Challenges with decentralization
Seventeen years ago, Indonesia embarked on its so-called big bang decentralization. Almost overnight, responsibility to deliver many public services was transferred to local governments. This was done, in part, with the hope that the decentralization would make local government more agile and responsive to issues facing local communities. However, results have yet to materialize in many locations.
In my view, a key factor driving poor results is the central government’s approach to regulating local governments. In a decentralized environment, the central government has a legitimate role as a regulator to standardize service delivery or financial management procedures. However, in practice, they have been more focused on controlling inputs and processes, with little attention to accountability for results. This approach results in the proliferation of regulatory constraints and a fearful bureaucracy that make it difficult for local leaders to respond to citizen’s problems.
Public Sector and Governance
A snow storm was barreling toward New York City and the roster of attendees at the UN Statistical Committee meeting—myself included—fully expected that all flights would be canceled. Fifty statisticians made the same calculation—to find the closest bar. I headed to the Vienna Café in the UN headquarters building, a place which affords one the rarified opportunity to socialize with high-level government officials from around the world. On my way in, I recognized the Director-General of a statistics office from an African country and we spoke. I mentioned several statistical programs that donors were planning to finance in his country. He expressed enthusiasm about these projects but voiced an increasingly familiar note of concern about long term sustainability of his agency in general. He fretted that his entire statistical office would collapse without donor support. He admitted that most of the demand for data was coming from the donors themselves, as indicators for their own reporting and planning; the country’s own government had much less interest in data or statistics.
The journey is ongoing as Nepalis continue to confront and challenge the conventional wisdom about Nepali statehood and chart a path towards a more inclusive, equitable and modern nation-state.
The new federal structure also redefines the World Bank Group (WBG)’s engagement with Nepal. This week, as the WBG’s Board of Executive Directors endorsed a new five-year Country Partnership Framework (CPF), Nepal’s Finance Minister Yuba Raj Khatiwada attended a series of Nepal Day events at the WBG headquarters in Washington DC. There, he unfurled the new government’s vision and development priorities and discussed approaches to address Nepal’s financing and knowledge needs in the WBG’s upcoming programme of assistance.
. To that end, our strategy and approach seeks to support the authorities and engage with development partners in three transformative engagement areas: (i) public institutions for economic management, service delivery and public investment; (ii) private sector-led jobs and growth; and (iii) inclusion for the poor, vulnerable, and marginalised groups, with greater resilience against climate change, natural disasters, and other exogenous shocks. These focus areas were informed by extensive consultations and surveys across the country’s seven states with over 200,000 citizens, government, civil society organisations, the private sector, media and development partners.
In many respects, Nepal is starting from a clean state. While Nepal did practise a limited version of decentralisation in the early 2000s, the scope of devolution proposed by the 2015 Constitution is unprecedented. Meanwhile, reforms promise to rid the country of a legacy of exclusion based on geography, ethnicity and gender.
Over the last decade, Nepal experienced frequent government turnover and political fragmentation with a considerable toll on development. The 2017 elections mark a significant turning point, in that they offer higher hopes for political stability and policy predictability that remained elusive during most of Nepal’s recent past. This is a considerable achievement.
While the national poverty estimates await updating starting next year, at last count, poverty fell from 46 per cent in 1996 to 15 per cent in 2011 as measured by the international extreme poverty line. However, most of the poverty reduction resulted from the massive outmigration of labour, and a record increase in private remittances. Moreover, a significant disparity remains in poverty incidence across the country.
Nepal now faces the daunting task of adapting to a three-tier structure in the face of nascent and often-nonexistent institutions at the sub-national levels. Immediate challenges include the need to clarify the functions and accountabilities of the federal, state and local governments; deliver basic services and maintain infrastructure development; enable the private sector; and ensure strong and transparent governance during the early years of federalism. Meanwhile, if left unmet or unmanaged, heightened public expectations of federalism could rapidly degenerate from anticipation to disillusionment. . Nepal needs to grow in the order of at least 7 to 8 per cent and shift from remittance-led consumption to productive investment. The economy also remains exposed to exogenous shocks like earthquakes, floods and trade disruptions. These long-standing economic vulnerabilities will require far-reaching but carefully-calibrated reforms.
In Gaza, the drinking water tastes like seawater. Years of neglect and poor management, due in large part to recurring conflicts, has led to the steady depletion of Gaza’s natural aquifer. The empty aquifer has been invaded by seawater and, alarming for public health, untreated sewage. A series of droughts that struck Syria from 2006 onwards destroyed the livelihoods of millions of Syrians who relied on agriculture. The United Nations (UN) estimated that between 2008 and 2011, the drought affected 1.3 million people, with 800 000 people “severely affected.” People were forced from their land, poverty levels rose, and part of the population was plunged into deep food insecurity.
This blog is based on the report The Web of Transport Corridors in South Asia -- jointly produced with the Asian Development Bank, the United Kingdom’s Department for International Development, and the Japan International Cooperation Agency
One of the oldest, the Grand Trunk Road from the Mughal era still connects East and West and in the 17th century made Delhi, Kabul and Lahore wealthy cities with impressive civic buildings, monuments, and gardens.
In India alone—and likely bolstered by the successful completion of the Golden Quadrilateral (GQ) highway system—several transport proposals extending beyond India’s borders are now under consideration.
