Looking at failure of public services

It is not corruption per se but the fragmentation of power that explains Uganda’s crisis.

Two things stand in contradiction of one another regarding corruption in Uganda: On a positive note, it seems not to have undermined economic growth – at least, not yet. Uganda has sustained impressive rates of economic growth over the last 25 years. On the negative side, corruption seems to have led to a precipitous decline in the ability of the state to deliver public goods (hospitals, schools, roads, bridges, electricity dams) and public services (education, healthcare, agricultural extension services, electricity, etc).

Why is this so? The existence of the right macroeconomic policy framework – a largely liberalised, deregulated and privatised economy backed by low inflation – has saved a significant chunk of economic activity from the dead hand of an incompetent and corrupt state. Secondly, it seems corruption does not harm growth when thieves invest their loot in the economy. The moralists will hang me for this. However, economic reality does not follow morality – so I will accept the sentence.

But why has corruption eroded the ability of the state to serve its citizens? There is no evidence that corruption per se undermines the ability of the state to deliver these vital public goods and services. Some of the countries that developed the best infrastructure such as South Korea, Taiwan and Indonesia in the 1980s and 1990s had extremely high levels of corruption. Equally in the recent past, nations like Tunisia had high levels of corruption. Yet they had also been successful at delivering quality roads, hospitals, schools and health and education services to their citizens.

The experience of South Korea or Tunisia shows that corruption is like a tax – it only increases the cost of doing business. Instead of building a road at US$ 50m, this cost may go up to US$ 75m. Companies do not opt out of areas of investment because of a high tax rate. Corporation tax in the United States, Canada and Germany is above 35 percent. But this has not stopped companies from investing in those regions.

One could argue that taxes are credible and predictable costs of doing business while corruption is the opposite. Granted! But the experience of South Korea and Taiwan is empirical proof that corruption does not stop states from delivering quality goods and services. The problem in Uganda is that the cost of delivering public goods increases while the quality becomes worse.

Why is this so? It seems to me that the primary source of the problem is the way political power is distributed. Our country enjoys a rare and contradictory reality – power is at once centralised and personalised in the person of the president while at the same time it is highly defuse among different fragments of the state: the bureaucracy, intelligence services, oversight institutions (the Inspectorate of Government, Parliamentary committees, Public Procurement Authority), the mass media etc.

Public officials everywhere possess power to allocate lucrative rights over scarce resources. One need not be surprised therefore that holding other factors constant, public officials would seek to grab for themselves a share of the rights the help to allocate. The problem for Uganda, however, is that the power to allocate these resources is distributed across many yet uncoordinated centers as illustrated above.

Thus, when one of these centers allocates rights to a particular lucrative contract, other centers can effectively challenge the initial allocation. For example, assume the ministry of Energy allocated the right to an oil well to Tullow. You can never be sure that Tullow will hold this right. Other arms of government can effectively challenge this initial allocation. In our case, one of the companies that that lost in the initial allocation may petition PPDA to reverse the decision of the ministry of Energy oil committee.

Once PPDA decides to investigate the matter, regardless of its motivations, it will prompt all those who had bided initially to seek to influence its decision. Money will begin to flow from the various bidders to PPDA officials. Whoever wins this bribing battle at PPDA can never be sure he has a deal because anyone of the losers can petition the IGG – another institution with power to cancel a public contract. Again, the process of bidders trying to influence the decision of the IGG begins afresh and more money flows.

Whichever way the IGG decides, his/her decision is not final. Losers can petition parliament thus shifting the bribing competition to the committee handling the matter. Finding legislators fresh from an election (and therefore highly indebted) or about to go into one (and therefore desperate for cash), competition for the prize will get more intense.

At this point, many other forces may be mobilised – especially the press. Bidders may pay off reporters and columnists to support their cause – or given the paucity of our journalists, simply feed them wrong or one-sided information. Others will field people on radio talk shows to argue their case. Whichever is the case, debate in the media will be ferocious.

But because power in Uganda is equally personalised and centralised at State House, bidders may try to influence key players – real and assumed – around the President. Some members of the first family may be recruited so that the battle for a tender pitches a brother-in-law to the president against his son-in-law. Intelligence organisations may be drawn into the battle and will offer their own biased reports to the chief of state.

Thus, the battle for a government contract will consume parliament and the mass media, drug in intelligence services and the President. No one will be spared. The actual financial cost of bribes may be low. But the resultant uncertainty and the time it takes to resolves such issues (often more than six years) make it difficult for the country to get a good deal.

It is not the corruption of the system per se that has made it difficult for Uganda to get better public services. It is lack of centralised control over bribe taking that makes matters worse. There are too many centers of power and therefore many bribe takers. I am not sure that removing these official centers would solve the problem. This is because this formal distribution of power seems to reflect its actual constitution in the country.

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written by Lt Col Adam Kifaliso, January 17, 2012

In other words , the state house oversight is zero and institutions are weak economic development zero, remember the budget was in deficit by 30% , no power no water , Andrew the rot in Uganda does not relate to your claiming that Uganda has seen economic growth , its people like you who have managed to add on more cash to your pockets through bogus ways that claim to see development , its the volume of trade that has increased not development , Andrew remember we were only 10 million Ugandans when you left your village for town , Do you know what economic development means ?

What is the message?
written by Sultan, January 17, 2012

You celebrate corruption. Maybe you could be a beneficiary but that does not necessarily make it logical. The examples you make comparison with seem to have developed in spite of corruption; which is not the case with us. Growth may be climacteric for some, but it's a fake measurement because of the skewed nature of the description. Apart from justifying corruption, (which you could be mandated to do given your current portfolio) your message is lost. It's one thing to tell a story, and another thing to make an analysis.
Happy new year all the same.

