Slide 1 Evaluation of Policy Initiatives: Transparency and Accountability Presented to: Anti-Corruption Policy: Can International Actors play a Constructive Role? Bellagio, June 13-17, 2011 Presented by: Francesca Recanatini Senior Economist PREM Public Sector Governance World Bank

Slide 2 Outline  Setting the stage – a few illustrations  Framing the problem  An alternative approach  Lessons learnt and remaining challenges (for local and international actors)

Slide 3 Setting the stage…  In a low-income, democratic country in Latin America, top political leaders paid and accepted bribes from an intricate network, spanning all aspects of state and society. Through the network, the leadership controlled judiciary, legislature, and media.  Oligarchs in a country in northern Africa have divided the economy into lucrative monopolies, through government supported restrictions on competition. Civil society is weak.  The President of a resource-rich country in Central Asia accepted millions of dollars in bribes, placing them abroad in a major financial center. There are few checks on executive power.

Slide 4 Setting the stage, cont.  An African country has signed a peace agreement after a decade of conflict. Formal institutions (especially local ones) are largely absent. Capacity is limited. Power is highly concentrated – a few leaders control allocation of land and awarding of public contracts for reconstruction. Nepotism and patronage are widespread.  In a low-income, democratic country in Africa, businesses finance political parties in exchange for preferential treatment. Petty corruption is widespread. Efforts to combat corruption stop prior to elections, out of fear that party financing will be cut off.  A chronically under-funded military in a country in East Asia resorted to self-financing, establishing commercial enterprises and foundations. Generals enrich themselves by sitting on boards.

Slide 5 Emerging “features” of the “corruption” challenge heterogeneous  In practice, an heterogeneous challenge Different country’s reality (political, institutional and cultural) Different forms of corruption Different level of skills and resources  It involves diverse actors and stakeholders (local, national and international)  It requires a significant re-allocation of powers and rents

Slide 6 How to address this challenge? The emerging policy should…  Be country specific  Ensure and sustain coordination and collaboration among different actors  Have both short term and a medium term vision  Promote local capacity building  Monitor progress and adjust to new circumstances

Slide 7 Selecting an approach Official request from Government Yes Sector-specific engagement with government GAC Diagnostic Surveys Approach No Selective engagement with alternative actors/ players

Slide 8 A possible approach: Governance and A-C Diagnostic Surveys  A participatory process to identify governance challenges and build local capacity  Key features: Medium/long term partnership between multiple actors for design and implementation Mechanism to facilitate feedback from different stakeholders (focus groups) Multiple sources of data (from households, firms and public officials) focused on experience Rigorous technical implementation Local institution implements

Slide 9  What are the likely outcomes? Unbundled evaluation of corruption – administrative, state capture, bidding, theft of public resources, purchase of licenses, nepotism Identification of weak and strong institutions Assessment of the impact and costs of corruption on different stakeholders  To what extent has this approach helped shape public sector reforms? Only when paired with political will, donor coordination and (true) medium term vision Lessons learnt

Slide 10 Lessons learnt, cont.  What are the advantages and disadvantages of this approach? Pros: Greater local capacity, consensus and ownership that can ensure sustainability of reform process; “south-south” knowledge sharing (Costa Rica, Zambia, Mozambique, Haiti) Cons: Time consuming and costly; challenging to coordinate many different actors, especially international ones; unforeseen political changes  How do we “reconcile” aggregate indicators with national assessments? Two sides of the same coin with different objectives. Key => the two approaches complement each other

Slide 11 Lessons learnt, cont.  Who should be involved in measuring? It depends on the country reality. Our experience: the country as a whole. But donors, INGOs can play a very important role (Sierra Leone, Mozambique, Haiti). NSOs should also be involved to promote sustainability (Peru, Paraguay)  How can we help various stakeholders make appropriate use of these tools? Local focus, local capacity building, participation, and learning by doing (Paraguay, Peru, Sierra Leone)

Slide 12 WB Governance Resources on the Web  Governance and Anti-corruption: ~menuPK:34480~pagePK:34370~theSitePK:4607,00.html ~menuPK:34480~pagePK:34370~theSitePK:4607,00.html  Public Sector Group: ECTORANDGOVERNANCE/0,,menuPK:286310~pagePK:149018~pi PK:149093~theSitePK:286305,00.html ECTORANDGOVERNANCE/0,,menuPK:286310~pagePK:149018~pi PK:149093~theSitePK:286305,00.html  Governance and Anti-corruption (WBI): COR/0,,menuPK: ~pagePK: ~piPK: ~theSit ePK: ,00.html COR/0,,menuPK: ~pagePK: ~piPK: ~theSit ePK: ,00.html  Governance Diagnostic Surveys Country Sites: surveys.html surveys.html  Courses and Surveys: Governance Diagnostic Capacity Building:  Actionable Governance Indicators Website: (internal) (external) Additional material available upon request:

Slide 13 THANK YOU! Q & A

Slide 14 Addendum

Slide 15 The role of governance assessments Will and Political Leadership for Institutional Reforms On governance Strategy and Action Plan Governance assessment: - Identification of severe obstacles - Vulnerability of each institution - Identification of priorities Empirical Tools and Data Capacity building and coalition building

Slide 16 Country Diagnostic Results Extent of corruption, (Selected Countries ‘03-’05)

Slide 17 Corruption imposes barriers to households to access basic services, Corruption imposes barriers to households to access basic services, Sierra Leone 2003 Sierra Leone Roads Transport Authority

