Foreign Assistance: U.S. Anticorruption Programs in Sub-Saharan Africa Will Require Time and Commitment

Foreign Assistance: U.S. Anticorruption Programs in Sub-Saharan
Africa Will Require Time and Commitment (26-APR-04, GAO-04-506).

In October 2000, Congress passed the International Anticorruption
and Good Governance Act (P.L. 106-309). The purpose of this
legislation is to promote good governance by helping other
countries combat corruption and improve government transparency
and accountability. U.S. agencies spent about $33 million per
year in fiscal years 2001-2002 providing anticorruption
assistance to 22 sub-Saharan African countries. The U.S. Agency
for International Development (USAID) provided the majority of
this assistance, along with the Departments of the Treasury,
Justice, Commerce, and State. To help Congress oversee management
of anticorruption programs in sub-Saharan Africa, GAO was asked
to examine (1) what is known about the extent of corruption in
the region, (2) the factors that give rise to corruption in this
region, (3) the anticorruption assistance U.S. agencies have
provided, and (4) the lessons about anticorruption assistance
that U.S. agencies and other international organizations have
learned.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-506
ACCNO: A09863
TITLE: Foreign Assistance: U.S. Anticorruption Programs in
Sub-Saharan Africa Will Require Time and Commitment
DATE: 04/26/2004
SUBJECT: Accountability
Developing countries
Federal aid to foreign countries
Foreign aid programs
Interagency relations
International cooperation
International relations
Corruption
Sub-Saharan Africa

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GAO-04-506

United States General Accounting Office

GAO
Report to the Subcommittee on African Affairs, Committee on Foreign Relations, U.S. Senate

April 2004

FOREIGN ASSISTANCE

U.S. Anticorruption Programs in Sub-Saharan Africa Will Require Time and Commitment

GAO-04-506

Highlights of GAO-04-506, a report to the Chairman and Ranking Minority
Member, Subcommittee on African Affairs, Committee on Foreign Relations,
U.S. Senate

To help Congress oversee management of anticorruption programs in
sub-Saharan Africa, GAO was asked to examine (1) what is known about the
extent of corruption in the region, (2) the factors that give rise to
corruption in this region, (3) the anticorruption assistance U.S. agencies
have provided, and (4) the lessons about anticorruption assistance that
U.S. agencies and other international organizations have learned.

www.gao.gov/cgi-bin/getrpt?GAO-04-506.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact David Gootnick at (202)
512-3149 or [email protected].

April 2004

FOREIGN ASSISTANCE

U.S. Anticorruption Programs in Sub-Saharan Africa Will Require Time and
Commitment

Indexes, surveys, and studies indicate that corruption in sub-Saharan
Africa is pervasive, but assessing it is inherently difficult. Indexes
published by the World Bank Institute and Transparency International have
limitations; for example, both focus on perceptions of corruption, and
both recognize their measures to be imprecise. Regional surveys indicate
that many businesses are affected by corruption, although perceptions of
corruption levels vary among countries (see figure). According to
country-level surveys and other information, households view corruption as
rooted in the police, judicial system, and health services, although
perceptions of the most and least corrupt institutions vary by country.

Sub-Saharan African countries share some fundamental challenges that can
give rise to corruption. According to studies and U.S. agency officials,
these challenges include low civil service salaries, a lack of
transparency and accountability in government operations, ineffective
legal frameworks and law enforcement, weak judicial systems, and tolerant
public attitudes.

U.S. anticorruption programs cover a range of issues. Funding for these
programs represented about 2.4 percent of U.S. assistance to sub-Saharan
Africa in fiscal years 2001-2002. The programs have focused on supporting
civil society; encouraging legal, judicial, and regulatory reform;
privatizing government functions; enhancing government accountability;
supporting elections; establishing anticorruption agencies; and providing
law enforcement assistance. However, U.S. legislative restrictions on
foreign law enforcement assistance limited agencies' activities in this
area. These programs are relatively new and early evaluations and our
analysis suggest prospects for sustainability are unclear.

Lessons learned from anticorruption efforts include the importance of (1)
political will from public and private leaders; (2) widespread public
support; (3) programs tailored to country conditions; (4) multipronged
efforts that incorporate prevention, education, and law enforcement; (5)
access to government information; and (6) time and commitment to address
the difficult nature of these problems.

Businesses Reporting That Bribes Are Essential to "Get Things Done" in
Sub-Saharan Africa, All of Africa, and the World

Contents

Letter

Results in Brief
Background
Corruption in Sub-Saharan Africa Is Pervasive but Difficult to

Measure Sub-Saharan African Countries Share Some Underlying Factors That Give Rise to Corruption U.S. Anticorruption Programs in Sub-Saharan Africa Were Broadly

Integrated and Received Limited Funding Anticorruption Efforts Have Identified Some Lessons Learned Conclusions
Agency Comments and Our Evaluation

1 2 4

14 32 34 34

Appendixes

Appendix I:

Appendix II:

Appendix III: Appendix IV: Appendix V: Appendix VI:

Appendix VII:

Scope and Methodology 36

International Agreements Addressing Corruption in
Sub-Saharan Africa 38

Characteristics of WBI and TI Corruption Indexes 41

Analysis of Corruption and Economic Development 44

World Business Environment Survey 51

Comments from USAID 56
GAO Comments 63

GAO Contact and Staff Acknowledgments 64
GAO Contact 64
Staff Acknowledgments 64

Bibliography

Tables Table 1: Characteristics of the WBI and TI Corruption Indexes 42
Table 2: Correlation between 2002 WBI Index and Selected
Development Indicators 45
Table 3: Summary of Regression Analysis Using 2002 WBI
Index 47

Figures Figure 1:
2002 WBI Corruption Index Rankings for 47 Sub-Saharan African Countries 7

Contents

Figure 2:
2003 TI Corruption Perception Index Rankings for 24 Sub-Saharan African Countries 8

Figure 3:
Firms in Selected Sub-Saharan African Countries Responding "Always, Usually, or Frequently" to WBES Statement "It Is Common for Firms in My Line of Business to Have to Pay Some Irregular `Additional Payments' to Get Things Done" 10

Figure 4:
Annual Averages of U.S. Anticorruption Assistance to Sub-Saharan Africa, Fiscal Years 2001-2002 16

Figure 5:
Sub-Saharan African Countries or Programs Receiving U.S. Anticorruption Assistance in Excess of $1 Million, Fiscal Years 2001-2002 17

Figure 6: U.S. Anticorruption Programs in Sub-Saharan Africa, Fiscal Years 2001-2002 22 Figure 7: Relation of WBI Index to Percentage of Population with Access to Improved Drinking Water Sources 50

Figure 8:
Firms in Selected Sub-Saharan African Countries Responding "Moderate or Major Obstacle" to WBES Question "How Problematic Has Corruption Been for the Operation and Growth of Your Business?" 52

Figure 9:
Firms in Selected Sub-Saharan African Countries Responding "Always, Usually, or Frequently" to WBES Question "Do Firms Like Yours Typically Need to Make Extra, Unofficial Payments to Gain Government Contracts?" 53

Figure 10: Firms in Selected Sub-Saharan African Countries Responding "Never, Seldom, or Sometimes" to WBES Question "How Often Do You Associate `Honest/ Uncorrupt' as Description of the Court System in Resolving Business Disputes?" 54

Figure 11: Firms in Selected Sub-Saharan African Countries Responding "Minor, Moderate, or Major Obstacle" to WBES Question "To What Extent Has Corruption of Bank Officials Had an Impact on Your Business?" 55

Contents

Abbreviations

AU African Union
BPE Bureau of Public Enterprises
FCPA Foreign Corrupt Practices Act
FBI Federal Bureau of Investigation
ICITAP International Criminal Investigative Training Assistance

Program IDA International Development Association INL Bureau for International Narcotics and Law Enforcement Affairs MCA Millennium Challenge Account NGO nongovernmental organization NSC National Security Council OECD Organization for Economic Cooperation and Development OPDAT Office of Overseas Prosecutorial Development Assistance and

Training SADC Southern African Development Community TI Transparency International UN United Nations USAID U.S. Agency for International Development WBES World Business Environment Survey WBI World Bank Institute

This is a work of the U.S. government and is not subject to copyright
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separately.

United States General Accounting Office

Washington, D.C. 20548

April 26, 2004

The Honorable Lamar Alexander Chairman The Honorable Russell D. Feingold Ranking Minority Member Subcommittee on African Affairs Committee on Foreign Relations United States Senate

In Africa, the world's poorest continent, high levels of corruption hinder economic and political development, diverting funds that could be used for education, investment, and public infrastructure. Corruption-the misuse of public office for private gain-is perpetrated by government officials engaging in embezzlement and nepotism; it can also take place between public officials and private citizens in the form of bribery, extortion, influence peddling, and fraud. Corruption varies in scale: grand corruption involves the loss of large amounts of money at high levels of government, while petty corruption involves the payment of small amounts of money for favors or preferences.

In October 2000, Congress passed the International Anticorruption and Good Governance Act.1 The purpose of this legislation is to ensure that U.S. anticorruption assistance programs promote good governance by helping other countries to combat corruption throughout society and to improve transparency and accountability at all levels of government and throughout the private sector. The legislation established anticorruption as one of five major U.S. foreign policy goals but did not provide new funding for anticorruption initiatives. The recently initiated Millennium Challenge Account (MCA) assistance program proposes to reward good governance and to use a measure of corruption as a key indicator of a country's eligibility for assistance. The MCA initiative, funded at $1 billion in fiscal year 2004 with significant increases proposed by fiscal year 2006, has increased interest in country eligibility for these funds, the steps that sub-Saharan African governments have taken to address corruption, and U.S. efforts to assist these nations. In response to your request that we review U.S. anticorruption assistance to sub-Saharan Africa, this report examines (1) what is known about the extent of corruption in sub-Saharan African countries, (2) the factors that give rise to corruption in this region, (3) the

1P.L. 106-309, Title II.

anticorruption assistance that U.S. agencies have provided to these countries, and (4) the lessons about anticorruption assistance that U.S. agencies and other international organizations have learned.

To address these issues, we analyzed data on corruption compiled by the World Bank Institute (WBI) and the nongovernmental organization Transparency International (TI). We also analyzed country-level surveys and studies focused on corruption and governance in the region. We reviewed documents and interviewed key officials from the U.S. Agency for International Development (USAID) and the Departments of the Treasury, Justice, Commerce, and State, and we examined the results of a recent USAID survey of its anticorruption programs in fiscal years 2001-2002. In addition, we analyzed program documents from the six countries in sub-Saharan Africa-Mozambique, Nigeria, South Africa, Uganda, Zambia, and Benin-in which the U.S. government undertakes the largest anticorruption programs, and we obtained more detailed information from the USAID missions in these countries. We obtained perspectives on multilateral efforts and country-level programs from officials of the World Bank and the UN Development Program. In addition, we visited Nigeria and Mozambique to meet with U.S. and host government officials, other donors, and representatives from civil society to review past and ongoing anticorruption efforts there. We conducted our review from March 2003 to March 2004 in accordance with generally accepted government auditing standards. (See app. I for additional information on our scope and methodology.)

Results in Brief
Corruption in sub-Saharan Africa is widespread, but measuring its extent is inherently challenging. The WBI and TI indexes rank many sub-Saharan African nations among the most corrupt worldwide; however, both indexes assess perceptions rather than actual incidences of corruption, and both institutions recognize that these indexes are imprecise. In addition, we found no statistically significant differences in corruption scores between countries that are closely ranked in the indexes. Regional surveys indicate that many businesses are affected by corruption, although perceptions of corruption levels vary among countries. According to country-level surveys and other information sources, households see corruption as rooted in police, the judicial system, and health services, although perceptions of the most and least corrupt institutions vary among countries.

