Corruption and its effects on the development of the construction industry in Malawi

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CORRUPTION AND ITS EFFECTS

ON THE DEVELOPMENT OF THE

CONSTRUCTION INDUSTRY IN

MALAWI

CHARLES INJESS MARTIN CHIOCHA

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CORRUPTION AND ITS EFFECTS ON

THE DEVELOPMENT OF

CONSTRUCTION INDUSTRY IN

MALAWI

By

CHARLES INJESS MARTIN CHIOCHA

203085450

Treatise submitted in partial fulfilment of the

requirements for the degree of Magister Scientiae in Built

Environment in the Faculty of Engineering, the Built

Environment and Information Technology at the Nelson

Mandela Metropolitan University

January 2009

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SYNOPSIS

The purpose of this study was to investigate corruption and its effects on the development of the construction industry in Malawi. The major causes were identified and probable solutions as well as preventive measures suggested for all stakeholders in the construction industry in Malawi and neighbouring countries to follow in order to combat bribery and corruption.

This treatise consisted of a literature review for the causes of bribery, fraud and corruption, effects of corruption on the construction industry, preventive measures, probable solutions to corruption and a descriptive survey involving responses from building and civil engineering contractors, the built environment professionals, home owners, developers, public works officers amongst others from the construction industry in Malawi.

According to the literature study, the construction industry is one of the most corrupt industries in the world, which is a huge concern and threat both to governments, investors and humanity at large. This must be addressed by all the official players in the construction industry, from the innovator of a project to the tradesmen employed on that site.

The research showed that all players in the construction industry are aware of the impact of corruption on the development of the construction industry in Malawi. Furthermore, there is room for improvement as far as prevention, reduction and elimination of corruption is concerned.

Keywords:

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ACKNOWLEDGEMENTS

My sincere thanks are given to the following:

My Almighty God who has made this possible! My lovely wife, Vivien for encouragement

My wonderful children, Vanessa, Martin, Tiyamike and Madalitso (VAMATIMA) My mother, Abitiya Likongwe Chiocha and all relatives for their love and support Professor Winston Shakantu, the Supervisor of this project, for his guidance. Prof. John Smallwood for constant reminders

Dr. Patrick Goldstone and Mrs Goldstone for proof reading this document

Mr Wellington Gondwe, The Chief Quantity Surveyor, Buildings Department – Capital Hill Lilongwe for the advice.

The European Union/Malawi Government Project Engineer for South

Members of Association of Building Contractors and Trade Alliances (MABCTA) The Anti-Corruption Bureau – Malawi Staff Members

To all my friends and colleagues for morale support.

To all my respondents who assisted with the field work, this was impossible without your input.

All people who are fighting bribery and corruption to make the world a better place to live.

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DEDICATION

This treatise is dedicated to my wife, Vivien and my children, Vanessa, Martin, Tiyamike and Madalitso and all people who stand for the truth and continuously work hard to make the life of others better in this world.

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TABLE OF CONTENTS

Page

SYNOPSIS…….………...………...………...…...…...……... i

ACKNOWLEDGEMENTS……….…………..………….……... ii

DEDICATION………..………...…….……... iii

TABLE OF CONTENTS……..…...………...……... iv-ix LIST OF APPENDICES... x

LIST OF TABLES... xi-xv LIST OF FIGURES... xvi

CHAPTER ONE 1. THE PROBLEM AND ITS SETTING……...…………....…... 1

1.1 Introduction...………….…..………...…...…....…... 1

1.2 THE RESEARCH PROBLEM…….………..………... 2

1.2.1 THE SUB-PROBLEMS……….…………..………….………... 2

1.2.1.1 The First Sub-Problem……..….………...……..………... 2

1.2.1.2 The Second Sub-Problem…... 2

1.2.1.3 The Third Sub-Problem…..…..…...………...…... 2

1.2.1.4 The Fourth Sub-Problem...…...…...………... 2

1.3 HYPOTHESES………....………....…... 3 1.3.1 Hypothesis One...………....………..…... 3 1.3.2 Hypothesis Two...……….….………...……….…... 3 1.3.3 Hypothesis Three ....……….…..……...……….…... 3 1.3.4 Hypothesis Four....……….…..…..……….…... 3 1.4 THE DELIMITATIONS……….…..……...………... 3 1.5 DEFINITIONS OF TERMS……...………... 4 1.5.1 Corruption... 4 1.5.2 Bribery... 5 1.5.3 Fraud... 5 1.5.4 Member of Parliament... 6

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1.5.6 National Constructional Industry Council... 6

1.5.7 Small-scale building contractor... 6

1.5.8 Large-scale building contractors... 6

1.6 ABBREVIATIONS USED IN THE STUDY…...………... 6

1.7 ASSUMPTIONS... 7

1.8 THE IMPORTANCE OF THE STUDY.….…....………... 7

1.9 AIMS AND OBJECTIVES OF THE STUDY... 8

1.10 MALAWI GOVERNMENT’S STAND ON CORRUPTION... 8

1.11 THE DATA, THEIR TREATMENT AND INTERPRETATION... 10

1.11.1 The data... 10

1.12 THE PRIMARY DATA... 10

1.12.1 The interviews... 10

1.12.2 Participant Observation... 11

1.12.3 Questionnaires... 11

1.13 THE SECONDARY DATA... 11

1.14 THE CRITERIA GOVERNING THE ADMISSIBLITY OF THE DATA... 12

1.15 THE RESEARCH METHODOLOGY... 12

1.16 THE SPECIFIC PROJECTED TREATMENT OF EACH SUB-PROBLEM... 12

1.16.1 Sub-Problem One... 12

1.16.1 .1 Data needed... 12

1.16.1.2 How the data was secured... 13

1.16.1.3 How the data was treated and interpreted... 13

1.16.1.4 How the data was presented... 13

1.16.2 Sub-Problem Two... 13

1.16.2.1 Data needed... 13

1.16.2.3 How the data was treated and interpreted ... 14

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1.16.3 Sub-Problem Three... 14

1.16.3.1 Data needed... 14

1.16.4.0 Sub-Problem Four... 15

1.16.4.1 Data needed... 15

1.17 ETHICAL CONSIDERATIONS... 16

1.18 QUALIFICATIONS OF THE RESEARCHER... 16

1.19 THE ORGANISATION OF THE REMAINDER OF THE STUDY…... 17

CHAPTER TWO 2.1 ORIGIN OF CORRUPTION... 18

2.1.1 Reasons why corruption and bribery exist... 18

2.2 DEFINITIONS... 19 2.2.1 Corruption... 19 2.2.2 Bribery... 20 2.2.3 Fraud... 21 2.3 CAUSES OF CORRUPTION... 21 2.3.1 Recession economy... 21 2.3.2 Competitive bidding... 22 2.3.3 Lack of control... 23

