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Drilling Down Through Selected Governance

Diagnostic Tools

Francesca Recanatini

Sr. Economist, PRMPS

The World Bank

April 23, 2007

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Objective of this session

Which empirical tools and approaches are already available?

How can we select among them? How can such assessments be used for our

operational work?

Which governance tools are more operationally relevant for our work?

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Governance 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 helps combat corruption by addressing its underlying causes

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Governance receives extra weight in CPIA indicator-based allocations of IDA funds

All Country Assistance Strategies (CASs) are required to address governance issues, including corruption

Increasingly, CAS’s are centered around governance issues

A key focus of the Bank is to help countries to improve their governance systems to mitigate risks for all stakeholders

How does governance fit into ouroperational agenda?

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Existing WB Empirical Tools

BEEPS IGR Public Official

surveys PER and PETS QSDS Score Cards Investment Climate

Surveys

EC Audits CFAA CPAR GAC Case Studies HIPC Exp. Tracking ROSC Life In Transition Survey

(ECA region)

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Existing Non Bank Tools (Sample)

TI Perceptions Index UNDP GAC Freedom House Press

Freedom Indicators MCC ratings Afrobarometer Surveys Global Risk Service Business Enterprise

Environment Survey Latinobarometro Surveys

Media Sustainability Index

Business Risk Service Transition Report Global E-Governance Global Competitiveness Global Integrity Index Human Rights Database Open Budget Initiative Reporters w/o Borders

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Key starting points

1. What is the purpose of the assessment?

Research and analysis Awareness raising Policy and Action planning Capacity building Monitoring

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2. What is the focus of the assessment?

Governance as a whole Corruption Performance of a specific agency/sector Quality of a specific public service delivered

Key starting points

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Linking the Tools to State Institutions

PERHIPC E.T.ROSCCPAREC Audits

CFAA

IGR & GAC & Governance Cross-Country Ind.

BEEPS & INVEST.CLIMATE

SCORE CARDS

QSDS

Public Official Surveys

Political System- Cam paign Finance- Recruitm ent/Patronage

Executive Branch- Core Accountability M echanisms- Key Sectors: Revenue, Expenditure & Regulatory Agencies

Legislative Branch- Parliam entary O versight- Parliam entary Safeguards

Judicial Branch- Judicial Independence- Judicial Predictability- Prosecution & Trial of Corruption Cases

Sub-National Governm ent- Transparency and Responsiveness- Accountability M echanisms

Users- Households- Enterprises

Service Delivery Agencies- Accountability M echanisms- Accessibility and Responsiveness

PETs

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Linking Governance Tools to Accountability

CitizensCitizens

Politicians/Politicians/PolicymakersPolicymakers

Public Public ServantsServants

Deleg

atio

n

Deleg

atio

n/

Voice

Voice

Politi

cal

Politi

cal

Accou

ntab

ilit

Accou

ntab

ilit

yy

Internal

Internal

Accountability

AccountabilityD

elegation of

Delegation of

Implem

entation

Implem

entation

public goods/ servicespublic goods/ services

client power/client power/social social

accountabilityaccountability

PETs

GAC; BEEPS; PETsScorecardsDoing Business

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MonitoringMonitoring

CASCAS

Operations & Operations & Capacity buildingCapacity building

Actionable indicators:PFM indicators (including PEFA, CPAR and CPAA); scorecards; Doing Business; GACs; BEEPS

Political Governance Diagnostics; GAC Diagnostics, LITS

Specialized technical reports:BEEPS; PETs; IGRs;GSDS; ICAs; PERs: GACs

Linking Governance Tools to Accountability

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Governance tools for operational work

Three examples:

Public Expenditure Tracking Survey

BEEPS

Governance and Anti-Corruption Diagnostic Surveys

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Goal: Assess fiscal leakages given significant share of intended resources do not reach the frontline

Country Year Sample Leakage Estimate

Ghana 2000 200Clinics

80 % Non-Salary

Ghana 2000 200Schools

49 % Non-Salary, 35% Salary (primary)52% Non-Salary, 25% Salary (secondary)

Honduras 2000 805 staff;35 Clinics

2.4% of all workers on the payroll considered ‘ghosts.’ Absenteeism estimated at 27%. 5.2% of workers were not actually in the assigned post but had moved to other location (5.2%)

