2/16/2006Vinay Bhargava1 Mainstreaming Governance and Anti- Corruption in the CAS and Operations: A Guide for Country Teams with Country Applications By:

2/16/2006 Vinay Bhargava 1

Mainstreaming Governance and Anti-Corruption in the CAS and Operations:

A Guide for Country Teams with Country Applications

By: Vinay Bhargava

Director, Operations and International Affairs, EXT

Presentation at the Core Course on Public Sector Governance and Anti-corruption

February 14-16, 2006The World Bank


What do you think is the most important problem facing the world?

26%

12%

9%

8%

7%

6%

5%

4%

4%

4%

4%

2%

2%

2%

1%

Poverty; gap between rich and poor

Terrorism

Unemployment

Wars and conflicts

Economic problems

Environmental issues

Drugs and drug abuse

Corruption

Crime

HIV/AIDS and other diseases

Globalisation/fairer world trade

Religious fundamentalism

Educational issues

Human rights

Refugees

Source: Gallup International – Voice of the People 2005

CORRUPTION Decrease a lot, 5%

DK/NA, 7%

Increase a lot, 23%

Increase a little, 21%

Stay the same, 30%

Decrease a little, 14%

Decrease a little

Stay the same

Increase a little

Increase a lot

Decrease a lot

TI: Global Corruption Barometer 2005

Level of corruption in next three years expected to:

In a Voice of the People Survey by Gallup International the responses were:


OutlineFive Phases in Mainstreaming

Diagnose governance environment and causes/drivers of corruption

Choosing entry points and designing anti-corruption program suited to operating governance environment

Assessment of risks to the Bank and design of mitigation measures

Building coalition of external/internal supporters

Monitor progress, evaluate results and adjust


A quick review of the Bank’s Guidelines for

addressing governance issues in CASs

Upstream Review Significance of corruption/governance issues in the country Risks to country development and the Bank operations Proposed Bank assistance and risk mitigation approaches

Downstream CAS preparation and Review Diagnosis of corruption and governance issues Country’s strategy and programs for improving

governance Bank’s proposed assistance program and results Analysis of fiduciary, developmental, and reputational risks

to country and Bank and mitigation measures


Institutional Checks & BalancesParliament

Other accountability institutions

Institutional Checks & BalancesParliament

Other accountability institutions

Public Sector ManagementFinancial management reformsCivil Service reformsDecentralization of service delivery provisionLocal government and public expenditureImprove M & E capacity

Public Sector ManagementFinancial management reformsCivil Service reformsDecentralization of service delivery provisionLocal government and public expenditureImprove M & E capacity

Anatomy of Governance Elements in Ghana 2004-6 CAS Anatomy of Governance Elements in Ghana 2004-6 CAS Diagnosis: CPIA-3.0. Major structural issues. Risks: to country - high; to Bank - no mention. Country Vision: Strong good governance and accountability program – 1 of 5 PRSP Pillars.

Triggers:Triggers: To Stay in the Base Case: Progress on financial management, in particular on the 16 benchmarks (now 28 PEFA indicators) of HIPC Accountability Action Plan. To Move to the High Case: Progress on public sector including civil service reforms.

Civil Society Voice & ParticipationImprove capacity of civil society groups

Lending Instruments: PRSCs; M&E components; Community Empowerment loansAAA Instruments: WBI; Development Dialogue sessions; Outreach/media programs; CPAR;

CFAA; Community Empowerment study; PER; M&E assessmentResults and Performance Indicators: Well specified

CAS Objective:CAS Objective: Support to Improve Governance and Empowerment -3rd Pillar of CAS


A Review of 107 CASs produced in FY99-05 shows:

However quality issues: Weak diagnostics

Generic prescriptions

Selection criteria not clear

Risk-response not balanced

Risks to the Bank not fully assessed/mitigated

Success stories scarce

0102030405060708090

100

MentionACG

ACGTA/LEN

ACGTriggers

AssessACGRisks

FY99-01

FY02-04

FY05

Very good coverage…


Phase 1–Diagnosis: Assembling knowledge (Practical Tips)

Governance indicators (e.g., KKZ, CPIA, TI, etc.)