Several factors in sub-Saharan Africa give rise to corruption. First, low civil service salaries often lead employees to solicit bribes or embezzle funds. In

addition, a lack of transparency and accountability in government operations creates opportunities for corruption. Also, ineffective legal frameworks and weak enforcement of laws impede attempts to investigate and prosecute corruption. Further, most of the countries lack an effective judicial system to prosecute and sanction corrupt officials. Finally, public tolerance of corruption is common and, in some countries, corruption is expected.

The United States has taken a broad approach to addressing corruption in sub-Saharan Africa. Funding for U.S. anticorruption programs developed by USAID, as well as the Departments of the Treasury, Justice, Commerce and State, represented about 2.4 percent of U.S. assistance to the region in fiscal years 2001-2002. In general, these programs have addressed corruption directly or indirectly by working to create an environment not conducive to corruption. Although USAID lacks a strategic plan for its anticorruption efforts, it has coordinated its programs through an internal working group. Interagency coordination has been led by the National Security Council and the Department of State (State). U.S. anticorruption assistance has focused on developing civil society programs; encouraging legal, judicial, and regulatory reform; privatizing government functions; enhancing government accountability; supporting elections; establishing anticorruption agencies; and providing law enforcement assistance. However, law enforcement assistance has been limited by legislative restrictions on the use of foreign assistance funds for training and financial support of police or other foreign law enforcement entities. Finally, USAID has conducted a limited number of evaluations of anticorruption programs in the region and has found unclear results and objectives. These early evaluations and our work suggest that programs are relatively new and prospects for sustainability are unclear.

Anticorruption efforts have produced some lessons learned about the conditions and components necessary for programs to succeed. First, political will and commitment from a country's leadership are essential. Second, widespread public support is necessary. Third, the programs must be tailored to each country's unique historical and economic conditions. Fourth, programs should take a multipronged approach emphasizing prevention, education, and law enforcement. Fifth, transparency and public access to information are important to ensure adequate oversight of government. Finally, because corruption cannot be eradicated quickly and simply, anticorruption efforts require long-term commitment to gain public confidence.

USAID provided written comments on a draft of this report and the Departments of the Treasury, Justice, and State provided informal comments. These agencies generally agreed with our presentation of the issues and conclusions. We were also provided technical comments from the World Bank Institute that were discussed with officials and included in this report where appropriate.

Background
International donors believe that corruption is a challenge to political stability, hampers sustainable growth, distorts prices, undermines legal and judicial systems, and prevents public services from reaching those most in need. At its worst, poor governance and corruption also help create the economic and social conditions that can lead to disillusionment and nurture fanaticism, according to State.

Sub-Saharan Africa contains multiple examples of alleged corruption, particularly in nations with extractive industries such as oil, natural gas, and precious gems. For example, a Nigerian case of grand corruption involved a former military ruler, Sani Abacha, who, according to press accounts, is alleged to have transferred tens of billions of dollars out of the country during his 1993-1998 rule.2 In Angola, government mismanagement of oil revenue was reported in the press to have resulted in the disappearance of $4.2 billion between 1997 and 2002. In Benin, the Minister of Finance estimated in 2001 that $68 million is lost to corruption every 3 years. Petty or administrative corruption, involving lesser amounts of money, has also been shown to affect the poor adversely by increasing the price of, and restricting access to, public services. For example, the poor in Sierra Leone pay a disproportionately higher percentage of their incomes on bribes for health, education, and courts than do wealthier citizens, according to recent analysis by the government of Sierra Leone. A 2003 Nigerian government study described the "10 percent syndrome," a 10 percent unofficial "tax" paid to public servants to ensure that they perform their official functions.3

Concern that corruption impedes development in Africa and other regions began to emerge among donor nations and multilateral organizations in the

2Nambibian.com (July 7, 2000).

3Government of Nigeria, Governance and Corruption Diagnostic
Study (Abuja, Nigeria: 2003).

mid-1990s. Previously, government corruption in the region was often considered a taboo subject in U.S. bilateral and multilateral discussions, according to USAID officials. The creation of international nongovernmental organizations concerned with transparency increased awareness about the insidious impact of government corruption. International efforts to address corruption began in the mid-1990s. (App. II contains additional information on international and regional agreements addressing corruption.)

U.S. anticorruption efforts in sub-Saharan Africa began with a few efforts between the 1960s and 1980s with USAID's government reform programs in Liberia, the Sahel Region, and Niger. During the mid-1990s, building on "windows of opportunity," USAID began incorporating anticorruption activities into new and existing programs and, since 2000, USAID's programs promoting transparency have evolved to include surveys, media campaigns, anticorruption commissions, and support for host government legislatures. According to USAID officials, its assessment of political will is a critical element on which it bases country programming decisions. In addition, the Departments of the Treasury, Justice, Commerce, and State have provided specialized legal, law enforcement, and financial assistance that include anticorruption elements.

To assess corruption, researchers and policy analysts have developed broad indexes, conducted regional or sectoral surveys, and undertaken country-level surveys and studies. WBI and TI publish two well-known indexes that gauge perceived corruption. The WBI index is one of 16 performance indicators that will be used to determine eligibility to apply for funds from the newly established MCA. To be eligible for MCA assistance in 2004, countries must rank above the median in relation to the pool of candidate countries4 on at least half of the indicators in each of the three policy categories-ruling justly, encouraging economic freedom, and investing in people-and be ranked in the top half of the WBI index. In addition, countries must have inflation rates under 20 percent. The MCA board may also consider data from the TI Corruption Perception Index and the Department of State's Human Rights Report in assessing just and democratic governance.

4For fiscal year 2004, the candidate pool of countries must be (1) eligible for assistance from the International Development Association (IDA), (2) have a per capital income equal to or less than $1,415, and (3) not be subject to legal provisions that prohibit them from receiving U.S. economic assistance under the Foreign Assistance Act. These criteria are expected to change in future years.

Corruption in Sub-Corruption in sub-Saharan Africa is perceived to be widespread, but

measures are imprecise. The WBI and TI indexes measure perceptions ofSaharan Africa Is corruption rather than actual incidences. Regional business surveys also Pervasive but Difficult indicate that high levels of corruption affect business development, to Measure although perceptions of corruption's effect vary. Country-level surveys and

studies show that, while some perceptions of corruption are similar among countries, generalizing about its causes and incidence is difficult.

Broad Indexes Show Extensive Corruption but Have Weaknesses

The WBI and TI indexes show high levels of corruption in sub-Saharan Africa: in its 2002 index, the WBI index ranked 36 of the 47 sub-Saharan African countries it surveyed below the worldwide median, and 22 of these countries in the bottom 25th percentile (see fig. 1). The TI index ranked 20 of 24 sub-Saharan African countries it surveyed in the bottom half of its index (see fig. 2). However, both indexes gauge survey respondents' perceptions of corruption rather than directly measuring the incidence of corruption, and both recognize their measures of corruption to be imprecise (see app. III for further details). We identified the following additional limitations:

o
In the WBI and TI indexes, individual country measures of corruption are associated with a range of uncertainty or confidence interval (depicted by the vertical lines in figs. 1 and 2). No statistically significant differences in relative country corruption rankings may exist when vertical lines overlap, as is the case for many low-income sub-Saharan African countries, because country scores with overlapping measurement errors cannot be differentiated.5

o
Fifty percent (median) of the 195 countries ranked by the WBI index have corruption scores of -0.25 or higher. As figure 1 shows, 11 sub-Saharan African countries' (23 percent) have corruption scores above the worldwide median, while 36 (77 percent) sub-Saharan African countries have scores below the worldwide median. However, when measurement error is taken into consideration, only 6 countries have corruption scores that are significantly above the median (at 90 percent statistical confidence). Twenty-four countries have scores statistically below the median, and 17 countries have scores that do not differ statistically from the median. Therefore, the 6 sub-Saharan Africa

5WBI staff and others also identified this limitation.

countries that have scores statistically above the WBI median can clearly be differentiated from the 24 counties that have scores statistically below the median.

Figure 1: 2002 WBI Corruption Index Rankings for 47 Sub-Saharan African
Countries

Note: For each country, the vertical line indicates a 90 percent
confidence interval around its estimated corruption score. The index
ranges from 2.5 (low corruption) to -2.5 (high corruption). Country
corruption scores are not statistically different when confidence
intervals overlap. The horizontal lines separate the 195 countries, ranked
by WBI, into quartiles, each containing approximately 49 countries.

Figure 2: 2003 TI Corruption Perception Index Rankings for 24 Sub-Saharan
African Countries

Note: For each country, the vertical line indicates a 90 percent
confidence interval around its estimated corruption score. The index
ranges from 10 (highly clean) to 0 (highly corrupt). Country corruption
scores are not statistically different when confidence intervals overlap.
The horizontal lines separate the 133 countries in the TI index into
quartiles, each containing approximately 33 countries.

o
In the WBI index, a statistically significant association exists between levels of corruption and selected development indicators when all
countries are considered together.6 In general, higher levels of
corruption are associated with lower development outcomes. However,
when we analyzed the countries' data
by income level (low, middle, and high, as defined by the World Bank), we found a statistically significant

6These indicators include 12 Millennium Development indicators, as
well as five key performance indicators.

association for far fewer of the indicators than when we considered all of the countries together. (See app. IV for more details of our analysis.)

In this
context, a senior World Bank official working on corruption has observed that although the WBI and TI indexes are useful as a broad gauge of corruption, they are not intended to guide specific program or policy decisions.7

Regional Business Surveys
Show Negative Effects, Varying Perceptions of Corruption

Regional and sectoral survey instruments that measure governance, the business environment, and corruption are often used to gain insight into
corruption in economic sectors and geographic regions. One of the more
comprehensive surveys is the World Business Environment Survey (WBES) (see app. V for more information).8 WBES results indicate that high levels of corruption negatively affect business development in sub-Saharan
Africa. However, the perceived effect of corruption varies among countries. In addition, the WBES report noted that the response rates for the African countries, and for questions on corruption, are relatively low. Because of the response rates and the numbers of respondents, differences between some countries may not be significant.

The WBES reported that about 64 percent of businesses it surveyed in 16 sub-Saharan African countries considered corruption to be a serious constraint. This compares
with 17 percent of businesses
surveyed in OECD countries and approximately half of businesses worldwide. The survey also found that, on average, more than half of businesses operating in sub-Saharan Africa believe that irregular payments are essential to "get things
done" (see fig. 3). Specifically, nearly 70 percent or more of businesses in Nigeria, Tanzania, Madagascar, and Uganda reported this belief, compared with less than 25 percent in South Africa, Botswana, and Namibia. In
addition, Madagascar, Senegal, Ivory Coast, and Nigeria had the highest
percentage of businesses stating that unofficial payments are required to gain government contracts. (See app. V for additional analysis of WBES data.)

7D. Kaufmann, A. Kraay, and M. Mastruzzi, Governance Matters III:
Governance Indicators for
1996-2002 (Washington, D.C.: World Bank Institute, 2003).

8The WBES queried 10,032 businesses in 81 countries, including 1,629 in
16 African countries in 1999 and 2000.

Figure 3: Firms in Selected Sub-Saharan African Countries Responding
"Always, Usually, or Frequently" to WBES Statement "It Is Common for Firms
in My Line of Business to Have to Pay Some Irregular `Additional Payments'
to Get Things Done"

Notes: Response options were "always," "usually," "frequently,"
"sometimes," "seldom," and "never." Figures in parentheses are the number
of firms that responded in each country.

Country-Level Surveys and Country-level public perception surveys and corruption studies play an Studies Show That important role in providing information about the nature, magnitude, and Corruption Is
Seen as location of corruption within a country (see the bibliography for a list of

the surveys and studies we reviewed). These sources suggest thatRooted in Public
households in most of the countries we reviewed see corruption as rooted
Institutions in institutions that have the greatest contact with the public, namely the

police, the judicial system, and health services.9 For example, police corruption is considered to be a serious problem in Nigeria, South Africa, Zambia, Mozambique, and Uganda. However, the institutions considered least corrupt varied considerably. In Zambia, commercial banks and anticorruption commissions
are considered to be least corrupt, whereas in
Uganda, local councils and primary schools are considered least corrupt. In addition, for some countries, the data suggest a gap between personal experiences with corruption and perceptions of corruption. For example, a 2001 household survey in South Africa found that although 11 percent of
those surveyed had direct experience with corruption, 41 percent of respondents perceived it to be one of the country's most important problems.

