52482 December 2009 . Number 17 GOVERNANCE, INTEGRITY, AND TRANSPARENCY: AN IMPORTANT DEVELOPMENT AGENDA FOR MENA Shamshad Akhtar1 Economic Department in the Middle east region of the World Bank, our Public Introduction: The cause of good governance, Management unit, found that as much as 80 integrity, transparency and anticorruption is percent of non-wage funding for education in vital for facilitating private sector led growth Uganda was being diverted before it reached and development throughout the MENA schools ­with a significant negative impact on region. the quality of education. Similar findings have emerged in numerous studies across There are many different ways in which weak sectors and countries around the world. governance can impede development. It compromises the delivery of public goods and The World Bank's MENA Flagship report for services to the citizens, particularly to the poor 2003 focused on governance and highlighted and the vulnerable. It complicates the task of some of the issues that the region faces in regulating markets and creating an enabling terms of improving accountability and environment for private-sector led growth. It inclusiveness for development outcomes. undermines meritocracy in the public sector, Using measures of overall governance quality as well as a government's ability to allocate created for the report, the MENA region came resources efficiently to achieve its desired considerably behind comparator regions. The ends. report estimated that this `governance gap' cost the region as much as one percent per Governance and Growth: Over the past year in per capita GDP growth. fifteen years, analyses at both the macro and micro levels have demonstrated that countries This year's MENA flagship on the institutional where governance is weak see slower growth, environment for private sector-led growth worse delivery of services, and lower quality illustrated the particular governance of life. challenges facing entrepreneurs. Not least, the report discussed how old business elites At the macro level, Paulo Mauro2 estimated benefited from favorable treatment from that if Bangladesh could raise its governance regulators government officials, stifling new to the quality of Uruguay, investment rates entrants and competition. The median would rise five percent and growth by over number of competitors for a firm in MENA is half a percent per year. At the micro level, less than one fifth of the number in Europe Ritva Reinikka, Director of the Social and and Central Asia, for example. Yet there are reasons for optimism. 1 Vice President, Middle East and North Africa Throughout the MENA region, there has been Region, World Bank. 2 considerable movement on the governance Paulo Mauro, IMF and fiscal probity agenda over the past 4-5 technical assistance on the legal framework for years, with more changes currently underway. strengthening integrity and combating corruption, including income and asset The challenge of weak governance is first and disclosure and conflict of interest legislation; foremost an issue of development, and that civil service codes of conduct; and means improving governance is part of the whistleblower protection. core business of the World Bank as a whole. As such, it is one of key responsibilities of Assistance has also been provided to MENA operational units, which are in charge of the countries in examining key institutional preparation and supervision of Bank-financed questions, such as whether they should projects and programs. establish an ombudsman office or independent anticorruption agency. We have World Bank and Good Governance in MNA: worked with new agencies, such as Yemen's The World Bank has been rapidly expanding Supreme National Authority to Combat efforts to assist our clients along the three Corruption (SNACC), to help establish their dimensions of prevention, prosecution and operations. In support of this the Bank has public awareness. also conducted comparative analytic work across the region on these issues. Prevention is at the core of what we do, including much of our traditional public Work is continuing apace on supporting sector work on topics such as civil service public awareness, including strengthening reform and public financial management. The demand side governance and the role of civil reform of core government systems and society. The Bank has been active in procedures can be slow and tedious work, but supporting public opinion surveys and polling it is essential to tackle systemic bottlenecks data in a variety of countries, including Egypt, that can burden the entire public sector. Much Kuwait, West Bank & Gaza and Yemen, to of this work is targeted towards attaining better understand both public perceptions and greater efficiency and productivity in public actual experience with governance. To expenditure, but it can also pay dividends in enhance transparency, we are working on terms of enhanced fiscal probity. We also government disclosure issues and freedom of work extensively on institutional development information legislation in several countries, with sectoral ministries, which can both i.e. Egypt, Kuwait and Yemen. There is also improve the quality of service delivery and increasing work with civil society, including a reduce opportunities for corrupt or illicit number of local Transparency International behavior. Examples include: chapters as well as groups such as Global Parliamentarians Against Corruption. · Working with the Egyptian Government to develop one stop shops that Beyond our strong commitment to issues of streamline investment procedures, therefore good governance and improved public sector reducing opportunities for corruption; management as a key developmental objective in MENA, we also have been expanding our · Improving the internal and external efforts to ensure that our projects adhere to audit function in Yemen; and the highest standards of financial probity. For this purpose, the Bank has put in place one of · Conducting a public expenditure the most stringent fiduciary safeguards tracking survey to monitor resource flows in system, and our procurement and financial the health sector in Egypt, and Morocco. management colleagues have long labored to ensure the integrity and effectiveness of our Prosecution is a relatively new area for us. internal and external controls and Over the past five years, we have started procurement regulations. working with countries in the region to review their obligations in light of the United Nations World Bank Governance scale-up resources Convention Against Corruption (UNCAC) have been used to conduct a number of Treaty, which 15 MENA countries have signed additional independent procurement reviews and 12 have ratified. We have provided and to ramp up assessments of the accounting December 2009 · Number 17· 2 sector in selected countries. An enhanced Contact MNA K&L: risk-based approach to project design and Emmanuel Mbi, Director, MNA Operational Core supervision is also being introduced. In Services Unit: performing all of these tasks, the focus is on David Steel, Manager, MNA Development balancing the importance of achieving greater Effectiveness Unit: reliance upon country systems with the goal Regional Quick Notes Team: of ensuring that project lending goes for the Omer Karasapan, Roby Fields, Najat Yamouri, purposes intended. and Aliya Jalloh Tel #: (202) 473 8177 Although the governance agenda has moved rapidly over the past decade, and quite a bit The MNA Quick Notes are intended to summarize has been accomplished, there is still a long lessons learned from MNA and other Bank way to go in addressing this agenda. Knowledge and Learning activities. The Notes do not However, the World Bank will play its part to necessarily reflect the views of the World Bank, its board or its member countries. ensure that progress on this critical front continues. December 2009 · Number 17· 3