti-corruption strategy, then, is not the implementation of a separate anti-corruption strategy per se, but the integration of anti-corruption measures into the strategy to make our institutions functional and to make them perform better than they are doing now.
When teams of managers and specialists with integrity and competence are put in place, when policies are improved, broken processes and procedures are repaired. When accurate reporting is restored, leakages – including from inefficiencies, theft and corruption – will be reduced. Systemic interventions, together with continuous improvement of performance, will protect the institutions into the future.
In the early 2000s, the South African Revenue Service (SARS) did not start an anti-corruption movement. Instead, an institutional reform programme called Siyakha, (“we are building”) was introduced. What were we building?
The aspiration was to build a world-class, modern, customer-centric tax agency. Corruption got sorted out in the process. Indeed, SARS had a very tough anti-corruption stance. It was difficult to be in SARS and be corrupt. However, the war cry was “Higher Purpose” not “kill corruption”. Programmes for change must have positive goals and provide hope so that positive energy is created in the institutions.
We summarise by saying that: let us make our institutions functional and efficient, so that developmental programmes can be implemented and, in that process, make it difficult to be corrupt in the system. This summary is of course at a conceptual level. We will have to address the system as a whole. Is this possible? We argue, yes, it is possible if we can work at it systematically and rigorously. DM
*Pillay is a former SARS Deputy Commissioner. Kesavan and Pikie were both senior managers at SARS. They all resigned in 2015. This is part I of a first paper on corruption. Part II will explore a systems approach to build integrity and combat corruption, into the plans to reform and make our institutions and systems more effective. Later, there will be papers on procurement, people management, leveraging technology and law enforcement.
*Why Nations Fail is authored by Daron Acemoglu and James A Robinson
Daily Maverick © All rights reserved