How can aid agencies promote local governance and accountability? Lessons from five countries.

This post also appeared on the World Bank’s ‘People, Spaces. Deliberation‘ blog

Oxfam is publishing a fascinating new series of papers today, drawing together lessons from our programme work on local governance and community action. There are case studies from Nepal (women’s rights, see photo), Malawi (access to medicines), Kenya (tracking public spending), Viet Nam (community participation) and Tanzania (the ubiquitous Chukua Hatua project), and a very wise (and mercifully brief) overview from power and governance guru Jo Rowlands. Here are some highlights:

“Governance is about the formal or informal rules, systems and structures under which human societies are organised, and how they are (or are not) implemented. It affects all aspects of human society – politics, economics and business, culture, social interaction, religion, and security – at all levels, from the most global to the very local.

Most people experience the most immediate impacts, fair or unfair, of governance at a very local level. It is where women experience gender inequalities most keenly, for example in the way that issues that particularly concern them tend to get de-prioritised and their participation obstructed. In most political systems, it is also the place where ordinary people should, in theory, be best placed to participate in governance, for example by voting for their local councillors, taking part in local committees or protesting against laws or actions that they don’t think are fair.

Local people may face barriers of language, ethnicity, gender, class, poverty, access to information, or simply lack the confidence to speak out. They face the visible formal and informal structures of power, such as village or neighbourhood committees, service user groups, tribal councils, dominant families or castes, and formal structures of local government. They also face power dynamics such as business interests or patronage relationships based on debt and obligation.

It is essential for anyone working on governance to make a thorough analysis of local power relations, drawing on history and culture, specific economic realities and the interests of different groups of people. This analysis can then shape the options and approaches that a development programme uses, informed by how change has happened in the past and might happen in the future.

Oxfam differentiates between three key aspects [see diagram, below]: people claiming rights, institutions willing and capable of delivering rights, and people in positions of power with the will to make it happen.

When you deliberately address these relationships and processes, i.e. the arrows in the diagram, interesting things happen to the way issues are tackled in practice. For example, in Kenya, very high levels of mistrust existed between local community members, local councillors and local authority officials. Although there were institutional structures of decentralisation for local decision making, neither community members nor local authority officers knew enough about them to successfully implement them. The tools of social auditing provided a mechanism to address the knowledge gaps and rebuild damaged relationships.

All the case studies show how it is essential to work with both citizens and people in authority in order to achieve positive change in local governance. This might be about finding or creating spaces for constructive engagement between people and authorities, as in the ward meetings organised by women in Nepal. It could involve working with citizens to raise awareness and knowledge about their rights and about how local governance works, so that they can make relevant demands and monitor effectively how resources are used and accounted for, as in Malawi and Kenya. It may require working with officials and elected representatives to increase understanding about how to work accountably and transparently and to understand the benefits of actively involving citizens in planning and monitoring, as in the Tanzania example. Or it might be about working with officials to understand how particular legislation or regulation should work, as in Kenya.

A recurring theme across the individual stories is the importance of focusing action about local governance on the real, tangible interests of local people – health, education, livelihoods, water and sanitation. Women in Nepal moved into participation and leadership in committees and user groups on these issues; in Tanzania, communities became organised around setting up new market spaces for local women to sell produce, or around land rights.

Anyone working on local governance needs to be aware that in many contexts where there is not a culture of speaking out, individuals may be putting themselves at risk if they confront authority.  It is vital to ensure first that individuals who want to take that risk are supported, both from inside and outside the community, and that ideally the demands come from a group that has built the strength, skills and confidence to demand the changes they want to see. In Nepal, women did take a number of risks – facing opposition from husbands, and senior community members – but the support they received allowed them to prove themselves and to join with others in becoming change-makers within their villages.

Accountability and transparency are proving useful entry points for engaging the various actors and processes to help navigate the minefields of power relations. It is also clear that people who take on official responsibilities do not necessarily have the competency to carry out those roles. Therefore, well-targeted support and training for office-holders can go a long way in building better governance relationships.”

Jo identifies some particular ‘issues and challenges’, including:

Culture change: Making change in local governance often requires culture change as much as a change in structures, processes and representation. (particularly true on gender rights and women’s voice).

Access to information: As Maimuna says in the Tanzania case study, “Ignorance is a killing machine”.

Things can take time: Some changes can happen quickly, but the changes in culture and in deeper attitudes required to ensure system and process changes stick can take much longer (decades).

Risk management: Local and national governance are both about political processes, and carry significant levels of risk. This risk can include violence, fear, crack-downs on individuals or groups and a closing of space to operate for particular actors.

Areas where we need to do more thinking? How to deal with patronage systems, corruption and decentralization; improving our understanding of urban governance (the examples are all rural).

Final (very sensible) voice of experience:

“As well as being informed by good analysis, [future governance work] will also be informed by serendipity – watching for the chance combinations of the right person/people, the right moment, the right focus, the right alignment with other events – requiring good judgement and probably inevitably, whatever the expectation about how change will happen, a certain amount of sheer luck.”

