The Role of Development Partners in Public Sector Reforms to Enhance Economy Productivity

1. The role of development partners in promoting public sector reforms (PSR) to enhance productivity of the economy Sarah Sanyahumbi ECAMA conference, Malawi, 6th September 2013 Sarah Sanyahumbi ECAMA Conference

2. Structure of the Presentation • 1. Why does this matter? • 2. A tale of two countries • 3. What makes the difference? • 4. What can we learn? • 5. The good news • 6. What about us (donors)? • 7. Conclusions Sarah Sanyahumbi ECAMA Conference

3. 1. Why does this matter? Let’s start at the end • End goal of public sector reform…must be to improve the lives of poor people. • The UN High Level Panel on post 2015 agenda notes; • “Good institutions are in fact the essential blocks of a prosperous and sustainable future” • Focuson service delivery aspects of PSR; not trade, economy, investment • Better health and education outcomes in Malawi are possible. Sarah Sanyahumbi ECAMA Conference

4. 1. Why does this matter? • Improved public sector reform = improved service delivery • Improved service delivery = improved productivity • educate a girl = fewer babies • fewer kids = fewer mouths to feed • Better education = ability to earn a living = improved productivity & much less pressure on state resources! Sarah Sanyahumbi ECAMA Conference

5. 2. A Tale of Two Countries: Malawi and Rwanda – A Quick Snapshot: • Good to Talk about Malawi in the context of another similar country. • 1994 Important “Starting Points” For Both Countries: • Malawi– End of Dictatorship and Need For Country To Rebuild • Rwanda– Genocide And Need For Country To Rebuild – Rwanda’s starting point was from a lower base compared to Malawi given the 1994 Genocide. • Both Countries are similar demographically, geographically and in terms of size of economy, • Both poor, landlocked, and densely populated. Disclaimer: This comparison is not about the different political structures of each country, but rather about Government Commitment Sarah Sanyahumbi ECAMA Conference

6. 2. A Tale of Two Countries: • Service delivery outcomes in Malawi are poor compared with those in Rwanda • Malawi has made slow progress in reducing poverty • Government of Malawi commitment is there (on paper): • Policy focus – in MGDSII • Recent budget allocations pro-poor • Donor presence in SWAPs • Rwanda –Why has progress on poverty reduction been faster? • Stronger policy and more sustained political commitment; and, • Better ability to convert resources into results • Serious about public sector reform and managing performance Sarah Sanyahumbi ECAMA Conference

7. 2. A Tale of Two Countries:Human Development Trajectories Human Development Index (HDI) YEARS Sarah Sanyahumbi ECAMA Conference Comparable DATA Source:http://hdr.undp.org/en/data/explorer/

8. 2. A Tale of Two Countries: Maternal Mortality Ratios Maternal Mortality Ratio (per 100,000 live births) Sarah Sanyahumbi ECAMA Conference Comparable DATA Source:http://hdr.undp.org/en/data/explorer/

9. 2. A Tale of Two Countries: Primary School Enrolment Gross Primary School Enrolment Ratio (%) Sarah Sanyahumbi ECAMA Conference Comparable DATA Source:http://hdr.undp.org/en/data/explorer/

10. 2. A Tale of Two Countries: Tertiary School Enrolment Gross Tertiary School Enrolment Ratio (%) Sarah Sanyahumbi ECAMA Conference Comparable DATA Source:http://hdr.undp.org/en/data/explorer/

11. 3. What makes the difference? Money is not the Issue!Rwanda’s rapid progress from a low base compared to Malawi’s is not necessarily because of aid – as both countries have received similar amounts over last 10 years. Net ODA Received (Y Axis: Current US$ Value) Malawi Sarah Sanyahumbi ECAMA Conference Comparable DATA Source:http://hdr.undp.org/en/data/explorer/

12. 3. What makes the difference? Child Mortality – An Example Net ODA Received (Y Axis: Current US$ Value) Malawi Per Capita Health Expenditure in Rwanda and Malawi since 1995 (US $) Rwanda Malawi Sarah Sanyahumbi ECAMA Conference Source: adapted from Farmer et al (2013), in http://www.bmj.com/content/346/bmj.f65

13. 3. What makes the difference?If it’s not money what is it? To it’s credit Malawi does fare better on global democracy indicators, but this is not enough in the face of excessive corruption Sarah Sanyahumbi ECAMA Conference

