In the name of almighty AllahIn the name of almighty Allah

Asian Institute of Technology (AIT)Asian Institute of Technology (AIT)

School of Environment, Resources and Development (SERD)

Regional and Rural Development Planning (RRDP)

Corruption and Decentralization in Afghanistan

ED 77. 9007: DECENTRALIZATION AND GOVERNANCEED 77. 9007: DECENTRALIZATION AND GOVERNANCE

Instructor: Dr. Soparth PongquanInstructor: Dr. Soparth Pongquan

Assignment No.1Assignment No.1

March 2013March 2013

Submitted by:

Palwasha Tokhy Meranzai – ID: St 114727Palwasha Tokhy Meranzai – ID: St 114727

Table of contents

1. Concept of Decentralization and Corruption…………………………………………........................................ 1.1 Decentralization in Afghanistan……………………………………………………………………….…….. 1.1.1 The pros of Decentralization in Afghanistan……………………………………………….………… 1.1.2 The cons of Decentralization in Afghanistan………………………………………………………… 1.2 Specific Challenges of Decentralization in Afghanistan…………………………………………………...2. Anti Corruption measures in the context of decentralization……………………………………………………. 2.1 Strengthening the legal framework to prevent and fight corruption……………………………………… 2.2 Reinforcing participation and voice mechanisms………………………………………………………......3. Corruption Risk Factors associated with Decentralization in Afghanistan…………………………..………… 3.1 Widespread corruption and lack of good governance …………………………….……………………… 3.2 Lack of capacity of state institutions, including the judiciary…………………………………………….. 3.3 Weaknesses of sub national structures……………………………………………………………………. 3.4 Contradicting and confusing institutional structure…………………………………………..………….... 3.5 Insufficient oversight and control at the local level……………………………………………………….. 3.6 Specific risk of state capture……………………………………………………….…………………………4. Conclusion and recommendations……………………………………………………………………………….References………………………………………………………………………………………………………………

Corruption and Decentralization in Afghanistan

1. Concept of Decentralization and Corruption

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Decentralization is the process of distribution of functions and powers from a central location or authority to the local or lower level authority. While decentralization, especially in the governmental sphere, is widely studied and practiced, there is no common definition or understanding of decentralization. The meaning of decentralization may vary from country to country or place to place because decentralization can be applied in different ways. Decentralization concept can be applied not only in governments but private businesses as well.

Recently, decentralization has become an emerging trend and governments have been increasingly encouraged to decentralize their activities and shift decision making to the local level in order to promote public participation, government accountability as well as responsiveness of public policies and service delivery. Although decentralization provides opportunities as well as entry points for anti-corruption reform programs, specific corruption risks and vulnerabilities are associated with it.

Corruption is defined as exercise of official powers against public interest or the abuse of public office for private gains. Public sector corruption is a symptom of failed governance (Shah, 2006). Corruption may include many activities including bribery and embezzlement. Government, or 'political', corruption occurs when an officials or other governmental employee acts for his or her own personal gain.

Although there have been a lot of researches and studies to know the impact of decentralization on corruption, findings of theoretical and empirical researches have failed to clearly establish whether decentralization or decentralized systems systematically lead to less corruption or facilitate corruption. As responsibilities are transferred from central to local governments, new corruption opportunities occur, including the risk of the development of corrupt networks among public officials, citizens and interest groups. At the same time, decentralization provides more participation opportunities, which this may increase the ability of citizen to monitor the government activities and hold public officials accountable.

1.1 Decentralization in Afghanistan

The Bonn Agreement set out a strong centralized authority based on democratic principles. To reach decentralization, one must start with centralization. The current Afghan Constitution is based on highly centralized system of government. Once a strong, centralized government elected by the people has established the power can be devolved to the provinces and districts. This will be challenge in Afghanistan because this concept of centralized authority has left bad experiences in Afghanistan’s history. In the past decades provinces were completely free of Kabul’s (Capital of Afghanistan) authority and the internal or local governments were fighting with each other to fulfill their demands in the country.

Based on the constitution, three powers in Afghanistan is balanced, but overall in the constitution the most power is given to the executive body which is led be president and consists cabinet, ministries, governors, provincial councils and district councils. Constitutionally, the decentralization process in Afghanistan is based on the concept of the provincial councils and district councils. Article 138 of the Constitution stimulates that each of the country’s thirty four provinces will maintain a provincial council that is to take part in securing the development targets of the state and improving its affairs in a way stated by law and give advice on important issues. The key word in the function of the provincial councils is “advice”. Thus far the provincial councils have done little in terms of empowering the provinces to share governance with Kabul. The smallest official devolution forums (the district councils) are yet to be elected.

