Improving Governance _ Public Sector Performance by fionan

VIEWS: 64 PAGES: 44

									     Improving Governance:
Lessons of International Experience




 Sanjay Pradhan, Director   "Good Governance and Private Sector-Led
 Public Sector Group        Growth for Sustainable Development:
                            Challenges and Perspectives“
 The World Bank
                            Madagascar Government Learning Retreat
                            June 14, 2003
                                                            Page 1
                    Outline

1              Importance of Good Governance

2     Implementing a Governance-Anticorruption Program

3       Governance-Anticorruption Diagnostic Surveys

             Mechanisms to Improve Accountability:
4
    Internal Restraints, Voice and Transparency, Competition


5               Strengthening values and ethics


6               Managing the politics of reform


7                         Conclusion



                                                               Page 2
                           Good governance leads to
                          higher investment & growth.
       % Investment share in GDP                               Income per capita Growth Rate
     20%                                                     2%

                                                           1.5%

                                                             1%

                                                           0.5%
     15%
                                                             0%

                                                           -0.5%

                                                           -1.0%
     10%                                                   -1.5%
                High       Medium       Low                             High       Medium       Low

                                         Quality of Governance
Quality of Governance in this case was measured by perceptions of 4,000 firms in 67 countries
 on: (i) protection of property rights; (ii) judicial reliability; (iii) predictability of rules; (iv) control of
                   corruption. Source: World Development Report Survey, 1997                             Page 3
                   „Traffic Light‟ Map: Rule of Law, 2000




Source for data: http://www.worldbank.org/wbi/governance/govdata2001.htm ; Map downloaded from : http://info.worldbank.org/governance/kkz/gov2001map.asp
Colors are assigned according to the following criteria: Red, 25% or less rank worse; Orange, between 25% and 50%; Yellow, between 50% and 75%; Light Green between
75% and 90% ; Dark Green above 90%
     Control of Corruption: one Aggregate Indicator
      (selected countries from 155 worldwide, for illustration, based on 1998 research data*)
             2
 Good                                                                                                                                               Margin of
 Corruption
                                                                                                                                                    Error
 Control                              Corruption
                                      Level
             1



             0



            -1



            -2

                                                                                                                                                               Costa Rica

                                                                                                                                                                            Hungary
                                                                                                                                                    Botswana
                                                                                        Pakistan
                  Tajikistan




                                                                    Indonesia




                                                                                                                                                                                                        Australia




                                                                                                                                                                                                                                                Denmark
                                                          Ukraine
                                                  Sudan




                                                                                                            Philippines
                                                                                                   Mexico




                                                                                                                                     Korea, South




                                                                                                                                                                                                Chile
                               Iraq

                                        Myanmar




                                                                                Syria




                                                                                                                                                                                      Belgium




                                                                                                                                                                                                                    Singapore
                                                                                                                          Thailand




                                                                                                                                                                                                                                 New Zealand
             POOR                                                                                                                                                                                                                              GOOD
                                                                                                                                                                                                                                Page 5
Source: „Governance Matters‟, 1999, PRWP 2196 by Kaufmann, Kraay and Zoido. http://www.worldbank.org/wbi/governance/
     Rule of Law and Corruption:
Among 48 sub-Saharan African countries, Madagascar
  scores better than all but 6 countries (Botswana,
Mauritius, South Africa, Seychelles, Namibia and Cape
                        Verde).
               Governance Indexes for Sub-Saharan Africa
        1.0
                                                                                BWA
                                                                           SYC    MUS
          .5                                                        ZAF
                                                                    CPV
                                                          MR T            NAM
                                                            MD G
                                                      ERI
                                                     BFA
        0.0                                                 SEN
                                                  SWZ STP      LSO
                                                      MLI
                                                       ETH GHA

         -.5                                RW A GIN SLVGAB
                                             GNB       BEN
                                        SLE
                                               COM TGO
                                                      GMB
                                                                      Madagascar
                                         CIV   UGA ZMBMW I
                                    LBR COG           TZA
                                   BDI        TCD MOZ
                                               CAF
        -1.0                           CMR KEN NER
                                  AGOSDN
                    SOM              ZWE
                                     NGA
                            ZAR
        -1.5

                                          GNQ
        -2.0
           -2.5      -2.0          -1.5     -1.0      -.5     0.0          .5         1.0


               Rule of Law Index
                                                                                            Page 6
    What is Good Governance?

