Corruption: venial extortion or a happy compromise?

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Corruption_tajikistan Usually when we think about corruption we think that one side (i.e., the government official) is demanding, while the other (i.e., the citizen, the entrepreneur, the company) is forced to obey fearing the consequences.

In reality, the situation is not always so straightforward. There are cases in which corruption, the little kind ("petty corruption" as it is usually called), becomes part of the usual way of doing business and is the "preferred solution" for dealing with public officials. Take Tajikistan, my adoptive country of 12 months. Like many other countries, we see the following combination of factors: extremely low salary level for government officials, complex economic regulations that make compliance practically impossible, and, finally, low legal awareness among the general public.

Let's start with the first one. Government salaries in Tajikistan are well below the subsistence level and a public official, although formally employed, realistically cannot cope with the cost of living. For example: food for one person for one month is estimated to be 50 TJS (~15 USD), while on average, a public official's salary is 85 TJS (~25 USD). In this situation of "underemployment," government employees (from doctors to teachers) often hold a second job outside the public sector or resort to unofficial payments to supplement government wages.

From the citizens' side, particularly small and medium enterprises (SMEs), the regulations in most cases date back to the Soviet times and have been only partially updated to take into account technical developments, not to mention the needs of a market economy. An example: a window of a restaurant kitchen should face the north!

Additionally, Soviet regulations were not exactly a benchmark in terms of streamlined processes and, as such, do not fit the "family owned" company size. Another example: the Fire Regulations for markets and trading places consist of about 150 pages (with no pictures!!). It is almost impossible for an SME to comply with them.

Third, the general public knows very little about law and has a particularly limited knowledge of rules and regulations. To make matters worse, copies of legal documents are a rare catch.

In such a context, corruption becomes endemic, while, at the same time, turning out to be the preferred choice for the private sector! Indeed, why spend money to comply with fire safety rules when it is simpler and cheaper to pay to get around them? The result: compliance is but a dream.

So far, so good, at least for the private sector? Well, not really. Indeed, rent-seeking behavior (i.e. request for bribes) grows with the size of businesses and creates an uncertainty which does not facilitate investments and business growth. It reflects negatively on overall public welfare: regulations for food and fire safety and labor protections are not followed, resulting in obvious consequences (2 in 3 visitors to our IFC office have gotten sick!!).


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