Political landscape and degrees of freedom for action

Summary findings of diagnostics and evaluations (AAA)

Government strategy—current and historical

Key anticorruption institutions (executive/non-executive branches)

Key anti-corruption champions (in and out of government)

Legacy issues: past donor assistance; media

On-going and recent Bank anti-corruption activities (last CAS)

Relatively high risk ministries/public enterprises


Causes: Opportunity to abuse power

A Bribe was directly asked for

0

10

20

30

40

50

60

70

80

90

100

Bo

livi

a

Cam

ero

on

Do

min

can

Eth

iop

ia

Gh

ana

Gu

atem

ala

Ind

ia

Key

na

Lit

hu

ania

Mex

ico

Mo

ldo

va

Nig

eria

Pak

ista

n

Par

agu

ay

Per

u

Ro

man

ia

Ru

ssia

Ser

bia

To

go

Ukr

ain

e

Per

cen

tag

e o

f res

po

nd

ents

Source: Transparency International Global Corruption Barometer 2005, http://www.transparency.org/policy_and_research/surveys_indices/gcb/2005


Causes: Ambiguous Laws and Regulations; Weak Rule of Law; and Crime

A bribe was offered to avoid a problem with the authorities

0

10

20

30

40

50

60

70

80

90

100

Bo

livi

a

Cam

ero

on

Do

min

can

Eth

iop

ia

Gh

ana

Gu

atem

ala

Ind

ia

Key

na

Lit

hu

ania

Mex

ico

Mo

ldo

va

Nig

eria

Pak

ista

n

Par

agu

ay

Per

u

Ro

man

ia

Ru

ssia

Ser

bia

To

go

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ain

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tag

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Causes: Low Income; Historical; Quality of Public Administration; Political Corruption

A bribe was offered for a service entitled to

0

10

20

30

40

50

60

70

80

90

100

Bo

livi

a

Cam

ero

on

Do

min

can

Eth

iop

ia

Gh

ana

Gu

atem

ala

Ind

ia

Key

na

Lit

hu

ania

Mex

ico

Mo

ldo

va

Nig

eria

Pak

ista

n

Par

agu

ay

Per

u

Ro

man

ia

Ru

ssia

Ser

bia

To

go

Ukr

ain

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Per

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tag

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f res

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ents



Phase 2: Designing an anti-corruption program suited to local conditions

A typical program includes the following elements:

Objectives and approach to assistance

Proposed entry points

Proposed mix of lending and non-lending instruments

Expected results (country and CAS/CSP performance indicators)

Proposed triggers (if any) associated with CAS/CSP scenarios


Phase 2-Objectives and Assistance Approach: Key Trade-Offs depending upon

situation

Supporting development imperatives vs. risks to the Bank

Balancing help to executive branch with help to non-government institutions of accountability

Selectivity of entry points for results and credibility vs. comprehensive approaches

Balancing lending vs. non-lending mix and sequence of assistance

Prerequisites and Selectivity in When, Where, How and How Much to lend in high risk situations


Phase 2: Choosing Entry Points

The range of entry points is very broad

Governance systems of actors, capacities, and accountability (supply-side and demand-side relationships) Many dimensions of good governance (a menu of entry points)

Criteria to use in selecting entry points


Governance Systems: Actors, Capacities and Accountability

Political Actors & Institutions• Political Parties

• Competition, transparency

Executive-Central Govt

Service Delivery & Regulatory Agencies

Subnational Govt & Communities

Check & Balance

Institutions• Parliament• Judiciary• Oversight institutions

Civil Society & Private

Sector•Civil Society

Watchdogs•Media

•Business Associations

Cross-cutting Control Agencies (Finance, HR)

Citizen

s/Firm

s

Citizens/Firms

Cit

izen

s/F

irm

s

Citizens/Firms

Source: Sanjay PradhanSanjay Pradhan Outcomes: Services,

Regulations, Corruption


Source: Sanjay PradhanSanjay Pradhan

Good Governance has many dimensionsGood Governance has many dimensions

Political Accountability• Political competition, broad-based political parties• Transparency & regulation of party financing• Disclosure of parliamentary votes

Checks & Balances• Independent,

effective judiciary• Legislative oversight

(PACs, PECs)• Independent

oversight institutions (SAI)

• Global initiatives: UN, OECD Convention, anti-money laundering

Citizen

s/Firm

s

Citizens/Firms

Cit

izen

s/F

irm

sCitizens/Firms

Decentralization and Local Participation• Decentralization with accountability• Community Driven Development (CDD)• Oversight by parent-teacher associations & user groups• Beneficiary participation in projects