Sub-Saharan African Although it is difficult to
generalize about corruption in sub-Saharan Africa,

the six countries we reviewed share some factors that are perceived to giveCountries Share Some
rise to corruption. These include (1) low civil service salaries, (2) a lack of
Underlying Factors transparency and accountability, (3) ineffective legal frameworks, (4) an That Give Rise to ineffective judicial system, and (5) tolerant attitudes and lack of public

awareness about the costs and consequences of corruption.

Corruption

Low Civil Service Pay Contributes to Corruption

In the countries we examined, low
and untimely payment of salaries was cited as a significant and leading root
cause of
corruption. To augment their incomes, civil servants may solicit bribes, embezzle funds, or engage in a
second job or private business during government
working hours. In a 2003 Ugandan survey, 51 percent of the respondents identified low civil service
salaries as a main cause of corruption. The same study quoted one respondent asking rhetorically, "How can one refuse $257 to allow a
prisoner to escape when one is earning only $97 per month?" According to
analysts in Uganda, corruption in the magistrate courts is attributed in part
to low salaries for court clerks and registers who seek extra payments to expedite cases. A 2003 Nigerian corruption and governance survey ranked the police as the most corrupt institution in the country. A U.S. official
stated that one of the root causes of police corruption in Nigeria is that

9In five of the countries that we reviewed-Mozambique, Nigeria, South Africa, Uganda, and
Zambia-some level of survey or assessment was conducted in the past 5
years. No assessment or survey was conducted
in the sixth country, Benin, despite the presence of ongoing U.S. anticorruption programs.

police often do not receive their full
salaries or per diems for months at a time. In addition, a 2003 TI study states that in Zambia, the police live in
very poor accommodations, lack basic facilities such as sanitation, water,
and electricity, and earn $25 to $63 per month. While country-level studies
and surveys consistently cite low civil service wages as a major cause of
corruption, USAID officials and studies by other donors state that
increasing civil service pay does not necessarily reduce corruption. They suggest that wage increases must be accompanied with other reforms to be effective.

Lack of Transparency and Accountability Increases Corruption Opportunities

Surveys, studies, and donor documents all cited lack of transparency and accountability in government systems, including procurement and budget, as creating considerable opportunities for corruption in the countries we reviewed. According to the 2003 Nigerian corruption survey, the struggle to
secure government contracts is intense, and public officers involved in the
process are often tempted to interfere with the process to their own advantage. The same study reported that 30 percent of firms pay between 6 and 10 percent of a contract's
value to cover kickbacks for patrons in Nigeria. While the assessment
affirms that public procurement in Nigeria
has been considered a significant problem, according to a government
official we interviewed in 2003, the government has made recent efforts to increase the credibility of the process by streamlining it to include widely
advertised tenders and making timely and rational decisions.

Legal Frameworks Fail to Address Corruption Adequately

Weak legal frameworks also hinder attempts to investigate and prosecute
corruption. Although anticorruption laws exist in all of the six countries
that we reviewed, in many cases, these
laws do not address important areas of concern or they have been weakened by legal challenges. According to
USAID officials, in Mozambique, the government recently passed an anticorruption law that requires government decision-making officials to
declare their assets, offers whistleblower protection, imposes sentences
for government officials requesting bribes, and mandates fines for auditors
who do not inform the anticorruption unit of corrupt practices they may uncover. While this law is a move toward international best legal practices for combating corruption, it does not allow undercover operations and procedures such as plea bargaining in corruption investigations; nor
increase penalties for corrupt officials; or require that all civil servants publicly disclose assets.

According to U.N. documents, South Africa's 2002 Prevention of
Corruption Bill establishes legal frameworks to address corruption that
are modeled on international best practices. Prior to this legislation, however, it was very difficult to prosecute individuals, because South Africa's
previous 1992 Corruption Act abolished the common law crime of bribery and made it difficult to fulfill the evidence requirements for prosecution of
corruption. In Nigeria, the Independent Corrupt Practices and Other Related Offenses Act of 2000 is considered to be based on best practices; however, it has been weakened by numerous legal challenges from the courts and National Assembly, particularly regarding the anticorruption agency's mandate.

Ineffective Judicial Systems Hamper Prosecution of Corrupt Officials

Most of the countries that we reviewed also lack an effective system for publicly prosecuting or sanctioning corrupt officials. Corruption in the judiciary, combined with other weaknesses such as poor legal training, an insufficient number of prosecutors, limited resources, and weak
enforcement of laws impedes attempts to investigate and prosecute
corruption cases and results in considerable delays in prosecuting such
cases. In Zambia, a 2003 survey suggested that, by not prosecuting and convicting public officials for corrupt practices, governments demonstrate a lack of political will to address corruption. For example, a 2003 South African study reports that long court delays and a high rate of withdrawal
of cases have conveyed the message that corrupt officials can act with
impunity.

According to a 2000 USAID governance study in Uganda, from 1996 to 2001,
only 10 of the 16,361
new corruption-related cases handled by the Inspector General of the Government from 1996 to 2001 resulted in convictions. In
Mozambique, data provided by USAID
indicate that during a 12-month period that ended in October 2003, the anticorruption unit based in the Attorney General's office investigated 116 cases and convicted three
individuals. According to a USAID official, corruption charges in
Mozambique have been particularly difficult to prosecute owing to resistance by the court.

Public Tolerance of According to government officials, corruption assessments, and donor

Corruption Is
Common documents, public acceptance or tolerance of corruption is common in many of the countries that we reviewed. While the public generally
perceives corruption to have a negative impact on society,
in some countries, people have become accustomed to it. For example, although

both the WBI and TI indexes rank South Africa's corruption level as relatively low,
a 2003 study by the UN Office on Drugs and Crime found that
corruption in that country has become a part of the "national psyche." In
addition, other documents state that corruption is often tolerated in certain
forms, such as nepotism: in many African countries, it is expected that
those in a position to help family or tribal members and other associates
will do so by providing jobs, contracts, or other opportunities. In Zambia, a 2003 TI
study states that the widespread public acceptance of corruption is
one of its main causes.

A 2000 USAID assessment of democracy and governance in Uganda states
that the public commonly expects that people in power will take advantage
of their positions. Another recent study in Uganda reported that 39 percent
of the respondents agreed with the following statement: "It is acceptable to
bend the law as long as one does not break it." In addition, the head of Nigeria's anticorruption commission told us that the level of corruption in the country had led to a change
in the nation's moral fabric, so that it is
considered acceptable to use one's position to increase his or her income.

U.S. Anticorruption Programs in
Sub-Saharan Africa Were Broadly Integrated and Received Limited Funding

The United States has taken a broad approach to addressing corruption in
sub-Saharan Africa. Funding for U.S. anticorruption programs represented about 2.4 percent of U.S. assistance to the
region in
fiscal years 2001-2002. In general, these programs have addressed corruption both directly and indirectly by working to create an environment not conducive to corruption. U.S. agencies' anticorruption assistance has been coordinated formally and informally and has included a wide range of programs. However, U.S. law enforcement assistance programs have been limited by
legislative restrictions. Few U.S. anticorruption programs have been evaluated, often only as components of larger programs.

U.S. Programs in Sub-Saharan Africa Received Limited Funding

In fiscal years 2001-2002, U.S. funding for anticorruption assistance to sub-Saharan Africa averaged about $33 million per year,10
a small portion of the more than $1.4 billion in average annual U.S. assistance to the region. Programs were implemented by USAID and the Departments of the Treasury, Justice, Commerce, and State, with USAID's programs
accounting for about 84 percent of the funding (see fig. 4). U.S. programs operated in 22 countries, with budgets ranging from
$50,000 to $7.6 million.
The largest programs were in Nigeria and South Africa, with reported annual funding
of $7.6 million and $3.9 million, respectively. Ten countries,
plus regional programs, each were reported to have received more than $1 million in anticorruption assistance (see fig. 5).11 USAID's civil society programs constituted the largest number of the agency's anticorruption programs, with average annual funding of nearly $6.7 million in fiscal years
2001-2002. As shown in figure 6, there are a wide range of anticorruption programs in the region, many of which receive relatively small amounts of funding. Decisions about programming are made by the U.S. personnel
working in the region.

10A 2003 USAID inventory of its
fiscal years 2001-2002 global anticorruption programs
requested missions to estimate the portion of programs that were
related to anticorruption activities. The Department of State provided funding data for anticorruption projects and diplomacy for
fiscal years 2001-2002. The program funding data we obtained for the
Departments of the Treasury, Justice, and Commerce
did not indicate which parts of the
agencies' programs were tied to anticorruption objectives.

11In the following 12 countries, the average annual amount of annual anticorruption
assistance was less than $1 million: Mali, Angola, Namibia, Democratic Republic of Congo, Malawi, Rwanda, Kenya, Zambia, Tanzania, Chad, Guinea, and Botswana.

Figure 4: Annual Averages of U.S. Anticorruption Assistance to Sub-Saharan
Africa, Fiscal Years 2001-2002

Figure 5: Sub-Saharan African Countries or Programs Receiving U.S.
Anticorruption Assistance in Excess of $1 Million, Fiscal Years 2001-2002

In June 2003, USAID's Africa Bureau established a $7.5 million annual anticorruption initiative
to fund new anticorruption programs proposed
by USAID missions that were reviewed and selected by Washington headquarters staff. USAID anticipates that this initiative will allow it to pilot innovative approaches that will contribute to an emerging set of best
practices for improving transparency and accountability in Africa. USAID also expects this initiative to capitalize on what the agency considers its comparative advantage within the development community-having staff
in countries to work on developing civil society organizations to advocate

for, monitor, and help sustain anticorruption efforts. According to a USAID official, nine countries received funding from this initiative in 2003.12

U.S. Agencies Addressed Corruption Directly and Indirectly

The United States pursues a mix
of programmatic and diplomatic efforts to address anticorruption goals. U.S. anticorruption programs developed in sub-Saharan Africa were intended to address corruption both directly and indirectly. According to USAID anticorruption specialists, USAID programs
directly addressed corruption through work with civil society to promote advocacy, legislative initiatives to promote transparency and accountability, support for supreme audit agencies, and work with anticorruption commissions. The agency indirectly addressed corruption by supporting elections and privatization. (The direct and indirect approaches sometimes overlap, however, and certain programs such as the drafting of legislation may fall into either category depending on the program's focus.)

The Department of State has promoted efforts considered to directly
address corruption by negotiating international agreements to establish legal frameworks to combat corruption13 and supporting the participation of African representatives in developing such agreements. In addition, State has addressed corruption indirectly through its public diplomacy
programs in the region, which included presentations and conferences to
local officials on corruption and related issues such as privatization and investigative reporting.

The Department of Justice, with funding from
State and USAID, has indirectly addressed corruption by providing law enforcement assistance through the International Criminal Investigative Training Assistance
Program (ICITAP) and the Office of Overseas Prosecutorial Development Assistance and Training
(OPDAT). ICITAP provides
technical advice, training, mentoring, equipment donations, and internships with model
criminal justice organizations to enhance the capabilities of police
organizations in emerging democracies. OPDAT develops and implements
criminal law assistance programs to enhance the ability of selected foreign

12These countries include Benin, Kenya, Madagascar, Mozambique, Rwanda, South Africa, Tanzania, Zambia,
and Nigeria.

13See appendix II for a description of key international anticorruption agreements that relate
to sub-Saharan Africa.

countries to investigate and prosecute criminal offenses effectively and cooperate with the United States more fully in combating transnational
crime.

