Reducing corruption in infrastructure provision in Georgia

Georgia’s drastic transition from a centrally planned to market economy in the 1990s resulted in large growth in poverty. Decentralisation and democratic reform failed to make institutions transparent, accountable, or responsive to local needs. Widespread corruption, among other factors, resulted in the near-collapse of urban public services.

In 1999, Transparency International ranked Georgia 85th among 99 surveyed countries on its Corruption Perception Index. In infrastructure provision, favouritism, bribes, fraud and state capture were all common. Tolerance of corruption was high, and there were few administrative mechanisms in place to reduce it. Researchers working with the Water, Engineering and Development Centre at Loughborough University in the UK looked at recent infrastructure services reform to see what effect they have had on corruption.

Following the Rose Revolution in November 2003, determined efforts have been made to combat corruption and improve accountability. This paper uses three case studies to analyse reforms carried out in 2004. The first two were based in the capital Tblisi. They aimed to improve water billing and use new funding arrangements to repair multi-story residential buildings. The third was the implementation of new property registration mechanisms across the country.

The results show that introducing even relatively simple mechanisms of accountability and transparency in public service delivery can increase efficiency, cut corruption, and improve public opinion towards the services. People were happier to pay their water bill, for example, when they knew the money went to the water utility and was not being kept by household collectors. Specific projects included:

• A deal was reached with the power utility to include water payments on the same bill as electricity payments, so that both could be paid directly to the bank. Payment rates increased dramatically and immediately. High wastage due to lack of meters and non-payment (10 percent) still need to be tackled.
• Massive privatisation of housing stock took place, but new homeowners were unprepared for maintenance, particularly of commonly owned areas, including roofs and elevators in apartment buildings. They were helped to form homeowner’s associations, and were able to apply for maintenance funds, choose the contractor and manage the works.
• In new land-titling arrangements, the number of institutions, steps in the process, fees, and opportunities for bribery have all been reduced. The system has been computerised and a central registration database installed. Everyone now has full and free information about the process.

The Georgian government turned their decision to cut corruption into specific, utility-level, institution-based accountability mechanisms and systems. Transparency, efficiency, and public opinion all improved, while corruption decreased. Based on their experience, the following mechanisms will reduce corruption and improve infrastructure provision:

• introduce computerised billing and collection systems
• initiate bank-based payment systems for infrastructure services
• encourage public responsibility for, and participation in, community-based projects
• introduce clear criteria for decision-making to reduce the opportunities public and municipal officials have to make discretionary decisions
• increase public access to information.

Source(s):
‘Addressing Corruption in Infrastructure Services in Georgia: A Case Study’, Partnering to Combat Corruption series, WEDC: Loughborough, by Maryam Sekhniashvili and Tamara Sulukhia, Series Editor: M. Sohail, 2007 Full document.
Further details about this research project ‘Accountability arrangements to combat corruption’ can be found on the DFID Research for Development website Full document.

Funded by: UK Department for International Development (C-64)

id21 Research Highlight: 8 June 2007

Further Information:
M. Sohail
WEDC
Loughborough University
Leicestershire LE11 3TU
UK

Tel: +44 (0) 1509 222885
Fax: +44 (0) 1509 211079
Contact the contributor: m.sohail@lboro.ac.uk

Water, Engineering and Development Centre, Loughborough University, UK

Other related links:
' Infrastructure is vital for pro-poor growth in East Asia'

'Tackling corruption to improve housing services in Indonesia'

'Uganda’s state-owned water company turns itself around'

'Understanding corruption in West Bengal: is decentralisation the answer?'

'Cleaning up corruption in Nicaragua’s education ministry'

'Managing urban calamity: the infrastructure crisis facing metropolitan Lagos'

'Attracting private investment for infrastructure in emerging markets'