Building accountability in Tanzania: applying an evolutionary/venture capitalist theory of change

A version of this post appeared yesterday on ‘People, Spaces, Deliberation’, the World Bank’s clunkily-named but interesting governance and accountability blog.

I’ve been catching up on our accountability work in Tanzania recently, and it continues to be really ground-breaking. Rather than churning out the standard logical framework of activities, outputs and predicted outcomes before the project even starts, the programme, known as Chukua Hatua (Swahili for ‘take action’) uses an evolutionary model of change (try out numerous approaches, drop the less successful ones, scale up and develop the winners). It’s more like a venture capitalist backing ten start-up firms knowing that most will fail, but some will win big. This has been possible partly because DFID has been willing to fund such an experimental approach as part of its Accountability in Tanzania (AcT) programme  (props to them).

18 months into the programme, it’s good to see that Chukua Hatua is, errmm, evolving, according to programme coordinator Jane Lonsdale, who I caught up with recently. The first phase piloted six approaches:

1) Election promises tracking – training of ‘trackers’ in 36 communities prior to the 2010 elections. They recorded rally promises on voice recorders, took them back to the communities to agree priorities and are now following up progress against the leaders’ promises.

2) Farmer animators – training more than 200 farmers nominated by their communities, to understand principles of accountability, how to hold those in power to account, and how to share their knowledge and facilitate their groups to take action. (pic right shows some animators getting into the groove at a workshop)

3) Active musicians – training 42 musicians on principles of accountability to act as seeds of change through their music, which is widely listened to by communities.

4) Student Councils (see pic, below) – building the skills of leaders at primary school level; linking students with community ‘champions’ to help them raise issues with teachers and school management committees.

5) Community radio – creating a new space in Ngorongoro district to enable pastoralists to share information and debate.

6) In addition to the pilots, Oxfam also supported local campaigns where communities were already active, most notably in Ngorongoro.

Last September came the difficult bit – killing off the less successful experiments. We got all the partners in a room, plus a couple of other NGOs, the consultants, some Oxfam staff from outside Tanzania and KPMG (which manages the programme for DFID). The group came up with four basic criteria on which to judge the pilots:
- How much were they spreading awareness?
- How successful were they in mobilising people to take action?
- How effective were they at expanding ‘spaces’ in which people can claim their rights – this includes both taking advantage of existing ‘invited spaces’ and creating new ones
- How responsive was the government (either local or national)?

Overall, the farm animators came out best. The musicians were better at awareness raising and mobilisation, but failed to get a good government response. We dropped some pilots and merged others. The student council approach was dropped and spun off to another funder (one unintended consequence of the venture capital approach  – generating other fundable spin-offs).

What didn’t work and why?

Geography: The active musicians were not able to work well in Ngorongoro, because the communities were too widely dispersed to reach.

Government obstruction: The community radio never got off the ground because the government did not issue a licence.

Informal v formal power: The farmer animators’ work was unsuccessful in spreading awareness beyond the groups that the animators belonged to. This might have been due to their lack of a ‘formal’ position in community leadership.

Attitudes to youth: Students were able to make demands within their schools, but were unable to take this approach into the community– there was simply not enough respect for young people’s viewpoints. 

What have we learned for the next phase of the project?

Apart from the shake-out of pilots, a number of other issues have emerged:

• The programme needs to do more to prepare for negative responses, especially from local officials (interestingly, reactions from the state have been most hostile where local opposition parties are strongest, whereas in communities dominated by the ruling CCM, officials are more open to dialogue). These have included threats by village executive officers to community members for being ‘trouble-makers’, arrests for demonstrating for electricity and closing a school for 2 days after students demanded more say in their education. Dealing with these responses will require training in negotiation skills and conflict resolution and linking citizens and partners to national organisations such as the Human Rights Defenders Coalition. The cycle of conflict and cooperation recurs in many change processes, and is always a real headache for both participants and NGOs like Oxfam.

• In Tanzania, building ‘created spaces’ is much harder than helping citizens make better use of existing ‘invited spaces’ for consultation and accountability. In such fora, the main obstacle is often lack of capacity, so the next phase will continue to work with local elected leaders. The benefits of changing the behaviour and increasing the capacity of village leaders and ward councillors are two-fold – they are more likely to support citizens demands’, and they can be a key ally in taking citizens’ issues upwards to central government. 

• Although there have been some notable successes, gender bias in Tanzania is very entrenched and work with women needs to be strengthened, especially looking at women’s leadership, men’s attitudes to women and women’s participation in public spaces. 

Perhaps most interesting for me is the wider impact on how Oxfam is working in Tanzania. The team is getting much more expert in understanding who has power at local level, and in the next phase will involve key local players such as faith leaders, traditional birth attendants and healers. Over to Jane for the last word:

‘I can’t differentiate programming from power analysis – they go hand in hand. We’re doing something different now, not just rolling out a load of community scorecards, or public expenditure tracking – the usual kind of governance work. We’re pushing ourselves to really think through how change happens in Tanzania and try out different things. The whole team and partners are now talking in terms of power analysis. We’ve got the same language to describe what change looks like. Everyone is picking up trends and patterns – it’s a lot better than conventional indicators.’