Earlier to the election of the provincial councils in December 2004, a UN development program mission on local governance visited Afghanistan. According to UN (United Nation) special representative Arnault, this mission recommended a “gradualist approach to the empowerment of these bodies” Arnault elaborated

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more on the yet to be elected councils considering that for the time being, the councils could be given an advisory role to the executive bodies at the local level. In November 2006, the ICG (International Crises Group) put forth a series to recommendation to counter the mounting problems of insurgency in Afghanistan, some of which focused on devolution of power from the center to the periphery. The ICG suggested that the Afghan National Assembly delineate administrative boundaries and pass laws for district and municipal elections as well as create a special commission on sub national governance to examine devolution of more powers and budget to the provinces.

In at least one case, more power was given to the provinces by NATO (North Atlantic Treaty Organization). However, NATO was not following a parliamentary recommendation but rather wanted a method of solution to control violence in one of the most volatile districts in southern Afghanistan. By empowering traditional tribal structures, NATO –ISAF (International Security Armed Forces) hoped to minimize losses of NATO forces and increase security in the region. In mid October 2006, British forces serving with ISAF under NATO direction left Helmand province’s Musa Qal’a district. Musa Qal’a was considered a stronghold of the insurgents. ISAF commander British General David Richards explained this move as a “desire” on NATO’s part to do what the people want. Reichards insisted that a deal was not made with the insurgents but rather was “with local elders principally”. In here the devolution has occurred although it was with pressure by a violent opposition but it stands as a step backward in Afghanistan’s state building and democratization process.

1.1.1 The pros of decentralization in Afghanistan:The theoretical arguments in favor of decentralization are well known. Generally the pros of decentralization in Afghanistan are as follow:

1. Decentralization brings government activities closer to the people: When the government activities matches with the people needs and run closely with the people, it will increase efficiency and accountability, and will reduce the amount of services for which public officials can demand bribes.

Bringing the government closer to the people is not enough. Local governments need to have the capacity to manage public funds, a functioning and transparent system of accounting and reporting as well as clear government structures that allow tracking responsibilities within the governance chain.

2. Decentralization offers greater opportunities for voice and choice: In a decentralized system, a variety of “voice” mechanisms may also potentially influence the use of public resources, including influencing taxing and spending priorities. When there is good picture from the needs of people, it will be easy to priorities those needs.

3. Making the public sector more responsive and accountable to the citizens: As a result, decentralization brings greater transparency in the local allocation of public resources, making service delivery and local investments. Furthermore, local officials with limited powers have reduced opportunities to engage in massive corruption. Decentralization is also expected to reduce the expected gains of corruption.In addition to transforming power relations between central and local governments, decentralization brought a shift in power at the local level, with public officials competing to gain and maintain support from the legislature, while the legislature exploited its newly acquired powers over local budgets to secure the funding for their political parties.

Numerous empirical studies support the positive impact that decentralization can have on controlling corruption. Evidence from Bolivia indicates that decentralization results in higher investment patterns in

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human capital and social services, pointing out to a form of government more responsive to the local community needs.

A study on decentralization carried out in India and Bangladesh shows that decentralization substantially reduced the amount of public funds diverted by powerful individuals in India (Crook and Manorin 2000). However, the study further indicates that if decentralization tends to reduce grand corruption, it is nonetheless likely to increase petty corruption. An earlier study also finds that increased fiscal decentralization is associated with enhanced quality of governance, as measured by citizens’ participation, political and bureaucratic accountability, social justice, improved economic management and reduced corruption (Huther and Shaw 1998). Another much study also concludes that over centralized top down management systems contribute to corruption and poor service delivery (Wade, 1997). Cross country evidence from a study conducted in 2000 by the World Bank further suggests a consistent negative relation between decentralization of government expenditures and corruption.

Power sharing would be easier under a decentralized democracy, in which many responsibilities now held by Kabul would be delegated to the periphery. Some of these powers would surely include the authority to draft and enact budgets, to use traditional alternatives to centralized justice systems for some offenses, to elect or approve important officials who are now appointed by Kabul, and perhaps to collect local revenue and enforce local regulation.

Increasing local autonomy would make it easier for the people to monitor the central government and identify the gaps into the local level. The responsibility for foreign policy and internal security, however, would remain with the central government, which would prevent even the more autonomous territories from hosting international terrorist groups or supporting insurrection against the state.

