Transcript Strengthening Institutions - Home

Strengthening Institutions
David Nguyen-Thanh
GIZ, Sector Program Public Finance,
Division Good Governance and Human Rights
Presentation held at the Annual Meeting of the Practitioners
Network of European Development Cooperation
Luxembourg, April 20, 2012
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I. Institutions, Ownership and
the role of Aid
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Why care about institutions?
 Institutions: different concepts
 Narrow: public organisation (e.g. ministry of
education)
 Broad: rules, norms (North, Williamson)
 Institutions are believed to play an important role in
promoting development outcomes
 Plausible assumption
 helpful to use impact chain to assess role of
institutions in specific contexts
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Reduced poverty
Example: Complex Theory
of Change for Resource
Governance
Risks +
Activities
Sustainable growth
Strengthened regulatory
& policy environment
Increased FDI
New policies and regulations
Reduced corruption
Assumption
better natural resource
governance
Assumption
Ex.: Reports are
understood by
broad public
Publication and disemination of
EITI reports
Risks +
Activities
More inclusive and better
informed debate & dialogue
Risks + Activities
Assumption
EITI Validation reports produced
Risks +
Activities
Assumption
Ex.: Trainings
reach relevant
actors
Government, companies and civil
society engage in EITI process
Assumption
Ex.: New laws are effectively
implemented and adhered to
Greater public awareness
Risks +
Activities
Assumption
Identification of financial
discrepancies
EITI compliance achieved
EITI reconciliation reports
produced
Assumption
Strengthened stakeholder
capacity to engage in EITI
process, eg by trainings
Recovery of financial
discrepancies
Risks +
Activities
Assumption
Timely and regular information
on revenue flows
Risks +
Activities
EITI activities managed and
coordinated
Risks +
Activities
… so far so good!
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…where does aid come in?
 If there is sufficient ownership, then countries may
‚build‘ institutions and eventually achieve desired
outcomes …
… so the dev‘t challenge of strengthening institutions
boils down to a financing problem. Really?
 Evidence suggests that lack of ownership may be
the problem
 Why?
 Political economy: vested interests, neo-patrimonial
state
 collective action problems – Booth (2011)
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Can development partners contribute to
ownership?
 Booth (2011): third party (e.g. development
partners) may be best fit to unlock ‚bad equilbria‘
(not conducive to long-term interest) which
involved stakeholders may not overcome due to
lack of trust, awareness or mechnisms of
cooperation
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…which suggest for the role of
development partners:
 Identify the nature of problems incl. collective
action problem (political-economy analysis;
capacity assessments)
 Stand ready to
 engage as honest broker (multi-stakeholder
dialogue)
 initiate trust-building activities, and
 suggest ways of establishing forms of cooperation
that will be mutually beneficial in the long-term
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II. Busan and the Building Block
‚Effective Institutions‘
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Busan and the Building Block ‚Effective
Institutions‘
 A new consensus on supporting and strengthening
institutions and policies to ensure they are
effective in delivering or enabling the delivery of
public services was endorsed.
 Effective public institutions are pivotal and
indispensable for development in Partner Countries.
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What is meant by effective institutions?
Effective Institutions:
 Enable effectively the delivery of public services.
 Catalyze the leveraging of financial and other
resources for sustainable development.
 Capitalize on the opportunities created by the
changing global landscape.
 Improve accountability and fight corruption through
effective internal and external oversight.
 Are based on solutions specifically tailored to the
country context and local processes.
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Busan: A new approach to supporting and
strengthening institutions and policies
1. A focus on factors that make reforms and
capacity development happen: e.g. PFM, political
economy, dom resource mobilization, parliaments
2. Partner-led joint assessments of country
institutions
3. Country-based partner-led evidence-gathering on
institutional performance and capacity
development to inform decision making,
accountability, transparency and accessibility.
4. Systematic regional and global knowledgesharing, including south-south, international and
regional organizations to facilitate learning
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III. Strengthening institutions and
the GIZ approach: the case of
Ghana
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The GIZ approach to Capacity Development
„Strengthening partners – developing potential“
 Political and social frameworks are essential for
effective and sustainable reforms
 Any country must be able to organize complex
processes on their own to help itself in the long run
Therefore the GIZ:
 Supports people to obtain expertise
 Advises governmental agencies to make their
management/production structures more efficient
 Advises governments to anchor goals and change
processes in laws and implement them
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Ghana: Process Landscape Financial Governance
Steering processes
MDBSCore
CoreGroup
Group
MDBS
HOM/HOC meeting
PFM Sector
Working Group
Steering Committee
on Audits of
Selected Flows
Steering Committee
on GIFMIS and GRA
Reform
GRA Reform
Implementation
Committee
REVENUE
Tax Policy
DomesticTax
Rev.
