the world bank strengthening world bank group engagement on governance & anticorruption...

The World Bank

Strengthening Strengthening World Bank Group World Bank Group

Engagement on Governance & Engagement on Governance & AnticorruptionAnticorruption

Presented to:

World Bank Staff

Course on Public Sector Governance and Anti-corruption

Addis Ababa, Ethiopia

June 4, 2007

Presented by:Helga Muller

Sector Manager

The World Bank

Sanjay PradhanPublic Sector Governance Course

OutlineOutline

A. Context

B. The World Bank’s Governance & Anticorruption Strategy

1. Country Level

2. Project Level

3. Global Level

C. Implementation – WAY FORWARD

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ContextContext

In 1996, corruption was a taboo “c-word”.

Since then, the World Bank’s governance and anticorruption work has evolved rapidly

In recent years, stakeholders in recipient & donor countries are demanding better governance & corruption control – scaling up of aid also requires strengthening governance

On March 20, 2007 the World Bank’s governance & anticorruption (GAC) strategy was unanimously endorsed by the Board, and approved by the Spring Meetings in April 2007

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Governance is the door to anticorruptionGovernance is the door to anticorruption

The manner in which the The manner in which the statestate acquires acquiresand exercises its authority to provide and exercises its authority to provide public goods & servicespublic goods & services

Use of Use of publicpublic office for office for privateprivate gain gain

GovernanceGovernance

CorruptionCorruption

•Corruption is an outcome – a consequence of weak or bad governance•Governance reform – strengthening capacity & accountability – helps combat corruption by addressing its underlying causes

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Consistent Approach: While there is no ‘one-size-fits-all’, the World Bank will

apply a consistent approach across countries & continue to allocate more

aid to better governed environments (PBA)

Consistent Approach: While there is no ‘one-size-fits-all’, the World Bank will

apply a consistent approach across countries & continue to allocate more

aid to better governed environments (PBA)

Seven Guiding PrinciplesSeven Guiding PrinciplesGovernance &

Anticorruption for Poverty Reduction: Poor governance and

corruption undermine the World Bank’s mission of

poverty reduction

Governance & Anticorruption for

Poverty Reduction: Poor governance and

corruption undermine the World Bank’s mission of

poverty reduction

Country Leadership & Ownership:

The World Bank is committed to supporting a country’s own governance & anticorruption priorities

Country Leadership & Ownership:

The World Bank is committed to supporting a country’s own governance & anticorruption priorities

Staying Engaged: The World Bank will seek creative ways to

provide support, even in poorly-governed

countries—“don’t make the poor pay twice”

Staying Engaged: The World Bank will seek creative ways to

provide support, even in poorly-governed

countries—“don’t make the poor pay twice”

Multi-Stakeholder Engagement:

The World Bank will scale up good practice in engaging with

civil society, media, parliaments, judiciary, private sector in its

operational work

Multi-Stakeholder Engagement:

The World Bank will scale up good practice in engaging with

civil society, media, parliaments, judiciary, private sector in its

operational work

Strengthening Country Systems:

Better national institutions are the long term solution to mitigating fiduciary risk

for all public money

Strengthening Country Systems:

Better national institutions are the long term solution to mitigating fiduciary risk

for all public money

Working Together: The World Bank will work

with donors & other actors at the country & global levels

to ensure a harmonized approach—“the World Bank should not act in isolation”

Working Together: The World Bank will work

with donors & other actors at the country & global levels

to ensure a harmonized approach—“the World Bank should not act in isolation”

7 Guiding 7 Guiding PrinciplesPrinciples

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Project Level

Combating corruption in

World Bank Group operations

Country Level

Deepening support to countries to

strengthen governance

Global Level

Working with development

partners, sharing experience & addressing

transnational issues

Key Elements of World Bank’s StrategyKey Elements of World Bank’s Strategy

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Public Management

Public financial management & procurement,

monitored by PEFA

Administrative & civil service reform

Governance in SectorsTransparency & participation

Competition in service provision

Sector-level corruption issues (EITI, forestry)

Civil Society, Media & Oversight Institutions

State oversight institutions (parliament, judiciary, SAI)

Transparency & participation (FOI, asset declaration, user

participation & oversight)

