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Private Sector Development

How Communication can Help Break the Chain of Corruption in the Private Sector

Roxanne Bauer's picture

When one thinks of corruption in the private-sector, grand scenes of executives paying bribes, bidders lying to win contracts, and senior accountants setting up secret bank accounts are likely to come to mind. In reality, though, the most common form of corruption is small-scale bribery involving people at every step of a company ladder. 

Small-scale bribery can take many forms, including non-disclosure of conflicts of interest, setting up deals that benefit particular people, or paying a little extra money to speed up a normally slow process. You might not think the everyday payments people make to building inspectors, customs officials, their friends across the street, or to themselves matter, but they can create a culture of corruption and set an expectation for future payments.

This was one of the main points of a panel discussion, “The Role of Integrity Compliance and Collective Action in Making the Private Sector a Partner in the Fight Against Corruption” at the International Corruption Hunters Alliance conference held at The World Bank Group December 8-10, 2014. The panelists were Dr. Andreas Pohlmann, Billy Jacobson, and Cecilia Müller Torbrand. Galina Mikhlin-Oliver of the Integrity Vice Presidency of The World Bank was the moderator.

Weekly Wire: The Global Forum

Roxanne Bauer's picture
These are some of the views and reports relevant to our readers that caught our attention this week.
 

Thanks to Urbanization, Tomorrow's Megalopolises Will Be in Africa and Asia
Foreign Policy
Tokyo will still be the world’s largest city in 2030, but it will have many more contenders on its heels. According to a fascinating new report from the United Nations, the globe will have 41 “mega-cities” -- defined as those with 10 million or more inhabitants -- up from 28 now. Although the world’s largest urban centers have historically been concentrated in the developed world, fast-paced urbanization in Africa and Asia means that the megalopolises of tomorrow will be found in the developing world. By 2030, Asia and Africa will host nine of the world’s 10 largest cities, according to the report.

Mobilizing Private Investment for Post-2015 Sustainable Development
Brookings
The sustainable development goals are likely to have a more ambitious scope than the Millennium Development Goals. Accordingly, they will need a more ambitious financing for development strategy that can mobilize much more public, private, and “blended” finance.  Very rough estimates indicate that at least $1 trillion of additional annual investment is required in developing and emerging economies.  At first glance this might appear to be a large number, but it represents only approximately 10 percent of extra investment above current levels. It is clear that official development assistance, on its own, would be incapable of meeting financing needs, even if the target to provide 0.7 percent of gross national income were to be achieved by all developed countries. But official development assistance (ODA) could, through leverage and catalytic support, help mobilize substantially more private capital. 
 

How to Fix Fragile States? The OECD Reckons it’s All Down to Tax Systems.

Duncan Green's picture

‘Over-generous tax exemptions awarded to multinational enterprises often deprive fragile states of potential revenues that could be used to fund their most pressing needs.’ Another broadside from rent-a-mob? Nope, it’s the ultra respectable OECD in its Fragile States 2014 report.

After years of growth, aid to fragile states started to fall in 2011, so the report centres around an urgent call for OECD member states to help their more fragile cousins find a post-aid arrangement that funds essential state functions and builds the ‘social contract’ with citizens.

The key is a shift from aid dependence to ‘domestic resource mobilization’ (taxes and natural resource royalties), currently averaging a feeble 14% of GDP across fragile states and far too dependent on royalties from oil, gas and mineral extraction. Foreign direct investment (factories, farms etc) is generally low in volume and volatile.

Education Wonkwar: The Final Salvo. Kevin Watkins responds to Justin Sandefur on Public v Private

Duncan Green's picture

The posts are getting longer, so it’s probably a good time to call a halt, but at least you had the weekend to read Kevin Watkins‘ response to Justin Sandefur on private v public education provision. If you have even more time, it’s worth reading (and relishing) the whole exchange: Justin post 1; Kevin post 1; Justin post 2 and now this.

Dear Justin,

Thank you for the response. I’d also like to thank Duncan for setting up the discussion, along with the many people, on both sides of the debate, who have contributed their ideas and experiences. Whatever our differences, I think all of us share a conviction that decent quality education has the power to transform lives, expand opportunities, and break the cycle of poverty. There is no greater cause, or more important international development challenge, than delivering on the promise of decent quality education for all children.

