Improving Governance and Combating Corruption: The Evolving World Bank Approach & The Role of E-Government

Presented to: InfoDev Day IFC Room L-103 Washington, DC June 7, 2006 The World Bank Presented by: Sanjay Pradhan Director Public Sector Governance Board The World Bank

Poor Governance and Corruption Pose Three Risks

Development Effectiveness Risk Poor governance and corruption will be impediments to development in general and in donor-supported projects Reputational Risk Fiduciary Risk That large amounts of aid in countries with corrupt leaders will tarnish donors’ reputation That donor resources will be not be used for the purposes intended The World Bank Sanjay Pradhan PREM Public Sector Governance Page 2

Overarching emphasis Help countries improve governance systems to achieve development goals & mitigate risks

Sanjay Pradhan PREM Public Sector Governance Page 3 The World Bank

Governance & Anti-Corruption Not the same thing!

Governance The manner in which the

State

acquires and exercises its authority to provide public goods & services Corruption Use of

public

office for

private

gain

•

Corruption accountability relationships in the governance system

• Poor •

delivery of services other outcomes of bad governance Governance is an outcome overarching framework – a consequence of the failure of and weak investment climate is the door to anticorruption, and the for donor engagement are broad The World Bank Sanjay Pradhan PREM Public Sector Governance Page 4

Strengthening Governance Systems: Balancing Supply & Demand

Supply-side Strengthen the state’s bureaucratic capability – leadership, skills, human resource & financial management systems – to deliver public goods and services Demand-side Strengthen accountability arrangements – elections, political parties, effective parliaments, independent judiciary, free press, vibrant civil society, accountable local governments – that enable citizens and firms to hold state institutions to account The World Bank Sanjay Pradhan PREM Public Sector Governance Page 5

Governance System

Actors, Capacities & Accountability Citizens/Firms

•

Political Governance

•

Political Parties Competition, transparency Formal

•

Oversight Institutions Parliament

• •

Judiciary Oversight institutions Executive-Central Govt Cross-cutting Control Agencies (Finance, HR) Civil Society & Private Sector

•

Civil Society Watchdogs

•

Media

•

Business Associations The World Bank Service Delivery & Regulatory Agencies Subnational Govt & Communities Citizens/Firms Outcomes: Services, Regulations, Corruption Sanjay Pradhan PREM Public Sector Governance Page 6

• • •

Transparency: Parliamentary votes Income & Assets Campaign contributions Formal

•

Oversight Institutions Parliament

• •

Judiciary Oversight institutions

• •

Transparency: Fiscal transparency (central & local budgets) Public Expenditure Tracking Surveys (PETS) The World Bank

Transparency Initiatives

Citizens/Firms Political Governance

•

Political Parties

•

Competition, transparency Executive-Central Govt Cross-cutting Control Agencies (Finance, HR) Service Delivery & Regulatory Agencies Subnational Govt & Communities Citizens/Firms

• • •

Transparency: Free press Freedom of information Citizen Report Cards Civil Society & Media Private Sector Interface

• • • •

Transparency: ‘Blacklisting’ firms bribing in public procurement E*procurement: transparency (web) & competition Financial status of Banks EITI; CoST Sanjay Pradhan PREM Public Sector Governance Page 7

How Can E-Government Help Government Systems & Performance

Greater transparency and less corruption

: Publishing information, publishing decision outcome, on line tracking of applications, automation to minimize discretion

Improved public sector management

: Treasury, IFMS, publishing financial data, modernizing/computerizing government infrastructure & processes

Convenient and affordable services to citizens

: one stop service centers for on-line delivery, Rural tele centers; land title, on-line municipal services

Private Sector Investment Climate

: Transparent & competitive procurement, business-registration, licenses, land, customs and tax agencies

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Chile’s Internet-based Public Procurement: Transparency and Competition

 All supplier companies register, indicating areas of business (e.g., IT, construction, furniture)  Public agencies submit tenders through internet  Automatic e-mail to all companies in selected area  Online information on name, position of official in charge  Online information on results: who participated, proposals made, scores received, who won bid, historical record of agency’s purchases and contracts

