Professional Documents
Culture Documents
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CV MENA
In-a-Nutshell
Connecting Voices (CV) Middle East and North Africa (MENA) is a
regional initiative and partnership that promotes governance and
improved financial management practices in the public and private
sectors. The ultimate aim is to support the demands of citizens
throughout the Arab World for jobs, better governance, a voice in
public affairs, and social and economic inclusion as reflected in the
World Banks MENA Regional strategy. CV MENA plans to seize on the
windows of opportunity available in the region. It will support capacity
building in the area of governance, facilitate the development of a
professional community, as well as the sharing and transfer of
knowledge both within countries and within the region as a whole. CV
MENA will help foster greater transparency and accountability, thereby
engendering enhanced public trust. In addition, building public and
private sector governance and financial management capacity will also
help attract and provide comfort to much-needed foreign direct
investment in the region.
The Exchange is a major annual forum that provides a channel for dialogue,
enabling countries to share experiences and promote societal-governmental
consensus building. It fosters intra-regional cooperation and stimulates
interest in improving public sctor governance, public financial management,
and corporate governance and financial reporting in MENA. The Exchange
facilitates knowledge-sharing from transitional democracies and showcases
successful experiences from fragile and conflict states. The Exchange starts
where public sector and public financial management diagnostics leave off,
that is, in supporting the creation of an enabling environment for reforms to
move from concept to reality. It helps catalyze innovative activities to develop
regional public goods and enables the World Bank to fulfill its mission as a
Solutions Bank.
www.cvmena.org
cvmena@worldbank.org
Note: The posts in the Connecting Voices magazine should not be reported as representing the views of The World Bank.
The views expressed are those of the authors and do not necessarily represent those of the The World Bank or its policy.
Editors Note
Hisham WALY
Practice Manager
Governance Global Practice / MENA, World Bank
The Allegory of Good and Bad Government is a series of three fresco
panels painted in the Sala Dei Nove (Salon of Nine or Council Room)
in Siena, Italy by Ambrogio Lorenzetti around 1338. The series consists
of six different scenes: the Allegory of Good Government; the Allegory
of Bad Government; the Effects of Bad Government in the City; the
Effects of Bad Government in the Country; the Effects of Good
Government in the City; and the Effects of Good Government in the
Country. The fresco panels depict the effects of good versus bad
governance in a society as we are introduced to how life would look
like under good governance (with peaceful and thriving cities and
countryside) and the opposite under bad governance (with tyranny,
disorder and degeneration). This has inspired the cover story of this
issue of Connecting Voices (see drawing on page 62), where we
examine the impact of corruption on development.
There is increasing evidence that the costs of corruption are
enormous whether at the economic, social, environmental or political
level. We have seen many examples of corrupt politicians who use
their power to divert scarce public resources to unnecessary
purchases, projects and initiatives to benefit themselves and their
cronies instead of their constituencies. We have also seen
government officials deliberately not enforce environmental
regulations to enable a few to exploit rare, sometimes nonrenewable, natural resources and destroy the environment. Whether
it is petty, grand or political corruption, the media and watchdogs in
many developing countries share examples of it on a daily basis. They
wonder why strategies to address the root causes of corruption are
not successful in terms of design, implementation, monitoring and
impact.
In the Middle East and North Africa (MENA) region of the World Bank,
for many years we recognized that corruption is a symptom of a
deeper governance problem. Thus, we designed and implemented
reforms to promote governance and institutional reforms. Some of
these reforms focused mostly on the state, resulting in a top-down
approach generally aimed at formal institutions. However, based on
experience and research, we realized that in order to help build and
Content
Public Financial
Management (PFM)
08 Interview
Dr. Abed Kharabsheh,
President of the Jordan Audit Bureau
13 Methodologie PEFA
La conduite dune valuation de la
gestion des finances locales
Public Financial
Management (PFM)
Corporate Governance
& Financial Reporting (CGFR)
19 Decentralization
Decentralization and Service Delivery in Iraq
27 Interview
H.E. Dr. Talal Tawfiq Abu-Ghazaleh
20 Interview
Mr Alaa Marzougui, Fondateur de
lObservatoire Tunisien de lEau &
chef du projet Watchwater
29 Interview
Samia Msadek, Director Governance
Global Practice, World Bank
23 Humanitarian Engineering
Innovative Approaches and
Partnerships in Crisis Response
31 Integrated Reporting
Counting What Counts
16 Taxation
Alls fair in love and (the global tax) wars?
32 MENA SMPs
MENA Region Results from
the IFAC Global SMP Survey
24 Procurement
Public Procurement Reform and
Modernization in MENA:
A Peer-Learning Experience
17 Refugees
Aid to Refugees and the Internally
Displaced: Who is watching?
34 Interview
Rajeev Swami, Lead Financial
Management Specialist, World Bank
36 Innovations in Ethics Education
IAESB Collaboration to
Support Worldwide Change
Content
Corporate Governance
& Financial Reporting (CGFR)
Public Sector
(PS)
37 Insurance Accounting
Enhancements to Insurance
Accounting Under IFRS
44 Regulatory Reform
KRG-IRAQ: Guide to Legislative Drafting
Events
122 ECA Conference
Quality Financial Reporting,
A Catalyst for Growth
Cross-Cutting
126 Syrians
Will Forcibly Displaced Syrians
get their Land Back?
