Inside Corruption Networks: Community Driven Development in the Village

Decentralized, participatory development is a large and rapidly growing mechanism for donor aid delivery. The World Bank estimates that over the past decade it has spent over $80 billion on what it refers to as community driven development (CDD), and that other donors and agencies have spent an equivalent amount (Mansuri and Rao 2011).  CDD is founded on the notion that communities know best what projects they need, and that their incentives are properly aligned to ensure that agents are monitored effectively, and value for money is achieved.  Proponents of CDD also argue that it will further lift poor communities by developing greater social capital to facilitate downstream collective action and stronger governance.  It is a sweet package:  more efficient delivery of poverty reduction, lower corruption, more collective action, and better governance.  What we do not have is consistent evidence that this massive experiment in development aid works.

 

This paper examines four village projects that were part of a nearly two decades-long $150 million World Bank CDD project in Kenya.  The data are unusually detailed in three respects:  we have individual level data on who got what from the projects, we have corresponding demographic data, including social network centrality measures and household wealth a generation ago, and we have qualitative data that capture what was really going on at the village level.  The picture that emerges points to a massive failure of monitoring and transparency at every level.  Corruption was rampant, the projects left virtually no lasting material benefits, and collective action and good governance declined.

 

By following the money and the networks, we are able to understand much of the agency failure.  Virtually all of the incentives in the project are misaligned to achieve the desired results.  It is not in the interest of an individual villager to speak out against the committee that disperses the benefits; similarly, the village is threatened with no future projects if it protests against malfeasance by the district project officers, and the district is in the same structural position with the national office.  Finally, the World Bank overseers have both little information about what is actually happening on the ground, and virtually no incentive to invest their limited time to risk killing their own project by following up on suspicions. Contrary to the main tenet of CDD, what all levels also have in common is a vested interest in maintaining as much secrecy as possible regarding budgets and contract specifications in the event that a rogue individual or group is determined to try to hold agents to task.