Meeting Summary
Daniel Kaufmann
Daniel Kaufmann started by outlining that his presentation
would cover (slide 2):
- the evolution of the World Bank's (WB) governance and
anti-corruption strategy (GAC)
- where we are now with GAC
- the main pillars of GAC
- fallacies and misconceptions about GAC
- debates about GAC
- the power of data
Outlining the evolution of GAC (slide 3), Kaufmann explained
that in the mid-90s there was a prohibition to mention,
let alone directly to work on governance at the WB. Only
when James Wolfensohn arrived as president in 1995, was
corruption taken up as a major issue. Over the past ten
years, work on corruption and governance more widely has
grown substantially. However, as the governance indicators
which started to be collected in 1996 reflect, across countries
overall progress has been limited over the past ten years
(some countries have seen governance improvements, while
governance has deteriorated in others). This has led to
calls for a new GAC strategy by the WB's new president,
Paul Wolfowitz.
He explained (slide 4) that governance and anti-corruption
are not synonymous. The set of institutions one needs to
look at to examine governance is much broader than those
for anti-corruption. Rather, corruption is one important
aspect of poor governance.
In outlining the need for a GAC (slide 5), Kaufmann explained
that there were three main factors in this process. Firstly,
citizens and government reformers from emerging economies
have been asking the WB 'where have you been?'; secondly,
the evidence that better governance is a key issue in improving
aid effectiveness; and thirdly, there is a new global environment
regarding governance and anti-corruption.
In outlining the main pillars of GAC (slide 9), Kaufmann
emphasized that it was very much in support of thw wider
goals of development and poverty alleviation.
There are 3 key levels (slides 10 to 12) on which the GAC
is intended to operate:
- country (systemic issues are crucial)
- project (this involves both sectoral expertise and investigations)
- global and local partnerships (this involves donors, both
bilateral and multilateral - a new agreement was reached
on this systemic-level collaboration in Singapore; NGOs;
a network of reform champions; and alliances of private
sector groups)
In outlining the next steps for the GAC (slide 15), Kaufmann
explained that this was a subject for debate. The strategy
paper was approved in Singapore, but the details of its
implementation were not spelt out therein. It is expected
that there will be a report on the strategy for the Spring
meetings in April.
Kaufmann then outlined eight of the most common misconceptions
and concerns relating to the GAC (slide 16)
In outlining the questions, debates and challenges ahead
for the GAC (slide 17), Kaufmann explained that one of the
major questions was whether and how to engage on the 'demand'
side of governance, and also maintaining the perspective
that other factors apart from poverty matter - for example,
at the macro-level, lessons from aid effectiveness/failure
could be brought to bear.
Verena Fritz
In her role as discussant, Verena Fritz started by stating
that there are still many questions to be answered on issues
of governance and anti-corruption, but that the worldwide
governance indicators contribute in a major way to the state
of knowledge on GAC.
She explained that she wanted to cover four main points
in her discussion:
- country categorisation
- resources required for anti-corruption strategies and
assessments
- conditionality and transaction costs
- lesson learning
Referring to the 4 groups of countries set out in the GAC
(relatively well governed; high opportunity for governance
improvements; major obstacles; exceptional risk) she stated
that, for the latter two categories, there are many challenges
facing such countries. Furthermore, she raised the question
about criteria for deciding about how to categorise countries.
Referring to the resources required for implementing and
assessing anti-corruption strategies, Fritz stated that
'high opportunity' countries in particular, can be a very
tricky category as they can quickly 'fall from grace' -
for example, after the Orange Revolution in the Ukraine,
there was a 'high opportunity' situation, yet one and a
half years on, it still lags far behind expectations. This
could also apply to Kenya since the elections in 2002. There
are therefore many challenges in reacting to changes within
countries with regard to the different categories and to
operationalise the WB's concepts.
On conditionality and transaction costs, Fritz stated that
there is a commitment at the policy level not to re-increase
the use of conditions, but there is also the risk that operational
teams further down the line nonetheless will do so; and
may even chose conditions such as the creation of AC agencies
which have been recognized not to be effective. On transaction
costs, there is much ODI work on aid effectiveness, the
Paris Declaration, etc. There is a risk that implementing
the GAC will increase transaction costs of aid - how will
this issue be dealt with?
On lesson learning, Fritz stated that this should be much
more hard-headed - for example, the 'demand' side needs
to be strengthened - what works and what doesn't? There
is a need for broader comparative evaluations - for example,
anti-corruption commissions don't work. There are therefore
many new challenges which remain.
