1. The World Bank Governance & Anti-Corruption Diagnostics Institutional Governance Reviews (IGRs) Conference on Making Macro-Social Analysis Work for Policy Dialogue Wednesday, May 17, 2006 Doris Voorbraak PREM Public Sector Governance

2. The World Bank Page2 Doris Voorbraak PREM Public Sector Governance Governance and Corruption Not the same thing! State The manner in which the State acquires and exercises its authority to provide public goods & services publicprivate Using public office for private gain Governance Corruption Corruption is an outcome – a consequence of the failure of accountability relationships in the governance system Poor delivery of services and weak investment climate are other outcomes of bad governance

3. The World Bank Page3 Doris Voorbraak PREM Public Sector Governance Original Objective of the IGR Diagnostic The Bank began conducting IGRs in 1999 with two key objectives: Tracing the institutional roots of poor government performance and Providing options for operational design and country strategy –Surveys and quantitative measures to assess governance performance were developed for analysis of reform recommendations

4. The World Bank Page4 Doris Voorbraak PREM Public Sector Governance The Prohibition Era 19801990199519961997199819992000200120022003 WDR on Institutions 1982 JDW Cancer of Corruption Speech (10/96) State in a Changing World (97) Diagnostic/Data/ Monitoring Tools Public Financial Management and Procurement Administrative & Civil Service Reform Civil Society Voice, Transparency, & CDD State Capture Legal & Judicial Reform Broadening & Mainstreaming The World Bank has come a long way in a brief period of time TI CPI (5/95) Anti- corruption Strategy (97) Governance Strategy (00) 1st set of firms Debarred from WB (99) Formalization of INT (01) Strategic Compact (97) O.P. Mainstreaming AC in CAS (99) Governance Pillar - CDF (98) Internal AC unit created in WB (98) Gov/A-C Diagnostics start (98) 20042005 Board endorses Integrity Strategy (04) PSG Implementation Update (02) PDW Bank President (05) IGRs developed

5. The World Bank Page5 Doris Voorbraak PREM Public Sector Governance IGRs are one of several governance/anti-corruption diagnostics Citizens Government Officials Enterprises Civil Society Private Sector The State PET QSDS PER CFAA CPAR Score Cards IGR BEEPS INV. CL. surveys

6. The World Bank Page6 Doris Voorbraak PREM Public Sector Governance Experience and On-Going IGRs RegionCompletedOn-Going AFRBurkina Faso, Nigeria, Benin, DRC, Cape Verde, Chad, Cameroon, Ethiopia, Tanzania, Zambia Burkina Faso, Ethiopia, Guinea ECAArmenia, Romania EAPIndonesia LACArgentina, Bolivia, Eastern Caribean, Paraguay Argentina, Bolivia, Colombia, Mexico, Haiti MNARegional, EgyptGaza SARBangladesh, PakistanBangladesh, Nepal Source: Business Warehouse and Public Sector staff.

7. The World Bank Page7 Doris Voorbraak PREM Public Sector Governance IGRs represent a range of products, and were used for different purposes IGRs cut across many sectors and issues: Social sectors – e.g., to lay the groundwork for health and education reforms (Argentina) Political patronage and governance in complex coalition environments. These reviews generated debates on the various incentives for reform. (Armenia, Bangladesh, Bolivia and Peru) Service delivery – to look into service delivery under decentralization (DRC, Burkina Faso and Guinea)

8. The World Bank Page8 Doris Voorbraak PREM Public Sector Governance Challenges IGRs have covered a broad array of governance issues –Traditional technical PSG and insufficient attention to political constraints IGRs have grown in length and cost IGRs risk to become stand-alone products separated from operations More attention is needed for political economy issues Debate on inclusive internal/external use in view of sensitivities

9. The World Bank Page9 Doris Voorbraak PREM Public Sector Governance Governance Framework Actors, Capacities and Accountability Political Actors & Institutions Political Parties Competition, transparency Executive-Central Govt Service Delivery & Regulatory Agencies Subnational Govt & Communities Formal Oversight Institutions Parliament Judiciary Oversight institutions Civil Society & Private Sector Civil Society Watchdogs Media Business Associations Cross-cutting Control Agencies (Finance, HR) Citizens/Firms Outcomes: Services, Regulations, Corruption

