Complete Book PDF (4.12MB) - World Bank eLibrary

Construction Sector Corruption in Ethiopia 275
increasing costs in the road sector (Africon 2008). Using data from current
road projects, it tested three hypotheses: (a) rising input prices,
(b) tight construction markets, and (c) inadequate competition.
The study found that the single strongest explanatory factor for the
rising cost of roads was the absence of meaningful tender competition,
which affected 78 percent of projects. This finding, albeit tentative, is
consistent with the study finding that there are strong signs of a lack of
effective competition within Ethiopia’s road sector.
Conclusions and Recommendations
On the basis of this preliminary study, operational-level corruption in
Ethiopia’s construction sector appears to be relatively low by international
standards. However, the perception of higher-level corruption, whether
real or imagined, is already having a significant detrimental effect on confidence
within the sector. Without corrective action, both the perception
and the reality of corruption in the sector are likely to increase, spurred
on by a combination of high spending levels, capacity constraints, and
increased exposure to corrupt practices commonly encountered more
widely within international construction.
Signs, Examples, Perceptions
Ethiopia’s construction sector strongly displays both direct and indirect
warning signs of corruption risk. The direct warning signs include problems
with the quality of construction, inflated costs, and delayed implementation.
Indirect signs include unequal contractual relationships; poor
enforcement of professional standards; high multipliers between public
and private sector salaries; and a high level of government influence over
costs within, and access to, the construction market.
Specific examples of corruption have been reported (stripped of
identifying characteristics) at each stage of the value chain. The bulk
of these are related to tendering and procurement as well as construction
and operations, but in most cases stakeholders consider them to
be the exception rather than the rule. As such, corruption risks are
broadly viewed as controllable by the stronger procuring entities such
as ERA.
At the higher level, however, stakeholders perceive that the opaque
nature of some aspects of policy making and regulation as well as planning
and budgeting may be masking significant distortions of access to
construction markets. In the road sector, this perception is reinforced by