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2.3.5 Prevalence... 24

2.3.6 Procurement policies... 25

2.3.7 High cost of tendering... 25

2.3.8 Procurement processes... 26

2.3.9 Decay in professional conduct... 27

2.3.10 Susceptibility... 28

2.3.11 High poverty level... 29

2.3.12 Inequality in education... 29

2.4 EFFECTS OF CORRUPTION ON THE CONSTRUCTION INDUSTRY... 33 2.5 FRAUD... 36 2.6 CAUSES OF FRAUD... 37 2.7 TYPES OF FRAUD... 37 2.7.1 Employee’ embezzlement... 37 2.7.2 Management fraud... 38 2.7.3 Investment scam... 38 2.7.4 Vendor fraud... 38 2.7.5 Customer fraud... 39 2.7.6 Miscellaneous fraud... 39

2.8 COSTING CORRUPTION AND FRAUD ... 39

2.9 EXAMPLES OF CORRUPTION AND FRAUD IN MALAWI... 41

2.9.1 Corruption and politics... 41

2.9.2 Political induced corruption... 42

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2.9.4 Long–running scandals... 42

2.10 MALAWI GROWTH DEVELOPMENT STRATEGY VERSUS CORRUPTION... 42

2.11 EXAMPLE OF CORRUPTION IN THE WORLD... 47

2.12 PREVENTITIVE MEASURES... 50

2.13 DEALING WITH CORRUPTION, BRIBERY AND FRAUD... 54

2.14 PROBABLE SOLUTIONS TO CORRUPTION, BRIBERY AND FRAUD ... 55 2.15 FIGHTING CORRUPTION... 58 CHAPTER THREE 3 RESEARCH METHODOLOGY... 60 3.1 INTRODUCTION…………... 60 3.2 AIM…………... 61 3.3 THE DATA…………... 61

3.3.1 The primary data…... 61

3.3.2 The secondary data…... 61

3.4 THE RESEARCH METHODOLOGY………... 62

3.4.1 The sample population and questionnaire administration... 62

3.4.2 Sampling method... 63

3.4.3 Sampling requirements... 63

3.5 QUESTIONNAIRE DESIGN AND COVERING LETTER... 64

3.6 THE DATA PROCUREMENT…..…... 64

3.7 THE TREATMENT OF DATA…………... 64

3.8 THE INTERPRETATION OF DATA…………... 65

3.9 CONSTRAINTS …………... 65 CHAPTER FOUR

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4 THE RESULTS OF THE SURVEY... 66

4.1 RESPONSE RATE……... 66

4.2 RESULTS AND FINDINGS………... 67

4.2.1 Section A – Biographical Data…………... 67

4.3 SECTION B: PERCEPTIONS REGARDING BRIBERY AND CORRUPTION…………... 67 4.4 INTERPRETATION OF RESULTS…………... 113 4.5 TESTING OF HYPOTHESES…………... 115 4.5.1 Hypothesis One………... 115 4.5.2 Hypothesis Two…………... 115 4.5.3 Hypothesis Three……... 116 4.5.4 Hypothesis Four..……... 116 4.6 SUMMARY…………... 117 CHAPTER FIVE 5 SUMMARY, CONCLUSION AND RECOMMENDATIONS... 119

5.1 RESEARCH SUMMARY…………... 119

5.2 RESEARCH CONCLUSION…………... 121

5.3 RECOMMENDATIONS ARISING FROM THIS RESEARCH... 123

6.0 REFERENCES…………... 126

LIST OF APPENDICES APPENDIX I Example of International Corruption………... 131

APPENDIX II Questionnaire Covering Letter... 132

APPENDIX III Questionnaire…………... 134

APPENDIX IV Declaration Form... 144

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LIST OF TABLES

Table 4.1 Response rate…………... 66

Table 4.2 Respondents…………... 67

Table 4.3 Corruption is a major problem. …………... 68

Table 4.4 Corruption will increase in the Construction Industry in Malawi...… 68

Table 4.5 There is a high rate of uncompleted projects due to bribery in the Construction Industry in Malawi. ... 69

Table 4.6 Delays in completing projects are due to corrupt practices in the Construction Industry in Malawi. …………... 69

Table 4.7 Great economic pressure…………... 70

Table 4.8 More sophisticated criminals…………... 70

Table 4.9 Weakening of society’s values…………... 70

Table 4.10 High poverty levels…………... 71

Table 4.11 Guilty of involvement in corruption by Built Environment Professionals………... 71

Table 4.12 Guilty of involvement in corruption by Building Contractors……... 72

Table 4.13 Guilty of involvement in corruption by bankers or bank Employees………..…. 72

Table 4.14 Guilty of involvement in corruption by politicians…………... 72

Table 4.15 Guilt involving corruption by Public Works Officers…………... 73

Table 4.16 Guilt involving corruption by accountants…………... 73

Table 4.17 Guilty of perpetrating corruption by others…………... 73

Table 4.18 Contract goes to a friend…………... 74

Table 4.19 Lack of goods and services which are in high demand….……... 74

Table 4.20 Malfunctioning and inefficient administration…………... 74

Table 4.21 Too many ambiguous regulations and loopholes in the legal Framework………..………. 75

Table 4.22 Lack of high moral standards and widespread dishonesty…... 75

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Table 4.25 Colluding of tenders…………... 77

Table 4.26 Demand payments for tasks carried out by consultants, like valuation of work, inspection of works…...………... 77

Table 4.27 One professional pricing same tender document for two different clients…………... 78

Table 4.28 One supplier quoting differently on the same item for different contractors…………... 78

Table 4.29 Bid rigging…………... 78

Table 4.30 Short delivery of goods ordered…………... 79

Table 4.31 Lower-quality goods being supplied but charged at higher quality rates…………... 79

Table 4.32 Contractors’ work being charged for but not carried out….……... 79

Table 4.33 Consultants increase the quantities of work and share the proceeds with contractors…………... 80

Table 4.34 The Contractor providing false documentation in support of a legitimate claim for a grant covering agreed travel and subsistence…………... 80

Table 4.35 Altering or falsifying a certificate of testing on work completed, such as concrete cubes…….……... 80

Table 4.36 Any allegations made against you for not performing jobs properly or not at all……... 81

