Don’t Sweat the Petty Stuff? The True Costs of Petty Corruption
In many developing countries, petty corruption is rampant to the degree of being deemed “everyday,” “cultural,” or even “survival” corruption. Small, usually frequent payments most often paid to lower level officials, petty corruption can seem negligible to an economy in comparison to grand corruption or state capture cases. However, the cumulative impact of corruption is costly to education systems, health services, and the business environment. In a lecture to participants at the 2016 School on Integrity hosted by Transparency International Lithuania, Director of U4 Anti-Corruption Resource Centre Boris Divjak calculated the true costs of petty corruption on democratic, economic, and social institutions.
Where central and local governments fail to deliver on public goods and services, citizens are left to pay extra for basic services such as school education, health services, and legal processes such as registering and operating a business. In situations where the good or service is imperatively needed, paying a bribe, facilitation payment, tip, or however it may be construed, does seem like a survival mechanism. Yet, the public service sectors in which they occur ultimately pay the price of these seemingly small payments over time.
As an example within school education, payments can be required for entrance to certain schools, sale of necessary exams, and receipt of exam results. Teacher absences are often common and thus other teachers are known to draw salaries on behalf of these absences. In other instances, “ghost” teachers appear on paper but never materialize in person. Items that are presumably subsidized by local government such as books and school materials also may require payment. Therefore, even where public education exists in theory, in corrupt environments, a school can still be too expensive to attend.
The example of Ebola in Liberia was a wakeup call to many around the world of the systemic corruption occurring within health service systems. Corruption can take the form of counterfeit and substandard drugs sold as well as poorly regulated licensing and accreditation of professionals. In many countries, common cultural curtesy calls for informal payments or gifts to express gratitude to a medical professional after an appointment or treatment. Extra payment might be given as insurance that better care will be received.
Acting similar to an extra tax, petty corruption is an added cost facing small and medium sized enterprises (SMEs) at the lowest levels. Though petty corruption exists in both the informal and formal economy, the formal economy often has higher costs of corruption due to bribes involved in the registration, licensing, and inspection costs of operating a business. Many businesses are unable to expand and grow their business as any profits are eaten by corruption.
Petty corruption can be controlled meaning it is centralized, organized, and coordinated usually by the central government. In contexts of controlled corruption, businesses are then able to forecast and estimate the level of corruption they might face – then able to account for it as a measurable expense or an extra tax. On the other hand, corruption can be less predictable. Uncontrolled corruption tends to be more unpredictable.
Unanticipated costs can be harmful for anyone, but affect the poorest the hardest. Many households at the bottom of the pyramid have limited income generating power and rely on heavy planning to make ends meet. An extra medical bill or unseen cost can deeply impact such households. The small nature of payments exchanged in petty bribes gives the impression that the impact overtime is minor, but effectively petty corruption unravels the social service safety net and system of institutions majorly.
Stephanie Bandyk is a former Program Assistant with Global Programs at CIPE.