Governance, Development and the 2005 Agenda

4 April 2005
Public event

Speakers:
Goran Hyden, Distinguished Professor at the University of Florida
Hester le Roux, Policy Analyst for Governance Issues at the Commission for Africa Secretariat
Matthew Sudders, Policy Analyst, DFID
Chair:

Julius Court, Research Fellow, ODI

Description

This event disscused 'Good Governance' and its role in developing nations.

Earlier this month, the Commission for Africa highlighted "The issue of good governance and capacity-building is what we believe lies at the core of all of Africa's problems." UN Secretary General Kofi Annan has agued that "Good governance is perhaps the single most important factor in eradicating poverty and promoting development." Whether in Africa or elsewhere, the relationship between governance and development has risen up the international policy agenda.

But what exactly is governance and why does it matter? How does governance vary among countries and how can we best assess it? What can we say about strategies to improve governance?

This discussion event marked the launch of a recent book on: 'Making Sense of Governance: Empirical Evidence from 16 Developing Countries' by Goran Hyden, Julius Court and Kenneth Mease (published by Lynne Rienner).

Visit the 'World Governance Assessment' Website to learn more about this project

The main speakers at this meeting were Goran Hyden, Distinguished Professor at the University of Florida and an expert on issues of governance and African development and Hester le Roux, Policy Analyst at the Commission for Africa Secretariat. There were comments from Matthew Sudders, Policy Analyst, DFID, and Julius Court, Research Fellow, ODI.

Julius CourtMeeting Summary
1. Julius Court (Research Fellow at ODI) opened the meeting on Governance, Development and the 2005 Agenda by setting the context: this meeting on governance was put together to respond to the build-up to the G8 meeting, the MDG Summit, the UK EU presidency and the publication of two major reports: the Report of the Commission for Africa (CFA) and the Millennium Project (MP) report.

2. The objective is to talk about the bigger context of governance and the 2005 agenda as well as to launch the book - Making Sense of Governance - which constitutes, not a broad analysis like the CFA and MP reports but a more context specific study of governance.

3. These two key reports in 2005 have underlined the importance of governance: for the CFA, governance is at the heart of the African crisis; for the Millennium Project, governance is the most important issue to achieve the Millennium Development Goals. UN Secretary General Kofi Annan has agued that "Good governance is perhaps the single most important factor in eradicating poverty and promoting development."

4. Some of the key questions for the meeting are:

    * What do we mean by governance and why does it matter?
    * How can we assess governance?
    * What aspects of governance matter most to achieve the MDGs?
    * How can we do that in practical terms?
    * What is the role for outsiders?
    * Is governance good enough to double aid?

Hester Le Roux  

5. Hester Le Roux (Policy Analyst at the Commission for Africa Secretariat) focused on the analysis carried out by the CFA on the subject of governance in Africa.

6. She set out a brief overview of the CFA highlighting that it was set up a year ago to report about the challenges facing Africa today and to provide specific recommendations for action for the international community. The process involved extensive consultation and research with stakeholders in Africa and elsewhere.

7. As a result the report covers an enormous range of issues but it offers very specific recommendations for action.

8. She also mentioned that the CFA ceases to exist at the July G8 Summit as it will be up to the governments to implement its recommendations.

9. The CFA assessment of governance in Africa suggested that important gains had been achieved: NEPAD, more democratic elections, fewer wars, fairly strong economic growth in some countries, etc. The CFA recognised that these gains must be supported, especially considering that at the current pace poverty will only be halved by 2150 rather than 2015.

10. However, Africa as a continent has also grown poorer, it is far from achieving the MDGs, life expectancy has fallen and the consequences of not acting today can affect future generations.

11. The CFA report begun with an investigation of the causes of the current crisis. It identified a series of interlocking cycles. Two of them are:

    * Peace and development: no peace without development; no development without peace
    * Low growth and poor health and education: no growth without human capital; no human capital without growth

12. Hence the recommendation of the CFA is a 'big push' that deals with many sectors at the same time. This big push involves a total of $75 billion, some of which is expected to be generated within Africa, by 2015, contributing to a 7% growth rate in Africa to achieve the MDGs and position Africa as an equal partner in the world.