Table 4.37 Unnecessarily complicated transaction….………... 82

Table 4.38 Always able and quick to supply answers.…………... 82

Table 4.39 Refusal to delegate tasks…………... 82

Table 4.40 Short vacation or none at all …………... 83

Table 4.41 Unexplained or long working hours…………... 83

Table 4.42 Internal pressure like management pressures to meet budget………83

Table 4.43 Increased stresses…………... 84

Table 4.44 Ongoing transactions with related parties…………... 84

Table 4.45 Real or imagined grievances against the company…………... 84

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Table 4.47 Vices like greed, abuse of drugs, alcohol or gambling………... 85

Table 4.48 Personal financial pressure…………... 85

Table 4.49 Keeping quiet…………... 87

Table 4.50 Report it to the police or anti-corruption bureau…………... 87

Table 4.51 Report it to the relevant government body…………... 87

Table 4.52 File an insurance claim…………... 88

Table 4.53 Conduct an internal investigation…………... 88

Table 4.54 Set an example e.g. disciplining an offender and communicating with others…………... 88

Table 4.55 Take civil action for recovering losses…………... 89

Table 4.56 Immediate dismissal…………... 89

Table 4.57 Arrange a disciplinary hearing…………... 89

Table 4.58 Negotiate for a settlement…………... 90

Table 4.59 Fear of negative publicity…………... 91

Table 4.60 Inconvenience…………... 91

Table 4.61 Desire not to tie up own resources for years with a criminal case... 92

Table 4.62 No confidence in the ability of the police or anti-corruption bureau.... 92

Table 4.63 No chance of financial recovery... 92

Table 4.64 Expedite the matter in order to continue as normal... 93

Table 4.65 No confidence in the justice system... 93

Table 4.66 Establish code of conduct and ethics programme... 95

Table 4.67 Establish a bribery and anti-corruption policy... 95

Table 4.68 Implementing a comprehensive ethics programme... 95

Table 4.69 Improve the screening of employees prior to hiring them... 96

Table 4.70 Review and improve internal controls... 96

Table 4.71 Conducting forensic investigative reviews... 96

Table 4.72 Increasing the budget for security... 97

Table 4.73 Offering training programme on bribery and corruption prevention and detection... 97

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Table 4.76 Written policy document... ... 99

Table 4.77 Managing bribery and corruption risks is something that must be done to satisfy legislation... 100

Table 4.78 Managing bribery and corruption risks is a good public relations tool... 100

Table 4.79 Managing bribery and corruption is essential for good business practices... 100

Table 4.80 Managing bribery and corruption risks is something for the internal audit to deal with... 101

Table 4.81 Managing bribery and corruption risks is something that I have not really thought about... 101

Table 4.82 I would never give a bribe, even in a very difficult situation... 101

Table 4.83 A bribe is a supplement to a meagre salary... 102

Table 4.84 Bribery should be punished with long term imprisonment... ... 103

Table 4.85 In certain situations giving a bribe can be justified... 103

Table 4.86 Those who take and those who give bribes should both be condemned... 103

Table 4.87 A bribe is immoral in every walk of life, regardless of when and where... 104

Table 4.88 A gift from someone in return for doing them a favour is just a token of their respect and kindness... 104

Table 4.89 Only financial bribes deserve disapproval... 104

Table 4.90 Corruption is affecting contractors... 105

Table 4.91 Existence of corruption in the Construction Industry in Malawi... 105

Table 4.92 The construction Industry in Malawi has a lot of corruption and it is one of the most serious problems with which the industry is confronted. ... ... 106

Table 4.93 The construction industry in Malawi has a lot of corruption, but this industry is confronted with other, more serious problems………..… 107

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Table 4.94 The construction industry in Malawi does not experience a lot of corruption, but it is still one of the most serious problems with

which the industry is confronted... 107

Table 4.95 The construction industry in Malawi does not experience a lot of corruption and it is not among the serious problems the industry faces... 107

Table 4.96 Main causes of corruption in the construction industry in Malawi... 108

Table 4.97 Lose their jobs and go to prison... 109

Table 4.98 Lose their jobs and have to pay a fine... 109

Table 4.99 Lose their jobs only... 109

Table 4.100 It depends on the seriousness of the corruption... 110

Table 4.101 There should be no penalty for this... 110

Table 4.102 I don’t know... 110

Table 4.103 What can be done to combat corruption in the construction industry in Malawi? ... 111

Table 4.104 Final comments regarding the incidence and impact of bribery and corruption on the growth of the construction industry in Malawi... 112

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LIST OF FIGURES

Figure 4.1 Histogram: Corruption is a major problem... 68

Figure 4.2 Histogram: Corruption will increase... 68

Figure 4.3 Pie chart: Whistle Blowing ……... 76

Figure 4.4 Pie chart: Red Flags for Corruption……... 86

Figure 4.5 Pie chart: Action taken on corruption…... 90

Figure 4.6 Pie chart: Corruption reporting……... 90

Figure 4.7 Histogram: Negative Publicity……... 93

Figure 4.8 Histogram: Confidence in police and judiciary system…... 94

Figure 4.9 Area chart: Importance of establishing code of conduct and ethics programmes……….……... 98

Figure 4.10 Bar chart: Importance of managing corruption risks…...….. 101

Figure 4.11 Pie chart: Existence of Corruption in the Construction Industry in Malawi……... 106

Figure 4 All firms and construction firms in BEEPS- bribes as a Percentage of Revenue…... 125

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CHAPTER ONE

1 THE PROBLEM AND ITS SETTING

1.1 Introduction

Corruption has been defined as “dishonest or illegal behaviour, especially of people in authority making deals which come in many forms and can distort the allocation of resources and performance of firms or government in many ways’’ (Hornby 2002:261).

Bribery as it is defined by the Shorter Oxford English Dictionary Based on Historical Principles, Third Edition published by Clarendon Press, Oxford (Volume 1, page 236) as “theft, robbery; extortion; the exaction or taking of a bribe”, clearly constitutes a type of the dishonest behaviour cited by Hornby (2002).

The impact of corruption on the construction industry will depend on what bribery sets out to achieve and any form of corruption is harmful to economic growth. When corruption is associated with organised crime, legitimate business tends to be discouraged as potential clients become afraid to invest, and the allocation of resources is distorted by those in control of investment opportunities.