Civil Society & Media• Freedom of press, FOI• Civil society watchdogs• Report cards, client surveys

Private Sector Interface• Streamlined regulation• Public-private dialogue• Extractive Industry

Transparency• Corporate governance• Collective business

associations

Effective Public Sector Management

• Ethical leadership: asset declaration, conflict of interest rules

• Cross-cutting public management systems: meritocracy, public finance, procurement

• Service delivery and regulatory agencies in sectors


Phase 2: Practical tips for choosing entry points

Whether and how effectively the proposed entry point is likely to:

Reduce opportunities for corruption

Increase risk of exposure and punishment

Increase severity of punishment

Reduce incentives for corruption

Increase public demand/pressure for reducing corruption

Strengthen accountability of public sector programs

Be feasible under the political landscape, institutional setting, and administrative capacity


Phase 2: Choosing the mix of assistance instruments for an entry point

Undertaking and disseminating ESW Grants for institutional capacity building WBI capacity building programs Sponsoring in-country dialogue events Fitting lending operations with anti-

corruption plans Free standing lending/TA operations in

support of governance improvement


Phase 2: Analysis of entry points and instruments chosen in 21 FY05 CASs

02468

101214161820

AAA TA Lending

Public SectorMangement

InstituionalRestraints

CompetitivePrivate Sector

Civil SocietyParticiaption

Politcalaccountability

Note the dominance of public sector management interventions and none in political accountability


Phase 3: Building partnerships

Expectation for cooperation among donors

Coalitions are more effective for improving governance

Instruments: joint or parallel (coordinated) activities with domestic and/or external partners for:

**Studies **Funding **Joint statements **TA projects **Coordination group **Public dialogue events**Mass communications **Dialogues with gov’t.


Phase 3: Build Coalition to shift balance of power between vested interests and reformers

Cultivate political support

Get the public behind reform NGOs Media Business Associations Donors Students and Academics

Cultivate internal supporters

Build on scandals and crisis


Phase 3: Involve institutions to limit corruption

Judiciary Legislature Decentralization with accountability Constitutionally independent accountability

institutions Anti-corruption agency Election Commission Ombudsman Supreme audit institutions Media

Disclosure laws, policies and regulations


Sectors and Institutions Most Affected By Corruption

4

3.7

3.6

3.5

3.4

3.4

3.3

3.2

3.2

3

3

2.9

2.9

2.8

2.6

Political Parties

Parliament/Legislature

Police

Legal system/Judiciary

Business/Private sector

Tax revenue

Customs

Media

Medial services

Utilities

Education system

Military

Registry and permit services

NGOs

Religious bodies



Phase 4: Assessing Risks to the Bank

Country team members to rate the extent (on a scale of 1 to 5, with 5 being highest risk situation) to which the state of corruption and governance can:

Undermine results/effectiveness of Bank assistance

Reduce the ability to mobilize resources for development

Raise concern in public that Bank assistance increases opportunities for corrupt officials

Result in corruption seeping into Bank financed projects and

Pose personal security risks to Bank staff and counterparts


Phase 4 : Risk Analysis and Mitigation Upstream-Categorize country by risks to the Bank

CPIA ,governance indicators, and country knowledge assessment

Country team self assessment validated by selected external interviews

Commonly used mitigation measures to reduce risks to the World Bank: Fiduciary controls (procurement and financial) and INT review Integrating social accounting mechanisms Integrating strong results monitoring framework Screening of new projects for corruption risks; preventive

measures Increasing transparency (disclosure, hotline) Strategic communications and partnerships Proactive sanctions enforcement


Phase 5: Monitor progress, evaluate results and adjust

Set clear and monitorable results

Push beyond Disclosure Policy to supply information to public that make activities transparent

Set reporting and independent auditing systems

Put in place social accountability mechanisms

Encourage beneficiary participation in planning/evaluation


Phase 5: Social Accountability Mechanism

Source: Social Development Paper No. 76. World Bank, 2004.


Thank you.

Documents

2/16/2006Vinay Bhargava1 Mainstreaming Governance and Anti- Corruption in the CAS and Operations: A Guide for Country Teams with Country Applications By: