good governance and anti corruption

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Good Governance Good Governance & Anti-Corruption & Anti-Corruption Dec 2010

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East and Southern Africa, Good Governance and Anti Corruption

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Page 1: Good Governance and Anti Corruption

Good Governance Good Governance & Anti-Corruption& Anti-Corruption

Dec 2010

Page 2: Good Governance and Anti Corruption

Good GovernanceGood Governance

“The issue of good governance and capacity-building is what

we believe lies at the core of all Africa’s problems”

Commission for Africa, 2005

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Page 3: Good Governance and Anti Corruption

Good GovernanceGood Governance

Pillars of Good Governance

Transparency

Accountability

Participation

Good governance is integral to economic growth, the eradication of poverty and hunger, and sustainable development. The views of all

oppressed groups, including women, youth and poor, must be heard & considered by governing bodies because they will be most negatively

affected if good governance is not achieved

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Page 4: Good Governance and Anti Corruption

CorruptionCorruption

“…Corruption is a drawback to any government's effort in

saving the people from the pangs of poverty and will be

fought in deeds and words because it is right, because it is

good, and because it is… Government policy…”*

*President Banda of Zambia: September 20094

Page 5: Good Governance and Anti Corruption

“Corruption hurts the poor disproportionately – by

diverting funds intended for development, undermining

a government’s ability to provide basic services,

feeding inequality and injustice, and discouraging

foreign investment and aid.”

Secretary-General of the United Nations –

UN Convention Against Corruption (2003)

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CorruptionCorruption

Page 6: Good Governance and Anti Corruption

Impact of CorruptionImpact of Corruption

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The problem

Delays in implementation Selection of unqualified contractors Inflation of costs Failure to complete works Deters investment

Prevents development

Adds to unproductive debt

Page 7: Good Governance and Anti Corruption

Good Governance and CorruptionGood Governance and Corruption

Broad definition of Good GovernanceBroad definition of Good Governance

Good governance is, in short, anti-corruption whereby authority

and its institutions are accountable, effective & efficient,

participatory, transparent, responsive & equitable

Good governance is integral to economic growth, the eradication of poverty and hunger, and sustainable development. The views of all oppressed groups, including women, youth and poor, must be heard & considered by governing bodies because they will be most negatively affected if good governance is not achieved

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Page 8: Good Governance and Anti Corruption

Good Governance and CorruptionGood Governance and Corruption

► abundant natural resources► autocratic & unaccountable government► unevenly provided & poor quality public services► low salary of civil servants ► under-resourced/lack of independence for institutions/structures intended to

provide checks and balances

Leading causes of corruption:

► establishment of economic/ administrative/ market reforms► update of mandatory accounting, audit, procurement & other financial

regulations► involvement of civil society groups► strengthening capacities for decision-making & delivery of basic services ► implementing developmental initiatives

Ways of combating corruption and improving governance:

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Page 9: Good Governance and Anti Corruption

Governance & Corruption AssessmentsGovernance & Corruption Assessments

► global civil society organization dedicated to curbing corruption► publishes annually a series of corruption indices which ranks countries world-wide

from zero (highly corrupted) to 10 (highly clean)► based mainly on surveys from: IFI country teams/regional banks/local managers

Transparency International (TI)

► aims to improve the quality of governance specifically in Africa ► publishes annual governance statistics comparing African countries over time and

against each other in 5 major areas, being safety & security, rule of law, participation, sustainable economic opportunity and human development

► based mainly on surveys/national data including in-country researchers/institutes

Mo Ibrahim Foundation

► World Bank initiative published annually which ranks economies based on the regulatory environment’s conduciveness/ ease of doing business

► index averages 10 topics including starting and closing a business, getting credit, paying taxes, enforcing contracts and employing workers

Doing Business

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Page 10: Good Governance and Anti Corruption

Governance & Corruption AssessmentsGovernance & Corruption Assessments

TI 2010 rankings Least corruptDenmark 9.3New Zealand 9.3Singapore 9.3

Most corruptSomalia 1.1Myanmar 1.4Afghanistan 1.4

www.transparency.org

Mo Ibrahim rankings

Doing business 2010

These statistics in the above assessments are to be considered as relative ratings and are contested by certain countries, also as based on limited research in-country. However, they may be considered useful in so far as they indicate progress made by individual countries over time. The sets of statistics are broadly aligned in terms of providing an indicative rating.

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www.moibrahimfoundation.org

www.doingbusiness.org

Not coincidentally, many of the countries that score poorly on Ease of Doing Business also score poorly on perception of corruption. On a positive note, various countries in the region have made public strides fighting corruption in recent months.

Page 11: Good Governance and Anti Corruption

Governance & Corruption AssessmentsGovernance & Corruption Assessments

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Transparency International Corruption Perception Index

Page 12: Good Governance and Anti Corruption

IFAD’s Operational Approach on Anti-CorruptionIFAD’s Operational Approach on Anti-Corruption

Zero-ToleranceSetting the bar

Zero-ToleranceSetting the bar

Project designProject designRisk assessment. Quality review

Internal controls & checks

Proactive PreventionProactive PreventionParticipatory mechanisms to

strengthen accountability & transparencyIn-build capacity, thresholdsPublicise award of contracts

Supervision supportSupervision supportOn-site verification. FM advisers

Communications planProject oversight

Start up and trainingStart up and trainingGovt buy-in. Qualified staff

Procurement, FM, audit capacityContracts clauses

Credible sanctionsCredible sanctionsSuspensions & Cancellations. Mis-procurement. Audit plan