Madagascar 2003 185Schools

8-10% of cash transfers

Source: World Bank (2005) PETS Review

Public Expenditure Tracking Surveys (PETS)

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The PETS Cycle

1. Define Objectives Sector Identify Flow(s) Scope/ Complements

2. Map Flows Begin/ Endpoint # Layers/ Junctures Admin.Level

3. Measure Leakages Specify Leakage Types Sampling

4. Present Findings “Headline” Leakages Leakages patterns/ junctures

5. Inform Policy PFM Reform Accountabil.-Actionable Measures

The Prototype: Uganda Education PETS Remains Most Successful Case “Leakages” of Funds Going to Schools Reduced Significantly

(~ 13% (1996) to 82 % (1999) Methodologically Relatively Straightforward Flow

Central Government Disbursed Capitation Grant to Districts, Districts On-ward disburse to Schools.

Allocations Largely Reached Districts, But Allocations Did Not Reach Facilities

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PETS Coverage

PETS have now been conducted in 24 countries, almost exclusively in health and education.

Source: Chaudhury, N et. al. 2004

Country YearEducation Health Water Transport/

RoadsAgriculture/

Rural

Albania 2004

Azerbaijan planned

Cambodia planned

Cameroon 2003

Ghana 2000

Honduras 2000

Madagascar 2003

Mozambique 2001

PNG 2002

Peru 2001

Rwanda 2000

2004

Senegal 2002

Tanzania 1999

2001

2003 (pilot

)

Uganda 1996

1999

Zambia 2001

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Is corruption in Eastern Europe and the former Soviet Union getting better or worse?

What explains the changes? What motivates reform? Are there lessons for other regions?

Goal: Analyze how corruption, regulatory burden, and public sector factors affect the business environment

“Business Environment and Enterprise Performance Survey” (BEEPS)

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“Business Environment and Enterprise Performance Survey” (BEEPS)

Joint initiative with EBRD 20,000 firms in 3 rounds (1999, 2002, 2005) 26 transition countries 6 European comparators in ‘05: Ireland, Germany, Greece, Portugal, Spain,

Turkey (+ Korea and Vietnam) Focus on corruption in enterprise-state interactions

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31%

26%

20%

10%

0%

10%

20%

30%

40%

50%

1999 2002 2005

pe

rce

nt

of

firm

s s

ay

ing

bri

be

s a

re f

req

ue

nt

Transition Countries

Comparator Countries

BEEPS Results

Corruption is falling for the region as a whole (though not yet to W.Europe levels)

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0%

25%

50%

75%

100%

Geo Lat Slk Tur Bul Rom Aze Rus Alb Kyr

pe

rce

nt

"fre

qu

en

t"

… more in some countries than others … Bribe Frequency, 2002-2005

BEEPS Results

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… and not all sectors saw improvement.

0%

5%

10%

15%

20%

Fire andBlg Insp.

Courts Customs Bus.Licenses

Taxes Gov.Contracts

per

cen

t "f

req

uen

t"

comparator countries

2005

transition countries

2002-2005

BEEPS Results

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Governance and A-C diagnostic surveys

A demand-driven process to improve governance and build local capacity

Key features: Three surveys: households, firms, and public officials Questions focus both on experience and perceptions Questions are tested and adapted to local realities Rigorous technical requirements in implementation Local institution implements, with guidance from

international experts

Goal: Greater local capacity, baseline governance data, & action plan for policy reform

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The power of diagnostic data and key dimensions for analysis:

Unbundle corruption – administrative, state capture, bidding, theft of public resources, purchase of licenses

Identify weak and strong institutions Assess the costs of corruption on different

stakeholders Identify key determinants of good governance Input to develop concrete policy

recommendations

Governance and A-C diagnostic surveys

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1. Establishment of Steering Committee

2. Diagnostic surveys + analysis

3. Draft of the NAS

4. Public dissemination + discussion

5. Revision of the NAS

6. Implementation by Government

7. Monitoring and Evaluation of NAS

Challenge: poor governance and corruption

WB

I T

ech

nic

al A

ssis

tan

ce

Key Partnership: Government + Civil Society

Country Implemented

The study as part of a larger process

CAPACITY BUILDING

• Local firm collects data• Local enumerators trained• Local supervision by

technical cmte.

Collects EXPERIENCE& PERCEPTIONS data from serviceUSERS & PROVIDERS(3 sources)

End WB T.A.

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CountrySurvey

InstrumentsData Collection Report Dissemination A-C Strategy

BeninFinalized in

2005Completed, 2006

In Progress (Summer 2007)

Pending Pending

HaitiFinalized in

2005Completed, 2006

Completed (release

May/June 2007)

Planned

Summer 2007Pending

Malawi(Completed

independently by Country)

(Completed independently by

Country)

(Completed independently by

Country)

Completed (w/WB) February 2006

In Progress

Kenya Under reviewPending

(Summer 2007)Pending Pending Pending

Mauritania

In Development Pending (Summer 2007)

Pending Pending Pending

El Salvador

In DevelopmentPending

(Fall 2007)Pending Pending Pending

Burundi Finalized 2007Pending

(Summer 2007)Pending Pending Pending

Governance and Anti-Corruption Diagnostics2006-2007

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0% 15% 30% 45% 60% 75% 90%

% of public officialsreport frequent public

funds mis-management

% of public officialsreport frequent

purchase of positionsin their institutions

% public officialsreport frequent casesof corruption in public

administration

Sierra Leone(2003) Guinea(2004) Guatemala(2004) Zambia(2003)

Paraguay(2005) Mozambique(2004) Madagascar(2005)

Country Diagnostic Results

Extent of corruption, (Selected Countries ‘03-’05)Extent of corruption, (Selected Countries ‘03-’05)

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Corruption penalizes especially the poorest citizensCorruption penalizes especially the poorest citizens (% of monthly income paid for bribes as reported by households who sought a public service, 2000-2005)

0.0

5.0

10.0

15.0

20.0

25.0

Ecuador

(200

0)

Perú(2

001)

Hon

duras(2

001)

Guatem

ala(2

004)

Zambia

(200

3)

Sierra

Leo

ne(200

3)

Ghana(

2000)

Guin

ea(2

004)

Paragu

ay(2

005)

Madaga

scar (

2005

)

Moza

mbiq

ue(200

4)

Low Income Middle income High income

Country Diagnostic Results

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Percentage of household income spent on bribes to obtain services, by income status (as reported by households), Sierra Leone, 2003

0% 5% 10% 15% 20%

Public health services

Public education services

Income Tax Department

Judges/Courts officials

Municipal/Dist. Councils

Surveys and Lands

percentage of household income spent on bribeshigh income

middle income

low income

Corruption increases inequalityCorruption increases inequality

Country Diagnostic Results

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Managers and bribes to obtain public services, Managers and bribes to obtain public services, Guatemala 2004

0% 5% 10% 15% 20% 25% 30% 35%

Registry of property

Construction permits

Water Service Providers

Customs

Tribunals

Ports

Vehicle inspection

National Police

% of managers reporting that they were asked for a bribe when seeking these servicesNote: Thin lines represent margins of error (95% confidence intervals) for each value. They show the range where the true (population) proportion would lie with probability 0.95 if we had drawn a random sample from this population. Figures are calculated for those managers who contacted the agency btwn July ‘03 and July ‘04. Selected services.

Country Diagnostic Results

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Cost of corruption, by firm sizeCost of corruption, by firm size (as reported by managers, Guatemala 2004)

0% 10% 20% 30% 40% 50%

Sanitary Inspections

Customs

Vehicle Inspection

National Police

% of managers reporting that they were frequently asked for a bribe when seeking attention at these agencies

Small Medium Large

Note: Figures are calculated for those enterprises that sought attention at the institution between July 2003 and July 2004. Services selected out of 12 for which data are available.

