Jim Adams, Vice President of the World Bank’s Operations Policy and
Country Services network, opened the event by noting that the Bank’s efforts
to get countries moving to reform agenda had not been fully successful. A review
of the World Bank’s work suggested there was a strong bias on lending when lending
was not the best route to reform. He noted that new strategies are being discussed
within the institution and said the World Bank hoped to unveil these new strategies
in the coming years.
Carsten Staur, State Secretary of the Danish Ministry of Foreign Affairs,
said it was the sixth anniversary of the Danish governance trust fund and it
was created at a time when governance was still a new word in development circles.
Work has been conducted in 31 countries. Staur noted LICUS nations have significant
development difficulties. No country has been able to sustain growth while maintaining
poor governance policies. As a result, donors have focus aid on countries with
good policies and institutions including Denmark. The question becomes who assists
the weak states? New concerns have arisen as well such as the impact of terrorism
and mass population movements. Globalization has put severe pressure on what
Staur termed nation-states with new players such as civil society and multinational
corporations playing increasingly important roles. Globalization, he suggested,
leads to political disintegration and it is most felt in the developing world.
Traditional Western models of development may not be useful in the Third World
as normal power structures may not provide the best opportunities to invoke
fruitful change. Good institutions are essential. Enforcement of contracts is
a vital component. In Somalia, peace negotiations did not incorporate the input
of tribal war lords and the government now has little power outside the capital
city. Lessons learned by donors there included the need to focus at the community
level by building local constituencies for peace and economic initiatives and
the importance of adopting a mult-level approach to development. Some of the
overall lessons learned in the Danes efforts to sustain governance in LICUS
included: having the donor community look more closely at the regional, political
and cultural dimensions of the challenge before committing resources; support
is needed foster democratic stability where political instability is in place;
building the core financial and policy mechanisms of a government to help establish
its legitimacy; aid can be administered through NGOs and other legitimate civil
society actors; strengthening ties between communities is essential to establishing
an enduring peace process; helping elective governments deliver basic public
services is essential in places with instability; NGOs can supplement provision
of basic public services; regional integration of LICUS can have positive effects;
and donors should not draw away from situations too quickly where there is instability
or instability reoccurs.
Helen Sutch, a sector manager in the World Bank’s Public Sector Governance
network, said LICUS countries all had difficulties but there were significant
differences between countries and therefore different institutional challenges
that the Bank must address. For example, schools quality varied greatly. Some
were resource rich, others not. Some had civil wars, other long term political
instability. The underlying assumption by many is these countries don’t have
solid institutions, but Sutch noted where formal institutions are weak, informal
ones often exist and are strong. She noted that World Bank President James Wolfensohn
had suggested the most effective institution is corruption and the challenge
is how to be replace it. Sutch said the World Bank needed to better analyze
the dynamics of political reform. The task is transformation rather creation
of new institutions. There is often a need to create a mode of financial transactions
in places that use barter systems or where land is held collectively without
titles. The challenge for the Bank is to recognize different countries have
different challenges and for the institution to build a theoretical and diagnostic
framework that is flexible.
Poul Engberg-Pedersen, a senior public sector specialist in the World
Bank’s Poverty Reduction and Economic Management network discussed governance
as an entry point for aid. Country specific flexible aid is essential, but noted
that the concept of money for the good performers and ideas for the bad performers
was too simplistic. The politics of reform needs to be managed as well. Good
political analysis on the part of donors is important without also becoming
too involved in the political process. The content of public sector reform include
budgeting, diversified pay and tenure, performance targets and decentralization.
Basic reforms are about discipline on budget, security and governance structure.
Engberg-Pedersen discussed different types of aid reform such as budget support,
basket funding, social service delivery, zero generation reforms and humanitarian
aid. He noted champions of reform inside and outside governments are important.
Challenges for the donor community is to improve political analysis to identify
entry points for reform, link performance objectives and drivers of reform,
adjust capacity building to government performance, and keep out of the national
and political processes.
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