corruption and good governance deficits causing ghana's developmental challenges
DESCRIPTION
It details how "misgovernance" and corruption have served as developmental challenges to Ghana in its efforts of achieving its developmental goals as a country.TRANSCRIPT
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CORRUPTION AND GOOD GOVERNANCE DEFICITS
CAUSING GHANA'S DEVELOPMENTAL CHALLENGES
NYARKO JOHN ABBAM
Table of Contents
INTRODUCTION ...................................................................................................................................... 3
1. DEVELOPMENT ................................................................................................................................... 6
1.1 POLITICAL DEVELOPMENT ................................................................................................ 9
1.2 ECONOMIC DEVELOPMENT ................................................................................................... 11
1.3 SOCIAL DEVELOPMENT .......................................................................................................... 18
2. CORRUPTION .................................................................................................................................... 20
2.1 NATURE OF CORRUPTION ..................................................................................................... 21
2.2 THEORIES OF CORRUPTION ................................................................................................ 24
2.3 TYPES OF CORRUPTION ..................................................................................................... 26
2.5 CAUSES OF CORRUPTION ................................................................................................. 33
2.6 COSTS AND CONSEQUENCES OF CORRUPTION TO GHANA’S DEVELOPMENT 34
3. GOVERNANCE ................................................................................................................................... 37
3.1 THEORIES OF GOVERNANCE ............................................................................................... 39
3.2 CHARACTERISTICS OF GOOD GOVERNANCE ................................................................ 41
3.3 THEORIES OF GOVERNANCE AND DEVELOPMENT ...................................................... 42
3.4 Key attributes of good governance ................................................................................... 44
3.5 How does 'good governance' helps in promoting national development as a
country? ............................................................................................................................................... 45
REFERENCES .......................................................................................................................................... 51
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ABSTRACT: In a country where little development especially economic
development exists there is a higher propensity of inactivities leading to higher
rates of poverty among citizenry of such a state. Development is a natural
phenomenon that every nation or society desires since it comes with many benefits
such as improvement in people's living standards. With this knowledge, it is
incumbent on every single government of the day to ensure massive development
once in power, yet the attainment of this feat is not an easy one to accomplish
especially in an emerging and developing country like Ghana. Under the Fourth
Republic, development has been hindered by two main factors -i.e. "massive"
corruption and good governance deficits. The paper looks at development in
relation to corruption and good governance deficits in line with bad leadership. In
addition, the paper looks at the repercussions of corruption and good governance
deficits on Ghana‟s development. It looks critically at the multidimensional nature
of development as well as governance and corruption.
KEY WORDS: DEVELOPMENT, LEADERSHIP, GOVERNANCE and
CORRUPTION.
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INTRODUCTION
Development is defined as the improvement in all sectors of a country's economy,
political system as well as the changing of social structures leading to positive
impacts on the people. Development occurs when there is an economic growth that
culminates into improving the quality of life of a country's population. Sustainable
development of every nation will depend on both the quality of governance
democratically and the management of resources (Bamidele, 2013).
Ghana has achieved an appreciable level of development especially in the Fourth
Republic in various forms. For the past two decades, foreign direct investment
(FDI) has exceeded over US $10 billion, there have been massive improvements in
social infrastructure, human rights guarantee, rule of law is working and have
experienced at least a 5% of GDP as economic growth annually (Ghana Statistical
Services, 2008) but aside all these accomplishments as a country much is still
desired as the country progresses.
Ghana has many natural resources including oil, gold, cocoa, bauxite, just to
mention a few but has failed to achieve rapid development like its compatriot
countries such as Malaysia and Singapore. This failure is due to high levels of
corruption found at governmental, institutional and individual levels as well as bad
leadership and governance coupled with mismanagement at all levels of the society
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. Corruption and bad leadership and mismanagement at all levels of the society
(good governance deficits) have served as major hindrances to the accomplishment
of development as a nation economically, politically and socially. For instance, the
highest court, the Supreme Court recently ruled that monies paid by government to
certain individuals and organizations such as Isofoton, Waterville and Woyome
ought to be refunded back to the state because such monies were unconstitutional
and these are clear cases of corruption and mismanagement (Daily Graphic,
30/07/2014).
Interestingly in the last decade, monies paid to individuals and organizations by
government due to lack of proper diligence and good governance has costed the
nation over GH ¢4billion in the name of judgment debts services thus affecting the
fortunes of the state socially, politically and economically (Government of Ghana).
In addition to such losses, the lack of pragmatic leadership as well as proper
managerial skills deficiency from the Central Bank has caused the Ghanaian
currency to depreciate by 14.6%,16.7% and 20.1% to the US dollar, British pounds
sterling and Euro respectively in 2013 (myjoyfmonline.com,16/07/2014).
Corruption and good governance deficits coupled with mismanagement really
affect the country's developmental agenda.
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The paper looks at the bane of development in Ghana and blames it on two key
factors or obstacles i.e. corruption and good governance deficits. The paper is
divided into three sections. The first part looks at development and its
multidimensional nature. The second part looks at corruption and its relationship
with development. The final section considers the relationship between governance
and leadership and development.
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SECTION I
1. DEVELOPMENT
"Development must be defined as an attack on the chief evils of the world today:
malnutrition, disease, illiteracy, slums, unemployment and inequality. Measured in
terms of aggregate growth rates, development has been a great success. But
measured in terms of jobs, justice, and the elimination of poverty, it has been a
failure or only a partial success” Paul P. Streeten, Former Director, World
Development Institute.
From the statement captioned above, it means that development is an ambiguous
concept and very diverse in definition and its measurement is complicated and that
no country can actually achieve development in all sectors and fields but could
make substantive progresses (Thomas, 2004).