Customs
Non-Tax
Revenue
Grants and
Loans
Divestiture
of Public Assets
EXPENDITURE
Budget
Regulations
MTEF
Budget
Planning
Budget
Implementation
Budget
Monitoring
Public
Procurement
Improving
Improving
Public
Financial
Public
Financial
Mangament
to
Mangament
implement to
implement
GSGDA
GSGDA
DOMESTIC ACCOUNTABILITY
Parliamentary
Debate of Budget
External
Audition
Parlamentary
Oversight (Audits)
EITI
Public
Debate on Budget
Support processes
German Embassy
GIFMIS
Automatisation
of
GRA
Macroeconomic
Forecast
Training
KfW
GIZ
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Ghana: GIZ support (GFG Programme)
Good Financial Governance Programme
I.
Tax Policy
Tax Policy
Unit
MOFEP
II. Budget Pillar
Revenue Pillar
Tax
Administration
Ghana
Revenue
Authority
III. Domestic
Accountability Pillar
Donor
Coordination
Budget
planning &
execution
Parliament
PFM Sector
Working
Group
MOFEP,
different
Divisions
Public
Accounts
Committee
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EITI & Oil and
Gas
GHEITI,
GIMPA, Parl.
Centre
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Ghana: GIZ/SECO support to tax
administration reform (1/2)
Challenge:
 Low tax ratio due to out-dated / inefficient tax
administration procedures
Objective:
 Ghana Revenue Authority (GRA) is established and
the integration of the former Internal Revenue
Service and the former Value Added Tax Service into
a domestic tax department is successful
- Increased transparency
- Responsiveness of public administration
- Effective service delivery
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Ghana: GIZ/SECO support to tax
administration reform (2/2)
Approach:
 GRA support embedded in comprehensive support
programme => good financial governance
 Technical support (short/long-term experts)
 Long-term commitment and presence on the ground
 Sound mix of technical expertise, change
management and facilitation of multi-stakeholder
dialogue
 Close cooperation with other partners, e.g. IMF,
Crown Agents
 Delegated cooperation with Switzerland (SECO)
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GRA Impact Chain
Reduced dependence on external
funding
impacts
Increased self-financing
capability and economic growth
Outcomes/outputs
inputs
Relieved burden on citizens
and enterprises
More transparent and efficient
taxation
processes,
activities
More efficient revenue
management
LTO contributes 60% of total tax
revenue
Improvement in Doing Business
Paying Taxes
Transparency of taxpayer
obligations and liabilities
increase to B
Information about ongoing and
status of reform process
Adoption of LTU
evaluation report
Develop an effective
Infrastructure
Segmentation of
taxpayers
Development of HR and IT
strategy
Run human resources
management campaigns
Assistance to Oil and Gas
Taxation Issues
Run revenue integration and
modernisation campaigns
Technical and financial input from
partners
Sensitization of GRA
staff
Organization of workshop to
sensitize civil society
Facilitate interactive media
programmes
Improve of customer service
delivery
Technical and financial support
to GRA
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Ghana: Preliminary results
 Increase in domestic revenue
 Enhanced efficiency of tax collection (e.g. Large
Taxpayer Office)
2009
2010
2011
Tax revenues in
million GH¢
Tax/GDP ratio
4,625
5,951
8,706
12.6%
13.3%
LTO share
51,7%
(2008)
52%
15.3% /
15.9%
58,7%
Source: MoF, IMF
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Lessons Learnt
 Long-term commitment of German government to
support country-led efforts towards good financial
governance
 …Builds trust and enhances understanding of
reform needs / bottlenecks and politically feasible
approaches
 Support centres around comprehensive financial
governance programme (avoid silo solutions,
exploit linkages)
 Reform progress and results are not primarily
determined by funding; but: certain degree of
funds for TA/TC necessary
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Conclusion (1/2)
 GIZ/SECO support in Ghana suggests that it is
possible to support country ownership of
strenghtening institutions
 Support most likely to be meaningful if directed
towards capacity development efforts of partner
country (use window of opportunity)
 While quick wins are possible: reforms take time
 Much more to be understood about political
economy of reform design / implementation
(„capacity assessments“)
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Conclusion (2/2)
 Strenghtening institutions: two dimensions:
 Contents-wise: support to key institutions, such as
PFM, procurement, revenue administration, anticorruption agencies etc
 Mode-of-delivery: TA/TC support to help
stakeholders overcome obstacles (lack of trust,
experience to engage in forward-looking
processes)
 support necessarily is political in nature and not
technocratic
 requires re-thinking of some donor support
practices
 Busan focus on institutions excellent opportunity!
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Thank you very much!
contact:
[email protected]
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