Frederick H. Konteh Team Leader. Acknowledgements

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1 Acknowledgements This study was made possible through the generous financial support of the Department for International Development (DFID) as part of its continued assistance to the Government and people of Sierra Leone in the fight against corruption and the overall governance restructuring and reform programme. The study team is also immensely grateful to the overall technical assistance provided by the World Bank through the expertise of Francesca Frecanatini and her assistant; their special input into the Executive Summary is particularly acknowledged. We would like to express our profound gratitude to members of the Steering Committee for the Governance and Corruption Survey for their encouragement, support and patience without which this project could not have seen a successful conclusion. In particular, the chairman of the Committee and the Co-ordinator of Governance Reform Programme, Mr. Emmanuel Osho Coker s tremendous show of understanding and co-operation always saw the team through several hitches and constraints especially in times when it was difficult to meet set deadlines for specific tasks. We also owe special thanks and gratitude to Prof. Bob Kandeh, director of Statistics Sierra Leone (SSL), also member of the Steering Committee for providing us with the SSL s sampling frame from which we derived our EAs for the survey. The active facilitating role played by Mr Haakawa Moseray as Project Officer was also quite helpful. Mr Emmanuel A. R. Gaima, initially part of the study team, did not only contribute to its design but also continued to provide technical advice especially on issues pertaining to governance. Special thanks also go to Mr Taziff Koroma who helped to proof-read the draft of this report. Several other people also made invaluable contribution to the successful conduct of the survey for which the study team remains quite grateful. The names of these various individuals, especially those who served as enumerators and supervisors cannot be mentioned. However, our colleagues who served as regional co-ordinators deserve a special mention Mr Samuel J Braima, Mr Dante Bendu and Mrs Elizabeth Sam - as well as Mr F.A.S. Walker who was always available as technical back stopper and Mr Patrick Gbondo the Administrative Assistant. Frederick H. Konteh Team Leader CMDA Study Team 1. Frederick H. Konteh 2. Abdulai Jalloh 3. Andrew Allieu i

2 Table of Contents Page Executive Summary 1 Chapter One: General Introduction Background Justification Objectives Sampling Scope and Structure of Report 32 Chapter Two: Governance Analysis Key Findings on Governance and Public Sector Performance Major Factors Influencing Personnel Recruitment, Management and Reward System Analysis of Public Sector Management System and Employees Understanding of Institutional Objectives, Roles and Responsibilities Budget and Procurement Public Officials Assessment of the Quality of Service Delivery Determinants of Enhanced Service Delivery and Reform Measures Service User Experiences and Views on Service Delivery. 57 Chapter Three: Corruption and State Capture Key Findings on Corruption Detailed Analysis of Bribery and Unofficial Payment Detailed Analysis of Government and Institutional Efforts at Combating Corruption Detailed Analysis of the Process and System of Reporting on Corruption.. 88 Chapter Four: Conclusions and Policy Recommendations Conclusions General Policy Recommendations.. 92 Appendixes: Volume Two ii

3 Executive Summary Corruption and poor governance are by no means novel issues in Sierra Leone. Over the past decade researchers and practitioners have documented the deterioration of state institutions and the rise of corruption. A DFID report, conducted in 2000 using focus groups and perceptionbased household interviews, highlighted the widespread and long-standing prevalence of corruption at all levels of society in Sierra Leone 1. Furthermore, a more recent World Bank study on public sector reform 2 suggested, the public sector is characterized by a centralized organization, improper internal incentives, limited human and institutional capacity, and a failure to reach the poorest citizens. Figure A 3 provides a summary of the trend of six governance dimensions between 1996 and While in some governance dimensions the country has improved greatly since 1996, such as for example, Voice and Accountability and Control of Corruption, on others - Rule of Law and Government Effectiveness, the deterioration is extremely significant. This endemic and prolonged diffusion of misgovernance has been linked to the persistent economic downturn and political instability of Sierra Leone. Despite its abundant natural resources and highly educated human resources within the public sector, Sierra Leone has received the lowest value of the United Nations Human Figure A: Governance Indicators (Sierra Leone) Voice and Accountability Rule of Law Regulatory Quality Political Stability Government Effectiveness Control of Corruption percentage of countries that rank worse The above chart depicts the percentile rank of Sierra Leone on each governance indicator. Percentile rank indicates the percentage of countries worldwide that rate below Sierra Leone (subject to margin of error). For instance, the Voice and Accountability bar in 2002 has length 28.8%. The interpretation is the following: an estimated 28.8% of the countries rate worse and an estimated 71.2% of the countries rate better than Sierra Leone in this indicator. The governance indicators presented here reflect the statistical compilation of responses on the quality of governance given by a large number of enterprise, citizen and expert survey respondents in industrial and developing countries, as reported by a number of survey institutes, think tanks, non-governmental organizations, and international organizations. Higher values imply better governance ratings. Countries' relative positions on these indicators are subject to margins of error. Consequently, precise country rankings should not be inferred from this data. Source: Governance Research Indicators, based on data in D. Kaufmann, A. Kraay and M. Mastruzzi, 'Governance Matters III: Updated Indicators for Two are the key findings worth mentioning from this comprehensive report: corruption is widespread (94% of households report corruption is rampant) but the government is doing very little about it (almost 60% of households report that the government s efforts at fighting corruption are very limited) 2 Garnett and Lopez, Governance Research Indicators, based on data in Kaufmann, D., Kraay, A. and Mastruzzi, M. Governance Matters III Updated indicators for

