1. Governance and Anti- corruption Methodologies for designing and implementing reform policy Francesca Recanatini and Colleagues WBI Global Governance Team June 13-14, 2003 www.worldbank.org/wbi/governance

2. Objectives To highlight the challenges of improving governance at the country level To discuss a country-specific methodology to assess governance and promote policy reforms To provide some illustrations from the experience of other countries

3. Main Lessons Learnt Participation, ‘ voice ’ and leadership are key for sustainable policy changes Capacity building promotes participation and voice for good governance Key to identify objective priorities for reforms Transparency, incentives and prevention play a role in improving governance

4. What is Good Governance? Decision makers are held accountable through the voice of stakeholders Policy making and implementation processes are transparent and efficient Decisions are contestable Rules and regulations are predictable

5. The ‘Dividend’ of Good Governance Infant Mortality and Corruption 0 10 20 30 40 50 60 70 80 90 WeakAverageGood Control of Corruption x Development Dividend 0 2,000 4,000 6,000 8,000 10,000 12,000 WeakAverageGood Regulatory Burden x Development Dividend Per Capita Income and Regulatory Burden Literacy and Rule of Law 0 25 50 75 100 WeakAverageGood Rule of Law x Development Dividend Per Capita Income and Voice and Accountability 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 WeakAverageStrong Voice and Accountability x Development Dividend Note: The bars depict the simple correlation between good governance and development outcomes. The line depicts the predicted value when taking into account the causality effects (“Development Dividend”) from improved governance to better development outcomes. For data and methodological details visit http://www.worldbank.org/wbi/governance.

6. Overall Evidence is Sobering, however: Progress on Governance is modest at best, so far Evidence points to slow, if any, average progress worldwide on key dimensions of governance This contrasts with some other developmental dimensions (e.g. quality of infrastructure; quality of math/science education; effective absorption of new technologies), where progress is apparent At the same time, substantial variation cross-country, even within a region. Some successes.

7. Source: ‘Rethinking Governance’, based on calculations from WDI. Y-axis measures the log value of the average inflation for each region across each period Significant Decline in Inflation Rates Worldwide High Inflation Low (avg. in logs)

8. Quality of Infrastructure (Regional Averages of High/Low Quality every year, GCR 1997-2002) Low High

9. Source: ICRG/PRS, 1984-2001, data subject to margins of error Control of Corruption Over Time for Emerging/Transition Economies – PRS/ICRG Poor Good

10. Extent of Independence of the Judiciary (Regional Averages of Extent/Lack of Independence every year) Non- Independent Independent

11. Challenges for policy changes to improve governance Comprehensiveness of the reforms needed Sensitivity of the issue Potential bias due to existing stereotypes Costs and timing of the reforms Long-term commitment

12. A country-driven process to improve governance, build local capacity and consensus among key stakeholders Key elements: participation, transparency and analytical rigor (diagnostic surveys) Outcomes: greater local capacity, new policy actors, baseline governance data, and action plan for policy reform To overcome these challenges: in-country focus

13. In-country focus to policy making… Commitment of the government Creation of national steering committee Implementation of diagnostic surveys Public discussion and dissemination of results Participatory development of country strategy Follow-up monitoring activities

14. 1. Establishment of Steering Committee 2. Diagnostic surveys + analysis 3. Draft of the NAS 4. Public dissemination + discussion 5. Revision of the NAS 6. Implementation by Government 7. Monitoring and Evaluation of NAS Challenge: poor governance and corruption WBI Technical Assistance Key Partnership: Government + Civil Society Country Implemented The process Experiential data from 3 sources on quality of governance

15. Key Features Full participation (at all stages) Analytical and less-subjective identification of priorities Capacity building Flexibility of approach

16. Percentage of Respondents Who Should take the lead in a National Governance/Anticorruption Program?

17. 5 Successful partnerships: The cases of Bolivia, Paraguay and Honduras l Functions of the Steering Committes: þ Propose teaching directives to formulation of the Plan þ Support in draft of Sectoral Proposals þ Give conformity to the Plan þ Present Plan to National Workshop þ Accompany and monitor the implementation of the Plan þ Present plan to Donors

18. 5 Steering Committee in Bolivia l Composition: þ Vice-president of the Republic þ Minister of Estate þ Lord Chancellor þ Minister of Government þ General Controller þ Supreme Court þ Deputies’ Chamber þ Senators’ Chamber þ Private Sector þ Church þ Means of Communication þ General District Attorney

19. l Composition: 8 Government/pp, 8 civil society þ Minister of Commerce and Industry þ Minister of Estate þ Minister of the Interior þ Deputies’ and Senators’ Chamber þ Supreme Court of Justice þ Subcontrollership of the Republic þ Political Parties þ TI þ Association ONGs of Paraguay þ Chamber of Stock Exchange and Commerce þ Youths for the Democracy þ Episcopal Conference þ Means of Communication þ Trade Union þ Farmers PARAGUAY

