Wednesday, July 11, 2007

Mixed results in World Bank corruption report

A new World Bank report has praised African nations for their fight against corruption. The report measured the quality of governance in 212 countries from 1996 to 2006 and found Africa had shown the greatest improvement. The report did, however, find that the gains and losses balanced out such that the average quality of governance worldwide over the past decade has not improved much. Finland, Iceland, Denmark Norway and New Zealand were judged the least corrupt countries in the world while Somalia, Myanmar (Burma), Equatorial Guinea, Haiti and Zimbabwe ranked most corrupt.

The World Bank’s Daniel Kaufmann, co-author of the report and director of the banks knowledge-sharing and training arm, said that bribery is costing world $1 trillion a year with the billion people living in extreme poverty worst affected. “The burden of corruption falls disproportionately on the bottom billion people living in extreme poverty,” he said. Kaufman said improvements in governance are critical for aid effectiveness and for sustained long-run growth.

The report entitled Governance Matters, 2007: Worldwide Governance Indicators 1996-2006 highlighted the number of African countries that had made great strides in improving various aspects of government. Using criteria such as accountability, free media, political stability,government effectiveness, regulatory quality, the rule of law and control of corruption, the report covered 212 countries and territories and drew on 33 different data sources. It captured the views of tens of thousands of survey respondents worldwide, as well as thousands of experts in the private, NGO and public sectors.

Some countries such as Venezuela, Zimbabwe, Eritrea, Ivory Coast and Belarus had regressed in the timeframe of the survey. But others are doing well: Kenya, Niger, Sierra Leone, on leadership accountability, Algeria and Liberia on the rule of law, Algeria, Angola, Libya, Rwanda and Sierra Leone on political stability and Tanzania on corruption. Outside Africa, those making significant gains included Indonesia, Ukraine, Columbia, Turkey and Afghanistan. Meanwhile corruption is on the rise in Bangladesh, Poland, Kyrgyzstan, Moldova and Pakistan.

Management of corruption is now a key World Bank benchmark. Many of the debts of the world's poorest countries have been written off under the Bank's Heavily Indebted Poor Countries (HIPC) initiative and increased aid flows to them on condition that they stamp out corruption. HIPC started in 1996 and was enhanced in 1999 as an outcome of a comprehensive review by the International Development Association (IDA) and the International Monetary Fund (IMF). HIPC’s debt-burden thresholds were adjusted downward, which enabled more countries to qualify for larger volumes of debt relief.

The report showed that corruption in the US has significantly worsened in the last decade. The World Bank scored the US on the same measure as Chile. Similar surprises showed emerging economies such as Botswana, Costa Rica and Lithuania, scored higher on the rule of law and corruption than two industrialized countries Italy and Greece. Daniel Kaufman the report showed the power of data “It begins to challenge these long-held popular notions that the rich world has reached nirvana in governance,” he said.

However Kaufman also admitted that the Bank’s own recent scandal involving former President Paul Wolfowitz has impacted the credibility of both the report and the bank itself. Wolfowitz was forced to resign in May after he violated a World Bank ethics rule forbidding personal relationships between bank employees and their supervisors. Kaufmann said countries rightly asked the Bank, "What right do you have of rating the world when you first have to rate yourselves? It has to start at home."

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