The Magic of Collective Action Initiatives in the fight against Corruption.

Este artigo foi escrito pelo Sr. Francis Nyarai Ndende, que é um dos consultores da CAB e que tem sua base de atua??o na cidade de Joanesburgo, na áfrica do Sul.

Introduction

In most countries there is little or no political will to honestly fight corruption. Due to this, it is important that those who are in business whether it be a big company or small and medium enterprise find ways on how they can fight corruption. It is important that businesses regardless of their size be involved in the fight against corruption because at the end of the day they are the ones who loses as they are forced to pay bribes for services which are meant to be provided to them for free.

One of the best way of fighting corruption by companies is through Collective Action. Collective action has been defined as a collaborative and sustained process of cooperation among stakeholders (World Bank Institute, 2008). Collective action happens when a number of people either from the same field or different fields work together to achieve some common objective (Dowding, 2013).

It has been argued that despite efforts in the fight against corruption most methods have not worked and most countries are as corrupt as they were 15 years ago(Marquate and Pfeiffer, 2015). This has been attributed to the use of anti-corruption prevention methods that are based on inadequate theory, and it has been suggested that collective action theory offers a better understanding of corruption than the principal-agent theory which is usually used (Marquate and Pfeiffer, 2015).

In this paper we will look at how Collective Action can indeed be meaningful agents of change in relation to anti-corruption policies and procedures in both the private and public sector if it is applied effectively.

Challenges of doing business in a Competitive Environment

It is a known fact that in business there is always competition and because of this different companies use different methods to win this competition. This might range from strong advertising, producing good quality products, recruiting expert marketers but in some instance companies use corruption. A company may apply ethical means of doing business but if its competitor is using corruption it will be hard to survive in the market.

Further, Companies may also face corruption-related solicitations and extortions from the public sector (An Anti-Corruption Ethics and Compliance Programme for Business: A Practical Guide, 2013). What must be accepted is that this kind of corruption is present in small and medium-sized enterprises as well as large companies regardless where you are operating. One way which has proved to work in solving similar problems faced by companies is to engage in Collective Action.

 Types of Collective Action Initiative

There are a number of forms of Collective Action, however for the purpose of this paper we will describe the following forms only;

1)     Integrity Pacts:  An Integrity Pact is a short-term agreement on a project or a contract in which parties who will participate in the public procurement bidding process agrees to conduct themselves in a fair and transparent manner.

2)     Anti-Corruption Declarations: This is declaration in which parties to a short project or transaction declare that they will be committed to implement compliance with anti-corruption policies and program to themselves as well as third parties.

3)     Certifying Business Coalitions: The process of certification is where a company is certified only if it has shown that it will adhere to certain standards and commitments in the fight against corruption. The only company which join this initiative are the ones which have indeed proved their commitment (United Nations Global Impact, Joining forces against corruption: Anti-Corruption Collective Action, 2019).

Advantages of Collective Action

Collective action is more effective because firstly, it is an initiative which happens through the willingness and commitment of all stakeholders who are involved in the project. Secondly, Collective Action is voluntary, any stakeholders who is involved is already well informed of what initiative and cause he is fighting for, therefore it is easy for the participates to achieve their objective goals.

One of the advantages of Collective Action initiative is that both small and big companies can work together in the fight of corruption by using the same channels and resources. In addition to this Collective Action involves both party of the transaction (that is the bribe giver and the bribe taker), which makes it difficult for any of the parties to initiate any form of corruption in future. Through Collective Action the parties firstly identify their specific corruption risks, and develop and implement cost-effective policies and procedures to prevent bribery and corruption.

The United Nations Global Compact on Anti-Corruption has reported that Collective Action allows companies to:

• “Create deeper understanding of corruption issues
• Consolidate knowledge and financial and technical resources to achieve greater impact
• Create solutions that are perceived as more credible, acceptable and are more sustainable
• Help ensure fair competition and a level playing field for all stakeholders
• Create a more stable and enabling business environment
• Complement existing anti-corruption efforts in vulnerable regions and sectors, where industry or government-led regulations are not robust” (United Nations Global Compact, Joining forces against corruption: Anti-Corruption Collective Action report, 2019)

Collective action is a proven method of fighting corruption as it can be applied in various industries and countries with similar success stories and minor alterations. Collective action initiatives can take on various forms, ranging from short-term based agreements to long-term initiatives with external enforcement. Through this the stakeholders can;

       I.           Develop a risk prevention strategy and action plan based on the risk assessment of the industry corruption;

     II.           They might be able to share and get detailed information on the type, mode, methods of the corruption risk and came up with a focused strategic mitigating factors;

   III.           They might come up with a close collaboration of competing companies and create an environment which is difficult for bribe soliciting agents to operate, and on top of this they can create, improve and update risk assessments, codes of conduct, policies and procedures, and a due-diligence approach for third parties together, bringing a uniform application of anti-corruption laws and policies.

