This note gives practical guidance on how to identify and mitigate the risks of corruption in the infrastructure sector
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 programmes.
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]