CAIRO: Well-governed countries are better able to produce policies that promote growth, deliver essential services to the poor and regulate financial and product markets, a report by the Independent Evaluation Group (IEG) said.
IEG, which reports directly to the World Bank Group’s boards of executive directors but conducts studies independently, released a report Thursday assessing the World Bank’s 2007 governance and anticorruption (GAC) strategy and implementation plan.
“This evaluation is concerned with the relevance and effectiveness of the GAC strategy and its early implementation efforts with regard to country operations,” said Vinod Thomas, director general and senior vice president of IEG, in a memorandum to the executive directors and the president of the World Bank.
On the mass protests and calls for regime change that have recently swept across the Middle East and North Africa region, the report said, “The appeal of governance reform and the fight against corruption can resonate widely across diverse countries and social groups, as demonstrated by recent events in [MENA].”
In order to be practical in MENA, the report took into consideration political-economic aspects, including population growth and urbanization, which “pressure state institutions,” and increased perceptions of corruption that led to extraordinary mass protests.
Reforms targeting marginalized groups have met with limited success, the report stated. “In addition to women, the youth and rural dwellers lacked basic access to services, markets, and jobs.”
As an outcome of the GAC strategy, the bank’s country programs in MENA were most likely to identify and maintain GAC efforts […] to improve governance in “natural resources management.”
While the bank’s success at project or institutional levels fared better, it saw limited success in “effectively addressing systemic corruption or deep-seated governance pathologies, such as distribution of public goods on the basis of loyalty.”
Projects which supported specific points during 2004-2010 made moderate progress, the report found. For example, 42 percent of projects that specified core public sector reform as an entry point had achieved their objectives to a larger degree.
“Similarly, 41 percent of projects that support demand-side entry points, for example, through community-driven initiatives, achieved their objectives,” the report said.
Moreover, operations supporting “domestic accountability, which constituted 30 percent of the operations, and investment climate operations, which constituted of 28 percent, were not as successful.”
According to Thomas, this first report is simply part of an ongoing process that is simply opening the door for a second step of implementation. This report focused on the first phase of implementation efforts that took place from 2008-2010.
“By contributing to a bank-wide learning process, this evaluation of an ongoing, multi-year effort seeks to inform a planned second phase of the GAC implementation.”
As part of the bank’s efforts to participate in international efforts to fight corruption, one of the 2007 GAC strategy and implementation plans included supporting multiple partnerships and collaborative programs to combat money laundering and the finance of terrorism.
The study however pointed out that the bank “could have gone further in improving the coherence of these diverse and sometimes fragmented efforts, and done more to strengthen the link between global efforts, and developing country priorities.”
Early outcomes of the study also showed that case studies proved the bank did not always evaluate the risks of corruption and fraud in projects consistently.
For example, as a result of this, studies showed that more strict approaches were recommended and that other countries were seen to be more susceptible to these risks than others, like Cambodia, according to the study.
On the other hand, more flexibility in the application of the bank rules was encouraged in countries like Liberia.
The study looked at the organizational restructuring of the bank’s integrity and vice presidency as well as how to strengthen its corporate investigations and sanctions regimes.
“The bank has tripled the number of countries in which it planned to support institutional strengthening for good governance, in particular, public financial management, service delivery, and the investment climate,” IEG said in a statement.
“The bank also increased its use of governance and political analysis in project design and relied more on countries’ own public management systems for managing aid resources, particularly in weaker states.”
Phase one of the plan “earmarked a total of $119 million for GAC implementation, consisting of $54 million in bank budget increments allocated for the fiscal year 2008-2011 period and $65 million in donor funds allocated for the fiscal year 2009-201 period under the largely bank-execute, Governance Partnership Facility trust fund,” the report stated.
The GAC results chain started with four bases of evaluation. The first was inputs for GAC in countries, sectors, projects and global. This step looked at funding and staffing as well as providing proper guidance tools, training and policies.
The second step looked at the responsive bank-country engagement observing selectivity, system strengthening, signaling and smart design.
Third, the evaluation observed intermediate outcomes in “capable and accountable states” by focusing on sound policies, improves service delivery, rules for the market and anticorruption.
Finally, there was an outcomes results chain of poverty reduction. This looked at growth, empowerment, expanding opportunity and reducing vulnerability.
This logical framework, which linked GAC inputs to outcomes, formed the overall basis of the evaluation.
The report, however, found that much more could be done in all of these fields in order to help build institutions as well as countries and alleviate governance problems, thus tackle corruption.
“More needs to be done in countries to build institutional capacities, to address fiduciary and governance risks, to improve measurement of governance results, and to help foster the demand for good governance,” IEG said in a statement.
“The evaluation also points out that the bank needs a more consistent approach in countries that experience worsening governance. This may help to address the perception — held by stakeholders inside and outside the bank — that there is a tension between the bank’s lending goals and its pursuit of good governance objectives,” IEG said in regards to the report.
The study emphasized that there “are more important opportunities yet to be seized” in order to get stronger results on the ground in the second phase of the implementation.
“This emphasis will require an updated approach to institutional strengthening — one that requires more innovative financial instruments, more systematic, harmonized and consistent risk management across the countries, and improved metrics for implementation and follow up,” Thomas added.
