Transcript Improving Governance & Public Administration: Frontier Areas of Reform

Improving Governance & Public
Administration:
Frontier Areas of Reform
Presented to:
Capacity Enhancement
Program on Controlling
Corruption & Improving
Governance for Thailand
September 6, 2008
The World Bank
Presented by:
Sanjay Pradhan
Director
PREM Public Sector
Governance
The World Bank
Sanjay Pradhan
Page 1
Governance & Corruption
Not the Same Thing!
Governance
Corruption
The manner in which the state acquires
and exercises its authority to provide
public goods & services – depends on
capacity & accountability relationships
among state & non-state actors
Use of public office for private gain
• Corruption is an outcome – a consequence of weak or bad
governance. Weak investment climate & poor service
delivery are other outcomes.
• Improving governance entails building a more capable,
accountable & responsive state
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Sanjay Pradhan
Page 2
Improving Governance
A Cross-Cutting Priority for Inclusive Growth
• Building a sound investment climate for growth
– Institutions for macroeconomic stability (e.g., fiscal responsibility legislation,
independent Central Banks)
– Streamlined regulatory system: business entry, tax system
– Independent, competent, trusted judiciary
– Physical and financial infrastructure: power, transport, finance
• Delivering better public services to empower the
poor
– Health, including curbing informal payments, leakages of drugs
– Education, including tackling absenteeism, leakages
– User participation and oversight in service delivery
• Managing public resources better
– Transparent & comprehensive budgets
– Transparent, competitive public procurement system
– Performance-based budgeting and human resource management system with
meritocracy and adequate pay
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Sanjay Pradhan
Page 3
Mechanisms to Improve Governance
Capacity, Transparency, Accountability
Citizens/Firms
Political Institutions
State
Formal Oversight
Institutions
• Independent judiciary
• Legislative oversight
• Independent
oversight (SAI)
• Global initiatives: UN,
OECD Convention,
anti-money
laundering
Executive
• Transparent budgeting
&
Patronag
procurement
e&
• Civil service meritocracy
& adequate pay nepotis
• User participation &
m
Accountability in service
delivery agencies
Civil Society & Media
• Free press, Right to
information
• Civil society watchdogs
Private Sector
• Contracting out
• Extractive Industry
Transparency Initiative
• Collective business
associations
administrati
ve
corruptionLocal Governments & Communities
• Decentralization with downward accountability
• Community Driven Development (CDD)
• Oversight by parent-teacher associations & user groups
Citizens/Firms
Citizens/Firms
• Political accountability, broad-based political
Capture
parties
• Transparency & regulation of party financing
Outcomes:
Services,
Investment
climate,
Corruption
Citizens/Firms
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Sanjay Pradhan
Page 4
Helping Countries Improve Governance
Different Entry Points Across Countries
Private Sector
Public
Management
Competitive
investment climate
Responsible private
sector
Public financial
management &
procurement
Administrative & Civil
Service Reform
Structure of Public
Sector
Decentralization
Creation of Arms-length
agencies
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Demand-side
Reforms
State oversight institutions
(parliament, judiciary, SAI)
Transparency & participation
(right to information, user
participation)
Civil society & media
Governance in Sectors
Transparency, participation, accountability in
service provision (health, education,
transport)
Sector-level corruption issues (EITI, forestry)
Sanjay Pradhan
Page 5
Evolution of Reforms in High-Income OECDs
Significant Foundations of Legitimacy in Place
Deepening basis for the legitimacy of the public service
1990s – Performance
Concern to make promises and deliver on them
Measurement of results and the use of measurements
for planning or accountability purposes
1970s - Responsiveness to elected officials and
political priorities
Frustration with political neutrality
Concern that the public service is an obstacle to political objectives
1950s - Equal access and equal treatment
Impartiality
Concern that employment in the public sector should be representative of society
19th century - Due process and institutional continuity
 Patronage & purchase of public positions
 Northcote-Trevelyan Reforms of 1854 in UK, following bureaucratic chaos in the Crimean War
 Driven by the law
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Sanjay Pradhan
Page 6
High-Income OECD Countries
• Performance-based budgeting: recent trends
– Shifting focus from input control to accountability for results
•
Example: UK Public Service Agreements (PSAs) with the Treasury: three-year agreements with objectives
& targets, published & monitored by Treasury
