Governance and Transport: Developing Frameworks for South Asia
The infrastructure sector is often viewed as susceptible to corruption. Making up between 10-20% of a country’s budget, transport sector is a major infrastructure expenditure. Corruption in transport projects can account for as much as 5-20% of transaction costs.
This, on top of similar levels of inefficiency, means that collectively strengthening governance and capacity in the transport sector could potentially save 10-40% of overall spending in the sector.
As well as improvements in resource allocation, enhanced governance can reduce mortality and injury through safer, cleaner and more accountable delivery of transport infrastructure and services.
Where does corruption manifest itself in the transport sector?
Transport can be defined in terms of infrastructure and services.
In terms of management and maintenance of assets there are opportunities for corruption throughout the life cycle. Examples include:
• Pre-bid phase: over design at feasibility stage to promote higher consultant fees during design phase or manipulation of design costs
• Bidding round: Collusion by bidders and/or public officials
• Bid opening and evaluation: opportunities for falsifying bid amounts during evaluation
• Implementation and supervision, opportunities for false Variation Orders, local kickbacks or substandard implementation
• Payment to firms: bribes sought for processing claims
Transport services can also operate within corrupt or weak institutional environment. The impacts can be felt through:
• Poor regulation e.g. bribes for vehicle or driver licensing leading to increased risk of traffic fatalities, bribes to let off traffic infringements, extortion by traffic police exacerbating poor accountability, failure to implement safety or environmental standards increasing risks to communities and the environment.
• Market behavior raising barriers to entry such as collusion and cartelization of bus and truck companies capturing freight and passenger services.
Corruption and poverty
The effects of corruption are felt by all but the poorest people are unable to mitigate these impacts. Failure to deliver infrastructure or services appropriately often means that project outcomes for target beneficiaries are not realized. The poorest people often have no voice to gain redress for injury or wrongdoing and as such continues to undermine their ability to lift themselves out of poverty.
Another direct correlation with poverty is that when politicians seek to affect priorities, less than optimal projects in terms of user needs get built, thereby missing opportunities of reducing social exclusion and eradicating poverty.
Meeting the challenge of greater governance and reducing corruption
Against the backdrop of the World Bank’s Governance and Anti-Corruption strategy, the South Asia region has made improving governance and public accountability a central theme. Advisory committees have been established to provide a platform for sharing experiences, disseminating best practice for identifying and mitigating against fraud, corruption and collusion risk in operations.
Governance and anti-corruption initiatives work on two levels: within Bank operations and within the economy as a whole.
In trying to improve the delivery of operations and reduce the risk of corruption, best practices are emerging which can be developed with our partners and clients. The initiatives can be clustered into national political economy features such as freedom of information initiatives, road public expenditure reviews and government-wide anti-graft initiatives on the one hand and more project specific fiduciary management measures on the other.
The latter would include reforms in financial management, procurement, third party monitoring, road user voice in agency performance monitoring, and overall civil society involvement in optimizing value for money.
Many of our projects now include Governance and Accountability Action Plans as a matter of course. There is increased scrutiny on the region to ensure a high level of integrity in projects as well as continued research and analysis (such as analysis of unit costs) into best practice for governance.
Some examples of how governance and corruption issues are integrated into transport projects in South Asia region countries are below:
Bangladesh
Initiative: Operational Risk Assessment of Roads and Highways Department
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India
Initiative: Development of Governance and Accountability Action Plan (GAAP) Guidance Note
Outcome: Diagnosis of sources of corruption and potential actions for capacity building within institutions. Guidance Note in development
Initiative: Study on Road Construction Industry in India
Outcome: Identification of areas critical to implement quality road development programs. Development of indicators to measure the performance of the construction industry.
• Orissa
Initiative: GAAP development for State Roads Project
Outcome: Under preparation in compliance with Right To Information Act and State-wide Anti-Corruption Action Plan. Initiatives include:
• Disclosure policy
• Website development and information management system
• Complaints handling system
• Citizens oversight/civil society involvement
• Actions for mitigating collusion in procurement and payment fraud
• Punjab
Initiative: Punjab State Road Sector Project – Action Plan for Enhancing Transparency and Accountability
Outcome: Introduction of mitigation measures to enhance disclosure of procurement information, transparency and oversight mechanisms including civil society oversight during implementation phase. Also set up mechanism for comments, suggestions and grievances.
Pakistan
Initiative: Assessment of capacity for implementation of large infrastructure projects in Pakistan
Outcome: Assessment of the operating environment for institutions, contractors and consultants in Pakistan. Recommendations developed to enhance capacity for implementing infrastructure projects in the country
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