Building Wealthy Economy through Healthy Governance

Poor governance of public resources has been one of the key drivers of conflict in many fragile and conflict affected countries. In our recent ‘know-how and how-to series’, we have convened an online discussion, engaging our partners, Board Members and representatives of private sector to discuss how public resources should be governed in order to underpin sustainable development and forge lasting peace and stability.

Fragile and conflict affected states receive major international financial and aid contributions. Some donors directly contribute to the budget of these governments in order to address resources deficits. We have witnessed unfortunately that in many countries even international aid and financial contributions are prone to corruption and misuse.

In our discussion, we have particularly focused on post-conflict situations and exchanged views as to how sound economic governance prevent countries from relapsing into repeated cycle of violence. As result, we have put together the following sequence of measures that governments and the international assistance community should undertake to ensure sustainable peace:

In post-conflict situations, political and economic governance reforms should move ahead hand-in-hand

The core focus of the international community and their host governments is mainly on political reforms and settlements once crisis ends. In this kind of situations, economic governance priorities are often overlooked. In addition, the economies in post conflict situations is largely driven by the security sector, by the presence of international military forces and aid. One country where this situation is explicitly visible is Afghanistan, where economy was largely tied up to the presence of international security forces and the large amount of international aid. The international community completely overlooked as to how the country will feed itself once they withdraw. The consequences: Afghanistan is one of the highly-corrupt, largely aid dependent and one of the world’s most poor countries with raising unemployment rate, particularly among youth. It is of significant importance that the international community and their counterpart governments set-up a trusted system of laws and regulations, policies and institutions that provide the framework for self-sustaining economic recovery and growth.

Tackle petty corruption from the onset

Corruption presents a key challenge to post-conflict reconstruction and development. There is a growing need to invest significantly in mobilizing the political and social wills to forge zero tolerance to corruption. Petty corruption erodes public trust slowly, but surely and reinforce inequality as well as undermines public trust on the governments. Failure to address petty corruption from the onset, may result in sustained public grievance and subsequent stand-off between the government and the public. It may also provide, as we have witnessed in some countries the breeding ground for non-state armed groups and criminal networks to seize the opportunity and provide their own version of solutions. People needs justice and quickly and these groups seize the opportunity to address grievance, when governments fail to do so.

Prevent grand and political corruption

A key driver of failed states seems to be the lack of leadership and political consensus to address grand and political corruption. Corruption of this nature has reversed hard gained development, democratic and peace gains in many countries. The biggest threat to sustaining peace and stability after conflict ends or regime changes arises from politically-driven corruption (also known as (political-economic nexus). We have discussed cases such as Afghanistan, Iraq and Nigeria where political leaders through their organized criminal networks capture import and export as well as key resources such as oil, gas and minerals. In some of these countries, the international community did make some great mistakes by engaging corrupt officials in the formation of governments. While this could have been necessary to forge inclusive governments, this has also created some formidable challenges to the enforcement of rule of law. Corrupt politicians are powerful than the rule of law in these countries and they have the means to rule these countries the way they wish for the years to come.

Prevent corruption and other risks in natural resources management

Natural resources play a key role in post-conflict reconstruction and development. But it is not always the case. In most cases natural resources become a curse more than a blessing. There are many countries where natural resources have sustained the vicious circle of poverty, inequality and injustice. Why? well, one reason is simply the so-called " Dutch Disease" where economic growth is achieved in one particular sector (Oil and gas), but this had led to a sustained decline in others. Even if revenue from natural resources does produce growth, it only makes the corrupt elite even richer, rather than results in a tangible change in the living standard of an average person. Natural resources become as risk more than a wealth if it is not governed as it should be. failure to governed it accountably, responsively and transparently, this may fuel ongoing conflict or increase fragility. In our discussion, we identified three major cases that justify that natural resources are more risk than wealth for countries that suffer weak rule of law and governance:

• Frist, where economic governance and the rule of law are weak, the economic potential of natural resources may incentivize certain groups or ethnics to rebel or seek independence (the case of Baluchistan in Pakistan).
• Revenue from natural resources may finance the operation of rebels or even terrorists (the case of Iraq, Syria and Afghanistan).
• The unequal distribution of wealth combined with high level of corruption, extortion and weak governance often result in losing hearts and minds and leads to grievance and rebellion (The case of Angola and Nigeria).