2007 Spring Meetings

The World Bank Governance and Anti-Corruption Strategy: Moving Forward on Implementation

Monday, April 16, 2007

The session was convened by the World Bank Group (WBG) and Transparency International (TI); it involved over 60 participants, including representatives from civil society, the private sector, and WBG regional and network governance focal points.

In her opening remarks, Nancy Boswell expressed TI’s enthusiasm and support for the WBG’s willingness to continue an on-going multi-stakeholder dialogue during the implementation phase of the WBG’s governance and anticorruption strategy. On behalf of TI, Nancy acknowledged deep concern regarding the recent developments involving WBG’s president, and remained hopeful that this would in no way fetter the WBG’s credibility and commitment to combat corruption.  She noted that this situation, in fact, exemplifies the very need to have strong systems of governance.

Sanjay Pradhan provided a brief update on the key elements of the WBG’s governance strategy. He emphasized that the formulation of the strategy was not new as it had benefited from the Bank’s work in the area over the last decade. Sanjay noted that there were a number of outstanding issues surrounding the strategy at the Singapore Annual Meetings, and noted that following consultations in over forty countries with over 3,200 individuals, a number of core issues were clarified, leading to WBG’s Board reaching a collective consensus and unanimous approval of the strategy at the end of March 2007—an important milestone in the development agenda. Sanjay recognized that successful implementation of the governance strategy would require concerted and joint action on the part of the WBG, the donor community as well as civil society – for example through building coalitions (e.g., the Stolen Asset Recovery (StAR) Initiative and the UN and OECD’s work with businesses and others in creating collective action against corruption), developing improved “actionable” governance indicators (e.g., the public expenditure, financial accountability (PEFA) indicators), and strengthening project design and implementation with greater civil society oversight (e.g., more than 50 World Bank projects involve mutli-stakeholder participation in service delivery).

The seven guiding principles of the governance and anticorruption strategy that were agreed by the World Bank’s Board include:

1. Governance and anticorruption is crucial in carrying out WBG’s mission of poverty reduction—Governance must be integrated in all of the WBG’s work.
2. Country leadership and ownership is vital to carrying out the governance agenda—WBG is committed to playing a supporting role.  
3. A consistent approach on governance must be applied to all countries—While there is no one-size-fits-all model, WBG is committed to apply a consistent approach across countries. There is no change in the Bank’s performance allocation system.
4. WBG Must Remain Engaged in Poor Governance Settings—Understanding that the poor must not pay twice, the WBG is committed to seeking creative, smart means of providing support in challenging environments.
5. There is a need for harmonization among all actors, including donors—WBG will not act in isolation. 
6. There is a need to strengthen country systems. 
7. Recognition that WBG should scale-up engagement with multi-stakeholders to help implement its governance agenda—This includes civil society, media, and the private sector.

Peter Harrold articulated the necessary steps involved in the implementation process, which essentially reflects the seven guiding principles mentioned above. The fundamental challenge in proceeding with implementation is how to take the agreed upon strategy and adequately apply it to the country level.  Toward this end, the Bank is looking into ways to mainstream governance and anticorruption within its country strategies in order to address country-specific governance issues. He emphasized that the success of any governance and anticorruption strategy will depend on the level of commitment of countries in addressing governance issues. In challenging governance environments with weak government cooperation, the WBG is dedicated to devise alternative means to address governance and anticorruption issues, while remaining engaged.  Also, there is agreement to develop more “actionable” governance indicators, with the understanding that this may be a long-term process. 

Peter noted the need to examine ways to enhance participation in the Bank’s governance agenda, and looks forward to hearing more from civil society on how best to achieve greater collaboration. He noted that the Bank was undergoing a review of several key internal issues, such as budget and staffing. He noted that the work in governance and anticorruption was particularly challenging since the difference between this and other corporate strategies, is that governance is not a sector, but rather an approach that requires staff involvement throughout the institution.

Joachim Von Amsberg reflected on his experiences as the Country Director for the Philippines. He noted that the Philippines is a unique environment since it is home to a large, innovative civil society community, even though the country also is plagued by endemic levels of corruption. The consultative process has piqued interest and excitement among his field-based colleagues, who are keen to work and learn from civil society at both the country and global level. 