13. Governance was identified early on in the consultations as being of crucial importance. The opening paragraphs of the report recognise that greater focus on governance as well as on growth is necessary to achieve poverty alleviation. The history of bad governance is identified as one of the causes of the crisis currently facing many African countries. The report acknowledges the role the international community has had to play in endorsing bad governance.

14. The CFA, took a very broad, non-theoretical, pragmatic definition of governance, namely the existence of effective states, able to deliver, with effective institutions which represent and include all citizens. An effective state is one with a sound constitution, with separation of powers, able to maintain peace and security, protect rights, promote growth and deliver the public services that citizens require. It extends to parliament, media, judiciary and it covers elements of political, economic and administrative governance. The Report recognises that governance has been improving, referring specifically to the prominence given to political and economic governance in pan-African institutions like to AU and its programme NEPAD.

15. The CFA identified two components of good governance:

    * Capacity: ability to design and deliver policies
    * Accountability: how the state answers to its people

16. The CFA also highlighted that transparency is an essential tool to strengthen accountability and capacity, that corruption undermines them and that reliable and readily available data are needed to improve them.

17. In line with its mandate, the CFA addressed what to do to improve capacity, accountability, transparency and corruption.

18. Improving Capacity requires:

    * Strong political and financial support for the AU and NEPAD, including for the African Peer Review Mechanism (APRM)
    * Donors should change behaviours and get behind African countries' own strategies of capacity building
    * Need to build up professional skills and knowledge, by strengthening African higher education (estimated investment of $500 million a year over next 10 years to revitalise Africa's institutions of higher education and up to $3 billion over 10 years to develop Centres of Excellence in science and technology)

19. Improving accountability requires:

    * Good economic and financial management systems
    * Strengthening of the justice system
    * Training for parliamentarians
    * Training local authorities
    * Encouraging a free independent media
    * Emphasis on strengthening civil society (through capacity building and funding)

20. Increasing transparency (often absent in countries with large natural resources) requires:

    * When dealing with natural resources: multinational and domestic companies should adhere to standards and codes of conduct, and shareholders and consumers should put pressure on companies to do so
    * Supporting the Extractive Industries Transparency Initiative (EITI) through funding and political endorsement
    * Expanding transparency principles to other natural resources sectors like forestry and fisheries, and to public procurement, especially in construction and engineering

21. Reducing corruption (state and petty level) requires:

    * Export credit agencies should demand better standards of governance
    * OECD Action Statement on Bribery and Officially Supported Export Credits should be fully implemented
    * G8 nations should ratify the UN convention against corruption
    * Steps should be taken to repatriate illicitly required state assets

22. Again the argument is that action is needed on many fronts and the same time. Unfortunately, media coverage has focused on issues of corruption, especially by Multinational Corporations, and the repatriation of state assets rather than emphasising the need for wider-ranging action.

Goran Hyden

23. Goran Hyden (Distinguished Professor at the University of Florida) presented the main findings of the book. The book was born out of the realisation that the literature on development and democracy had run out of steam. The analysis of democracy was not adding anything new to its role in promoting development. Hence, to challenge the academic community, the book argues that it is not just democracy, but also governance in a much broader sense.

24. Also, in the policymaking community there was a growing interest in development and governance: getting politics right. For too long, politics in development had been two separate things (politics and development). Since then, the donor agencies have domesticated governance to become part of their own programmes. Hence it means a lot of different things depending where you come from (DFID, SIDA, USAID, etc). Each uses the concept to suit their own different needs.
25. The book addresses the question of whether governance can be used as an analytical tool:

    * In what ways and why governance varies around the world?
    * Which rules are most importance?
    * When why and how do these roles make a difference?
    * What deficiencies in political arrangements might bring conflict?

26. The meaning of governance that the study considers is more specific. It considers the nation state as the unit of analysis and how the relations between the state and society are managed (more than just good government).

27. Governance is seen as a political manifestation (not economic governance) and hence a process oriented approach is taken. They also assume that human agency can make a difference. Not necessarily as much as they want, but have a role to play.

28. The definition of governance is "the formation and stewardship of the formal and informal rules that regulate the public realm, the arena in which state as well as economic and societal actors interact to make decisions." It refers to behavioural dispositions rather than technical capacities.