Civil society & media

Local GovernanceCommunity-driven development

Local government transparency

Downward accountability

Private Sector

Competitive investment climate

Responsible private sector

Coalition building across stakeholders

Helping Countries to Improve Governance Helping Countries to Improve Governance Through Various ‘Entry-Points’Through Various ‘Entry-Points’

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The new international aid

architecture emphasizes the

principle of mutual accountability

Scaling up of donor assistance requires sound PFM systems

and reduced corruption in partner

countries

Strengthening PFM Systems a key priorityStrengthening PFM Systems a key priority

Increasing recognition that

"ringfencing" projects will not work – need to strengthen

country systems

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Tackling Corruption in Key SectorsTackling Corruption in Key Sectors

Manufacturing

Registration

Selection

Procurement

Distribution

Prescription & Disbursement

Random inspections

Monitoring based on

transparent & uniform

standards

Tracking systems

User surveys

Media coverage of drug

selection committee meetings

Transparency

Reference: Jillian Clare Cohen, Assistant Professor, Faculty of Pharmacy and Director, Comparative Program on Health & Society, University of Toronto

Tracing Vulnerabilities in Value-Chain:

Pharmaceuticals

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Participatory Participatory prioritization of prioritization of

policies & public policies & public spendingspending

Investment OperationsBrazil Rural Poverty Reduction Project Rio Grande do Norte; Malawi Third Social Action FundDevelopment Policy LendingArmenia SAC IV; Laos PRSC1; Timor-Leste Consolidation Support Program Policy Grant, Vietnam PRSC (I to IV)

Innovative Examples of Multistakeholder Innovative Examples of Multistakeholder Engagement in WB OperationsEngagement in WB Operations

Strengthening Strengthening transparency & transparency &

oversight over the oversight over the use of budgetary use of budgetary

resourcesresourcesInvestment OperationsBangladesh Public Procurement Reform Project

Development Policy LendingHaiti Economic Governance Reform Operation I and II

User participation User participation & oversight in & oversight in

service provisionservice provision

Investment OperationsAndhra Pradesh, India District Poverty Initiatives Project; Morocco Initiative for Human Development Support ProjectDevelopment Policy LendingBrazil PHDSRL I; Georgia PRSC; Peru PSRL IIIEthiopia, Protection of Basic Services

Strengthening Strengthening participatory local participatory local

governancegovernance

Investment OperationsAlbania Community Works 2 Project; Bangladesh Local Governance Support Project; Ethiopia Capacity Building for Decentralized Service Delivery; Indonesia KDPDevelopment Policy LendingSierre Leone ERRC III

Strengthening Strengthening other formal other formal

oversight oversight institutionsinstitutions

Investment OperationsGuatemala Judicial Reform Project; Kenya Institutional Reform and Capacity Building Project; Legal & Judicial OtherWBI Parliamentary Strengthening Program

Other actionsOther actions

Development Policy LendingBangladesh DSC III

OtherWBI Media ProgramCommunity Radio InitiativesPartnership for Transparency Fund

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DecentralizationDecentralizationThe ChallengeThe Challenge

Decentralization is more likely to work when there is adequate capacity and two sets of accountabilities are in place Downward accountability between local governments and

citizens Allocation of responsibilities between central and local

governments• Assignment of service provision responsibilities• Assignment of fiscal resources (including local tax base)• Central fiduciary and performance oversight over local

In practice, the impulse for decentralization is political; high risk of being stuck in institutional ‘limbo’ (Albania; East Asia review – Cambodia, China, Indonesia, Philippines, Thailand and Vietnam)

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Making the Private Sector an Advocate of Making the Private Sector an Advocate of Governance ReformGovernance Reform

The two faces of the private sector Competitive, productivity-focused firms thrive on a level-playing field

Corrupt, rent-seeking firms thrive in the shadows

How to support competitive, responsible private sector? Create sound business environments, benchmarked internationally (Doing

Business Indicators)

Showcase examples & evidence that ‘avoiding corruption is good for business’ (Celtel’s Mohammed Ibrahim)

Support initiatives to promote business ethics and voluntary codes of conduct (ICC Code of Conduct, TI’s Business Principles, WEF PACI, UN Global Compact) – and create external verification mechanisms