4 Development Index. The decade-long civil war, during which the public sector suffered incalculable losses both in terms of human skills and infrastructure, clearly played a role in this declining trend. However, as Sierra Leone emerges from years of civil war and conflict, there is the possibility to reform government institutions and improve governance in the country. The purpose of this report is to provide the Government of Sierra Leone with updated information on the status of governance and corruption in Sierra Leone. This effort is fully supported by the international donor community and builds on past government efforts. The authorities have attempted since 1999 to re-build its public sector and address the issue of poor governance. Among the key reforms immediately implemented in the aftermath of the civil war, Parliament enacted the Anti-Corruption Act (ACA) in February The Act established the Anti-Corruption Commission (ACC), with the mandate to investigate instances of alleged or suspected corruption referred to it by any person or authority or which has come to its attention, whether by complaint or otherwise and to take such steps as may be necessary for the eradication or suppression of corrupt practices 4, which includes the submission of cases for prosecution to the Attorney General s Office. The activities of the ACC are often reported in the local newspapers and have helped increase awareness on corruption issues and citizens rights. Following the ACC s formation, the Department for International Development (DFID) commissioned the aforementioned study on corruption. The study, completed in 2000, suggested the following set of preliminary policy recommendations: 1. Implementing a nation-wide awareness campaign to inform and educate people on their rights and duties about corruption and on the existing mechanisms to protect themselves from corrupt practices. 2. Strengthening the ACC and the Judiciary, in terms of staffing and resources to improve their ability to handle and prosecute corruption cases. 3. Reinforcing meritocracy in public administration. 4. Promoting the decentralization of the ACC outside the capital and the main cities. 5. Continue to regularly monitor the quality of Governance. The limited accomplishments achieved and many, still unresolved problems, however, have created a growing skepticism in the public opinion about the true commitment and capacity of the country s leaders to fight corruption and improve governance. Thus, the ACC was created as an essential component of the Governance Reform Programme. To guarantee the necessary organizational capacity for the programme, the Government established the Governance Reform Secretariat (GRS). 4 Anti-Corruption Act, 2000, Part III, Section 5 (I). 2

5 The GRS has been established with DFID funding as the focal point for the public sector reform, local government reform and decentralization, and its steering committee and subcommittees provide the machinery that can initiate, define and manage reform programmes over a broad area and with a wide range of donor support. It was within this arrangement that a sub-committee was set up to oversee an in-depth diagnostic analysis of governance and corruption in the country. The Steering Committee comprises representatives from the Government, the ACC, Civil Society, the Central Statistics Office (now Statistics Sierra Leone), the media and the international community. This institutional arrangement aims to promote a sustainable collaboration among local stakeholders and to build local capacity. The Steering Committee, chaired by Mr Emmanuel Osho Coker, has the responsibility to draft the Strategy based on the results of this in-depth analysis of Governance and Corruption in the country. This report constitutes the main findings of the in-depth analysis and is based on detailed, experiential information from three separate surveys of public officials, households, and enterprises 5. In particular, it summarizes the experiences of 1800 households, 600 managers and 590 public officials as users and providers of public services, and offers useful insights on: 1. The magnitude and the costs of poor governance and corruption, especially for the least protected segments of the population; 2. The institutional strengths and weaknesses in the country; 3. The institutional dimensions that should be reformed to improve governance. The recent experiences of other countries in their fight against corruption support and justify this approach 6. Such comprehensive and in-depth diagnostic analysis has often provided the much-needed input for policy makers and civil society for related program formulation and implementation. Moreover, by focusing on institutions and their performance, it promotes open and constructive dialogue among key stakeholders (both Government and the civil society). Finally, the rich data collected can be used to establish quantitative benchmarks for monitoring the success of institutional reforms already underway and, if necessary, to redirect them to concentrate efforts on priority areas. The report attempts to build upon the 2000 DFID study. Its overall scope is however broader since it aims at providing objective and experiential information to the Government for the design of a holistic and integrated reform policy meant to improve governance, accountability and transparency and to reduce corruption. In particular, the report tries to: 5 The user survey targets households in their role as users of public services, subject to regulations and laws, and as clients for licenses and permits. The enterprises survey is directed toward firms in their dual role as service users as well as providers who are subject to laws, regulations, licenses and permits. The public official survey focuses on their roles as policy sources and provides for a detailed picture of institutional strengths and weaknesses of governance in Sierra Leone. 6 For a few illustrations on similar programs currently in progress in other countries, please visit: 3

6 Ascertain the performance of key public institutions and their effectiveness in service delivery from the perspective of households and business enterprises; Determine the degree of interaction/inter-relationship between the public and service providers; Determine the impact of corruption on the process and outcome of this interaction; Investigate the dynamics of administrative procedures and decision making in the public sector; Determine the implication for (or effect on) good governance/public sector performance of such procedures and other factors (including corrupt practices). Figure B: Key Problems in Sierra Leone, 2002 (as reported by households managers and public officials) High cost of living Corruption Infrastructure / Quality of roads Safety concerns / delinquency 0% 20% 40% 60% 80% 100% % respondents considering that these are very serious problems household business public official The main message of this work is that corruption is a pervasive and institutional problem, which hampers the potential for the growth and development of Sierra Leone. In particular, the report offers a few lessons that should be taken into account in the development of the Governance Reform Strategy Sierra Leone faces many problems in the aftermath of the civil war, from unemployment, to high cost of living and poor infrastructure. Corruption however is considered as one of the most serious challenges faced by the country by all respondents (Figure B) Corruption is widespread and has a significant cost for the country: As Figure D illustrates, corruption manifests itself in many forms in Sierra Leone, from bribes to obtain basic public services to misappropriation of funds. Moreover, bribery appears to have a regressive impact, with the lowest income citizens paying the largest share of their income on bribes (Figure G). The cost of corruption also emerges clearly from the willingness of managers to pay a reasonable proportion of their revenues in order to eliminate corruption (11.2% of firm s monthly revenues; Figure A.6). 4