– Different degrees of performance information in high-income OECDs:
•
•
Presentational: performance information presented with budget for later discussion
Direct or formula-based performance link rare – Example: Korea, where ineffective programs get 10
percent automatic cut, concern about information quality & gaming
– Move to accrual accounting and performance & value-for-money audits
• Many different approaches towards performance management
–
–
–
Only in a few countries (UK, Denmark): agencies’ performance directly reflected in pay or performance bonus of
senior management
In other countries, use of individual performance agreements & appraisal systems to link organizational goals to
performance, influencing future career
Majority of OECD countries introduced performance-related pay (PRP) policies, but this has not been successful
(created resentment, promotion is better instrument for recruiting or retaining capable staff)
• Creation of arms-length agencies
–
–
Focused purpose, accountability with autonomy. Examples: UK Next Steps Agencies, Netherlands ZBOs
Coordination challenges with proliferation of agencies
• Demand-side reforms -- open government & E-government
Examples:
–
–
–
–
Freedom of Information legislation – with widespread utilization
Publication of service standards (e.g. citizen charters)
Consultative mechanisms (regulatory impact assessments)
Creation of ombudsman offices to hear redress
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Sanjay Pradhan
Page 7
MICs in Latin America
• Budget rules for aggregate fiscal discipline: “Fiscal
Responsibility” laws
• Reforms to improve budget performance
– Chile stands out as the country that has made results-based budgeting
– Progress in Brazil of withdrawal of autonomy and possible dismissal of Secretary)
– But less progress in Bolivia, Peru, Colombia
– Integrated Financial Management systems (IFMSs) successful in LAC in 1990s
• Human Resource Management
– Some success in meritocracy (Chile’s 2004 Reforms, Brazil 1995 Reform)
– Failure of meritocracy in clientelistic bureaucracies (Honduras, Bolivia, Peru)
• Significant decentralization: Fiscal and administrative, election of mayors
• Creation of arms length agencies in enclaves: e.g., Peru’s SUNAT, with
some improvement in performance, but questions of sustainability
• Major thrust in demand-side reforms
– Right to information legislation
– E-government – one-stop shops & e-procurement in Brazil & Mexico
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Sanjay Pradhan
Page 8
Latin America: Two Patterns of Public
Administration Reforms
• Institutionalized and sustained (Chile, Brazil, Costa
Rica)
– Where public sector operates on reasonably transparent and
formal lines, and public servants are hired on merit and
reasonably immune from political pressures, then reforms look
similar to those in high-income OECD countries
– Performance-based human resource management and budget
management driving efficiency improvements in service delivery
– These reforms are institutionalized and sustained
• Opportunistic reforms, but with risks of reversals
(Bolivia, Peru, Ecuador)
– Where patronage is more entrenched, reforms have flavor of
pilots or experiments
– More likely to be enclaved or disconnected from the rest of public
sector
– Flavor of opportunism with risk of reversal
– Need rule-based compliance as precondition for reforms
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Sanjay Pradhan
Page 9
‘Leapfrogging’ & Non-traditional Sequencing:
Achievements & Challenges
• Spectacular failures because of missing or inadequate
“prerequisite” organizational practices
- Kyrgyz, Mongolia, Argentina, Ecuador
• Limited number of clear examples – Middle-income countries
– sequencing from “prerequisite” to “mature” performancefocused systems
- Chile, Singapore
• Many countries chosen to “leapfrog” directly from patronagebased to performance-based management though “islands
of success” based on “performance-based” management
practices
- Central Banks in many countries
- Tax administration (SUNAT in Peru)
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Sanjay Pradhan
Page 10
Frontier Areas for Reform
• Ensure rule-based public administration practices
are in place:
– Internal audit & control
– Monitoring of merit-based recruitment, promotion, transfers
– Indicators for rule-based compliance: Public Expenditure
and Financial Accountability or PEFA indicators; Human
resource management (HRM) Actionable Governance
Indicators (AGIs)
• Strengthen ethical responsibility:
– Asset declaration requirements
– Codes of ethics for public officials
– Strengthen commitment to values and ethics in public service:
transformational leadership at individual & collective levels
– Coalitions of integrity to combat entrenched networks and
attitudes towards corruption
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Sanjay Pradhan
Page 11
Frontier Areas of Reform (cont.)
