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250 Diagnosing Corruption in Ethiopia Table 6.1 (continued) Underlying factors affecting this risk in Ethiopia The government’s dominant role in Ethiopia’s construction sector is a natural result of its political history. Many functions in controlling the sector are conducted in a committed manner that is focused on serving the national interest. But such powers are open to abuse, particularly in a market where the government is a major client and where there is a reluctance to express dissent. Many stakeholders are concerned about the possibility of a connection between the dominant role of Chinese contractors in the road sector and high-level links between the Ethiopian and Chinese governments. Corrective measures recommended by stakeholders in Ethiopia • Government should communicate and consistently enforce existing regulations while raising awareness of the damaging effects on society of construction-related corruption. • Government should strengthen procurement policy and related regulations to improve transparency, reduce its own discretionary powers, allow more investigative reporting and challenges by civil society and the media, favor domestic firms, take more account of past performance, allow a sample of bid evaluations to be subjected to independent external scrutiny, and give specific powers to independent bodies to define and maintain professional standards. • There should be more open debate about the role of Chinese contractors in the road sector. • Consultants and contractors’ associations should actively combat corruption among members. Source: Author’s compilation. a. Though accepted by other stakeholders as being plausible, these examples are neither backed by hard evidence nor necessarily widespread in the sector. Table 6.2 Corruption Risks in Planning and Budgeting in the Construction Sector in Ethiopia Value chain stages Corruption risks at each stage of the construction value chain 1. Policy making and regulation Now (international comparison) 2. Planning and budgeting 3. Management and performance monitoring 4. Tendering and procurement 5. Construction and operations 6. Payment and settlement of certificates Typical risks as experienced internationally Perceived corruption risk at this stage of the value chain High Med Low High Likely trend (without corrective measures) High Med Low Tendency toward top-down planning combined with a perceived conflict of interest for some officials High The risk of downstream corruption through collusive alliances is introduced whenever planning, budgeting, and project preparation procedures deviate from the use of a rational, objective basis for prioritizing the allocation of limited resources on the basis of need, anticipated rates of return, or other objective criteria. Such risks are typically greatest when there is evidence of • lack of separation between policy making, budget allocation, and implementation functions; • top-down planning by decree; (continued next page)
Construction Sector Corruption in Ethiopia 251 Table 6.2 (continued) • projects that are not responding to a prioritized need and (when combined with weak procurement regulations) can sometimes be negotiated directly between a corrupt official and a specific construction company; • adoption of inappropriately high construction standards to enhance contract values; • focus on constructing new infrastructure while neglecting to maintain existing facilities; • conflicts of interest for officials with a stake in the construction sector; • construction companies with party political allegiances; and • increasing unit costs when estimates are based on past output unit costs (which may have been influenced by corruption) rather than on future margins. Indicators of such risks as perceived in Ethiopia Specific General • Tendency toward top-down planning • Adoption of inappropriately high construction standards • Perceived conflict of interest for some officials • Party-related companies operating in the construction sector • Increasing unit costs • Delays in project execution • Lack of transparency Examples reported by stakeholders as having recently occurred in Ethiopia a • Packaging of contracts in a manner intended unfairly to favor some contractors over others • Lack of transparency in planning some design-build contracts and off-budget engineering, procurement, and construction contracts Underlying factors affecting this risk in Ethiopia Ethiopia has taken some decisive actions to address these risks, including (a) separating policy making and implementation functions in some parts of the sector; (b) defining appropriate technical standards; and (c) developing and publishing strict rules governing the roles of party-owned companies and party and government officials in the sector. But across the sector the overall picture remains patchy, with many perceived risks remaining. Such perceptions tend to be aggravated by an underlying tendency toward top-down planning and leadership styles. Specific concerns expressed relate to the risk of reduced competition arising from the dominance of Chinese firms on International Competitive Bidding (ICB) contracts, the proposed renewed use of tied Chinese aid in the transport sector, and an apparent distortion in some cases of the appraisal and prioritization procedures for proposed road investments overseen by some of the weaker RRAs. Corrective measures recommended by stakeholders in Ethiopia • Review of construction standards to identify areas at risk of overspecification or design • Requirement for all government and party officials to declare any commercial interests • Extension and more transparent application of proper project appraisal and ranking procedures for all construction sector investments • Encouragement of increased and fairer competition in the sector through strict enforcement of both the spirit and the letter of all relevant provisions of the Public Procurement Agency (PPA) regulations Source: Author’s compilation. a. Though accepted by other stakeholders as being plausible, these examples are neither backed by hard evidence nor necessarily widespread in the sector.
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DIRECTIONS IN DEVELOPMENT Public Se
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Diagnosing Corruption in Ethiopia P
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Contents Foreword Preface About the
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Contents vii Chapter 6 Construction
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Contents ix Map 3.1 Ethiopian Regio
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Contents xi 3.6 Summary of Corrupti
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Foreword The government of the Fede
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Preface Although many would argue t
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Preface xvii Goldie-Scot, Piers Cro
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xx About the Editor and Authors bil
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xxii About the Editor and Authors g
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xxiv Abbreviations GAC Governance a
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CHAPTER 1 Overview Janelle Plummer
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Overview 3 Focusing on Ethiopia, th
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Overview 5 for their knowledge of c
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Overview 7 and group discussion wit
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Overview 9 analysis, Goldie-Scot ge
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Overview 11 Chapter 8: Telecommunic
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Overview 13 might be explained by t
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Overview 15 The perceptions of corr
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Overview 17 Given the Ethiopian gov
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20 Diagnosing Corruption in Ethiopi
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44 Figure 2.4 Corruption Vulnerabil
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100 Diagnosing Corruption in Ethiop
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154 Table 4.4 Value chain area Cons
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Annex 4.1 Ethiopian RWS Borehole St
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CHAPTER 5 Justice Sector Corruption
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Justice Sector Corruption in Ethiop
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CHAPTER 9 Corruption in the Mining
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Corruption in the Mining Sector: Pr
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