7 The public management of resources is poor and too centralized 1. Human resources and personnel: The use of bribes to obtain a job within the public sector is very common, with more than one third of public officials reporting such practice. Promotion appears to be based on seniority and made transparently in at least 60% of cases (Figure 5). At the same time, public officials report that political pressures in 26% of the cases influence hiring/promotion decisions. In terms of job and salary satisfaction, the majority of respondents feel that their jobs are secure, but are not satisfied with their salary levels. 2. Financial resources: Transparency in budget administration is an issue for more than one third of public officials interviewed, and especially for the Sierra Leone Police and the Ministries of Health and Information (Table 30 in the Appendix). Decisions about the budget are seriously influenced by political pressures and external influences (Figure 7) and a significant amount of budget resources are lost due to irregularities. 3. Information: Public officials report that information about some key functions, such as, management of funds and personnel, is highly centralized and is not shared with subordinates. There is also a strong, widespread feeling among public officials of exclusion from the policy making process (Tables 18 and 19 in the Appendix). Managers feel likewise about the lack of information and transparency of government s requirements and decisions. Only about one third of managers acknowledge clarity of information about the requirements to establish a business. Corruption and poor management of public resources translates into poor quality of public service and citizens exclusion. As users report, the overall quality of the public services is poor, with agencies like the Sierra Leone Housing Corporation (SALHOC) the Income Tax Department (now part of the National Revenue Authority (NRA)), the Department of Surveys and Lands and Immigration ranking at the bottom of the list. The Northern and Eastern parts of the country face the greatest challenge for health and income tax services (Table 49 in the Appendix). Poor quality of services is not however the only byproduct of mis-governance. Because of the unofficial costs often necessary to obtain a public service, a significant proportion of citizens decide not to seek the service needed. This is especially true when dealing with the agencies that provide the poorest quality of services - SALHOC, the Sierra Leone Transport Authority (SLRTA), the Income Tax Department, and the Department of 2

8 Surveys and Lands. In addition, in the case of the SALHOC and SLRTA, low income users are least likely to seek the service needed than wealthier citizens (22% and 25% of the cases, respectively; see Additional Figures) In sum, this is the time for change. As public officials reported, there is a strong support for reforms in the public sector, especially for reforms that promote meritocracy, accountability and transparent management of public resources. (Figure L). Moreover, the recent efforts promoted by the Government in building operational and institutional capacity for policy changes in the area of governance have helped change the citizens perceptions on the government s effectiveness to fight corruption. (Figure C) Thus, there is a window of opportunity for Government and for the country to implement sustainable policy changes to improve governance. 45% 40% 35% 30% 25% 20% 15% 10% Figure C: Effectiveness of Government in fighting corruption Households perception, 2000 & % 0% not effective at all minimally effective partially effective 2000 Report 2002 SL Survey effective 1. An overview of the main findings Diffusion of corruption: Corrupt practices in Sierra Leone are widespread and appear in various forms. Figure D summarizes the most common practices of corruption reported in Sierra Leone. Service delivery by the public sector in Sierra Leone was generally marked by irregularities and bribery. Indeed, 67% of users and 20% of managers report that they were asked to pay a bribe to obtain public services. In addition, bribery affects other aspects of the relationship between the private sector and the public sector: 23% of public officials report that bribes were necessary to obtain public contracts. Perhaps a most glaring indication of the widespread nature of Figure D: Corruption in Sierra Leone - A summary (as reported by households, managers and public officials) percentage of users that were asked to pay a bribe while trying to obtain a public service percentage of managers that were asked to pay a bribe while trying to obtain a public service percentage of cases in which bribes were necessary to obtain public 3 contracts (as reported by public officials) public funds misappropriation (% of public officials reporting it is very 2 frequent) purchasing of positions (% of public officials reporting it is a very frequent 1 practice) % 20% 40% 60% 80% % of respondents who reported that type of corruption

9 corruption is the fact that a significant proportion of public officials (42%) owned up to irregularities in the management of their institution s budget, including misappropriation; the same proportion reveal that purchasing positions is very frequent in their institutions. Bribes are not exclusive for national enterprises, but are also reported to be quite widespread among foreign investors. As shown in Figure E, business respondents state that 20% of domestic and 18% of foreign firms frequently pay bribes for licenses and permits. For public service procedures, 17% of foreign firms are said to pay bribes frequently compared to 16% of domestic firms. Around 9%-13% of firms report that they frequently pay bribes to pursue legal proceedings in the judicial branch, to obtain contracts with state institutions or to update on fiscal situation. The administration of justice is particularly afflicted by mis-governance. The Court System is not utilized by many firms and households (at least one third decided not to use a court despite the need) (see Additional Figures A.1). At least three quarters of households Figure E: Bribes for type of activity: Comparing domestic and foreign enterprises Request for licenses and permits Public service procedures Pursue legal proceedings in the judicial branch Obtain contracts with state institutions agreed that the most important obstacles to accessing the courts were influence of corruption, high legal fees, long court process and high gratification. The use of bribes to advance legal proceedings or to alter legal decisions is also quite common (see Additional Figures A.2) Integrity and honesty of Update on fiscal situation key institutions. The citizens 0% 5% 10% 15% 20% of Sierra Leone question the % of firms reporting that bribes are very frequent honesty of key Government foreign domestic agencies. Figure F reports the top 5 and the bottom 5 agencies in terms of honesty. Among the agencies rated as most dishonest we find Customs, the Traffic Police, Surveys and Lands, the Income Tax Department and Law Officers. From a positive perspective, public officials give a very high honesty/integrity rating to Parliament, followed by Births and Deaths, NPA, SIERRATEL and the ACC. Households give the most positive assessment to the Sierra Leone Broadcasting Service, followed by the Bank of Sierra Leone and the Sierra Leone Water Company; and business enterprises regard the commercial banks as the least dishonest (or most honest) followed by Bank of Sierra Leone and the Sierra Leone Water Company. 2

