Blockchain is one of the many technologies that can be utilised in the fight against corruption. Photo: Supplied
Corruption is an endemic problem in South Africa. It is a multifaceted phenomenon that has blighted the country for decades and is holding back economic growth, social cohesion and service delivery.
The 2017 Corruption Perceptions Index, for instance, ranked South Africa 71 out of 180 countries, scoring 43 out of a possible 100. This placed the country in the “red zone”, signifying a high risk of corruption.
The corruption problem is further compounded by the public sector’s lack of accountability and transparency. The full extent of the problem was laid bare in the state of capture report, which detailed the extent to which the country’s political and business elites have been involved in acts of fraud and malfeasance.
The fight against corruption is, therefore, an imperative for South Africa if the country is to improve its stagnating economy and lift millions of its citizens out of the morass of poverty and deprivation.
However, for this to happen, it is prudent to first recognise that corruption is a complex phenomenon and is challenging to tackle. Scholars have characterised corruption differently based on distinct theoretical and methodological approaches. Such differences are mainly due to the features of the corrupt activity.
The word “corruption” can be used to refer to many different activities; it can describe the act of bribing someone to gain an advantage, it can refer to the abuse of authority by those in positions of power and, in its most general sense, corruption is the misuse of entrusted power. It also includes extortion, fraud, forgery, embezzlement and money laundering.
Corruption is a global problem affecting developed and developing countries. It undermines trust in the government and hurts the economy. It destroys confidence in a country’s functions and in the operation of institutions, businesses and governance.
Corruption of any kind threatens the growth and stability of any country. Its impact on the equitable distribution of resources among entities in a population cannot be overemphasised. Hence, developing strategies to fight corruption in any system is crucial and should be one of the priorities of any government.
The fundamental problem with corruption, according to Transparency International, is it corrodes society’s fabric and undermines people’s trust in political and economic systems. As a result, the poor continue to be disadvantaged.
In the fight against corruption, government and business institutions must develop and deploy technologies that target the prevention, detection, investigation, prosecution, and monitoring of corruption and corrupt practices. Technology has proven to be a tool that can redefine the functions and operations of many systems and processes, to deliver optimal performance.
As a result of the fourth industrial revolution (4IR), and its suite of enabling technologies, many technological options have become available to combat corruption throughout government and business, as well as in the public sector.
Blockchain is one of the many technologies that can be utilised in the fight against corruption. Blockchain guarantees the authenticity of records and provides unprecedented information security. Through blockchain, data management is made more efficient and reliable by eliminating opportunities for falsification and risks associated with a single point of failure. Blockchain also allows data to be shared across organisations and removes the problem of data silos in traditional bureaucracies.
Using blockchain technology to track transactions such as procurement processes and register assets can be an effective way of combating corruption. It can eliminate intermediaries, reduce red tape and reduce discretion by utilising a shared, distributed ledger database. Lack of accountability, inadequate recordkeeping and a lack of transparency are the main challenges around procurement processes.
With blockchain in procurement, credentials, certificates and qualification, statuses of critical suppliers remain safe from forgery. Blockchain also provides transparency at every stage of the supply-chain lifecycle, keeping a record of every single transaction that took place.
Various blockchain-based applications have been pilot-tested worldwide with the goal of strengthening public integrity. In 2018, Sierra Leone conducted its first blockchain-based election. This implementation aimed to reduce the cost of voting and the likelihood of corruption in elections. Other areas, such as West Virginia and Utah county, in the US, Japan and Russia have also used blockchain voting in the past.
Blockchain can be used to prevent voter fraud since it is a decentralised and encrypted peer-to-peer network; information transacted on the blockchain network cannot be corrupted and is easy to verify.
Another area that has witnessed growth in the number of blockchain real-world applications is the education sector, notably higher education. Blockchain in higher education provides tamper-proof credentials and academic records that students can share directly with anyone and have them trusted to be authentic.
With blockchain in education, transcripts and other documents can be verified without manual intervention, reducing costs and eliminating fraud.
Potential employers want graduates to share their qualifications electronically and these qualifications need to be validated quickly and affordably.
For the first time in South African tertiary education, the University of Johannesburg is using blockchain technology as an additional security measure against certificates that have been falsified.
Firms have adopted more innovative approaches to combat financial crime, thanks to big data, artificial intelligence (AI) and machine learning. The traditional black-and-white rule approach of financial institutions is being replaced with a more technologically focused approach that is much more effective at detecting anomalies. AI and other elements of 4IR can contribute to dealing with a problem like corruption.
On the one hand, new technologies and AI offer opportunities to reduce the risk of fraud and corruption. There is great potential for AI to detect and, eventually, reduce crime in places of power.
Big data, on the other hand, has the potential to enhance the collection and compilation of corruption-related information. This information can then be processed and analysed using AI and predictive analysis systems.
Businesses are starting to map out transactions using big data, allowing them to establish connections and detect patterns in the data. This lets the organisation trace the sources of illicit activity more efficiently.
It is clear that technology can enhance efficiency and accuracy and help prevent illicit activities that harm economies and societies.
However, it is important to note that technology tools alone cannot overcome corruption; corrupt actors who hold power can weaken anti-corruption tools to allow their illicit activities to continue. Technology tools can be ineffective and even provide new opportunities for corruption when they are in the wrong hands.
In countries where corrupt elites block anticorruption reforms, information and communications technology is more effective against low-level corruption (Adam, Fazekas, 2021).
Corruption is rooted in the acts of human beings who use illicit means to maximise personal or corporate gains. Measures aimed at fighting corruption become undermined when public officials and organisations use these as opportunities to practise corrupt acts. Those in power should rather use such measures to prevent, capture and prosecute those guilty of crime.
However, in the fight against corruption, government and business institutions must develop and deploy strategies that focus not primarily on the detection, investigation, prosecution and monitoring of corrupt practices, but on preventing corruption.
Preventing corrupt practices implies addressing their root causes, which include scarcity of resources, lack of earning opportunities, lack of transparency/ accountability in the management of the commonwealth, uncertainty in the exchange of values and lack of a trusted mechanism to punish and prevent corrupt practices.
In short, a preventive strategy for combating corruption entails a strong organisational ethical foundation augmented with preventative technological interventions. Such a strategy should further wear the cloak of trust and certainty in the identification and execution of punishment for corruption activities. The suite of enabling technologies of the 4IR provides capabilities for contributing to the strategic objective of preventing corruption worldwide.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.