Why governance matters

• Empirical evidence and research show that effective and well functioning public institutions, regulatory quality, control of corruption and transparent decision making processes, are the building blocks of modern economies capable of delivering quality, affordable, and equitable public services and goods for their citizens.

• The absence of good practices in governance hurts the whole economy, and affects the poor the most. Promoting good governance is good for poor people and for sustainable development. 

• The World Bank Group focus on governance and anticorruption follows from its mandate to reduce poverty—a capable and accountable state creates opportunities for poor people, provides better services, and improves development outcomes.

The World Bank’s strategic approach to promoting good governance

• The World Bank Group developed its Governance and Anti-Corruption (GAC) Strategy between November 2006 and January 2007 through a global multi-stakeholder consultation process.

• The strategy recognizes that countries have primary responsibility for improving governance. The World Bank Group commits itself to support a country’s own priorities, and to engage with a broad range of government, business, and civil society stakeholders in promoting GAC reforms. It also seeks to strengthen, rather than bypass, country systems—recognizing better national institutions are the more effective and long-term solution to governance and corruption challenges, and mitigating fiduciary risk for all public money, including that from the Bank. Finally, the strategy underscores the importance of coordination with other aid donors, international institutions, and other actors at the country and global levels to ensure a harmonized approach, and coordination based on respective mandates and comparative advantage.

The World Bank’s work for better governance

• The World Bank Group governance work cuts across all sectors and encompasses corporate and public sector governance.

• Public sector governance at the World Bank spans public finance management, transparency and accountability; anti-corruption; public voice, participation and accountability; and decentralization.

• The World Bank Group, through its private sector arm, the International Finance Corporation (IFC), champions the Group’s corporate governance work in emerging economies applying principles such as best practices, shareholder rights, the internal control environment, and transparency and disclosure. This work is complemented by the Extractive Industry Transparency Initiative (EITI), which supports improved transparency and accountability in the oil, gas and minerals sectors. Recently the World Bank introduced the EITI ++, which furthers transparency efforts along the entire value chain.

• The World Bank also makes available benchmark tools to help countries measure their progress on governance. The World Bank Worldwide Governance Indicators (WGI) is one of these tools; it covers 212 countries and territories.

• Finally, the World Bank Group instituted measures to improve governance internally, through actions towards greater organizational integrity, and minimizing corruption on World Bank-funded projects, thus integrating good governance and anti-corruption as important aspect of its development mission.

What concrete actions has the Bank taken to promote good governance?

• In Sub-Saharan Africa the Bank is working with governments, the private sector and civil society, and is providing technical assistance, advisory services and analytical work. For example, a focus on governance can be found in Public Sector Reform Projects; Decentralized Planning and Financing Projects; Financial Sector Technical Assistance Projects; Municipal Development Projects; and Poverty Reduction Support Credits. The latter looks at the broader spectrum of reforms aimed at improving the state’s capacity and poverty reduction efforts.

• There have been significant improvements on financial and budget management in many countries in the region. In Mozambique for instance, the monitoring and evaluation of government performance has improved significantly, and government budget execution is now better aligned with its own poverty reduction strategy targets. Through the Decentralized Planning and Financing Project, the law on local organs of state has been created and approved, and places the district at the center stage of development.
  
• In many parts of Africa, and thanks to improvements made in governance in recent years, more schools and hospitals with better and more affordable services are being provided. Better roads are being built with improved maintenance services; access to potable water is better managed; and improvements have been made in the collection and management of fiscal revenues. 

• On the business front, there are tremendous gains in fighting red-tape across the region, with many countries in Africa joining the Doing Business top reformers club. In 2008, three African countries were among the top ten business-friendly reformers.