41 MSME Audits
Enhancing the Quality of MSME Audits:
Increase Access to SMP Audit Software
42 Interview
Mme Halima Bahar, Minister
des Finance Tunisien
54 Reforms
The Political Economy of Reforms
127 Syrians
International Community Endorses New
Initiative to Support Refugees, Host
Communities, and Recovery and
Reconstruction in MENA
128 Information
What Uber Drivers Can Teach Us
About Learning And Rationality
56 Citizen Engagement
Public Service Delivery in the Context of
Fragility: West Bank & Gaza
129 Interview
Renaud Seligmann, New Governance
Practice Manager for the MENA Region
43 Islamic Finance
Accounting and Auditing Reform
58 Citizen Engagement
Rebuilding Trust between Citizens and
Government: Morocco
Cover Story
THEMES
62 Iconography
A World With and
Without Corruption
76 PFM
The Impact of Corruption
on Public Fionance
89 Interview
Asad Alam, World Bank Country
Director for Egypt, Djibouti and
Yemen
78 Tax Administration
Designing an Anti-Corruption
Strategy for Tax Administration
91 Interview
Jesko Hentschel,
World Bank Country Director,
Argentina, Paraguay and Uruguay
64 Overview
Corruption: Yesterday, Today, and
Tomorrow
66 Speech
Jim Yong Kim,
President, World Bank
67 Interview
Debbie Wetzel, Senior Director
GGP, World Bank
80
Uncertainty as a Factor in
Investment Decisions
The Case of the Russian
Federations Regions
INSTITUTIONS
94
A Multifaceted Approach
to Anti-Corruption
82 Wasta
A Key Challenge for Iraqs
Civil Service
95 SAIs
Strengthening the Role of SAIs in the
Fight against Fraud and Corruption
PARTICIPATION
71
97 Ombudsman
Corruption and the Role of
Ombudsman
98
Anti-Corruption Agencies
An Effective Tool to
Curb Corruption?
73 Open Government
Transparency and Open
Government for Accountability
86 Global Issues
Illicit Financial Flows
Cover Story
OPERATIONS
111 Integrity
The Role of the World Banks Integrity
Unit in Addressing Corruption in Bank
Projects
70
112 LAC
Entry Points in the Fight Against
Fraud and Corruption
103 Construction
The Construction Sector
Transparency
Initiative (CoST)
75
Ban-Ki Moon
115 Interview
Susan Rose Ackerman,
104 Justice
Corruption and the Justice Sector:
The Role of an Independent
Judiciary
117 Interview
Alina Mungiu-Pippidi
119
EVENTS
120 Events
Anti-Corruption Conferences
121 Meetings
Anti-Corruption Meetings
Christine Lagarde
Public Financial
Management
Interview
Dr. Abed Kharabsheh,
President of the Jordan Audit Bureau
Interview conducted by Jad Mazahreh,
World Bank, Senior Financial Management
Specialist
9
What is the legal, legislative and
institutional framework under which the
Jordan Audit Bureau operates?
full
financial
independence.
administrative
and
10
With respect to relations with audited
entities, the Bureau conducts financial and
accounting consultations with the audited
entities because it believes that all the
parties concerned are partners in the success
of the audited entities, in the sense that we
are all partners and overseers. The Bureau
also submits recommendations that would
contribute to the development of the
entities methodologies. It also organizes
periodic workshops on various auditing
issues in which specialized employees at the
audited entities participate.
What are the challenges that confront
auditing bodies in the regions?
The challenges that Jordan is currently
confronting include the prolonged economic
recession, the budget deficit, the internal
and external public debt, and the impact of
the regions political instability resulting in
the influx of large numbers of Arab refugees
into Jordan. Combined, these factors have
placed increasing pressures on the countrys
natural, economic and financial resources,
resulting in the addition of new oversight
tasks, which hitherto have not been included
in the Bureaus normal plans. This has in turn
prompted the Bureau to give utmost priority
to this issue because it implies spending
large amounts of money to confront these
circumstances.
What are the main objectives which the
Bureau seeks to achieve?
The Audit Bureau seeks to accomplish
several objectives.
For instance, it is
main
Governance in Sectors
Extractive Industries in Egypt:
Governance and the New Law
11
Mohamed Yehia
Senior Financial Management Specialist,
World Bank
Main Features
Revenues revision. Articles 10 and 11 of the
new law allowed bi-annual revisions of the
rental value and royalty fee by the Mineral
Resources Authority (MRA) in the case of
mines, and by the respective Governors in
the case of quarries. The executive
Critiques by Stakeholders
Some of the stakeholders in the field have
criticized the new law and its executive
regulations. Among the main critiques cited
by stakeholders are the following:
12
quarries. Article 11 in the executive
regulations entitles the Mineral
Resources Authority to establish its own
companies in the field of exploration
and production.
Whats Next?
Overall, the new law provides reasonable
clarity concerning the regulations and
requirements governing the different stages
of the business cycle from licensing to
exploration to operations and production.
Unless this is coupled with strict
enforcement of the rules in a fair and
transparent manner, the government may
be vulnerable to losing investor confidence
and undermining growth in the sector.
Revenue sharing
Dispute and controversy are likely to
continue regarding the pros and cons of the
consolidation of the state revenue versus the
previous arrangements for revenue
collection at the sub-national level that
involved significant flows into special funds.
Private investors will always seek to
maximize their returns and challenge the
taxes and fees imposed by the government
citing the effect of increased
taxes
on
discouraging
investments and the negative
implications for the overall
sector. In the final analysis,
revenues of the extractive
industries
business
are
naturally split between the
central government, the subnational administration and
the business owners. Striking a
balance between the three
parties to optimize fair
revenue distribution through
an equitable scheme/model is
the ultimate objective if the
overall economy is to benefit.
In principle, revenues should
ideally be proportionately
shared among the different
levels
of
government
according to their assumed
responsibility of the underlying
assets. Under the Egyptian
13
Tunisia
La conduite dune valuation de la gestion des finances locales
selon la mthodologie PEFA: avis de la structure sujet dvaluation
(Cas de la commune de Sfax/Tunisie)
Guidara Ahmed
Directeur Financier de la Ville de Sfax
Introduction
Dans lobjectif de renforcer sa crdibilit en
matire de gestion financire et de
consacrer sa politique de transparence, la
municipalit de Sfax sest engage en 2015
dans une valuation de la mesure de
performance de la gestion des finances
locales selon la mthodologie PEFA et ce par
le biais dun financement conjoint de lAFD
en partenariat avec PPIAF. Cette valuation
permettra aussi la commune davoir un
diagnostic de sa gestion financire pour
dceler les pistes qui enregistrent des
insuffisances par rapport aux bonnes
pratiques internationales. Le projet est le
fruit dun partenariat fructueux entre la
commune et lAFD et laboutissement dun
processus de ngociation entam depuis
2013 suite lacceptation des bailleurs de
fond de la requte de financement faite par
la commune pour la ralisation de
lvaluation. Le Cadre commun dvaluation
PEFA (version 2011) comprend une srie
dindicateurs de haut niveau (31
indicateurs), qui permettent de mesurer et
de suivre lvolution de la performance des
systmes, des procdures et des institutions
de gestion des finances publiques. Ces
indicateurs se rapportent toutes les
dimensions de la gestion des finances
publiques, savoir :
crdibilit du budget.
Exhaustivit et transparence.
budgtisation fonde sur les politiques
nationales.
prvisibilit et contrle de lexcution
du budget.
comptabilit,
enregistrement
de
linformation et des rapports financiers.
surveillance et vrification externes.
Le caractre standard des indicateurs cidessus cits permet de les utiliser pour
lvaluation aussi bien des structures
nationales
quinfranationales.
Depuis
lacceptation du financement de lexercice
PEFA et avant de connaitre les rsultats de
lvaluation et les notes attribues pour
chaque indicateur, la municipalit a
exprim son engagement publier le
rapport final linstar de plusieurs
collectivits locales dans le monde sur le site
du secrtariat PEFA.
14
peuvent rencontrer les syndicats patronaux
et les organisations professionnelles
intresses par le travail communal.
Gnralement, ces rencontres visent
valuer la participation et limplication de la
socit civile dans les processus de dcision
communale dans le volet financement
essentiellement la prparation du budget et
aussi laccs aux documents comptables.
RESTITUTION DES RESULTATS ET PLAN
DACTIONS
La mission du terrain a t clture par une
restitution de lvaluation sous forme de
briefing
des
rsultats
prliminaires
susceptibles
de
modification
ultrieurement. Aprs la fin de la mission sur
terrain, la relation entre la commune et les
experts a continu distance travers un
change
dinformations
et
dclaircissements demands souvent par
les quipes dexperts. Aprs lenvoi du
rapport prliminaire, la commune a
rapidement ragi au contenu du rapport et
fait les observations ncessaires surtout
celles qui concernent le narratif de
lindicateur sujet de notation et ce dans le
cadre du comit de pilotage cr pour cela,
le narratif tant lexplication de la motivation
de la note attribue.
Le comit de pilotage a demand lavis des
autres partenaires ainsi que celui des
autorits centrales. En concertation avec
lAFD, la commune a organis en septembre
2015 un atelier de restitution des rsultats
de lvaluation PEFA auquel toutes les
parties prenantes ont t invites. Durant
cet atelier, les experts ont prsent les notes
finales attribues aux diffrents indicateurs
et ont rpondu aux multiples questions
voques par les prsents. Lvaluation PEFA
a permis de dtecter les secteurs
ainsi que les pistes qui mritent un
appui sous ses diffrentes formes
(formation,
informatisation,
ringeneering,..). Lutilit du
diagnostic selon la mthodologie
PEFA ne concerne pas seulement
la commune. En effet, plusieurs
indicateurs valuent les pratiques
des autorits centrales, les
dispositions
du
cadre
rglementaire et juridique, les
pratiques des instances de
contrle et daudit externe et les
pratiques des bailleurs de fonds.
