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Public Sector and Governance

What will it take to realize Pakistan’s potential?

Sri Mulyani Indrawati's picture
Sri Mulyani Indrawati meeting beneficiaries
Meeting with beneficiaries of the Benazir Income Support Programme in Lahore, Pakistan.

As Pakistan readies to celebrate its independence day, we can all feel satisfied about progress in restoring macroeconomic stability, but should also realise that the country can and should do much better. Pakistan has many assets, of which it can make better use — from its vast water and river endowment, to its coastline and cities, to its natural resources. And there are upsides: a growing middle class, a lively informal economy and a strong influx of remittances. Pakistan can also be proud of the first peaceful transfer of power between two civilian governments. But to reach its full potential, Pakistan needs to focus on two critical areas, both obvious and urgent. It needs to ensure that its people have the means to fully participate in and contribute to the economy. And it needs to integrate itself more, globally and regionally.

The first challenge is demographic. As a result of rapid population growth, 1.5 million youngsters reach the working age each year. The question is, will the private sector be able to provide the jobs they need and want? And will the youth have the skills to get good jobs? Pakistan must do far better in education. Primary school net enrollment is about 57 per cent, well below other South Asian countries. Enrollment drops by half in middle school, with much lower levels for girls and children from poor families. This is not a good foundation to build on.

It is not surprising then that Pakistan also struggles to give all its citizens the opportunity to participate in building better lives for themselves. Only 25 per cent of women participate in the labour force, compared to 50 and 80 per cent in most developing countries. Women and girls deserve better. Research shows that girls with little or no education are far more likely to be married as children, suffer domestic violence, and live in poverty. This harms not only them, but also their children, their communities and the economy. Greater gender equality can enhance productivity and improve development outcomes for the next generation. It is smart economics.

Pakistan has taken steps to empower women. The Benazir Income Support Program, supported by the World Bank, has provided millions of women with national ID cards and makes direct payments to them, strengthening their ability to take decisions and move out of poverty.

Cecil the lion: Is there a golden lining?

Hermione Nevill's picture

Cecil the Lion at Hwange National Park in Zimbabwe.

We all know about the story that broke the Internet: the story of Cecil the lion and the Minnesota dentist who killed him. What you may not know is that you can now buy a gold-plated iPhone case with Cecil etched on the back for about US$1,000.

The world has reacted in different ways to the news of this black-maned martyr. For various reasons, the media has gone into overdrive, the public has been outraged, and enterprising phone-case companies have gotten creative. So what does it mean for us in the field of tourism, conservation and development?

The global spotlight has been a good thing.  First of all, it has raised the temperature of the debate around conservation. People have flooded the dentist’s business page with negative online reviews (“murderer!”), called for his extradition to Zimbabwe, signed petitions, made donations, retweeted celebrities and forced three US airlines to ban wildlife trophy transport.

Publicity like this can have a lasting effect on consumer demand by stimulating more responsible behavior. For example, media exposs on sex tourism and child abuse in Thailand and Madagascar caused the tourism industry (more than 1,000 travel and hospitality companies) to adopt a global code of ethics. Public backlash against the negative impacts of orphanage tourism (volunteering) in Cambodia – following a 2012 investigation by Al Jazeera – meant that most large travel agents removed the product from their books, not only in Cambodia but globally. There is an opportunity here for all tourists, hunters and operators to reflect on and improve the way they behave and interact with wildlife.

More crucially, Cecil’s publicity has revealed the divisiveness of the issue. While everyone condemns the illegality of what happened, conservationists, columnists, academics and others cannot definitively agree on bigger questions. Does trophy hunting really contribute to conservation? Or should it be banned? Is photographic tourism a better alternative? Do we actually know?

For those of us concerned with such development goals as natural-resource management, job creation or local community empowerment, this lack of a global consensus poses a policy challenge. Indeed, the last few days have highlighted that indeed both consumptive (hunting) and non-consumptive (safari) tourism can demonstrate positive impacts.

So perhaps the question is not “Which is the better alternative” but “How can we better capture the value and benefits of each?” One way is to look at the policy framework and its role in regulating the supply side of the equation.

​LGBTI people are (likely) over represented in the bottom 40%

SOGI Task Force's picture

World Bank President Jim Kim recently said “we will not reach our twin goals […] unless we address all forms of discrimination, including bias based on sexual orientation and gender identity.”