Misuse of scarce resources in the construction industry means less development in the country and, in terms of political legitimacy, any development, which may occur, is usually perceived as being compromised. Corruption has a pervasive and negative impact on the poor since it distorts both public and private choices in favour of the wealthy. The authorities’ powerfulness reduces the capacity of individuals, businesses and the State to

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1.2 THE RESEARCH PROBLEM

This study endeavours to investigate corruption and its effects on the development of the construction industry in Malawi, as most literature coverage that has been published regarding corruption is mainly focused on office bearers in government offices, political offices, non-governmental organisations (NGOs), parastatal bodies, and construction in general. The major causes of bribery, corruption and fraudulent actions that affecting the development of construction industry in Malawi will be evaluated and possible solutions as well as preventative measures will be proposed to enable stakeholders in Malawi to combat corruption effectively.

1.2.1 THE SUB-PROBLEMS

1.2.1.1 The First Sub-Problem

High rate of uncompleted or delay in completing projects is due to corruption practices in the construction industry in Malawi.

1.2.1.2 The Second Sub-Problem

Poverty is one of the major causes of corruption in the construction industry in Malawi.

1.2.1.3 The Third Sub-Problem

Lack of ethics contributes to increased corruption cases in the construction industry in Malawi.

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Poor working conditions contribute to high levels of corruption among the Built Environment Professionals and other stakeholders in Malawi.

1.3 HYPOTHESES

1.3.1 Hypothesis One

Corrupt practices are affecting the development of the construction industry in Malawi.

1.3.2 Hypothesis Two

Lack of corruption policing mechanisms is causing cases of corruption to increase in the construction industry in Malawi.

1.3.3 Hypothesis Three

Lack of work ethics is the fertile grounds for corruption growth in the construction industry in Malawi.

1.3.4 Hypothesis Four

Poor working conditions are major contributor in corruption cases among the construction industry professionals and other stakeholders in the construction industry in Malawi.

1.4 THE DELIMITATIONS

This research was based on the construction industry in Malawi. The target group were both building and civil engineering contractors, the built

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environment professionals, civil servants, politicians and many interested stakeholder in the construction industry.

Data on corruption were difficult to obtain due to the sensitivity of the information required, as few people are prepared to discuss these issues.

Two possible limitations on the effective scope of this study were the non-return of questionnaires by respondents as well as a scarcity of statistical information regarding corruption in the study area.

1.5 DEFINITIONS OF TERMS

1.5.1 Corruption

Corruption is behavior which deviates from the norms, rules and duties governing the exercise of a privileged role or office for purposes of private gain; it may do so by ignoring prohibitions against certain acts, or by fulfilling obligations to act or by exercising legitimate discretion to act, as long as it does so for private advantage or private regarding motives (Szeftel, 1998).

Corruption does not lend itself to an easy definition. “In fact, at the outset, it must be stressed that corruption cannot be understood in isolation, as a discrete phenomenon, but must be located within a wider pattern of socio-political behaviour whereby resources are diverted from intended beneficiaries to private and/or group ends” (Shakantu, 2003).

Szeftel (1998) offers a working definition that assists in exploring corruption in construction, suggesting that corruption is behaviour which deviates from the norms, rules and duties governing the exercise of a privileged role or office for purposes of private gain; it may do so by ignoring prohibitions against certain

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acts, or fulfilling obligations to act or exercising legitimate discretion to act, as long as it does so for private advantage or regarding private motives.

It is the second part of the definition that is of interest to the construction industry, viz. by ignoring prohibitions against certain acts or fulfilling obligations to act or exercising legitimate discretion to act, as long as it does so for private advantage or regarding private motives.

Further, Sangweni and Balia (1999) suggest that to describe a person as corrupt could mean that a person is dishonest.

The World Bank Sanctions Committee defines corruption as the offering, giving, receiving or soliciting of anything of value to influence the action of an official in the procurement or selection process or in contract execution (World Bank, 2003).

1.5.2 Bribery

Bribery is a gift of inducement offered or received and it is believed that there is a culture which makes it possible to offer and receive bribes. Bribes are individual offers of gifts of inducement to influence decision-making; to gain unfair advantage; to escape with supplying substandard services or products like casting concrete of low strength while the specification requires high strength; to receive out of turn favours; to facilitate faster delivery of services (Van Der Walt et al,, 1998).

1.5.3 Fraud

According to Hornby (2002) the term fraud means the crime of deceiving somebody in order illegally to get money or goods or services.

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The terms corruption, bribery and fraud will, in this context be used interchangeably. Furthermore, when the terms “corrupt”, “bribe” or “fraud” are mentioned, these will mean conduct related to corruption, bribery or fraud. These words in combination describe a sector of criminal activities described as white collar or non-violent crime, the primary sphere being illegal acts of forgery, embezzlement, bribery, deceptive trade practices, tax evasion and trickery (Albrecht, 1995).

1.5.4 Member of Parliament

An individual elected by the populace of his constituency to represent them in parliament.

1.5.5 Malawi Kwacha

Unit of currency for Malawi pegged at Mk140 to 1USD.

1.5.6 National Construction Industry Council

A board set by an Act of Parliament to monitor and evaluate building and civil engineering contractors.

1.5.7 Small-scale building contractor

The firm carrying out the actual construction works on the ground and registered in the MK10Million category to MK150 Million.

1.5.8 Large-scale building contractor

The firm carrying out the actual construction works on the ground and registered in the unlimited category.

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1.6 ABBREVIATIONS USED IN THE STUDY

ACB - Anti Corruption Bureau ALF - Africa Leadership Forum DoB - Directors of Buildings

MGDS - Malawi Growth Development Strategy

MHRMD - Malawi Human Resources Management Department

MK - Malawi Kwacha

MP - Member of Parliament

NCIC - National Construction Industry Council NGO - Non-Governmental Organisation

OECD - Organisation for Economic Co-operation and Development SAUSSC - Southern Africa Universities Social Science Conference TI - Transparency International

UN - United Nations

1.7 ASSUMPTIONS

Corruption was a major threat in the development of the construction industry. Corruption would increase in future in the construction industry.

1.8 THE IMPORTANCE OF THE STUDY

According to the secondary data obtained corruption can be both destructive and dangerous to individual, country, continent and the world as whole, if it is not controlled.

Corruption can lead to projects, which are unnecessary, unsuitable, uneconomic or dangerous. The specification of components, which are over-priced, or expensive to operate and maintain, increased project costs, project

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delays, the supplying of defective equipment, materials or poor services and paying for equipment, materials or services which were not supplied.

If bribery / fraudulent dealings are discovered, it can result in criminal prosecution, fines, imprisonment, loss of professional status, disqualification from office, and loss of employment for the responsible officials, directors and employees, blacklisting and reputation risk for those – individual and the company -involved. Bribery and fraud can also result in (Shakantu, 2003).

Court proceedings against the companies found or even suspected to be involved in corruption practices, can prove to be very expensive, stressful, and time-consuming for management.

The construction industry involves many role-players, and when corruption is discovered on a project, it is not one party only which suffers. The whole team of participants is, unfortunately, perceived to be corrupt. Clearly, even professional consultants have a duty to perform in protecting their respective professions against the effects of corrupt behaviour.

1.9 AIMS AND OBJECTIVES OF THE STUDY.

War against corruption is not only for the Malawi government, the Media, Non-governmental organisations only, but individual as well. Against this simple background is the main aim and objective for the author has seen it worth to research about the impact of corruption in the development of the construction industry in Malawi.

1.10 MALAWI GOVERNMENT’S STAND ON CORRUPTION

After 31 years of autocratic rule in Malawi, in which corruption prevailed unchecked, and it was almost taboo to refer to it, combating corruption took

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centre-stage after the advent of multiparty democracy in June 1994. Malawi has declared total war on corruption, and a number of mechanisms and institutions have been established to address issues relating to it.

Government’s willingness to decisively combat corruption has been manifested in the president’s speeches. Recently, he stated: “I will not relent until the

roots of corruption have been pulled out from our nation. I will not relent until those who plundered our economy with impunity have been brought to book”. However, thirteen years after establishing the enforcing mechanisms

to combat corruption, critics question the effectiveness of these mechanisms (Hussein, 2005).

According to the MGDS (2006:62), Corruption retards economic growth and development by diverting resources from socio-economic development activities into coffers of a few. It discourages legitimate business investment, and reduces the public resources available for the delivery of public goods and services especially to the poor. Despite efforts to curb corruption, cases of corruption are still on the rise. The Anti-Corruption Bureau’s effectiveness is hampered by inadequate human and financial capacity in addition to the need for reviewing other related laws. One of the main challenges in the medium term is, therefore, to ensure that corruption and fraud prevention is improved while offenders face the law.

Development of infrastructure will contribute to the achievement of a number of the expected outcomes of the MGDS. Specifically, a well developed infrastructure will contribute to reduced cost of doing business in Malawi as it will improve its attractiveness as an investment destination; increased access to markets, clinics, schools, especially in rural areas and reduced incidence of water-borne diseases and environmental impacts from poor water usage and poor sanitation.

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However, the provision of infrastructure is not an end in itself but provides an enabling environment for the economic and social activities. In line with the goals of the MGDS 2006, infrastructure development would focus on provision of infrastructure services as a package, which will promote activities in the various sectors of the economy.

In recent years, institutions and forums have raised themes relating to the control of corruption, and various initiatives have stressed the importance of combating corruption in order to attain sustainable socio-economic development.

Since the advent of multiparty democracy in Malawi in 1994, the fight against corruption has taken centre-stage. In recent years African institutions and forums such as Transparency International (TI), the Africa Leadership Forum (ALF) and the Southern Africa Universities Social Science Conference (SAUSSC) have raised themes relating to good governance, including corruption. For instance, the ALF organised a seminar in September 1995 in Johannesburg on Corruption, Democracy and Human Rights, and SAUSSC held a conference in Lusaka on December 1997 on the theme ‘Towards Democratic Governance, Ethical Behaviour, Public Accountability and the Control of Corruption’.1 Similarly, a conference on ‘Fraud and the African Renaissance’ was held on 8–10 April 1999 at Uganda Martyrs University. (Hussein 2005).

1.11 THE DATA, THEIR TREATMENT AND INTERPRETATION

1.11.1 The data

Two types of data to be used in this research are primary and secondary data.

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1.12.1 Interviews

Information and statistics in this method were gathered in three ways:-

The first method was a standardised schedule interview; this was uniform and repetitive thereby asking the same questions to all.

The second method was a standardised interview without a schedule, this involved asking different questions to different people, and

The third and last method was an unstructured interview; this form of interview will have no set order of wording thereby enquiring different views of different people i.e. in government, the private sector or independent.

1.12.2 Participation Observation

In this method the key personality being myself, the researcher, has observed directly what is happening on the ground and also indirectly as to consider the results of actions and events.

1.12.3 Questionnaires

These methods consisted of a written standard format of questions which were broad, impersonal and easy to answer questions in order to get co-operation and interest. However, some of the questions were sensitive, personal and confidential.

This was primary data collected using a questionnaire circulated to Anti-Corruption Bureau members (ACB) Professionals in the built environment/construction industry, investors, banks, NGOs, Building and Civil

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Engineering contractors, residential developers, and home owners, MPs, projects accountants and many more construction industry stake holders.

1.13 THE SECONDARY DATA

The secondary data in this research was drawn from relevant information existing in the public domain relative to corruption in the construction industry as well as in other industries, sourced from a range of publications including but not restricted to newspapers, the Internet, textbooks, journals and conference papers.

Press reports, information downloaded from the Internet, content located in technical and legal textbooks and the work of other researchers presented in conference papers provided substantial support during preparation of this master’s treatise. Information specific to corrupt practices amongst stakeholder in the construction industry was not readily available, but corruption in general within the construction industry has been widely reported by numerous researchers and investigators.

1.14 THE CRITERIA GOVERNING THE ADMISSIBILITY OF THE DATA

In primary data, only people who have knowledge about corruption were chosen as potentials respondents for the surveys and questionnaires.

As for secondary data the latest publications was preferred and owing to the lack of specific sources, related sources were used to draw parallels.

1.15 THE RESEARCH METHODOLOGY

This research used the descriptive survey method for collection of required data. According to Ghauri & Gronhaug (2002), in descriptive research the

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problem is structured, well understood and the research problem to be solved is set out clearly.

1.16 THE SPECIFIC PROJECTED TREATMENT OF EACH SUB-PROBLEM

1.16.1 Sub-Problem One

High rate of uncompleted or delay in completing construction projects is due to corruption practices in the construction industry in Malawi.

1.16.1.1 Data needed

The data needed for the sub-problem one are written records, progress reports, and accounts of past events which are also called historical data.

Data collected from Ministry of Transport, Housing and Public Works, Malawi Housing Corporation, Non- Governmental Organisations involved in construction and another statutory organisation and related public literature.

1.16.1.2 How the data was secured

Respondents did not have to disclose their identity when responding to the questionnaire and surveys. All responses and views of all respondents were treated as strictly confidential.

1.16.1.3 How the data was treated and interpreted

The data collected was analysed and interpreted based on the information collected and responses to questions posed during personal interviews and the results of statistical analyses.

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The data was analysed to determine general opinions, perceptions and objectives prevailing in the construction industry environment.

