Implementing GAC in Africa: Approach, Progress and Challenges

1. Implementing GAC in Africa: Approach, Progress and Challenges AFRVP Report to the GAC Council October 22, 2008 Africa Region Office of the Vice President

2. AFR Philosophy on Governance • We believe good governance is the critical issue for development effectiveness in our countries. • We recognize that this is a long term goal that requires: • regional and national leadership that is accountable; • state institutions capable of providing public goods and services, including regulatory policies that support private sector and non-profit initiatives; • Enabling mechanisms for citizen participation. • Our approach targets these dimensions, developing key partnerships while holding ourselves accountable for progress.

3. The Starting Point • We recognize the challenge of engagement, of assessment, of implementation, of scaling up and sustaining efforts. • We intensified our dialogue with Africa’s leaders and partner institutions (e.g: NEPAD, AU, AfDB, RECs). • We are engaged in areas of our competence where we have had positive impact - PFM, procurement, and decentralized service delivery. • We are using multiple indices of governance and transparency (e.g., CPIA, Doing Business, etc) to assess progress in key dimensions. • We are undertaking innovative ESW (on political economy,corporate governance, parliamentary capacity, etc) to open up additional entry points. • We remain alert to opportunities, not fully anticipated in the GAC (as in Mauritania, Zimbabwe for example), to advance the agenda.

4. Progress on Implementation (1) • Regional: MOU with African Union (Sept. 2008) defines Bank collaboration on governance (supported by an IDF grant). • National: we rolled out 9 country pilots embedding GAC features in the design of operations and CASs . Bank policies provide the space to engaged creatively in pressing governance issues in countries such as Chad,Mauritania, Sudan, Zimbabwe. • Sectoral: • We have initiated a value chain approach to extractive industries in partnership with IFC’s oil and gas division. • We have engaged Cote D’Ivoire on governance of the cocoa sector, the DRC on mining & forestry sectors, Ethiopia on corruption in construction, and Kenya on corruption in the judiciary and roads subsector. • We have initiated preparation of a justice sector strategy planned for FY10 and GAC-integration in regionwide sector strategies, starting with the HD sector in FY09.

5. Progress on Implementation (2) • Projects: • In key countries, we are mainstreaming a risk-based approach to project management, including the management of governance and corruption risks. • We are engaging INT in upstream consultation and as a partner in “red flag” awareness clinics for TTLs. • Increasingly, our projects feature greater focus on stakeholder engagement and transparency, applying lessons from the Kenya DIR on third party monitoring and accountability for Bank-financed projects. • We are strengthening field-based task management and fiduciary support to improve project implementation. • Learning and Knowledge Sharing: • We held a GAC learning event in Johannesburg, June 2008. • We have shared our experience on dealing with corruption in infrastructure projects at various Bank-wide learning events.

6. Challenges and Constraints • The Urgent vs. The Important • AFR faces a difficult challenge in balancing urgent responses to crises with sustaining the long term effort to build institutions and capabilities. • Deepening Ownership of GAC • Many managers are unfamiliar or not on-board with GAC agenda. • Some view issues in narrow fiduciary terms, others see GAC as a passing fad. • A major push is needed to raise awareness of GAC as central to development effectiveness. • Shortage of Core GAC Skills • GAC skills are critical to implementation but are in short supply. • GAC implementation will be uneven if attempted across a large group of countries – choice is to limit countries/ sectors until skill gap is addressed. • Supporting Fragile States • Post-conflict governance issues require specific expertise, ideally in-country. • Establishing basic state capacity requires experienced staff but we need to share such staff across countries.

7. Priorities for FY09 • Re-inforce AFR GAC Commitment and Managerial Accountabilities • RMT awareness training on GAC. • Clarify RMT accountability for GAC implementation. • AFR GAC Council focus on integrating GAC in sector strategies and projects. • Fully mainstream GAC in project. • Invest in Knowledge • GAC sub-regional clinics for CGAC country teams. • Program to share good practice and strengthen GAC skills of AFR staff. • Learn how to integratepolitical economy analysis in ESW/operations. • Strategic Staffing • Establish decentralized fragile states governance cluster in AFR. • Attract lead/senior governance specialists to AFR. • Locate Lead/Senior Specialists as field-based cluster leaders. • Deepen Partnerships • African Union: Implement MOU. • DFID-Netherlands: Implement GPF Funded Governance Activities. • African Media Initiative: Support implementation of 4 point agenda.