Other U.S. efforts to address corruption indirectly have included the Department of the Treasury's provision of advisers from
the Office of Technical Assistance to assist with debt and financial management, budget
transparency, tax systems, and financial crimes. In addition, the Department of Commerce provided training and consultation to local
lawmakers and lawyers to evaluate, revise, and implement laws related to
investment and trade, focused on Nigeria and Angola as well as West
Africa and Southern Africa regional programs.

U.S. Programs Lack a Comprehensive Anticorruption Strategy

USAID has conducted its anticorruption activities in sub-Saharan Africa to
date without the benefit of a comprehensive strategy and has relied on mission program strategies that have sometimes included anticorruption objectives. USAID anticorruption programs are generally developed at its missions. In 2003, the Africa Bureau prepared an Africa Anti-Corruption Initiative for anticorruption programs that are proposed by the missions and selected by Washington headquarters staff. USAID
said it would develop performance monitoring plans to evaluate performance, record
results, and formulate lessons learned for the programs
that will be funded under this initiative.

USAID's Inspector General, reporting on the agency's worldwide anticorruption efforts in 1998, found that its anticorruption activities in Africa were less developed than in other geographic regions.14 The report recommended that USAID set program priorities and performance measures in order to develop a strategy for implementing its anticorruption programs. Since 1998, USAID has issued a number of resource documents, a handbook, and an analysis of its worldwide anticorruption work that
identified how the agency has approached anticorruption activities.
However, 5 years after the Inspector General's report, USAID still lacks a comprehensive strategy for all anticorruption assistance, although we were told in March 2004 that a draft strategy was prepared and being reviewed. USAID officials stated that the agency has nearly completed its review of

14U.S. Agency for International Development, Office of the
Inspector General, Audit of the Status of USAID's Anti-Corruption Efforts
in Assisted Countries, 9-000-98-002-P (Washington, D.C.: 1998).

the draft strategy, which will then be provided to other U.S. agencies and implementing partners for comment. USAID
officials said they expected the strategy to be issued later this year.

Coordination of U.S. Anticorruption Assistance Has Been Both Formal and
Informal

Coordination of U.S. anticorruption assistance has been both formal and informal and has been conducted in various forums that included coordination (1) in USAID
headquarters, (2) between U.S. agencies in Washington, (3) between U.S. agencies at the missions, and (4) between U.S. agencies and other donors in the field.

Since 1998, USAID has convened an informal headquarters working group on corruption issues that is open to all of its bureaus. Representatives of
State's Bureau for International Narcotics and Law
Enforcement Affairs (INL) and USAID's Office of the Inspector General have participated in
these meetings.

Since 2002, interagency coordination in Washington has been conducted by the National Security Council (NSC) and the Department of State through
ad hoc interagency meetings, according to Department of State and USAID officials. Prior to
September 2001, interagency anticorruption coordination was
linked to democracy development
and counterterrorism. According to State officials, in 2002, the NSC directed INL to survey how foreign governments and assistance programs were addressing corruption. However, this effort was never completed. In 2003, State coordinated interagency support for a U.S. anticorruption initiative focused on budget
transparency that was adopted by the Group of Eight (G8) at its June 2003 meeting.15 This initiative was intended to mobilize G8 countries' efforts to
fight corruption and mismanagement of public resources.

According to USAID, interagency coordination at missions has involved interagency committees to coordinate policy concerning anticorruption or related programs. However, since anticorruption programs in sub-Saharan
Africa are limited, and the majority are implemented by USAID, the need for interagency coordination is also limited. USAID officials reported generally good coordination between the embassies and USAID missions on anticorruption programs and objectives and that Ambassadors often

15Group of Eight, Fighting Corruption and Improving Transparency: A G8
Action Plan,
http://www.g8.fr/evian/english/navigation/2003_g8_summit/summit_documents/fighting_cor
ruption_and_improving_transparency_-_a_g8_declaration.html.

paid close attention to anticorruption programs. Further, USAID's
programs are subject to a formal State approval as part of the embassy's Mission Policy Plan.

In the countries we visited, we observed that U.S. agencies use various
means, as follows, to coordinate their anticorruption activities among themselves and with other donors.

o In Nigeria, USAID and the UN Development Program cochair donor
governance activities, which are the chief coordinating mechanisms for
international anticorruption assistance. USAID and other donors closely
coordinated their activities during the 2003 elections by jointly funding an election results management center and a public Web site to promote transparency of election results. USAID and other donors also participated in a cooperative review of the 2003 elections. However, in
the area of court administration, USAID's contractor told us that he did not know how the United Kingdom was planning to carry out its program
and that he had not been informed for at least 2 months about a breakdown in the electronic court reporting system in Lagos (where
donors had some court administration activities).

o In Mozambique, USAID, State, and Department of Justice officials have
worked together to coordinate their assistance to the anticorruption unit in particular and to the judicial and law enforcement sectors in general. USAID and donor representatives told us that overall coordination among donors was good, particularly in the area of
democracy and governance, which includes anticorruption activities.
Donors, whose contributions totaled about $800 million in
2003, play an influential role in the country, because they finance more than 50
percent of the national budget. At least six donor working groups were used to coordinate government reforms addressing corruption issues, but there were no formal mechanisms for coordinating anticorruption programs.

U.S. Anticorruption U.S. anticorruption programs generally fall into one or more of the Assistance Covers a Wide following categories: (1) strengthening civil society; (2) promoting legal, Range of Programs judicial, and regulatory reform; (3) privatizing government functions; (4)

enhancing government accountability; (5) providing election assistance; (6)

supporting anticorruption
agencies; and (7) assisting law enforcement (see

fig. 6).

Figure 6: U.S. Anticorruption Programs in Sub-Saharan Africa, Fiscal Years
2001-2002

Strengthening Civil Society The most widespread U.S. anticorruption initiatives in sub-Saharan Africa are civil society programs that work to increase public awareness and knowledge about the impact of corruption, decrease public acceptance of corrupt behaviors, and encourage the citizens to become involved in
government oversight. USAID has included civil society programs in 15 of the 22 countries in sub-Saharan Africa where the United States has implemented anticorruption programs (see fig. 6). USAID has also supported the start-up and strengthening of nongovernmental

organizations (NGO) to build
advocacy, administrative, and research skills. Examples of USAID's programs include the following:

o
In Mozambique, a local NGO called Etica issued a 2001 report on an anticorruption survey followed by a public awareness campaign. According to U.S., donor, and Mozambican officials, the survey raised public awareness of corruption but this did not result in support from the Government of Mozambique.

o
In Ghana, USAID implemented a program called Government Accountability Improves Trust to increase the capacity of civil society organizations to advocate for the interests of their members to local
government and improve governance, transparency, and accountability at the local level. According to USAID, public budget meetings were
held
in 10 of the 110 administrative districts of Ghana, affording citizens
the opportunity for the first time to view their district's budget and pose questions to their representatives. In four districts, 692 people participated in meetings where citizens queried the electricity, water,
and telephone companies about corruption, inadequate services, and rates. USAID
said that district assembly officials were subsequently more open to considering the concerns raised by civil society.

o
In Uganda, USAID reported that it provided training in advocacy and effective lobbying in Parliament to 32 civil society organizations to
increase their oversight of national government programs. USAID also
trained an additional 80 NGOs at the district level to provide oversight
for local governments.

o
In Madagascar, USAID provided training and the administrative and logistical costs associated with its start-up to individuals who established a national TI chapter.

Supporting Legal, Judicial, and
U.S. anticorruption assistance has supported a broad range of programs to

Regulatory Reforms help reform legislatures, judicial and court administration, financial sectors, commercial law, international anticorruption agreements, and customs, as well as to help decentralize government services. U.S. assistance included the following programs:

o In several African countries, USAID worked with the World Bank to
analyze obstacles to private sector investment and reduce red tape. In
Tanzania, the Investor Roadmap study decreased the number of
clearances required for work permits and reduced the number of

months before a company could start business operations. In
Mozambique, USAID support for a business association and its 2001 study of government efforts to reduce red tape contributed to the passage of new laws and revised regulations that simplified the business registration process and import and export controls. As a result, opportunities for corrupt officials to solicit bribes were reduced and, according to the business association, the time required to register a business dropped from about 18 months to 6 months.

o In Mozambique, USAID supported the country's Legal and Judicial
Training Center to provide short-and long-term training to the staff of
the Attorney General's Anti-Corruption Unit and other government
personnel. This support covered expenses for course participants and trainers, equipment, and curriculum development. However, the
center's financial sustainability was not ensured. The center
has been supported by donors since it
opened in 2000, and the director was uncertain whether it would be able to continue operations if donor funding decreased. However, USAID officials believed that without donor
assistance, the center could still maintain basic operations because it
receives partial government funding.

o In Nigeria, the Department of Commerce's Commercial Law
Development Program provided technical assistance and training to the government on intellectual property, public procurement, ethics, project finance, and regulatory reform through workshops in Nigeria and the
United States.

o
In South Africa, the U.S. Department of Justice's antitrust division and the Federal Trade Commission provided technical assistance and training to the South African Competition Commission to limit anticompetitive behavior. The USAID mission reported that pricing collusion had been uncovered and prosecuted successfully.

Privatizing Government U.S. assistance has helped support privatization processes to allow for

Functions greater transparency and to build trust that the process was fair. According to USAID, privatizing government-owned assets in addition to supporting economic growth is a recognized method of limiting officials' opportunities to seek bribes and promote special interests. Following are examples of U.S. assistance programs:

o
In Nigeria, USAID advised, trained, and subsidized the salaries of private sector experts in the Bureau of Public Enterprises (BPE) and provided a

computer database to support privatizing state-owned enterprises. The
Nigerian government adopted a three-phase program and a review process for enterprises that were to be privatized. According to USAID, BPE's goal was to privatize 44 enterprises in 2001 and 2002, but only 15
enterprises were privatized during those years. BPE has become an established government agency and received World Bank support to continue the privatization process.

o
In South Africa, USAID provided assistance for restructuring and privatizing state-owned telecommunications, ports, ecotourism projects, and mining companies by keeping the public informed of the projects' progress and developing policies for employee stock ownership. Another initiative helped create public-private partnerships in hospitals, schools, and transportation to deliver cost-effective
services.

o
In Uganda, the U.S. Department of the Treasury, Office of Technical Assistance, placed an adviser within the Central Bank to assist with privatizing the Uganda Commercial Bank. This also resulted in a system
for asset management.

Enhancing Government
U.S. agencies have supported reforms and provided technical training and

Accountability

advice to enable governments to better account for public funds and establish standards for public servants. Following are examples of U.S.
assistance programs:

o
In Chad, the U.S. Department of the Treasury's Office of Technical Assistance provided an adviser to assist the Chad-Cameroon Pipeline
Committee, an oversight body formed in 2001, responsible for
overseeing distribution of revenue from Chad's newly discovered oil reserves.16 The Treasury adviser provided the committee logistical and
technical assistance that included developing a manual on reviewing public expenditure. Treasury officials told us that the committee is
operational, and that the agency will consider sending another adviser
to Chad to assist with its operations.