1.16.2 Sub-Problem Two

Poverty is one of the major causes of corruption in the construction industry in Malawi.

The data needed for the sub-problem two are written records, economical indicators and accounts of past events called historical data. Data collected from National Statistics Council of Malawi and NGO, Social welfare offices, ACB and public accessible past court cases and related public literature.

The data collected was analysed and interpreted based on the information collected and responses to questions posed during personal interviews, (which will be benchmarked against on-site observations) and the results of statistical analyses.

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The data were analysed to determine general opinions, perceptions `and objectives prevailing in the construction industry environment.

1.16.3 Sub-Problem Three

Lack of ethics being the contributor of increased corruption cases in the construction industry in Malawi.

The data needed for the sub-problem three are syllabi for different courses offered in Malawi, like higher schools, colleges and universities written records and accounts of past events which are also called historical data. Data collected from ACB, Malawi Government Human Resources Management Department and public accessible past courts cases and related public literature.

The data collected was analysed and interpreted based on the information collected and responses to questions posed during personal interviews and the results of statistical analyses.

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The data was analysed to determine general opinions, perceptions and objectives prevailing in the construction industry environment.

1.16.4 Sub-Problem Four

Poor working conditions are contributing to high level of corruption among the Built Environment Professionals and other stakeholders in Malawi.

The data needed for the sub-problem four are Ministry of Labour basic working conditions, written records on labour conditions and accounts of past events which are also called historical data. Data collected from Ministry of Labour District Offices/Inspectors Records and public accessible past courts cases and related public literature.

The data collected will be analysed and interpreted based on the information collected and responses to questions posed during personal interviews and the results of statistical analyses.

1.16.4.4 How the data was presented

The data will be analysed to determine general opinions, perceptions and objectives prevailing in the construction industry environment.

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1.17 ETHICAL CONSIDERATIONS

A declaration form has been be signed by the researcher that the attached work is all his, except for secondary sources which have been acknowledged, as listed in the bibliography.

1.19 QUALIFICATIONS OF THE RESEARCHER

The qualifications of the researcher are as follows:-

I. Part I Certificates in Construction Technology and Quantity Surveying obtained from University Malawi – The Polytechnic in 1993.

II. Part II Certificates in Construction Technology and Quantity Surveying obtained from University Malawi – The Polytechnic in 1995.

III. Bachelor of Science in Construction Economics obtained from Nelson Mandela Metropolitan University in 2005.

IV. Bachelor of Science (Honours) in Quantity Surveying obtained from Nelson Mandela Metropolitan University in 2006.

1.20 THE ORGANISATION OF THE REMAINDER OF THE STUDY

Chapter Two presents a secondary literature review related to the effect of corruption on Malawi Construction Industry. This forms the major theoretical basis for this study. The chapter discusses the impact of corruption on the development of the construction industry (built environment) and the economy as a whole. The major causes of corruption amongst construction industry stakeholders will be highlighted, followed by a proposal of preventative measures, which can be applied to combat corruption in the construction industry.

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Chapter Three discusses the methodologies used in the survey and explains the processes utilised in collecting the required data and treatment of the data obtained.

Chapter Four presents the results of this investigation, the analysis and interpretation of the research findings and the testing of the hypotheses.

Chapter Five will provide a summary of the research, conclusions drawn from the results and recommendations related to combating corrupt practices which are affecting the development of construction industry in Malawi.

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CHAPTER TWO

2 THE REVIEW OF THE RELATED LITERATURE

2.1 ORIGINS OF CORRUPTION

The culture of corruption, bribery, fraud, extortion and other related practices has its historical roots amongst rulers who developed systems of taxation. For example, when Rehoboam was King of Israel, taxes were imposed on the nobility and ruling classes, as described in the 2nd Book of Chronicles, Chapter 10 of the Old Testament in the Holy Bible. Van Der Walt et al, (1998) perceive this as a problematic issue, as it constituted taxation of the King’s own people, and were not the same as expropriating wealth to support raiding or robbing neighbouring tribes, towns and countries.

The extortion of money from one’s own people was a historical development, as these were the means of enforcing extortion, violence and a particular legal system which was intended to take care of bureaucracy and the nobility who were, in return, expected to protect their people from enemies and marauders. This was the context of the origins of early corruption (Ibid).

2.1.1 Reasons why corruption and bribery exist

According to Van Der Walt et al, (1998) there are three reasons for the existence of corruption and bribery, viz historical, social and economic.

On historical and social grounds, it is claimed that human nature has fallen into a greedy and a selfish attitude of “me first” which has given rise to a culture of corruption and bribery (Ibid).

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For economic reasons, Van Der Walt et al, (1998) states that “Economic principles create a climate for corruption and bribery; the principles of exchange mean that people are paid for work they do. If wages are low people will be ready to earn extra money dishonestly to survive. Limited resources and practical shortages force people to pay bribes to obtain things. As well as lack of an open market means that a few in powerful positions can demand payment for necessary commodities”.

To be termed ‘corrupt’, an action must satisfy two conditions. Firstly, the recipient of the corrupting object or device must consciously be disposed predictably to favour the interests of the benefactor. Secondly, the corrupting object or device must be substantial enough to warrant reasonable worry that the recipient will favour the interest of the benefactor even when all else is equal (Vee and Skitmore, 2003).

The impact of corruption and fraud on Malawi economy remains significant today. Every communication channel ranging from the printed to electronic media at least, reports something about corruption and fraud in the high offices of the land, parliament in particular, down to the least businessman. The reports are eye-catching and leave everybody wondering what happened to society held dear by most citizens.

The TI study, carried out between 2003 and 2004, assesses the effectiveness of the Malawian National Integrity System (NIS). The NIS is comprised of the key institutions that contribute to the fight against corruption in a country. The study looks at the culture of corruption, transparency and accountability, donor-government co-operation on the fight against corruption, and future prospects for the consolidation of good governance and democracy in the country. The report finds that corruption has increased in Malawi, in part as a result of weak institutions of state.

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2.2 DEFINITIONS

2.2.1 Corruption

Corruption does not lend itself to an easy definition. In fact, at the outset, it must be stressed that corruption cannot be understood in isolation, as a discrete phenomenon, but must be located within a wider pattern of socio-political behaviour whereby resources are diverted from intended beneficiaries to private and/or group ends (Shakantu 2003).

Szeftel (1998) offers a working definition that assists in exploring corruption in construction, suggesting that corruption is behaviour which deviates from the norms, rules and duties governing the exercise of a privileged role or office for purposes of private gain; it may do so by ignoring prohibitions against certain acts, or fulfilling obligations to act or exercising legitimate discretion to act, as long as it does so for private advantage or regarding private motives.

