Background – The Challenge of Africa

1. Background – The Challenge of Africa • Economic development has not occurred • Good governance is a precondition for growth • Overgrown state that doesn’t deliver • Entrenched interests wedded to the current system • What instruments can be used? • Neither a short-term infusion of money nor HIPC will solve the problem of living from hand to mouth • Investment lending can’t build institutions • Structural adjustment associated with dismantling of institutions • Programmatic lending becomes key tool to restructure the state • To be credible, the Bank portfolio must deliver outcomes on the ground

2. Lessons from Adjustment in Africa • Africa has made important contributions to intellectual work on adjustment in the Bank • Recognition that tangible benefits in terms of poverty reduction must be delivered • Focus on improvement within organizations in charge of revenue and expenditure • Expand the approach to line ministries in charge of human development and poverty reduction • These strands led to the articulation of the MTEF • Articulating a logic for designing adjustment operations (e.g. Cameroon SAC III): • objectives stated • constraints identified • strategies to deal with constraints developed • key conditionalities

3. African Adjustment in the QAG Review • Lack of systematic attention to organizations within the government as stakeholders • Reliance on champions rather than coalitions for change across levels and functions of government and with the private sector and civil society • Good identification of risks arising from weak implementation capacity, social opposition and coordination within government, but inadequate risk management mechanisms • Emphasizing changes in technical systems of management rather than institutional mechanisms for mobilization of existing capacity • These result in an emphasis on process rather than outcomes and the fundamental reversibility of reforms • In tranching, neither front-loading nor back-loading has ensured results on the ground

4. Possible Approaches • Elements of an approach are in place, but the approach seems neither shared, nor applied systematically • The challenge is linking the articulated logic to outcomes on the ground • The issues that have been articulated by task teams and highlighted by QAG indicate the need for methods to address implementation issues • Useful methods in implementation analysis include: • Mapping processes to identify constraints and opportunities • Mapping stakeholders within gov’t • Mapping strategies

5. Process Mapping to Identify Constraints and Opportunities • Take existing arrangements as a starting point • Trace a concrete and “bulky” item (flow of funds, flow of policy, flow of information) through the system, going across levels and functions of government • Identify obstacles to and opportunities for delivery and of outcomes within existing “rules of the game” • Access implicit knowledge: • Mid-level and front-line staff understand both everyday practices and the system above them • Users/beneficiaries can discuss requirements for benefits and common problems in receiving them • Quick and direct • Two individuals can trace a “bulky” issue through a system in a few weeks: full PER is not always necessary • Focuses search for useful external expertise as a way to complement existing capacity

6. Mapping Stakeholders within Government • Government is not a single actor, but a space in which different organizations interact • Effective policy implementation requires participation of stakeholders across levels and functions of government • Stakeholder mapping helps to identify organizations which can deliver key services • Rules of the game which are predictable and create incentives and sanctions can be developed to institutionalize a new relationship between players

7. Articulating a strategy • Leadership is necessary but not sufficient. • To succeed, strategy must become a continuous process, linking resources and outcomes across levels and functions of government. • The crucial internal processes need continuous revisiting, to improve efficiency, transparency and accountability. • A strategy is in the detail, not in the grand vision. • Credibility of a strategy is derived from having early wins in a critical area. • Selectivity and sequencing are therefore crucial. • Effective change of rules of the game must recognize that rules are embedded in chains of relationships. • Mechanisms of coordination to align the pace of reform are necessary. • Scenario analysis can provide a useful technique. • Tailoring a strategy to its context has been more productive than benchmarking and use of best practice.

8. Mapping a strategy • Select policy-making organizations and line ministries critical for poverty-reduction • Align internal systems for allocation of resources between these organizations through checks and balances • Bring local government and key points of delivery of services into alignment with policy in terms of delivery of specific outcomes • Require monitoring by users or a systematic process of comparison between organizations

9. An example of change: Russia Coal SECAL • Outcomes on the ground: • Subsidies decreased from $2.76 bn in 1994 to $0.28 bn in 2000 • Productivity up from 764 tons per worker per year in 1994 to 1,355 tons per worker per year in 2000 • Full and timely payment of social protection to redundant workers and ongoing payment of disability benefits • Organizational outcomes: • Finding new roles for existing organizations (Treasury, Social Insurance Fund, Ministry of Energy) • Mechanisms to enable participation between stakeholders (IACC and inter-ministerial group) • Institutional outcomes: • Rules for establishing a clear link between allocations and outcomes • Rules of accountability, creating checks and balances, through incentives and sanctions • Rules to secure the participation of critical organizations in the ongoing process of reform and decision-making

10. Techniques: Russia Coal SECAL • Process mapping of constraints and opportunities • Flows of money • Flows of policy • Flows of information • Stakeholder mapping through consultation • Federal level: MoF, Treasury, SIF, MoL, MoFE, MoE, RusUgol, Trade Unions • Regional government: 17 out of 89 regions • Local government: 79 municipalities; Association of Coal City Mayors, miners (as individuals, groups and members of communities)

11. Russia Coal SECAL Promoting Stakeholder Interaction • Mechanisms to enable participation between stakeholders • At the federal level, institutional mechanisms were created (1) to enable stakeholders to voice their concerns but not to enable any single stakeholder the right of veto (IACC) and (2) to take key decisions (inter-ministerial group) • At the local level, a mechanism for participation of stakeholders was created in the form of local oversight committees that were vested with the authority to make decisions on local development programs • Mechanisms of accountability were enhanced through constant monitoring, auditing and strengthening of internal processes • Internal processes were reorganized to multiply the sources of information and achieve the outcomes