A major anti-corruption crackdown has exposed serious weaknesses in development projects across the Horn of Africa. Global advisory firms, once trusted to manage public funds, are now facing penalties for misconduct in key infrastructure programs.
The World Bank announced sanctions against units of PricewaterhouseCoopers for their role in the $1.3 billion Eastern Electricity Highway Project. This project was designed to connect Ethiopia and Kenya and improve regional electricity supply. However, investigations revealed that the firms were involved in collusive and fraudulent practices, including using confidential procurement information to influence contract awards.
The firms also misrepresented the availability and qualifications of experts and failed to fully disclose subcontractors. As part of a settlement, they admitted wrongdoing and accepted a 21-month debarment, along with commitments to improve internal compliance systems. While this affects their work on World Bank-funded projects, it does not stop their global operations.
This case follows a similar action in 2024, when Ernst & Young Kenya was debarred for 30 months over corruption in Somalia. The firm failed to disclose conflicts of interest and made payments to officials, described as fraudulent and corrupt practices. Another consultancy, Africa Development Professional Group (ADP), was also blacklisted for failing to disclose a conflict of interest in a Somali project. These repeated cases point to a growing pattern of misconduct in the region.
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Weaknesses in the Gatekeeper Model
For many years, firms like PricewaterhouseCoopers and Ernst & Young acted as “gatekeepers” in development finance. They were responsible for monitoring funds, ensuring compliance, and supporting governments in managing large projects. The system depended heavily on their reputation for trust and transparency.
However, recent events show serious flaws in this model. These firms were not only overseeing projects but also competing for contracts within the same system. This created a conflict of interest, allowing them to influence processes while trying to win business.
In the electricity project, investigators found that confidential information was used to manipulate bidding. This raised concerns about fairness and accountability. Another issue is how penalties are applied. When firms are debarred, the company is punished, but individuals involved often face limited consequences. This allows similar practices to continue.
Firms can return after the debarment period by updating policies and compliance systems, but the core structure remains unchanged. This weakens efforts to promote good governance and raises questions about whether misconduct is treated as a serious violation or a manageable business risk.
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Rising Influence of Alternative Financing Models
The impact of these scandals is changing how countries in the Horn of Africa view global funding systems. Nations like Ethiopia and Somalia rely heavily on external financing for infrastructure and economic development, traditionally working with institutions like the World Bank that require strict compliance.
However, trust in this system has been affected. When firms responsible for ensuring transparency are found guilty of misconduct, it raises doubts about the overall process. At the same time, alternative financiers are becoming more active in the region.
Gulf-based companies such as DP World and AD Ports are expanding investments in ports and logistics. A major example is a planned $3 billion railway linking Ethiopia to the port of Berbera, aimed at reducing reliance on Djibouti. These projects are often executed through direct agreements with fewer compliance requirements.
China is also increasing its presence through companies like China Railway Construction Corporation, focusing on fast delivery and execution. This approach reduces reliance on external advisory firms and prioritizes project completion.
This contrast highlights two different models. Traditional institutions follow strict rules and slower processes, while new players offer faster solutions with fewer conditions. At the same time, tighter compliance requirements from the World Bank are increasing costs and making it harder for smaller local firms to participate, further reshaping the development landscape in the region.