Development could therefore be defined as the progression of a country's life
whereby changes in the fundamental structures of that country whether politically,
socially or economically that impacts greatly on the life of its citizens (Corbridge,
1995; Chambers, 2004). Development is a set of ideas that really shape and frames
reality and power relations (Hickey and Mohan, 2003). Development is a label for
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plunder and violence, a mechanism of triage (Alvares, 1992:1). It is the process of
enlarging people's choices (UNDP, 1990:1). Craig (2006: 28-29) defined
development as a part of the solution to the problems of the Industrial Revolution
which can be understood as a complexity of social practices designed to ameliorate
the problems of inequality across societies in a sustainable manner due to the
revolution. Akhil Gupta considers “developmentalism” as a mode of power
practiced by government as well as institutions that harbor hegemonial aspirations
(Gupta, 1998: 36-37). Development serves as a means of aiding a country to gain
or maintain legitimacy from its populace (Ludden David cited in Dirks, 1992: 247-
287; Sugata Bose cited in Cooper, 1997: 45-63; Packards, 1997: 52-57). One of the
problems found in development literature is whether development is immanent and
unintentional process...or development is an intentional activity (Cowen and
Shelton, 1998:50). Development depends on values and therefore has no uniform
definition (Kanbur, 2006:5). Development is not based on desires because it does
consider the physical conditions of a person as well as his capabilities (Sen, 1997;
Nussbaum, 2000; UNDP, 2007).
Most theories pertaining to development have centered on economic development
(Lash, 2003) but development actually encompasses so many facets of society.
Development has moved beyond economic progress, politics and society but
includes improvements in incomes and productivity which involves radical
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changes in institutional, social and administrative structures as well as in
population‟s attitudes and changes in the technical and institutional arrangements
by which it is produced and in many circumstances, even changes in customs and
beliefs of the society (Rodney, 1972). Todaro argues that development ought to be
a process of improving the quality of all human lives with three equally essential
aspects:
a. Raising the populace living conditions
b. Creating an environment conducive to the growth of people‟s self-worth
through the setting up of social, economic and political systems and
institutions with the aim of promoting human dignity.
c. Increasing the populace‟s freedom of choice by enlarging the available
options to choose from.
The attainment and realization of development ought to be necessitated through
the basic modification of both economic and social systems of society locally,
regionally or nationally. Development must lead to investment of capital in and
improvement of infrastructures especially of “undeveloped” areas.
“Infrastructures” means more than physical amenities such as roads and bridges
but also opening up of places or areas considered “empty” and establishing
industries which are viable and sustainable as well as establishing rules based
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on technological innovations through modernization of all structures
economically, politically and socially (van Laak, 2004).
In analyzing development, the paper takes into consideration three (3) key
typologies and they are economic development, political development and social
development.
1.1 POLITICAL DEVELOPMENT
The concept “political development" can be traced into the 1950s when a large
number of American political scientists were attempting to study the political
dynamics of emerging countries of Africa, Asia and Latin America. The concept
has no uniform definition leading to inconsistency. Daniel Lerner (1958) in his
“The Passing of Traditional Society: Modernizing the Middle East” equates
political development with political modernization; W.W Rustow (1971) in his
“Politics and the Stages of Growth” treated political development as a typical
phenomenon of modernization i.e. industrialization; Edward Shils treated the
terminology as a process of nation-state building (Mouton, 1962; cited in Legge,
2010) while Kenneth Organski (1973) defined political development as a process
which comprises political unification, industrialization, national welfare as well as
material affluence.
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Gabriel Almond (1970) defined political development as “the increased
differentiation and specialization of political structures and the increased
secularization of political culture”. But interestingly, two scholars best define the
concept and they are Eckstein (1982) and Park (1984). Eckstein (1982) defines
political development as the growth that occurs “in politics as such” (p. 470). He
went on to define the growth of politics as growth of all relations such as power
legitimacy, conflict resolution management, the regulation of social actions and
conducts, among others. Eckstein (1982) further argued that politics could easily
exist throughout a society but may not be located in any clearly defined social
institution of such a community or society (p. 470). Also, Park (1984:58) defined
political development as follows: “Political development may be defined in terms
of the capacity of the political system to satisfy the changing needs of the members
of the society”. To him, the focus or fulcrum of analysis lies on institutions that
have the capacity of satisfying the various higher levels needs of the populace.
In summary, the concept is a very dicey one but the basic point in understanding
the concept is that, it involves the citizenry accepting the kind of political system
and regime being established and that for political development to occur in a
society, there is the need for institutions of the state to be able to functions
adequately to be able to meet the needs of the populace.
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1.1.1 INDICATORS OF POLITICAL DEVELOPMENT
Guaranteeing of human rights
Democracy
Practice of multipartyism
Rule of law
Existence of separation of powers and checks and balances
Constitutionalism
Independent judiciary
Free press
Availability of strong and workable state institutions.
1.2 ECONOMIC DEVELOPMENT
“Without economic development, any potential for political openness and freedom
will be questionable” – Jose Maria Aznar (Former Prime Minister of Spain from
1996-2004).
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The most essential aspect of every country‟s development is the society‟s
economic development and therefore to measure a state‟s development, the basis
must be the use of its economy. This is because once a country‟s economy is doing
better and there is an increased improvement in its economy, the impact is great
and easily felt by majority of the society‟s populace.
Economic development occurs when there is a precedence of economic growth.
Economic development is a broader concept than economic growth. Haller (2012)
defines economic development as a process of generating economic, social,
quantitative and qualitative changes which causes a nation‟s economy to
cumulatively and durably increase its real national product whilst economic growth
is the increase in the national income per capita which involves quantitative terms
with a focus on the functional relations between the endogenous variables-i.e. an
increase in the gross domestic product (GDP), gross net product (GNP) and net
income (NI). Economic growth could be positive, negative or zero. A positive
economic growth occurs when the annual growth of GDP is higher than the growth
of the population; zero when the average growth of a country‟s GDP equals that of
its population‟s growth and negative when the growth of the population is higher
than the growth of its GDP.
To Leszek Balcerowiez (2001) economic growth is a process of quantitative,
qualitative and structural changes with a positive impact on the economy and on
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the population‟s standard of life and argues that economic development has four
dimensions and they are:
a. The initial level of development and/or the level existing when the rhythm of
development starts being calculated.
b. The human capital or people‟s level of education and professional training.
c. The internal economic conditions or the structures of the economy and
d. The external economic circumstances.