• Decision makers are held accountable
  through voice of stakeholders
• Policy making and implementation
  processes are transparent and efficient
• Decisions are contestable
• Rules and regulations are predictable


                                        Page 7
Good governance requires well-functioning institutions
     Institutional Checks & Balances
 • Independent, effective judiciary
                                                                           Political Accountability
                                                                 •   Political competition, credible political parties
 • Legislative oversight
                                                                 •   Transparency in party financing
 • Decentralization with accountability                          •   Disclosure of parliamentary votes
 • Independent prosecution, enforcement                          •   Asset declaration, conflict-of-interest rules




     Civil Society Voice &                                                                 Competitive Private Sector
         Participation                                                                    •   Economic policies
 •   Freedom of information                            GOOD                               •   Restructuring of monopolies
 •   Public hearings on draft laws                  GOVERNANCE                            •   Effective, streamlined regulation
 •   Media/NGOs                                                                           •   Robust financial systems
 •   Community empowerment                                                                •   Corporate governance
 •   Report cards, client surveys                                                         •   Collective business associations




                                            Public Sector Management
                            •   Meritocratic civil service with adequate pay
                            •   Public expenditure, financial management, procurement
                            •   Tax and customs
                            •   Frontline service delivery (health, education, infrastructure)



                                                                                                                          Page 8
   Who Should take the lead in a National
   Governance/Anticorruption Program?
     Broad Coalition                                                  48%


         A-C Agency                      18%


   Civil Society Alone             8%


     Executive Alone               7%


Enforcement Agencies          4%


           Legislative        4%

         Int'l Experts        4%

         NGOs Alone           3%

        Not Worth It          4%                Percentage of Respondents

                         0%        10%   20%   30%       40%        50%
                                                                 Page 10
       Governance Diagnostic Surveys
• Surveys of firms, households, public officials to
  highlight problems experienced by respondents
• Identifies key problems and priorities of reform
• Quantifies and makes transparent the nature of
  the problem
• Public dissemination of results generates
  pressures for reform and imperative for action
• Benchmark for assessing progress

                                                Page 11
                     The “Bribe Fee” List
   Unofficial payments by firms in Ukraine
                                                                   Enterprises
Type of License/Service/”Favor”         Average fee required   admitting need to pay
                                            (1996)                 “unofficially”

Enterprise registration                       $176                    66%
Each visit by fire/health inspector           $42                     81%
Tax inspector (each regular visit)            $87                     51%
Telephone line installation                   $894                    78%
Lease in state space (square ft. per month)   $7                      66%
Export license/registration                   $123                    61%
Import license/registration                   $278                    71%
Border crossing (lump sum)                    $211                    100%
Border crossing (percent of value)            3%                      57%
Domestic currency loan from bank on           4%                      81%
 preferential terms (percent of value)
Hard currency loan on preferential            4%                      85%
 terms (percent of value)                                                    Page 12
                      Client Survey: Report Card of
                      Government Services in Latvia
                         Post Office

      State Educational Institutions

            Office of Social Benefits

          Polyclinic/Health Services
Agency of Immigration & Citizenship

                         Prosecutor

                 Customs Service
                              Courts

            Local Housing Authority
                              Police

                                       0   10               20                30        40
                                            Percent giving favorable rating        Page 13
Public Officials Survey: Purchasing Public Positions
                                                                                                                    60
 Customs inspectors                                                                                      48
                                                                                                   41

