Business monthly December 06   EDITOR'S NOTE COVER STORY EXECUTIVE LIFE VIEWPOINT IN PERSON SUBSCRIPTION FORM IN BRIEF MARKET WATCH ADVERTISING RATES IN DEPTH CORPORATE CLINIC THE CHAMBER FEATURE Search Business Monthly | Back Issues

Analysis by Rehab El-Bakry

Transparency International (TI) recently published its annual Corruption Perception Index 2006 (CPI), which evaluates the perception of corruption involving public sector officials and politicians. The rankings, which were first issued in 1995, are based on data compiled by a variety of reports and researches conducted by reputable institutes worldwide as the bases for gauging the perceived corruption of certain countries.

This year’s CPI included 163 countries, compared to 159 in the previous year’s index. It begins by defining its definition of corruption and methodology.

“The TI CPI focuses on corruption in the public sector and defines corruption as the abuse of public office for private gain. The surveys used in compiling the CPI asks questions that relate to the misuse of public power for private benefit, for example bribery of public officials, kickbacks in public procurement, embezzlement of public funds or questions that probe the strength of anti-corruption policies, thereby encompassing both administrative and political corruption.”

The CPI was developed on the premise that it’s almost impossible to gather accurate empirical data about corruption. To base the index on the number of bribes paid to officials or the number of cases prosecuted would be misleading, as neither would reveal the true level of corruption. The first would include all bribes and “gratuities” from a few dollars to several million, which would be extremely hard to track or categorize. At the same time, the latter only reveals the quality of the prosecutorial and judicial capabilities of any given country to successful prosecute corrupt officials. As such, the CPI focuses on the perception of corruption by those doing business in the country, a more easily measured and arguably more accurate way to rank how corrupt a country is.

This year’s survey noted “a strong correlation” between corruption and poverty.

“Almost three-quarters of the countries in the CPI score below five (including all low-income countries and all but two African states) indicating that most countries in the world face serious perceived levels of domestic corruption. Seventy-one countries – nearly half – score below three, indicating that corruption is perceived as rampant.”

Most Arab countries ranked by the CPI scored results consistent with those of 2005, with a few making noteworthy moves up and down the ranks. The highest-ranking, least corrupt, Arab country was the United Arab Emirate (UAE), which came in 30th, with Qatar coming in 32nd - also consistent with its 2005 rank. Both topped Oman, which was the highest-ranking Arab country in the 2005 CPI at 28th, but fell in 2006 to 39th position. Bahrain held on to its 36th position, while Kuwait inched down from 45th in 2005 to 46th in this year’s CPI.

Jordan ranked 40th this year, compared to 36 in 2005. Tunisia, on the other hand, made an even sharper drop from 43rd in 2005 to 51st this year. Syria, on the other hand dropped more than 20 position ranking number 93 this year compared to ranking 70th last year.

Lebanon, which ranked 83rd in 2005’s CPI climbed exactly 20 positions up the ranks coming in 63rd in this year’s CPI. Algeria also made serious strides moving up from 97th last year to 84 in 2006. Iraq was not only the poorest performer among the Arab countries, but it was among the poorest performers worldwide ranking second last in the 160th position, tied with Guinea and Myanmar, and ranked only one notch above Haiti, at the bottom of the list in 163rd position.

Egypt has, for the second year in a row tied with Saudi Arabia for 70th position, indicating that, while the perception of corruption in Egypt has not deteriorated, it has not improved either.

While it is interesting to compare countries, the report’s authors note that the focus should be on a country’s score, not its relative position in the index.

“While ranking countries enables TI to build an index, a country’s score is a much more important indication of the perceived level of corruption in a country. A country’s rank can change simply because new countries enter the index or others drop out.”

It is also worth noting that while a country might rank low on the corruption index, it doesn’t necessarily mean that it is the most corrupt in the world or that it’s officials are the most corrupt. However, it does mean that of the ranked countries, its overall performance is poor compared to others included in the index. It also means that officials in that particular country are faced with the biggest challenge when it comes to creating and enforcing laws that prevent or curb the level of corruption by officials.

“While corruption is indeed one of the most formidable challenges to good governance, development and poverty reduction […], the vast majority of the people are only victims of corruption. Corruption by a limited number of power individuals, and failure of leaders and institutions to control or prevent corruption, does not imply that a country or its people are most corrupt.”

Due to this, TI does not encourage that CPI be used by international aid or donor agencies as a tool to determine whether or not a country should qualify to receive aid for development.

“Countries that are perceived as very corrupt can not be written off – it is particularly they who need help to emerge from the corruption-poverty spiral. If a country is believed to be corrupt, this should serve as a signal to donors that investment is needed in systemic approaches to fight corruption. And if donors intend to support major development projects in countries perceived to be corrupt, they should pay particular attention to ‘red flags’ and make sure appropriate control processes are set up.”

Submit your comment

Top