Ce diagnostic reprsente une
opportunit pour la commune et
les autorits centrales pour
entamer des chantiers de rforme
et de modernisation qui leurs
permettront de sapprocher des
bonnes pratiques internationales
en matire de gestion des finances
locales (projet de code des
lchelle
internationale. Parmi les actions proposes,
on peut citer celles relatives la conception
dun plan de trsorerie, llaboration dun
cadre de dpenses pluriannuel qui concerne
linvestissement et le fonctionnement,
linformatisation du mcanisme de suivi des
arrirs, la mobilisation des ressources et le
renforcement des capacits de la commune
en matire daudit interne. Durant latelier
de restitution des rsultats finaux de
lvaluation, le reprsentant de lAFD a
exprim son accord pralable pour le
financement des actions dcoulant du
diagnostic PEFA et de continuer son
partenariat avec la commune de Sfax
Certaines mesures entreprises par la
collectivit peuvent tre mentionnes dans
le rapport mme si elles chappent la
priode dvaluation. Elles doivent tre
motives par la documentation ncessaire
fournie par les autorits locales. Par
exemple, la commune de Sfax a entam
depuis le dbut de lanne 2015 une grande
exprience de budgtisation participative
15
I-Prparation de la mission dvaluation
Aprs la dsignation du bureau dtude charg de llaboration de lvaluation suite un appel doffre sur la base de termes de rfrence tablis
lavance et dressant avec prcision les tches effectuer par des experts ainsi que leurs qualifications et rfrences en la matire, la commune
est informe des rsultats de lappel doffre organis pour le choix de lquipe dvaluation ainsi que leurs coordonnes. En change de mails
avec les experts dsigns pour lvaluation, la commune a reu une liste des documents ncessaires lvaluation. Ces documents sont
constitus gnralement des diffrents documents comptables (budgets, comptes de gestions, comptes administratifs,), la lgislation rgissant
le travail communal (finance locale, fiscalit locale, emprunts, investissement,) qui sont ncessaires lvaluation des systmes et des soussystmes des finances locales. De mme, les experts envoient une liste des personnes rencontrer pour organiser une srie de rendez-vous avec
eux durant la mission sur terrain. Du cot de la commune et, dans le but de bien prparer la mission, un comit de pilotage a t cr. Il est
constitu par les parties prenantes intervenant en matire de gestion des finances locales savoir :
Le directeur financier,
Le contrle rgional des dpenses publiques charg de faire le contrle priori des propositions dengagement et qui relve de la prsidence
du gouvernement.
Pour faciliter la mission de lquipe dexperts, la commune a dsign le directeur financier en tant que point focal pour la mission. Il sera
linteroculaire des experts durant toute la mission. Le rle du comit du pilotage est le suivi de la mission durant toutes ses phases. Il intervient
dans toutes les difficults qui peuvent naitre. Des arrts municipaux ont t promulgus par le maire pour la constitution du comit de pilotage
et pour la dsignation du directeur financier comme point focal. Ces diffrents arrts ont t communiqus aux diffrents dpartements et
services de la commune accompagns pour une note circulaire relative lvaluation PEFA qui explique lobjectif de la mission avec une
description succincte de la mthodologie et une motivation aux diffrents chefs de services et dpartements pour faciliter la mission des experts
et fournir toute documentation demandes pour la bonne conduite de lvaluation.
Avant le commencement de la mission du terrain, le point focal a fourni lquipe dexperts lorganigramme de la commune traduit en langue
du travail du rapport, car par exemple en Tunisie et depuis 1996, tous les documents utiliss dans ladministration tunisienne sont en langue
arabe tandis que le rapport est rdig en langue franaise. De mme, le point focal a prpar un recueil des diffrents textes rgissant le
fonctionnement de la commune (les textes doivent tre mises jour par les diffrents amendements pour faciliter aux experts la comprhension
du contexte de la dcentralisation). Les textes de loi doivent toucher tous les volets de laction communale savoir, le fonctionnement de la
collectivit locale, la fiscalit locale, la finance et le budget local, les emprunts et le financement des investissements locaux. Concernant la
priode dvaluation il faut se concerter avec lquipe dexperts sur la priode de travail ; celle-ci doit tre base sur des exercices clturs
suivant la rglementation en vigueur relatif au rglement du budget communal.
A Sfax, la priode de travail choisie tait 2011-2013 malgr le commencement de la mission en Avril 2015. Lanne 2014 ntait pas prise car le
compte du rglement du budget relatif cette anne (appel en Tunisie compte financier et synthtisant le compte administratif et le compte
de gestion) na pas encore t vot par le conseil communal (la loi organique des collectivits locales stipule que le conseil communal dlibre
sur le compte financier relatif au rglement de lexercice N durant la session ordinaire du mois de Mai N+1). La commune doit prparer lavance
une prsentation des aspects dmographiques, conomiques et sociaux de la collectivit. Cette monographie servira aux experts afin de bien
comprendre le contexte de lentit value et ses perspectives de dveloppement. La phase prparatoire est trs lourde et demande un
investissement considrable que ce soit en termes de temps ou de ressources humaines ncessaires pour la prparation des donnes qui font
parfois dfaut et mritent le cas chant un effort de production ou de retraitement.
Taxation
Alls Fair in Love and (the Global Tax) Wars?
16
Jim Brumby
Director, Governance Global Practice,
World Bank
The mishmash of overlapping and incoherent
national tax policies and systems, which
together comprise the global tax
architecture, used to be a niche topic
relegated to the fringes of global policy
debates and the domain of a small number of
technical experts. But the leak of the
Panama Papers in April thrust these issues
into the spotlight anew.
This added fuel to the fire that was started by
the 2012 Amazon and Google cases and
subsequent initial high-profile leaks that first
brought international tax policy under public
and legislative scrutiny. The technicalities of
issues such as transfer pricing, offshore
financial centers, aggressive tax planning and
tax minimization, and illicit financial flows
involving public officials have gained the
attention of the media and taxpayers around
the world.