Sexual and gender minorities are particularly important for the Bank because they are (likely) overrepresented in the bottom 40% -- the target of the Bank’s goal to promote shared prosperity.

Why only “likely”? Because robust data on LGBTI development outcomes is rare, even in high income countries.  With support from the World Bank’s Nordic Trust Fund, we are seeking to fill some of these data gaps, starting with research in the Western Balkans.

What we do know is that, across the board, barriers to education and employment contribute to greater chances of being poor – and this may be worse for LGBTI individuals. 

Available data on Lesbian, gay, bisexual, transgender and intersex (LGBTI) people shows that youth are more likely to face barriers in getting a good education.  It’s also harder to find – and keep – a job, pushing LGBTI people further into poverty.

For success and sustainability, seek broad social ‘well-being’; Good governance promotes a ‘virtuous cycle’ of growth

Christopher Colford's picture

Beyond the cold calculus of GDP and TFP and FDI, development is about promoting strong societies as well as propelling powerful economies. But how can we measure societies’ progress toward success? Some may try to calculate “Gross National Happiness” as a yardstick, and some may envision “getting to Denmark” as the ideal end-of-history destiny of development – but are there patterns that reveal how societies can flourish?

Two recent Washington seminars suggest that – by pursuing innovation and inclusion, and by focusing on broad-scale social “well-being” – policymakers can define realistic paths toward development success.

The methodologies used by Harvard economist Philippe Aghion at an International Monetary Fund forum and by former World Bank strategist Enrique Rueda-Sabater at a Center for Global Development discussion may have been different, but their conclusions were in harmony: Societies thrive – in a sustainable way – when inclusion and innovation help expand the circle of opportunity, and when strong governance standards lead to sound civic decision-making.

Taken together, the two seminars’ insights should help inform policymakers’ debate about the Sustainable Development Goals, which are due to be approved in September at the opening of the United Nations General Assembly.

Aghion, at an IMF seminar (sponsored by its Low-Income Countries Strategy Unit) on June 30, approached the topic of “Making Growth Inclusive” by imagining “how to enhance productivity growth while promoting social mobility.” Presenting data from a recent paper on “Innovation and Top-Income Inequality,” which he recently co-authored with an all-star team of economists, Aghion outlined the way that income and wealth inequality have drastically soared in developed countries since the mid-1970s – analyzing trends that by now are sadly familiar to the squeezed middle class, as calculated in the esteemed work of Thomas Piketty, “Capital in the Twenty-First Century.”

Building on that data, Aghion took the inequality-and-inclusion logic several steps further. He lamented the way that “skill-biased technological change” has (in the absence of policy safeguards) provoked societies to stratify along the lines of wealth, income, education and connections. Yet “creative destruction” is inevitable in “a Schumpeterian world,” reasoned Aghion: A significant factor expanding the wealth gap is the same process of continuous economic renewal that helps economies advance. “There is a big [economic] premium to being a superstar innovator,” he asserted, noting that “you can become rich by innovating” – and thus “innovation is a big part of top-1-percent income inequality.”

Philippe Aghion

“Creative destruction is good for social mobility” and broader inclusion, in the long run, because it causes a steady procession of “new innovators to replace old incumbents.” The effect of each wave of innovation is fleeting, especially in a hyperspeed economy: “You get temporary ‘rents’ when you innovate. You don’t get them forever,” because the relentless Schumpeterian process will eventually cause yesterday’s innovators to become, in turn, tomorrow’s has-beens.

The darker danger of entrenched inequality occurs, said Aghion, when incumbent interests use their political power to lobby for the protection of their advantages – whether by pleading for tax-code favors, seeking government-imposed barriers to the entry of new competitors, or purchasing influence with pliant politicians through campaign donations. (In an aside on U.S. politics, Aghion pointed to his paper’s data linking a state’s representation on the congressional Appropriations Committees with its amount of federal favors – a shrewd quantification of the pork-barrel compulsions of Capitol Hill.)

Because innovation promotes social mobility and thus greater inclusiveness, Aghion contended that “innovation is a good guy; lobbying is a bad guy.” So “if you’re for inclusive growth, then you will be against lobbying and [the creation of] entry barriers.”