Challenges of Collective action

Whilst this paper recognize and accept that collective action is one of the best methods of fighting corruption by companies it must be also made clear that there is also some arguments against the implementation of Collective action. It must be noted that in some circumstances people might fail to work together to achieve some common goals or good. Individuals in any given group may share common interests with every other member of the group but they may still have some differences due to conflicting interests and self-interest. For instance if taking part in a collective action is costly, then some members will soon move out of the collective action initiative using financial constraints as an excuse (Dowding, 2013).Further to this, if some companies believe that the objectives which are being tried to be achieved by a collective action initiative will occur without their individual contributions, then they may try to free ride (Dowding, 2013).

David Hume (1740) has argued that;

“……… although two neighbors may agree to drain a common meadow, to have a thousand neighbors agree on such a project becomes too complex a matter to execute” (Dowding, 2013 p3).

Mancur Olson (1965), who is an American political economist argues that for collective action to work there must be some sort of incentives or penalty on the individual participates. He argues that members of the collective action initiative must be rewarded or incentivized upon taking part in the action or penalties must imposed on those who do not. He further, argues that those who take part in the collective action must be identified and those who do not take part must be noted too and this information must be made available to the public (Dowding, 2013).

Olson (1971) using the algebraic argument argued that people will not contribute towards a collective action initiative if what they will achieve when they do a collective action is worth less than what they have contributed to the collective action initiative in general (Dowding, 2013).

However, in our opinion this is not exactly true, sometimes a common good of human kind is always wealth more than an individual achievements. Successful societies have been built through the collective action of individual members of that particular society. Greed and selfishness is what has destroyed societies and even strong leadership. There is always power in numbers. It is true that smaller groups are easier to organize than larger ones, however, it has been proved that even large group can have very successful stories when it comes to collective action if it is implemented effectively, and the case story below will show an example of such success stories. 

Collective Action in Action: a Case Study of Malawi

Malawi is one the African countries which has been seriously affected by corruption especially in the construction industry. The level of corruption which was experienced in this industry almost crippled the whole economy of the country. However, despite this hiccup people who are in this industry decided to work together in order to make sure that this type of corruption and rooting should never happen again through a Collective Action initiative. The Collective Action initiative which was established in Malawi was initiated by the private sector. The Infrastructure Transparency Initiative Malawi (CoST) was established in 2008 and targeted stakeholders in the construction industry (Basal Institute of Governance: B20 Collective Action Hub, 2018). CoST membership ranges from the private sector, government departments, the media council, Nongovernmental organization and also government owned companies.

This initiative was most funded by international donors who are committed in the fight against corruption with little financial support from the local Non-governmental Organizations. It had the full blessing of the government and some sort of political Will, this was seen by the level of participation of government departments and government owned companies. Through CoST there have been a lot of information sharing, capacity building which is mainly aimed at sensitizing the stakeholders and the public in general of the dangers of corruption specifically in the construction industry.

Further CoST managed to do the following for companies in Malawi;

        i.           Established an effective host organization that provided an effective platform for likeminded reformers from government, industry and civil society to speak with one voice for transparency and accountability in public infrastructure.

      ii.           Pushed for the involvement and support from the high level political establishment which allowed them to establish a legal mandate that lead to a systematic change in the amount of information disclosed to the public in construction contracts awarded by the government so that it can be done in a transparent manner.

     iii.           They were able to build the capacity of government institutions to disclose information which was critical to the establishment of a legal mandate and scaling up transparency in public infrastructure.

    iv.           They established a good relationship with the media so that they should be informing the public accurate information which has been integral in keeping momentum alive, maintaining high visibility and generating social accountability.

      v.           They have provided a platform to ordinary citizens where they can raise their concerns and engage with key stakeholders in the industry.

    vi.           The fact that CoST engages International development partners they play a crucial role in providing financial support and important informal and impartial advice as an independent observer (Basal Institute of Governance: B20 Collective Action Hub, 2018).

CoST also played a big role in lobbying and pushing for the change of procurement laws in Malawi. In addition to the above CoST has taken on the important role of representing the private sector voice on public procurement law by giving their expert opinion on the same. 

In a nutshell, despite a lot of challenges CoST has managed to achieve a lot and proved once again that collective action can be used as a meaningful agent for change in relation to anti-corruption policies and procedures in both the private and public sector if it is applied efficiently and effectively (Basal Institute of Governance: B20 Collective Action Hub, 2018).

“CoST Malawi is a great example of a private sector driven Collective Action initiative that has been able to achieve longevity and impact despite a difficult political climate through building strong networks with other stakeholder and maintaining a certain level of flexibility within their Initiative to adapt to changes in the political environment” (Basal Institute of Governance: B20 Collective Action Hub, 2018, p 2).

Conclusion

Collective Action is indeed a unique way of solving common problems which are faced by companies especially when it comes to corruption. Its success stories are numerous to mention. When people come together for a common good there is always magic. Good always prevail over evil. Therefore despite what has been negatively said about Collective Action initiatives, in as far as the fight against corruption is concerned Collective Action can indeed be meaningful agents of change in relation to anti-corruption policies and procedures in both the private and public sector if it is applied effectively. The Malawi infrastructure industry initiative is a good example of an effective Collective Action program.  

By Francis Nyarai Ndende