And here’s a nice 14m video covering the first phase of the project. In the words of the commentary, ‘they all deserve a big-up’.

Can Cities build local ‘developmental states’? Some surprising good news from Colombia

Discussions of the role of states in development, and in particular the role of the hands-on ‘developmental state’ in producing impressive take-offs in East Asia and elsewhere, almost exclusively focusses on the national level. But in many countries, particularly since the push for decentralization in recent decades, local and city governments play an increasingly influential role. So might we see a ‘local developmental state’ emerge in some cities or regions, even when the national state isn’t up to much? A recent paper from the Overseas Development Institute argues that this is exactly what is happening in the former drug capital of Medellín, Colombia:

‘After more than two decades of very well-publicised narco-industry and paramilitary-driven violence and chaos, Medellín has made significant economic and social progress since the late 1990s thanks to a renewed appetite for local state activism that has proved both popular and effective.’

The authors, Milford Bateman, Juan Pablo Duran Ortíz and Kate Maclean, argue that this is nothing new:

‘A ‘local developmental state’ model appears to have emerged in many of the most successful countries and regions, most notably in post-war northern Italy, Southern Germany and in several Scandinavian countries…. The core idea is that sub-national levels of government can, and should, be pro-active in building the institutional and organisational infrastructures required for growth-ori¬ented micro-, small and medium enterprises to emerge and succeed.’

Cities can promote this form of local industrial policy through local state ownership of key enterprises, local taxes, and use of local powers such as planning laws and transport policy – ‘Medellín has proved adept at using pro-poor transport policies to link communities together.’

In addition, the city of Medellín has developed its own programme of cash grants, the Medellín Solidaria programme, similar to the successful Bolsa Familia experiment undertaken in Brazil since the early 2000s.

‘Medellin has set up a network of 14 publicly-funded business support centres (the local acronym is CEDEZO, Centros de Desarrollo Empresarial Zonal). These CEDEZOs are located in the very poorest areas and are designed to support business development by the poor by offering free-of-charge business support services and technical advice to anyone with a good business idea. Working alongside the CEDEZOs is the Banco de las Oportunidades, which provides microloans up to $2,500 at a favourable interest rate (0.91% monthly) to establish microenterprises.’ [i.e. nothing like your standard microfinance lender - one of the authors, Milford Bateman, is a trenchant critic of microfinance]

Fascinating – a lot of the good things that have happened in Latin America over the last couple of decades have been incubated at city level, even though, like Bolsa Familia, they are then sometimes adopted by national governments. Cities offer natural laboratories, ideal for testing a range of new approaches to sift out what works from what doesn’t. They are also at a scale where it is much easier for relatively small organizations to engage at the city level (see this example from Bogota). And turning around a city like Medellin is a huge achievement – in a previous job in the early 90s I published ‘Born to Die in Medellin’, a bloodcurdling set of interviews with teenage assassins in the City (a translation of Alonso Salazar’s great book, ‘No Nacimos pa’ Semilla’). Wonder what the surviving ex-gangsters are doing now?

Anything else to read on local developmental states? They certainly seem a lot more plausible than Charter Cities.

What use are models of change? An experiment in Tanzania

I spent last week in Tanzania, but had to wait til I returned to internet-land before blogging on it. So this is Tanzania week on the blog.
 
First up, models of change (MoC). As you may have noticed, I’ve been thinking a lot about these recently. That usually involves exhausting intellectual gymnastics in seminars or dozing off over impenetrable academic papers, but now I got to apply them to Oxfam’s work in Tanzania. Fascinating (at least for me). The task was to use MoC to develop a programme called Chukua Hatua (‘take action’ in Swahili), part of an innovative and ambitious DFID programme managed by KPMG called AcT (Accountability in Tanzania).

Here’s a blurb from the programme coordinator, the redoubtable Jane Lonsdale (left, apologies for the Oxfamese – she wrote it at the end of a long, it was a hard trip):

‘Chukua Hatua (Take Action) does what it says on the tin. The programme is testing different approaches through a series of pilots to learn which can best act as a catalyst for Tanzanians to claim their rights. These include training a network of ‘farmer animators’ at village level, student councils, and an ‘active musicians’ scheme. Each pilot uses several of the following approaches in the design: 1) using visual and digital communication on issues such as monitoring election promises and land rights; 2) building the capacity of citizens to understand the concepts of rights, entitlements, transparency and accountability, and to seek information, organise and take action; 3) supporting citizen networking and the establishment/ strengthening of spaces for engagement and collective action; 4) researching issues that are a priority for the communities and providing simplified information along with disseminating relevant budgets, policies and laws and providing appropriate monitoring tools; 5) promoting women’s voices and rights, including in decision-making; 6) supporting communities’ initiatives to plan, organise and take action.  Following a year of piloting along with close monitoring of changes in communities and their leaders, the programme will be scaling up the most successful approaches through a combination of promoting natural replication across communities and groups, increasing programme coverage, and advocating for adoption and/ or replication.  The programme is delivered across the Shinyanga region and in Ngorongoro district, and is integrated with Oxfam’s agriculture, pastoralist and education programmes.’

