Recently, Transparency International urged the IMF to ensure the transparency and accountability of its Covid-19 funds. Writing to the IMF’s Executive Board on 8 April, the chair of Transparency International, Delia Ferreira Rubio, said that “The urgent need to support countries in their efforts during the pandemic makes transparency and accountability in government spending critically important”, adding: “The scale of the crisis raises the risks and dangers of the theft of public money that should be used to save lives and rebuild livelihoods.”
She’s right, and her advice to the IMF could be given to corporate leaders and organisations giving coronavirus-related relief money to government: follow your money! Indeed, I would add that it’s wrong for them to give money to government in the first place. For relief donations to government are not only misdirected, they can incentivise or amplify graft. More on that later.
But first, why is COVID-19 a fertile ground for corruption? Well, the answer is simple. The pandemic has led to big government and fiscal splurges globally, and where there is big government, where there is a dramatic increase in the amount and speed of public spending, corruption is not far away. The only safeguards are strong institutions, with embedded transparency and accountability mechanisms. But Nigeria lacks such institutional safeguards, yet it is now flush with coronavirus-related funds.
Indeed, almost every country is flush with COVID-19 cash. As governments try to mitigate the economic consequences of the coronavirus and protect jobs and livelihoods, they have embarked on unprecedented fiscal activism, spending enormous amounts of money to support businesses, workers and families. For instance, the United States introduced a $2.2 trillion stimulus package; Germany put aside €656 billion; France budgeted €350 billion; and the UK allocated £450 billion, with a vow to “do whatever it takes” to support the people.
The truth is that any statement trumpeting the success of the government’s welfare programmes should be taken with a pinch of salt. Such statements are, like George Orwell said in Politics and the English Language, designed to give the appearance of solidity to pure wind
In Nigeria, the central bank announced a N1 trillion stimulus package, and then the Federal Government asked the National Assembly to approve a N500 billion intervention fund; it also withdrew $150 million from the Sovereign National Fund and indicated it would borrow $6.9 billion – all purportedly to cushion the effect of COVID-19.
But here’s the difference. In those western countries, the citizens can hold their government accountable for where every cent or every penny of the money goes. But in Nigeria, the citizens cannot hold anyone accountable for how the Covid-19 funds are spent!
Recently, the government said it disbursed N100 billion to beneficiaries of its conditional cash transfer in one week. But how many people actually received the purported N20,000 social palliative? In his broadcast last week, President Buhari directed that the number of households in the so-called national social register be increased from 2.6 million to 3.6 million. But last year, Maryam Uwais, the president’s special adviser on the social investment programme, SIP, said there were just over 700,000 on the register. So, when did the number jump to 2.6 million? Furthermore, given that, according to the World Bank, nearly 50 per cent of the Nigerian population live in extreme poverty (on less than $1.90 a day), who qualifies to be on the register?
In 2018, President Buhari’s wife, Aisha, said the SIP “has failed woefully”, and recently the Senate President, Ahmed Lawan, and the Speaker of the House of Representatives, Femi Gbajabiamila, strongly criticised its implementation. And, in a pungent intervention, an advocacy group, Human and Environmental Development Agenda, HEDA, which has been monitoring the SIP since 2016, said that “only 900,000 households have benefitted from the CCT, contrary to the claim that over 2 million households have been reached.”
The truth is that any statement trumpeting the “success” of the government’s welfare programmes should be taken with a pinch of salt. Such statements are, like George Orwell said in Politics and the English Language, designed “to give the appearance of solidity to pure wind”. Whatever the government claims about the SIP and the COVID-19 funds, the reality is that poor Nigerians are unlikely to be their real beneficiaries. In its statement, HEDA said that while the government was spending the N20,000 anti-poverty stipends from the recovered $322m Abacha loot, it gave the impression it was spending it from the COVID-19 funds. Such confusion is inevitable without transparency and accountability.
Which brings me to the corporate donations. Businesspeople and philanthropists all around the world are giving massively towards COVID-19 relief. In Nigeria, prominent private-sector leaders, under the auspices of the Coalition Against Covid-19, CaCovid, have donated N21.5 billion. The difference is that, unlike their counterparts elsewhere, they gave the money to the government!
Indeed, in his first broadcast on the coronavirus, President Buhari said all private donations should be made to the presidential task force, a government agency, “to ensure efficient and impactful spending.” Really, Mr President? How efficient and impactful were the spending of the North-East’s Internally Displaced Persons’ funds? Private sector leaders contributed about N3bn ($8m), but, according to a Senate Committee probe, there was widespread corruption in the management of the funds, and a secretary to the federal government was forced to resign for the alleged fraud.
Elsewhere, corporate donors and philanthropists either give to charities or fund specific initiatives directly themselves. For instance, Jack Dorsey, the chief executive of Twitter, has pledged $1bn to coronavirus relief, part of it given to a charity running a food programme for the poor. Jeff Bezos, the Amazon founder, gave $100m to Feeding America, a charity which supplies food banks. Most charities have as their objects the relief of poverty and the relief of need, hardship and distress. Across the world, charities are rising to the Covid-19 challenge by responding quickly, speedily and effectively to local needs.
Consider this scenario. If you give N10m to a reputable Nigerian charity and ask it to distribute relief materials to 1m households, it will do it diligently and with a passion because that’s its raison d’être. But if you give the same 10m to a local government and ask it to provide relief to 1m households, well, nearly half of the money would be embezzled or misused, and the local government officials carrying out the task would do it shoddily and arrogantly. The truth is, charities are better at delivering relief programmes than government. As someone who chaired a large UK charity for nearly five years and knows the contribution good charities make to a society, I believe that Nigeria will be strong not only when it has an effective government but also successful businesses and successful charities.
Which is why businesses should support charities. But if they don’t give directly to charities, they could, as I said, fund specific initiatives themselves. For instance, the Bill and Melinda Gates Foundation gave $100m towards vaccines, testing and treatments. Mark Zuckerberg gave $30m for treatment. Some are contributing to the WHO’s Covid-19 response fund.
Last week, Patrick Atuanya, the BusinessDay editor, wrote in his column an interesting piece entitled “Nigeria’s private sector takes lead role in Covid-19 roll back”. He listed several coronavirus-related projects that financial institutions, such as Access Bank, UBA, Guaranty Trust Bank and Union Bank, as well as corporate leaders like Aliko Dangote and Femi Otedola, are funding, including treatment and isolation centres and intensive care unit facilities. That’s commendable and it’s how it should be.
Business leaders, corporate organisations and philanthropists should either be supporting indigenous charities – which must be a key part of the social fabric of Nigeria, because no society is civilised without them – or fund and deliver specific initiatives themselves. They should not encourage corruption by giving money to government for relief measures.
Meanwhile, corporate donors to the Covid-19 funds should behave like rational businesspeople and follow their money. They must demand transparency and accountability in the administration of the funds!