          Tax inspectors                                                                                      52
                                                                                               41
                                                                              25
       Natural resource                                                                             43
               licensers                                                                 33
                                                                                   27
                                                                                              39
                        Judges                                                          32
                                                               16
                                                                              25                                         Albania
         Ordinary police                                                                       40
                                                                              23                                         Georgia
             Investigators/                                                             32
               prosecutors                                                               33                              Latvia
                                                            14
                                                                              24
            Local officials                                              21
                                                                  18
                                               5
                     Ministers                        10
                                                                    19

                                     0                              20                        40                   60              80
                                     Percent of public officials believed to have purchased their positions
Based on 1998 World Bank surveys of public officials in these countries: 218 public
officials in Latvia (with Latvia Facts); 350 public officials in Georgia (with GORBI); and                                    Page 14
97 public officials in Albania (with ACER).
    Firms Survey: Composition of Corruption in Georgia
                          Contact with road police
                         Building permits
               State banking services
               Lease of state-owned                      Phone line installation
               commercial real estate                                  Enterprise registration
         Registration of ownership of
          physical or real property                                                Water and electricity



   Border crossing at customs
                                                                                         Weights and measurements
                                                                                                inspection

                                                                                        Fire and sanitary inspections
    Export or import permit

  Clearances for procurement
        or privatization


                                                  Inspection by tax or financial
                                                          authorities
                                                                                                              Page 15
based on a World Bank - GORBI survey of 350 enterprises in May 1998.
Mechanisms to improve
   accountability                                       Internal
                                                       Restraints
                             •Judicial Independence
                             •Anti-corruption bodies


                                        •Merit-based
                                         recruitment

                •Public-         •Decen-
                private          tralization
                deliberation
                                               •Contracting Out
                councils
                                  •Client      •Benchmarking
                 •Community                    •Competitive
                                  Surveys
                 participation                 Procurement
    Voice &        • Citizen
                   Charters
    Participation
                                                  Competitive
                                                   Pressure 16
                                                         Page
Internal Restraints: Anticorruption bodies
Anti-Corruption Strategy
Creation of stand alone or ad hoc anti-corruption entities: independent
 commissions (Korea); anti-corruption offices (Argentina, Ecuador); committees
 (Paraguay, Peru); Ombudsman (Philippines).
Often work with civil society organizations (e.g. in Ecuador)

Experience -- Mixed
 if there is a lack of political will, stand alone bodies will be ineffective:
        -- Tokenism and political capture (Argentina’s AC Office during
        Menem administration).
        -- Intentional limitation of powers and resources
 countries with strong political commitment, can actually mainstream anti-
 corruption efforts in the ministries.
 where there is some political will, such bodies may be effective but:
        -- not advisable to combine investigative, prosecutorial, and judicial
        functions
        -- don not expect them to solve problems in the judiciary or the Attorney
        General’s office
                                                                              Page 17
        Internal Restraints:
   Capable, Motivated Civil Service
• Merit-based recruitment and promotion
• Reduction in politicized, premature
  transfers: stability of tenure
• Building esprit de corps (Singapore,
  Ceara-Brazil)




                                          Page 18
                                 Meritocracy enhances government
                                            capability
                                 4.0
Index of government capability




                                 3.5


                                 3.0


                                 2.5


                                 2.0


                                 1.5
                                             Low            Medium           High


                                       Index of meritocracy in recruitment and promotion
                                                                                      Page 19
        Depth of political appointments

      Philippines                       Other East Asia

       Secretary                         Minister


      Under secretary                      Level 2
                                                            Index of bureaucratic
                                                                  capability
  Assistant secretary                      Level 3
                                                          1.0
     Bureau Director                       Level 4
                                                                                  0.6
  Regional Director


  Service Director
                                                          0.5
       Division chief                   Division chief
                                                                  0.2
                        Political appointees

           Ratio of public to private wages
       Percent                                            0.0
100
                                                                Philippines   Other East Asia
80                                             66
60
40                  26
20
 0
               Philippines            Other East Asia                                   Page 20
                                                  As public employment has risen,
                                                         wages have fallen
                                                                 (African countries, 1972-93)
                                            13
relative to real per capita GDP (in logs)
Central government average real wage