It is the second part of the definition that is of interest to the construction industry, viz. by ignoring prohibitions against certain acts or fulfilling obligations to act or exercising legitimate discretion to act, as long as it does so for private advantage or regarding private motives. Further, Sangweni and Balia (1999) suggest that to describe a person as corrupt could mean that a person is dishonest.

The World Bank Sanctions Committee defines corruption as the offering, giving, receiving or soliciting of anything of value to influence the action of an official in the procurement or selection process or in contract execution (World Bank, 2003).

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Bribery is a gift of inducement offered or received and it is believed that there is a culture which makes it possible to offer and receive bribes. Bribes are individual offers of gifts of inducement to influence decision-making; to gain unfair advantage; to escape with supplying substandard services or products like casting concrete of low strength while the specification requires high strength; to receive “out of turn favours; to facilitate faster delivery of services (Van Der Walt et al,, 1998).

2.2.3 Fraud

The term fraud means the crime of deceiving somebody in order illegally to get money or goods or services (Hornby, 2002).

The terms corruption, bribery and fraud will, in this context be used interchangeably. Furthermore, when the terms “corrupt”, “bribe” or “fraud” are mentioned, these will mean conduct related to corruption, bribery or fraud. These words in combination describe a sector of criminal activities described as white collar or non-violent crime, the primary sphere being illegal acts of forgery, embezzlement, bribery, deceptive trade practices, tax evasion and trickery (Albrecht, 1995).

2.3 CAUSES OF CORRUPTION

Corruption, bribery, fraud and extortion are not new phenomena, as these practices have existed for centuries. There are several factors which cause corruption and the following discussion is not exhaustive. Certain practices are generated within time-based, location, political environments, others on economic forces, some are temporary and others are permanent.

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The construction Industry depends on the strength of the country’s economy. Economic growth is usually accompanied by a construction boom and vice

versa. Notably, it is during periods of recession in the construction industry that

corruption flourishes, possibly due to there being less work for contractors and intensified competition. As a result contractors may do everything possible to obtain work in order to survive (Shakantu, 2003).

2.3.2 Competitive bidding

The construction industry is characterized by a large number of heterogeneous and fragmented firms engaged in intense competition. The industry is project based with the majority of projects being designed and built for a price established through competitive bidding / tendering systems (Fellows et al, 2002).

Goldstock (1990) identifies four types of collusive bidding practices prevailing in the construction industry especially amongst small-scale contractors who want to protect their existence.

Firstly, there is predatory bidding in which firms collusively agree to bid below prevailing market rates in order to drive out the competition. Once this is accomplished, the firms typically inflate the prices.

Secondly, there is what is known as identical bidding, in which firms agree not to bid competitively. This normally happens when there are very few contractors tendering or in selective procurement.

Thirdly, territorial bidding means that firms agree not to submit competitive bids in each others’ territories established by geographical position of contractors or customer -area.

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Fourthly, rotational bidding exists when firms agree to take turns in obtaining contracts through low bidding. This practice is usually concealed through the use of complementary inflated bids submitted by other members involved in the contractors’ “club” (Goldstock, 1990).

The construction industry has its own characteristic methods of project procurement, which are different from other industries. Contractors and consultants obtain their work through open or selected tendering, or by negotiation. These processes may also prove to be competitive in so far as contractors and consultants fear that their chances of being awarded a particular contract are almost zero. It is at this point that ideas of corrupting the tender-award / decision making parties arise.

2.3.3 Lack of control

Corruption inevitably results when individuals try to circumvent controls and regulations in order to take advantage of any loopholes inherent in their operating environments. Corruption flourishes in virtually all phases of the construction processes and it is possible that participants at every level may engage in corrupt practices (Ibid).

It is possible that at one point or another within the confines of a construction project, some form of corruption such as extortion, bribery, theft, fraud, collusive bidding or rigging may occur. Professional advisers and consultants are normally the first port of call for clients of the construction industry. As such, Shakantu (2003) contends, they should also be the first line of defence against the corruption web. The industry ignores corruption at its own peril.

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Tendering processes are both time-consuming and dependent on a range of other available resources and good governance, such as human expertise, experience and ethics - the latter being currently of special importance in view of the drive by governments, donors, companies and individuals to stamp out corruption in all sectors of the industry. Tendering processes are complicated to the extent of contractors and consultants having failed to supply the required information during pre-qualification periods. Regardless of this failure, however, such contractors and consultants seek to be among the list of pre-qualified tenderers, and have been known to use corrupt practices to achieve this sought-after status (Ibid).

In some instances, contractors, consultants or individuals influenced by organised crime have formed cartels to rig bids for construction / supervision work. Within a cartel, the members decide which contractors, consultants or individual will submit bids and how much they will bid, thereby destroying the open market advantages of competitive bidding. Organised crime operatives benefit from receipt of kickbacks from contracting firms, sometimes known as “mob tax” of five percent or more, and this contributes to increases in the prices of construction projects paid by developers and owners (Goldstock, 1990).

During the last 30 years, in the United States of America, the Federal and State Investigators have uncovered cartels among concrete suppliers, drywall and window replacement contractors, among others. A combination of criminal prosecution and civil racketeering charges may have broken up some of these cartels, but other cartels continue to exist (Goldstock, 1990).

2.3.5 Prevalence

Corruption flourishes in virtually all sectors of the construction industry and it is practiced by operators at every level. However because of the size, diversity

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and complexity of the construction industry a comprehensive audit of related in-house corrupt activities is impossible (Goldstock, 1990).

Nevertheless, Vee and Skitmore (2003) opine that there is evidence of corruption at all levels, for example:

a) Proprietary information infringements and “stealing of drawings during the design stage”.

b) Collusive bidding during the tendering stage.

c) Cash inducements (bribery) for over-valuing work performed during the site operations stage.

d) Negligence in the form of poor quality documents during production documentation stage.

e) Fraudulent conduct, such as covering up poor workmanship during site operations.

These practices are engaged in by practitioners at all levels, for example developers, product suppliers, engineers and tradesmen.

2.3.6 Procurement policies

Open competition has been widely criticised in the construction industry, with its large tender lists, but it continues to be used, mainly by local authorities. It is argued that there cannot be the suspicion of favouritism or corruption and the lowest possible price will be secured (Rabb, 1996).