16The Chad-Cameroon Pipeline Committee represents one of the first efforts in Africa to
ensure that extractive industry revenue is spent on development projects
and not misappropriated for corrupt purposes.
It is estimated that oil revenues could provide Chad
and Cameroon with $2 billion and $500 million, respectively, over the
next 25 years.

o
In Nigeria, USAID's objective was to train Budget Office of the Federation staff in planning and budget classifications. Initially, the project had few results, because contractor staff failed to keep their commitment to work with high-level Nigerian government officials. Support within the government has also been mixed, because vested interests oppose changes that could improve government transparency and accountability. However, according to USAID, despite initial
difficulties, this project has begun to realize improvements in budget
formulation and management.

o
In Mozambique, USAID has collaborated with other donors and the government since 1999 in developing a common set of agriculture
policies and programs to restructure the Ministry of Agriculture and Rural Development. The objective of these programs is to link budget
and planning information, the release of donor funds, and financial reports. According to USAID's
agriculture adviser in Mozambique, it
took 3 years to install the new financial management system, indicating that the Ministry's systems had been weaker than anticipated. As a result
of the program, financial transparency in the Ministry was improved.
This program served as a pilot for similar multidonor, sectorwide
programs that are being developed in Mozambique's
health and education sectors. It was also a model for a donor-funded, governmentwide financial management system.

o
In Benin, USAID provided training, computers, and equipment to the Chamber of Accounts of the Supreme Court and the Ministry of
Economics and Finance's Office of the Inspector General of Finance. The assistance helped these institutions create an audit manual and initiate new audits including a review of electoral campaign expenses. USAID reported that these agencies
exceeded the number of audits
they had planned, and that their findings have resulted in prosecutions.

o
In South Africa, USAID worked with the Parliament's Public Accounts Committee to help members understand auditor-general reports, conduct investigations, and handle public testimony to determine whether public officials should be cited. USAID reported that hearings
and trials of corrupt officials resulted, and that similar training was later
provided by professional associations to legislators in nine provinces.

Providing Election Assistance The U.S. government provided assistance in a few instances to strengthen
the national elections and the role of NGOs during elections. Examples of
U.S. assistance include the following:

o In Nigeria, USAID
election assistance over the past 5 years has supported preparing manuals, providing materials to safeguard ballots, developing strategic logistic plans, training officials, and helping draft a
new election law. For the 2003 national and state elections, USAID provided about $625,000 to lease communications equipment for the rapid transmittal of results from some of Nigeria's polling stations and $1.3 million for materials designed to reduce ballot fraud. However, U.S.provided training did not reach some of the wards, and on election day,
nontrained workers were substituted for trained workers, according to
an NGO official. Also, materials to secure ballot boxes and tamper-proof envelopes were not distributed by the Electoral Commission in time to
be used, and 70 percent of these materials remained in warehouses in
the capital during the election. Election observers noted numerous
violations, could not determine the validity of the election, and could not attest to the impact of the violations on the final election results.17
An Electoral Commission official told us that, as of September 2003, 917 of the approximately 1,600 elections conducted in 2003 had been
disputed and taken to the Electoral Tribunal for resolution.

o
In Benin, as part of its civil society development programs, USAID supported civil society organizations that trained poll watchers and political party representatives in election procedures.

o
In Uganda, USAID provided training to the NGO Election Monitoring Group that enabled it to monitor and report on local
trends and issues in the local elections held in February 2002.

Supporting Anticorruption USAID has concluded that supporting anticorruption agencies is
warranted

Agencies if the agencies have a mandate for reform and involve the public in monitoring and reporting on the agency activities. Although a number of
African governments18 have established anticorruption agencies, many of
these agencies have not been able to fulfill their mandates. Some anticorruption agencies have encountered legal challenges when they

17Peter Lewis, "Nigeria: Elections in a Fragile Regime," Journal of
Democracy 14 (July 2003): 131.

18A 2002 Department of State survey
found that 14 of 29 sub-Saharan African countries that
responded had established some form of anticorruption agency, such as
a special court or commission, that
may have multiple mandates including law enforcement, prevention, and education.

began to prosecute government officials.19 In addition, some commissions
have operated under the executive branch of government, calling into question their political independence and authority.20 Further, some commissions lacked resources and were too
understaffed and underfunded to be effective.21 U.S. assistance included the following programs:

o In Mozambique, USAID and OPDAT have provided technical assistance
and training to help the Attorney General's office create an Anticorruption Unit staffed by four principal prosecutors and an assistant prosecutor. U.S. support also included purchasing office equipment and furniture, providing funds to rent office space, training prosecutors, and supporting study tours abroad to meet with foreign officials running similar programs. OPDAT also provided a series of
training programs on techniques to investigate allegations of public
corruption. According to a U.S. official, from November
2002 to October 2003, the Anticorruption Unit received 116 crime reports-which the official interpreted as a sign of public confidence in the unit-11 of
which resulted in formal charges and three sentences. In November 2003, the unit also sponsored a public exercise to discuss its work to
date, a step toward transparency typically not seen in the Mozambican justice sector. The head of the unit works at great personal risk, having survived an attempt on her life.

o
In Nigeria, Justice's OPDAT provided prosecutorial and investigative training
to the anticorruption commission. However, the National
Assembly challenged the commission's authority in 2003, thereby
delaying further U.S. assistance. By September 2003, commission officials stated they had conducted 56 prosecutions, resulting in no convictions. The commission's administrators said that they had received only 25 percent of the budget they requested. According to OPDAT officials, additional factors that hinder the commission's

19In 2000, the Kenyan Anti-Corruption Authority was ruled unconstitutional and dissolved by
the High Court and a police antigraft unit formed to undertake some of the authority's
anticorruption activities
accomplished very little. The Kibaki administration, elected in
December 2002, created a new Kenyan Anti-Corruption Commission.

20In Benin, the anticorruption commission has low credibility and a poor record of anticorruption investigations and operates under the jurisdication of the executive
branch, according to USAID.

21In Uganda, an Anticorruption Commission was created in
the mid 1990s but lacked sufficient funding to
undertake its work, according to a 2000 USAID assessment.

effectiveness are that certain high-level officials are immune from
prosecution for public corruption while holding office and that it is not
permitted to initiate investigations.

o
In Namibia, USAID helped the Office of the Ombudsman, which USAID regards as an anticorruption unit, collaborate with civil society organizations in a national integrity promotion campaign.

Strengthening Law Enforcement To strengthen law enforcement agencies, the United States, primarily
through the Department of Justice, has performed needs assessments and provided technical training in the investigation and prosecution of
corruption-related crimes. An integral part of the training has involved
building respect for human rights.

o In Nigeria, ICITAP's in-country representative stated that
assistance has
indirectly addressed corruption and included training on community policing techniques for more than 450 constables.22 In addition, ICITAP provided election security training and equipped and trained police
squads, primarily from the states of Kaduna, Kanu, and Lagos, in civil disorder management.
Both U.S. officials and the Nigerian police told us that these squads deterred violence during the 2003 elections.

o In South Africa, with USAID funding, OPDAT worked with the National
Prosecuting Authority and its subsidiary, the Directorate of Special Operations, an agency that investigates and prosecutes serious corruption. OPDAT funded an organizational workshop, helped develop guidelines to prosecute organized crime cases, trained prosecutors to
investigate complex financial fraud, and provided
expertise on applying a new organized crime statute. As a result of this training, the Directorate of Special Operations developed a national screening and approval process for prosecuting organized crime cases.

o
In Uganda, Treasury's Office of Technical Assistance provided training and assistance on money laundering and worked with the Ugandan Office of the Inspector General.

22We were unable to obtain reliable information on the number of Nigerian
national police. However, according to the Department of Justice, the
police force is currently estimated to number 300,000.

Restrictions on Law Enforcement Assistance and Funding Flow Affect Program Development

U.S. government anticorruption law enforcement programs are limited by a restriction on law enforcement assistance imposed by section 660 of the Foreign Assistance Act of
1961.23
This provision prohibits the use of foreign assistance funds, including funds transferred by USAID to the Department of Justice, to finance ICITAP and OPDAT activities for training and financial support of police or other law enforcement forces of foreign governments.

USAID can develop assistance programs for law
enforcement agencies only if such programs qualify for funding under one
of several exceptions to
the section 660 prohibition24 or if Congress specifically exempts them from section 660. For example, in 1999, USAID began to operate in Nigeria under an exception (22 U.S.C. 2420(b)(6)) that allows for certain types of police assistance to countries emerging from conflicts. Later, after USAID determined that the exception no longer applied because Nigeria could no longer be classified as emerging from instability, USAID redesigned its
anticorruption program and did not implement a planned community policing program in that country.

The USAID mission in South Africa reported that the restrictions
on foreign law enforcement assistance limited its ability to support South African government agencies involved in fighting corruption. In addition, some U.S. agencies evidenced confusion about the type of assistance that could be
provided. For example, USAID's General Counsel determined that the South African Special Investigating Unit was a law enforcement agency and that consequently USAID was restricted from working with it; meanwhile, the Federal Bureau of Investigation (FBI) home office determined that the unit was not a law enforcement agency and therefore did not qualify for FBI funding. In Zambia, USAID was unable to work with the anticorruption unit. The USAID
Administrator initially offered the agency's assistance to help support investigations by a Task Force on Corruption. However, while the program was getting under way, USAID determined that it would not

23P.L. 93-559, sec. 30(a); 22 U.S.C. 2420.

24Exemptions include (1) assistance to countries emerging from instability, (2) spending
related to international narcotics control, (3) programs to enhance professional capabilities
to carry out investigative and forensic functions
conducted under judicial or prosecutorial control (22 U.S.C. 2346c), (4)
programs to assist in developing academic instruction and
curricula for training law enforcement personnel (22 U.S.C. 2346c), and
(5) assistance to customs authorities for customs
law enforcement and improving customs laws, systems, and procedures.

fund this work because the Task Force and the Anticorruption Commission had police powers and thus were ineligible for the agency's assistance. According to USAID, the mission was able to use the Administrator's grant to fund work with the Director of Public Prosecutions, whereas assistance
to the Task Force on Corruption was provided by Treasury's Office of
Technical Assistance.

The Department of Justice's ICITAP also said that the slow transfer of funds it
received from State for its law enforcement work hindered its
efforts to develop integrated police training programs and, as a result, its
assistance ended up being piecemeal.25 According to Department of Justice
officials, uncertainty about the amount of funding ICITAP would receive
made it difficult for them to plan the bureau's work in sub-Saharan Africa. For example, in Nigeria, ICITAP had to wait 1 year for funds to begin a program
with the Police Service Commission. State officials were unable to
provide data on the department's
funding of justice programs in sub-Saharan Africa. USAID officials stated that certain budgetary accounts are funded only once a fiscal year, creating delays in program implementation.

Few Evaluations of Anticorruption Programs Have Been Conducted; Program Results Unclear

USAID provided eight program evaluations of its anticorruption activities
in sub-Saharan Africa and these evaluations showed limited and unclear
results.26 For example, an evaluation of a USAID government
accountability program in Ghana showed that the program had increased the level of trust between civil society and the district government but that
the program's final goals and sustainability were not clear. An evaluation of
democracy and governance assistance to Benin showed that an NGO supported by USAID had been successful in raising public awareness of
corruption. However, an evaluation of an economic rehabilitation program in Sudan, which included an objective to increase good governance and institute accountability and transparency measures into government practices, found no evidence
that government officials implemented any of

25GAO has previously reported on problems coordinating U.S. rule-of-law assistance. For
example, see U.S. General Accounting Office, Foreign Assistance: Status of
Rule of Law Program Coordination, GAO/NSIAD-00-8R
(Washington, D.C.: Oct. 13, 1999).

26These evaluations were conducted between February 1991 and December
2003; 6 of the 8
evaluations were completed since 2000. The Departments of the Treasury, Justice, and Commerce told us that they monitor their anticorruption activities with periodic and end-ofprogram reports
but have not evaluated their programs.

the measures. According to USAID officials, their work in Sudan was impeded by a lack of a viable civil administration.

Further, in several cases, the evaluations provided incomplete information. In reviewing the evaluations, we found it difficult to identify the programs'
anticorruption objectives, the degree to which the objectives
were met, and the degree to which the programs were sustainable.

Anticorruption Efforts Anticorruption efforts in sub-Saharan Africa and elsewhere have shown

that success in such efforts depends on (1) political will, (2) widespreadHave Identified
Some public support, (3) country-specific programs, (4) multipronged strategies, Lessons Learned (5) transparency and access to information, and (6) time and commitment.

Political Will Is Key to Fighting Corruption

Donors and international groups generally agree that political will and commitment from
a country's leadership are instrumental to implement and sustain anticorruption reform efforts. However, maintaining political
will may be difficult for elected officials, because their ability to stay in
office may be challenged by those with vested interests in the current system. While political will can be uneven across government, working with leaders who are committed to sustaining and advancing reform is
crucial.