Focusing simply on present-day inequality is less informative than focusing on social mobility, he asserted. There’s nothing wrong with an economy that bestows ample financial rewards upon genuine innovators who create new products and processes. There is, however, something deeply wrong – and economically growth-inhibiting – with governments that allow no-longer-innovative incumbents to use their political connections to suppress potential competitors.

The IMF panel’s respondents amplified Aghion’s analysis. World Bank economist Daniel Lederman noted that it would be wise to use “the lexicon of ‘inequality of opportunity’,” because some degree of wealth inequality is inevitable (and perhaps even desirable) when individuals’ talent and effort are rewarded with rising incomes. IMF economist Benedict Clements – deploring the “great degree of disparity in ‘equality of opportunity’ ” that now prevails in advanced economies, including the United States – noted that there need be “no conflict between equity and efficiency if you design your policies right.”

Getting policies right – by upholding strong standards of governance – was also one of the underlying themes at a July 21 seminar at the Center for Global Development led by Rueda-Sabater, who is now a senior advisor to the Boston Consulting Group and a visiting fellow among CGD’s strong lineup of scholars. Rueda-Sabater is well remembered at the World Bank for leading a research team’s detailed “scenario planninganalyses that, in 2009, discerned the contours of three possible scenarios for the world in the year 2020.

Presenting a recent BCG report, “Why Well-Being Should Drive Growth Strategies,” Rueda-Sabater outlined an imaginative BCG diagnostic tool: the “Sustainable Economic Development Assessment” (SEDA), which measures the relative well-being of 149 countries by gauging their success in converting wealth into well-being – that is to say, in effectively translating their potential into tangible progress.


Senegal shifts its thinking: Context is everything

Oumar Diallo's picture
Editor's note: this is the second in a two-part series. Click here to read the first part, "Senegal shifts its thinking: Rural water delivery moves to private operators."
Photo: flickr/Julien Harnels

In the rural water sector in Senegal, as with many parts of the world that have experienced tremendous changes, context is everything. Rarely does one single act spur a shift at the government level; many elements combine to prompt a change in approach.

The PPP team in Senegal was privileged to be able to develop a brand-new system for rural water delivery in Senegal (see previous post here), but our activity was just one contributing factor in a much larger national and even international effort. The political context in Senegal, along with sustained attention to the Millennium Development Goals (MDGs), created the right atmosphere for this PPP.   
Here are five important elements that came together to make Senegal’s paradigm-shifting PPP possible:
  1. Government officials’ forward-thinking views. Coming up with an original plan for the delivery of rural water depended on zoning changes. Our group’s internal study showed that dividing the country into three zones would make it possible to cluster services. Government’s willingness to consider clustering pipe systems across 14 regions was critical, because it made support from the private sector a viable option.

One question, eight experts, part one: Isabel Rial

Isabel Rial's picture

Some public-private partnerships (PPPs) fail. That’s a fact. But when the lessons these failures impart are integrated into future projects, missteps have the potential to innovate — energizing the learning cycle and setting the stage for long-term success. To gain a better understanding of how innovation in PPPs builds on genuine learning, we reached out to PPP infrastructure experts around the world, posing the same question to each. Their honest answers redefine what works — and provide new insights into the PPP process.

This is the question we posed: How can mistakes be absorbed into the learning process, and when can failure function as a step toward a PPP’s long-term success?

Our first response in this eight-part series comes from the International Monetary Fund's Isabel Rial.

For centuries, PPPs have been used by governments as an alternative to traditional public procurement for the provision of public infrastructure, although results have been mixed. If properly managed, PPPs can deliver substantial benefits in terms of mobilizing private financial resources and know-how, promoting efficient use of public funds and improving service quality.

Yet in practice, PPPs have not always performed better than traditional public provision of infrastructure. The reasons for this vary across countries.