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written by kato, January 17, 2012

Mwenda can argue for the corrupt all he wants. That is his right. The trouble is his use of examples of other countries in a very ignorant way or worse--intentionally to mislead or lie. I wonder whether Mwenda has now reached a point that he will say/write anything to craft his arguments.

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written by Jessika, January 17, 2012

I wish we can stop mixing up public servants and civil servants the same way Tax payers' money and citizen's or people's money is mixed up.
Most of the money stolen is not actually tax money so please do your home work about who is responsible or is at the center of the cabinet thieves before saying it is not centralized loot? How did the president know that there are thieves in the cabinet or are you saying that it is not centrailised enough. Who authorized basajabalaba, helicopters, jet fighters, sales of UCB, Nytil, Grain Millers, DANZE etc.

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written by Joan Kateme, New York City, January 17, 2012

Andrew, you are a distinguished Ugandan, who has studied in the finest universities on the planet, travelled the world, appeared on Fox News with John Stassel, hobnobbed with the likes of Bono etc etc. However, your analysis is not a reflection of your credentials, with all due respect. It is my prayer that at some point in time your journalistic credentials and ethics trump whatever is currently motivating your analysis.

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written by inno, January 17, 2012

in conclusion, we can therefore prune powers of some of the power centers and give autonomy to the the departments responsible besides at the end of the day it is the department to give accountability to the public. As a tax payer i don't mind all these bureaucracies, i am only interested in good services.

However Andrew, clarify whether corruption in Uganda is responsible for the the impressive economic growth registered as per the article. the article seems to imply to me that Uganda would be where it is in terms of growth rates if there was no corruption.

Corruption steals and misallocates resources
written by Ocheto, January 17, 2012

From a point of economic development, corruption misallocates resources from productive and advantageous sectors to non-productive sectors. The Ugandan political class supports corruption because by their own nature they are non-productive, so corruption legitimates or justifies their parastic unproductiveness.

Lost it Again
written by Rajab Kakyama, January 18, 2012

Andrew a student of Milton Fiedman? Andrew your analysis is difficult to follow. There are a number of contradictions. Are in support of corruption as it is one way of uniting a multi-ethnic society like Uganda? Or a you advocating for the removal/reduction of government institutions put in place to curb corruption but in reality only seem to abate it? In otherwards, are you for bureaucracy or anarchism?

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written by milton, January 19, 2012

Mr Author,

You say that power is centralised & contolled @ state house, then next sentence you say 'there are too many centers of power and therefore many bribe takers'..which way is it exactly, are you trying to deliberately confuse your readers? A very poor excuse for journalistic licence and pse do not think your readers are a bunch of moronic hoodlums, we deserve better commentary than this!

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written by Birungi, January 19, 2012

Milton, that's exactly what Mwenda is saying! That yes power is too centralized at the top - read Statehouse at the same time, clustered all over different institutions. I personally think Mwenda's view has some logic. The question is, why is this so? this kind of confused structure is no acident at all but rather a delibereate act by govt for political reasons. Create all these bodies - IGG, PPDA , anti-corruption office, parliamentary committee etc. and seem to be fighting corruption but retain control. We have seen institutions fighting each other, overturning each other's decisions and when the bubble bursts it becomes very difficult to trace who made what decision. And as such, projects that would take a given reasonable time are stalled for ages or the cost shoots up tenfold.

right, Low-rated comment [Show]

So Much for Pretentiousness: The Chinese Engineers Break the Mold
written by Ocheto, January 19, 2012

All social (read soft) scientists do is confuse people with obscure, wordy and pretentious language usually to make obvious and commonsensical. The Chinese technocrats (read hard scientists) who have not been socialized/trained in obscurantism have tackled the centuries' old problems that bedeviled all their governments for eons and look what they have done. They have set China developing faster than any country, nation or empire did in all of world history. In a matter years it will overtake the US as the largest economy in the world, and would have done it in a mere three decades (the time Museveni has been in power).

Seeing a superpower made in real life
written by Ocheto, January 19, 2012

When all is said and done there wont be any need to read history books about how China became a superpower (militray and economic) because it would have happened in our life time.

AM- The main Problem is Museveni
written by Raymond, January 20, 2012

Your former lecturer at SOAS- Mushtaq H. Khan (2001) the new political economy of corruption; as well as Shleif & Vishny, have done a lot of studies about corruption and your article mainly borrows from their ideas, though AM cut and paste does not apply in Uganda. I admit that political organizational differences serve as good pointers for analysing why corruption is associated with different outcomes (some –ve others +ve).

Contn
written by Raymond, January 20, 2012

What I don’t accept is the assumption that centralized corruption would work in Uganda as long as Museveni is still the president. Why? First, for 25 yrs, Museveni has clearly demonstrated that institutional centralization is not sufficient for coordination. Second, it is the significance of the way Museveni has distributed power to the institutions that has been vital in the way they behave. There are many states whose institutions appear fragmented yet they have worked in coordinated way to increase output. The biggest problem is Museveni’s & there is not much we can do about corruption as long as he is still put.

Moralizing the immoral: the effect of hurried assertions
written by Musinguzi Denis, January 20, 2012

Andrew, this piece is easy to read and follow; but strangely, it’s an article whose content and logic, albeit apparently direct, is difficult to comprehend! I find it paradoxically simple and inconsistent; both informative and misleading. I am also suspicious it was hurriedly written! I can’t ascertain its motivation; but what’s obvious is that the more you try to escape from the high moral ground, the more you seem entrapped into its inescapable grip!