To Haller (2012) economic growth and development determine a society‟s
progress and the fulfillment and multilateral development of human personality,
increase of people‟s material and spiritual wealth as well as the scale of civilization
and culture (p.68). Economic development should lead to creation of more
opportunities in the sectors of education, healthcare, employment, improvement of
the environment and the increase in the per capita income of the citizenry. In other
words, economic growth is necessary but not a sufficient condition for achieving
economic development and that economic development ought to improve the
living standards of a country‟s populace by the creation of proper employment
avenues with suitable shelters and the sustainability of the nation‟s natural
resources.
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1.2.1 THEORIES OF ECONOMIC DEVELOPMENT
I. Linear Stage of Growth approach. This approach used in explaining a
country‟s economic development predominated in the 1950s and 1960s
and saw development as a process of historical changes and a process of
changing social structures (Thomas 2000, 2004). Linear stage of growth
approach sees economic development as a linear chain that needed to be
followed if development was to be achieved economically by any
society. This approach advocated for major societal changes in its
dimensions. For instance, from an agrarian economy to an industrialized
economy.
Here development is seen to have radical implications on a society‟s
structures in respect of social classes and relations of productions. The
approach perceives development to encompass changes to socio-
economic structures. It focuses on quantitative growth in which foreign
aid, investments and savings are essential to facilitate the process of
development (Fisher, 1935; Rostow, 1960).
II. Patterns of structural changes approach. This theory of economic
development came to dominate the explanation of development
economically in the 1970s. This approach focuses on economic statistical
figures and ideologies. The approach lays emphasis on patterns of
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instituting structural changes in other to achieve development. It uses
modern theory and statistical analyses in explaining the needed processes
of structural changes necessary for sustainable development. Analyzing
development is based on performance assessments (Gore, 2000; Thomas,
2000, 2004).
Development is more of a radical nature as well as of political
orientation. It argues that development can be attained based on goals and
outcomes which ought to be calculable and assertive in nature. Again, the
patterns of structural changes approach links development to power
relations existing domestically and internationally; institutional and
structural rigidities as well as the existing proliferation of dual economies
and societies both within and outside (Lewis, 1954; Chenery, 1979).
Proponents of this approach argue that to achieve development, there is
the need to critically examine both external and internal institutions as
well as the political systems and that development occurs when policies
are enacted and implemented to eradicate poverty, provide more
diversified employment opportunities and reduction of income
inequalities (Clark, 1940; Lewis, 1954;Kuznet and Murphy, 1966;
Wallerstein, 1974; Chirot, 1977; Snyder and Kick, 1979; World Bank,
1980; Freeman, 1998; Nelson, 2000).
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Interestingly, this approach of development is highly favored by
international development agencies such as the Organization for
Economic Cooperation and Development (OECD), the United Nations
Development Programme (UNDP) among others.
III. Neoliberalism approach. This approach advocates for free markets, open
economies and the privatization of inefficient and redundant state
parastatals and enterprises. To the proponents of this approach, they
argue that for development to be achieved, there is the need for economic
liberalization, privatization, free trade, deregulation and reduction in
government size or the state‟s role of spending in order to encourage the
private sector to be more active in the management of the economy and
that states fail to develop because of exploitative external and internal
forces and too much governmental interventions and regulations of the
economy (Silva, 1993; Gill, 1998; Polin, 2003;Swank, 2006; Boas and
Gans-More, 2009; Mirowski, 2009‟, Chomsky and McChesney,
2011,Wolff, 2012;Dines, 2013). Scholars of neoliberalism argue that
development and poverty are social constructions (Gills, 1998; Wolff,
2012).
The neoliberal‟s perspective of development can be looked at from two main
angles and they are:
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a. Development as modernization. It considers the process of social changes to
produce economic progress and examine changes in social, psychological
and political processes. It also seeks to develop wealth oriented attitudes and
values in citizens as well as how to promote human values by looking at
investments in education and skill training.
b. Development as “distributive justice”. This perspective considered
development as improving basic needs of people. It looks at the nature of
goods and services provided by the state, its accessibility to different social
classes, and how burdens of development could be shared among these
different social classes.
In summary, economic development refers to the sustainable policies and
actions of societies as well as of policymakers that improve the standard of
living as well as the economy in general. Economic development involves
developing the human capital, increasing the rate of literacy among citizens,
massive improvement of infrastructures that help in improving society‟s
economy and production as well as modernizing and industrializing and
improvement in citizens‟ wellbeing.
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1.3 SOCIAL DEVELOPMENT
Another important aspect of assessing Ghana‟s development is that of its social
development. Whenever a country grows and develops economically as well as
politically and yet it has not experienced social development, then there is the need
to put measures in place to ensure the attainment of this aspect of development as
well because it is the population that makes the country.
“Social development is the promotion of a sustainable society that is worthy of
human dignity by empowering the marginalized groups, women and men to
undertake their own development, to improve social and economic positions and to
acquire their rightful place in society…” (Bilance, 1997). UNRISD defines social
development as "processes of change that lead to improvements in human well-
being, social relations and social institutions, and that are equitable, sustainable,
and compatible with principles of democratic governance and social justice".
Social development ought to ensure human development and to help in the
eradication of poverty, generation of employment opportunities ought to be
available as well as societal harmony (Copenhagen Social Summit, 1995).
What then is human development since social development necessarily would have
to fast track the development of humans in any society. The Indian Human
Development Report of 1999 gives an acceptable definition which could be used as
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a yardstick to measure how far Ghana has gone in the development of its human
resources and society. “Human development is a process of enlarging people‟s
choices… The most critical choices that people should have include a long and
healthy life, access to knowledge and income, assets and employment for a decent
standard of living…(But) human development concerns more than the formation of
human capabilities such as improved health or knowledge. It also concerns the use
of these capabilities.” (India Human Development Report, 1999)
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SECTION II
2. CORRUPTION
Corruption is a cancerous disease as well as a plague that is corrosive and eats into
the cultural, political and economic fabrics of every society and destroys the
functioning of vital organs of such a society due to the wide range of effects it has
on society and it is as well also a crime (Amundsen, 1999; Annan, 2004; Lederman
et al., 2007). Corruption is a behavior which deviates from the normal duties of a
public servant because of private-regarding (families, close private
clique),financial or status gains; or violates rules against the performance of certain
types of private-regarding influences. This includes certain behaviors such as
bribery, nepotism or misappropriation (Nye, 1967). Corruption is considered a
major obstacle to state development and it is much detrimental when such a state is
a developing one (Camacho and Gyimah-Brempong, 2006).