1.1.2 The Cons of Decentralization in AfghanistanThere is argument that the benefits of decentralization in terms of corruption reduction are not obvious. Besides the benefits from the decentralization there are some cons as well:

1. Lack of human and material sources: Local governments in developing countries often lack the human and material resources to perform government duties in an efficient, transparent and accountable manner. As the decentralization needs the power to be distributed as well as the duties so it needs for more resources which seem to be challenge for the developing country like Afghanistan.

2. Creates corruption vulnerability: Decentralization may also generate a new set of corruption vulnerabilities, including the risk of state capture by the local elite or a lack of fiscal discipline and financial management. Local politicians are also more vulnerable to pressures by influential individuals or interest groups whose money or vote count. Local officials have less independence from politicians at the local level, resulting in a greater risk of both groups to get vulnerable into corruption.

The capacity of local administrations to manage increased responsibilities and powers has an impact on local government‘s vulnerability to corruption, because they are untrained and weak administration with limited financial management capacity, so there is an increased risk of misuse of public funds as well as a lower probability of corrupt practices to be detected. At the local level, evidence points to a number of vulnerability areas and indicates that corruption is especially prevalent in public procurements, revenue collection and financial management, human resource management as well as land allocation and control.

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3. Creates more opportunities for corruption: Decentralization may increase corruption, as there are more opportunities for getting into corrupt practices at the local level. Closer relationships between the various stakeholders at the local level create more opportunities to develop corrupt networks. Citizens and public officials come more often in close and direct contact.

1.2 Specific Challenges of Decentralization in AfghanistanThe Bonn Conferences emphasized on centralization system in Afghanistan to maintain peace and stability through the building of strong central state. This has resulted in extremely vertical and centralized government structures. For example the budget is centrally and secoraly distributed from Kabul downwards through ministries to the provincial level authorities. Decentralization is not likely to be only measure for the effective anti-corruption strategy. The country political, institutional and social context is also key factor to take into the consideration in the terms of decentralization as an option to reduce corruption and increase efficiency and responsiveness of government to local needs. Decentralization will bring the expected result in a well functional, institutional and legal environment where adequate human and material resources are available to fight against corruption. So, overall the implementation of decentralization in Afghanistan faces with following challenges: 1. Efficiency: It is difficult for the government to reach the needs of the society because the decisions are always made at the upper level and people are kept away from the political, financial and administration decisions.

2. Responsiveness: Due to the financial and logistical constraints the central government has very limited capacity to deliver basic services to the people. As the decentralization needs for more human and material resources, it is seemed to be challenge for Afghanistan in the terms of decentralization implementation. The central government has limited sources and it is hard to allocate it and have clear priority plan for the each level.

3. Accountability: Still in Afghanistan more of regions are under the facto rule of warlords, commanders or illegal armed groups who substitute for the central authorities. With the implementation of decentralization these warlords will attempt to misuse their powers to reach to their own goals and will not follow the central government. This can lead the country to the local war as experienced in the past decades.

2. Anti-Corruption Measures in the Context of DecentralizationWays to control the corruption risks is related to the capacity of local authorities to enforce the law and rules. The corruption in the context of decentralization can be addressed by strengthening the legal framework, reinforcing participation in order to prevent and fight against the corruption. Promoting citizen’s participation in the management of public affairs to empower civil society to hold public officials accountable for their actions and decisions is one of the ways to measure anti-corruption.

2.1 Strengthening the Legal Framework to Prevent and Fight CorruptionCommonly used preventive as well as legal measures that can be put in place to contain the corruption risks in a context of decentralization are outlined in the Anti Corruption strategy of Afghanistan (Shah, 2006). In this strategy legal framework is provided which allows corrupt practices to be identified as well as the risk coming from those practices that includes:

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• The development and enforcement of appropriate codes of conduct setting enforceable standards for public officials in the area of conflict of interest whistle blowing or accountability;• The monitoring of lifestyle and introduction of assets and incomes declaration for public officials;• The development of transparent public procurement processes;• The introduction of transparent procedures for hiring and firing staff. Rotation of public officials at the local level is also a measure aimed at preventing the development of corrupt networks.• The adoption and enforcement of access to information laws;• The definition and enforcement of appropriate sanctions for corrupt behaviors. In this regard, the reform of the Judiciary with a special emphasis on the local level legal and judicial reform is of special importance, especially in the Afghan context. (chene, 2007)

Based on this legal framework which makes the corrupted acts highlighted, it would become easy to understand the meaning of corruption in an afghan society and government. Those acts which come under the legal framework will be considered as corruption.

2.2 Reinforcing Participation and Voice MechanismsMany decentralizing countries have weak mechanisms for the public to control and monitor decentralized services in areas such as public finance or service delivery targeting. As a result, decentralization should also be accompanied by increased participation mechanisms to empower citizens to participate and influence local government processes. Based on this, citizens are informed about what their government is doing, have the technical capacity to criticize and monitor the quality of local governance as well as to ensure their concerns are heard and acted upon them.

Finally, local elections provide an opportunity for citizens to express themselves by voting elected officials out of office but there is a need to open alternative avenues to enforce accountability in a more discriminating manner. Various tools and techniques are available to reinforce participation and voice mechanisms as well as enhance civic influence over government processes including:• Strengthening local players or structures such as citizens committees, community based management committees, etc;• Organizing regular public meetings or hearings that can encourage citizens to express their views, concerns or discontentment on specific issues or services;• Strengthening local level anti-corruption initiatives by building coalitions of CSOs, community groups, private sector representatives that can articulate their protests and lobby the local government;• Strengthening the local media or identifying targeted channels of communication at the local level that provide opportunities to citizens to be better informed and discuss local issues. (To hold public officials accountable, the public needs to be informed of what the government is doing.)• Introducing effective complaints and redress mechanisms • Using report cards or conducting public opinion surveys to asses the quality and efficiency of service delivery at the local level.

In implementing these measures, should be consider to involve people with the empowering manner which means participation shouldn’t be symbolic but a real participation should be act. For example, average citizens, especially poor or marginalized groups, may not have the capacity to monitor highly technical processes. There is also a danger that this kind of mechanisms may be manipulated by dominant local interest groups or individuals using this channel to exert their influence. In poor areas, voices are often ignored or captured by the local elite, depriving the poor the opportunity to participate in decision making. As a result, issues like how to involve people, who should be involved and what impact their voice is likely/meant to have on local governance should be looked at when designing participation mechanisms. Experience shows that reform yielding broad and influential participation and ensuring a wide access to the voice mechanism has a strong positive accountability effect.

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3. Corruption Risk Factors associated with Decentralization in AfghanistanHowever, given the weak state of the legal and institutional environment combined with the lack of human, material and financial resources, decentralization in Afghanistan faces considerable challenges of efficiency, responsiveness and accountability. In the absence of national level accountability mechanisms than can act against corruption and enforce integrity, many of the corruption risks associated with decentralization are increased Afghanistan.

3.1 Widespread corruption and lack of good governance Levels of corruption at the local level are likely to be correlated to the administrative environment as a whole, with increased corruption risks in a public sector with low standards of reliability. The CPI (Corruption Perceptions Index) 2007 ranks Afghanistan among the countries whose public sectors are perceived as the most vulnerable to corruption. The wide spread illegal opium production combined with the lack of security and stability in parts of the country and the weakness of the state institutions creates an environment likely to fuel corruption and further forms of illicit activities, both at the central and local levels. In such a context, decentralization may lead to public office abuse and rent-seeking activities by local warlords and powerful influential individuals in order to feed the illegal armed groups that control the illicit opium economy at the local level.

3.2 Lack of capacity of state institutions, including the judiciaryNon functioning institutions, limited capacity of government as well as reported corruption in the justice sector itself seriously facilitate the corrupt practices. This may include the shortage of skilled people, very low capacity levels, lack of basic facilities and infrastructure as well as low level of financial resources available for government salaries. Decentralization is also challenged by logistical constraints such as communication and transport difficulties. In such a context, central institutions may face with lack of capacity to manage and monitor the reallocation of responsibilities and resources as well as build the local capacity to handle newly acquired powers and responsibilities in a an accountable way.

3.3 Weakness of sub national structures Very weak local institutions also create major challenges to address corruption risks in a context of decentralization. In addition to insufficient financial and material resources, local institutions lack staff, training and knowledge of procedures to manage public funds as well as increased powers and responsibilities in an accountable, transparent and effective manner.

3.4 Contradicting and confusing institutional structures The various above mentioned argues make clear that the lack of coherent policy and strategy for developing sub national governance has resulted in a very weak and uncoordinated implementation of decentralization measures. Provincial Councils were elected in 2005 without a clear order, but in the context of decentralization provincial councils have only role of advice. And their responsibilities with the legislation and other bodies are remaining complicated. For example, at the provincial level, direct budget authority for key services is held by highly centralized line ministries. This system creates contradiction and confusion among the institutional structures.

