Foreign Aid and Corruption: Anti-Corruption Strategies Need Greater Alignment with the Objective of Aid Effectiveness

The history of foreign aid has been inextricably linked with corruption. Since the inception of International Development Association(IDA) in 1960, with its concessional lending to developing countries, a large body of writings has emerged on the corrosive effect of corruption that undermines the effectiveness of foreign aid. In view of the pervasiveness of corruption, the international development community has taken a firm stance against it. This essay begins with a brief discussion of the definition, type, and measurement of corruption. This is followed by a review of various anti-corruption measures implemented by donors and recipient countries to combat corruption. The final section ends with some concluding remarks. It also appears that the recent intensified campaign against corruption has reached a point of diminishing returns in terms of its impact on aid effectiveness. It argues that combating corruption is not an end in itself; it is a means to an end (i.e., attaining aid effectiveness). The current strategy of combating corruption emphasizes on implementing new procedures, establishing new departments, and strengthening prosecution; it has no direct bearing on the results foreign aid seeks to achieve—such as inclusive growth, service delivery, and sustainability. The strategy of combating corruption should, therefore, be subsumed under the strategy of aid effectiveness for maximum development impact