                                            12


                                            11


                                            10


                                            9


                                            8


                                            7
                                                2.5      3       3.5      4        4.5      5        5.5      6          6.5
                                                      Central government employment relative to population (in logs)
                                                                                                                       Page 21
                              Citizen Voice/Feedback Improve Access of Public
                                      Services to the Poor (Bolivia diagnostic)
                              100
                                          r = 0.54
  Accessibility to the Poor



                               80                                           Controlled Causal Link

                               60

                               40

                               20

                                0
                                    10   20   30     40   50   60   70    80       90
                                         Voice / External Accountability
Based on Public Officials Survey. The sample of institutions includes 44 national, departmental, and municipal
                                                                                                       Page 22
agencies which are a prior anticipated to be accessible to the poor
Indonesia: Agencies with External Accountability /
    Feedback Mechanisms Have Less Bribery
           76


           72
 Bribery




           68


           64


           60
                       Low                       Medium                         High
                                           Citizen Voice

                             Simple Average Association                      Controlled Link

                Based on 36 public agencies covered in the Indonesia Public Officials Survey.
                                                                                                Page 23
     Citizen participation can improve project
            performance (rural water)
Percent of projects successful
   70

   60

   50

   40

   30

   20

   10

    0
                        Low                                     High
                           Level of beneficiary participation          Page 24
             Indonesia: Community empowerment &
                          governance
             Current program:                             Looking Ahead:

                  Kecamatan Development Project:            Strengthening
                  (3rd Phase, covers more than ½ of
                                                            reformist LGUs
                  country)                                  (KGRIP-UGRIP)
Approach      •   Information & community                 • Encouraging
                  empowerment                               participation; link
Results       •   Some local officials jailed – a first     AC reforms closely
              •   2 provinces suspended until corrupt       to service delivery;
                  official fired & money returned           reward good
              •   Costs reduced by more than 20% in         governance
                  procurement of infrastructure           • Challenge:
              •   Communities demanding rights to           Choosing winners
                  information                               carefully;
              •   Corruption still prevalent; formal        evaluate/manage
Challenges        system still not responsive to            risk; convince
                  victories under KDP                       CSOs to join effort


                                                                           Page 25
                         Transparency
• Necessary regardless of political system
• Needed to help underpin and support accountability
  and contestability
• Internal processes of government, e.g.
  -- procurement (Chile, Mexico, South Korea, Philippines, Brazil)
  -- expenditure tracking surveys
  -- public dissemination of government priorities
  -- monitoring and evaluation
• Role of a responsible media

                                                                     Page 26
The Power of Transparency and Monitoring
       Primary Education in Uganda
      US$ per
      Student

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0
            1990       1991         1993     1994           1995        1999

                   Intended Grant Amount   Received by School (mean)
                                                                       Page 27
      Internet-based Public Procurement:
        Transparency (and Competition)
 All supplier companies register, indicating areas of
  business (e.g., IT, construction, furniture)
 Public agencies submit tenders through internet
 Automatic e-mail to all companies in selected area
 Online information on name, position of official in-
  charge
 Online information on results: who participated,
  proposals made, scores received, who won bid,
  historical record of agency’s purchases and contracts
                                                  Page 28
                   Bribery in Government Procurement
                            (View of the Firm, GCS 2001, Selected Countries)
    High Bribery
        7




        4




   Low
        1



Source: Global Competitiveness Survey, 2001; Values range from 1 (good) to 7 (bad). Estimates subject to margin of error.
                                                                                                                                Page
Question: “How commonly do firms in your industry give irregular extra payments or bribes when getting connected to public utilities?” 29
Control of Graft and Freedom of the Press