10 2. A Closer Look Corruption imposes barriers to households to access basic social services. Households are often discouraged to use Public Services. Up to 20% of households report that the reason for not using the Public Services is that they couldn t pay the unofficial costs, thus, hurting heavily the poorest people. (see Additional Figures A.3) In addition, households pay higher bribes to obtain access to some basic public services, such as water, telecommunications, postal services, electricity and traffic police. (see Additional Figure A.4) Figure F: Perceived level of honesty in public institutions (as reported by managers, public officials, and households) Customs Department Traffic police Surveys and Lands Department Income Tax Department Law Officers Department Ministry of Gender Social Welfare & Children s Affairs University of Sierra Leone Sierra Leone Water Company (SALWACO) Sierra Leone Broadcasting Service (SLBS) Bank of Sierra Leone 0% 10% 20% 30% 40% % of respondents reporting the institution to be honest households public officials business Corruption increases inequality. Bribery is a significant and regressive tax on public service users. Users report major bribe expenditures extorted from institutions in charge of Income Tax Department, Surveys and Lands, Public education, Public health services, Judges/Courts officials and Municipal/District Councils. Furthermore, the poorer groups are disproportionately affected by corruption, with lower income users 2

11 spending on average in bribe payments a percentage of their income at least twice as high as wealthier households. (Figure G) Figure G: Percentage of household income spent on bribes for obtaining services, by income status (as reported by households) Surveys and Lands Municipal/Dist. Councils Judges/Courts officials Income Tax Department Public education services Public health services 0% 5% 10% 15% 20% 25% percentage of household income spent on bribes The thin lines represent margins of errors (or 95% confidence intervals) for each value low income middle income high income Corruption has a negative impact on business environment: 40-46% of managers report that bribes to different public institutions have a negative impact on the country s business environment. (Additional Figures A.5) Furthermore, corruption costs firms greatly, especially when dealing with bureaucracy. 36% of firms spend 1 to 5 hours per week and 15% more than 5 hours dealing with bureaucracy. Businesses, however, are not without guilt and try to influence political decisions. 30% of managers report that Parliament is where their staff spent the most time in dealing with bureaucracy. (see Figure H). 3

12 Shared responsibility at the roots of such poor governance system. Many firms share mis-governance responsibility with public sector institutions as illustrated in Figure H and A.5. Public procurement is also another channel through which firms promote poor governance (Figure E). At least 10% of managers report always paying a bribe to win public contracts. In addition, the 35% 30% reported percentage bribe 25% fee expected to secure such 20% contracts is rather large. In 15% the north, east and south 10% around 50% of firms report 5% that they invest more than 10% of the value of the 0% procurement contract in gratification when doing business with government. In the Western Area only 18% of firms report that this is so. Figure H: Institution where firms spent more time dealing with bureaucracy parliament law officers customs income tax % firms reporting that the greatest amount of time was spent in this institution Estimating the total cost of corruption on businesses. Managers report that they are willing to offer on average 11 % of their firm s monthly income to eradicate corruption. Small firms appear to be the most willing to pay (11.4% versus 9% of large firms). This large potential tax contribution is not only an indicator of how costly corruption is financially for many competitive businesses, but also of the potential fiscal losses to the Treasury if a more transparent system were to exist. (see Additional Figures A.6) Bribery payments do not translate in higher quality of public services for the Figure I: Bribes and quality of public services users and firms. There (as reported by managers) exists a negative relationship between the quality of the service and corr = the amount paid in bribes to the institution providing it. (Figure I) average bribe paid to obtain the service (in leones) average quality of service Each point in the graph represents the combination quality/bribe for a public service Quality of service delivery: The study has revealed widespread dissatisfaction with the quality of service delivery, especially with key institutions such as Customs, Income Tax, Surveys and Lands, SALHOC and SLRTA. The Judiciary and Law 4

13 Officers were also considered very inefficient. Institutions that received an overall positive assessment from users include the water supply services, the Administrator and Registrar General s Office, the Armed Forces and the Police. Interestingly, however, public officials generally thought that the public s perception on the quality of services rendered by their individual organizations was high and that their performance was satisfactory to the public. Geographical heterogeneity and the quality of service delivery. The quality of public services appears on average to be lower in the Northern and Eastern provinces than in the rest of the country. However, the assessment of quality of public services by households and business could be analyzed by province and for each service. In the Eastern Province, Income tax, customs and public health stand out for their underperformance. In the Western Area, the worst ratings are for police and traffic police. In the North, vehicle license obtains very bad assessment compared to other regions. A high percentage of respondents consider water services to be of poor quality in all provinces except in western area. In the South the law courts, education, health, and income tax obtain a better assessment compared to other regions. It appears that the quality of public services in the different regions is different for those services provided locally (water, health and education), while it is more uniform for services provided nationally (like vehicle license and immigration. (Figure J) Water Supply Services Public health services Law Court / NA Court officials Municipal and District Councils Figure J: Quality of public services (as reported by households and managers) Southern Province Northern Province Eastern Province Western Area Southern Province Northern Province Eastern Province Western Area Southern Province Northern Province Eastern Province Western Area Southern Province Northern Province Eastern Province Western Area 0% 20% 40% 60% 80% 100% % of respondents reporting very poor quality households business 5