Widespread Support Is Key to Advancing Reform

In addition to clear and unambiguous commitments from key political
figures, widespread support for change is necessary to advance comprehensive anticorruption reforms, according to Transparency International. According to USAID, public-private partnerships that include
government, the private sector, civil society, and the media have proven to
be successful in identifying governance problems, agreeing on solutions, and implementing reforms. In addition, campaigns by civil society groups to raise awareness of corruption problems or mobilize the public to
support specific reform agendas have been the starting point for
developing political will in many countries.

Anticorruption Programs For anticorruption programs to be effective, they must be tailored to each
Must Be Tailored to Local
country's unique historical and economic conditions, including the legacy Conditions
of colonial and socialist governments in some sub-Saharan African

countries. According to the World Bank and USAID, a baseline assessment

of the nature, extent, and root causes of corruption in a country is a critical
first step to planning and implementing anticorruption activities. Based on this information, both government and donors can develop reform strategies and priorities. In addition, the results of anticorruption
assessments should be widely disseminated to clarify the nature and extent
of the problems, mobilize support, and develop action plans.

Multipronged Strategy Is Key to Anticorruption Efforts

Prevention, education, and law enforcement are considered to be equally important components of a multipronged strategy to comprehensively
address corruption, according to the UN, the World Bank, and national
anticorruption institutions.

o
Prevention measures include increasing transparency and oversight of government functions; eliminating opportunities for corruption; improving incentives for good performance in public office; and
simplifying procedures for basic services such as granting permits, licenses, bank loans, and passports.

o
Education measures include informing citizens about how corruption lowers their standard of living and about their role in monitoring
government performance and reporting abuses. Without such information, citizens may not understand their role in addressing corruption.

o
Law enforcement activities include prosecuting, fining, or imprisoning corrupt officials. (Law enforcement,
while key to this approach, is most
effective when combined with prevention and education, according to the World Bank.)

Transparency and Access to Transparency and access to information are also indispensable tools for

Information Is Important enabling the public to identify and report corruption. According to USAID, without public access to information about government decision-making
processes, anticorruption efforts will fail. Information about government
policy, programs, budgets, fees for services, and performance should be available, permitting citizens to oversee government, hold it accountable,
and ensure that their rights are respected

Controlling Corruption Requires Time and Commitment

Because addressing corruption is a complex political endeavor requiring governmentwide reform, corruption cannot be controlled quickly.
As a result, long-term commitments are required to gain public confidence in
efforts to prevent and control corruption. TI states that countries and donors should be wary of any single action billed as a "quick fix," even if it
is a sensible step in itself, such as increasing public sector wages, enacting anticorruption laws, prosecuting many corrupt officials, or relying on civil
society organizations to drive change.

Conclusions In sub-Saharan Africa, corruption is a daunting problem associated with
underdevelopment, lack of government accountability, and limited capacity
of public institutions; it has also become widely tolerated by the public of that region. U.S. government anticorruption programs in sub-Saharan Africa are relatively new, have received limited funding, and are broadly targeted across a number of areas. While few
anticorruption programs in the region have been
evaluated systematically, such analysis could be used
in developing future programs and strategic plans. Evaluations could also
help officials refine anticorruption objectives and performance measures. Although U.S. programs have made some progress in addressing and highlighting corruption problems facing the region, major challenges
remain that appear to exceed the scope of what donors alone can achieve. Ultimately, U.S. anticorruption efforts, along with the efforts of other donors, will succeed only with long-term commitment and political and financial support from host governments, the private sector,
and the public.

Because it is difficult to measure corruption directly, the World Bank Institute and TI indexes capture perceptions of corruption. In the context of the new Millennium Challenge Account, it is
important to recognize that
these indexes, although useful in showing broad differences across the
globe, should be used with caution, particularly when attempting to
differentiate among closely ranked countries.

Agency Comments and GAO received written comments on a draft of this report from USAID, which are reprinted in appendix VI. This appendix also contains GAO

Our Evaluation responses to the comments. In its formal comments, USAID highlighted additional information on its efforts to coordinate anticorruption assistance, lessons learned, and the sustainability and impact of this
assistance, some of which we incorporated into the report as appropriate. The Departments of the Treasury, Justice, and State provided informal

comments that we incorporated into the report as appropriate. The agencies generally agreed with our presentation of the issues and conclusions. We were also provided technical comments from the World Bank
Institute that were discussed with officials and included in
this report where appropriate.

As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies of this report to interested
congressional committees as well as the Attorney General, the Secretary of
the Treasury, the Secretary of State, the Secretary of Commerce, and the
USAID Administrator. We also will make copies available to others upon
request. In addition, the report will be available at no charge on the GAO
Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me
at (202) 512-3149 or at [email protected]. Other contacts and staff
acknowledgments are listed in appendix VII.

David Gootnick
Director, International Affairs

and Trade

Appendix I

Scope and Methodology

To assess what is known about the nature and extent of corruption in sub-Saharan Africa, we analyzed the indexes compiled by the World Bank Institute (WBI) and Transparency International (TI).
We examined the data
sources and methodologies used to construct each index and the statistical
limitations inherent in each approach. To assess
the reliability of the WBI and TI corruption indexes, we (1) interviewed WBI officials, (2) reviewed
the methodology used to compile both indexes, (3) reviewed professional literature on measuring corruption, (4) compared the indexes against each other, and (5) performed some advanced statistical tests. In our report, we note the difficulties of measuring corruption and the limitations of both indexes. We determined that the data were sufficiently reliable to provide a
broad gauge of corruption in sub-Saharan Africa and demonstrate that levels of corruption vary among sub-Saharan African countries. (See app. III for additional details of our analysis of the WBI and TI indexes.) In
addition, we reviewed the World Business Environment Survey (WBES) and analyzed data for companies from
sub-Saharan Africa that participated in
the survey. To assess the reliability of the WBES survey, we
reviewed the documentation provided by, and analyzed the data we obtained from, the
World Bank Web site. The World Bank reported a number of quality control
procedures, such as pretesting of instruments. However, the World Bank also noted that the response rates for African countries and for questions
on corruption are relatively low. In addition, only 16 African countries were
included in the survey. The survey questions we used had between 40 and 120 respondents per country. Because of the response rates and the numbers of respondents, differences between countries may not be significant. We determined
that the WBES data were sufficiently reliable to
report that corruption was perceived to be a problem for many of the
African businesses responding to the survey and that perceptions of
corruption varied by country.

To identify the factors that give rise to corruption in this region, we reviewed country surveys and studies funded by TI, the U.S. Agency for International Development (USAID), WBI, the United Nations (UN), and others since 2000. Our analysis of these documents focused on identifying broad themes and challenges facing sub-Saharan African nations. (See the bibliography for a list of documents used in this review.)

To determine the types of U.S. government programs providing
anticorruption assistance in sub-Saharan Africa, we reviewed documents
and interviewed key officials from USAID and the Departments of the
Treasury, Justice, Commerce, and State in Washington, D.C. We also
obtained the results of a 2003 USAID global survey that asked missions

Appendix I Scope and Methodology

about their anticorruption programs from 2001 and 2002 and the funding allocated to these efforts. To assess the reliability of USAID's data on its
anticorruption programs, we (1) interviewed USAID officials about their data collection procedures, (2) reviewed their data collection instrument, and (3) examined the data collected using the instrument.1 Our assessment
showed that the data were sufficiently reliable for the purposes of
identifying which agencies provide funding on anticorruption programs, identifying the countries that receive the most anticorruption funding, and establishing that anticorruption programs in sub-Saharan Africa receive limited funding.

In addition, we analyzed program documents and assessments from six countries in sub-Saharan Africa in which the U.S. government has undertaken anticorruption programs (Benin, Mozambique, Nigeria, South Africa, Uganda, and Zambia). We obtained more detailed information from the USAID
missions in these countries. We also interviewed World Bank and UN
Development Program officials to obtain their views on multilateral efforts in the region. Further, in September 2003, we spent a week in both Nigeria and Mozambique where we met with key U.S. and host government officials and with representatives from civil society and other donors to review past and ongoing anticorruption efforts. We also obtained funding data for programs implemented by the Departments of the Treasury, Justice, Commerce, and State.2 The information on foreign law in this report does not reflect our independent legal analysis, but it is
based on interviews and secondary sources.

To identify lessons learned regarding implementing anticorruption programs, we reviewed a wide range of documents and materials. These
included USAID's policy guidance for its African programs as well as
toolkits, handbooks, and other materials prepared by the World Bank, TI, the Organization for Economic Cooperation and Development's Development Assistance Committee, and the UN Office on Drugs and Crime. We also interviewed USAID and other donor officials working in
the countries we visited and in Washington, D.C.

1USAID's data derive from a self-reported survey. USAID headquarters
officials reviewed the survey responses
to ensure that these meet their criteria for anticorruption; the officials accept that the
data may somewhat overstate the amount of funding directed to
anticorruption activities.

2Because the information provided
by the agencies did not isolate the components tied to anticorruption objectives, the data may overstate anticorruption funding.

Appendix II

International Agreements Addressing Corruption in Sub-Saharan Africa

Multilateral organizations have adopted agreements that prohibit the
payment of bribes to government officials (the "supply" of corruption) and the solicitation of bribes or diversion of public funds by government officials (the "demand" for corruption). The Organization for Economic
Cooperation and Development (OECD) has addressed the supply of
corruption by adopting an agreement governing the conduct of the convention's 35 industrialized signatories. Two African multilateral
organizations, the Southern African Development Community (SADC) and the African Union (AU), have adopted agreements addressing supply and demand, but neither regime has entered into force. In 2003, the United Nations (UN) General Assembly adopted a convention that also addresses supply and demand. The Department of State expects that this convention will be the first anticorruption treaty applied on a global level.

OECD Convention The
OECD adopted its Convention on Combating Bribery of Foreign Public
Officials in International Transactions in 1997. The convention requires its 35 signatories to adopt common rules to punish companies and individuals
who offer or promise a bribe to foreign officials to obtain or retain business or other improper advantage in international business deals. Unlike the Foreign Corrupt Practices Act (FCPA), which the United States enacted in
1977,1 the convention does not apply to payments to campaigns or political
parties. According to government officials with whom we spoke, this omission can be problematic when applied to parliamentary systems in
which political parties exert significant control over government appointments and actions. Also, the laws that the convention requires
member states to enact are not easily applied to legally distinct foreign subsidiaries of a corporation unless their actions can be imputed to their
parent.

According to U.S. government officials and experts, the key element of the OECD convention is a peer-review
mechanism, organized by the OECD Secretariat but implemented through teams drafted from
signatory countries. The reviews, which are intended to continue indefinitely on a 5to 8-year cycle, are conducted in two phases. The first phase is intended to
ensure that OECD members have enacted laws satisfying the requirements
of the antibribery convention. The second phase examines the extent to which OECD members are enforcing their antibribery laws and examines

115 U.S.C. 78 dd-1, et seq.

Appendix II
International Agreements Addressing
Corruption in Sub-Saharan Africa

both the efficiency of the procedures employed by the member and the member's commitment to enforce its antibribery law. The initial round of
first-phase reviews is complete when all signatories have attained the OECD standard. OECD members are currently engaged in second-phase reviews, having issued five second-phase reports as of December 13, 2003, including a review
of the United States' application of antibribery legislation issued in October 2002.2

African Regional Initiatives SADC and AU3 have adopted anticorruption regimes in an effort to harmonize the laws of their member states. However,
neither regime has
entered into force, so neither legally binds its signatories.4 These regimes are intended to criminalize, among other things, the solicitation of bribes and diversion of public funds by government officials. Both the SADC Protocol Against Corruption, agreed to in 2001, and the AU Convention on Preventing and Combating Corruption, agreed to in 2003, can be seen as expressions of
their signatories' political will. To
enter into force, the SADC protocol requires the deposit of 10
instruments of ratification; as of January 9, 2003, eight
states had ratified the agreement. Three states had ratified the AU convention, with 15 ratifications required for entry into force.

