The infrastructure sector is associated with corruption. Estimates of
financial losses range between 10 and 30% of the value of publicly
funded construction projects (Transparency International 2005). Global
construction is predicted to grow by 70%, from US$7.2 to US$12 trillion,
from 2010 to 2020 (Global Construction Perspectives 2010). Some
estimates put potential losses as high as US$2.5 trillion (CoST 2012).
In 2009/10 DFID invested £929.5 million into infrastructure, of which
just over half was invested through country programmes (House of
Commons, 2011). DFID provides direct grant funding for infrastructure
programmes that reach the very poorest. This includes many water and
sanitation and rural roads programmes, particularly in remote areas,
where public funding is sometimes needed to reach those poorly served.
Incorporating anti-corruption prevention mechanisms into these
programmes is essential to minimise the risk of corruption and ensure
value for money.
DFID support to infrastructure is also invested through the European
Commission and multilateral development banks, which deploy concessional
loans to finance large capital infrastructure projects. DFID also
increasingly engages with partners who use grant funding to mobilise
larger quantities of private sector finance (for example the Private
Infrastructure Development Group (PIDG)). DFID needs to ensure its
partners mitigate corruption when investing in their infrastructure
DFID has published specific plans to tackle the threat of endemic
corruption in each of its 29 priority countries, as well as supporting
action against international corruption, including through dedicated
units in the UK Metropolitan and City of London Police and the Serious
Organised Crime Agency.
This How to Note provides DFID Infrastructure Advisors and other policy
makers involved at all levels of intervention in infrastructure
programmes with practical guidance on how to identify and mitigate the
risks of corruption in the infrastructure sector. It also points to
further resources on the topic.
The guidance note consists of two sections:
- Section 1 explains what corruption is, and the forms it can take in
the infrastructure sector, provides evidence on its scale and impact
and discusses the challenge of how to address it.
- Section 2 provides practical guidelines for identifying and mitigating
the risk of corruption in the infrastructure sector. It also provides
some potential tools that can be integrated into infrastructure
interventions by DFID and other development institutions.
Hawkins, J. How to Note: Reducing corruption in infrastructure sectors. Evidence on Demand, UK (2013) 50 pp. [DOI: http://dx.doi.org/10.12774/eod_cr.may2013.hawkins]