Paying to Live: Where Public Corruption Hits the Hardest

April 16, 2020 by Benjamin Kamelhar

by Rachel Pollan

Public corruption disproportionately impacts disadvantaged and impoverished communities around the world. Not only does public corruption erode the trust the public has in its officials, it also wastes taxes and funds that have been earmarked for community projects. Corruption reduces access to services including health, education, and justice. Many studies show that the poorest people pay the highest proportion of their income in bribes.[1] In Sierra Leone, impoverished people pay 13% of their income to bribes, while wealthier populations pay around 3.8%.[2] Similarly in Paraguay, poorer people pay 12.6% of their income, while the wealthiest individuals pay 6.4%.[3] These staggering differences demonstrate how corruption unequally impacts socio-economic groups.

 

Public corruption especially affects the population in developing countries. In Ghana, Madagascar, Morocco, Niger, Senegal, Sierra Leone, and Uganda, 44% of parents pay school fees for their children to attend public schools that are free by law. Not only are people directly paying bribes, but corrupt officials are also influencing policy decisions to siphon money that could fund roads and schools. Additionally, corrupt practices significantly impact essential services, such as clean water and access to medicine. In cities such as Jakarta, Lima, and Manila, impoverished people pay private water retailers between five and ten times more for their water than wealthier classes pay for their piped water.[5]

 

Just this year, the World Bank published a report finding that a sixth of foreign aid intended to help the world’s poorest countries, is directly funneled into bank accounts in tax havens owned by elites.[6] On average, between 1999 and 2010,  7.8% of international aid was deposited in tax haven bank accounts  in Switzerland and Luxembourg.[7] This number increases with the ratio of aid to the recipient country’s GDP, and the study found “as much as 15% ‘leakage’ for the most aid dependent countries.”[8]  Funneling international aid into tax havens creates incredible hardship for poor communities. In Indonesia, “it is estimated that nearly one-fifth of the rice distributed for an anti-poverty programme disappeared.” Corruption prevents the neediest communities from obtaining necessities such as food, while allowing elite members of society to pocket extra money.

 

The World Bank Group considers corruption one of the main challenges to its goal of ending poverty by 2030.[9] Transparency International outlines a solution to combatting corruption that involves ensuring local communities are involved in all aspects of governance.[10] Taking these steps will hold officials accountable to their constituents. Local communities will become watchdogs thus reducing opportunities for corruption.[11] Since poverty and corruption are entwined, we must battle both together in order to eliminate each problem.

 

 

[1] Combatting Corruption, THE WORLD BANK, https://www.worldbank.org/en/topic/governance/brief/anti-corruption (last updated Oct. 4, 2018).

[2] Id.

[3] Id.

[4] Corruption: Cost for Developing Countries, TRANSPARENCY Int’l, https://www.transparency.org.uk/corruption/corruption-statistics/corruption-cost-for-developing-countries/ (last visited Feb. 21, 2020).

[5] Id.

[6] Ollie Williams, Corrupt Elites Siphon Aid Money Intended for World’s Poorest, FORBES (Feb. 21, 2020, 7:42 AM), https://www.forbes.com/sites/oliverwilliams1/2020/02/20/corrupt-elites-siphen-aid-money-intended-for-worlds-poorest/#ed467ca15658.

[7] Id.

[8] Id.

[9] Combatting Corruption, THE WORLD BANK, https://www.worldbank.org/en/topic/governance/brief/anti-corruption (last updated Oct. 4, 2018).

[10] Poverty and Development, TRANSPARENCY INT’L, https://www.transparency.org/topic/detail/poverty_and_development (last visited Feb. 21, 2020).

[11] Id.