29. To apply the definition, the study identified 6 areas of governance:

    * Civil society where demands for change are made
    * Political society is an intermediary between the citizens and the government
    * The executive is the government (the steward of the system)
    * Bureaucracy is more an implementation part of policy
    * Economic society is the intermediary between the government and the market and
    * The judiciary which settles disputes.

30. To ensure that the concept of governance was universal they identified 6 principles that moved away from the western view of the liberal democracy:

    * Participation
    * Fairness
    * Decency (above three refer to how the state relates to society)
    * Accountability
    * Transparency
    * Efficiency (above three refer to the internal operations of the state)

31. Goran Hyden then described the methodology of the analytical framework. A survey instrument was used to collect information on the six areas of governance, the six principles and a human right-based concept of development leading to 30 pilot indicators.

32. Data was collected using an in-country panel of experts: Local people that are well informed and that have a stake in the governance of their country. A sample of 22 countries was collected, with only 16 countries providing all the data. The data was analysed using other studies of governance and tested to find the compatibility with them.

33. The study findings shows that that people can experience rules as legitimate from angles different form the western point of view. There are also dynamics in a country that are specific to that country can have an influence of people perceptions of governance at the time.

34. Donors often miss, that there are windows of opportunities as well as closing doors that means that we cannot assume that 'strengthening transparency' or 'reducing corruption' can be done at any time. One needs to understand when it is possible. Hence the importance of a political/governance analysis.

35. The study also found that certain indicators matter more than others in each arena:

    * Civil society: freedom of expression and assembly
    * Political society: free and fair elections
    * Government: civil-military relations
    * Bureaucracy: transparency and accountability
    * Economic society: absence of corruption
    * Judiciary: impartial judgement

36. The most difficult areas to change are bureaucracy and the judiciary. Positive change is far easier to achieve in civil society. Reforms are not a matter of technical intervention but highly political.

37. Finally, the presentation concluded that good governance is not a prerogative of richer countries; poor countries can have good governance too. It is important to identify opportunities where a difference can be made.

38. There will be a second round of the study in 2005.


Matthew Sudders  

39. Matthew Sudders (Policy Analyst at DFID) then commented on the book. He considered that unlike many other studies or analytical frameworks of governance and transparency, this one is transparent. He would like to see transparency expand into the area of measuring transparency. Matthew and a colleague from the UNDP Oslo Governance Centre have just compiled "Governance Indicators: A Users Guide"

40. In his view, the criticism of the data source for measuring perceptions is unfair as perceptions are valid in measuring governance. Agents base their decisions of investment or policy on perceptions.

41. He also considered that there are many data bases and methods of measuring governance that, together, would provide a significant data base for assessing governance globally. Coordination of data sources is needed.
42. The challenge of the MDGs is that there are no indicators in the MDGs that have to do with governance. The set of indicators are being reviewed this year but it would be good to work towards 2010 to introduce governance indicators in that set. We can't keep leaving them out and just putting some sentences on it.

43. A really good example of approaches to governance indicators is the mirror survey by DIAL. Information on this approach can be seen in: http://www.undp.org/oslocentre/docs04/UserGuide.pdf

44. Based on his experience, he has identified 3 golden rules:

    * Any indicator should be used as a first question (not the last)
    * Always use a range of indicators; one indicator that captures all does not exist
    * As soon as you start using it you implicitly endorse the methodology behind it. The Freedom House indicator is often used as a measure of human rights, but it does not measure that (just some liberties). One should know that.

He also highlighted the value of using in-country experts.


Audience members proposed issues for discussion  

45. During the Discussion, some of the following issues were raised:

46. Implementation is a key issue. Three decades after the first commission for Africa, how to make sure that this time the recommendations will get through to the policymakers if the CFA will cease to exist in July?

47. That civil society should demand accountability is correct. But if a government that is in a position of power was persuaded that more accountability would lead to better governance, then would they not want to be more accountable? What determines the direction of travel in developing country governance?

48. It seems to that there is a tension between civil society and political institutions and actors. How do you change the behaviour of political actors (what incentives) to make the political process seen as more legitimate by civil society?

49. Who are African governments accountable to (donors or their own populations)? Can ODA undermine the role of democracy?