Ineligible expenses

Legal frameworkLegal frameworkCorruption policyContract clauses

Focus IN-COUNTRY on Risks, Outcomes & Sustainability

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Financial Management & Good GovernanceFinancial Management & Good Governance

► solely for purpose intended & results-orientated► in accordance with AWPB► in conformity with administrative, technical, financial, environmental,

agricultural & rural development practices & good governance► ensuring value for money► following best practice► with considerations of efficiency & effectiveness

Good financial management means that funds are used:

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Page 14: Good Governance and Anti Corruption

Financial Management & Good GovernanceFinancial Management & Good Governance

FM is an integral part of the development process to achieve the Millennium Development Goals

One of the goals of the Paris Declaration is to ensure greater reliance on public financial management systems

ESA works with borrowers to use national systems where possible (e.g. reporting/ procurement/ budget/ accounting/ audit)

FM work involves 2 approaches

a) assurance that IFAD funds are being used for intended purposes (thro’ reliable internal systems & direct supervision)

b) assistance to governments/ projects to improve FM capacities

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Good Governance FrameworkGood Governance Framework

Elements Issues

1. PROCUREMENT• Ensure transparent and efficient procurement at national,

provincial & commune levels

2. FINANCIAL MANAGEMENT

• Ensure strong internal controls at central, provincial, district & commune levels

• External/ internal audit capacity• Minimize cash transactions• Adoption of Merit-Based Performance Incentive by project.

3. DISCLOSURE• Minimize possible conflicts of interest among project staff;• Enhance transparency through public disclosure of project

information

4. CIVIL SOCIETY ROLE • Provide for greater involvement by Civil Society Organizations

5. COMPLAINTS & REMEDIES MECHANISM

• Provide overall complaints and grievances mechanism covering all aspects of project

6. CODE OF ETHICAL CONDUCT • Require all staff to adhere to Code of Ethical Conduct

7. SANCTIONS• Reinforce Code of Ethical Conduct with sanctions for fraudulent/

corrupt activity by project staff, contractors, suppliers & consultants.

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Page 16: Good Governance and Anti Corruption

IFAD’s Policy on CorruptionIFAD’s Policy on Corruption

⇉ IFAD has a zero tolerance against fraud, corruption & misconduct

⇉ Most countries in which IFAD operates have poor governance/ corruption records

⇉ Responsibility for use of funds rests with Government

⇉ IFAD now requires additional checks/ controls in design documents for countries which have a score of less than 3.0 per TI

⇉ Systematic checks/ controls may be built in at design +/or implementation stage of a project (e.g., low procurement thresholds/ FM advisors) in addition to normal IFAD procedures

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Page 17: Good Governance and Anti Corruption

IFAD’s Policy on CorruptionIFAD’s Policy on Corruption

Government is responsible for following up in the first instance

IFAD may declare mis-procurement/ineligible expenditures as a

result of fiduciary responsibilities, also if in doubt

Specific cases of suspected fraudulent/ corrupt practices are referred

to IFAD’s Office of Audit and Oversight, which may collaborate if

required* Contact may be made anonymously providing adequate

supporting documentation via:

http://www.ifad.org/governance/anticorruption/how.htm

* (rare cases) 17

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IFAD Anti-Corruption Policy: IFAD’s policy to ensure observation of highest standards of ethics in IFAD-funded contracts

IFAD’s Policy on CorruptionIFAD’s Policy on Corruption

• Zero-tolerance policy

• Appropriate sanctions will be applied where allegations are substantiated

• Range of sanctions enforced in accordance with the provisions of applicable IFAD rules and regulations and legal instruments

• Applies to IFAD-funded activities whether supervised directly by IFAD or by a cooperating institution

• IFAD will continue to improve its internal controls, including controls inherent in or pertaining to its project activities, so as to ensure that it is effective in preventing, detecting & investigating fraudulent, corrupt, collusive and coercive practices

• IFAD shall take all possible actions to protect individuals from reprisals who help reveal corrupt practices & individuals or entities subject to unfair or malicious allegations

• This policy is in line with policies adopted by the other IFIs

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► Persistent high prices► Poor quality works► Unnecessary agents (“middlemen”, ”local partners”) ► Inadequate/incomplete documentation ► Lack of or inadequate inspections► Project official ‘micro managing’► Lack of transparency in selection / evaluation processes

Red Flags of fraud / corruption

IFAD’s Policy on CorruptionIFAD’s Policy on Corruption

► Reject award recommendations► Cancel relevant portion of loan if borrower fails to take action► Sanction firms or individuals involved and declare ineligible for stated or

indefinite period of time

In case of fraud and corruption, IFAD will:

IFAD has the right to require a provision in bidding documents/ RFP enabling IFAD’s inspection & audit of accounts related to contract

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What can you do?What can you do?

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What can you do?What can you do?

► Prevent: Perform best practice FM practices regularly and consistently

(e.g. bank/ SA reconciliations, filing of documents/backups)

► Transparency: Ensure all FM procedures & processes are diligently & fully

followed

► Encourage & facilitate reports of concerns: Challenge suggestions/requests

to carry out tasks/practices which do not seem in line with (standard)

procedures

► Contact IFAD (CPM/ Office of Oversight): If you feel that your superior(s)

has not taken your complaints seriously (need to present evidence) and/or

need advice

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What can you do?What can you do?

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“Whenever you are in doubt…recall the face of the poorest and weakest man who you have seen and ask yourself, if the step you contemplate is going to be of any use to him? Will he gain anything by it? Will it restore him to control over his own life and destiny?...Then you will find your doubts and your self melting away.”

Mahatma Gandhi

Page 23: Good Governance and Anti Corruption

Thank YouThank You