Corruption is a vague concept and is very difficult to conceptualize (Jowitt, 1983;
Wedel, 2001; Johnston, 2004; Andvig, 2008). Corruption is the likelihood that
government officials (both high and low-ranking) would demand or accept bribes
in exchange for special licenses, policy protection, biased judicial sentences,
evasion of taxes and regulations, or simply to expedite government procedures
(International Country Risk Guide, ICRG). Corruption is bound to occur when an
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act is prohibited by laws established by the government (Gardiner, 1993).
Corruption reduces growth of any society through reduced private investments
therefore affecting development especially that of the society‟s economy (Mauro,
1995; Burki and Perry, 1998; Kaufmann et al., 1999; Bai and Wei, 2000;
Lederman, Loayza and Soares, 2007).
Due to the adverse effects of corruption on Ghana‟s development, it is essential to
understand and consider the various determinants and multidimensional nature of
corruption. It is also necessary to look critically at the nation‟s state institutions as
well as the political regime to fully understand corruption in Ghana. This is
because state institutions such as the courts, parliament, the executive arm of
government or state enforcement agencies all affect the level of corruption existing
in any society through political accountability mechanisms and the structure of
providing public goods and services (Lederman et al., 2007).
2.1 NATURE OF CORRUPTION
Corruption is not about an amount of money changing hands or about a "greasing
of the wheels of businesses" but it is about the destiny and future of a nation
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(Begovic, 2005). Corruption is a vague concept and is very difficult to
conceptualize (Jowitt, 1983; Wedel, 2001; Johnston, 2004; Andvig, 2008).
Corruption has a direct or indirect link to the political system experienced in Ghana
and this affects the fortunes of the country in its efforts in developing (Ahlin, 2000;
Treisman, 2000). The shaping of rules of interactions-i.e. the citizens and the
political echelons affect the level of corruption experienced in Ghana. The
occurrence of corruption arises as a result of the practice of neo-patrimonialism or
clientelistic form of politics and the country‟s failure to monitor failures to ensure
accountability (Lederman et al., 2007).
Corruption usually entails the extraction of rents by patrons under clientelistic
political system due to the vesting of some forms of public powers and authority.
Institutional designs existing in the country also determines the magnanimity of
corruption found in the country as well as competitions among individuals and
organizations in accessing public goods and services (Shleifer and Vishny, 1993;
Weingst, 1995; Ahlin, 2000). Moreover, to also understand the nature of corruption
and its ascendency, there is the need to look at Ghana‟s legal traditions and the role
of the state; this is because some scholars have argued that socialist legal tradition
states are more prone to having corrupt government officials thus encouraging the
practice of corruption in such societies (La Porta et al., 1993; Amundsen, 1999;
Ahlin, 2000; Fisman and Gatti, 2000; Treisman, 2000).
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Furthermore, the nature of corruption in a state could be understood when there is a
look at the mechanism for electing leaders or governors for the management of the
state‟s resources. Proportional representation systems of choosing leaders are more
prone to corruption tendencies than plurality (or majoritarian) systems because
under this system, electorates vote for the party and not actually its candidates and
corruption is worsened when such a state is practicing the presidential system of
government (Kuniwra and Rose-Ackerman, 2002). Others have also argued that,
corruption is related to policy formulations and its variables such as relative public
wages and openness (Ades and di Tella, 1999; Laffont and N‟ Guessman, 1999;
Van Rijckenghen and Weder, 2001).
Corruption arises due to an opportunity for bureaucrats to appropriate public funds
by misinforming government about the costs and quality of public goods
provisions (Blackburn et al., 2011). Corruption takes shape when there is
competition for positions of privilege holding public offices as well as bureaucrats‟
monopoly of power (Lui and Ehrlich, 1999; Sarta, 2000). Over-regulation of the
market is also a major factor in the acceleration of corruption and this point is
clearly pictured when it is viewed from an economic perspective. This is due to the
fact that, the push for privatization has opened up a whole new field in which
bureaucrats exploit regulations and tendering processes for personal gains as well
as political liberalization through the diversion of government from reforms as it
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seeks to win elections. In addition to these factors that help to understand the
nature and shape of corruption existing in Ghana, there is the need to know that the
lack of capacity of government, synchronization of politics and business and denial
of access to information also foster corruption.
2.2 THEORIES OF CORRUPTION
Principal-Agent theory. This theory bases corruption on the assumption that,
there is an asymmetry of information between principals (decision makers) and
agents (civil servants). This theory of corruption sees the state as a benevolent
entity and that corruption is exogenous to the political system (i.e. corruption is
not determined by the political regime of the day which means that corruption is
not influenced by political processes and political constellations therefore
making corruption not systematic or institutionalized) (Begovic, 2005). This
approach is looked at from a political point of view.
Also, there is an economic theory of corruption and this economic theory has
advanced two fundamental views in understanding corruption and dealing with
it (Begovic, 2005). These are (i) corruption being endogenous and (ii)
corruption being exogenous. Corruption being endogenous to the political
system means that corruption emanates from within the political structure of the
country as well as dependent its political regime.
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Endogenous corruption is evident when the rendering of public goods and
services are allowed to thrive on biases and patronage (Begovic, 2005) and
there are four (4) channels through which corruption is manifested under this
economic view of understanding corruption in Ghana and these include higher
public investments, lower government revenues, lower expenditures on
business operation and maintenance and lower quality of public infrastructures
(Tanzi and Davoodi, 1997).
Exogenous corruption is also evident when corruption emanates as a
consequential result of externalities and these externalities includes comparative
advantages enjoyed by countries, the organizational nature of corruption itself
and the nature of patronage existing outside a state‟s political system.
