www.australia.cmu.edu leadership in governance and accountability prof emil bolongaita
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Leadership in Governance and Accountability
Prof Emil Bolongaita
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“Poverty is not natural. It is people who have made poverty and tolerated poverty, and it is people who will overcome it. And overcoming poverty is not a gesture of charity. It is an act of justice.” - Nelson Mandela
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Outline
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• Governance and market failures• Governance challenges in Nepal• Government failures: controlling itself (corruption)• Government failures: fostering enterprise (competition)• Thoughts on personal effectiveness
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“the manner in which power is exercised in the management of a country’s economic and social resources for development”
- World Bank (1992)
“the structure and functioning of the legal and social institutions that support economic activity and economic transactions by protecting property rights, enforcing contracts, and taking collective action to provide physical and organisational infrastructure”
- Avinash Dixit (2009)
“a government’s ability to make and enforce rules, and to deliver services, regardless of whether that government is democratic or not”
- Francis Fukuyama (2013)
Governance
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Market failures
If property rights are fully specified and transaction costs are zero, the allocation of resources will be efficient.
- Coase theorem
“a situation in which a market left on its own fails to allocate resources efficiently”
- Gregory Mankiw
“a situation in which a private economy lacks the incentives to create a potential market in some good, and the non existence of this good results in the loss of efficiency”
- Kenneth Arrow 1969
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• Monopolies• Externalities• Public goods• Asymmetric information• Tragedy of commons• Destructive competition
Examples of market failures
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Governance constraints
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• Quality of governance of a country impacts on bureaucratic capacity to deal with market failures.
• Countries with higher quality of governance have more bureaucratic capacity to develop and implement effective responses to market failures.
• Countries with poorer quality of governance have more institutional and organizational limitations to effectively dealing with market failures.
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Accountability matters
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• Accountability for government responsibility to deal with market failures is diminished by corruption.
• Corruption purchases public officials and distorts the policy process – tackling wrong problems and seeking wrong solutions.
• Corruption co-opts regulators to favor the regulated, and disadvantages ordinary citizens, who pay disproportionately or even when they shouldn’t be paying at all.
• Corruption captures judges and law enforcers and destroys rule of law and prevents institutional development.
• Corruption prevents access of the poor and marginalizes them.
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Low voice and accountability
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http://info.worldbank.org/governance/wgi/pdf/c166.pdf
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High political instability and violence
http://info.worldbank.org/governance/wgi/pdf/c166.pdf
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Low government effectiveness
http://info.worldbank.org/governance/wgi/pdf/c166.pdf
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Poor regulatory quality
http://info.worldbank.org/governance/wgi/pdf/c166.pdf
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Weak rule of law
http://info.worldbank.org/governance/wgi/pdf/c166.pdf
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High level of corruption
http://info.worldbank.org/governance/wgi/pdf/c166.pdf
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% of people asked, in the past three years, how has the level of corruption in your country changed
Government failure: corruption
Source: Daily Lives and Corruption: Public Opinion in South Asia, Transparency International, 2011.
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Citizen experiences of bribery by sector or agency
Source: Daily Lives and Corruption: Public Opinion in South Asia, Transparency International, 2011.
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Nepalis bribe to speed things up: efficiency calls!
Source: Daily Lives and Corruption: Public Opinion in South Asia, Transparency International, 2011.
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Many accountability agencies, but not enough accountability?
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• Limited jurisdiction• CIAA cannot investigate judiciary, military,
private sector, and impeachable officials • Limited capability of investigators and
prosecutors• Seconded to CIAA with limited experience
• Recruitment options narrow• Constrained by civil service rules, cannot
recruit at large
CIAA constrained
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Nepalis trust media most to fight corruption
Source: Daily Lives and Corruption: Public Opinion in South Asia, Transparency International, 2011.
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Nepalis consider political parties and parliament most corrupt: legitimacy problem
Source: Daily Lives and Corruption: Public Opinion in South Asia, Transparency International, 2011.
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Ease of Doing Business in the World 2015
Source: www.doingbusiness.org
Government can tackle market failures through more effective policymaking, regulation, enforcement, and service delivery in fostering competition and enterprise development.
