The objective of development cooperation (DC) is to give all "people the freedom to shape their lives in a self-determined and self-reliant manner without material hardship and to enable their children to have a good future" (BMZ). A noble goal that is unfortunately still a long way off. This makes it all the more important to use the limited development funds available in such a way that losses due to corruption or inefficiencies are avoided. After all, every euro that is embezzled or wasted through mismanagement reduces the effectiveness of development cooperation or is missed by the actual beneficiaries, who are regularly among the poorest in the world in material terms.
But what is the right level of monitoring and control in development cooperation?
Ensuring compliance, i.e. ensuring that funds are used in accordance with the rules, also costs money; money that is no more available to the beneficiaries than the funds lost through corruption or inefficiencies. It is therefore important to balance the need for control with the costs associated with control in order to serve the goals of development cooperation. The bottom line is that compliance must not cost more than the respective development project benefits from compliance - in the form of less corruption or less waste of funds.
Barbara Scheben
Partner, Audit, Regulatory Advisory, Head of Forensic, Head of Data Protection
KPMG AG Wirtschaftsprüfungsgesellschaft
The second question donors in Germany and Europe should ask themselves is how to find the right instruments to sustainably reduce the risk of corruption and waste of funds in recipient countries.
Economic crime and the fight against it depend on country- and sector-specific characteristics, i.e. the simple export of known solutions from donor countries falls short in many cases. For example, whistleblowing systems are only functional to a limited extent when there is an overriding sense of loyalty to members of one's own ethnic group, as is the case in many regions of Africa. Another example is the regularly diverging conditions with regard to existing processes such as accounting, which is often still done in Excel by local partner organisations in development cooperation.
Our experts for Compliance & Forensic in development cooperation are familiar with the formal requirements of donors in Germany and Europe as well as with the linguistic, cultural, legal and socio-economic conditions in the main recipient countries in cooperation with our international KPMG network.
Based on this expertise, we offer innovative solutions within the framework of IDAS that support public and private actors in development cooperation in detecting, investigating and preventing corruption as well as ensuring the efficient use of funds in Africa, Asia and Latin America without negatively impacting the administrative costs of the donor organisation.
We are there for you around the clock:
KPMG Forensic Emergency Hotline: 0800 SOS KPMG (0800 767 5764).
E-mail: de-sos@kpmg.com