It looks like we are entering the fray of
global tax wars. This pits the interests of
tax administrators against internationally
mobile taxpayers, of developing against
developed countries, of domestic against
multinational companies, of physical output
against intellectual value, and of the top one
percent of income earners against the other
99 percent.
Demands for greater transparency and
fairness have already led to some tangible
changes, like elimination of the double
Irish in 2014. Some countries, such as
Australia and the UK, have recently
unleashed
new
taxes
(known
euphemistically as Google taxes) designed
very specifically to address the problem of
getting taxes out of multinational companies
with large operations.
Satisfactory resolution of the global tax
wars could fundamentally reshape the
international tax system with major
consequences for multinational enterprises,
governments, wealthy individuals, and
politicians. The implications for developing
countries and average citizens are less
straightforward, and this is of concern.
Although there is no precise figure, as it
involves leakages which by definition are
hard to measure, global corporate income
tax revenue losses due to profit shifting and
17
with the full knowledge and even complicity
of some national authorities, who have
bowed to or lobbied for the interests of
powerful stakeholders.
Within the current framework, there are
significant short-term gains to be made from
helping countries improve rulemaking and
enforcement. A challenge for many
developing countries that is bigger than
tweaking domestic rules and processes,
Refugees
Aid to Refugees and the Internally Displaced:
Who is watching?
Mona El-Chami
Senior Financial Management Specialist,
World Bank
Refugees and the Internally Displaced How Many? From Where? To Where?
According to the United Nations (UN), as of
the end of 2015, a worldwide record of 65
million men, women and children were
forced from their homes by war or
persecution. This means that roughly one in
every 113 people around the world was
either
a refugee,
an internally
displaced person or an asylum seeker. The
latest
annual Global
Trends
Study
(http://www.unhcr.org/5748413a2d9 ) from
the UN refugee agency, the United Nations
High Commission on Refugees (UNHCR),
shows that the total number of forcibly
displaced people rose sharply last
year, increasing from 59.5 million in
December 2014 to 65.3 million in 2015.
More than half of the refugees under the
UNHCR mandate are from just three
countries: Syria (4.9 million), Afghanistan
(2.7 million), and Somalia (1.1 million). A
further 5.2 million Palestinian refugees are
registered with the United Nations Relief and
Works Agency (UNRWA) for Palestine
Refugees in the Near East. Conflicts in the
Middle East and North Africa remained the
single greatest cause of displacement last
year. Syrias war left 4.9 million people living
as refugees, with a further 6.6 million
internally displaced. In Iraq, the conflict
displaced 4.4 million people internally, and
created more than a quarter of a million
refugees. Yemens civil war, which began in
March 2015, has internally displaced 2.5
million people, while violence in Libya has
forced nearly half a million people to flee
their homes. For the second consecutive
year, Turkey hosted the largest number of
How Much Do
Disasters Cost?
Humanitarian
These
18
dramatically. For example, the contributions
of many developing countries, such as
Lebanon and Pakistan that host large
numbers of refugees are not reflected. In
addition, there is a question of data
timeliness, as key figures are typically
published a year after ODA is spent. In the
absence of comparable and up-to-date data,
not only do myths creep into the rhetoric,
but it is also hard to identify and fill financing
gaps.
Who is Responsible for managing these
Funds? What are their findings?
Usually, the Supreme Audit Institution (SAI),
Auditor General or Court of Audit of each
donor country audits the way in which funds
are managed and spent. A recent audit
report by the European Court of Auditors
regarding the management and use of
refugee aid alerted that: Budgets were not
detailed enough and there were no
assessments of whether proposed costs were
reasonable; there was a lack of documentary
evidence to determine geographical priorities
and assess project proposals; and that
reports from the commissions field staff
were not sufficiently comprehensive4.
Around half of the aid provided by the
European Union (EU) was spent through UN
agencies, with the remaining half spent
through independent contractors. Although
data from UN agencies is readily available,
there was a lack of data regarding the
amount spent through subcontractors about
the amount actually spent on beneficiaries.
What reporting did take place was noted to
be frequently late, which the European
Court of Auditors noted limited their
usefulness. (figure 1)
How is the World Bank Trying to Help SAIs
Audit the Budget and Aid Allocated to
Refugees and Internally-Displaced People?
As approximately 10 million refugees and
internally displaced people are hosted by just
four key countries Iraq, Jordan, Lebanon,
and Turkey the World Bank Global
Governance Practice teams in the Middle
East and North Africa (MENA) and Europe
and Central Asia (ECA) regions have been
working
together
to
support
SAI
development. On April 20, 2016,
representatives from these four host
country5 SAIs attended a roundtable
workshop entitled Refugees and Internally
Displaced Audit and Accountability. Leading
the International Organization of SAIs
(INTOSAI) Working Group on Accountability
for and the Audit of Disaster-Related Aid, the
Netherlands Court of Audit co-led the group
discussion. Each of the four countries SAIs
REFERENCES
Development aid rises again in 2015, spending on
refugees doubles, OECD
http://www.oecd.org/dac/development developmentaid-rises-again-in-2015-spending-on-refugeesdoubles.htm.
2 ECHO Factsheet June 2016 Refugees and IDPs.
3 Creditor Reporting System, OECD
https://stats.oecd.org/Index.aspx?DataSetCode=CRS1.
