Measuring procurement corruption challenges

via Measuring procurement corruption challenges – NewsDay Zimbabwe July 27, 2015

NO one can dispute the fact that corruption is a cost in all respects. The challenge is that measures of corruption are qualitative because corruption is hidden and therefore cannot be quantified.

What compounds the matter in procurement corruption is that procurement is complex; procurement involves engagement of many suppliers who compete to sign contracts; buyers at the extreme end of procurement corruption can also be suppliers competing to supply their organisational requirements.

Some countries such as Hungary have used data collected to understand corruption in procurement. It is believed that the more the data, the more the procurement activities become transparent, the more the pandemic is manageable. This is against the background that information affects governance in procurement. ‘Big data’ certainly offers a host of possibilities and opportunity for social science though with a degree of caution.

Despite the global focus on the issue, what worries is the lack of scholarly agreement on the basic elements of corruption. The four basic elements of corruption are the definition; the causes; the extent, and; how to combat it. The only silver lining on the dark cloud is the broad consensus that corruption is a bad thing that causes major harm to the general populace and that it is illegal.

Issues such as cultural differences, the varying degree of professionalism in procurement and the level of development of a nation have implications on the definition of procurement corruption. The Asians value trust build from personal knowledge of the other party to the extent that it is a custom to share meals with business partners. In that regard, having meals is not construed a corrupt practice but rather a tool to understand your business partner. Other areas depend on the old maxim that ‘there is no free lunch’ rendering the practice questionable. There are various dimensions on culture that we could explore but would want to round up with the fact that cultures differ and one man’s meat could be another man’s position.

Developing from the cultural issues discussed above. The question of what causes corruption also differs on the background of culture. Robert Klitgaard put forward a well-known formula for identifying when corruption arises. Corruption is a result of monopoly and massive discretion without accountability. (C = M + D – A where C = corruption, M = monopoly, D = discretion and A = accountability). Whilst the writer is of the opinion that the formula is inadequate and the matter shall be explored later.

The third element, the extent of corruption refers to the actual measure of corruption. Transparency International (TI) has used the Corruption Perception Index (CPI) which by name, points out to the fact that it is how it is perceived meaning that the measure is more qualitative as opposed to quantitative measures that can be proven by mathematical measures. The CPI is used as a benchmark indicator for the level of corruption across the world. It has also been used as a political tool particularly in countries where corruption is viewed as a major problem. Development institutions have used it for major decisions such as loans, grants and decisions for use of country procurement rule for on loans and grants.

The last element of how to combat it is based on how much data is available. The main approach to data availability is the perception based indices such as the CPI, World Bank aggregate ‘Control of Corruption’ Indicators, TI’s Global Corruption Index and Business Environment and Enterprise Performance Surveys (EBRD/World Bank). Challenges with such data are that they are impressionist, only when there is an arrest and convictions do people involved open up limiting the measure of corruption to mere perception.

l Nyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback:; Skype nyasha.chizu