The first step was two days ‘in the field’ (literally and figuratively). More on some of the encounters there in subsequent posts. In what was essentially a two day rolling seminar, we identified three MoC already exemplified by the programme, and a further three that could add new elements to the work. Ready?

First the MoCs that best describe the current programme:

Evolution: Take Action is a nice example of evolutionary acceleration, built on evolution’s core process of variation-selection-amplification. In the first phase, the programme sets lots of different hares running, from ‘farm animators’ to ‘active musicians’ to primary school student councils. It then selects (or allows natural selection, as projects multiply or die of their own accord). The final phase will be amplification: creating an enabling environment for them, promoting synergies between different initiatives, but otherwise staying out of the way so that new ideas and approaches bubble up from the grassroots.

The Four Powers: One model of change holds that disempowered, marginalised people must first feel a sense of ‘power within’ – the lightbulb moment when people realize they have rights, and that those they elect should serve them, rather than vice versa. Then they move to ‘power with’ – coming together around common issues -  before achieving ‘power to’ – asserting their rights, campaigning, mobilizing. Finally comes ‘power over’ officials or companies. Chukua Hatua concentrates on the upstream part – power within and power with, especially among women. What happens next is up to them.

Transitions to Accountability: This is based on the work of Jonathan Fox in Mexico (an elected one party state for most of the 20th Century, so some similarities with Tanzania, which has been under one party rule since independence). Fox found that local breakthroughs in accountability arise through the interaction of ‘the thickening of civil society’ and successful reformism by parts of the state e.g. particular ministries, or local officials. These often involve cycles of conflict and resolution.

OK, so far that’s just a fancy theory(ies) to describe what is already happening (or at least planned), but three other MoCs we identified actually suggest changes in the programme design.

Drivers of Change and importance of alliances: one of the findings of DFID’s ‘drivers of change’ work was that successful change often comes about through alliances of dissimilar actors, e.g. social movements, churches, sympathetic officials and private sector champions. What works best is if they come together around a simple, winnable aim – nothing like an early victory to galvanize people and overcome fear (a real issue in Tanzania). That suggests the relative purism of the programme in seeking to build ‘active citizenship’ needs to move much quicker to exploring alliances – e.g. when we asked them, five out of 40 farm animators turned out to be church leaders (protestant and Moslem), yet the programme had never explored alliances with faith based organizations. The lesson? Start building alliances from the outset – don’t wait til you’ve got a nice big citizens’ movement (and emerging leaders do it anyway – they don’t wait for your permission!)

Granularity/local political economy analysis: This is linked to the previous point. Social movements are seldom homogenous masses. On closer inspection they are made up of building blocks of more permanent, stable organizations – churches and mosques, savings groups, village militia, faith healers, cultural groups etc. You need to explore and understand this local granularity both to identify potential allies, and to understand the political economy of change (and resistance to change) at local level.

Positive Deviance: the evolutionary process doesn’t fit into distinct periods of variation, selection and amplification. It is constant. So even as you support successful experiments, you need to be constantly watching for new innovations. One way to do that is via positive deviance – studying outliers in terms of project performance or otherwise looking for what was ‘not in the plan’.

Conclusion: In order to use MoCs to understand reality (rather than the other way around), you need as big a range of them as possible. Looking for a single grand theory may close down avenues and stop you spotting opportunities (I even found myself urging our staff not to get too hung up on active citizenship….). Instead, you need a toolkit of ideas, which each contribute to understanding what is happening and how to improve things. But overall, I am reassured that I haven’t been wasting my time in the ivory tower – this looks like an approach worth developing. Feel free to agree or disagree below……

Africa Power and Politics – David Booth responds

ODI’s David Booth responds to my post on the ODI’s Africa Power and Politics Programme

“The APPP could hardly have hoped for a more encouraging reception for its first policy brief than the one provided by Duncan’s blog of 15 April. Encouraging and suitably challenging!

The point of a policy brief is to be, well, brief, and focused on implications. So it’s not surprising if Duncan finds some of our formulations a bit too pithy and in need of substantiation.

Duncan quotes us generously, but there is much more where that came from, freely downloadable from the APPP website. It’s also worth saying that the evidence base we are drawing on is not just APPP research but a large body of other work, including stuff to which Duncan refers us.

Let me pick up just a couple of points of apparent disagreement.

Citizen pressure and public goods

Obviously, one of them has to be our proposition that citizen pressure and bottom-up demand for accountability is a weak factor in improving the governance of public services. This poses a rather direct challenge to the way most international NGOs view their mission, so Duncan’s ‘alarm’ is understandable.

We are aware of walking into a lion’s den in posing this issue so bluntly. But we are doing so with good reason. There is a real conflict here between the conventional ‘progressive’ viewpoint and what virtually all documented experience shows.

In elaborating, we said: ‘… client “voice” is a weak source of results-based accountability unless accompanied by strong top-down pressures of some kind’’. The qualification is important. It is meant to capture two things.