Slide 18 Corruption increases inequality (Sierra Leone, 2003)

Slide 19 Corruption acts as a regressive tax, and small firms pay more in bribes, Corruption acts as a regressive tax, and small firms pay more in bribes, % of gross monthly revenue paid in bribes, as reported by managers

Slide 20 Mechanisms to participate to the policy process % of households reporting to use the following channel to participate in the policy process (Sierra Leone, 2003)

Slide 21 Bribes to win contracts with Government, ( as reported by public officials, )

Slide 22 % of Public Officials that said irregularities/(misappropriations) are frequent Public funds are mismanaged by agency (as reported by Public Officials, Sierra Leone, 2003)

Slide 23 Agency-level Indicators  Using responses from public officials  Public officials are employees of each agency  Public official’s responses are re-scale (from 0 to 100) and then aggregated by agency using factor analysis technique  0 always meaning the lowest level of quality of governance, corruption, access or service performance

Slide 24 Governance Indicators IndexDefinition AUDIT MECHANISMS Percent of cases where the decisions on personnel, budget and service management are subject to external and/or internal audits. MERITOCRACY Percent of cases the decisions on personnel management issues are based on professional experience/merit/performance or education levels. ENFORCEMENT OF RULES Percent of cases where policy/guidelines/regulations in the personnel and budget management are well supervised and strictly enforced MISSION Index determining the degree of understanding of agency's objective and own tasks and responsibilities by public officials within the institution QUALITY OF RULES Percent of cases where rules/guidelines/regulations in the personnel and budget management are formally written, simple, clear, stable, not adding too many administrative steps.

Slide 25 Governance Indicators, cont. IndexDefinition RESOURCES Percent of cases where physical, financial and human capital resources of the agency are adequate. VOICE An index representing the existence of consumer feedback and complaint mechanisms. WAGE SATISFACTION Percent of employees very satisfied or somewhat satisfied with their wages and benefits. TRANSPARENCY Percent of cases where the decisions on personnel, budget, procurement, and service management are done transparently. CORRUPTION Corruption index representing the average of five standardized corruption indicators: administrative corruption, bribery over regulatory/legal decisions, bribery over public contracts, corruption in personnel management and corruption in budget management.

Slide 26 Governance Indicators, cont. IndexDefinition CORRUPTION IN PERSONNEL MANAGEMENT Corruption index representing the percentage of cases where decisions on personnel management are based on unofficial payments (job purchase). CORRUPTION IN BUDGET MANAGEMENT Corruption index representing the frequency within the institution of irregularities/diversion of funds or any other type of budget abuse. CORRUPTION IN CONTRACTS Corruption index representing the frequency within the institution of bribes in the contracting process. LEGAL/REGULATORY CORRUPTION Corruption index representing the extent of bribes to alter regulations and legal decisions within the institution. ADMINISTRATIVE CORRUPTION Corruption index representing within the frequency of bribes to obtain public services at the institution.

Slide 27 SouthNorthEastWestSIERRA Prov. AreaLEONE Overall corruption Corruption in budget Corruption in public contracts Corruption in personnel Accessibility for poor Audit Mechanisms Enforcement of rules Politicization Quality of rules Resources Transparency Citizen voice Meritocracy Governance and corruption indicators by province

Slide 28 Governance Indicators, by agency (Public officials from 20 agencies, Guinea 2004) The indicators above take values between To interpret them please keep in mind that: -The higher the value of the governance indicator the better the quality of that dimension. -The higher the value of the corruption index, the more severe the problem.

Slide 29 Sector Level Diagnostic Surveys: Key questions (e.g. transport)  Institutional structure of the sectors under study How does transport work in Mauritania? What needs to happen at the implementation level?  Possible vulnerabilities Internal to the sector: transporters, officials and regulations. External to the sector: linked to banking sector? International issues?  Mechanisms of poor governance Is it difficult to get a trucking license? Are bribes required to cross borders with freight? Do civil servants have necessary capacity? Are rules clear?  Costs of poor governance What price do transporters and customers pay to ‘facilitate’ antiquated or inadequate processes? What is the mark up on contracts due to fraud? How many roads are narrower than they should be because of corruption?  Who are the major players and what are their policy needs? Potential entry points for reform? Who plays a role in the reform process? Who can be a potential deal breaker? How can we understand the political landscape to ensure policy outcomes are politically viable?

Slide 30 Methodological Approach Sector Level Governance Assessment Tools & Info Desk Study: history, sector structure, current context In-Depth Interviews 3 Surveys (Experience Based) Audit & Project Data Cross-Sector Team (PREM, WBI, SDV,PDS, Procurement) Country Ownership Political Economy Assessment Team Capacity Needs Transparent Process Local Partnership Gov’t + Civil Society Donor Partnership w/Active Donors Partnership w/ Bank Country Team Broad Peer Review Process Needs Outcomes: 1. Governance Baseline 2. Agency Specific Indicators 3. Public Dissemination & Participatory Policy Process Iterative process: 8-12 months

Slide 31 Innovative features  Sector-specific focus: Apply methodology and solutions to country and sector realities  Mixed methods: Focus groups & In-depth Interviews Surveys (households, businesses & civil servants) Desk study Project cost data  Active participation of civil society and government to contribute to policy making process.  Close collaboration with donors’ colleagues.  Active links to on-going sector projects WB transport and port projects EU transport ministry aid project