Francesca Recanatini Leader, AC Thematic Group World Bank
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1 Francesca Recanatini Leader, AC Thematic Group World Bank XXV Villa Mondragone International Economic Seminar, University of Rome Tor Vergata, June 25-27, 2013
2 Useful Definitions 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 is an outcome a consequence of weak or bad governance Governance reform helps combat corruption by addressing its underlying causes 2
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6 In practice, a 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 within the country 9
7 Need to design a strategy that: focuses on incentives is country specific and pragmatic allows to monitor progress and to adjust to new circumstances includes both short term and medium term measures fosters and sustains coordination and collaboration among different actors promotes local capacity building (citizens, civil servants and youth) 10 H S
8 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 Focus on monitoring results and impact
9 % citizens reporting bribes used frequently to obtain public services % of public officials reporting frequent purchase of positions in their institutions % of public officials reporting frequent public funds mismanagement Country Diagnostic Results Extent of corruption, (Selected Countries 03-05) 0% 15% 30% 45% 60% 75% 90% Sierra Leone(2003) Guatemala(2004) Zambia(2003) Paraguay(2005) Mozambique(2004) Madagascar(2005)
10 Ecuador(2000) Guatemala(2004) Honduras(2001) Paraguay(2005) Peru(2001) Guinea(2004) Ghana(2000) Sierra Leone(2003) Zambia(2003) Mozambique(2004) Confidential Small Medium Large
11 Corruption imposes barriers to households to access basic services, Sierra Leone 2003 Sierra Leone Housing Corporation (SALHOC) Sierra Leone Roads Transport Authority (RTA) Cost of Corruption: discouraged users by service Public health services Sierra Leone Housing Corporation high income 0% 10% middle income 20% 30% low income Sierra Leone Roads Transport Authority Public education services Municipal and District Councils 0% 5% 10% 15% 20% 25% Proportion of head of households reporting that they decide to not conduct procedures with these institutions because they couldn't pay the unofficial costs 0% 10% 20% 30%
12 Public funds are mismanaged by agency (as reported by Public Officials, Sierra Leone, 2003) Min. of Health Min. of Agriculture S.L Police Min. of Justice Min. of Education Min. of Social Welfare Min. of Local Govt. Min. of Finance Para-statals Others Nat. Commissions Min. of Information Min. of Development Min. of Defence % of Public Officials that said irregularities/(misappropriations) are frequent
13 Lessons learnt 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
14 What are the advantages and disadvantages of this approach? Pros: Greater local capacity, consensus and ownership that can ensure sustainability of reform process; southsouth 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
15 Using responses from public officials Public officials are employees of each agency Public official s responses are rescale (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
16 Governance and corruption indicators by province South North East West SIERRA Prov. Prov. Prov. Area LEONE 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
17 Audit Mechanisms Enforcement of Rules Quality of Rules Politicization Resources Transparency Citizen Voice Wage Satisfaction Ministère de la justice Ministère de la Sécurité Ministère de l Administration et de la Décentralisation Ministère des Finances Ministère de l Enseignement Supérieurs et Recherche Scientifique Ministère de l Urbanisme et Habitat Ministère de la Santé Publique Service Communal Service Sous Préfectoral Ministère de la Communication Ministère de la Jeunesse et Sports Ligue Islamique Nationale Ministère de l Agriculture Ministère de l enseignement Pré Universitaire Ministère de la Fonction Publique Organisation Non Gouvernementale (ONG) Entreprise Micro Finance Ministère de l Energie, Mines et Environnement Whole Country 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.
18 Legal and Regulatory Corruption Corruption in Personnel Corruption in Budget Administrative Corruption Corruption in Public Procurement UDIT (0.048)* (0.055)*** (0.061)*** (0.056)** (0.055)** ERIT (0.040)*** (0.045)*** (0.051)** (0.046)*** (0.045)** PENNESS (0.054)** (0.062) (0.069)*** (0.063)*** (0.061)** bservations djusted R- quared Weighted SUR regressions with regional Fixed Effects Standard errors in parentheses * significant at 10%; ** significant at 5%; *** significant at 1% 28
19 2SLS OLS Total Corruption Total Corruption Internal Organization (0.7649)* (0.0419)*** Obs First Stage Regression Average Internal Organization Internal Organization Obs. 909 (0.1279)* Weighted SUR regressions with regional Fixed Effects Standard errors in parentheses * significant at 10%; ** significant at 5%; *** significant at 1% 29
20 Governance and Anti-corruption: Anti-Corruption Authorities Portal: World Bank Public Sector Group: TPUBLICSECTORANDGOVERNANCE/0,,menuPK:286310~ pagepk:149018~pipk:149093~thesitepk:286305,00.html Governance Diagnostic Surveys Country Sites: Actionable Governance Indicators Website: (internal) (external) Additional material available upon request: 30
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22 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?
23 Tools & Info Desk Study: history, sector structure, current context In-Depth Interviews 3 Surveys (Experience Based) Audit & Project Data Iterative process: 8-12 months Outcomes: 1. Governance Baseline 2. Agency Specific Indicators Sector Level Governance 3. Public Dissemination Assessment & Participatory Policy Process Cross-Sector Team (PREM, WBI, SDV,PDS, Procurement) Country Ownership Political Economy Assessment Process Needs Transparent Process Local Partnership Gov t + Civil Society Donor Partnership w/active Donors Partnership w/ Bank Country Team Broad Peer Review Team Capacity Needs
24 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
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