2.2.1 IS CORRUPTION BENEFICIAL OR NOT?
There is lack of agreement among scholars whether corruption could be
beneficial or not to any country. Whilst others argue that corruption is
economically desirable because it provides a more efficient provision of
government services through by-passing red tapeism and increasing public
investments and that corruption is also beneficial especially when a country has
significant natural resources such as oil (Acemoglu and Verdier, 1998;
Looney, 2006). others have also argued that it affects the quality of providing
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public goods such as social amenities and infrastructures to the citizenry,
reduces productivity, governments expenditure on operations and maintenance
as well as affecting the per capita income of a country and the distribution of
income (Tanzi and Davoodi, 1997; Ehrlich and Lui, 1999; Camacho and
Gyimah-Brempong, 2006; Blackburn et al., 2011).
Interesting to note is the argument advanced by Mo (2000) and he argues that a
1% increase in a country’s corruption level reduces such a country’s growth
rate by about 0.72% and that the most significant channel is that of political
instability which accounts for about 53% of the total effects experienced by the
country. Also, according to Gyimah-Brempong (2001), a unit increase in
corruption reduces the growth of GDP and per capita income by between 0.75
and 0.90 percentage points and between 0.39 and 0.41 percentage points per
year respectively.
2.3 TYPES OF CORRUPTION
Riley (1987) identified three categories of corruption.
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a. Incidental corruption. This is a small scale corruption. This type of
corruption involves junior public officials and has little macro-economic
costs as well as it being difficult to curb.
b. Systematic corruption. This type of corruption affects a whole department or
organization. It has substantial effects especially when the issue of state
revenues is considered as well as on trade and/or development. Example of
this type of corruption is false names on government payrolls.
c. Systemic corruption. This typology of corruption is also considered as
thievery or kleptocracy since it is carefully executed and normally indulged
in by the political elites and has a huge impact on a nation‟s development.
OTHER TYPES OF CORRUPTION
d. “State capture”. This corruption is aimed at changing rules and regulations
into rules and regulations that favor the interests of the corruptor. The
concept of “state capture” was advanced by the World Bank in explaining
the reality of life politically of a transitional economy. With this type of
corruption, the state is captured when interest groups influence legislations
through aggressive lobbying and effective corruption. This kind of
corruption could be termed as "elitists executed corruption".
e. Public corruption. Public corruption involves a breach of public trust and/or
abuse of position by state officials and their private accomplices. To
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simplify it, public corruption occurs when governmental officials or
bureaucrats demand, ask, solicit, accept or agree to receive anything of value
in return for being seduced in the performance of one‟s official duties (Legal
Information Institute).
f. Political corruption. It is any transaction involving both private and public
sectors through which collective goods are illegitimately converted into
private-regarding pay-offs (Heidenheimer et al., 1993). Political corruption
is evident when there is corruption involving political decision makers.
Political corruption occurs when state agents or politicians who are
mandated to make and enforce laws in the name of the sovereign (the
citizenry) are corrupt themselves and use their political power to sustain
themselves in power and sustain their status, power and wealth (Amundsen,
1999:3). This form of corruption leads to biased decisions and misallocation
of scarce state resources and sometimes leading to institutional decay and it
is evident in countries where there are weak accountability mechanisms
existing between the governors (the political elites) and the governed (the
populace) (Johnston, 1996:323).
g. Administrative corruption. This particular type of corruption violates the
legal rules and it is the most profound type of corruption experienced in
Ghana. It is the greatest single kind of corruption that serves as impediment
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to the development of Ghana. To Begovic (2005), whenever bad policies are
enacted by government and its institutions, corruption becomes the second
best solution thus encouraging the commonness of this kind of corruption.
This kind of corruption occurs due to the technical discretionary powers
enjoyed by civil servants in the implementation of laws enacted by
government.
h. Private corruption and collective corruption. Private corruption is defined as
the extraction of benefits that are shared or not shared by an individual with
his colleagues. This kind of corruption is evident when there is a conspiracy
between individuals and is shrouded in secrecy (Méry cited in de Sardan,
1999:49). It is called private because the corruptor and corruptee gain
private benefits as well as his family or close friends.
It is collective corruption when the benefits accrued are shared collectively
by the group and in this case, the institutions or organizations. Collective
corruption brings a sense of social acceptance as corruption spreads.
i. Redistributive and extractive corruption. Extractive corruption is evident
when there is a flow of resources from the society (i.e. individuals,
corporations of private nature) to the state while redistributive corruption is
evident when there is a scarce resource benefits flows from the state to the
society. Both redistributive and extractive corruption could occur
30
simultaneously and at different levels. Such scarce resources include fiscal
privileges, money, influence, identity and security.
With redistributive corruption, the state is the loser here. Various social and
economic groups, interests or persons are organized and are powerful
enough to draw more benefits from their corrupt practices. The main
benefactors are that the state resources are depleted and distributed to
various groups as well as interests according to their power configurations.
This scenario of corruption does not imply equal or equitable allocation of
resources. The effects of redistributive corruption are that the state becomes
incapacitated, dormant and politically inefficient as well as ineffective; also
the authority of the state to tax and render public services becomes eroded.
Again, the state‟s ability to implement coherent policies becomes destroyed
as well as its capacity to transform the society and the economy. When
development policies are not executed, it hurts the poor especially due to the
fact that resources become privatized and are redistributed according to a
group‟s ability to influence policies through bribery, lobbying, and pressures
but with extractive corruption, the main benefactor is the state. In this case,
the elites use the state‟s apparatus as its instruments to extract resources
from society and it does so for the state. This corruption flourishes when the
31
ruling elites have developed into a strong ruling class in control of the state‟s
power.
2.4 FORMS AND SHAPES OF CORRUPTION
a. Bribery. Bribery occurs when a person offers or gives some benefits to
another individual as an inducement for the person to perform a duty
dishonestly or when an individual requires a favor from another fellow as
an inducement for himself (i.e. the solicitor) to act dishonestly. Bribes
could be cash payments or non-cash advantage. Such dishonesty could
include an omission done by someone in relation to his or her employer‟s
enterprise.