High 2.5
                                                                                   DNK
                                                                             FIN SWE
       2                               SGP                                       CANNZL
                                                                              NLDCHE
                                                                          CYP ISL
                                                                       GBR       DEU NOR
                                                                                  LUX
                                                                         IRL AUT  AUS
     1.5                                                  HKG     ISR
                                                                    FRA ESP
                                                                              USA
                                                                           PRT
       1                                    FJI
                                                                 CHL
                                                                  SVN
                                                                   ITA
                                                                   GRC
                                           MYS QAT KWT            TWN JPN
                                                                HUN EST CRI !
     0.5          CUB
                                       OMN                       BWA
                                                                 TTO
                                                                   POL
                                                                 URY
                                                                 NAM
                                                                   ZAF CZE
                                                                     MUS
                                                                            MLT     BHS
                                              LSO MARJOR             KOR
                                                                 BRA
       0                        ARE TUN
                                 SLE SWZ
                                  BRN GMB
                                  CIV
                                     TGOBHR GNB
                                                     SVK
                                                  LKA PHL MWI SUR
                                                PER           MNG
                                                              THA
                                                                    GUY LTU JAM
                           CHN       EGY       BGD MEXLBN SEN ARG
                                                            BFA PAN LVA
                                    BIH TUR GHA SLV ROM IND MDG MLI
                                               ZWE
                                      VNM ETHMDA                        BOL
    -0.5       PRK
                         BLRSAU TCD
                                          HRV COLMOZBGR UGA
                                             HTI
                                           ZMB RUS COG
                                             KENPAK
                                                              MKD
                                                               VEN
                                                 GEO
                      LBY
                DZA NGA      IRN SYR YEM KGZGTM UKR ECU DOM
                               IDNAGO     GIN ARM TZA
                                UZB LBR KAZ
                                                        NIC
                                                      HND
                                                                 BEN
                                                                 PNG
      -1        MMR      SDN
                        SOM      ALB
                                  AZE
                                 YUG
                                   CMR
                                                   PRY
                                                    GAB
               IRGTJK     TKM
    -1.5                  ZAR             NER                             r = .68

      -2                                                                   r = 0.68
    -2.5
 Low
           0              0.2           0.4            0.6           0.8              1
           Low                                                                High

       Freedom of the Press (Freedom House)
                                                                                           Page 30
             Contestability
• Competitive bidding – public
  procurement
• Contracting out competitively
• Outsourcing
• Benchmarking
• Meritocratic recruitment and promotion


                                      Page 31
‘State Capture’ – the obverse of contestability

Defining State Capture: Influential firms that shape the
  formation of rules of the game (laws, regulations and
  policies of the state) to their advantage -- through illicit,
  non-transparent private payments to officials/politicians

 Includes the following measurable manifestations:
   •   purchase of legislative votes
   •   purchase of executive decrees
   •   purchase of major court decisions
   •   illicit political party financing
   •   Illicit influence on Central Bank policies/regulations
                                                         Page 32
       Measuring State Capture in Transition


                       45

                       40
                       35

                       30
Proportion of
firms affected         25
by capture of..        20

   Parliamentary       15
   Votes
                       10
   Presidential
   Administrative        5
   Decrees
   Civil court           0
   Decrees                      Hungary              Estonia               Russia             Ukraine

                                                                                                       Page 33
                    Source: J. Hellman, G. Jones, D. Kaufmann. 2000. “Seize the State, Seize the Day: State Capture,
                    Corruption and Influence in Transition” World Bank Policy Research Working Paper 2444.
          Addressing Capture: Economic Reform and
                                  Political/Civil Liberties Matter




                      0.4
State Capture Index




                      0.3


                      0.2                                                   Slow

                      0.1                                            Partial
                                                                               Pace of
                                                                 Advanced      Econ Reform
                       0
                            Partial Civil Libs High Civil Libs

                        Political/Civil Liberties Reforms                          Page 34
 Generating Early Wins: Reforming
 High-priority Agencies and Services
        (Malaysia, Karnataka-India)
• Select services with large public or
  private interface to demonstrate impact
  (e.g., stamps & registration, tax-customs)
• Clear Published Standards
• Grievance Redressal Mechanisms
• Organizational Restructuring and E-
  governance to improve performance
• User Surveys
                                         Page 35
          Reforming a Revenue Agency:
                 SUNAT, Peru
• Comprehensive staff evaluation and replacement program
• Introduction of new salary policy based on comparable
  employment in private sector
• Financial autonomy through guaranteed sources of income
• Comprehensive streamlining of procedures and services
• Investment in infrastructure and technology
• Building private sector partnership
  RESULTS:
• Tax collection increased by 4% of GDP
• 90% of large taxpayers believed that service had improved