One is the almost universal finding that public service improvement comes when there is successful action to improve provider motivations. And this doesn’t come mainly from the bottom-up (even in the UK, where service users are much more empowered, providers respond poorly to having ‘demands’ placed on them). The other is the fact that the documented successes in so-called ‘social accountability’ almost always involve political forces (new parties, new leaders or something of the kind); rarely are they just movements of ‘citizens’.

This is actually what the IDS research and related ODI and IDS evaluations tell us. None of them provide a blanket endorsement of civil society action on accountability. If this seems surprising, it’s because there has been a huge amount of over-selling of ‘demand side’ interventions on the basis of partial reading of the evidence.

So I hope Duncan’s alarm will soon give way to agreement. The challenge to conventional thinking about ‘good governance’ applies to all of us, not just to the soft target provided by official donor governance work.

The politics of aid

There are many other points I might pick up, but I will leave democracy, Amartya Sen and universal rights for another occasion. And on the important question of how to avoid sliding back into ‘decent chap-ism’, I will defer to my APPP colleague Tim Kelsall.

For now, let me just comment on Duncan’ scepticism about uptake of APPP findings by official aid. Of course, yes, the obstacles are pretty daunting. Backing off and concentrating on the ‘do no harm’ agenda at home, as suggested by Mick Moore and Sue Unsworth, has much to be said for it. But it is too easy to take the existing aid set-up as a given, and see the function of research as limited to feeding its appetite for ‘take-aways’.

As we said in the brief, aid needs to fit the needs of development, not the other way round. For sure, this is not a simple matter. It is about public attitudes and the long-term shaping of opinion in the North, and not just about the civil servants or the ministers who are currently in charge of things – which is why, as Duncan notes, drivers of change and political economy analysis don’t change behaviour all that much. But public attitudes to development have been substantially remoulded in recent years by NGO campaigns, not always for the good but significantly nonetheless – and with Oxfam often in the lead.

Given this success, it seems a bit soon to give up on the possibility of shaping a more mature general consensus on what matters and what doesn’t in governance for development. I think we should talk about how we can work together on this.”

Duncan: Thanks David, and I really hope you’re right about getting aid donors to think more about politics and context. But using blogger’s prerogative to have the last word, I’d just like to say that there’s at least one straw man in here – the idea that NGOs like Oxfam see change coming about purely by bottom-up civil society organization. In fact, both our theory of change, and the practice of our advocacy usually involves cross sectoral alliances with business, allies within government, churches as well as community organizations, peasant associations and the like. I’d go further, often, NGOs’ most important role is to act as catalysts and convenors, bringing groups together who would not normally talk to each other. So where I differ with you is not that change comes about from a combination of top down and bottom up, but in the APPP Policy Brief’s far too dismissive line that ‘citizen pressure is at best a weak factor and at worst a distraction’. I think events in North Africa are just the latest reason (on top of all that work by the IDS Citizenship team) to say that that statement is simply wrong. US civil rights movement, anyone? The struggle against apartheid? I notice you don’t repeat it in your post – perhaps it wasn’t quite what you meant to say?

The World Bank breaks its promises on Africa’s voting power

The World Bank went backwards in Washington last week, when it announced a set of reforms on ‘voice’ (the different countries’ share of voting power at the Bank) that reversed many of the gains for African countries from the previous voice reform, at the Bank’s last Annual Meeting in Istanbul in September 2009.

In last week’s rejig, of 47 countries in Sub-Saharan Africa more than a third (18) lost share, 60% stayed the same, and only one (Sudan) gained. The biggest losers were Nigeria (-11.5%) and South Africa (-9.5%). Full country breakdown see Bank voting shares.

This apparently contradicts the Bank’s communique from the meeting – ‘In line with our Istanbul commitments, we endorsed voice reform to increase the voting power of developing and transition countries (DTC) in IBRD by 3.13%, bringing it to 47.19%. This represents a total shift of 4.59 % to DTCs since 2008’ 
 
The reasons for the difference?

1. The Bank is comparing with the pre-Istanbul voting shares, which were even worse (i.e. voice for Africa went two steps forward in Istanbul, then one step backward last week)
2. The reform reflects the shift in global GDP, and so benefits the big emerging economies like China and India, not the slower growing economies in Africa.

The Istanbul communiqué read ‘it will be important to protect the voting power of the smallest poor countries’, so it’s hard to see what happened last week as anything else but a broken promise. I am not privy to these discussions, but it looks to me like Africa got squeezed between the emerging powers and a Europe reluctant to cede any power in the Bank. Not good.

If anybody from the Bank or elsewhere wants to comment/set the record straight, feel free.

Lifting the Resource Curse (or how to make finding oil a blessing)

‘Lifting the Resource Curse’, a new Oxfam paper, revisits the difficult question of how to ensure natural resources are a blessing, and not a curse, for poor countries. Countries like Angola, where oil revenues (which represent 80 per cent of national income) are estimated at $10bn per year, yet 70 per cent of the population live on less than $2 per day. By one estimate, between 1997 and 2002 more than $4bn in state oil revenues ‘disappeared’ from the Angolan treasury; an amount almost equal to total government spending on social services in the same period.

