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
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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
The World Bank
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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
The World Bank
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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
The World Bank
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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