14 3. Management of Human Resources and Personnel Recruitment and personnel decisions: The survey reveals that recruitments and top level management decisions are still influenced by external factors such as illegal payment, political connections and family ties. Standard administrative procedures are followed with regard to recruitment and personnel management decisions in many agencies, as indicated by the majority of respondents (55 to 65 percent). Remuneration, manpower development/training and job security/satisfaction: The salary level of public officials is far from encouraging. Hence, over two thirds of public officials reported a high level of dissatisfaction. Surprisingly, however, the majority of respondents stated that their current working environment, as compared to a couple of years ago, was better. Finally, just over half of respondents received any from of training on the job during the last two years. 4. Management of Public Contracts, Funds, Budgetary Process Observance of procedures in budget management: Public officials reported that the correct procedures in the management of budget and procurement were followed in their agency. These include documentation, clarity and transparency, and formalization of procurement guidelines. According to the survey results, budget planning and monitoring is not widely practiced by government agencies. Moreover, external influences significantly affect budget planning and monitoring. Finally, public officials recorded frequent budget losses arising from irregularities such as fraud (Figure D). Fulfillment of needs from budgetary allocations: It is interesting that despite the evidence of irregularities and external influences on budget management, most public officials agreed that their needs were met from budgetary allocations. 5. Management of Information Observance of administrative procedures: Very few respondents indicated that managerial decisions taken were being recorded. More worryingly, a significant proportion of the respondents (20%) indicated that auditing mechanisms do not exist in their agencies. Thus, a good number of public institutions do not have built-in checks, creating room for inefficiency and corruption. Participation in the decision-making process: Participation in the decision-making process on the part of public officials is important, since it can guarantee institutional efficiency and enhance service delivery. Public officials in Sierra Leone, however, did not feel part of the decision making process (44 percent reported that senior managers never made provision for inputs from their subordinates in arriving at major decisions). Furthermore, more than half of public officials stated that too many levels existed within their institution, and that the decisionmaking process was centralized. 6

15 6. Reporting Mechanisms Users do not know how to report a corrupt act: When asked if they knew what process to follow in reporting a corrupt act by a public official, two-thirds of households reported they did not know. More than three quarters acknowledged having observed an incident of corruption, but the majority of households decided not to report it, mostly because of lack of knowledge on where to report. Geographical heterogeneity in the knowledge of the process to report a corrupt act: Regional analysis shows Eastern Province as the most knowledgeable (43%), followed by Southern Province (37%), and Western Area (30.5%) with the Northern Province recording the lowest (23%). 7. Key Public Sectors - Education, Health, Judiciary Education services: With the exception of the Southern Province (16%), more than one third of households reported that the quality of education is poor. In addition, households reported that the number of hours spent in school by their children is much lower than the hours spent by teachers. (see Additional Figures A.7) Inadequate infrastructure and facilities, cost of education and low professional capacity of teachers were considered by households as important causes of poor education. Health services: A significant proportion of respondents from both households and business enterprises (48.4% and 40.2% respectively) considered services provided by the health sector to be poor. Households also often needed to pay a bribe to obtain medical assistance (26% of cases) The Judiciary: Households and managers overwhelmingly reported that the judicial system did not function effectively and fairly because of the high costs, the lack of credibility and professionalism of judges, and the overly complicated legal procedures. For all these reasons, 67% of households and 52% of managers preferred to use alternative mechanisms for conflict resolution. Southern province Northern province Wastern province Western area Southern province Northern province Wastern province Western area Households also reported that the Judiciary is often manipulated by economic interests (about 70% of respondents) and is dependent on the Government (about 57% of respondents) (Figure K) Figure K: Undue influence on the Judiciary (Households) Manipulated by Economic Interests Dependent on Government 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % of respondents reporting that the Judiciary is... 7

16 8. Indicators of Public Sector Performance The data from the public officials survey in Sierra Leone allows us to explore the link between institutional dimensions of the public administration and levels of corruption as reported by public officials. Since many institutional features are centrally determined, one might expect little variation across public sector bodies and regions. As shown subsequently, this is not the case, and the quality of governance and corruption vary greatly across regions and government agencies in Sierra Leone. 7 Table A provides a summary of the definitions of the indicators constructed for this analysis. In particular, we focused first on the variance of governance and corruption across the four geographical regions, motivated by the heterogeneity of behaviour found in previous analysis. We then focus on the variance across government agencies to identify potential institutional weaknesses. Finally, we explored the correlation between corruption and each of the governance indicators to highlight the institutional limitations that may foster corruption. 7 The analysis reported here is based on the governance and corruption indicators, constructed using the public official data. To construct these indicators, we aggregate the relevant survey questions using a factor analysis technique and obtain one single indicator for each governance dimension. For additional details about the methodology used, please see Main Report, Volume II. 8