Certain governmental policies are considered to have also contributed to increased corruption and bribery. For example, the much-publicised Black Economic Empowerment policy implemented by the South African government seeks to promote preferential employment opportunities for black South Africans, which, in view of past exclusive practices, is a positive step to ensure

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However, many white building contractors feel sidelined, perceiving abuse, misuse or misinterpretation of procurement and other policies by tender-awarding authorities to the disadvantage of white contractors. Unfortunately, these perceptions have promoted fronting, corruption, bribery and fraud (Ibid).

2.3.7 High cost of tendering

Tendering can prove to be costly, especially in a contractor’s organisation, consultant firms, which finds difficulty in employing resources vital to sustaining its operations for example the cost of purchasing tender documents, transport and phone bills to get quotations from the suppliers, time taken for the estimator to price the tender document, tender guarantees or letter of intent payments, postage cost of tender documents for opening and many more. This situation worsens if contractor, consultant or individual carries on tendering without winning a single contract. As a result, the contractor may resort to offering bribes to corrupt consultants, developers or owners of building projects (Ibid)

2.3.8 Procurement processes

As construction projects frequently require government approvals or permits; opportunities are abundant for official corruption. In many instances, contractors, consultants and individuals have bribed municipal inspectors to either expedite the processing of approvals or overlook problems on job sites (Ibid).

During the past five years, the Director of Buildings (DoB) has suffered such scandals in New York (Rabb, 2002). In 2000, the DoB Deputy Commissioner of Operations and four other senior officials in New York City were indicted for accepting money and favours to expedite DoB approvals.

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The Manhattan District Attorney issued a press release on September 6, 2000 describing an arrangement whereby construction contractors paid organised crime officials at least five percent of the value of their contracts with public agencies and private developers (Rabb, 1996).

“Irregularities in Concrete Industry Inflate Building Costs, Experts Say,” was a headline in the New York Times, April 26, 2002, and the supporting report noted that as a result of corruption, the price of concrete was more expensive in New York than elsewhere in the country, at 70 percent higher than in any other State in America.

Some observers believe that Federal and State prosecutions may have decreased the incidence of mob infiltration and union corruption in recent years, but law enforcement officials note that a crackdown on one trade may simply displace corruption to other trades (TI, 2004).

It is difficult to quantify the prevalence of corruption in the construction industry. Developers and builders are reluctant to discuss the topic because some fear retribution; many turn a blind eye to the practice (since payoffs are typically made by contractors rather than developers) and because pay-offs may be a price they are willing to pay to ensure that construction proceeds in a timely manner (TI, 2004).

It is likewise difficult to quantify the impact of corruption on the cost of housing construction. Although certain corrupt practices such as bid-rigging clearly increase the cost, other corrupt practices may actually lower the cost of building housing. Arguably, certain corrupt practices exist precisely because they decrease the cost of navigating a bureaucracy, complying with regulations or contending with labour unions. Again, reducing the difficulties associated with these elements would undermine the conditions that lead to corruption (Shakantu, 2003).

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2.3.9 Decay in the professional conduct

As architects prepare drawings, information is leaked to quantity surveyors about a potential project through the evaluation of initial cost estimates. Quantity surveyors leak information to their colleagues in the contracting sector who at bid/tender period will have advantage over those who did not know the probable value/contract sum of the upcoming project (Albrecht, 1995).

Evidence provided by Vee and Skitmore (2003) demonstrates that even professional advisers and consultants are, in some cases, party to the corruption web. Consultants such as architects, quantity surveyors, construction managers, management contractors and clerks of works normally have an idea of what the clients are paying for and ought to be the first line of defence for clients against corrupt practices. This is not always the case as some consultants may have compromised their own positions through involvement in unethical conduct. In such cases it is logical to conclude that such consultants and professional advisers will remain silent even when corrupt practices are being conducted in projects that they are involved in. It is time to question the construction professional advisers, consultants and contractors about what they are doing about corruption. As previously stated in foregoing point 2.3.3, the industry can ignore corruption only at its own peril (Shakantu, 2003).

2.3.10 Susceptibility

There are many features of the construction process that make it especially susceptible to corruption. Firstly, the nature of construction projects where contracts tend to be huge, with only a few companies with financial and technical capability being available to implement them. Secondly, the process

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of construction lends itself favourably to corruption. At each stage of the process, the potential for corrupt practices is high (Ibid).

According to Rabb (1996) ethical issues present themselves at the inception and feasibility stages of projects (technical, economic and environmental factors) and occur during the first phase of project development, viz. falsification of cost, time factors, estimates of potential return on investment and invalid requests for proposals. The second phase, during planning and organization, provides opportunity for bid rigging, bribery and fake declaration of capability. The third phase, when the project is implemented and executed, could permit padding of expense accounts, use of sub-standard construction materials and methods, and compromising on health and safety of workers. Lastly, at close-out phase, final account figures could be fraudulently manipulated by professional consultants, employee re-assignment could be misrepresented and project failures, which put the client at a disadvantage, could be covered up.

According to Shakantu (2003) some ethical issues arise out of the nature of the construction process. These are separation of design from construction, competitive bidding, the system used for payment of the contractor, contractor employment practices, and material procurement practices. Others include ease of generating and concealing cash payments, opportunities for non-monetary rewards and the use of variation orders.

2.3.11 High poverty levels

Corruption also siphons off goods and money intended to alleviate poverty. These leakages compromise a country’s economic growth, investment levels, poverty reduction efforts and other development-related advances .The despair caused by inequality and pervasive poverty may encourage people to break the rules of honesty and decency. Lack of personal development opportunities

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encourages corruption. This happens in all industries and small-scale building contractors are not spared. On the other hand, a prospering economy can afford to pay its civil servants well, thereby reducing any motivation to be dishonest and eliminating incentives for corruption (TI, 2008).

2.3.12 Inequality in education

Standard of education inequality often translates into broader income inequalities, and the earning power of individuals is affected by their relative levels of education. Furthermore, higher education levels empower some groups to lobby government more effectively in order to prioritize their particular needs and requirements (TI, 2004)

In most countries, construction does not have a well educated workforce, apart from professional consultants, as may be encountered in other sectors of economic activity. Most workers are hired on a temporary basis, with the result that in the past, lobbying government to establish enhanced standards of education throughout the industry has been almost impossible (Sigcau, 2000).

According to Stansbury 2006, the following features of construction projects make them particularly prone to corruption:-

(i) Size of projects. While construction projects vary in scale, infrastructure

projects in particular are often huge. The costs of dams, power stations, industrial plants and highways can run into billions of dollars. It is easier to hide large bribes and inflated claims in large projects than it is in small projects.

(ii) Uniqueness of projects. The fact that many major construction projects

are one off makes costs difficult to compare, which in turn makes it easier to inflate costs or hide bribes.