Sahr J. Kpundeh GAC-in-Projects Focal Point AFTOS Introduction to concepts and definitions of governance & corruption: Analytical Perspectives

Outline 1 1. What is governance? 2. Why does governance matter? 3. How can we use governance perspectives in practice? 4. What is corruption ? 5. How should we approach governance and corruption issues?

What is governance? No universally accepted and agreed definition “A multifaceted concept encompassing all aspects of the exercise of authority through formal and informal institutions in the management of the resource endowment of a state” - Huther and Shah (2003). “The manner in which public officials and public institutions acquire and exercise the authority to provide public goods and services, including the delivery of basic services, infrastructure, and a sound investment climate” – World Bank GAC Strategy (2007)

GAC Agenda: Key Themes 3 Governance & Corruption are not the same thing!Governance is about how a country manages its resources for development Good governance is associated with faster growth and more pro-poor development outcomes Poor governance has the opposite effects, and provides greater scope for corruption to occur Corruption is an outcome – a consequence – of poor governanceBoth poor governance and corruption reduce development effectiveness

Political Actors Political competition, broad-based political parties Transparency & regulation of party financing Citizens/Firms Decentralization and Local Participation Decentralization with downward accountability Community Driven Development (CDD) Oversight by parent-teacher associations & user groups Civil Society & Media Free press, FOI Civil society watchdogs Private Sector Interface Contracting out Extractive Industry Transparency Initiative Collective business associations Public Sector Management Transparent budgeting & procurement Civil service meritocracy & adequate pay Accountability for performance in service delivery agencies Outcomes: Services, Investment climate, Corruption Formal Oversight Institutions Independent judiciary Legislative oversight Independent oversight (SAI) Global initiatives: UN, OECD Convention, anti-money laundering Source: World Bank Governance as a System: Many institutions/relations

The Three Key Principles of Good Governance 5 Openness to public scrutiny, clearness & visibility in decision-making process in a government Various measures of public information disclosure & access (freedom of info. acts, admin. procedure acts, “Gvt in the sunshine” acts, etc.) Transparency Probity, efficiency & effectiveness in resource management, public goods & service delivery Gvt’s answerability & responsibility to explain its actions & responsiveness to people’s needs & values Internal in terms of proper use of resources External in terms of responsiveness to clients Accountability Citizens’ engagement & empowerment in decision making process. Everyone has fundamental rights to be recognized & its voice needs to be heard in policy making & implementation process. Considered to improve efficiency, effectiveness & sustainability of public service delivery and development projects. In terms of “voice”, inputs to project design, and oversight of implementation Participation

What is corruption? 6 Poor governance: Lack of transparency, weak accountability, monopoly, inefficiency, lack of participation etc. Corruption: “the abuse of public office for private gain” and a symptom of failed governance Two-Way Causality

What is corruption? 7 Corruption State capture: Influence of powerful economic interests in the public and private sectors in the formation of laws, regulations, policies through illegal provision of private benefits for public officials Grand corruption: “The theft or misuse of vast amounts of public resources by state officials – usually members of, or people associated with, the political or administrative elite…”. Nepotism & patronage: Favoritism shown to narrowly targeted interests by those in power such as granting favors, giving contracts or making appointments to office in return for political support Petty, administrative corruption : Private payments and other benefits to public officials in connection with the implementation of government policy and regulations Adapted from Shaw (2007) and Campos (2008)

How should we approach governance & corruption issues? 8  Getting system, principles, and process right at three level of governance, including: Setting standards, collecting basic information on performance & creating incentives for good performance – Lewis and Pettersson (2009) Improving supply-side (state institutions) & demand-side (non-state institutions/actors) of governance in the health sector  It’s important to remember there is no one-size-fits-all approach. Context matters as much as contents.

What’s really new with GAC? 9 Naming the problem Digging Deeper Applying the “TAP” Principles

If I ignore it, will it go away? 10  Who cares?  Why do they care?  What are the implications for the Bank? “Invading Armies can be resisted, but NOT an idea whose time has come.”

The Starting Point: GAC at the Country Level 11 The new CGAC Approach “Work from the bottom up” Engage the whole team Identify the GAC impediments to development & potential entry points Incorporate in the Country Assistance Strategy

GAC Agenda at the Country Level 12  Public Financial Management Reforms Budget and fiscal management reform – including enhanced parliamentary oversight Reform of procurement, financial management, public sector accounting and auditing  Civil Service Reform  Legal and Judicial Reform  “Voice for the People” (w/Gov’t approval)  Establishment of Anti-Corruption Agencies

From Country Level to Sector & Project Levels 13  TAP Principles at the country level: “Right to Information” “Rule of Law” “Social Accountability”  Does this stuff “trickle down”? Not automatically, but it can be helpful  Country conditions set the stage for work on GAC issues at the sector and project level  Country Team has key role to play in cross-sector coordination & knowledge sharing about both GAC issues in the country and “what works” in mitigation

The GAC Agenda at the Sector & Project Levels 14 Focus first on GAC Risks at the sector level using “value chain analysis” Drill down to understand the underlying factors impeding service delivery (Political Economy Analysis) Develop plans for improving governance and reducing corruption at sector level (including communications strategy and TAP-related tools and approaches) Reflect (as appropriate) in project design (“Smart Project Design” and Anti-Corruption Action Plans)

Emerging Good Practices 15 These approaches must be tailored to the specific country/sector/project circumstances Risk mitigation focusing on both “supply side” and “demand side” (including social accountability tools) IL Reform will enhance focus on risk identification Innovative new approaches are emerging in risk assessment, risk mitigation and project supervision Rely on existing Bank processes: No new policies, procedures, or standards!

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