Finally, Fritz added that the findings from the governance
indicators indicated that there had been improvements in
freedom and democracy but not necessarily in terms of government
effectiveness. She observed that it is surprising that there
isn't more of a visible improvement in Africa, given the
effort that has gone into capacity building on that continent
over the last ten years. She also warned of the dangers
of 'feckless pluralism' - there may be a wider choice of
parties, but this does not mean that new governments may
be more effective. In addition, the first indicator, 'voice
and accountability', actually measures civil freedom and
there is no good accountability indicator to measure whether
governments are actually accountable.
Discussion
Questions and comments raised in the discussion included:
- The WB and other institutions tend to talk only to the
elites in countries, not citizens - this is a very narrow
conversation. Does this not limit the WB's ability to measure
governance?
- Is one indicator more important than the others - i.e.
government effectiveness? Have there been problems in bringing
the different indicators together? Is it valuable to do
so?
- With regard to the issue of DFID withholding £50million
from the WB recently - does this indicate a lack of trust
with regard to President Wolfowitz?
- In terms of measuring 'accountability' - this term only
really exists in the English language and does not translate
easily into other languages. Instead it is necessary to
describe 3 or 4 different concepts. Would it therefore be
more useful to break this concept down into several more
easily understandable pieces of analytical work?
- With regard to aid effectiveness, shouldn't we be doing
less, but doing it differently?
- There are different 'means' of accountability - for example,
the UK and France have very divergent views. The meaning
of the term also varies between the public, private and
voluntary sectors. In addition, the concept of 'demanders'
and 'suppliers' in terms of accountability is also flawed
because the voluntary sector could be perceived as both.
- A 2004 WB report into the political and economic state
of Uganda found that it was doing well with regard to GAC,
but it now appears to be slipping, lubricated by WB unconditional
budgetary support. Is this accountability and/or conditionality?
How does the WB reconcile this if the funding they deliver
appears to be fuelling such a decline?
- Has the WB considered using a classification which is
dependent on the size of a territory? For example, applying
the indicators at a provincial level might be more useful
for large countries.
In his response, Daniel Kaufmann stated:
With regard to the categorisation of countries, Kaufmann
agreed that most developing countries fall into the middle
of the four categories and have major challenges and constraints
which the WB programme will need to be tailored to. There
is a need to engage differently and more smartly with countries
in selected, focused areas. With regard to the Ukraine and
Kenya: political analysis has not been one of the strengths
of the WB - this is a problem which needs to be addressed.
Country leaders also need support to implement their actions.
The process should also be de-centralised and there should
be a framework of mutual accountability rather than conditionality.
On the indicators, these are aggregates from existing indicators,
and rely on a set of responses from a broad cross-section
of people. These responses do show some progress. For example,
Singapore does very well on 4-5 of the 6 indicators, but
it is an outlier with regard to voice and accountability.
With regard to the aggregation of the indicators, the WB
prefers not to do this since there would be no clear methodological
base for doing so, but some other researchers have taken
the data and aggregated it in various ways.
With regard to issue of trust in President Wolfowitz, the
DFID WB funding issue is already close to being resolved.
The argument on this issue must be professionalised so there
is clarity on the way forward. It is important to note that
the DFID White Paper on governance does not differ substantially
from the WB's approach.
With regard to the WB report on Uganda, Mr Kaufmann stated
that an approach is needed which furthers both development
and poverty alleviation. There have been accusations of
arbitrariness levelled at the WB and there is a need for
a paper on how to conceive these ideas and also on the power
of the data. It is always necessary to ask tough questions
but preferably without disengaging from countries.
With regard to territory size, working at the provincial
level in large countries does makes sense and the WB is
already doing this in Mexico - and there has been a request
for the same from India.
There would be definite advantages of GAC work being independent
from the WB, but if this was the case, no internal influence
could be brought to bear. All the data is on the website
- there is no WB influence over this, so in that sense,
the data itself is independent. This is a core competence
of the WB. Though the WB is already engaged with many colleagues
and experts in these sectors, but there is a challenge of
getting relevant anti-corruption and governance expertise
into the WB.
In her response, Verena Fritz stated that the WB
may not be particularly well equipped to become a major
player on governance and anti-corruption issues; since its
fundamental expertise is around economic issues. However,
given its importance as a development institution and 'agenda
setter' it is welcome that it seeks to become more engaged;
and now we have to see how this can best be done.
In conclusion, the chair, Julius Court, summed up
by stating that this area is very much still a work in progress
for both the Bank and for DFID. He asked for people to stay
engaged with the issues and to hold Daniel Kaufmann accountable
for what he has said about GAC at the WB. He added that
it was important to clarify that DFID withheld £50million
of funding from the WB was in fact due to concerns over
conditionality and not the GAC strategy.