8. Annex Material:Selected Details on Progress and Challenges in GAC Implementation in Africa AFRVP Report to the GAC Council October 22, 2008

9. In FY08, GAC funded 3 sets of activities • GAC in sectors/projects • 9 CGACs • NRM Burkina Faso, Burundi, Cameroon, DRC, Ethiopia, Kenya, Mali, Swaziland, Zambia PSD, PFM, Water, Urban, etc. EITI ++ Political economy

10. Among 9 CGAC pilots, success factors have included: Strong CMU leadership Multisectoral GAC platform Core GAC skills in country team DRC CGAC: Support to “Governance Compact” of govt. has helped define a CAS roadmap for governance reforms in key sectors. Burundi CGAC: Political economy analysis and civil society consultations have shaped CAS design and risk mitigation strategy. Zambia CGAC: Upstream political-economy analysis applied to key sectors has helped CAS focus on incremental, politically viable reforms CGAC pilots: an upstream entry point for the GAC approach 3 EXAMPLES

11. CGAC pilots: the way ahead FY08, some successes, as noted but also • Some pilots failed to launch, reflecting skills shortage, inadequate support and coordination • Others, such as Ethiopia, were selective and focused analysis on specific sectors and were able to engage government in dialogue on follow up actions • Lesson learned: • starting with 9 pilots needed to be supported by rapid enhancement of GAC skills. • Active technical coordination needed to monitor progress • Excessive reliance on bottom up processes • Need for AFR GAC Council engagement to provide top-down guidance FY09, deepening and catalyzing change • Maintain focus on same set of countries • Invest in learning and sharing events to build knowledge • Use CAS as spearhead for progressively mainstreaming GAC in the region, together with sector and project level innovation

12. GAC in Extractive Industries – A Sector Example Established a common value chain framework for coordinated (with IFC) Bank-group support to countries • Undertook scoping missions to countries to identify key areas to focus • Initiating background work on political economy to improve design of institutions/ policies for extractive industries • Set up an External Advisory Group to advise on approach Achieved in FY08: • Political economy of natural resource management piloted in 5 countries (DRC, Ghana, Guinea, Mauritania and Nigeria) • Supporting RoC and Equatorial Guinea in EITI implementation • Key inputs to CAS is operations/sector-specific activities • Next steps: • Enhancing Bank focus on Public Investment Management in PERs • Supporting design of EITI++ framework and implementation

13. GAC in Sectors – Other Examples c’ed • Analysis of corruption in the construction sector influenced Ethiopian government to join the Construction sector Transparency (CoST) Initiative • Use of political economy analysis to understand decision-making in sectors, e.g. infrastructure and telecom sectors in Zambia, Nigeria power project • Development of Justice Sector Strategy for the Region (by early FY10) • Forthcoming HD strategy on health systems

14. GAC in PSD in FY08 • Dissemination and strengthening of Corporate Governance in State-owned Enterprises – in Burkina Faso, DRC, Kenya, Mali, Mauritania, Nigeria. • Governance-oriented ICAs: identify the impact of corruption on the private sector through developing and roll out of a customized survey instrument to be used as part of Investment Climate Assessments – pilot started in FY08

15. GAC in Projects • Since July 2008, AFR has adopted a new framework for management of investment lending (MRIL) and Country/Sector/ Operational risks to development effectiveness and Bank reputation. • Lessons learned from Kenya DIR review led to a number of new initiatives to strengthen fiduciary risk management in projects, including but not limited to: • piloting the mainstreaming Institutional Risk Management Policy Framework (IRMPF) at portfolio-level. This framework would provide effective internal controls, strengthened Audit Committees, enhanced corruption and fraud prevention structures, among other things. • strong partnership with INT to facilitate smart project design. This includes upstream consultation during project preparation, and awareness clinics for TTLs for projects under supervision. • We have initiated a dialogue on the use of country procurement systems in Ghana, Rwanda, Senegal and Tanzania as part of a Bankwide pilot.

16. Media/Demand-side Interventions • Media: Support dialogue on Freedom of Information laws and ongoing efforts by regional and international organizations to strengthen Africa’s media industry so that they can enrich public debate on development goals in Africa. AFR will also support implementation of the four point agenda (policy, training, infrastructure, and research) reflecting extensive research funded by a consortium of donors under the framework of the African Media Initiative. • Third Party Monitoring: A greater focus on stakeholder involvement that can “crowd in” more stakeholders to ensure that public resources are efficiently and effectively used for the purposes intended, e.g. Madagascar, Tanzania, Kenya, Sierra Leone public sector projects. • Support for Parliament: Going beyond traditional Bank support to strengthening Public Accounts, Investment, and Finance Committees, to a broader analysis that highlights options for engaging and/or providing assistance for capacity building to African legislatures.

17. Learning from GAC Workshop, Jo’burg, June 2008 The Workshop concluded that: • Long term engagement is necessary to yield results on GAC • Smart project design should be scaled up • Human resources are key constraint and should be a regional priority • Peer learning should complement strategic staffing Clear Take-away message • Learning needs to be scaled up – including opportunities for peer learning within the region and with other regions • GAC workshops planned in FY09 as part of regional Learning plan • Sector governance will be a key issue in forthcoming senior policy conference with the AU on infrastructure (January 2009)

18. AFR GAC Learning in FY09 • GAC sub-regional clinics for selected CGAC countries – key entry point to ensure GAC approach reflected in CAS portfolio choices and project design and implementation • Program to train trainers in country teams • Program to strengthen GAC skills of AFR staff • Dynamic learning program on NRM/EITI++ issues • Disseminate good practice in design and application of political economy analysis • Learning from risk management