4 EU aid spending not properly tracked, auditors warn,
see:
http://www.publicfinanceinternational.org/news/2016/0
7/eu-aid-spending-not-properly-tracked-auditors-warn.
5 Including the Iraq Federal Board of Supreme Audit, the
Jordan Audit Bureau, the Lebanon Court of Accounts,
and the Turkey Court of Audit.
19
Decentralization
Decentralization and Service Delivery in Iraq:
An Evolving Process
Rama Krishnan
Venkateswaran
Lead Financial Management Specialist,
World Bank
Decentralization is a multi-dimensional
process that requires a common
understanding of the outcomes and
processes by the various stakeholders
involved. In Iraq, although the Constitution
and the legal framework contain the broad
layout of the decentralization reform
process, there is still a lack of clarity among
key stakeholders regarding their respective
roles. In a diverse socio-economic and
political country such as Iraq, it is important
for the Central Government to reach out to
the various constituents involved in the
decentralization process both within and
outside of the government. Likewise, it is
essential that the government communicate
effectively about the expected outcomes and
benefits of this decentralization process.
Since the new Constitution of Iraq (enacted
in 2005) provided for decentralizing powers
and functions for the Governorates, the
Government of Iraq has enacted several
legal, policy and institutional reform
initiatives, the intent of which is to shift
political and administrative powers and
responsibilities
from
the
Central
Government to the Governorates.
The first major step toward decentralization
under the Iraqi authority was the election of
the Governorate Councils (for all 18
Governorates) in January 2005. This first
major step toward political decentralization,
taken by Iraq even prior to the adoption of a
new Constitution, has stood the test of time.
Its statutory basis was adopted in 2008 and
successful, subsequent elections in 2009 and
2013. The new Constitution, adopted
overwhelmingly in a national referendum in
late 2005, affirmed a federal structure with
locally-elected councils that in turn select the
local executive authority which would be
the Governor in the case of the
Governorates. However, the federal nature
of the structure refers only to regional
governorates. The authorities of regions
(only the Kurdistan Regional Government
[KRG] at present) are protected in the
Constitution. For those Governorates not in
a region, the Central Government has the
constitutional
authority
to
legislate
Governorate authority and sources of
revenue.
20
authority only to coordinate, but not require,
specific actions. As a result, very little
happened in 2013 and 2014.
In 2015, the new Prime Minister Haider AlAbadi gave a strong push to implement the
2013 devolution provision, making it a core
priority of the Government. As a result,
several of the Ministries coordinated by the
High Commission began negotiating to
identify the functions to be devolved, as well
as the mechanics of staff and budget
assignments. Despite this sense of urgency,
no agreements were reached by the deadline
of August 2015, which was then extended to
November 5, 2015.
A Third Amendment to the Law on
Governorates not Incorporated into a Region
has been approved by the High Commission
and the Council of Ministers. This
Amendment is meant to force rapid
devolution of some ministry functions, and
allow for a more gradual devolution of other
ministry functions. Substantial agreement
has been reached on the devolution of the
Ministry of Housing and Municipalities
(including the five directorates of
Municipalities, Water, Sewage, Urban
Planning, and Planning and Follow up). Other
ministries to be devolved, at least in part,
indicate that they have not started the
process. Moreover, there was no clear
indication as to when they would expect to
complete the process. Although significant
policy changes have been made in 2013 and
2015 to substantially move decentralization
forward, tangible progress on the ground can
occur only if key issues are addressed.
Interview
Mr Alaa Marzougui,
Fondateur de lObservatoire Tunisien de
lEau & chef du projet Watchwater
Lamlioration des conditions de vie des
citoyens suppose laccs aux services publics
de base tel que leau, llectricit et
lassainissement. Cependant les institutions
publiques ont parfois du mal garantir ces
services pour une multitude de raisons ce qui
peut tre lorigine dun manque de confiance
des citoyens envers ces institutions. En
Tunisie, o certains problmes deau ont t
suivis rcemment de mouvements de
contestations, une association a cr une
plateforme
citoyenne
qui
sappelle
Watchwater. Cette plateforme vise
cartographier les problmes daccs leau
potable sur la base des alertes des citoyens
et les porter la connaissance des dcideurs
publics pour les aider les rsoudre et ainsi
rconcilier le citoyen avec les institutions
concernes.
21
Pouvez-vous
brivement
prsenter
lassociation Nomad08 Redeyef et les
circonstances de sa cration ainsi que le
profil de vos membres ?
Je suis Alaa Marzougui membre fondateur
de lassociation Nomad08 Redeyef et
chimiste de formation. Nomad08 Redeyef a
t fonde en 2012 en marge de la
prparation du forum mondial social de
2013. Cest une sorte de cooprative cr
Redeyef (Gouvernorat de Gafsa) par huit
jeunes diplms chmeurs de diffrentes
spcialits. Tout a commenc lors dune
runion de prparation du forum mondial
social 2013 Monastir suite la dfaillance
dun prestataire de service pour fournir du
matriel de traduction simultane. En effet,
Mr Mohamed Jeribi (ingnieur et membre
fondateur de Nomad international) a de
fabriquer le matriel en question en faisant
appel notre groupe! Cest ainsi que notre
groupe a relev le dfi de fabriquer le
matriel ncessaire pour la traduction
simultane de lvnement du lendemain
alors que la plupart dentre nous naient pas
de formations et dexpriences pralables en
lectronique.
