Financing Development by Fighting Corruption

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Secretary General, Arab Forum for Environment and Development (AFED)
15 March 2018

Najib Saab is Secretary General of Arab Forum for Environment and Development (AFED)and Editor-in-Chief of Al-Bia Wal-Tanmia magazine (www.afedmag.com)

Achieving the Sustainable Development Goals (SDGs) in Arab countries requires an additional $57 billion annually in investments until 2030, according to Arab Forum for Environment and Development (AFED) reports. Countries had agreed on the 2030 deadline to achieve ambitious goals set by the United Nations, including eradicating poverty and hunger, ensuring health care, education, clean water and energy, and providing appropriate housing for all.

Traditional sources of financing sustainable development in developing countries are international institutions, multilateral and bi-lateral funds and foreign direct investment. However, regardless of the importance of securing additional external financial resources, emphasis should be placed on mobilizing and reorienting existing domestic and public financial resources, such as integration among non-official sectors in Arab economies, public-private partnerships, tax reforms and adjustment of price support systems, charities, remittances, and private investments.

Over the past several decades, national and regional development institutions have played an important role in providing development and humanitarian assistance to Arab and other developing countries. Currently, the Coordination Group for Financing for Development includes eight national and regional Arab development institutions, in addition to the Islamic Development Bank and OPEC Fund for International Development (OFID). These institutions have substantially contributed to the financing of the Millennium Development Goals and have made a strong commitment to providing assistance to finance the SDGs. Arab recipient countries can attract more funding for their sustainable development objectives from development financing institutions in the region by streaming their strategies towards the sustainable development goals. They should also prioritize their agenda accordingly and in a sequential manner on the basis of well-developed and implementable development processes and projects.

But attracting regional and foreign aid, as well as attracting private sector funding, depends on policy reforms, the reorganization of price support practices and tax collection, in addition to enhanced transparency and public participation in decision-making. Although many Arab countries have already begun to shift in this direction, serious action in the fight against corruption is still slow, especially in poorer countries and those facing wars and conflicts.

A report recently released by Transparency International, “Corruption Perceptions Index 2017”, is alarming. It shows that only five Arab countries ranked above the global average score: the UAE, Qatar, Saudi Arabia, Jordan and Oman. On the other hand, all remaining Arab countries achieved very low scores, among them five countries that ranked the worst. It is worth mentioning that the most corrupt countries were also the poorest.

According to reports by the World Bank and the World Economic Forum, the world's combined losses from bribes and theft of public funds were estimated at between $1.5-2 trillion last year, representing 2-3 percent of the world's GDP. This exceeds ten times the amount spent annually on external development assistance to developing countries.

According to a group of economists working on a new AFED report on financing sustainable development in the Arab world, the cost of corruption in Arab countries ranges between 2-3 percent of the GDP. This means that between $60-90 billion a year is lost as a result of corruption and bribery. In other words, fighting corruption alone can save money beyond what Arab countries need to fill the gap in the additional funds needed to achieve sustainable development goals, which are less than $60 billion a year. The remaining savings will be enough to finance the reconstruction in countries torn by wars and conflicts such as Iraq, Syria, Yemen and Libya.

It will not be possible to eliminate corruption completely or to save money from corruption immediately. That is why there is a continuing need for support from external sources, whether from international organizations or development funds. First, there needs to be a rapid launch of serious anti-corruption programs, as this is a prerequisite for attracting international support and foreign investment. The private sector will also be deterred by corruption and the lack of transparency. Only serious reforms will provide confidence to invest in projects that lead to sustainable development, especially in the energy, food and water sectors.

Achieving sustainable development and enhancing environmental protection in the Arab region begins with fighting corruption. Although it does not end there, the road ahead will become easier when this goal is achieved.

Themes: 
Development


The opinions expressed herein are solely those of the authors and do not necessarily reflect the official views of the GGKP or its Partners.