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Domains of government effectiveness
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POLICY
REGULATION
ENFORCEMENT
SERVICE DELIVERY
1) Policy – government decision2) Regulation – rules for implementing decision3) Enforcement – incentives to ensure implementation4) Service delivery – citizen benefits
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Starting a business
Best in category: New Zealand - # of procedures (1), # of days (0.5 day), cost (0.3% of per capita income)
Source: www.doingbusiness.org
In DB 2014: Nepal made starting a business easier by reducing administrative processing time at the company registrar and by establishing a data link between agencies involved in incorporation process.
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Building a warehouse
Best in category: Hong Kong - # of procedures (5), # of days (66 days), cost (0.4% of warehouse value)
Source: www.doingbusiness.org
In DB 2015, Nepal’s ratings improved after Kathmandu Metropolitan City (KMC) implemented an Electronic Building Permit System where permit and design plans and other docs can be submitted online and processing can also be tracked online.
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Getting new electricity connection
Best in category: South Korea - # of procedures (3), # of days (18), cost (41% of per capita income)
Source: www.doingbusiness.org
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Registering property
Best in category: Georgia- # of procedures (1), # of days (1), cost (0.1% of property value) Source: www.doingbusiness.org
In DB 2010, Nepal ranking improved when it made property transfer easier by reducing the registration fee.
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Getting credit
Best in category: New Zealand – strength of legal rights (12), depth of credit information (8), credit bureau coverage (100%)
Source: www.doingbusiness.org
In DB 2010, Nepal improved access to credit information by starting to distribute historical data
Indicator Nepal South Asia OECDStrength of legal rights index (0-12) 7 5 6Depth of credit information index (0-8) 0 3 7Credit registry coverage (% of adults) 0 3.2 12.1Credit bureau coverage (% of adults) 1 11.3 67
DB 2015 Rank 116 DB 2014 Rank 111 Change in Rank -5
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Indicator Nepal South AsiaPayments (number per year) 34 31.4Time (hours per year) 334 325.3Profit tax (%) 17.7 17.9Labor tax and contributions (%) 11.3 8.7Other taxes (%) 0.5 13.1Total tax rate (% profit) 29.5 39.7
DB 2015 Rank 126 DB
2014 Rank 120 Change in Rank -6
Paying taxes
Best in category: United Arab Emirates – Payments (4x), Time (12 hours)
Source: www.doingbusiness.org
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Trading across borders
Indicator Nepal South Asia OECDDocuments to export (number) 11 8 4Time to export (days) 40 33.4 10.5Cost to export (US$ per container) 2,545.00 1,922.90 1,080.30Documents to import (number) 11 9 4Time to import (days) 39 34.4 9.6Cost to import (US$ per container) 2,650.00 2,117.80 1,100.40
DB 2015 Rank 171 DB 2014 Rank 169 Change in Rank -2
Best in category: Singapore – docs to export and import (3), time to export (5 days), time to import (3 days), cost to export and import ($460)
Source: www.doingbusiness.org
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Indicator Nepal South Asia OECD
Time (days) 910 1,076.90 539.5
Cost (% of claim) 26.8 30.4 21.4
Procedures (number) 39 43.3 31.5
Enforcing contracts
Best in category: Singapore – time (150 days), cost (25.8% of claim), procedures (21)
DB 2015 Rank 134 DB 2014 Rank 134 Change in Rank 0
Source: www.doingbusiness.org
In DB 2012, Nepal’s ranking improved due to Better oversight and monitoring in the court, and speeding up the process for filing claims.
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Indicator Nepal South Asia OECD
Time (years) 2 2.6 1.7
Cost (% of estate) 9 10.1 8.8
Recovery rate (cents on the dollar) 43.7 36.2 71.9
Resolving insolvency
DB 2015 Rank 82 DB 2014 Rank 78 Change in Rank -4
Best in category: Finland – time (0.9 years), cost (3.5% of estate), recovery rate (90.2 cents)
Source: www.doingbusiness.org
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Becoming a more effective leader
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1. Ask what needs to be done?2. Ask if is right for the organisation?3. Develop an Action Plan4. Assign responsibility for decisions5. Communicate decisions and actions6. Focus on opportunities, not problems7. Be productive with your meetings8. Say “We”, not “I”
Source: Peter Drucker, The Effective Executive.
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