Suite cette russite, le comit
dorganisation du forum mondial social a
confi Nomad08 la mission dassurer la
traduction simultane lors du forum mondial
social Tunis de 2013. Par la suite, nous
avons continu fournir des services de
traduction simultane de qualit bas cots
aux associations locales qui ne pouvaient pas
se permette de faire appel des traducteurs
professionnels.
En 2015, le forum mondial social sest tenu
encore une fois Tunis et le comit
dorganisation a refait confiance Nomad08.
Cest grce ces expriences que Nomad08
a t cr et a pu dvelopper son rseau en
nouant de bonnes relations avec la socit
civile tunisienne et internationale.
Au fil du temps, nous avons russi nous
diversifier en collaborant dautres
initiatives linstar de Watch The Med
(http://www.watchthemed.net/) qui est une
plateforme en ligne de geo-mapping qui
permet de suivre et dalerter sur les noyades
et les violations des droits des migrants dans
la frontire maritime de lEurope. Cest une
initiative soutenu par la fondation Rosa
Luxemburg,
le
rseau
dassociation
Boats4People et reposant sur une solution
de tlphonie par satellite. Nomad08 a
contribu cette initiative en mettant en
place l'outil technologique libre pour le
projet refltant ainsi notre philosophie qui
met la technologie aux services des causes
comme celle de limmigration dans ce cas
prcis.
Au fil des expriences Nomad08 a pu
constituer un rseau solide de membres
bnvoles surtouts dlves ingnieurs et
dingnieurs qui continuent aider Nomad08
ne
la
plateforme
22
utilisent aussi les donnes de Watchwater
pour dnoncer les problmes deau au
niveau rgional et local. Ainsi Watchwater
est devenue non seulement un moyen de
dnonciation pour le citoyen mais aussi une
source dinformations pour les journalistes
et les mdias en leur permettant de porter la
voix des citoyens dmunies au plus haut
niveau.
Il faut dire que nous avons commenc il y a
seulement quelques mois et malgr cela
nous avons russi constituer un rseau de
reprsentants dans toutes les rgions de la
Tunisie. Nous avons une grande ambition
pour dvelopper ce rseau et nous aimerions
que cette plateforme devienne une source
incontournable dinformations et permette
terme dexercer une pression sur les
dcideurs publics en vue dun changement
positif. Jespre que dici un an on aura un
historique dalertes qui permettra de rvler
davantage de dysfonctionnements et une
comprhension plus approfondie de lorigine
des problmes de coupures et de fuites
deau.
La dcentralisation est un apport
considrable de la nouvelle Constitution.
Comment vous percevez le rle de la socit
civile pour accompagner ce processus et
favoriser un accs aux services publics
quitable ?
Je prendrai lexemple de laccs leau
potable que je connais le mieux. Je pense
quil faudrait faire un bon diagnostic et
dfinir les responsabilits afin didentifier qui
sont les responsables que ce soit la SONEDE,
ses sous-traitants et parfois mme les
citoyens. Il y a des fuites qui restent
longtemps sans solutions cause de
problmes entre la SONEDE et ses soustraitants ou bien avec les socits de travaux
publiques qui ont initialement install la
partie du rseau concerne par la fuite. Il ny
a pas de mcanisme de suivi et de contrle
systmatique des prestations des soustraitants.
La dcentralisation pourrait aider
amliorer la fourniture de services publics
dans les rgions. A titre dexemple Redeyef,
on pourrait avoir lappui de la Compagnie de
Phosphate de Gafsa (CPG) dune faon
formelle car jusqu ce jour elle est en train
dassurer
informellement
lapprovisionnement en eau potable de
Redeyef. Une fois la prise de dcision sera
dcentralise au niveau local, laccs et la
qualit des services publics samlioreront et
il y aura plus dquilibre entre la cte et les
rgions dfavorises.
Est-ce que vous pouvez nous donner un
aperu sur les principales ralisations de
votre association et vos futures initiatives
citoyennes envisages ?
Actuellement,
nous
disposons
dun
laboratoire dans notre local Redeyef ou
nous
dveloppons
les
solutions
informatiques et des appareils lectroniques
pour soutenir les causes. Rcemment nous
avons commenc travailler sur les
problmatiques nergtiques et sorienter
vers les nergies renouvelables. Nous avons
ainsi russi crer des onduleurs solaires de
qualit en mobilisant lexpertise ncessaire
travers notre rseau et de lautoformation
en ligne.
Nanmoins nous avons encore besoin de
ressources financires, matrielles et
humaines qui pourraient nous aider
dvelopper nos activits, nous faire
connatre davantage et nous aider sur
dautres causes. On dispose de peu de
moyens pour linstant et la plupart de nos
ressources financires proviennent de la
location du matriel de traduction
instantane. Outre ce don en nature nous
avons russi dcrocher quelques petits
dons dont lun nous a permis de mettre en
place Watchwater.