10. The World Bank Page10 Doris Voorbraak PREM Public Sector Governance Governance Framework When Accountability Breaks Down Outcomes: Services, Regulations, Corruption Political Actors & Institutions Political Parties Competition, transparency Executive-Central Govt Service Delivery & Regulatory Agencies Subnational Govt & Communities Formal Oversight Institutions Parliament Judiciary Oversight institutions Civil Society & Private Sector Civil Society Watchdogs Media Business Associations Cross-cutting Control Agencies (Finance, HR) Citizens/Firms State Capture Patronage & Nepotism Administrati ve Corruption

11. The World Bank Page11 Doris Voorbraak PREM Public Sector Governance Political Accountability Political competition, broad-based political parties Transparency & regulation of party financing Disclosure of parliamentary votes Formal Oversight Institutions Independent, effective judiciary Legislative oversight (PACs, PECs) Independent oversight institutions (SAI) Global initiatives: UN, OECD Convention, anti- money laundering Citizens/Firms Decentralization and Local Participation Decentralization with accountability Community Driven Development (CDD) Oversight by parent-teacher associations & user groups Beneficiary participation in projects Civil Society & Media Freedom of press, FOI Civil society watchdogs Report cards, client surveys Private Sector Interface Streamlined regulation Public-private dialogue Extractive Industry Transparency Corporate governance Collective business associations Effective Public Sector Management Ethical leadership Public finance management & procurement Civil service meritocracy & adequate pay Service delivery and regulatory agencies in sectors Good Governance has many dimensions Outcomes: Services, Regulations, Corruption

12. The World Bank Page12 Doris Voorbraak PREM Public Sector Governance Political Accountability Political competition, broad-based political parties Transparency & regulation of party financing Disclosure of parliamentary votes Formal Oversight Institutions Independent, effective judiciary Legislative oversight (PACs, PECs) Independent oversight institutions (SAI) Global initiatives: UN, OECD Convention, anti- money laundering Citizens/Firms Local Participation & Community Empowerment Decentralization with accountability Community Driven Development (CDD) Oversight by parent-teacher associations & user groups Beneficiary participation in projects Civil Society & Media Freedom of press Freedom of information Civil society watchdogs Public hearings of draft laws 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 Effective Public Sector Management Ethical leadership Public finance management & procurement Civil service meritocracy & adequate pay Service delivery and regulatory agencies in sectors The Bank operations focus only on some Primary focus of WB operations in governance Outcomes: Services, Regulations, Corruption

13. The World Bank Page13 Doris Voorbraak PREM Public Sector Governance Unbundle governance – What are the specific governance problems of concern? –Corruption? If so, where is it concentrated? Health? Education? Financial sector? Procurement? Grand corruption and capture? Administrative corruption? –Poor delivery of public services? If so, which one? –Weak credibility for private investment? Analyze underlying dynamics – What are the specific drivers of poor outcomes? –Powerful interests purchasing state policy for private interest –Lack of citizen voice to influence service delivery –Weak checks and balances to constrain arbitrary action Sequence reforms and donor strategies – How to support drivers of change? –Analyze and support drivers of change –Develop appropriate sequencing of public management and checks & balances –Balance supply side interventions with demand side pressures –Rely on multi-donor partnerships, based on mandate & comparative advantage Governance An Overall Operational Approach

14. The World Bank Page14 Doris Voorbraak PREM Public Sector Governance Purchasing of public positions Source: Kaufmann, Pradhan, Ryterman (1998) Percent of public officials believed to have purchased their positions Cutting-edge diagnostics and research helps to identify entry points Public expenditure tracking (Uganda) Source: Reinikka and Svensson (2004) Public info campaign (1999) Control of corruption, 2004: World map Colors are from Dark Red - the worst bottom 10th percentile rank to Dark Green - the best above 90 th percentile. Source: Governance Matters IV: Governance Indicators for 1996–2004, D. Kaufmann A. Kraay, and M. Mastruzzi (2005) 5 10 15 20 25 30 Proportion of firms affected by capture of … HungaryEstoniaRussiaUkraine Parliamentary Votes Presidential Admin. Decrees Civil Court Decrees The Challenge of State Capture

15. The World Bank Page15 Doris Voorbraak PREM Public Sector Governance Moving forward Increased demand for governance/political economy and anti-corruption diagnostics which are problem- driven, can be applied flexibly and relatively quickly Country Governance Assessment - linked to strategy workshops with country-teams in advance of a CAS or to address major strategic challenge Country anti-corruption assessments: diagnostics to assess corruption/judiciary risks and mitigation strategies, with a focus on high-risk countries Governance of service delivery diagnostics: instruments to identify key bottlenecks and reform options

16. The World Bank Page16 Doris Voorbraak PREM Public Sector Governance Q&A