Introduction

There is ample evidence on the adverse impact of Prohibited Practices and illicit financial outflows on African economies and societies. A large number of studies carried out both in Regional Member Countries (RMCs) of the African Development Bank Group (AfDB) and outside show Prohibited Practices as a factor that undermines political stability, impedes economic progress and results in social discord on the continent.

The troubling effects of pervasive corruption on the performance of public institutions and development effectiveness are well documented: By distorting the allocation of resources, corruption increases the prices of public goods and services while lowering the quality of service delivery and restricting access to services to the poor who can ill afford to pay the corruption premium. It is also well established that the incidence of Prohibited Practices is affected by the probability of being caught and punished. Research has shown Prohibited Practices to be high in countries where the government system does little to deter such practices, leading lawbreakers to believe there is little chance of being caught or, if caught, of having to face the law. The negative impact of Prohibited Practices is amplified by the subsequent financial outflows of illicit funds from RMCs to financial “safe havens”, mostly in developed countries.

In response to the challenges facing RMCs in the fight against Prohibited Practices and illicit financial outflows and in line with the institution’s priorities, the Integrity and Anti-Corruption Department (IACD) proposes the establishment of the Africa Integrity Fund (AIF) to extend grants to eligible recipients in order to finance measures which contribute to the prevention, the detection, the investigation and the sanctioning of Prohibited Practices, which support the repatriation of stolen assets, which alleviate the financial drain from illicit outflows on the Bank’s RMCs and which strengthen transparency and accountability in the management of public resources.

Alignment

Anti-corruption, highlighted in the Paris Declaration on Aid Effectiveness as an area where more support to country efforts is needed, has always been a priority for the Bank and is further reemphasized in the African Development Bank Group Ten Year Strategy for 2013-2022 At the Centre of Africa’s Transformation (TYS). The Bank commits in the TYS to strengthen the capacity and reach of government and civil society organizations that focus on anti-corruption. The Bank’s Governance Strategic Framework and Action Plan 2014-2018 (GAP II) identifies the fight against corruption as a cross-cutting objective. The Bank commits in GAP II to support Regional Member Countries’ efforts to improve the performance of anti-corruption agencies in preventing, investigating and sanctioning corrupt practices.

Grounded in the anti-bribery and anti-corruption provisions of the African Union Convention on Preventing and Combating Corruption, the UN Convention Against Corruption, and the OECD Convention on Combating Bribery of Foreign Public Officials, the Organisation for Economic Co-operation and Development (OECD) and the AfDB in 2011 launched a partnership to support African governments in their efforts to fight bribery and corruption. Working with African policymakers, businesses, regional and international organizations, the Joint OECD-AfDB Initiative inter alia aims to boost private-sector competitiveness by promoting standards of corporate integrity and accountability.

In the Uniform Framework for Preventing and Combating Fraud and Corruption agreed upon by the Multilateral Development Banks (“MDB”) community, the signatories commit to support initiatives of member countries to combat corruption. In accordance with Board Resolution B/BD/2012/07 Fine-tuning the Organizational Structure and Business Processes of the Integrity and Anti-Corruption Department, IACD’s mandate was broadened to provide support programs assisting the Bank’s RMCs in preventing, detecting and investigating instances of corruption, fraud and other wrongdoing.

Objectives, core priorities, outcomes and outputs

The AIF’s ultimate objectives are to reduce the prevalence and impact of Prohibited Practices and illicit financial outflows in the Bank’s RMCs by strengthening core priorities, in particular prevention, detection and investigation, and the sanctioning process, as well as by supporting knowledge creation and dissemination. These outcomes will be met by improving the policy framework and the legal environment of law enforcement and public finance management institutions, by enhancing the implementation of the existing legal framework and by encouraging civil society participation in fiduciary, accountability and monitoring systems. The principal activities ensuring such outputs are outreach, training, capacity building and technical assistance. Studies on emerging issues in the field of anti-corruption and the fight against Prohibited Practices and illicit financial flows will result in the development of knowledge products to inform the development of national strategies and programs, as well as providing a robust analytical base to feed into policy dialogue.

More specifically, the AIF aims at:

1. Becoming a platform for the funding of activities aiming at reducing the prevalence of Prohibited Practices, at recovering stolen assets, at ebbing illicit financial outflows and at promoting good economic and financial governance across the continent;

2. Documenting innovative approaches in the area of anti-corruption and good governance;

3. Serving as a vehicle to incorporate development actors such as civil society organizations (CSO), advocacy groups, the press and academia in the fight against corruption and the search for innovative solutions to the problem of corruption and more generally weak governance at both country level and in the region.

Conclusion and recommendation

The AIF will be an innovative instrument providing the Bank with additional resources to address development priorities in its RMCs in the area of anti-corruption without tapping into traditional donor funds. It allows the Bank to fulfill its commitment to RMCs to support their efforts to improve the performance of anti-corruption agencies in preventing, investigating and sanctioning corrupt practices and to strengthen their governance agenda. In addition, the Fund will provide unprecedented support to innovative ideas by incubating and strengthening some of the emerging and most promising anti-corruption practices. Through its agile and flexible approach, it will allow the development community to quickly respond to the pressing need of Africa in this key area and strengthen the role of the Bank as partner of choice for delivering more transparency and accountability in the use of public funds.