20. Key Features of Governance Diagnostic Tools Multi-pronged surveys of: households, firms and public officials [ ‘ triangulation ’ ] Experiencial questions (vs. ‘ opinions ’ /generic) Specially designed and tested closed questions Conceptual framework: Incentive Structure behind Governance; focus on development Rigorous technical requirements in implementation Local Institution Implements, with WB Collaboration Recognizing Multidimensionality of Governance Focus on Service Delivery: Input for Action and Change

21. The power of diagnostic data and key dimensions for analysis 1.Unbundle corruption by type – administrative, capture of the state, bidding, theft of goods and public resources, purchase of licenses and regulations 2.Identify both weak institutions (in need of reform) and strong institutions (example of good governance)

22. Key dimensions… Cont. 3.Assess the cost of each type of corruption on different groups of stakeholders 4.Identify key determinants of good governance 5.Develop policy recommendations

23. A few illustrations from country diagnostic surveys around the world Extent of mis-governance Type of mis-governance Quality of services Link with service provision Link with institutional determinants

24. Quality of Public Services (as reported by public officials; various counties, 1999-2001)

25. Accessibility of Public Services to the Poor (as reported by public officials; various counties, 1999-2001)

27. Mis-use of public resources (as reported by public officials, 2001)

28. Personnel and budget decisions in public institutions (as reported by public officials, 2001) PersonnelBudget

29. Extent of corruption

30. Excessive Regulatory Burden (as reported by enterprise managers, 2001) Notes: (1) For Ecuador and Paraguay average percentage was computed assuming 26 working days per month; (2) For Honduras, Colombia, Peru average percentage computed by weighting categorical responses to question about the percentage of time spent on negotiations with bureaucrats.

31. Vulnerabilities of Corruption Reporting: Complaint Mechanisms (as reported by public officials; various countries, 1999-2001)

32. National and municipal agencies are ridden by different types of corruption (based on public officials' responses, a Latin American country, 2001)

33. Corruption penalizes especially lower income users Corruption penalizes especially lower income users (% of income paid in bribes, as reported by all users that requested public services)

34. Corruption Restricts Access to Medical Services: Discouraged Poor Users Due to Bribes (as reported by public service users, 2001) Note: The figure shows the percentage of discouraged users not using medical service because a bribe is too high.

35. Public Sector Characteristics and Governance Internal Transparency Meritocracy Social Involvement and collective action Quality of norms and rules “ Accountability ” & citizen voice Rule application and supervision Salary Satisfaction Agency Missions Politicizing Quality of services

37. Transparency within Government Agencies Prevents Purchase of Public Positions Based on 90 national, departmental, and municipal agencies covered in the Public Officials Survey.

38. Citizen Voice Helps Control Bribery in LAC country Based on 90 national, departmental, and municipal agencies covered in the Bolivia Public Officials Survey.

39. Governance and Anti- corruption Initiatives Case Studies from Guatemala, Honduras, Peru and Sierra Leone Francesca Recanatini and Colleagues WBI Global Governance Team June 13-14, 2003 www.worldbank.org/wbi/governance

40. 1. Establishment of Steering Committee 2. Diagnostic surveys + analysis 3. Draft of the NAS 4. Public dissemination + discussion 5. Revision of the NAS 6. Implementation by Government 7. Monitoring and Evaluation of NAS Challenge: poor governance and corruption WBI Technical Assistance Key Partnership: Government + Civil Society Country Implemented The process Experiential data from 3 sources on quality of governance

41. Challenge: poor governance and corruption 1. Establishment of Steering Committee 2. Diagnostic surveys + analysis 3. Draft of the NAS 4. Public dissemination + discussion 5. Revision of the NAS 6. Implementation by Government 7. Monitoring and Evaluation of NAS WBI Technical Assistance Key Partnership: Government + Civil Society Country Implemented A few Illustrations Guatemala Highly fragmented civil society Joint effort (CMU, SDV, WBI) to build consensus Sierra Leone Strong commitment (civil society, state, donors) => surveys and report within a year. Results will be used for Institutional Reform Loan Honduras CNA: report and strategy to newly elected gov (January 2001); integration of strategy in the 2002- 2006 government plan

42. Example 1: Honduras, 2001 Issues: Poor performance of the public administration Poor quality of public services High level of corruption Economic crisis and post-Hurricane Mitch Lack of trust in the government

43. Example 1: Honduras, 2001 Objectives: To promote foreign investment and growth in private sector To improve quality of the public sector To eradicate corruption and improve trust To promote transparency and participation

44. Example 1: Honduras, 2001 Actions taken: Establishment of National Steering Committee (NSC) and Technical Unit (24 + 3) by Government Decree (Feb. 2001). President: Cardinal Rodriguez NSC coordinated with donor community for financial and technical assistance to develop Anti-Corruption Strategy (Feb. – May 2001) Implementation of 3 diagnostic surveys (June – Sept.) Results discussed at the local and national level (Oct.) Agreement with all Presidential Candidates to implement the strategy if elected (October 2001)