Private Schools or Public? Justin Sandefur responds to Kevin Watkins

Duncan Green's picture

Everyone enjoyed last week’s arm-wrestle on public v private education, so in a titanic struggle for the last word, Justin Sandefur (right, in the private corner) and Kevin Watkins (in the public one) are back for another go. Seconds out, round two…..

Dear Kevin,

Thanks for your reply. You are of course quite right that I wear a Pearson corporation logo on a chain around my neck to ward off evil spirits, I can’t stand (or understand) solutions with multiple steps and regularly visit my local medium to have a chat with the sadly departed Milton Friedman.  But despite all that, I want to contend that we agree on almost all the necessary ingredients for a constructive policy discussion.  I’ll end with where I think our core disagreements are.

Democratizing Development -- Really?

Maya Brahmam's picture

This weekend I drove by a Popularise sign and wondered what it meant. I learned later that a local commercial real-estate investor, Dan Miller of WestMill Capital, has been using Popularise to encourage communities to share their ideas about possible development ideas. This is a great way for “grassroots” brainstorming on commercial development.

In an article in The Washington Post about this phenomenon, Dan Miller states, “Most people…don’t get a say in how their neighborhoods take shape. Popularise is one solution to … a "broken community engagement" process…In [Advisory Neighborhood Commission] meetings, you have a vocal minority that dominates…You can have a much broader discussion with thousands of people and have it be dynamic. Popularise is the 21st-century version of a community meeting.”

Nurturing a Culture of Integrity?

Maya Brahmam's picture

At the World Bank Spring Meetings last week, there was a very interesting discussion, moderated by Femi Oke, on the topic of “Investment, Infrastructure, and Integrity,” On the panel were a few worthies from the private sector, Karan Bhatia, of General Electric, Peter Solmssen of Siemens AG, and Julio Rojas of Standard Chartered Bank, along with Rashad Kaldany and Janmitra Devan of the World Bank. They were joined by the Minister of Finance of Indonesia, Agus Martowardojo, and the Secretary of Finance of the Philippines, Cesar Purisima.

The issue is a prickly one: How to promote clean business in large infrastructure projects? It is unavoidable for the World Bank, the private sector and governments to be involved in infrastructure, so it is essential that the reputation of the infrastructure sector be tied to integrity. At the same time, the response to corruption has to be pragmatic. The challenge is to figure out the balance and respond appropriately and make “risk-based” decisions, versus “rules-based” decisions. The panelists alluded to the role of knowledge and the open dissemination of knowledge on private-sector business dealings and in government contracting and procurement to spur accountability and governance in this arena. There was agreement that the World Bank’s open agenda would be helpful in pushing this forward.

The panel was asked to share their individual “principles” to achieve integrity.

Are Citizen Service Centers Viable?

Sabina Panth's picture

In my earlier blog post, I had conceived the idea of 'fee-based service centers' that can be run through public-private partnership with the goal of improving citizens’ access to, and delivery of, government services.  The concept was considered in the context of sustainability of demand for good governance practices in relation to the aid dependency culture of civil society organizations.   Recently, I became aware that such ‘fee-based service centers’ do prevail and, in fact, have caught the attention of policymakers and development experts.

What Role Does Civil Society Play in Economic Development?

Sabina Panth's picture

I recently came across a fascinating initiative where civil society organizations have played a lead role in building public-private partnerships in economic development activities.  The USAID-sponsored Education for Income Generation (EIG) program has brought together local, national and international partners in galvanizing disadvantaged youth to partake in income generating activities toward increasing economic activities and peace building process in post-conflict Nepal. 

It’s Our Money

Sabina Panth's picture

It has been argued that corruption cases are focused mostly on the offenders and retribution is calculated on material value. This leaves out the victims of corruption and the collective damage done to the society at large, especially when the malfeasance involves the misappropriation of public money.  The concept of ‘social damage’ is an emerging concept in the anti-corruption movement, which seeks to identify, quantify, and repair the impact and consequences of corruption on ordinary citizens.  It posits that citizens, as taxpayers, are entitled to a legal claim on public money and how it is spent because “every dollar lost in corruption is a dollar stolen from spending in education, social services, poverty reduction and job creation (Its Our Money)”.

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