The first step for any country is to get your hands on the money. There are some successes to point to: Bolivia saw oil and gas revenues rise from $448m in 2004 to $1.531bn in 2006, due to the redistribution of profits agreed in contracts after 2005.

But then you have to use the money wisely (and not nick it). Indonesia and Norway are good examples of countries with significant revenue from natural resource extraction, where public spending is aligned coherently with long-term development goals. Oxfam’s research highlights some key ways to improve the opportunities offered by revenues from extractive industries: upgrading legal and fiscal frameworks in poor countries with natural resources; renegotiating contracts with big extractive companies; and putting in place or reinforcing public financial management systems. These systems should use extractive revenues for social spending, as well as for setting the foundations for the diversification of production, job creation, and to mitigate the social and environmental impacts of exploitation.
 
A cornerstone of such policies should be the promotion of transparency throughout the extractive industry supply chain, from the agreement of contracts to the allocation of revenues through public budgets.

If you have a government that wants to make natural resources into a national blessing, there is no shortage of advice. Numerous “best practice” guides have been developed in the last few years showing how to improve management of the extractive “value chain” – from licensing to government expenditures. These include the IMF’s Guide to Resource Revenue Transparency, the Natural Resource Charter developed by Paul Collier and others, a book, “Escaping the Resource Curse” edited by Macartan Humphreys, Jeffrey Sachs and Joe Stiglitz, and innumerable academic and NGO reports (the Oxfam report has over 4 pages of recommendations to be getting on with). African governments can access technical advice c/o the AfDB’s new African Legal Support Facility.

Fine, but what if you don’t have an effective state – if vested interests are skimming off revenues from oil and mining, and will do their best to stop you spending it on schools and hospitals? (This is where I try desperately to avoid using the phrase ‘political will’, banned by a previous blog). This is quite common since part of the curse of wealth is precisely that ‘money coming out of the ground’ often weakens the social contract between state and citizen (eg the state no longer needs to tax its people) and undermines institutional development.

At a national level, Lifting the Resource Curse argues, unsurprisingly, that the active involvement of civil society is essential both to increase the public pressure on governments to make the most of natural resource endowments and to act as watchdogs, tracking both the origins and uses of revenues from extractive exploitation. It is also of crucial importance to have public institutions that can support this process of participation and which are efficient in their control, monitoring, and enforcement of it.

But I think the paper could have gone a bit further with its power analysis on this – what other influential domestic groups have an interest in harnessing extractive industries for the national good? Answer, virtually all of them – business sectors (manufacturing, exporters, agriculture, finance), trade unions, media, national parliaments and local governments. Where and how have these kinds of coalitions formed and had an impact? There’s a lot more to life (and change) than CSOs.

At an international level, apart from the ever-expanding but voluntary Extractive Industries Transparency Initiative, there are moves in the US to introduce legislation that would require extractive industry companies that list on the New York Stock Exchange (basically all the big ones) to disclose payments to governments. Similar moves are under way in Spain. Clamping down on tax havens and international banking secrecy might also curb some of the outflows of stolen money. Export Credit Agencies could insist that any companies they support comply with the highest standards on bribery, corruption and transparency.

With high commodity prices looking set to continue, the ability to make natural resources work for the common good, rather than private evil, will play a big part in determining which countries prosper and which fail.

See also my recent post on a World Bank paper on this issue. Oh, and the black and white pic is apparently a Californian beach in the 1920s. Those were the days, eh?

Natural Resources and Development Strategy after the crisis: useful (but flawed) new World Bank paper

The World Bank’s influential PREM (Poverty Reduction and Economic Management Network) team has a new series of topical notes, pulling together its research on breaking issues (they’ve obviously been reading the literature on using research for influence – rehashing existing research at the right moment for policy makers is one of the most effective forms of influencing). It’s called ‘Economic Premise’ (geddit?). Very welcome idea, but the premises behind the first issue are a bit patchy.

Issue number 1 is entitled ‘Natural Resources and Development Strategy After the Crisis’ and starts with the data.  ‘It is notable that, while commodity prices fell sharply from their peak in 2008 with the onset of the global recession, they generally remained much higher than previous recession lows, often as high as in 2005–07, a period of robust world growth. Furthermore, prices have also rebounded smartly over the course of 2009.’  [see graph]

The paper then addresses four main issues:

1.  How dependent are developing countries on primary commodity exports?  ‘Although declining, commodity or natural resource dependence remains a fact of life for a majority of developing countries. Commodities still comprised a little over 60 percent of the merchandise exports of the average developing country in the middle part of this decade [presumably they mean the last one], although this was down from over 90 percent in the late 1960s.’

2. What is the outlook for primary commodity prices? ‘In the 1950s the famous Prebisch-Singer thesis argued that real primary commodity prices (for example, relative to manufactures prices) displayed a long-run declining trend. [But] based on econometric study of long time series, the present consensus appears to be that real commodity prices do not display any permanent trend or drift over time.’