14. 3. What makes the difference?If it’s not money what is it? Comparison of Overall Decentralisation Score Between Malawi and Rwanda Overall Decentralisation Score: Bassed on Ndegwa (2002)’s construction of an index of decentralisation which aggregates sub-indices of (i) political, (ii) administrative and (iii) fiscal decentralisation ranging from 0 to 4. 2008 index calculated by Dessy et al (2008) Source: Dessy et al. 2008, Services Delivery Reforms in Africa: A Review of Initiatives and Outcomes, AERC, Uganda Ndegwa, Stephen N. 2002, Decentralization in Africa: A Stocktaking Survey. Africa Region Working Paper Series No. 40. The World Bank, Washington D.C. November 2002. Dessy et al. 2008, Services Delivery Reforms in Africa: A Review of Initiatives and Outcomes, AERC, Uganda Sarah Sanyahumbi ECAMA Conference

15. 3. What makes the difference? High-level commitment to poverty reduction and resources (public and donors’) is necessary but not sufficient. Public Sector Governance is (a big part of) the answer. PSG is important because: • it sets the rules for between state and society and within the state; • it determines the that choose public policy priorities; • it allocates the to address these priorities; • and it produces and applies the that contribute to the management of those organizations implementing the policies. economic and political interactions decision making structures resources public sector rules and processes Sarah Sanyahumbi ECAMA Conference

16. 3. What makes the difference? Organisations, Institutions, People, Skills and Procedures Matter – but it has to start from the State. “There is nothing new the Government should adopt… It has adopted every best practise you can imagine, from results based management to multi-year budgeting. It has the best anti-corruption laws you can think of, and IT systems better than those in many developed countries. The problem is that the government has not gone beyond adopting these laws, systems and procedures to actually implement them and make them functional.” Matt Andrews, Harvard Kennedy School Sarah Sanyahumbi ECAMA Conference

17. 4. What can we learn? Malawi’s Public Sector Governance indicators show many weaknesses, but experience shows improvements can be made (but sustainability an issue) 1) Malawi’s PEFA scores show problems in many areas 2) Public Sector Reform/Civil Service Reform hasn’t happened - Many weaknesses 3) Malawi’s PFM record shows that improvements haven’t been sustained 4) Recent FRAs in education and health sectors show risk levels haven’t declined Sarah Sanyahumbi ECAMA Conference

18. 4. What can we learn? Education Fiduciary Risk Assessment 2008 National FRA (full review) • Fiduciary Risk Substantial Corruption Risk Substantial 2011 National FRA (update) • Fiduciary Risk Substantial Corruption Risk Substantial 2009 Education FRA (full review) • Fiduciary Risk Substantial Corruption Risk High 2011 Education (update) • Fiduciary Risk Substantial Corruption Risk No update 2013 Education (full review) • Fiduciary Risk Substantial Corruption Risk High Sarah Sanyahumbi ECAMA Conference

19. 4. What can we learn? It’s not about the money! From early 2010 until June 2013 pooled donors have contributed to the education sector. Plus off budget funds from USAID, JICA, DFID and China. DFID funds: • £42mdirectly to MoEST since 2010. • £2m support to EIMU • Plus £1.75m TA • 2. support to financial management • 3. support for institutional development. World Bank and GIZ have also provided TA support. US $152 million Sarah Sanyahumbi ECAMA Conference

20. 4. What can we learn? Back to Rwanda… The Government of Rwanda embarked on a transformation of the public service during 2000 – 2010. Key policy objectives: • To enhance public service productivity and efficiency by restructuring departments and functions, retrenching and redeploying staff, instilling codes of ethics and standardized recruitment procedures, improving pay, and building capacity; • To cut-costs and reduce state expenditure. For example a zero-fleet policy, plus control of wage bill, telephone expenses, rent expenses, etc; • To enhance responsiveness through Decentralization; • To address capacity constraints. Rightsizing the overall public service, redeployment and training. Sarah Sanyahumbi ECAMA Conference

21. 4. What can we learn? • Rwanda’s experience shows that, despite difficulties, Public Sector Governance improvements can lead to better service delivery outcomes. • Strong government commitment drives performance… • …and demands results. • Donor’s fit into a government’s agenda which is clear and focused (not a wish list). Hence there is coordination by the State (not coordination driven by donors as is the case sometimes in Malawi!) • Government got a grip on resources – in and out • and targeted service delivery (However: still problems in terms of low capacity, low pay, hierarchical systems etc…) Sarah Sanyahumbi ECAMA Conference