45. Example 1: Honduras, 2001 Actions taken: Draft Strategy prepared by NCS using Diagnostic surveys and other relevant analytical studies (Nov. December 2001) Presentation of strategy to elected President (January 2002) New mandate to the NSC (February 2002) to design policy recommendations in the areas of: Institutional reform Legal reform Citizen participation and social accountability

46. Example 1: Honduras, 2001 Actions taken: Work Plan for 2002 Capacity building activities at the local level Awareness and education campaign Establishment of municipal centers for transparency Creation of a network of contacts for dialogue and dissemination of the NCS work Contribution to the 5-year public reform government plan

47. Example 2: Sierra Leone, 2001 Issues: Post-conflict country Poor performance of the public administration High level of corruption Low level of transparency Limited citizens ’ voice Distrust in government institutions

48. Example 2: Sierra Leone, 2001 Objectives: To promote transparency and participation To improve efficiency and quality of the public administration To curb corruption To promote investment and private sector growth

49. Example 2: Sierra Leone, 2001 Actions taken: Creation of a Steering Committee that includes government, civil society, CSA, media and donors Full and clear support of the government Development of a communication strategy to promote participation Use of local capacity where possible: active participation of CSA in the process

50. Example 2: Sierra Leone, 2001 Actions taken [cont.]: Selection of local consultant firm for the diagnostic survey implementation Data collected and report drafted Draft Governance and A-C Strategy ready by September Integration of Governance Strategy in Institutional Reform and Capacity Building Project Discussion of draft strategy in 4 regions

51. Example 3: Guatemala, 2002 Issues: Poor performance of the public administration Poor quality of public services High level of corruption Low level of investment and growth Lack of trust in the government

52. Example 3: Guatemala, 2002 Objectives: To increase trust in National Institutions To improve efficiency and quality of the public administration To curb corruption To promote investment and private sector growth

53. Example 3: Guatemala, 2002 Actions taken: Open, frank dialogue between government and civil society Organization of 2 national workshops (by government and civil society) to define the details of governance effort – task force structure and composition, methodology Creation of a network of contacts with practitioners from other countries

54. Example 3: Guatemala, 2002 Actions taken: Appointed Core Task Force that developed working plan and selected Technical Unit Coordination of efforts within country Organization of workshops and education activities Selection of consultants to implement the assessment – In progress Preparation of Communication Strategy – In progress

55. Additional success stories Ghana: report and strategy (2000), integration of results into Bank projects, dissemination at national and regional level Colombia: report (2001). Strategy in progress, collaboration between government and steering committee Bolivia: report (2001); country reform policy for Judiciary and procurement

56. Stages for Development of the National Anti-Corruption Strategy 1. Establishment of Steering Committee 2. Diagnostic surveys + analysis 3. Draft of the NAS 4. Public dissemination + discussion 5. Revision of the NAS 6. Implementation by Government 7. Monitoring and Evaluation of NAS WBI Technical Assistance Key Partnership: Government + Civil Society Country Implemented Alternative paths Peru Lack of political will => strategy never implemented Subsequent entry point: capacity building for monitoring with CMU and SDV Indonesia Weak demand for reform and damaged reputation => work with local partners + donors; support A-C diagnostics by local NGO; involvement of locals in design and implementation of projects San Paulo Different unit of observation: city. Partnership with TI to adapt tools and compile report Ecuador Lack of political will (2000) => report never released New government (2003) => A-C and governance key issues in the new CAS

57. In Progress Sierra Leone Zambia Guinea Benin Guatemala Mozambique

58. An example – Peru 2002 Issue: the government wanted to monitor progress in terms of Transparency of public administration activities Civil society “ participation ” and voice Quality of public services

59. Peru 2002, cont. Purpose of assessment: monitoring Focus of the assessment: Transparency Citizens ’ “ Participation ” and Voice Quality of public services What next?

60. Peru 2002 Purpose of assessment: monitoring Final users: government and civil society Key feature: Comparability across time Ability to identify progresses Type of information needed: agency- specific Approach: objective, and based on citizen ’ s feedback

61. Peru 2002 Conceptual dimension Transparency in the management of resources Quality of basic health and education services Quality of complaint and feedback mechanisms Empirical Tool Score card/Questionnaire to households Focus on agency-specific information Objective, experiential data Close-end questions

62. Peru 2002 Process/Capacity building: Partnership between WBI and with National Statistical Office on methodological issues Data and results publicly available Analytical dimension Monitoring of indices ’ performance over time Link between indices of performance and measures of poverty

63. Peru 2002 – Decisions taken To develop the following yearly indicators: Index of transparency and civil society participation Index of quality of public services To focus on households/users only To promote a partnership between the National Statistical Agency and citizens

64. Cross-country capacity building In Guatemala Honduras: on coalition building and process design Ecuador and Colombia: on process implementation In Zambia Sierra Leone: on process implementation and sustainability of reforms

65. To sum: a few salient lessons Governance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C Strategy Transparency and public dissemination of the results are key The approach must be participatory at each stage of the process

66. A Few Salient Lessons, cont. To unbundle corruption and institutional weaknesses allows to identify key areas for reform Quality control and use of rigorous analytical methods enhance the credibility of the results