17 Table A - Definition of indices Governance variable ACCESS TO THE POOR AUDIT MECHANISIMS ENFORCEMENT OF RULES MERITOCRACY POLITICIZATION POLITICIZATION IN PERSONNEL QUALITY OF RULES RESOURCES TRANSPARENCY CITIZEN VOICE WAGE SATISFACTION Corruption index OVERALL CORRUPTION INDEX CORRUPTION IN PERSONNEL (1) CORRUPTION IN PERSONNEL (2) CORRUPTION IN BUDGET CORRUPTION IN PUBLIC CONTRACTS Definition Index of accessibility to poor citizens of the public service provided by the institution. High numbers imply high levels of access Percent of cases where the decisions on personnel and budget management are subject to external and/or internal audits. Percent of cases wherein rules/guidelines/regulations in the personnel and budget management are well supervised and strictly applied. Percent of cases wherein the decisions on personnel management are based on professional experience/merit/performance or education levels. Percent of cases wherein the decisions on personnel and budget management are subject to political ties, party affiliations, political pressure. Percent of cases wherein the decisions on personnel management are subject to political ties, party affiliations, political pressure. Percent of cases where rules/guidelines/regulations in the personnel and budget management are formally written, simple, clear, not requiring and excessive number of administrative steps. Percent of cases where physical, financial and human capital resources of the agency are adequate. Percent of cases where the decisions on personnel and budget management are done transparently. An index representing the existence of consumer feedback and complaint mechanisms. Percent of employees very satisfied or somewhat satisfied with their wages. Definition Corruption index representing widespread of bribery over regulatory/legal decisions, bribery over public contracts, corruption in personnel management and corruption in budget management. Corruption index representing the percentage of cases where decisions on personnel management are based on unofficial payments (job purchase). Same as (1) using an alternative set of questions to proxy job purchase. Corruption index representing the frequency within the institution of irregularities/diversion of funds or any other type of budget abuse. Corruption index representing widespread of bribery in the contracting process 9

18 Regional analysis of governance and corruption The geographical heterogeneity of corruption. Corruption is not equally widespread across Sierra Leone, and different types of corruption affect different parts of the country, as shown in Table 2. Corruption in personnel and budget affect the Eastern Province, while corruption in public contracts is a problem especially in the Northern Province. The Southern Province stands out as the least corrupt province in all four indicators of corruption. Table B: Governance and corruption indicators by province Southern Northern Eastern Western WHOLE Province Province Province Area COUNTRY Corruption in budget Overall corruption Corruption in public contracts Corruption in personnel (2) Accessibility for poor Audit Mechanisms Enforcement of rules Politicization Quality of rules Resources Transparency Citizen voice Meritocracy The indicators above take value between 1 and 100. To interpret them, please keep in mind that: - The higher the value of the corruption index, the more severe the problem - The higher the value of the governance indicator, the better the quality of that dimension The geographical heterogeneity of governance. Governance dimensions, such as meritocracy and auditing mechanisms also display a variance across regions. Consider for example, access to public service by poor citizens. The national average is 78. The variance across the four regions is however between 74 (Western Area and Northern Province) and 87 (Eastern Province). Similarly, the indicator of enforcement of public sector rules displays a significant variability across the four regions. This suggests the need for targeted policies in each region aimed to strengthening specific governance dimensions. Analysis of 31 Government Institutions of Sierra Leone Exploiting Institutional heterogeneity. The data from the public official allows us to explore the heterogeneity across government institutions in terms of corruption and governance performance. The evidence indicates that governance performance varies greatly across government agencies in Sierra Leone. Despite this variance, there is a consistency in the scores institutions receive across the different indicators. Institutions that score high in some indicators tend to score also high in others, and vice versa (Table 3). 10

19 Consider, for example, the Judiciary and the Supreme Courts and the Independent institutions (Bank of SL and National Electoral Commission). These institutions display high levels of governance performance. On the other side of the spectrum, the Ministry of Works and Public Maintenance presents the greatest challenge. Finally, a few institutions score low in some governance dimensions, while high in others, as in the case of the House of Parliament, which has the lowest values on all indicators but transparency. Table C. Governance and corruption indicators by institution Audit Enforcement of rules Resources Transparency Citizen voice Wage satisfaction Presidential Affairs Ministry of Finance Quasi-independent institutions Ministry of Trade and Industry Ministry of Internal Affairs Ministry of Energy and Power and NPA Ministry of Foreign Affairs & International Cooperation Ministry of Development & Economic Planning Ministry of Social Welfare, Gender & Children's Affairs Ministry of Health & Sanitation Ministry of Information and Broadcasting Ministry of Education, Science and Technology Ministry of Youth and Sports Ministry of Labor and Industrial Relations Ministry of Agriculture and Food Security Ministry of Local Government & Municipal and district councils Ministry of Transport & Communications Ministry of Works and Public Maintenance Ministry of Lands, Housing & Country Planning Ministry of Mineral Resources House of Parliament Office of the Attorney General, Minister of Justice and Director of Public Prosecutions Traffic Police and Sierra Leone Road Transport Authority Supreme Courts Local Courts SALWACO/GVWC and SIERRATEL SALPOST Sierra Leone Ports Authority SL National Tourist Board and SL Standards Bureau Police and Prisons Post-conflict institutions WHOLE COUNTRY Please note that we introduce a color-coding of the different agencies simply to facilitate the reading of the results. % Institutions highlighted in red are the ones with relatively low scores for each indicator % Institutions highlighted in green are the ones with high scores for each indicator 11