UN Convention Against
In October 2003, the UN General Assembly adopted5 the UN Convention

Corruption Against Corruption. The convention addresses prevention, criminalization, and asset recovery, as follows:

o Prevention. The convention contains provisions designed to prevent
corruption, including a requirement that signatories establish public procurement systems "based on transparency, competition, and objective criteria in decision making." It also contains public finance

2For OECD reports see: http://www.oecd.org.

3SADC represents 14 nations
in southern Africa; its objective is to harmonize
its members' laws and policies in an effort to
promote economic development in the region. The AU is the
successor organization to the Organization of African Unity.

4Parties to an international treaty generally adopt the form and content of
an agreement by signing it. It is common practice to sign the agreement
subject to ratification, the international act by
which a state indicates its consent to be bound to a treaty.

5UN Doc. A/Res/58/4.

Appendix II
International Agreements Addressing
Corruption in Sub-Saharan Africa

measures with procedures for the adoption of a national budget; timely
reporting on revenue and expenditure; and accounting systems, auditing standards, risk management, and internal controls.

o Criminalization. The convention requires its signatories to criminalize
a wide range of acts of corruption, including payment and receipt of bribes; diversion of public funds by public officials; concealment, or "laundering," of proceeds of corrupt acts; and obstruction of justice.

o Asset recovery. The convention's provisions on asset recovery were of
particular interest to foreign government officials with whom we spoke. Public funds that are embezzled would be returned to the state requesting their return.
Proceeds from any other offense covered by the convention would be returned to the requesting state once the state reasonably establishes its prior ownership of the property or when the requested state recognizes damage to the requesting state as a basis for returning the confiscated property.

The convention has been open for signature since December 9, 2003 and, as
of February 19, 2004, 100 countries, including the United States and 23 sub-Saharan African countries, had signed it.6 The convention requires 30 ratifications to take effect. As of February 19, 2004, only Kenya had ratified
the convention. Although the UN convention contains provisions establishing a Conference of States Parties to facilitate implementation of the convention, it is not clear whether such a conference will include the
vigorous reviews associated with the OECD convention. According to U.S. government officials, extrapolating the OECD peer-review model to the relatively large number of UN convention signatories would require a significant financial and organizational commitment.

6The UN convention sub-Saharan Africa signatories
include Angola, Benin, Burkina Faso,
Cameroon, Cape Verde, Central African Republic, Comoros, Ethiopia, Gabon, Ivory
Coast,
Kenya, Madagascar, Mali, Mauritius, Namibia, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania, Togo, Uganda, and Zambia.

Appendix III

Characteristics of WBI and TI Corruption Indexes

The World Bank Institute (WBI) and Transparency International (TI)
publish indexes that attempt to measure perceptions of corruption across a large number of countries. WBI produced its first corruption index in 1996 and updates it
every 2 years; TI first published its Corruption Perception
Index in 1995 and updates it annually. The two indexes share fundamental
characteristics but also have significant differences.

TI and WBI Indexes Have Important Similarities

The WBI and TI indexes have much in common (see table 1 for a summary of
the indexes' characteristics). Both are based on the results of
surveys of business people and citizens and analysis by country experts. In addition, both indexes rank countries by the degree of corruption perceived to exist in countries rather than by actual corruption, which is difficult to directly
measure. Further, each index is constructed of a number of different sources, about half of which come from
the same institutions.1 (We reviewed and analyzed the methodologies
used to generate the WBI and TI indexes, conducted analyses to check internal consistency, and determined their general reliability.) Each index also uses surveys and assessments that
rank a number of countries. These sources generally assess several areas, including the quality of governance, overall business environment,
democratic institutions, and levels of corruption. Both indexes
incorporate responses to specific questions considered to provide insight into a
country's perceived corruption; frequently the indexes include responses to
the same questions.

1For information on
the sources used, see the World Bank Institute's Web site at
http://www.worldbank.org/wbi/governance/govdata2002 and Transparency
International's Web site at http://www.transparency.org.

Appendix III
Characteristics of WBI and TI Corruption
Indexes

Table 1: Characteristics of the WBI and TI Corruption Indexes

Characteristics WBI index, 2002 TI index,
2003
Number of countries covered 195 133
High income 48 34
Middle income 83 63
Low income 64 36
Sub-Saharan Africa 47 24
Number of source institutions 13 13

Minimum number of sources per
country 1 3
Maximum number of sources
per country 12 16

Range (higher value implies less
corruption) -2.5 to 2.5 0 to 10

Methodology Uses an unobserved Computes an average
components model to score and a measure of
compute a country score precision for each country.
and unbiased measure of The index includes a
precision even when only country only when three
one source is available. or more sources are
available.

Sources: GAO analysis of WBI and TI data.

Note: The WBI index uses the latest information for 14 sources, including
2 from Business Environment Risk Intelligence. The TI index uses 17
sources, including surveys for 2001, 2002, and 2003 from both the World
Economic Forum and the Institute for Management Development.The unobserved
component is a statistical technique that makes it possible to infer the
distribution of corruption conditional on the observed data for a country.

An index using several sources (1) spans a larger set of countries than any individual source; (2) reduces the impact of outlier observations by providing a more reliable measure of corruption than any individual
source; and (3) provides a more reliable point estimate and measure of
precision, or standard deviation, of its estimate. The smaller the standard
deviation, the more precise the estimate.

Because of the similarity in data sources used to measure perceived corruption, there is a high correlation between the TI and WBI indexes across the 133 countries included in both (0.97, with 1.00
indicating perfect linear correlation).

Appendix III
Characteristics of WBI and TI Corruption
Indexes

WBI and TI Indexes Differ Significantly in Methodologies Used

Differences in the methodologies used to construct each index result
in divergent country coverage and rankings. WBI uses an unobservedcomponents methodology that enables it to compute a score and measure
of precision (standard deviation) for each country even with only one source for the country. This methodology enables the WBI index to
include a larger number of countries for which it has few sources of information.
For an individual country, the standard deviation is smaller the more sources are used and the more that information from each source corresponds with information from other sources. For some countries, the imprecision is quite large relative to the point estimate score.

In constructing its composite corruption index, TI uses a methodology different from WBI's that also generates for each country a point estimate
for corruption and a measure of precision. TI includes a country in its
index only if it
has three or more sources of information for that country.
Requiring three or more sources ensures greater
reliability of the estimate. However, it also limits the number of countries that are included in the index.2 The TI index for 2003 includes 133 countries, compared with 195 countries for the WBI index (see table 1).

The difference between country coverage in the two indexes is more
pronounced for low-income and sub-Saharan African countries. The WBI index covers almost twice as many sub-Saharan African countries as the TI index, 47 versus 24. Similarly, WBI covers 64 low-income countries, whereas the TI covers 36.3 Because the WBI index covers more countries, we chose to use it in assessing the relationship between corruption and the Millennium Development Goals and other development indicators.

2TI also computes corruption scores for 62 additional countries. Because there were less
than three sources available, these 62 countries are
measured less reliably and not included in the index.

3The correlations of the corruption scores between the two
indexes are 0.90 and 0.69 for all
sub-Saharan African countries and low-income
sub-Saharan African countries, respectively.

Appendix IV

Analysis of Corruption and Economic Development

To analyze the effect of corruption on development, we obtained corruption perception data from the World Bank Institute (WBI) for 195 countries in 2002 (the latest available). We
also collected data, representing averages for 1997-2001, from
the United Nations (UN) on development
indicators collectively known as the Millennium
Development Goals, which are commonly used to gauge countries' development progress.1 We
selected 11 representative indicators for our analysis. We also chose 6 indicators representing countries' broad economic achievements from the World Bank's World Development Indicators database.2 (See tables 2 and 3 for the selected goals and economic indicators.) We performed a series of
correlation and regression analyses to identify statistically significant associations between the WBI corruption index and the selected indicators.3 The relationship between corruption and development
indicators is complex, and the results presented here are an initial step
toward understanding this complexity. Further insight into the evolving
complexity of corruption and development indicators may be obtained through a more comprehensive analysis that, among other things, addresses interrelationships among development indicators, the possible
influence of measurement errors on estimated parameters, and the accuracy of the corruption measurements, which are based
on perceptions.

1The Millennium
Development Goals commit the international community to the promotion of human development as
the key to sustaining social and economic progress in all countries by
creating a global partnership for development.

2The database, generated by the World Bank, the International Monetary Fund, and various
UN agencies, is routinely and widely used in economic analysis of development
issues. For this reason, we did not assess the data's reliability.

3A regression analysis is a statistical method of measuring
the extent to which variations in one variable are associated with
variations in other variables.

Appendix IV Analysis of Corruption and Economic Development

Table 2: Correlation between 2002 WBI Index and Selected Development Indicators

Proportion of
variationb
Correlation explained by
Development indicators coefficienta corruption N
Millennium Proportion of population -0.31 * 10% 88
below $1 a day
Development Goals Income share held by 0.05 0 70
lowest 20%
Poverty gap at $1 a day -0.27 * 7 88
Education enrollment 0.37 * 14 141
ratio, net, primary level
Literacy rates, aged 0.34 * 11 119
15-24
Girls-to-boys ratio, 0.29 * 9 155
primary level enrollment
Infant mortality rate
(0-1 year) per 1,000 live -0.64 * 40 166
births
Children under five
mortality rate per 1,000 -0.6 * 36 166
live births
Maternal mortality ratio -0.51 * 26 154
per 100,000 live births
Percentage of rural
population with access to
improved drinking water
sources 0.49 * 24 128
Debt service as
percentage of exports of -0.13 2 96
goods and services
Broad indicators Trade (% of GDP) 0.19 * 4 154
Life expectancy at birth, 0.63 * 40 164
total (years)
Real GDP growth rate -0.09 1 155
Public spending on
education, total (% of 0.36 * 13 145
GDP)
Foreign direct
investment, net inflows 0.15 2 147
(% of GDP)
Gross capital formation 0.05 0 152
(% of GDP)

Legend

* Indicates statistical significance of at least 90 percent confidence

N= number of countries for which data were available

GDP=gross domestic product

Sources: GAO analysis using UN data and World Bank data for 1997-2001.

aThe correlation coefficient measures the linear relationship between the
corruption index and each indicator. It ranges between -1 and +1, where -1
indicates a perfect inverse relationship, 0 indicates no relationship, and
+1 indicates a perfect direct relationship.

bAcross countries.

Our correlation analysis showed that, for all 195 countries in the WBI
index, a statistically significant association exists between corruption and the selected development indicators. As table 2 shows, the indicators show significant statistical association, at a
90 percent confidence level,
with the WBI index for all but five variables. We found that lower levels of
corruption are associated with higher
primary education enrollment ratios, literacy rates, girls-to-boys ratios in primary school enrollment,

Appendix IV Analysis of Corruption and Economic Development

percentages of population with access to improved drinking water sources, trade, life expectancy at birth, and total public spending on education. Furthermore, lower corruption is statistically associated with
decreased
proportions of population living on less than $1 a day, depth of poverty (poverty gap at $1 a day), infant mortality rate, mortality rate of children
younger than 5 years, and maternal mortality ratio.

Our correlation and regression analysis also showed that the proportion of
variation across countries that is associated with corruption fluctuates
depending on the indicators chosen. For example, as table 2 shows, corruption "explains" approximately 40 percent of the variance of infant
mortality among countries but only 1 percent of the variance in real GDP growth rate.4

We also performed a regression analysis for subgroups of countries
classified according
to per capita income-high, middle, and low, as seen in table 3. To highlight the effect of corruption in sub-Saharan African countries, we created an additional variable to represent low-income sub-Saharan African countries. In table 3, "all countries" refers to the regression analysis for all 195 countries in the WBI index and assumes that corruption has the same effect on each country. In contrast, the regression analysis of countries grouped by income
allows for the possibility that the effect of
corruption may vary for countries in different income groups.5

4Our analysis highlights an association between corruption and the
development indicators. It does not imply a cause-effect relationship.