3. Is there a natural resource “curse” (or blessing)? ‘The short answer is “no” or rather “it depends.” Natural resources are “neither curse nor destiny”… negative long-run growth effects are mostly related to oil and minerals —concentrated “point source” resources that can easily become the object of rent-seeking and redistributive struggles (including armed conflict). On the other hand, there is little evidence of negative growth effects related to high prices for agricultural commodities, which are generally more open to competitive entry. Second, high oil and mineral prices mostly have a negative impact on long-run growth in exporting countries with bad governance. They have a significant positive impact on growth in exporters with good governance. This finding suggests that continued high commodity prices in the next few years could provide valuable resources to accelerate economic and social development in commodity exporting countries with good policies and governance.’

At this point alarm bells started to ring for me. Natural resources and governance are not independent variables – the interesting question is the impact of natural resources on governance itself. Countries are not born with either good or bad governance, they evolve, not least because of the influence of ‘money coming out of the ground’. How will Ugandan governance fare when its new oil finds come on stream this year? The Bank (or at least PREM) seems stronger on the economics and data than on the politics.

But that is nothing compared to this paper’s blind spot on environmental constraints. An entire paper on commodities, including agriculture, in which the only reference to climate is ‘investment climate’ is really quite an achievement. Might climate change not just have a bit of an impact on the future supply of commodities? And nothing on natural resource exhaustion either. Long term investors have largely accepted that oil production will peak, probably this decade, and then fall away. But in this paper the happy world of unlimited natural resource usage lives on. Extraordinary. Other bits of the Bank are doing good work on climate change, but it doesn’t seem to have reached the authors. Deep breath and back to point 4.

4. What policies can help poor countries best manage commodity resources for development? A fairly standard set of policy prescriptions:

a) Deal with governance through transparency, as in the Extractive Industries Transparency Initiative, backed up by citizen watchdogs. Not a bad thing (after all, we NGOs developed the ideas behind the EITI as Publish What You Pay, before Tony Blair nicked and rebranded the idea), but hardly a game changer.

b) Set up Natural Resource Funds to put money aside during booms and smooth out the impact of price swings on government revenues.

c) Don’t spend all the money on consumption and wages. Better in low income countries ‘to devote a larger portion of resource revenues to high-return public domestic investments, leading to higher growth and, ultimately, a higher value of consumption than under the permanent income strategy.’

For natural resource wonks, this last point is more significant than it seems. The authors think the standard advice, known as the ‘permanent income approach’ to natural resource fiscal management, doesn’t go far enough, and want governments to spend more.

What can you do if teachers don’t show up?

There has been significant progress in recent years in getting kids into school, but what’s the point if the teachers don’t show up for work? In general, the poorer the country, the higher the level of absenteeism. The explanations are both obvious (wages are so low, teachers need to look for second jobs, or funnel their students into private tuition) and less apparent (demoralized teachers with no money for textbooks and huge class sizes; weak governance means no-one holds absentees to account, and good attendance is not rewarded).

The first priority should be to pay teachers properly, invest in education and build a real public service ethos, as has been achieved in countries such as Sri Lanka.  But what other policies could contribute to reducing teacher absence?

A new paper from the Poverty Action Lab at MIT surveys some of the attempts to measure the effectiveness of efforts to reduce absenteeism, and comes up with some interesting success stories. Cautionary note: because PAL likes to conduct randomised control trials, it gravitated towards non-state providers willing to experiment with introducing new techniques in some schools and not others, however, the lessons might be useful for reforming state services too.

One way is to improve the accountability of teachers to their local communities. An ICS Africa programme in Kenya, the Extra Teacher Programme, tested a range of different approaches to improving education, including hiring locally accountable teachers, tracking students by ability level, and training the local school committees that oversaw these teachers. Locally accountable teachers had much lower absence rates than centrally hired teachers and pupils’ test scores improved.

Unfortunately, the Extra Teacher programme also paid the extra teachers a fraction of the government salary, (something the MIT researchers seem unhealthily delighted by), but the overarching point is that you can raise teacher attendance through local accountability. This is born out by the Citizen Report Card programme in Uganda, which informed communities about the quality of services (in this case health care services) and facilitated a “shared action plan” to monitor providers, including drawing up a “community contract” between local communities and health providers. The result was better quality health care, attributed to increased provider effort. Although provider absence was not the focus of the programme, the programme resulted in a 10 percentage point improvement in attendance.

More draconian methods also seem to work. The most successful project reported in terms of overall impact in reducing absenteeism took place in rural Udaipur in India, where Seva Mandir, an Indian NGO, runs informal schools to help students not reached by ordinary government schools. Each school has only one teacher who instructs about 20 students in basic Hindi and maths. Similar to other schools around the world, teacher absenteeism was high: the teacher absence rate was 44 percent. Because these were NGO schools and teachers, it was an ideal setting to test how teachers responded to incentives. Each teacher in the programme was given a camera with a tamper proof date and time stamp and was instructed to take a picture with students at the beginning and end of each school day. Teachers were paid for the number of days that they attended as recorded by the cameras, giving them a clear incentive to attend school. To test the effectiveness of the programme, Seva Mandir randomly assigned half of the teachers to the camera programme, while the rest were supervised and paid the normal way as a control group. Unannounced, random checks measured the true attendance of each group.