Build coalitions of businesses and other stakeholders for anticorruption (Indonesia Business Link, Makati Business Club, Global Integrity Alliance)

Enforce global/regional laws & regulations (OECD Convention, UNCAC)

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Monitoring for ResultsMonitoring for Results Use aggregate governance indicators (e.g., CPIA, KKZ, TI

CPI) to indicate of extent and mix of governance problems

Use actionable & outcome indicators (e.g., PEFA, Global Integrity Index) to monitor progress in implementing priority governance and anticorruption reforms

Support participatory mechanisms for monitoring and mutual accountability (private sector, civil society)

Frontier challenge:

Improve menu of actionable and

outcome indicators

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Combating Corruption in World Bank Combating Corruption in World Bank OperationsOperations

Prevention Strengthen country systems

Identify high-risk operations, mitigate risk upstream

Prepare project anticorruption action plans

Increase disclosure and transparency; greater oversight and participation from civil society organizations

Create anticorruption teams composed of field staff to review project design & rate risk

Focus on corruption in portfolio review

IFC-MIGA to strengthen ethical corporate practices across their operations

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Combating Corruption in Bank Combating Corruption in Bank Operations (cont.)Operations (cont.)

Enforcement Independent review of INT in order to

strengthen investigation of corruption in projects

Continue to publicly sanction corrupt firms

Implement the Voluntary Disclosure Program (VDP)

Sanctions reform: on separate track, Board approved

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Coalitions

with civil society,

private sector,

parliamentarians, and

others (e.g., GOPAC,

PACI, Global Integrity

Alliance) to combat

entrenched

corruption networks

Donor

Collaboration

MDB harmonization

in high-risk settings

to avoid ‘mixed-

signals’;

coordinated donor

action to support

demand-side

initiatives

Global Collective Action Against Global Collective Action Against CorruptionCorruption

Global & Regional

Conventions (UNCAC, OECD, AU,

OAS, Asia-Pacific Action Plan)

need to be enforced to

curb transnational

corruption & facilitate

asset recovery

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Scale up governance work where it matters most for development– alleviate governance constraints to poverty

reduction

Moving Forward: Moving Forward: What Will the World Bank do Differently?What Will the World Bank do Differently?

Systematically scale up engagement with private sector & industrialized

countries – to tackle the supply side of corruption

Scale up multistakeholder engagement – with civil

society, media, parliaments, local

communities in policy making & service delivery

Work with donors & other int’l actors to ensure a

harmonized approach & collective action –

based on respective mandates & comparative

advantage

Systematically integrate governance in sectoral projects & programs – in extractive industries, infrastructure, forestry,

health, education

Strengthen country systems while enhancing

anticorruption measures in WB operations –

a/c action plans; enhanced disclosure, participation &

monitoring

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Emerging Elements of GAC Emerging Elements of GAC Implementation PlanImplementation Plan

- Country Governance & Anticorruption implementation plans (CGAC)

- Competitive fund for topping up country Bank budgets

- Performance reward & innovation fund for teams

1Country-

drivenProcess & Incentives

2Leadership Capacity &

Organizational Arrangements

3Country-level:

Sectoral Governance

& Engagement

4Diagnostics, indicators & knowledge

5Project-

level: Risk Management

6Global

Collective Action

– Bankwide leadership team to coordinate GAC work

– Regional clusters (2 pilots)– Multisectoral organizational

arrangements– Field advisors in high-risk

settings

– Donor coordination in high-risk settings (OECD-DAC GovNet & MDG Task Force)

– StAR Initiative-asset recovery– Multi-statkeholder alliances in

sectors (EITI, FLEG, PROFISH, MeTI, CoST, GIA)

– Guidance & good practice in integrating GAC in sectors

– New instruments for private sector work to curb ‘supply-side’ of corruption

– Guidance on engaging with non-governmental stakeholders (media, etc.)

– Integrated fiduciary assessments in project preparation

– Risk reviews– AC action plans & teams– Enhanced disclosure & 3rd

party monitoring– More regional supervision

– Diagnostics for CASs & key sectors

– Guidance & good practice notes for staff

– Accelerate development & use of actionable & outcome indicators

– M&E to evaluate impact

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