Public Sector Corruption And The Hopeless Future

It's interesting how some things are connected and certain factors influencing evolution. I've spent quite some time on learning about digital currencies lately and yesterday I came across a report by Transparency International that made me smile, although there's nothing to smile about as the situation is very bad.

Transparency International has published a report about the level of public sector corruption worldwide in 2020, ranking 180 countries by their Corruption Perceptions Index (CPI). Scores range from 0 to 100, 0 being the lowest, 100 the highest on the scale.

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None of the countries could reach the maximum score of 100, but there are 8 European countries in the top 10, which is great news.

Scandinavian Countries

In the top 7, there are the three Scandinavian countries, Denmark, Norway, and Sweden. No surprise there as it's know how disciplined these nations are, compared to the rest of the world and how advanced they are in regards of using new technology.

Sweden has announced recently that wants to go cashless by March 24, 2023, because use of cash is decreasing annually and there's no reason to keep cash in circulation. The country is fifth on the list, with a CPI of 85, corruption is minimal, why wouldn't they go cashless and adopt the digital e-krona.

These predictions reflect a strong trend in both Sweden and the Nordics as a whole. In 2016, cash made up just one percent of the total value of all payments in Sweden and was used for less than 20 percent of transactions, down by half compared to five years earlier. In Denmark, falling demand for cash led to the Nationalbank deciding to stop printing its own money in 2015, choosing to instead outsource this task to a French supplier. The Bank of Finland has calculated that the use of banknotes in Finland will end by 2029, at the latest. In Norway, the issue of creating a cashless society by 2030 has even been brought up as a political goal by the conservative party. source

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European Union

The European Union is not doing well in this regard. If you look at it as a whole, the average regional score is good as it's 66 out of 100, but if you take country by country, the results are shocking and my country is at the bottom, as always. We're lucky we have 8 European countries in the top 10, to counterweight the others at the bottom, like Hungary, Romania and Bulgaria.

Just judging the facts on the list, it's clearly visible what the European Union's problems are. The 27 countries forming the Union have different economic levels. The plan has been to unite these nations, make the countries stronger and by that, create a strong Union that can compete with the other economic powers of the world. The plan itself is good but things went sideways a long time ago, some countries like Greece needed help to survive repeatedly.

As far as I can see, the last EU member on the list is Romania, with a CPI of 44. Me being a resident of this country, I can assure you there's corruption, unfortunately the stats are not wrong and I'm not sure the next list will show us in a better position.

According to Transparency International’s corruption report, the average score is 43 and 2/3 of the countries score below 50.

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Sub-Saharan Africa

Things are even worse in sub-Saharan Africa and Asia. Most of the countries are marked with red and dark red, the bottom of the list being populated by Syria, Somalia and South Sudan.

These countries have been already in great economical difficulty before the pandemic and the lockdown made it even worse. However, not for everyone.

Government funds are always tempting for many. Officials see it as a big pocket from which they are entitled to take as much as they can as they are the guardians of it.

When there's a crises like covid, aid is coming for these countries and is distributed in form of food packages or money. It's common practice to hijack a good part of the money and buy overpriced food from companies tied to government officials with the rest. That's what happened in South Africa last year.

Back in March, Corruption Watch warned of the vulnerabilities in the emergency procurement measures, noting that the R500-billion stimulus package presented a fine opportunity for greedy officials to dip their hands into the COVID-19 cookie jar.

Abuse of TERS was enabled in part by private firms who claimed benefits on behalf of unknowing employees or deceased people and then pocketed the cash, or used the benefits paid out for their own purposes. The Special Investigating Unit (SIU) is probing 75 of these businesses for Unemployment Insurance Fund (UIF) fraud.

In the same way, the complicity of the private sector in abusing procurement of personal protective equipment (PPE) has resulted in the looting of billions of Rands which should have been directed to the vital response plan. source

Nigeria, the biggest economy of Africa with the largest population of the continent (200 million people) is not in a better position either. The country has been struggling for years, corruption is at the highest level, the economy is on the ground and tackling covid is basically impossible, due to lack of resources.

Nigeria recently requested and got US$3.4 billion in emergency assistance from the International Monetary Fund (IMF).

The International Monetary Fund (IMF) is an international financial institution, headquartered in Washington, D.C., consisting of 190 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world while periodically depending on the World Bank for its resources. source

This look nice, one that has no idea about IMF would think this is the solution. The truth is far from it. IMF is not a charity organization, it's a monetary fund giving financial assistance to countries in difficulty. These funds come under certain conditions with strings attached and those strings can be tight sometimes. IMF is dictating the terms, there's a negotiation process of course, but in fact it's a take it or leave it offer, when a country is is such a big difficulty as Nigeria.

Think of it as a very expensive loan, that must be paid back and if half, or a great part of it ends up in the pockets of government officials, then it helps people that don't need help, while the problems remaining unsolved.

The irony is that IMF is not spotless either, has been implicated in more than one scandal in the past. Former IMF Managing Director Rodrigo Rato has been arrested and convicted to four​ and a half years' imprisonment for embezzlement.

In an interview (2008-05-19), the former Romanian Prime Minister Călin Popescu-Tăriceanu claimed that "Since 2005, IMF is constantly making mistakes when it appreciates the country's economic performances". Former Tanzanian President Julius Nyerere, who claimed that debt-ridden African states were ceding sovereignty to the IMF and the World Bank, famously asked, "Who elected the IMF to be the ministry of finance for every country in the world?"source

So every time countries like Nigeria are asking for loans and using funds for purposes other than to what those have been destined, they are digging a deeper hole for themselves, which they are never going to get out of. Accumulating debt is never good.

Paying back these loans is only possible by tightening the belt, by cutting spending, introducing or increasing the collection of value-added taxes (VAT). This can affect the health sector as well, which has been already hit hard. Over 80 per cent of IMF Covid-19 loans will push austerity on poor countries.

Asia

Asia is in the same situation, the whole map is red and dark red, except for a couple of countries that are light orange. China and India, the two biggest countries by population are dark orange. China is 78th, India is 86th.

Japan is 19th on the list, so the country is doing good not only tackling corruption but economically as well.

What's The Solution?

Implementing central bank digital currency could help track public fund spending, offer transparency but no corrupt government will vote such measure. As long as they only care about their own well being, milking public funds during their term, nothing will change.

Governmental corruption, tax evasion, it's like the chicken or the egg causality dilemma. Which came first? Which should be liquidated first? The government says tax evasion, tax payers say government corruption. Who is at fault?

One thing is certain, if things don't change, some countries are never going to come out of the deep hole they are in right now.

So, how corrupt is your government? :)

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