Ordinarily, teachers were paid a salary of Rs. 1,000 (about $22) per month, for 21 days of teaching. In the camera schools, each teacher was guaranteed a base pay of Rs. 500. Teachers were rewarded with Rs. 50 for each valid day taught, so if they turned up every day, they could significantly increase their admittedly paltry wage.

The cameras worked. Attendance increased from 58 percent in the control group to 79 percent in the group with cameras. Overall, this translates into 34 more days of instruction per student per year. Attendance increased for teachers with both relatively high and low attendance records. Teachers liked the programme because it gave them some control over their own income. Some initially resisted its inflexibility – invalid pictures meant no pay even if a teacher was present. But teachers grew to better understand the programme and technical problems became rare. Because the cameras were so successful, Seva Mandir has continued to use them long after the experiment has ended. From October 2006 to September 2007, attendance was 15 percentage points higher in classrooms with cameras, compared to those without cameras; attendance was still as high as before in the school with cameras, but it had some what improved in the other schools.

Not surprisingly, students in the camera schools learned more. They were 62 per cent more likely to be admitted to regular government schools. Seven percent more girls were able to take a test that required being able to write.

Finally, teachers respond to their pupils. A Girls Scholarship programme in Kenya, also run by ICS Africa, offered scholarships to sixth-grade girls who scored highest on tests, and showed an unintended (though positive) impact of incentives. The girls eligible for the scholarship showed academic improvement—as did girls who were unlikely to win and boys, who could not win. Teachers— who received no incentives themselves from the programme—responded to students’ increased motivation to learn and were absent 4.8 percentage points less than teachers in control schools. In other words, teachers responded to students’ increased motivation to learn.

At this point, the PAL researchers start to show the limits of the RCT number-crunching mindset and start to resemble that Monty Python sketch of the banker struggling to understand why someone should collect money for charity: ‘Is an appreciated or contented teacher less likely to be absent? If so, a programme carefully designed around a teacher’s situation could be successful without being financially expensive. It is not yet known exactly how teachers should be encouraged to want to teach. Researchers in J-PAL’s network are continuing to experiment with making teaching rewarding.’ Good luck with that, guys.

The Good Governance 8 and a debate on tax havens

One of the G20 Voice bloggers at the London Summit last week was a rather distinguished-looking, silver haired Chilean who turned out to be Daniel Kaufman. He used to work at the World Bank, where he was one of the 46 employees who blew the whistle on Paul Wolfowitz in a letter to Wolfowitz and the bank’s board that argued that the then World Bank President’s decision to arrange a promotion and pay raise for his companion undermined the credibility of the institution:

‘We are deeply concerned by the impact of the current leadership crisis on the bank’s credibility and authority…. Our own governance standards must be upheld and enforced impartially and without exception,’ the letter said, ‘even when they touch the highest levels of this institution.’

Kaufman outlasted Wolfowitz, but has now moved on to the of Brookings Institution and his blog, the Kaufman Governance Post. Here’s an example of his work: Daniel picks a ‘Good Governance Group of 8’, (ggg-8) made up of Botswana, Chile, Mauritius, Uruguay, New Zealand, Norway, Singapore and Switzerland, and contrasts them with both the G20 and the G8. He finds not only that the ggg-8 beats the G8 and G20 on a government effectiveness, rule of law and corruption, but that the gap is widening.

Kaufman got into a fascinating debate with fellow G20 Voice blogger Richard Murphy, a chartered accountant turned tax campaigner who runs the tax research blog (these two were not representative of the highly diverse G20 Voice crowd, don’t worry!). Murphy argues passionately that the secrecy surrounding tax havens was one of the contributory factors in the crisis, allowing financial bubbles to expand beyond the jurisdiction of the authorities. Kaufman is sceptical, worrying that tax havens have become a convenient scapegoat, when the real problem is regulating the financial sector in New York and London. The Economist and Martin Wolf in the Financial Times have made similar arguments. What I took away from their exchange though was that, whatever the argument over causality, if we are to regulate finance at home, we have to sort out tax havens at the same time, or else financial institutions will merely flee offshore. So toughening up the G20 decisions on ‘uncooperative jurisdictions’ has to be part of the solution, but is no substitute for re-regulating finance at home.

I have all sorts of problems with Daniel’s focus on governance – the indicators used, such as the World Bank’s Country Policy and Institutional Assessment (CPIA) present themselves as objective, but often have an inbuilt bias towards deregulation – for example, the CPIA gives countries higher marks for having low trade tariffs, ignoring the role of temporary tariff protection in the development of countries such as South Korea and Taiwan. The governance debate too often ignores issues of power and politics (my favourite definition of governance is ‘government with the politics taken out’), but there’s no questioning Kaufman’s sincerity or courage.