Highlights from internal WBG discussions regarding implementation among field-based staff include:

• Recognition that humility is needed to implement the governance agenda—Deep transformations of society can take decades or even generations. It would be unrealistic to assume that the WBG can formulate simple, straightforward, universal advice that would be applicable in all country situations.  
• Implementation will be the most effective if WBG plays a supporting role—Countries need to take the lead in addressing their specific governance challenges which means that WBG engagement will differ in countries.  
• The effectiveness of country governance and anticorruption plans in individual countries will determine the success of the strategy as a whole.
• Making a difference in the developmental agenda will depend to a degree on the overall influence of the governance and anticorruption strategy—Which in turn includes greater WBG engagement with a broader number of stakeholders on these issues.
• Recognition that the governance strategy is an institutional change—This requires management to make decisions on staff appointments and budget allocations.

Manish Bapna offered three key reflections on the implementation process:

• Humility and modesty are vital during the implementation phase—Staff need to understand that implementation must be viewed as a long-term process, which should not be rushed with perverse incentives. 
• The strategy should place more emphasis at the project level—For example, through adopting options assessments, especially in extractive industries or having greater transparency and disclosure in contracts (with the understanding that not all commercially sensitive information needs to be disclosed).
• The WBG’s own internal governance should be re-examined—This includes the leadership selection process, televising Board meetings, and issues surrounding greater accountability on voice and vote among its member countries.

Huguette Labelle thanked the WBG for its broad consultative process, and offered several points for consideration:

• Priority must be given to quickly ‘operationalize’ the strategy—Multi-stakeholders can pay a critical role in this process, since they can offer oversight on a long-term basis. 
• There is a need for greater transparency and disclosure—This means better supervision of all dimensions of public sector governance including public procurement.  
• Free democratic capacity is vital for good governance—Certain countries have experienced a pushback in legislation. In environments where institutions are not independent enough, or have limited capacity or resources, the WBG must remain supportive. Lack of political will should not be deterrence. 
• There is a need for greater transparency—This includes adequate reporting of concession fees and royalties, especially in the construction and defense sectors. 
• There is a need for greater engagement with the private sector—the ‘supply-side’ of corruption. The WBG can develop small integrity programs with companies. 
• Recognition that countries will have different points of entry in governance and anticorruption work.
• The need for the allocation of appropriate staff, resources, and skills mix at the country level.

Obiageli Ezekwesili, who has a long professional history as an anticorruption crusader in Nigeria, offered words of encouragement. She emphasized that there has been great progress on the governance agenda. Government officials have moved past the discussion of whether or not corruption hinders poverty reduction, and this in itself is an indicator of progress. She noted that political leadership is vital to carrying out the governance agenda and stressed that governance is not a mono-issue as it must be integrated in all facets of development work.

Participants offered several questions/comments on the strategy:

• Does the WBG support “illegitimate debt” cancellation? It was noted that the issue of “illegitimate” or “odious” debt is a historic and complex issue with many policy implications for the World Bank and other donors. The Management of the World Bank is currently looking into individual country cases, such as in Liberia, on a case-by-case basis.

• Is there a need for greater WBG engagement with the legislative branch?
  Participants noted the need for the Bank and other donors to focus more on the legislative branch in its governance work.

• How can more enforceable codes of conduct for the private sector, with a ‘zero tolerance’ attitude toward corruption be developed? 

• How will China’s role impact the WBG’s governance agenda? 

• Can the WBG’s audits be made more public, especially in the case of Democratic Republic of Congo? The Bank representatives noted the need to consult with governments in order to disclose audits as there are issues of confidentiality and in some cases accusations of corruption can have serious consequences (e.g., some countries have a death-penalty for corruption).  The Bank is committed to greater transparency and is thus looking closely at the how best to further advance our disclosure policies in this area.

• What instruments are available for greater civil society engagement? The Bank recognizes the need to develop more mechanisms to engage with civil society.

(Prepared by Soniya Mitra/WB)