Financial integrity to achieve SDGs

December 7, 2022

Corruption is not just unethical; it robs societies of resources needed to achieve development objectives. Upholding financial integrity is at the core of fighting corruption.

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We live in extremely turbulent times, with a wide range of issues – including the COVID-19 pandemic, cost of living, climate emergency and nature stresses – all adding to people’s growing dissatisfaction with the performance and outcomes of governance systems.

The issue of financial integrity is at the core of fighting corruption. Transparency International defines financial integrity as “a financial system that operates in a clean, transparent and accountable way”.

For UNDP, financial integrity is a service delivery issue, development finance issue, and most importantly, a trust issue of citizens in their government institutions.

When high-level officials exploit vast amount of public assets, public trust erodes, people are deprived of economic opportunities, and democratic institutions are weakened.

The drain of available public funds leads to reductions in basic goods and service delivery and weakens the capacity of countries to implement critical development agendas as well as enhancing human rights.

Countries are losing US$483 billion in potential tax revenue every year that could have fully vaccinated the global population against COVID-19 more than three times.

According to a UNCTAD report, an estimated $88.6 billion leaves the Africa continent in illicit financial flows (IFFs) every year, and those countries with high IFFs spend 25 percent less on health and 58 percent less on education compared to countries with low IFFs.

Tax transparency, fiscal transparency, procurement and contract transparency, and beneficial ownership transparency are prerequisites to financial integrity.

Critical to achieving additional progress is the need to develop capacities to identify and tackle corruption risks, while investing in collective action platforms that advocate for open government and open data, especially in vulnerable sectors like health, water, education, transport, energy and environment. These are areas where significant resources are invested and where large procurements are involved.

Two ways to effectively address the challenges and implement measures to prevent and combat corruption:

  1. Establish a United Nations convention on international tax cooperation to set consistent and multilateral standards for “financial and beneficial ownership transparency”. We can hope that a new convention as this could be a game changer to strengthen financial integrity.
  2. Promote strong international cooperation and assistance to prevent corruption and enforce rule of law to advance the financial integrity agenda.

As part of our commitment to United Nations General Assembly Special Session 2021 Political Declaration, UNDP is already working to integrate anticorruption measures across all development areas and sectors.

Our work to counter corruption targets root causes and builds transparency and accountability. Since 2008, UNDP has successfully implemented anti-corruption programmes and projects in more than 100 countries. To mention a few:

We are supporting the development of  strategies to prevent and address illicit financial flows, promote transparency in beneficial ownership, public procurement practices, budgets, contracts and taxation, and strengthen data collection on illicit financial flows and corruption, in line with SDG 16.

UNDP’s Tax Inspectors Without Borders (TIWB) initiative, in partnership with OECD, supports tax administrations, including tackling illicit financial flows: For every one dollar invested in it, TIWB has generated $127 for developing countries’ budgets.

With support from Norway and Sweden, UNDP launched an Anti-Corruption Innovation Initiative in 2021 to help 11 countries use cutting-edge digital tools to detect, analyse, and monitor corruption.  

UNDP’s Tax for SDGs initiative helps developing countries expand domestic resource mobilization and work toward the Sustainable Development Goals (SDGs) in an initial 25 countries. It considers taxation as a tool for revenue collection and policy instrument to encourage sustainable growth.

In Ukraine, a new UNDP-supported e-platform is increasing transparency in procurement. UNDP, in partnership with the EU and National Agency on Corruption Prevention, has also developed a new basic online course to train anti-corruption officers.

UNDP is supporting sectoral corruption risk management processes that enhance efficiency and strengthen integrity in service delivery including in the health sector in Tunisia, and is expanding to new sectors such as water, transport and education.

Going forward, UNDP can play an important convening role to bring together different actors, sectors and stakeholders to tackle this global agenda, particularly bringing together economic governance and governance communities. We will continue to shape global understanding on effective economic governance and financial integrity through advocacy, knowledge and policy research.