NGOs Critically Examining Bank Governance Strategy

28 July 2016

By Toby McIntosh

The World Bank’s emerging thinking on governance issues is receiving somewhat critical early reviews from non-governmental organization leaders.

Clues about Bank’s potential directions in this area are coming from selectively circulated drafts of the Bank’s World Development Report 2017 (due out later this year). The report’s theme is “rethinking the role of governance in development.”

That emphasis comes at a time when the Bank has trimmed its commitment to governance work. The Bank earlier this year let go its three staffers who worked on freedom of information issues. (See FreedomInfo.org report.) The Bank has halved its financial commitment to a fund that supports national accountability projections run by civil society organizations. (See FreedomInfo.org report.)

These signs, and the Bank’s emerging report (WDR), are being closely watched by NGO activist who think the Bank needs to do more to encourage good governance.

Discussion over what strategies to employ come against a backdrop of general concern, as one veteran observer told FreedomInfo.org, that “the [Bank] leadership commitment to this agenda is simply missing.”

A coalition of NGOs will be meeting in the week of Aug. 1 with Deborah Wetzel, the Bank’s Senior Director for the Governance Global Practice.

Some 130 NGOs wrote the Bank in early June protesting the decimation of its FOI staff, receiving a reply that triggered a subsequent request for more concrete information and a meeting. That letter has gone unanswered.

Encouraging good government, widely seen as vital for economic development, has always been a sensitive topic for the Bank. The Bank’s charter forbids it from interfering in national politics. Governance-related projects encouraged by the Bank typically concern public administration reforms and procurement polices.

The Bank concept note for the WDR suggested an interest in looking more closely at national political environments, possibly bringing such analysis “out of the governance ghetto” to which some critics feel it has been consigned.

The Bank’s concept note says the Bank should explore “what are the potential power imbalances that may limit the effectiveness of this intervention because of the implicit incentive structure?” It also states, “International actors cannot reform countries, but they can help change the domestic balance of power in favor of reform.”

Bigger Role for Transparency?

A related Bank research report, recently released, puts transparency at the center of what would be a radically new approach to Bank funding.

The report suggests that the Bank shift to giving lump‐sums payments to governments, who would decide for themselves what projects to fund, but “conditional on those measures that promote citizen engagement and transparency, so that the financial transfers contributes to overcoming the government failure.”

The co-author of that report, Shantayanan Devarajan, also is leading the drafting of the WDR.

Will WDR Be Influential?

Duncan Green, strategic adviser for Oxfam GB and author of the book“From Poverty to Power, praised the draft report in general while offered some caveats and speculating about its potential impact.

Describing “the good stuff,” Green said:

A huge contribution is that it squarely locates power as a core issue both to understanding and influencing development. It identifies the ‘policy arena’ as the missing link between formal rules and development outcomes. The policy arena is where all the interesting stuff happens: where different groups bargain over cash, policies and implementation.

But Green would like to see more attention to disenfranchised and excluded groups. Also, he wrote: “Its understanding of power is limited/compartmentalized, with a focus on formal power (both de jure and de facto). There is no discussion of hidden/invisible power, or power within.” The attention to citizen engagement is “superficial,” he said.

“Will it have much indirect influence, either within the Bank or more broadly?” Green asked, replying, “I’m a bit worried to be honest.”

The report may be “watered down,” he speculated, and “it is pretty inaccessibly written.” He concludes:

Best outcome? The Bank’s bigwigs, from Jim Kim downwards, get behind this and the WDR emerges as good as/better than the current draft. Then the Bank gets together with other aid organizations and sets up an implementation unit/do tank to turn its analysis into concrete plans for doing development differently, and puts some resources behind trying them out, including making sure the Bank has enough staff to support such ideas (its capacity in this area seems to be on the downturn of late). Well you can always dream…..

Hudson Analysis

Global Integrity Executive Director Alan Hudson has been critically examining the Bank’s approach to governance issues, too.

He also has drawn attention to a strategy paper on Governance and Institutions prepared as part of the ongoing replenishment (funding) discussions around IDA. The governance chapter is reportedly being revised.

Concerning the WDR, Hudson wrote in a recent blog post:

In our view, the WDR could be strengthened – as could the IDA18 Replenishment process and other aspects of the World Bank’s operations – through a stronger focus on adaptive programming; the provision of technical and financial assistance in ways that, taking on board the fact that politics and context are key, support locally-led and context-sensitive efforts to address implementation gaps and contribute to better development results.

He said that a WDR “that puts power and politics center-stage, and that focuses more on function rather than form and best-fit rather than best-practice, would be a great step forward.”

Several weeks ago, Hudson wrote that the WDR draft lacked much operational guidance.

Responding to reader requests for more specifics, Hudson has made a series of suggestions about what “adaptive programming means,” beginning with:

Problem diagnosis: Up-front investment in problem diagnosis and political economy analysis, involving local stakeholders, to establish a clear framework (theory of change) for implementation, monitoring, reflection and adaptation.

Lump Sums, More Transparency

Two recent reports by Bank staff members highlight a potentially larger role for transparency in Bank development policy.

One report ­– “If Politics Is the Problem, How Can External Actors Be Part of the Solution?” – is authored by Shantayanan Devarajan and Stuti Khemani.

Their “new model of development assistance that can help societies transition to better institutions” prescribes that “knowledge assistance should be provided to citizens to help them in holding the government accountable.”

They state, “External actors should target transparency to nourish the growing forces of political engagement. External agents have technical capacity for generating new data and credible information through politically independent expert analysis.”

They also propose that Bank support be provided in “a lump‐sum manner (that is, not linked to individual projects), conditional on governments’ following broadly favorable policies and making information available to citizens.”

Transparency, they wrote “can be targeted to nourish the growing political engagement and thereby complement other capacity building efforts to establish effective public sector institutions.”

They emphasize the role of external actors with the technical capacity for generating new data and credible information. “The information provided through transparency must be specific about both policy actions and the resulting outcomes, so that citizens can use this information to select and sanction leaders.” They stress that “media markets are crucial to foster healthy political engagement.”

Transparency, broadly defined, also is featured in another recent Bank report, “Making Politics Work for Development: Harnessing Transparency and Citizen Engagement,” whose lead author was Khemani. Among its messages:

–   “Transparency can support political engagement in order to overcome government failures. In contrast, transparency initiatives that do not improve political engagement are unlikely to be effective.”

–   “The design of transparency is important—the nature and credibility of sources of information, and media through which it is communicated—all matter.”

–   “Transparency is most effective when it supports the generation of specific, reliable, and impartial evidence on the performance of leaders tasked with the delivery of public policies.

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Filed under: IFTI Watch

ABOUT IFTI WATCH

In this column, Washington, D.C.-based journalist Toby J. McIntosh reports on the latest developments in information disclosure in International Financial and Trade Institutions (IFTI).
Contact: freeinfo@gwu.edu or
1-(703) 276-7748