20 Exploring possible links between corruption and governance As we have seen in Table 3 above, there is great disparity in the governance indicators among institutions thus it is misleading to generalize for all institutions on performance, governance and corruption. This subsection will emphasize the most significant correlations between the corruption index and the different governance variables. Overall corruption Figure L: Quality of the rules and corruption (based on responses of 31 government agencies) r = The quality of the rules of internal organization are good predictors of the level of corruption 10 in any organization. Agencies in which internal rules and procedures are simple, clear, well monitored and not excessively bureaucratic are significantly correlated to lower levels of corruption, as is shown in Figure 1. Effective complaint Figure M: Citizen voice and Corruption in budget (based on responses of public officials of 31 government agencies) Corruption in budget r = Citizen voice Quality of rules mechanisms translate to lower corruption. Complaint mechanisms channel the concerns of users about the quality of the public services that they receive and provide a means to hold accountable those in charge of delivering public services. As shown in Figure 2, the institutions more responsive to complaints are also those with lower corruption. This finding suggests that making complaint mechanisms more transparent, accessible, and responsive can help reduce corruption in public services. Corruption in personnel is a very serious challenge for government agencies in Sierra Leone (see Table 1 in the Appendix). A simple correlation analysis shows that high degree of politicisation in personnel management, that is, whether decisions are based on political ties, party affiliations and political pressure, instead of being based on professional experience, level of education, merit or performance, is significantly associated with the practice of job purchase (correlation coefficient between politicisation and corruption in personnel is 0.71). 12

21 Corruption in the budget is highly associated with lack of access to public services by the poor. Thus, more accountable decision-making in the budget management could significantly improve the situation of the poor. (correlation coefficient between accessibility and corruption in budget is -0.47). 9. Elements For Change Public Officials Assessment of Government and their Institution s Sincerity in Fighting Corruption: The majority of respondents, about 79 percent, expressed the belief that the Government is willing, genuine and sincere to fight corruption, while a lower but significant 66 percent made a similar complimentary assessment about its organization s concern and willingness to fight corruption. Households assessment of Government s sincerity and effectiveness of anti-corruption strategies: Public Officials support to various About half of Strengthen the operational management the respondents Simplifying administrative procedures stated that the Government is A public servant statute regulating the application of sincere in penalties and rewards according to job completion fighting A law that ensures that economic resources used by corruption. On political parties will have their origin and final use the other hand, clearly identified a mere 30 percent of considered Government s anti-corruption strategies as effective. Overall these results represent a much less positive assessment of the government commitment than that of the public officials. 0% 25% 50% 75% 100% Establishing objectives and norms for fulfilment of services Regular declaration of assets of public officials Establish effective mechanisms for allowing citizens free access to all information held by the state Decrease in the number of public officials if salary and benefits are increased Greater control given to the public and civil society over public sector activities Privatisation of public sector services Decentralization of state administration Establish a public service career structure based on defined job performance criteria 13

22 Comparison of households perception in the effectiveness of Government in fighting corruption (2000 versus 2002): Between 2000 and 2002 the public perceptions of the effectiveness of the government efforts in fighting corruption has changed. There has been a shift in the proportion of respondents at both extremes: a decrease in the number of people that considered the Government as not effective at all and an increase in the number of people saying that it is effective. (Figure C) Public Officials support for public service reform measures: The majority of respondents registered support for public sector reforms that could enhance performance and service delivery. These include strengthening operational management, establishment of objectives and norms for fulfillment of objectives, overall implementation of public sector reforms, mechanisms for free access of citizens to state information, down-sizing personnel to increase salaries, privatization. (Figure L) Conclusions and Policy Recommendations The findings discussed in the previous pages underscore one of the essential features for successful governance-improving reforms: the set of public sector reforms should be comprehensive and coordinated across sectors. This multi-pronged approach, described in Box 1, has been used in a set of reformist countries and has the benefit of tackling the different forms of corruption, promoting institutional accountability and transparency, strengthening enforcement mechanisms, improving public sector management, and supporting civil society participation. Box A: A multi-pronged strategy for improving governance and reducing corruption Institutional Restraints: Independent and effective judiciary Legislative oversight Independent prosecution, enforcement Political Accountability: Political competition, credible political parties Transparency in party financing Disclosure of parliamentary votes Asset declaration, conflict of interest rules Civil Society Participation: Freedom of information Public hearings of draft laws Role for media/ngos Anticorruption Competitive Private Sector: Economic policy reform Competitive restructuring of monopolies Regulatory simplification for entry Transparency in corporate governance Collective business associations Public Sector Management: Meritocratic civil service with monetized, adequate pay Budget management (coverage, treasury, procurement, audit) Tax and customs administration Sectoral service delivery (health, education, energy) Decentralization with accountability Source: World Bank, 2000, Anti-corruption in Transition A Contribution to the Policy Debate. 14