                                                      Page 36
          Central Challenge:
      Erosion of Values and Ethics
• How to change the mind-set of public officials accustomed to
  corruption?
• How to restore the ethic of public service?
• How to balance negative incentives – curbing negative
  behavior – to reinforcing positive incentives and behavior?
• Better pay is not enough: building a shared commitment for
  public service is central for improving performance
• Ethic: values and norms that animate politicians and
  managers to regard good performance as the purpose for
  government work
                                                      Page 37
     Building Worker Dedication:
             Ceara State, Brazil
• 1987: Fiscal crisis, deteriorating services
• State created a sense of mission around key
  programs and its workers
• Publicity campaigns to build awareness and
  facilitate community monitoring
• Civil Service: rewards, recognition for good
  performance
• Outcomes: Dramatic improvements in quality
  and coverage of services

                                            Page 38
   Strengthening Values and Ethics:
           5C’s to counter corruption
• Connectedness: Creating a sense of belongingness with
  society
• Courage: Overcoming insecurity and incessant quest for
  material acquisition
• Cosmology: Broaden vision by seeing one‟s life in
  context of the huge universe and unfathomable time
• Care and Compassion: Creating a sense of dedication to
  care for the more needy in society
• Commitment to Contribute: Creating commitment to a
  higher cause, to public service, to give rather than take

  -- H.H. Sri Sri Ravishankar (Founder, IAHV) @ The
  International Anticorruption Conference, Korea  Page 39
         Strengthening Values and Ethics:
            Some recent trends in India
• AP, India: Dynamic Chief Minister and prominent
  reform leader
• Comprehensive governance reforms launched
  - E-governance: successful one-stop shops to eliminate discretion
  - Crackdown on massive power sector theft
  - Independent anticorruption commission, right to information
• These reforms yielded impact but were not enough --
  politicians and bureaucrats blocked reforms
• Chief Minister made value-based training mandatory
  for Cabinet, legislative assembly, bureaucracy
• Partnership with IAHV (global NGO) providing
  innovative value-based training to build sense of public
  service and combat corruption                      Page 40
  Governance reforms can be
     politically difficult
• Powerful vested interests,
  institutionalized over a long period
• Distributional conflicts and uncertainty
• Institutional design (coalitions, party
  systems)


                                        Page 41
 How can reforms be initiated
       and sustained?
• Windows of opportunity (fiscal crises, new
  government)
• Strategic sequencing (early, visible wins)
• Leadership, consensus building and
  communicating the case for reforms --
  empowering allies


                                           Page 42
      Options for Consideration

•Diagnostic surveys
•Public dissemination of survey results and time-
bound action program
•Demonsratable early wins: improved delivery
of selected services with large public interface
(e.g., stamps-registration, customs)
•Team based training for public service ethic
and values (agency staff, core civil service,
Cabinet)
•Periodic monitoring, evaluation and reporting
                                               Page 43
International Experience: Five Key Messages
                           Countries have successfully undertaken
THERE IS HOPE
                           reforms to improve governance


                            Diagnostics, public dissemination of
GENERATE EARLY WINS         results and strategy, focused agency
                            reforms with visible impact can
                            generate early wins.


                            Strengthening internal restraints, public
STRENGTHEN                  oversight, community empowerment,
ACCOUNTABILITY
                            and competition can improve
                            incentives

                            Instilling ethic of public service is
FOCUS ON VALUES &           crucial for creating a powerful
ETHICS IN PUBLIC SERVICE    momentum for improving performance

                            Reforms require committed leadership
POLITICAL LEADERSHIP        and early wins generate and sustain
& SUPPORT IS VITAL          public support

                                                                Page 44
Q&A

      Page 45

								
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