Institutional bribery. This refers to a circumstance or situation
where bribe is paid or received with the full approval of the
organization on whose behalf one is either paying or receiving the
bribe. For instance, Mr. Amponsah is the CEO of Asglow
Companies and authorizes its commercial manager, Ms. Antwi to
pay bribe to win a tender.
Personal bribery. Personal bribery is a situation where a bribe is
either being paid or received by a representative of an entity
without the approval of the entity. Example is a government
official receiving bribes to award a contract whereas the
32
government department for which the official is taking bribe does
not or would not approve the bribe.
Supply-side bribery. This term is used to refer to the paying and
offering of bribes by persons and companies.
“Facilitation Payment” is a terminology used in relation to
payments made to officials so as to obtain or expedite
services to which the payer is entitled to say, obtaining
contract payments which are due, import or work permits,
or installation of telephone lines.
b. Extortion. Extortion is a form of blackmail where one party makes threats
against another party of adverse consequences unless demands asked by
the party are met by the other party who is being blackmailed.
c. Fraud. Fraud involves one person (or a collection of persons) deceiving
another person in order to gain some financial or other advantages.
Examples include dishonestly withholding payments, dishonestly
exaggerating the quantum of a claim and fabrication of evidences to
support claims.
d. Cartels. Cartels occurs when two or more bidders unlawfully collude to
rig a bid to favor one bidder and or to exchange or fix bid prices in
advance of tendering.
33
e. Money-laundering. This occurs when a party moves cash or assets
obtained by criminal activity from one geographic location to another
either through falsification of documents or aside deemed fit.
f. Misappropriation and embezzlement. Misappropriation could be defined
as the fraudulent usage of state resources entrusted to a public servant
while embezzlement is also the fraudulent conversion of another‟s
property by another who is in an authority or position of trust (English
Dictionary).
2.5 CAUSES OF CORRUPTION
Many scholars have sort to explain or assign reasons for the preponderance of
corruption in any society. For instance, it has been argued that, the salience of
corruption is the carry-over into present day political behavior of cultural values
inherited from a patrimonial past (de Sardan, 1999:25). Others have also argued
that as a country grows richer, the level of corruption decreases but even with this
stance, it is arguable because a country like Ghana is a direct opposite of what has
been proposed (Amundsen, 1999). Amundsen (1999) argues that when an income
increases, it may simply open up more corruption of more opportunities and
temptations and that simultaneously, increased income may reduce the level of
corruption because economic development normally go hand in hand with political
development, democratization and accountability.
34
Furthermore, others have argued that corruption exists because of competition and
liberalization of the market structure and also because of democracy.
Democratization provides avenues for corruption through elections and in the
struggle for political and administrative offices (Friedrich, 1993:16; Freedom
House Incorporation Index, 1998; Amundsen, 1999; Fisman and Gatti, 2000;
Gardiner, 2002).
2.6 COSTS AND CONSEQUENCES OF CORRUPTION TO
GHANA’S DEVELOPMENT
Corruption has so many effects on the attainment of Ghana‟s effort in achieving
development as an emerging economy. Corruption affects development in so many
ways and the first most essential aspect to look at corruption in terms of analyzing
development is that of human rights. Corruption infringes on the fundamental
human rights to fair treatment. Every person is entitled to be treated equally and
when one person offers bribe to a public official, he acquires a privileged status in
relation to others. Decisions also results in bias decision-making as considered
actions of personal enrichment and self-aggrandizement take precedence over the
establishment of rights for all as well as leads to over-investments in certain public
goods and services at the expense of others leading to unrealistic growth of a
country‟s GDP (Mauro, 1996).
35
Again, corruption leads to abuse of political rights as well as ramifications. When
leaders become corrupt, they siphon natural resources of the country and increase
public debts and could also encourage lack of accountability on the part of leaders
thus impeding development especially when patronage politicking is predominate
(Nas et al., 1986; Fackler and Lin, 1995; Linz and Stephen, 1996; Bailey and
Valenzuela, 1997; Persson et al., 1997; World Bank, 1997; Rose-Ackerman, 1999;
Djankov et al., 2001; Laffont and Melea, 2001; Shah, 2007). Moreover, corruption
hinders development through the reduction of growth as a result of reduced private
investments (Mauro, 1995; Burki and Perry, 1998; Kaufmann et al., 1999; Bai and
Wei, 2000; Lederman, Loayza and Soares, 2007).
Corruption prevents development of effective institutions needed for good
governance and could cause instability as well as civil war. Corruption violates and
undermines social trust, rule of law by encouraging an anti-democratic
environment characterized by uncertainty, unpredictability, declining of moral
values and disrespect for constitutional institutions and authority (UNDP, 2004).
Corruption also prevents transparency in a political system (Peter and Welch,
1980; Fackler and Lin, 1995; Giglioli, 1996; Rose-Ackerman, 1999; Djankov et
al., 2001; Lederman et al., 2007).
Furthermore, corruption increases cost of doing business, reduces revenues
accruing to the state, leads to poor service delivery, existence of multiple
36
concurrent sources of employment, deepens poverty and encourages
personalization of public offices, encourages siphoning of state resources, brings
about brain drains and inefficiency in the public service, breakdown of law is
common and finally could affect the trade and commerce of Ghana since investors
will be unwilling to invest leading to an increase in inflationary rate,
unemployment, lower productivity, decrease in foreign reserves and deterioration
of the citizenry‟s standard of life (McGovern, 1907; Stoddard, 1968; Linz, 1990;
United Nations, 1991; Heidenheimer et al., 1993; Johnston, 1996; Amundsen,
1999; de Sardan, 1999; UNDP, 2004; Camacho and Gyimah-Brempong, 2006;
Lawal, 2007; Nyarko, 2014).
37
SECTION III
3. GOVERNANCE
Governance issues have been an essential component of societies since the
begining of civilization especially issues such as how justice should be
administered, what values, ethics and rules of conduct should be upheld as well as
the manner of organizing societies themselves (Chibbah, 2009).