They include the International North-South Transport Corridor (INSTC), linking India, Iran and Russia, the Asia-Africa Growth Corridor, and the Bangladesh, China, India, and Myanmar (BCIM) economic corridor.
The hope is that these transport corridors will turn into growth engines and create large economic surpluses that can spread throughout the economy and society.
These two cities are the economic hubs of China and India respectively, two emerging global powers.
The distance between them, about 5,000 kilometers, is not much greater than the distance between New York and Los Angeles.
But instead of crossing a relatively empty continent, a corridor from Shanghai to Mumbai—via Kunming, Mandalay, Dhaka, and Kolkata—would go through some of the most densely populated and most dynamic areas in the world, stoking hopes of large economic spillovers along its alignment.
“Build and they will come” seems to be the logic underlying many massive transport investments around the world.
However, the reality is that not all these investments will generate the expected returns.
Worse, they can become wasteful white elephants—that is, transport infrastructure without much traffic—that would cost trillions of dollars at taxpayers’ expense.
First, countries need to change the mindset that transport corridors are mere engineering feats designed to move along vehicles and commodities.
Second, sound economic analysis of how corridors can help spur urbanization and create local jobs while minimizing the disruptions to the natural environment, is key to developing successful investment programs.
Specifically, it is vital to ensure that local populations whose lives are disrupted by new infrastructure can reap equally the benefits from better transport connectivity.
For instance, more educated and skilled people can migrate to obtain better jobs in growing urban areas that are benefiting from corridor connectivity, while unskilled workers may be left behind in depopulated rural areas with few economic prospects.
But while corridors can create both winners and losers, well-designed investment programs can alleviate potential adverse impacts and help local people share the benefits more widely.
In that vein, India’s Golden Quadrilateral, or GQ highway system, is a cautionary tale.
No doubt, this corridor had a positive impact.
Economic activity along the corridor increased and people, especially women, found better job opportunities beyond traditional farming.
But this success came at a cost as air pollution increased in the districts near the highway.
This is a major tradeoff and one that was documented before in Japan when levels of air pollution spiked during the development of its Pacific Ocean Belt several decades ago.
Another downside is that the economic benefits generated by the GQ highway were distributed unequally in neighboring communities.
A healthy Public-Private Partnership (PPP) has several defining features: strong competition, bankability with low financial costs, lower risk of renegotiations, secure value for money, and efficiency gains.
What does it take for countries to develop PPPs that can fit this description? Why is it that some countries such as India, Colombia, Turkey, and Egypt have been able to develop strong and successful PPP programs while others have not been able to award any projects under special-purpose PPP legislations?
Our experience with infrastructure PPPs across the globe suggests that three institutional pillars are needed to increase the probability of PPP success.
The Kenyan government took a big step in improving its business environment with the launch of the Public-Private Partnership (PPP) Disclosure Portal, an online tool that makes all non-confidential information relating to PPP contracts available to the public. The portal, which went live in June, is the result of the government’s work with the World Bank Group to improve transparency and accountability in PPPs since 2016.
As important as the act itself is the timing of the launch. The government recently announced its commitment to eradicate corruption in the public service. The government launched the PPP disclosure portal shortly thereafter—at a time when citizens in Africa are increasingly demanding answers, engaging their governments, and increasing scrutiny in public spending. This reflects positive movement and will hopefully fuel a virtuous cycle where citizens increasingly trust that the government cares about their views, their needs, and their hard-earned money.
On June 27-28, 2018, the World Bank's "States of Disruption" Conference brought together thought leaders and practitioners across several thematic areas to explore the ideas shaping governance in the 21st century today.
Juan Salamanca | Pexels
It’s hard to believe summer is already half over. I am sure many of you, like me, have been stuck at your desks for most of July, but here’s hoping we all get out in the sun in August. But before you go, make note of these really interesting articles that have come out over the last few months that might just make the perfect porch reading for those looking to tune out, but still stay engaged.
The Globe & Mail
Highway BR-163 cuts a rough path through Brazil’s conflicting ambitions: to transform itself into an economic powerhouse and to preserve the Amazon as a bulwark against climate change. This beautifully presented story takes you along the 2,000-kilometer BR-163 corridor in Brazil’s Amazon region to look at the competing needs of those living along this important national artery. It’s not just about a road, but about development itself, and why balancing the economic and social needs of a nation and its people is no simple task.
Miranorte is a small town in the State of Tocantins, northern Brazil, well-known for its pineapple production. During the rainy season, the production cannot reach the markets due to the obstruction of the roads with the water flow. In many places, the roads lack bridges and culverts, jeopardizing both safety and accessibility.
In order to address these challenges, the World Bank’s Multisector Project in Tocantins (2012-2019), which includes a rural road component, decided to hear firsthand from the community about their priorities for development and inputs in the selection of roads that needed improvement. Aside from a practical and transparent approach, the consultations compensated for the lack of information required for conventional planning.
Tocantins, as many places in the world, doesn’t have any traffic data, information on road conditions, or even maps of the rural road network available. Although IT technologies are emerging and the importance of these data for management of road assets is evident, it is often time-consuming and costly to survey all the rural road network, especially in a state like Tocantins, which is larger than the United Kingdom.