Governance Reform:Bridging Monitoring & Action

Framework Patterns Reforms

April 28th.2011

The National Governance System Framework

Governance and corruption are not the same thing.

Governance Trajectories

Some Governance IndicatorsTypes of Indicators

Broad Intermediate Specific

Dimension ofGovernance

Bureaucratic capability

State Effectiveness (KK)

Quality of budget and financial management (CPIA 13);

Quality of public administration (CPIA15)

PEFA public financial management performance indicator set

State oversight institutions

Voice and accountability (KK);

Rule of Law (KK);Executive constraints

(Polity IV)

Property rights and the rule of law (CPIA12)

Global Integrity Index

Governance and poverty reduction outcomes

Control of corruption (KK);

Quality of the business environment and service provision (DB&ICS)

Two Approaches to Measuring Governance

Broad and Aggregated: Broad measures to measure governance at more aggregated levels. Help reveal systematic patterns – and basis for monitoring trends over time.

Specific and Disaggregated: Specific measures of quality of key governance subsystems, including using “actionable indicators” to benchmark and track reforms.

Way Forward: Match the governance indicator with the purpose of measurement and monitoring; intensified investment in specific indicators

Governance patterns: East Asia

Patterns: Middle East and North Africa

Governance patterns: Africa

Patterns: East Europe and Central Asia

Patterns: Latin America

REFORMS

• Strengthening Bureaucratic Quality

• Strengthening Checks and Balances

• Initiating Reform from the Front-line

Strategy – Strengthening Governance Institutions I

Five Common Themes

1. Understand the politics: why are a country’s governance strengths and weaknesses what they are? (Kenya vs Sierra Leone; Bangladesh)

2. Focus narrowly, embrace momentum3. Many opportunities for improving transparency – be proactive everywhere4. Monitor progress, using specific indicators5. Initiate dialogue on path to long-run sustainability

PFM operations perform satisfactorily regardless of governance starting

point, but ACSR operations are successful in stronger settings

All projects

CPIA (Q16)

< 3.0

CPIA (Q16) from 3.0 to 3.5

CPIA (Q16)

Greater or equal to 3.5

No. of projects

Projects with

Satisfactory or better

(%)

No. of projects

Projects with

Satisfactory or better (%)

No. of projects

Projects with

Satisfactory or better (%)

No. of projects

Projects with Satisfactory or better (%)

PFMPFM 39 85% 15 87% 18 83% 6 83%

ACSRACSR 24 58% 11 36% 9 78% 3 100%

Trends in PFM can be monitoredNet Change in HIPC Tracking Indicators, 2001-2004

2

6

1

6

7

Decline in categories

Decline in categories

No change Improvementin 1-2

categories

Improvementin or morecategories

8

7

6

5

4

3

2

1

0

Improving PFM – A Platform ApproachCambodia – Sequence of Platforms

Enables more accountability for performance management

Enables a basis for accountability

Enables focus on what is done with money

Platform 1A credible budget delivering a reliable and predictable resource to budget managers

Platform 1A credible budget delivering a reliable and predictable resource to budget managers

Platform 2Improved internal control and public access to key fiscal information to hold managers accountable

Platform 2Improved internal control and public access to key fiscal information to hold managers accountable

Platform 3Improved linkage of priorities and service targets to budget planning and implementation

Platform 3Improved linkage of priorities and service targets to budget planning and implementation

Platform 4Integration of accountabilityand review processes forboth finance andperformance management

Platform 4Integration of accountabilityand review processes forboth finance andperformance management

Broad Activities

• Integration of budget (recurrent & capital budgets)

Strengthen macro and revenue

Forecasting

Streamline spending processes

Broad Activities

Re-design

Budgeting

Classification system

Initial design of FMIS for core business processes

Strengthen external audit and define internal audit function

Broad Activities

Re-design budget cycle (e.g. MTEF)

Pilot program based budgeting & budget analysis

Further fiscal

Decentralization

Broad Activities

Full design of FMIS

Develop IT

Management

Strategy

Initial design of asset register

Strengthening administrative capability Some initial lessons

• Ambitious administrative reforms work only in those few countries with strong political commitment and coherence

• Latvia: EU accession market competitive pay, meritocracy, comprehensive administrative restructuring

• Tanzania: pay decompression; performance-based agency reforms

• Even in these countries, implementation was difficult

• In most countries, a more modest administrative reform agenda is more likely to get results: example of Albania

• Pay reform and meritocracy targeted at top 1300 civil servants• Underpinned by independent appeals body• Beneficiaries successfully resisted political push-back

Building the Demand SideA constellation of checks and balances

Broader International Community

Civil Society

Media

Judiciary

Legislature

Subnational governments and autonomous oversight agencies

Executive

Strengthening Justice Three emerging lessons

Incentives for effective judicial system:•Incentives of citizens and firms to use•Incentives of politicians to refrain from intervening•Incentives of judges to carry out their rolesJudicial reform requires enabling institutional environmentReform needs to address political obstacles

Successful implementation remains elusive

Independence without accountability results in poor performance

• ECA: independent courts, w/o accountability, result: court corruption

Decentralization and Local Governance1. Effective decentralization needs:

– Clear allocation of responsibilities between central and local governments

• Assignment of service provision responsibilities• Assignment of fiscal resources (including local tax base)• Central fiduciary and performance oversight over local

– Capacity of local governments (and central counterparts– Downward accountability between local governments and citizens

=> High risk of institutional limbo

2. Community Local governmentOpportunity for cumulative gains?

Governance --the Many Meanings of ‘Demand-Side’ Reform

Extent of Co-operation with State Institutions Required for Effectiveness

Marginal Some Significant

Balance between state and civil society counter-parts

Mostly state

Capacity building for:Judiciary;Parliament ; Supreme audit institution

Mixed Foster transparency and participation in policymaking and service provision

Support for:Freedom of Information Act;Asset Declaration;Enabling legal framework for civil society organizations;Enabling business environment;

Mostly civil society

Work with civil society advocacy and watchdog organizations;Foster development of competitive private sector

Support media reformSupport community-based initiatives

Strengthening checks & balances through transparency

• Strengthening national-level transparency• Supply: Building statistical capacity - Marrakech action plan for statistics• Information availability: Freedom of Information Act; support for media• Participatory poverty reduction strategies (PRSPs)

• Strengthening participation and transparency• Citizen Scorecards in Bangalore• Rajasthan India: leverage FOIA to compare official data with actual

experiences of hospital patients and food rationing recipients• Philippines: citizen monitoring of textbook distribution• Tanzania: local community tracking of health and education spending• Transparency & competition in public procurement, e-procurement

Governance and Poverty Reduction: Orchestrated Imbalance

A Governance Virtuous Spiral?

Performance of service provision and regulatory agencies agencies

Performance of central governance agencies

Engaging citizens, firms and communities

Governance from the Front-line I

Getting the Priorities Right