THE 13th INTERNATIONAL ANTI – CORRUPTION CONFERENCE [IACC]: Athens, Greece.

THE EMPIRICAL TOOLS FOR GOVERNANCE AND CORRUPTION ANALYSIS:

The case for Tanzania.

2008

Dr. Edward G. Hoseah – DIRECTOR GENERALTHE PREVENTION AND COMBATING OF CORRUPTION BUREAU - TANZANIA

10/30/2008

EMPIRICAL TOOLS FOR GOVERNANCE AND CORRUPTION ANALYSIS

Sensibly evaluating an elusive concept like governance has become an ever-growing field of research viewed by large number of enterprise, citizen and expert survey respondents in industrial and developing countries.

EMPIRICAL: derived from experiment, experience and

observation rather than from theory or logic.

MEASUREMENT TOOLS1.In measuring governance, the following are

common empirical tools for analysis:

a) Voice and Accountability.

b) Political stability and absence of violence.

c) Effective Government.

d) Quality of Regulatory framework.

e) The Rule of law.

f) Control of corruption.

In the mid-1990s several institutions including the World

Bank, UNDP and EU have tried to asses governance empirically in order to justify its funding programs.

1.1. For example the World Bank has come up with the following as tools for assessing governance:

a) Control of corruption as a priority area. b) Promoting equity. c) Gender and gender mainstreaming. d) Economic growth and investments. e) Delivery of health services, education and infrastructure development. f) Preventing market failures.

1.2. The EU measures governance by using the following indicators:

a) Human rights. b) Democratization and democracy. c) The Rule of Law. d) Civil society. e) Decentralized power sharing. f) Sound public administration. g) Gain importance and relevance as a society

develops into a more sophisticated political system.

e) Electoral system.

1.3. While the UNDP, has developed tools for measuring governance in collaboration with the citizens and other groups which are:

a) control of corruption as a priority area. b) exercise of legal rights and obligations. c) developing infrastructure. d) health services and education. e) Investment level and growth of economy.

The situation above shows that every institution has different tools for measuring good governance in different Nations. These differences result in confusion for domestic implementers.

2. Good governance, therefore is to govern well and to produce results that meet the societal needs for the good of the citizens. Its underlying principles are:

a) Transparency. b) Accountability. c) Participation. d) Rule of law. e) Responsiveness. f) Consensus oriented. g) Equity and Inclusiveness. h) Effectiveness and efficiency. e) Predictability.

2.1. A sensible evaluation of governance in any particular setting is a very complex task for a number of factors, particularly where corruption has become a priority area of assessing good governance by large number of enterprise, citizen, and expert survey respondents in industrial and developing countries.

2.2. On the other hand, taking Transparency International (TI) measurement, the following indicators are considered in measuring governance:

a) Control of corruption as a priority area. b) The freedom of media. c) Electoral system. d) Promoting equity and human rights. e) Level of investment and economic growth.

2.3. On the other hand, the World Bank on assessing Tanzania and other countries on governance, their findings are based on the following:

a) Corruption perception index (CPI) produced annually Transparency International (TI). b) World Governance Indicators (WGI). c) Business Environment and Enterprise Survey (BEEFS).

However, Transparency international (TI) measuresgovernance by capturing the views of local stakeholders who perceive governance problems differently from those making a judgment from the outside.

2.4. The CPI, commonly called the “poll of polls” which has revealed as a powerful tool accepted worldwide, much criticism has been addressed against it in terms

of: a) inaccuracy. b) inconsistency. c) real impossibility to asses what a particular given degree of corruption means for a country.

2.5. Taking the TI measurements, much criticism arises due to the sampling techniques used which are:

a) basing on the “perception” views. b) basing on the “polls” and “surveys”.

3. In particular the World Bank in corruption index praises Tanzania for bits 2007 being one the countries improving governance. The world’s most corrupt nations named in the World Bank corruption index 2007 are North Korea, Somalia, Myanmar; formerly known as Burma, Afghanistan, Congo, Iraq, Zimbabwe, Bangladesh, Nigeria, Turkmenistan, Cambodia, Chad, Ivory Coast, Angola, Papua New Guinea, Sierra Leone accordingly.

3.1. But from the Transparency International corruption perception index of 2008 (CPI 2008) Tanzania has positioned at 102 group among around 180 Nations

assessed.3.2. Applying the Transparency International measuring

tools to Tanzania setting, the following are missing out in the TI considerations:

4. The case of Tanzania:

The National Strategy for Growth and Reduction of Poverty (MKUKUTA:2005-2010) whose target is to reduce poverty in line with the Millennium Development Goals (MDGs). The Government of Tanzania has and continues to address the problem of corruption by employing the principles of good governance and Rule of law, Accountability of leaders and public servants, Democracy, political and social tolerance, deepening peace, political stability, national unity and social cohesion (Cluster Three of MKUKUTA).

In addition, the Government by ensuring sound macro-economic management, promoting sustainable and broad based growth and reducing income poverty of both men and women in urban and rural areas (Cluster One of MKUKUTA).

Direct Measures undertaken by Government to address corruption include:

Introducing the National Anti-corruption Strategy and Action Plan (NACSAP) as tool for prevention of corruption in the public, the civil society, the private sector and media.

Promulgating the Prevention and Combating of Corruption Act, 2007 which has domesticated the UNCAC, 2003.

Introducing Integrity Committees in all public Institutions (MDAs) to ensure integrity values are inculcated and remain a permanent feature in public service delivery.

4.2.1. GDP and Inflation:Transparency International should consider also GDP,

price inflation, per capital income and revenue to GDP ratio as one of the tools for the assessment of control of corruption and good governance. Tanzania’s economic performance during the last ten years indicates that GDP growth increased from 4.1 percent in 1998 to 7.1 percent in 2007. GDP growth averaged 7.2 percent for seven years since 2002.

Inflation was reduced from around 30% in mid 1990s to 3.5% in 2003 and progressively increased to 7% in 2007. Nevertheless, the same has been kept below double digits despite recent increases in oil and food prices in the world market. Per capital income increased from USD 315.1 in 1998 to USD 439.5 in 2007. Revenue to GDP ratio increased from 11.5% in 1998 to 17.1% in 2006. Thus economic indicators should also be used to measure good governance.

Economic Performance (Selected Macro Variable)(Vertical axis represents rates in percentage %)

Revenue collection: Transparency International (TI) should also consider

that Country’s Revenue collections is one of the key component in measuring corruption and good governance. Tanzania Revenue collection has improved since 1995/96 financial year with annual collections of USD 336,723,333.3 to USD 1,700,327,500 in the financial year 2005/06.

From practitioner’s point of views, there is a need to consider the above factors in developing empirical tools for measuring governance because we need to have a fair and realistic assessment of the realities on the ground, particularly stakeholders views.

TANZANIA REVENUE COLLECTIONNote: Revenue collections reported in millions Tanzanian shillings (Tshs).

Source: Tanzania Revenue Authority (TRA) 2006.

Tax item

Fiscal Year

1995/96

1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06

Income tax-PAYE

25,695 38,358 47,722 54,862 73,291 92,744 116,567 139,694 183,237 233,460 277,759

Income tax- corporate

47,759 54,690 64,773 64,787 54,502 46,634 57,057 78,390 109,072 152,449 195,279

Income tax- other

38,735 41,075 47,626 52,025 98,486 77,022 82,547 94,032 96,045 107,501 146,317

VAT-local

51,573 67,053 61,758 115,580 126,968 140,035 165,908 201,543 181,109 296,203 329,219

Excise duties- local

44,107 61,923 78,783 57,796 66,960 68,999 72,837 85,263 92,869 108,985 135,173

Other domestic taxes & charges

28,199 43,337 43,656 22,829 22,742 22,087 24,982 26,140 32,020 25,434 41,648

International trade

168,000

208,709 227,086 261,739 279,306 413,806 456,710 520,099 624,955 754,975 914,998

Total 404,068 515,144 571,404 629,618 722,254 861,327 976,608 1,145,161

1,319,306

1,679,008

2,040,393

Graphical presentation of the Tanzania Revenue collections

4.2.3. Performance of the Prevention and Combating of

Corruption Bureau (PCCB): Transparency International should

cooperate with PCCB which is the leading Institution for

preventing and combating of corruption in Tanzania before publishing their annual CPI. An increasing performance of PCCB has increased the citizen’s awareness and participation in the areas of prevention and combating of corruption in Tanzania.

Measuring PCCB’s performance in preventing and combating of corruption in Tanzania has taken into account, inter alia, the following:

a)Corruption cases reported to the institution by citizens.

b)Corruption cases investigated by the institution .c)Completed investigation cases.d)Administrative actions taken against public officials

of questionable character.e)New cases filed into courts of law by the institution.f) Convictions recorded in the courts of law.

See the Institution’s performance table next slide:

OUTPUT REPORT FROM THE INVESTIGATION AND PROSECUTION FUNCTIONS: 2001 – 2007

(Source: PCCB/HQ-2007)

OUTPUT 2001 2002 2003 2004 2005 2006 2007

Cases reported

1,354(100%)

1,383(102%)

2,285(169%)

2,223(164%)

3,121(230%)

6,320(467%)

8,235(608%)

Cases Investigated

1,354(100%)

1,383(102%)

1,796(133%)

1,149(85%)

677(50%)

1,528(113%)

1,266(94%)

Cases completed

285(100%)

732(257%)

540(189%)

458(161%)

540(189%)

1,688(592%)

2,015(707%)

Cases transferred

154(100%)

222(144%)

36(23%)

25(16%)

2(1%)

496(322%)

460(299%)

New cases filed into court

57(100%)

52(91%)

60(105%)

60(105%)

50(88%)

71(125%)

196(344%)

Total cases prosecuted

110(100%)

191(174%)

178(162%)

202(184%)

218(198%)

251(228%)

352(320%)

Convictions 0(0%)

12(100%)

9(75%)

6(50%)

6(50%)

18(150%)

35(292%)

Acquittals 0(0%)

26(100%)

28(108%)

8(31%)

10(38%)

28(108%)

45(173%)

Administrative actions

1(0%)

42(100%)

21(50%)

126(300%)

111(264%)

209(497%)

280(667%)

Graphical presentation of the output from investigation function

The cases of corruption being reported in year 2007 has increased to 608% compared to what has been observed in year 2001. Cases being completed investigated in year 2007 have also increased to 707% compared to the cases recorded in year 2001.

Graphical presentation of the output from prosecution and administration actions function

Prosecution function has been increasing annually as cases sent to court in year 2007 had increased to 344% compared to those filed in court for the year 2001.

Graphical presentation of the output from the cases completed from courts and administrative actions taken.

More conviction was recorded in year 2007 by 292% compared to the convicted rate in the year 2002. More administrative actions has been taken against public officials with unethical and questionable integrity increasing by 667% compared to actions taken in the year 2002.

Concluding Remarks and RecommendationsThe state of corruption produced annually by the

Transparency International may not be realistic or their surveys used may lack some vital information which could make their qualitative surveyed data more realistic.

Their sampling methods and techniques which do not cover certain critical groups of the society denies TI a vital information/data that may increase the vitality of their findings.

Transparency International should cooperate with lead Institutions for preventing and combating of corruption to have a fair opinion in their surveys which are important for improvement of good governance at global level.

References

Joel Hellman, Geraint Jones, and Daniel Kaufmann, 2000, “Seize the state, Seize the day: An Empirical Analysis of State capture and Corruption in Transition,” paper presented at the World Bank’s Annual Bank Conference on Development Economics, April (Washington: World Bank), www.worldbank.org/wbi/governance/

Daniel Kaufmann, art Kraay, and Pablo Zoido-Lobaton (1999 a),” Aggregating Governance Indicators,” World Bank Policy Research Working Paper No. 2195 (Washington), www.worldbank.org/wbi/governance/.

Daniel Kaufmann, art Kraay, and Pablo Zoido-Lobaton (1999 b), “Governance Matters,” World Bank Policy Research Working Paper No. 2196 (Washington), www.worldbank.org/wbi/governance/.

World Bank Institute and Europe and Central Asia Public Sector Group, 1999, “New Empirical tools for Anti-Corruption and Institutional Reform: A Step-by-Step Guide to Their Implementation” (Washington), www.worldbank.org/wbi/governance/.

Francesca Recanatini, World Bank Institute, October 30 2003 report, “The role of Empirical Analysis in Addressing Governance”.

Bank of Tanzania, Monthly Economic Review, August 2008