3.5 Insufficient oversight and control at the local level In Afghanistan, direct administrative control of the government is limited to the capital city and its districts and there is no effective system of checks and balances in place to ensure that public goods are used efficiently at the local level. In the absence of internal and external controls functioning at the national level, there is a serious risk of decentralization leading to decreased accountability and increased corruption at

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the local level, with warlords and de facto local “authorities” taking control over human and economic resources, abusing public office or engaging in rent-seeking activities that benefit them.

3.6 Specific risk of state capture Since the governors are not selected by the people but they are appointed by the central government many of the governors in the provinces have gained their position not because they have been legitimately appointed but because they commend armed groups and militia, de facto controlling their area of influence. Although in most cases they may have received letters of engagement from the President to the central government authority, they combine military and administrative functions in their provinces and develop independent support and social domination patterns, which ultimately increase the risk of state capture at the local level.

4. Conclusion and recommendations:

In the Bonn conference a centralized system were highly recommended for Afghanistan in order to maintain the security and stability of the country. Since afghan government was just in it’s first stage and steps so centralized system was perfect to practice and had efficiency. After passing a decade the result of the system decided on Bonn conference is weak and highly corrupted government which gives sign that the centralized system is not applicable anymore. Although Afghanistan’s organizational structure has some of concept of decentralization but the way of structured or the role of those bodies are very faded. For example the provincial council at the provincial level is based on the concept of decentralization but their main function is advice and they don’t have the implementation power.

Theoretically Afghanistan is prepared to apply decentralization in it’s proper manner but in the reality if the decentralized system is enforced then the risks are very high and it may lead the country to the collapse or civil war. Decentralization faces many challenges in Afghanistan in the terms of efficiency, responsiveness and accountability.

Afghan government is weak with the lack of capacity; the main reason behind weak government is high level of corruption which is counted as a main challenge for the afghan government as well as international forces. From the forming of government thousands of moneys inflow to Afghanistan for capacity building and deducting corruption, it is not decreasing but has reached to it’s high level.

Many researches have been done that identified the impact of decentralization on corruption and findings are different, still it is not really clear that decentralization can lead to less corruption. In one hand with the transferring of responsibilities from central to local government the corruption opportunities will occur including the risk of elite capture or the development of corrupt networks among public officials but in the

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other hand decentralization provides more participation opportunities which increase ability of citizen to monitor state activities and hold public officials accountable.

Based on the analysis of pros and cons of decentralization and it’s impact on corruption, fully decentralization is not applicable in Afghanistan because there is major risks for that. Integrated strategies with the combination of decentralization in some parts and anti corruption policies are needed to be taken into consider. Maybe empowerment of the local government in the terms of fiscal and administrative decentralization is a better way to practice but still the central government may have it’s power to balance the power overall the country.

The state bodies are independent in Afghanistan and since the executive power influence is very obvious through the country, at the national level establishment of a monitoring body is essential to report on the activities of each power.

Local government capacity building could also be an option to reinforce accountability mechanisms. This could consist in strengthening the existing provincial councils and providing them with the skills and resources to effectively advice and monitor provincial administration. Their roles, responsibilities and mandate including one of monitoring and evaluating local government performances should be clearly defined and established.

References:

1. Anwar Shah, World Bank (2006) “Corruption and Decentralized Public Governance” pages 1-30. Available online: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2006/01/13/000016406_20060113145401/Rendered/PDF/wps3824.pdf [Download: March 20, 2013] 2. Kenneth Katzman, Congressional research service (2013) “Afghanistan: Politics, Elections, andGovernment Performance” pages 1-69, Available online: http://www.fas.org/sgp/crs/row/RS21922.pdf [Download: March 20, 2013]3. Ivar Kolstad and Odd-Helge Fjeldstad, Anti Corruption Resources Center (2006) “Fiscal Decentralization and Corruption - A Brief Overview of the Issues” pages 1-65, Available online: http://www.cmi.no/publications/publication/?2562=fiscal-decentralisation-and-corruption-a-brief [Download: March 20, 2013]4. Marie Chêne, Anti Corruption Resource Centre, (2007) “Corruption and Decentralization in Afghanistan” [Download: March 20, 2013] pages 1-95. Raymond Fisman, Columbia Business School and Development Research Group, the World Bank “Decentralization and Corruption: Evidence across Countries” pages 1-18, Available online: http://siteresources.worldbank.org/INTWBIGOVANTCOR/Resources/wps2290.pdf [Download: March 20, 2013]

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