Many thanks for the opportunity to discuss a topic that is vital for facilitating private sector led growth and development throughout the MENA region: the cause of good governance, integrity, transparency and anticorruption.
There are many different ways in which weak governance can impede development. It compromises the delivery of public goods and services to the citizens, particularly to the poor and the vulnerable. It complicates the task of regulating markets and creating an enabling environment for private-sector led growth. It undermines meritocracy in the public sector, as well as a government’s ability to allocate resources efficiently to achieve its desired ends.
Over the past fifteen years, analyses at both the macro and micro levels have demonstrated that countries where governance is weak see slower growth, worse delivery of services, and lower quality of life.
At the macro level, Paulo Mauro estimated that if Bangladesh could raise its governance to the quality of Uruguay, investment rates would rise five percent and growth by over half a percent per year. At the micro level, Ritva Reinikka, who is currently Director of our Public Management unit, found that as much as 80 percent of non-wage funding for education in Uganda was being diverted before it reached schools –with a significant negative impact on the quality of education. Similar findings have emerged in numerous studies across sectors and countries around the world. And in this region, the World Bank’s MENA Flagship report for 2003 focused on governance and highlighted some of the issues that the region faces in terms of improving accountability and inclusiveness for development outcomes. Using measures of overall governance quality created for the report, the MENA region came considerably behind comparator regions. The report estimated that this ‘governance gap’ cost the region as much as one percent per year in per capita GDP growth.
This year’s MENA flagship on the institutional environment for private sector-led growth illustrated the particular governance challenges facing entrepreneurs. Not least, the report discussed how old business elites benefited from favorable treatment from regulators government officials, stifling new entrants and competition. The median number of competitors for a firm in MENA is less than one fifth of the number in Europe and Central Asia, for example.
Yet there are reasons for optimism. Throughout the MENA region, there has been considerable movement on the governance and fiscal probity agenda over the past 4-5 years, with more changes currently underway.
You have had the opportunity to listen to our colleagues of the Integrity team who plays an important role the Bank’s engagement on issues of transparency, integrity and fiduciary probity. In performing this task, it is important that they forge close working relationships with those who are combating mismanagement and corruption throughout the region, including many of the agencies represented at this conference.
The challenge of weak governance is first and foremost an issue of development, and that means improving governance is part of the core business of the World Bank as a whole. As such, it is one of key responsibilities of operational units, which are in charge of the preparation and supervision of Bank-financed projects and programs.
The World Bank has been rapidly expanding efforts to assist our clients along the three dimensions of prevention, prosecution and public awareness.
Prevention is at the core of what we do, including much of our traditional public sector work on topics such as civil service reform and public financial management. The reform of core government systems and procedures can be slow and tedious work, but it is essential to tackle systemic bottlenecks that can burden the entire public sector. Much of this work is targeted towards attaining greater efficiency and productivity in public expenditure, but it can also pay dividends in terms of enhanced fiscal probity. We also work extensively on institutional development with sectoral ministries, which can both improve the quality of service delivery and reduce opportunities for corrupt or illicit behavior. Examples include:
- Work with the Egyptian Government to develop one stop shops that streamline investment procedures, therefore reducing opportunities for corruption;
- Improving the internal and external audit function in Yemen; and
- Conducting a public expenditure tracking survey to monitor resource flows in the health sector in Egypt, and Morocco.
Turning to the topic of prosecution, this is a relatively new area for us. Over the past five years, we have started working with countries in the region to review their obligations in light of the United Nations Convention Against Corruption (UNCAC) Treaty, which 15 MENA countries have signed and 12 have ratified. We have provided technical assistance on the legal framework for strengthening integrity and combating corruption, including income and asset disclosure and conflict of interest legislation; civil service codes of conduct; and whistleblower protection. We have helped clients examine key institutional questions, such as whether they should establish an ombudsman office or independent anticorruption agency. We have worked with new agencies, such as Yemen’s Supreme National Authority to Combat Corruption (SNACC), to help establish their operations. To support this, we have conducted comparative analytic work across the region on these issues, and Robert Beschel’s presentation discussed some of this work earlier.
Finally, we are supporting work on public awareness, including strengthening demand side governance and the role of civil society. We have been active in supporting public opinion surveys and polling data in a variety of countries, such as Egypt, Kuwait, West Bank & Gaza and Yemen, to better understand both public perceptions and actual experience with governance. To enhance transparency, we are working on government disclosure issues and freedom of information legislation in several countries, including Egypt, Kuwait and Yemen. We are also increasingly working with civil society, including a number of local Transparency International chapters as well as groups such as Global Parliamentarians Against Corruption.
Beyond our strong commitment to issues of good governance and improved public sector management as a key developmental objective in MENA, we also have been expanding our efforts to ensure that our projects adhere to the highest standards of financial probity. For this purpose, we have put in place one of the most stringent fiduciary safeguards system, and our procurement and financial management colleagues have long labored to ensure the integrity and effectiveness of our internal and external controls and procurement regulations. We have used governance scale-up resources to conduct a number of additional independent procurement reviews and to ramp up assessments of the accounting sector in selected countries. We are also moving to incorporate a more risk-based approach to project design and supervision. In performing all of these tasks, we are striving to balance the importance of achieving greater reliance upon country systems with the goal of ensuring that all of our project lending goes for the purposes intended.
Although the governance agenda has moved rapidly over the past decade, and quite a bit has been accomplished, we all have a long way to go in addressing this agenda. I am sure that this conference will mark another important step along this journey. We look forward to using this conference to deepen our relationships with existing clients and explore opportunities for collaborating with new ones.