• Enhance availability of information
– Monitoring and posting of information on activities, outputs and results
– Right-to-Information (South Africa, India)
• Enhance participation & monitoring by civil society & media
–
–
–
–
–
Stakeholder consultations in policy development process
Bring state closer to people: Decentralization
Posting of information on organizational budgets, standards and performance
CSO monitoring of public sector performance (e.g., Bangalore Report Cards)
Media monitoring of asset declarations (e.g., Philippines)
• E-Government
– Russia: online tax payment reduced corruption and increased overall tax
compliance
– Bhoomi project in Karnataka, India computerized 20 million land records for
6.7 million farmers
– E-Procurement in Chile, Brazil, Mexico
• Multistakeholder coalitions for reform
– Needed to combat entrenched networks of corruption
– Examples: EITI, FLeG
– Global collective action to combat transnational corruption (e.g. StAR)
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Sanjay Pradhan
Page 12
E-Government & Voice for Procurement Reforms
Growing Trend in International Experience
Engaging CSOs: Philippines
E-Procurement: Chile
 All supplier companies
register, indicating areas of
business (e.g., IT,
construction, furniture)
 Public agencies submit
tenders through internet
 Legal foundation a mess with


 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 & contracts
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

over 100 laws and regulations
New omnibus law needed for
clarity and predictability in the
process
New law in 2003 with determined
efforts of reform minded public
officials allied with strong and
unified advocacy efforts of CSOs
to offset entrenched vested
interests
For credible enforcement:
requirement that all bids and
awards committees must have at
least one observer from a
certified CSO
Extensive training of CSOs now
under way
Sanjay Pradhan
Page 13
Civil Society Monitoring for Improved
Service Provision: Bangalore, India
100
94
96
92
85
Percent Satisfied
90
80
73
73
78
73
77
67
70
60
47
50
42
41
34
40
32
32
25
30
16
20
10
34
5
6
4
14
9
n/a
1
n/a
0
Agencies
1994
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1999
Source: Public Affairs Center, India
2003
Sanjay Pradhan
Page 14
Media Monitoring: “BIR [Tax Collector]
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
CAR MODEL
BENEFICIAL OWNER
Edwin Abella
BIR Reg'l Director,
Quezon City
Suzuki Grand
Vitara
Nissan Cefiro
Ditto
BMW
Lucien E. Sayuno
BIR Reg'l Director,
Makati City
Ditto
Nissan Patrol
BMW
Honda Accord
Mitsubishi L200
Honda-VCR
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Ditto
Danilo A. Duncano
BIR Reg'l Director,
Quezon City
Corazon P. Pangcog
Asst.Reg'l Director,
Valenzuela City
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
152 Road 8, Quezon City
Limtra Dev. Corp.