50. There seems to be an assumption that good governance and economic growth go together. This cannot be assumed to be correct. There is a literature that says that rapid growth and corruption go hand in hand.

51. What about the causes of bad governance? The CFA seems to have evaded these issues. How to tackle those causes? What can donors do about politics?

52. A question was raised about ways in which the African diaspora could be mobilised and involved in the process of informing the CFA agenda.

53. Goran commented about a phase of people frightened to talk about politics. It seems that that phase happened when they wanted to have a clean break from the Colonial period. Pretending that development institutions had nothing to do with Colonial legacy is wrong. Should we take account of the colonial legacy? The patterns of Colonial relations still exist. Can we really just draw a line behind it? What do we mean by donors? Can investors or our governments or the commission be regarded as donors?

54. The concept of governance was commented on, pointing out that promoting participation may result in a cost in the capacity and efficiency of government. Talking from a Latin American perspective, the UNDP report on democratic governance found that people who were able to participate more fully in the democratic process were discontented with what they perceived as lack of democratic government.


Audience listening to the panel conclusions  

Panel Conclusions

55. Matthew Sudders answered the question of donor conditionality and recipient countries. He mentioned that the DFID website has a new policy on conditionality based on: i) realistic commitment to poverty reduction; ii) realistic commitment to tackling corruption with the tax payers' money; iii) issues surrounding human rights and environmental obligations.

56. He also addressed the issue of donors and their involvement in politics. He believes that the answer lies in the power of information and the power of assessment. When people know their rights they are more likely to become involved and make a difference.

Government transparency is another example of how the power of information has a major impact on donors. Uganda is one of the cases in which transparency proved to be successful - the government published a report on resources allocated to each school and as a result a proportion of the budget went up each year.

57. Matthew referred to the case of Estonia to underline the importance of information. The World Bank found that corruption in Estonia was isolated in particular sectors of the government. Corruption in traffic seemed to be an issue that infuriated a lot of people. Thus, the thing to be done was to change the rules and as a result people got a receipt when they received a fine.

58. Hester le Roux: Why is this report different this time? Because it relates to the challenge of implementation. It was recommended that a body should be created and its responsibility will be to monitor the implementation of all the recommendations of the report. However, the question of who should be part of this body is still left to the G8 partners and African development partners to decide before the G8 Summit.

59. Hester also talked about the role of diaspora in terms of a partner for implementation. In her opinion this role extends to civil society, government departments, academics etc. There are different countries with different agendas, but it is important that they implement the report's recommendations which suit them best.

60. There is also the question of: To whom should African governments be accountable? Hester believes past failures were due to each donor having a different agenda and recipients were often too busy getting on with what they were supposed to do to explain how they allocated the money. Donors should be more supportive and not tell Africans what to do with the money. Why did governance fail? Because there was a lack of capacity and capability.

61. In answering questions posed earlier, Goran Hyden responded that there is a diversity of actors on the political scene in Africa which should not be ignored. He identified the danger posed by donors in allocating money to government budgets and completely ignoring the civil society. In his opinion a vibrant civil society is the best hope for change in a country. Donors should not expect the governments to be the only actors for change but should also encourage and support civil society.

62. Finally, Goran mentioned his belief that colonial legacy should not be ignored. However we should also take into account the pre-colonial legacy which is as significant as the colonial one.

63. In closing, Julius Court emphasized that the topic of politics, governance and development was going to continue to be top of the agenda in the run up to the G8 meeting in Gleneagles and the MDG Summit in New York. ODI was also thinking of doing more specific meetings on this topic in the coming months.

64. A few key issues were critical: (i) What can we say about the reality of politics in poor countries and what are the implications for proposed policies towards governance and capacity - and aid more generally? (ii) Is governance really good enough to double aid? (iii) How can the international community assess governance better so as to help make better decisions about: how much additional aid, to what countries, on what issues and in what ways (rather than the three sizes fits all approach in the MDG report)?

65. The issue of accountability is critical - there are at least a couple of elements here: How can donors provide substantial aid to countries without undermining domestic processes of accountability? How can donors be assessed by their development partners?

66. Julius thanked the panel and the audience for their contributions.

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