23 A holistic, cross-sector reform package, however, is not sufficient for the successful and sustainable implementation of governance-improving reforms. This type of reforms aims to change the established interests of a small group of citizens and, therefore, may encounter strong resistance. To address this challenge it is necessary for a joint partnership effort of Government and the society. The government should commit to the reform process for the medium-long term and should build local capacity to ensure the sustainability of the reforms. The citizens should, on the other hand, participate actively in the monitoring of the reform implementation. While the comprehensive approach described in Box A is generally applicable, the details of the reform package should vary significantly from country to country. An in-depth diagnostic assessment of the institutional strengths and weaknesses, as the one carried out in 2000 and described in this report, would allow the country to identify the priority areas for reform. Building upon the findings of the 2000 diagnostic study, five broad areas were identified for action. These areas are discussed in detail in Chapter 4 of the Report. 1. Public resource management. The public officials survey shows clearly the link between a strong open system of public administration and low levels of corruption. In order to improve the management of human resources it is crucial to enhance and make more transparent the recruitment process for all categories of public jobs, ensure the insulation of the civil service from political and external influences and introduce clear guidelines for personnel performance and evaluation. To reduce, corruption in public expenditure management, on the other hand, the Government should review the existing statutory and regulatory framework for public financial management and design a revised framework, which promotes transparency, clarifies responsibilities among actors, and provides checks and balances in the system. Within this set of proposed reforms, it is important to include the decentralization and disclosure of the budget preparation process. In addition, the Government should reform the public procurement process, making it more transparent, since in its current status it greatly penalizes firms trying to do business with the government Transparency and accountability. Key elements for reducing corruption and improving governance are greater transparency and accountability and an effective monitoring system. Better monitoring and accountability can be achieved by promoting open access to information. In this context, a key reform measure could be the introduction of downward accountability of local government by its population. This could be achieved through extensive education and sensitization so that people understand the roles and responsibilities of local councilors, chiefdom councils, public servants, and communities; and through specific initiatives aimed to improve the transparency of local government activities and functions. In addition, existing accountability watchdogs, such as the Auditor General s Office, should be empowered with logistical and technical support. 8 Between 18% to 50% of managers (Western and Eastern Provinces, respectively) report that they need to pay more than 10% of the value of the contract to ensure business with the government 15

24 Since every bureaucratic and regulatory intervention creates an opportunity for corruption, reducing the regulatory burden on firms should be viewed as a key element of an anticorruption strategy. Indeed, firms whose managers spend more time dealing with government bureaucracy are much more likely to pay bribes. While reducing the number of regulations and inspections and building transparency into their implementation are key components of regulatory reform, the process of developing and implementing new regulations should also be addressed. 3. Civil Society participation and access to information. As emphasized above, successful governance and anti-corruption strategies are the product of society-wide and integrated efforts, which comprise all the branches of the government, the private sector and the civil society. The established partnership between the government, civil society and donors in the Anti- Corruption Steering Committee is the first step to ensure civil society participation. The promotion of local accountability mechanisms would be the subsequent, and necessary, step. Participation cannot be achieved, however, without access to information. The report highlights the limited and often contradictory information available to citizens and managers about services available and functions. There were also complaints about the lack of responsiveness of current procedures to the challenges facing public sector management. For this purpose, it would be useful to strengthen the information systems of public agencies both in terms of state of the art equipment and personnel training - to move away from manual to electronic filing and data-based system. 4. Capacity building: to sustain the reforms and policy changes discussed above, it is critical to strengthen the capacity of public officials. There is an urgent need to restructure and increase support to the training of personnel within the public sector. In particular, concerted effort should be made to build up the capacity of the new councils to manage local affairs. Intensive training for councillors and their staff will need to be designed and implemented over the coming years. Given the magnitude of capacity building needs at the central and local government levels, it may be useful to invest in strengthening key local training institutions, such as the Institute of Public Administration and Management (IPAM) and the Civil Service Training College (CSTC). In addition, training should also be provided to community groups and NGOs on skills to monitor Government performance and advocating for Government accountability and transparency. Finally, because of the reported lack of knowledge on how to report a corrupt act, the Anti-Corruption Commission may need to concentrate on an education and awareness campaign to motivate citizens to be actively involved in the fight against corruption. 5. Specific Anti-corruption measures. In addition to broader governance reforms, a combination of holistic, but interconnected measures should be considered in the fight against corruption aimed at strengthening the Judiciary and the Anti Corruption Commission (ACC). The Judiciary was rated by respondents as performing the least in the fight against corruption. To make the Judiciary more effective, this branch of the Government should be made increasingly independent of the executive and be allowed to process cases quickly. The ACC should receive support for the decentralization of its operations in the regions. This will improve the currently poor quality of the existing corruption reporting mechanism. 16

25 In sum, broad-based support and articulation of a governance and anticorruption strategy (that includes prevention, education, and enforcement) are important first steps. The implementation of the strategy may however prove to be the most formidable challenge. Requiring detailed action plans for reducing corruption and improving quality from across the state sector, and monitoring their implementation, helps ensure that progress is achieved. When progress isn t made, external monitoring brings accountability but only if the action plans are formal and public. Structure of the report The report is structured as follows. Chapter One provides a general introduction and background information. Chapter Two represents the core of the report, as it provides a detailed discussion and analysis of the governance and public sector management issues from the perspectives of both providers (public officials) and users (households and managers). Chapter Three builds on the findings presented in Chapter Two and focuses on corruption and mis-governance, using the experiences of service providers and service users. Chapter Four summarizes the main lessons and presents a few recommendations for possible policy action geared toward the improvement of the governance system in Sierra Leone. 17

26 Additional Figures A.1. Utilization of Court System (as reported by households and managers) 36% 34% 32% 30% 28% 26% Households Business % of households / firms that felt the need to use the court system but decided not to A.2. Bribes o pursue legal proceedings (as reported by public officials managers and households) public officials business households 0% 5% 10% 15% 20% % of respondents reporting that most times/always bribes are paid to pursue legal proceedings 18

27 A.3 A4.1 Amount spent on bribes for obtaining services by size of firm (as reported by managers) A.4.2 Amount spent on bribes for obtaining services by household income (as reported by households) Surveys & Lands Surveys & Lands District & Municipal Councils District & Municipal Councils Income Tax Department Income Tax Department Registrar General s Department leones small scale medium scale large scale Registrar General s Department leones low income middle income high income 19