Zone 4, Dasmariñas, Cavite
Marie Rachel D. Meneses
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
Sanjay Pradhan
Page 15
Entrenched Corruption Networks:
The Case on Montesinos in Peru
Judiciary
Civil Society
International
Political Parties
Legislative
Branch
Alberto
Fujimori
1
State
(Bureaucracy)
Vladimiro
Montesinos
Media
Private
Sector
Military
Municipal
Government
Source: “Robust Web of Corruption: Peru’s Intelligence Chief Vladimiro Montesinos,” Kennedy School of Government Case
Program, Case C14-04-1722.0, based on research by Professor Luis Moreno Ocampo; Peru: Resource Dependency Network, 2000
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Page 16
Multistakeholder Coalitions for Reform
Philippines: Procurement Reform
Transparency and Accountability
Network (20+ member groups)
PAGBA &
AGAP
(w/in
Gov’t)
Procurement Watch:
Drew other civil society groups
into the advocacy efforts and
coordinated the activities
Local chambers of Commerce
(Private sector)
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Walang Ku-Corrupt Movement
(Youth)
CBCP
(Church)
Philippine Contractors
Association
(private sector – main
stakeholder)
Sanjay Pradhan
Page 17
Extractive Industries Transparency Initiative (EITI)
• Multi-stakeholder approach with mutual accountability
between government, private sector and civil society
• Independent review of payments made to the government by
oil, gas and mining companies and of revenues received by
government from those companies by a reputable third party
(i.e. audit firm)
• Publication in accessible form, oversight by civil society
EITI
• From EITI to EITI++
•
•
Award
of
Regulat
ion and
contrac
ts
and
license
s
monitor
ing
of
operati
ons
Collecti
on
Revenu
e
of taxes
and
distribu
tion
and
royaltie
s
manage
ment
Sound
Sustain
able
Project
s
Azerbaijan’s State Oil Fund – transparent, consolidated, audited. Focus
now upstream on contract transparency & downstream on budget
transparency & reporting
Kazakhstan’s investment in downstream public finance management
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Sanjay Pradhan
Page 18
Global Collective Action: Corruption is
not just a developing & transition
country problem
Percentage of firms that
pay public procurement
kickbacks by country of
origin of foreign direct
investment
Source: “Are Foreign Investors and Multinationals Engaging in Corrupt Practices in Transition Economies?” by Kaufmann, Hellman, Jones, in Transition, May-June 2000.
Note: Survey Question was “How often nowadays do firms like yours need to make extra, unofficial payments to public officials to gain government contracts?” Firms
responding “sometimes” or “more frequently” were classified as paying kickbacks. These figures are subject to significant margins of error and thus should be regarded as
approximate.
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Sanjay Pradhan
Page 19
The Stolen Asset Recovery (StAR)
Initiative
The Problem
 Cross-border proceeds from criminal activity,
corruption & tax evasion estimated to be $11.6 trillion per year— half from developing &
transition countries
 Bribes received by public officials from
developing & transition countries is
estimated at $20-40 billion
 TI’s estimates of stolen assets include:
Mohamed Suharto
(President of Indonesia 19671998) $14-35 billion
Ferdinand Marcos
(President of the Philippines
1972-1986) $5-10 billion
A Global Effort
StAR is a joint initiative with the
Bank & UNODC, launched in
September 2007. Partnerships are
being developed at the global and
country levels to:
 Persuade all jurisdictions to ratify &
implement the UNCAC
 Help developing countries recover
the existing stock of stolen assets
 Help countries undertake the
necessary institutional reforms that
would help deter future asset theft
 Advocate with financial centers to
lower barriers to recovery
 On a voluntary basis, offer expertise
to monitor the use of recovered
assets for development (e.g., Nigeria)
Sani Abacha
(President of Nigeria 19931998) $2-5 billion
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Mobuto Sese Seko
(President of Zaire 1965-1997)
$5 billion
*Source for estimates of former Presidents above: Transparency International Global
Corruption Report 2004. All sums are estimates of alleged embezzlement in US dollars.
Sanjay Pradhan
Page 20
Conclusion: Frontier Issues for Reform
• Strategic reforms to strengthen performance-orientation:
o Improving quality & protection of rule-based, meritocratic system
o Make strategically important agencies more performance-oriented
o Greater performance-orientation (performance budgeting, performance
management, M&E, indicators)
• Integrating transparency & ‘demand-side’ approaches in public
management
o More systematic e-government (one-stop shops, e-procurement)
o More proactive use of right to information and transparency reforms
o Citizen voice in policy making & implementation (consultations, report
cards)
• Strengthening ethical responsibility in public service
o Asset declaration, conflict of interest
o Strengthening commitment to public service at individual & collective
levels
o Coalitions of integrity to rebuild culture of public service
• Build multistakeholder coalitions for reform
o Collaborative governance arrangements
o Global collective action to combat transnational corruption
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Sanjay Pradhan
Page 21
Discussion
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Sanjay Pradhan
Page 22