Country Diagnostic Results

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Country Diagnostic Results

Corruption imposes barriers to households to Corruption imposes barriers to households to access basic services,access basic services, Sierra Leone 2003

Cost of Corruption:discouraged users by service

0% 5% 10% 15% 20% 25%

Municipal and District Councils

Public education services

Public health services

Sierra Leone Roads Transport Authority(RTA)

Sierra Leone Housing Corporation(SALHOC)

Proportion of head of households reporting that they decide to not conduct procedures with these institutions because they couldn't pay the unofficial costs

Sierra Leone Housing Corporation

0% 10% 20% 30%

high incomemiddle incomelow income

0% 10% 20% 30%

Sierra Leone Roads Transport Authority

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Corruption affects differently Urban and Rural Corruption affects differently Urban and Rural areasareas (as reported by managers, Zambia 2003)

0% 10% 20% 30% 40% 50%

Rural

Urban

To obtain licenses and permits

To speed up legal proceedings in the judicial branch

To obtain basic public services

To update/revise tax status

To obtain contracts with state institutions

% of managers reporting that bribes are very frequent…

Country Diagnostic Results

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Guatemala(2004)

Guinea(2004)

Paraguay(2005)

Sierra Leone(2003)

Zambia(2003)

Mozambique(2004)

% of public officials reporting that the practice is frequent

Executive Legislative Judicial Local Governments

Purchase of positions in their institutions among Purchase of positions in their institutions among co-workersco-workers , as reported by public officials, 2003-2005

Country Diagnostic Results

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Practice of Purchasing JobsPractice of Purchasing Jobs (as reported by public officials, Zambia 2003)

0% 10% 20% 30% 40% 50% 60%

Min. of Finance and National Planning

Zambia Revenue Authority (ZRA)

Min. of Health

Min. of Education

Min. of Works and Supply

Min. of Mines and Minerals Development

Traffic Police

Zambia Telecommunications Company -ZAMTEL

Zambia Postal Services- ZAMPOST

Municipal government

Judiciary

superiors collegues at the same level

% of public officials reporting purchase of jobs is a very common practice among...

Country Diagnostic Results

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0 10 20 30 40 50 60 70 80 90

Min. of Defence

Min. of Development

Min. of Information

Nat. Commissions

Others

Para-statals

Min. of Finance

Min. of Local Govt.

Min. of Social Welfare

Min. of Education

Min. of Justice

S.L Police

Min. of Agriculture

Min. of Health

% of Public Officials that said irregularities/(misappropriations) are frequent

Public funds are mismanaged by agencyPublic funds are mismanaged by agency (as reported by Public Officials, Sierra Leone, 2003)

Country Diagnostic Results

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South North East West WHOLE

Prov. Prov. Prov. Area COUNTRY

Corruption in budget 35 43 48 39 40

Overall corruption 22 32 35 33 32

Corruption in public contracts 18 35 29 33 30

Corruption in personnel (2) 39 44 55 53 49

           

Accessibility for poor 85 74 87 74 78

Audit Mechanisms 55 59 66 58 58

Enforcement of rules 70 67 80 73 71

Politicization 21 34 22 34 32

Quality of rules 62 62 70 61 63

Resources 54 51 47 55 52

Transparency 51 55 53 51 55

Citizen voice 70 59 65 66 66

Meritocracy 66 65 70 69 68

Governance and corruption indicators by province, Sierra Leone, 2003

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To sum: a few salient lessons

Governance and A-C (GAC) studies affect the policy debate and serve as an input in the design of a National A-C Strategy

Transparency and public dissemination of the results are key

The approach must be participatory at each stage of the process

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A Few Salient Lessons, cont.

To unbundle corruption and institutional weaknesses allows to identify key areas for reform

Quality control and use of rigorous analytical methods enhance the credibility of the results

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WBI Governance on the Web

About Governance Diagnostics and Statistical Capacity Building: http://www.worldbank.org/wbi/governance/capacitybuild/about.html

Governance Diagnostic Surveys Country Sites: http://www.worldbank.org/wbi/governance/capacitybuild/d-surveys.html

Worldwide Governance Indicators 1996-2002: http://www.worldbank.org/wbi/governance/govdata2002/index.html

The Business Environment and Enterprise Performance Survey (BEEPS) 1999-2000: http://info.worldbank.org/governance/beeps/

The Business Environment and Enterprise Performance Survey (BEEPS II) 2002: http://info.worldbank.org/governance/beeps2002/

Courses and Surveys: Governance Diagnostic Capacity Building: http://www.worldbank.org/wbi/governance/capacitybuild/courses.html

Step by Step Guide to Governance Diagnostic Empirical Tools Implementation: http://www.worldbank.org/wbi/governance/capacitybuild/diagnostics.html