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The Powerful Role of Media in Transparency

“BIR Officials Amass Unexplained Wealth” By Tess Bacalla , Philippine Center for Investigative Journalism

Owner: Regional Director in the Bureau of Internal Revenue; forced to resign; currently facing corruption charges; other officials suspended, also facing charges The World Bank CAR MODEL Nissan Patrol Suzuki Grand Vitara Nissan Cefiro BMW BMW Honda Accord Mitsubishi L200 BENEFICIAL OWNER Edwin Abella BIR Reg'l Director, Quezon City Ditto Ditto REGISTERED OWNER Sulpicio S. Bulanon Jr.

1817 Jordan Plains Subd., Quezon City (listed address of Abella in his SALs) Merrick Abella (son of Abella) 24 Xavierville, Loyola Heights, Q uezon City Elizabeth S. Buendia -asa, Quezon City Limtra Dev. Corp.

Zone 4, Dasmari ñ as, Cavite Lucien E. Sayuno BIR Reg'l Director, Makati City Ditto Danilo A. Duncano BIR Reg'l Director, Quezon City Corazon P. Pangcog Asst.Reg'l Director, Valenzuela City Ditto Marie Rachel D. Mene c/o Metrocor and Holdings, G&F, Makati City Daniel Anthony P. Duncano 2618 JP Rizal, New Capital Estate, Quezon City Alberto P. Pangcog (husband) B2 L23 Lagro Subd., Quezon City Alberto P. Pangcog 9 Ricardo St., Carmel 1 Subd., Quezon City Ditto Sanjay Pradhan PREM Public Sector Governance Page 10

         

E-government: Tackling corruption & delivering better services

  Citizen Service Centers & One-Stop Shops (Bahia, Brazil; e-Seva in AP, India; online Motor Vehicles Departments) E-procurement (Brazil, Bulgaria, Chile, Korea, Mexico, Philippines, Romania, others) Land titling (Karnataka, India: 18m titles issued) New Business Registration (Jamaica, Jordan, China) Online counseling for teacher transfer (Karnataka, India) Online customs (70 countries) Online municipal services (Seoul, Korea) Property registration (AP, Kanartaka, Maharastra, India) Railway reservations (India: 5 billion passengers/year) Tax payment (Mexico, Singapore, India, Chile) Trade facilitation (Tunisia) Treasury and integrated financial management systems countries) (50

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E-Government, Transparency & Efficiency:

Country Brazil Chile China India, Andhra Pradesh Examples of savings Type of government application Number of days to process before application Number of days to process after application Registration of 29 documents Taxes online Several days 25 days 20 30 minutes per document, one day for business licenses 12 hours Online application for 32 business services Valuation of Property Land Registration 2-3 months for business license Several visits to multiple offices for filings Few days 7-15 days 10-15 days for business license Several seconds for routine filing for companies 10 minutes 5 minutes India, Karnataka India, Gujarat Updating Land Registration Obtaining Land Title Certificate Interstate Check Posts for Trucks Customs Online 1-2 years 3-30 days 30 minutes 30 days for approval, request completed on demand 5-30 minutes 2 minutes Jamaica 2-3 day for brokers to process entry 8 days to release cargo 3-4 hours Philippines Customs Online Singapore Issue of Tax Assessments 12-18 months The World Bank

Source: Subash Bhatnagar and Arsala Deane (World Bank, 2003).

3-5 months Sanjay Pradhan PREM Public Sector Governance Page 12

Lessons learned: e-government vs better government

Ways to fail Ways to go Consider and promote e government as a government-centered effort Focus the e-government process on users (citizens & businesses) Replace every paper-based process by an electronic process Offer ‘ministry-specific’ e solutions Use e-government as a tool to foster changes in attitudes and thinking, and as an instrument for reforms Rally government-wide efforts around common procedures and standards (back office), and an ‘all-of-government’ approach (front office)

Source: This slide is taken from a presentation by Bruno LANVIN CITPO/GICT, The World Bank, PREM Week, Washington DC – 26 April 2005

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Formidable Political Obstacles to Reform:

Montesinos’ Corruption Network in Peru Judiciary Civil Society International Legislative Branch Political Parties 1 Vladimiro Montesinos Alberto Fujimori State (Bureaucracy) Media Private Sector Municipal Government

Source: “Robust Web of Corruption: Peru’s Intelligence Chief Vladimiro Montesinos,” Kennedy School of

The World Bank

Peru: Resource Dependency Network, 2000

Military Sanjay Pradhan PREM Public Sector Governance Page 14

Forging Coalitions for Reform

Philippines: Procurement Reform Transparency and Accountability Walang Ku-Corrupt Movement Network (20+ member groups) (Youth) PAGBA & AGAP (w/in Gov’t) Procurement Watch: Drew other civil society groups into the advocacy efforts and coordinated the activities CBCP (Church) Local chambers of Commerce (Private sector) The World Bank Philippine Contractors Association (private sector – main stakeholder) Sanjay Pradhan PREM Public Sector Governance Page 15

Summary

 

Successful implementation requires changes in incentives, attitudes and government-wide systems – and focus on users.



E-Government can advance the agenda on governance reform, transparency, anticorruption. But it is not a panacea.

Situate reforms in a broader framework of governance and anticorruption: focus on supply and demand for reform



Focus on managing the political economy of reforms

Source: Based on Subash Bhatnagar and Arsala Deane (World Bank, 2003).

The World Bank Sanjay Pradhan PREM Public Sector Governance Page 16

The World Bank

Discussion

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Why Should We Focus on Governance & Anticorruption?

The

quality of governance

,

anti-corruption, is crucial for including

economic growth and poverty reduction

Improving governance is essential for

scaling up development assistance

Poor governance and corruption pose major

fiduciary and reputational risks

to donors

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Governance & Anticorruption

Key Elements of World Bank Strategy Ensure that Country Assistance Strategies address developmental, reputational, fiduciary risks Support international efforts to improve governance & reduce corruption The World Bank Help countries that request the Bank’s support to improve governance & reduce corruption Prevent fraud and corruption in World Bank financed projects Sanjay Pradhan PREM Public Sector Governance Page 19

Good Governance has many dimensions …

Citizens/Firms Political Governance

• Political competition, broad-based political parties • Transparency & regulation of party financing

Formal Oversight Institutions

• Independent judiciary • Legislative oversight • Independent oversight (SAI) • Global initiatives: UN, OECD Convention, anti-money laundering

Public Sector Management

• Public finance management & procurement • Civil service meritocracy & adequate pay • Service delivery and regulatory agencies in sectors

Civil Society & Media

• Free press, FOI • Civil society watchdogs

Private Sector Interface

• Streamlined regulation • Extractive Industry Transparency Initiative • Collective business associations

The World Bank Decentralization and Local Participation

• Decentralization with downward accountability • Community Driven Development (CDD) • Oversight by parent-teacher associations & user groups

Citizens/Firms Outcomes: Services, Regulations, Corruption Sanjay Pradhan PREM Public Sector Governance Page 20

… The Bank operations focus only on some

Citizens/Firms Political Governance

• Political competition, broad-based political parties • Transparency & regulation of party financing

Formal Oversight Institutions

• Independent, effective judiciary • Legislative oversight (PACs, PECs) • Independent oversight (SAI) • Global initiatives: UN, OECD Convention, anti money laundering Primary focus of WB operations in governance

Effective Public Sector Management

• Public finance management & procurement • Civil service meritocracy & adequate pay • Service delivery and regulatory agencies in sectors

Civil Society & Media

• Freedom of press • Freedom of information • Civil society watchdogs • Report cards, client surveys • Participatory country diagnostic surveys

Private Sector Interface

• Streamlined regulation • Public-private dialogue • Break-up of monopolies • Extractive Industry Transparency • Corporate governance • Collective business associations

Local Participation & Community Empowerment

• Decentralization with accountability • Community Driven Development (CDD) • Oversight by parent-teacher associations & user groups

Citizens/Firms The World Bank Outcomes: Services, Regulations, Corruption Sanjay Pradhan PREM Public Sector Governance Page 21