Corruption - A social disease (Part 155): The corruption trend since 1998: What to expect for the following two years?

22 March 2019 | Columns

Johan Coetzee - One of the most popular indices used by investors to provide them with an indication of the level of corruption and governance in a country is the Corruption Perception Index of Transparency International (TI).

The index is compiled annually per country and rated out of 10 – with 10 being a perfect score, indicating no corruption and perfect good governance. The problem with international indices, however, is that they are simplistic and do not analyse corruption from a systemic perspective.

When analysing the TI indices for Namibia from 1998 to 2018, the trend is stable. Since 2004, the "darkest year" with a rating of 4.1 the sub-trend until 2018 has been positive, slowly but surely rising, with a rating of 5.3 in 2018. Namibia has always been one of the top five least corrupt African countries.

A rating of mostly below 5 since 2004 indicates we are mediocre, not good, not bad, just "hanging in there".

Two most likely reasons for the improvement from 5.1 to 5.3 from 2017 to 2018 are because parliament approved the Whistleblower Protection Act and the Anti-Corruption Commission (ACC) said lifestyle audits would be executed. However, no prosecuted cases based on lifestyle audits has yet been reported.

The ACC has never published a time-series of corruption in Namibia that could reveal the trend as indicated in the attached graphic. The institution tends to respond favourably to a small increase like in 2018, but when a major deterioration occurs, e.g. 2004, then TI has been criticised by Government as not being objective.

However, the index is based on perceptions of Namibian economists, academics and business – not foreigners - and has been executed in 175 countries for 2018.

NO REAL IMPROVEMENT

The average rating over 21 years is 4.8. For the previous 10 years, the average is 4.8. For the first decade, it is 4.9.

These trends are indications that Namibia is failing from an international perspective in tackling corruption.

The mode, meaning the value that occurs the most is 4.5 and the value that is in the middle, the median is also 4.5. These two values are more meaningful than the average, because the average is an equalisation of distributed values. Since the mode and the median are the same, it means that Namibia is 55% corrupt.

Despite mechanisms such as the ACC and the Whistleblower Protection Act, Namibia is not improving. Contributors could be an increase in corruption from pre- to post-tender and an increase in State Owned Enterprises’ (SOEs) debt and corruption. For example, N$45 billion debt of SOEs and N$90 billion net worth.

Another contributor could be an increase in mismanagement of funds by local government.

The SME Bank fraud of N$ 350 million is another disaster at central government level and the relentless rosewood export from our forests have been ongoing for years. More than 11 000 tons were exported mostly illegally during 2018.

Corruption has infected law-enforcement agencies and the private sector.

From analysing the long-term trend, it can be deduced that there is tolerance for corruption in Namibia that became part of the culture of engrained corruption. Because Namibia has not improved since 1998, it is possible to deduce that we will not improve during the year to come.

With 2019 being an election year, mismanagement of public funds will most likely increase and the private sector will continue to fund the campaigns of corrupt politicians. We can expect the same or most likely a worse rating for 2019.

Not addressing corruption amidst a world and local recession can mean that investor confidence will further deteriorate. Policy uncertainty exists about the New Equitable Economic Empowerment Framework (NEEEF), urban and commercial land issue, and the reduced credit rating by Fitch.

From interpreting the long-term trend it is possible to synthesise that Namibia is not improving. No improvement of the 2018 rating is expected over the coming two years.

If every one refuse bribes and report corruption, we can change the trend. Are you willing to do it?

[email protected]

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