“An effective state is vital for the provision of the goods and services and the rules
and institutions – that allow markets to flourish and people to lead healthier,
happier lives. Without it, sustainable development, both economic and social is
impossible” (World Bank, 1997:1). This statement by the World Bank shows that
good governance is very key in the realization of any country‟s developmental
goals and outcomes (IDA, 1998). Governance is defined as “the manner in which
power is exercised in the management of a country‟s economic and social
resources for development” (World Bank, 1992).
United Nations Development Programmes‟s Regional Project on Local
Governance for Latin America (UNDP-RPLGLA) defines governance as
“governance is the rule of the political system to solve conflicts between actors and
adopt decisions (legality). It has been used to describe “the proper functioning of
institutions and their acceptance by the public (legitimacy). And it has been used to
38
invoke the efficacy of government and the achievement of consensus by
democratic means (participation).
Governance as a concept covers the type of political regime, the process by which
power and authority is vested and exercised in the day-to-day management of a
state‟s socio-economic resources for development as well as the capacity of
governments and administrations to design, formulate and implement policies and
performance of functions. Good governance should encompass sustainable
structural reforms, property rights, and rule-based governance, quality budget and
proper public investment processes, efficiency and equity of revenue mobilization
as well as of public expenditure, accountability and transparency of the civil
service (IDA, 1998; GAF; UNESCAP).
Governance can be divided into three aspects and this is well defined by the
UNDP. UNDP (1997) defined governance as the exercise of economic, political
and administrative authority to manage a state‟s affairs at all levels. It defined
“economic governance” to include decision-making processes that affect a nation‟s
economic activities and its relationships with other economies; “political
governance” as the process of decision-making in line with the formulation of
policies and “administrative governance” as the system of policy implementation.
Good governance is essential to development because it minimizes corrupt
practices which affect development; it takes into consideration the views of the
39
minority groups and especially that of the most vulnerable before taking final
decisions.
3.1 THEORIES OF GOVERNANCE
a. Rationale Choice Theory. This approach draws on micro-economic
analyses with its attempt to unpack social life in terms of individual
actions and to explain individual actions in terms of rationality and
especially through utility maximization. The rational choice theorists are
often more interested in explaining cases where institutions or norms are
honored even in the absence of a higher authority to enforce them.
Rational choice theory explains all social phenomena by reference to the
micro level of rational individual authority. It unpacks social facts,
institutions and patterns of rules entirely by analyzing individual actions.
This theory argues that the absence of any effective higher authority
means that such institutions have to be conceived as self-enforcing. It
goes to say that institutions structure people‟s strategic interactions with
one another and that stable institutions influence people‟s actions by
giving them reasonable expectations about the outcome of the varied
courses of actions from which choices are to be made.
b. Interpretive theories: Interpretive approaches to governance often
emphasize contingency. They reject the idea that patterns of rule can be
40
properly understood in terms of a historical or social logic attached to
capitalist development, functional differentiation or even institutional
settings. Instead, they emphasize the meaningful character of human
actions and practices. It simply means that, because individuals act on
beliefs, ideas, or meanings-whether conscious or not- their actions can be
understood properly only if the significant meanings are grasped. Some
of the interpretive approaches suggest that beliefs, ideas or meanings are
more or less uniform across a culture or society. Hence, they inspire
studies of distinct patterns of governance associated with diverse
cultures. Other interpretive approaches also place greater emphasis on the
contests and struggles over meanings that they take to constitute so much
political activity. Hence, they inspire studies of the different traditions or
discourses of governance that are found within any given society.
c. Policy network theory: This theory argues that, governance is simply
self-organizing, inter-organizational networks that are charged with
policy-making (Rhodes, 1996:660; Stoker 1998a:18). Any setting with a
plurality of actors and no formal control system that can dictate the
relationships between the actors is a governance network (Chhotray&
Stoker 2009:3). Policy-making involves multiple organizations, from the
government as well as from the outside. The policy issues are complex,
41
and even defining the policy problem is demanding (Stoker 2000:92).
Setting policy goals, defining solutions, and implementation all require
resources that are not held by any single organization, resulting in
interdependence of the organizations. The interdependence in turn
provides the organizations in the network considerable autonomy from
central control.
There is no single as well as exhaustive definition of "good governance"
neither is there a scopal delimitation which command universal agreement
among scholars (United Nations Human Rights). Good governance has been
defined as a process that considers the modus operandi by which public
institutions conduct public affairs, manage public resources and guarantees
the attainment and realization of human rights in a manner essentially free of
abuses and corruption, and with due regards for the rule of law.
3.2 CHARACTERISTICS OF GOOD GOVERNANCE
a. full respect of human rights
b. rule of law
c. effective participation by citizens
d. multi-actor partnership
e. political pluralism
42
f. transparent and accountable processes as well as institutions
g. an efficient and effective public sector
h. legitimacy of authority and power
i. access to knowledge, information and education
j. political empowerment of citizenry
k. equity, sustainability
l. attitudes and values that foster responsibility, solidarity and tolerance.
3.3 THEORIES OF GOVERNANCE AND DEVELOPMENT
a. The "SUCCESSFUL SOCIETY" school of thought. This school of
thought centres around and focuses on certain key characteristics commonly
pertaining to successful societies-i.e. advanced countries and argues that for
developing countries to achieve the feat of these advanced countries, they
should emulate how the developed, advanced economies achieved their
developments (Bloom et al., 2004). Some features of these advanced
economies include competitiveness and looks at the ways through which the
state governments can help in the facilitation of competitiveness among
firms and industries; strong institutions and rules-based conducts; and social
43
capital availability to aid in the competitiveness of industries and to build
strong institutions.
According to this school of thought, development i.e. economic
development could be achieved when there exist three essential
conditionalities and they are: clear definitions of roles of actors and
institutions of the state; responsiveness of governance mechanisms to
existing conditions plus adaptability and flexibility to change; and a
consistent focus on ensuring public interests reign paramount in any
decisions made using state power (Chibbah, 2009).
b. THE "GOVERNANCE FOR GROWTH" school. Chibbah (2009) calls
this school of thought the "cautionary school of governance for growth". The
"governance for growth" argue that growth is the raison d'être of
development and view "good governance" as development in itself (Knack
& Keefer, 1995; Easterlin, 1996; Hausman et al., 2004; Rodrik, 2008 cited in
Chibbah, 2009). One of such school of thought is Acemoglu (2008) who
argues that the link between improved governance and governance as
stimulus for growth is neither clear-cut nor can it be confidentially pursued
or implemented as a policy.