Good communication strategy is essential for good governance

Ravi Kumar's picture
2010 post earthquake Haiti. Photo - Mercy Corps Mercy Corps
2010 post earthquake Haiti. Photo: Mercy Corps

When trust in governments around the world is at a historic low, and a myriad of challenges continue to overwhelm leaders, it’s imperative for government agencies to revamp their strategic communications approach.
Whether it is during a natural disaster or a policy consultation process, citizens expect honest and useful communications from their government agencies. This expectation isn’t misplaced, as they now live in a world where mobile phones and the Internet are ubiquitous.
Governments often succeed or fail because of the way they communicate their vision, mission and policy objectives with the wider citizenry. In a digital age, it’s becoming increasingly obvious that governments ought to be proactive in the way they communicate and engage with citizens.
The decreasing price of technology such as mobile phones is leading to the rapid democratization of digital communicators.
Recently, when the devastating earthquake hit Nepal, Nepalis inside and outside the country wanted actionable information as soon as possible. Many of them were talking about the devastation even before the government’s initial statement. Twitter and Facebook are popular in Nepal and people were using the platforms to talk about damage and rescue.
As a Nepali citizen, I know my government has yet to be digitally savvy. Thankfully, the government launched a Twitter account to share the latest devastation numbers and information about rescue operation. It was a strategic use of the tool in a time of crisis.

Good decisions, successful PPPs!

Marcos Siqueira's picture

When considering public-private partnerships (PPPs), the million- (or even billion-) dollar question is: What is the single most relevant factor that drives PPP projects to failure?

Photo: flickr/Milton Jung
As a governmental officer, managing PPP transactions for many years, and later as a consultant on the private side of transactions, I have led more than 40 PPP initiatives. Many succeeded and are delivering Value for Money for users and taxpayers. However, several others failed along the way, and contracts never got signed. What surprises me is that failure came even to some technically perfect projects.

Every successful PPP with which I’ve been involved shared one important factor: effective governance in the project level, from the identification of the project, all the way to the tender process.

By governance I mean the set of processes that allows decisions to be made by the right people, with access to the right information, at the right time, so the project can meet the requirements defined by the project’s stakeholders.

Senegal shifts its thinking: Rural water delivery moves to private operators

Oumar Diallo's picture
Photo: Wikimedia Commons
Overnight success takes years, as the saying goes – and that’s certainly the case for the delivery of water to rural regions of Senegal. On July 2, 2015, the Government of Senegal celebrated the signing of its first lease (affermage) contract in the rural water sector, the result of a partnership that marks a significant and promising shift in rural water management for the country. This success in Senegal was years in the making, dating back about 15 years to the start of Senegal’s reform process.

Though Senegal’s situation is unique, insights and lessons from the project can inform and strengthen other rural water PPPs as well.
What changed, and why it matters 
In Senegal’s earlier period of reform, government officials looked to community-based management for 1,500 rural water piped systems to serve the 7.5 million people in need of water services across 14 rural regions. (Senegal is divided into three large geographic zones – North, South and Central – with ongoing transactions in smaller areas like Gorom Lampsar and Notto-Diosmone-Palmarin, known as GL-NDP, and the Senegal River region.) At that time, officials thought this would be the best way to eventually scale up management of the rural water system. By 2010, though, discussions between the World Bank Group and the Government of Senegal pushed reform forward by including more private sector management, which also aimed to increase sustainability of the system. 

Supporting the ICT sector in Somalia

Rachel Firestone's picture
Photo: Cilmi Waare/Radio Mogadishu

Somalia’s ICT sector – particularly mobile communications – is already one of the brightest spots in its economy. It could soon reach a tipping point where market competition, equitable distribution and demand-driven efficiency can grow exponentially and transform operating environments for both government and individual citizens.
Despite, or perhaps because of, the lack of a public sector presence in a 20-year civil war, private, unlicensed mobile companies, using satellite for international communications, have emerged to meet the high demand for communications, especially with the large Somali diaspora. In terms of mobile penetration rates, Somalia is a leader in the region, with higher rates and lower prices than neighboring Djibouti and Ethiopia, which both enjoy higher levels of stability but retain state-owned monopolies.
However, the current lack of a legal framework for both the ICT and financial sectors is a source of risk potentially cramping the Somali economy. Critical areas – including remittances, mobile banking and mobile-money services and mobile services – are influenced and, in some cases, controlled by large companies. The market structure is still evolving, with de facto consolidation around larger companies, resulting from mergers and alliances. Although consolidation can bring some consumer benefits and help in achieving economies of scale, the future licensing framework will need to take into account competition policy considerations and enforce interconnection.
An important opportunity for the passing of regulation for the ICT sector, in the form of Somalia’s Communications Act, is now at hand.