5Our regression analysis for all countries used Yi= a + b
* WBI, where Yi is a development indicator, a is the intercept, b is the
effect of the corruption index, and WBI is the 2001 WBI corruption index.
Our regression analysis by income group used Yi= a +
(b1* WBI ) + (b2* low-income Africa indicator)
+ (b3* middle-income country indicator) + (b4* high-income
country indicator) + (b5 *
low-income Africa countries' WBI scores) + (b6 * middle-income countries'
WBI scores) + (b7 * high-income countries' WBI scores), where Yi is a
development indicator; a is the intercept; bi =
1,..,7 indicates the effects of variables in the
model; and WBI is the 2001 WBI corruption index.

Appendix IV Analysis of Corruption and Economic Development

Table 3: Summary of Regression Analysis Using 2002 WBI Index Low income

Sub-Saharan Africa All countries High income

Middle income All

Development indicators

Millennium Proportion of population living on less than $1 a day +
Development Income share held by lowest 20%
Goals

Poverty gap at $1 a day

Education enrollment ratio, net, primary level +++

Literacy rates, aged 15-24 +++

Girls-to-boys ratio, primary-level enrollment +++

Infant mortality rate (0-1 year) per 1,000 live births -

Mortality rate for children under five per 1,000 live births

Maternal mortality ratio per 100,000 live births -

Percentage of rural population with access to improved drinking water
sources +++

Debt service as percentage of exports of goods and services

Broad Trade (% of GDP) ++ ++ indicators Life expectancy at birth, total
(years) +++ ++

Real GDP growth rate Public spending on education, total (% of GDP) +++ ++ ++

Foreign direct investment, net inflows (% of GDP) + ++ +

Gross capital formation (% of GDP)

Legend

Symbols indicate direction and significance of the estimated coefficient:

+++/---Statistically significant at 99 percent of confidence

++/- -Statistically significant at 95 percent of confidence

+/-Statistically significant at 90 percent of confidence

No symbol Statistically insignificant

Sources: GAO analysis of 1997-2001 UN and World Bank data and 2002 WBI
Corruption Index.

Notes: Results for "low-income " were obtained from a separate analysis
that grouped low-income, middle-income, and high-income countries. The
results shown have been corrected for possible heteroscedasticity, when
necessary. Heteroscedasticity refers to a statistical problem, which, if
not corrected, may lead to an association appearing to be statistically
significant or insignificant when it may actually be. For low-income
countries, the estimates for proportion of population living on less than
$1 a day and for the poverty gap at $1 a day were found to be
heteroscedastic, but corrections could not be made due to data
limitations.

According to the World Bank, in 2002, per capita income for high-income
countries was greater than $9,075; for middle-income countries, between
$735 and $9,075; and for low-income countries, $735 or less.

Appendix IV Analysis of Corruption and Economic Development

In general, when all countries are pooled together our analysis
of the effect of corruption shows
that most conclusions regarding the adverse effects of corruption on development are supported, that is, lower levels of
corruption are associated with better development outcomes. However,
these conclusions depend on the assumption that corruption has the same effect across all countries.

For most of the development indicators, we tested and rejected, with at
least 90 percent statistical confidence, the assumption that corruption has
the same effect for all countries. We found instead that the effect of
corruption varies by countries' income levels.6 Using regressions that
allowed for such variation, we analyzed the relationship of corruption to
development indicators for income groups and found corruption to be statistically significant for far fewer indicators than when all countries are
pooled together (see table 3).

For high-income countries, lower levels of corruption are associated with
lower infant mortality rates and higher net inflows of foreign direct
investment. Variations in corruption do not appear to be associated with
any other development indicators for high-income countries. For middleincome countries, lower levels of corruption are associated with lower
maternal, infant, and children under 5 years mortality rates. They are also
associated with higher trade, life expectancy at birth, public spending in
education, and net inflows of foreign direct investment.

For low-income countries, some of corruption's statistical associations
with development indicators were as we expected. For instance, lower levels of corruption are associated with higher public spending on education. On the other
hand, corruption is associated with some
development indicators in unexpected ways. For example, for all lowincome countries, less corruption is associated with a higher poverty rate and lower educational enrollment. For low-income sub-Saharan African
countries, variation in corruption across countries appears not to be associated with any of the development indicators. There are a number of
possible explanations for some of these counterintuitive results. For
example, the small size of the subgroups makes statistical significance hard to achieve. Also, as explained previously, relatively large amounts of

6We rejected this assumption with at
least 90 percent confidence for all development indicators
except debt service as percentage of
exports of goods and services, real GDP growth rate, and net inflows
of foreign direct investment.

Appendix IV Analysis of Corruption and Economic Development

imprecision and measurement error exist in the point estimates of corruption for each country. The development indicators themselves may,
in addition, be imprecisely measured. It is also possible for the causal
direction to be from corruption to income than vice versa, such that higher
corruption leads to lower income.

As table 3 shows, the regression results for all
countries may be misleading if not corroborated by the results for the income subgroups. This is
particularly true when the regression for all countries shows the effect of
corruption on a development indicator while the subgroup regressions do not. For example, when we analyzed all countries together, we found that
less corruption is associated (at a 99 percent confidence level) with an increase in the percentage of population with access to improved drinking water sources when all countries are pooled together. However, when we
analyzed the countries by income level, we did not find this effect (see fig. 7). This result suggests that the apparent association of less corruption with improved development indicators may be simply the effect of higher
income.

Figure 7 shows the results of our regression analysis for rural access to
improved drinking water countries by income group and for all countries. The
horizontal line indicates corruption's lack of statistical significance at a minimum of
90 percent confidence. In
high-income countries, an average of 97 percent of the population has access to improved water, unrelated to
country levels of corruption. Similarly, in middle-and low-income countries
and in low-income sub-Saharan African countries, an
average of 77 percent, 62 percent, and 49 percent, respectively,
have access to improved water,
unrelated to country levels of corruption in each group. The slope of the line representing the analysis for all countries appears to be a result of
moving along successive higher income levels.7

7The horizontal line is drawn at the level of the average value
of the development indicator for that subgroup.

Appendix IV Analysis of Corruption and Economic Development

Figure 7: Relation of WBI Index to Percentage of Population with Access to
Improved Drinking Water Sources

Appendix V

World Business Environment Survey

This appendix highlights data from the World Business Environment Survey (WBES), focusing on results for sub-Saharan Africa.1
The survey covered 10,032 businesses in 80 countries, including 1,629 businesses in 16
countries in sub-Saharan Africa (Botswana, Cameroon, Ivory Coast,
Ethiopia, Ghana, Kenya, Madagascar, Malawi, Namibia, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe). The purpose of
the survey was to better understand constraints that hinder private business development throughout the world.

The survey covered quality and integrity of public services, rules and regulations, bureaucratic practices, and corruption (our analysis focused on questions related to corruption). Sectors in sub-Saharan Africa represented included manufacturing, services, agriculture, and construction. Businesses responding were grouped into three categories:
small (50 or fewer employees), medium (51 to 500 employees), and large (501 or more employees). The firms responding included sole proprietorships, partnerships, cooperatives, privately held corporations, corporations listed on stock exchanges, and others not specified; about 27 percent of these firms operated in other countries as well. The World Bank noted that the response rate for Africa was "among the lowest" of the nine regions surveyed.

More than 60 percent of businesses that responded to the survey from the region stated
that corruption is a major constraint to their business. Figure 9 shows the responses of businesses from individual
African countries (for comparative purposes, we also included the average for the region and for the 80 countries in which the survey was conducted). As figure 8 shows,
Namibia and Botswana had the lowest number of complaints, while
Cameroon, Ivory Coast, Kenya, Madagascar, and Nigeria had the highest proportion of businesses claiming corruption was problematic.

1The survey was a collaborative
effort of the World Bank Group, the European Bank for
Reconstruction and Development, the International Development Bank, and Harvard University. Because of the response
rates and the numbers of respondents, differences
between some countries may not be significant.

Appendix V World Business Environment Survey

Figure 8: Firms in Selected Sub-Saharan African Countries Responding
"Moderate or Major Obstacle" to WBES Question "How Problematic Has
Corruption Been for the Operation and Growth of Your Business?"

Notes: Response options were "no obstacle," "minor obstacle," "moderate
obstacle," and "major obstacle." Because of the response rates and the
numbers of respondents, differences between some countries may not be
significant.

Figures in parentheses are the number of firms that responded in each
country.

Further, the extent to which corruption influences government
transactions may be inferred from a question that asked businesses if they typically needed to make extra, unofficial payments to gain government contracts. On average, about 26 percent
of sub-Saharan African businesses surveyed responded affirmatively. Businesses in Madagascar, Senegal,
Ivory Coast, Cameroon, and Nigeria had the highest rate of responses
indicating that illegal payments are required to gain government contracts (see fig. 9).

Appendix V World Business Environment Survey

Figure 9: Firms in Selected Sub-Saharan African Countries Responding
"Always, Usually, or Frequently" to WBES Question "Do Firms Like Yours
Typically Need to Make Extra, Unofficial Payments to Gain Government
Contracts?"

Notes: Response options were "always," "usually," "frequently,"
"sometimes," "seldom," and "never." Because of the response rates and the
numbers of respondents, differences between some countries may not be
significant.

Figures in parentheses are the number of firms that responded in each
country.

Another consequence of corruption is the erosion of trust among businesses, courts, and banks. More businesses stated that courts are dishonest and corrupt in the Ivory Coast, Madagascar, Nigeria, Senegal, Kenya, Tanzania, and Uganda (see fig. 10). Relatively large proportions of
businesses in Cameroon, Ivory Coast, Ghana, Madagascar, Nigeria, Tanzania, and Uganda stated corruption of bank officials is an obstacle to
their businesses (see fig. 11).

Appendix V World Business Environment Survey

Figures in parentheses are the number of firms that responded in each
country.

Appendix V World Business Environment Survey

Figures in parentheses are the number of firms that responded in each
country.

Appendix VI

Comments from USAID

Note: GAO comments supplementing those in the report text appear at the
end of this appendix.

Appendix VI Comments from USAID Appendix VI Comments from USAID Appendix
VI Comments from USAID

See comment 1.

See comment 2.

Appendix VI Comments from USAID

See comment 3.

See comment 4.

Appendix VI
Comments from USAID

See comment 5.

Appendix VI Comments from USAID

The following are GAO's comments on USAID's letter dated April 2, 2004.

GAO Comments 1.

Based on informal comments from
USAID, we added information on formal and informal coordination of U.S. anticorruption assistance on pp. 20-21.

We agree with USAID that political will is important. See our discussion on p. 3 in the results in brief and on p. 5 in background, and in the lessons learned section on p. 32 of the report.

We appreciate USAID's further elaboration on conditions required to
make anticorruption agencies effective. We did not modify the text, since
we believe we adequately addressed these conditions on pp. 27-28 of the report.

USAID cites examples already included in this report. We encourage USAID to increase the regularity and focus of evaluation of its
anticorruption efforts to provide meaningful and quantifiable
assessment of the programs' performance and results.

We agree with USAID that high level diplomatic
and coordinated policy dialog are key to anticorruption efforts. For that reason, we discussed the MCA initiative on pp.1 and 5 and the G-8 initiative on p.20, and
provided a summary of key ongoing diplomatic efforts to establish international agreements addressing corruption in sub-Saharan Africa in appendix II.

Appendix VII

GAO Contact and Staff Acknowledgments

GAO Contact Phillip Herr (202) 512-8509

Staff In addition to the individual listed above, Nima Patel Edwards, Maria Oliver, Bruce Kutnick, Gezahegne Bekele, Ann Baker, Mark Dowling,

Acknowledgments Martin de Alteriis, and Reid Lowe made key contributions to this report.

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