22. 5. The good news… • “Accelerated modernisation”: it’s easier to catch up than to lead. • Also called “no need to reinvent the wheel”! • There are models of demonstrated success from which you can learn. • Adopting a proven idea is easier than having to innovate a new one. • But context and political commitment matters. Sarah Sanyahumbi ECAMA Conference

23. 6. What about us? Case study: Malawi’s procurement reforms • Excellent example of “international best practise gone wrong” • 2003 GoM enacted Public Procurement Act • Decentralisation of decisions & responsibilities • Establishment of procurement cadres • New set of procurement methods • Creation of ODPP • By 2011 most of architecture in place (with donor support) • But – most of the system was non-functional (scored a D+ in 2011 PEFA assessment) Sarah Sanyahumbi ECAMA Conference

24. 6. What about us? Case study: Malawi’s procurement reforms II Lessons: • Procurement entities did not have necessary procurement skills • Not all staff understood government procurement regulations • If they did, they didn’t put this into practise • Controlling officer still had final decision-making authority • ODPP faced significant staff constraints • Did we focus on the wrong things? Sarah Sanyahumbi ECAMA Conference

25. 6. What about us? Case study: IFMIS: A Relative Success Story • First started 1996 • By 2004 $8million spent (incl. donor funds). Outputs there, but not functioning • 2004 – new economic governance reform programme to control government spending. • Functioning financial management system introduced This included: • Ending controlling officer’s discretion to overspend • New Auditor General appointed and mandated • Recentralised payments • 5 linked bank accounts opened at the RBM & 150 commercial bank accounts closed. • Within 18 months, new system rolled out and functioning (after 8 years of trying!) In Rwanda system introduced, spread, and replicated within 2 months – and loopholes corrected !!! Sarah Sanyahumbi ECAMA Conference

26. 6. What about us (donors)? What have we learned? • Not (only) about donor resources • Donors’ good intentions and interventions haven’t always resulted in successes: • Context matters – histories, culture, PE, politics, leadership and willingness to change, citizens’ demands • donors need to adopt a differentapproach… • …but donors also need to adopt the same approach as each other. • Copying best-practise isn’t always successful (ie Malawi’s procurement reforms) Sarah Sanyahumbi ECAMA Conference

27. 6. What about us? Lessons for Donors • Strong political support for the implementation of PFM reform over 2004 – 2009. • Development partners helped to establish the mechanisms to plan and coordinate reforms, and provided financial support. • However, financial constraints did slow pace of reform. • (and reform not sustained). • Donors not quick enough to recognise the window of opportunity. • Donors tolerating slow pace of reforms and corruption too much. (It is not acceptable that classrooms not built! It is not acceptable drug shortages keep reoccurring!) Sarah Sanyahumbi ECAMA Conference

28. 7. Conclusions • Politics matters – Donors can do nothing without sustained State commitment. • Donor pressure can help preserve political commitment, but can’t create it where it is lacking. • Focus on Public Sector Governance. • Link Public Sector Governance Reform to service delivery. • Models are there – don’t reinvent the wheel. • But DO make it appropriate to the local context (“best practise” may not be the answer). Sarah Sanyahumbi ECAMA Conference

29. 7. Conclusions • Too much has been expected of bottom up pressure from citizens… • …but popular support and understanding of reforms important. • “Working with the grain” with senior officials probably as important but that has to be backed by political commitment. • Make it doable. • Be brave and flexible (non-linear progression likely). • Be patient! • Most Importantly: BE COMMITTED Sarah Sanyahumbi ECAMA Conference

30. 7. Conclusions & Challenge ? Strong government commitment is the deciding factor, rather than donors. And strong government commitment necessarily means donors are more coordinated, which helps. But the role of donors is very much in a supporting role to government, rather than a driving role. Will Malawi Outpace Rwanda? The Challenge is Up To Malawi ! Donors will support if Malawi rises to the challenge! Sarah Sanyahumbi ECAMA Conference

31. THANK YOU Will Malawi Outpace Rwanda? The Challenge is Up To Malawi ! Donors will support if Malawi rises to the challenge! Sarah Sanyahumbi ECAMA Conference

32. Comparative Data Sources: Sarah Sanyahumbi ECAMA Conference