44
c. "SOCIAL ORDER" school. The "social order" school of thought argue
that good governance will exist when there is maintenance of social order
through the interplay between competitions, institutions and beliefs; respect
to the transition to open access by examining specific details of change and
specific institutions serving as agencies of change across societies;
institutions and organizations which help in reducing potential threats of
violence and disorder (North et al., 2008).
3.4 Key attributes of good governance
The concept of good governance has been
clarified by the work of the former Commission on Human Rights. In its
resolution 2000/64, the Commission identified the key attributes of good
governance:
transparency
responsibility
accountability
participation
responsiveness (to the needs of the people)
45
By linking good governance to sustainable human development,
emphasizing principles such as accountability, participation and the
enjoyment of human rights, and rejecting prescriptive approaches to
development assistance, the resolution stands as an implicit endorsement of
the rights-based approach to development. Resolution 2000/64 expressly
linked good governance to an enabling environment conducive to the
enjoyment of human rights and "prompting growth and sustainable human
development." In underscoring the importance of development cooperation
for securing good governance in countries in need of external support, the
resolution recognized the value of partnership approaches to development
cooperation and the inappropriateness of prescriptive approaches.
3.5 How does 'good governance' help in promoting
national development as a country?
Good governance principles provide a set of values to guide the work of
governments and other political and social actors. They also provide a set of
performance standards against which these actors can be held accountable.
Moreover, good governance aids to inform the development of legislative
frameworks, policies, programmes, budgetary allocations and other
measures.
46
On the other hand, without good governance, no development could be
achieved and maintained in a sustainable manner. Good governance ought to
rely on a conducive and enabling environment. This includes appropriate
legal frameworks and institutions as well as political, managerial and
administrative processes responsible for responding to the rights and needs
of the population.
The links between good governance and development can be organized
around four areas:
Democratic institutions
Good governance of democratic institutions creates avenues for the public to
participate in policymaking either through formal institutions or informal
consultations. They also establish mechanisms for the inclusion of multiple
social groups in decision-making processes, especially locally. Finally, they
may encourage civil society and local communities to formulate and express
their positions on issues of importance to them.
Service delivery
In the realm of delivering state services to the public, good governance helps
to improve the state’s capacity to fulfil its responsibility to provide public
47
goods which are essential for the attainment of development such as the
right to education, health and food. Good governance principles may include
mechanisms of accountability and transparency, culturally sensitive policy
tools to ensure that services are accessible and acceptable to all, and paths
for public participation in decision-making.
Rule of law
When it comes to the rule of law, good governance facilitates in the
reformation of legislation and assist institutions ranging from penal systems
to courts and parliaments to better implement that legislation. Good
governance traits and principles may include advocacy for legal reform,
public awareness-raising on the national and international legal framework
and capacity-building or reform of institutions.
Anti-Corruption
In fighting corruption, good governance efforts rely on principles such as
accountability, transparency and participation to shape anti-corruption
measures. Initiatives may include establishing institutions such as anti-
corruption commissions, creating mechanisms of information sharing, and
monitoring governments’ use of public funds and implementation of
policies.
48
McCord et al. (2005) argues that if a country fails to grow economically, the
problem should either be macro-economic mismanagement or hinderance of
the private market expansion due to bad governance. Ghana fails to achieve
development due to the nation lacking good governance and management
and due to some factors such as our socio-political history (Sachs et al.,
2004), higher transport costs, small markets, low productivity in agriculture,
higher rates of diseases as well as slow diffusion of technology from abroad.
.
Aside the fact that corruption hinders Ghana‟s development, the nation,
Ghana fails to develop because of its selfish and self-perpetuators who
subvert and debauch every essential institution of governance to service their
needs and not that of the populace and good governance deficits (Ayittey,
2002; Calderisi, 2006; Lawal, 2007). Bad governance is affecting the
development of the country because the central government wields
enormous political powers and there is no proper checks-and-balance due to
the patronage system found in our governance style (Merédith, 2006).
Ayittey (2011) argue that the nation could develop sustainably if the country
follows his proposed five-stage consecutive reform processed which starts
from intellectual reforms and ends with economic reforms. The five (5)
stages of reforms are intellectual reforms (including free media and freedom
49
of expression), political reforms (democratic pluralism), constitutional
reforms (limiting the powers of the executive in controlling six key
institutions-i.e. civil service, electoral commission, security forces, judiciary,
media and central bank).
CONCLUSION
In conclusion, development needs a conscious effort by government as well
as its people need to help reduce the level of corruption and also hold public
officials accountable for their actions and also the practice of patronage
disease ought not to be encourages because it gives public officers the urge
to still engage in corruption which affects the poor and marginalized more.
Also, there is the need for a vibrant civil society that hold political elites in
check and the opposition of the day also need put government on its toes as
well as government needs to help in the development of strong and viable
state institutions.
Also, there is the need for the downsizing of the government, privatization
and liberalization of the market ought to be encouraged but tailored carefully
as well as establishment of a lean but strong, efficient and democratic
developmentalist state and reforms must start from the top levels of the state.
50
In addition, there is the need to strengthen the central coordinating organs;
encourage simplification, standardization, flexibility in the bureaucracy;
dismissal of redundant civil servants; elimination of ghost names and
increase productivity and monetization of benefits should be encouraged.
Finally, there is the need for donor communities to attach political
conditionalities such as respect for human rights, democratization values be
enforced, "honest governance" and the passing of the right to the
information bill and there is the need for political will from various
government to render good governance and help fight corruption as well as
separate the realm of civil service from partisan politics and should
encourage professionalization of the bureaucracy through competitive entry,
competitive compensation and encourage meritocracy.
51
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