Humanitarian Engineering
Innovative Approaches and Partnerships
in Crisis Response
23
Yolanda Tayler
Practice Manager, Public Integrity and
Openness, Governance Global Practice,
World Bank
24
Partnering with stakeholders such as FIDIC in
the HEP initiative provides a strategic
multiplier for the Banks efforts in crisis
response. FIDIC represents the consulting
engineering industry globally, including 1.5
million professionals in 60,000 consulting
firms across 100 countries. FIDIC contracts
will provide accountability, efficiency and
enhanced development outcomes in crisis
response, through balanced contractual
clauses, fair allocation of risk, and credibility
as an international standard with a 50-year
proven track record supported by the public
and private sectors. Furthermore, FIDIC
facilitates dispute resolution options and
provides for capacity-building.
effectiveness in implementation of
crisis response contracts, other tools
and support for international and local
stakeholders (for example, through
follow-up
dissemination
and
coordination activities building on the
Cyprus event).
FOOTNOTES
1
Procurement
Public Procurement Reform and Modernization in
MENA: A Peer-Learning Experience
The MENA procurement team is fully
engaged in dialogue with governments in
the region on public procurement reform
and modernizationa key pathway to
achieve the twin pillars of reducing poverty
and ensuring shared prosperity through job
growth, enhanced service delivery, and
greater economic activity. The team had the
valuable opportunity to help disseminate
and share experiences in regional and
international procurement reform with 30
high-level government officials from 11
countries in the region. [Bahrain, Egypt, Iraq
(Federal and Kurdish Regional Governments,
Jordan, Kuwait, Lebanon, Morocco,
Palestine, Saudi Arabia, Syria, Tunisia]. That
peer-learning experience was provided in
the MENA procurement teams inaugural
course on current trends in public
procurement reform, hosted by the IMFMiddle East Center for Economics and
Finance (CEF) in Kuwait this February. The
peer-learning based course builds on the
work of the Bank-supported MENA Regional
Network of Procurement Experts, which has
brought together representatives across the
region to constructively learn from each
others lessons and together initiate regional
in
public
25
Rather than a course on how to do
procurement, the course showcased how
to improve it through high level reforms to
upgrade system performance and achieve
broader national development objectives.
The course drew on the Banks extensive
experience in assisting MENA countries in
the reform of public procurement systems
and included case studies presented by
participants from their own country
experiences and from international
examples.
Mainstreaming
of
procurement
reforms with other reform initiatives
and building on positive elements of
existing systems in a country.
26
27
Corporate Governance
& Financial Reporting
Interview
Exploring the Role and Impact of the International Arab Society of
Certified Accountants (IASCA) on the MENA Region
H.E. Dr. Talal Tawfiq
Abu-Ghazaleh
IASCA Chairman
28
accounting standards and the International
Accounting Education Standards (IESs) in
authoring the professional curricula issued
by IASCA. The Societys services are also
accessible to all professionals in the Arab
world in cooperation with the Talal AbuGhazaleh Organizations 85 offices around
the world.
What do you foresee in terms of the future
of IASCA and for the professional
associations of the MENA region? What do
you see as the key challenges and areas for
opportunity for the MENA accountancy
profession as a whole?
From our point of view, the profession in the
Arab world needs continuous development
to face current economic challenges and
succeed in the evolving global economy. We,
at the Society, constantly seek to develop the
profession and help the national professional
societies develop their member knowledge.
IASCA supports this through our close
relations with international professional
entities and its presence at international
conferences and events, including IFACs
Annual Meeting. In this way, we seek to
share international experience with the Arab
world. With regard to key challenges facing
the MENA regions accountancy profession,
IASCA views the lack of unification of the
professional societies in the Arab world as
important. Additional efforts are needed to
engage and coordinate the diverse voices of
the Arab profession throughout the region in
order to support the development of modern
accounting and auditing legislation. More
effort is also needed to enhance accounting
education at the university level, as well as to
support the strengthening of educational
institutions. To overcome these challenges,
IASCA aims to establish an Arab Regional
Center which will support the adoption and
implementation
of
international
accountancy standards in the public and
private sectors. It would create a convening
space where all professions may cooperate
to advance the quality of accountancy
throughout the Arab world. Furthermore,
IASCA will continue to expand on its efforts
to work with governments and private
universities to develop and provide
educational solutions (in particular through
distance learning) that support the
dissemination of accountancy knowledge.
I know that IASCA has been a strong
supporter of the effort to encourage MENA
region governments to adopt IPSAS. Can
you tell us about this? What has been your
motivation? What do you see as the
challenges and success factors in moving
IPSAS forward?
IASCA has had a significant role in supporting
the Jordanian governments decision to fully
Interview
Samia Msadek
Director Governance Global Practice, World Bank
that can provide solid, reliable financial
statements. For those businesses that
cannot meet this demand, the opportunities
to grow are more limited and/or costly. By
providing high quality services to businesses
and reliable reports to investors, the
accounting profession helps to foster trust in
the private sector, thereby stimulating
investment and growth.
29
communication,
from
personnel
management to office automation. The
accounting profession is not exempt from
the need to innovate and remain relevant to
the needs of economy and country
especially during times of change.
Technology has enabled much of the
innovation we see today, but innovation also
requires effective leaders to apply these
technologies and drive change. The old
saying goes, If you do what youve always
done, youll get what youve always gotten.
For a different outcome, change the
methods. The first step is for leaders of the
accountancy profession to explain the value
of adopting new methods and new tools, and
then to actively shepherd their application by
professionals.
Performance. The concept of performance
has evolved over the past decades. It was
previously defined largely by performance
information and annual performance
reports. However, todays concept of
performance focuses on achieving a handful
of strategic goals through the effective use of
data to inform real-time decision-making.
The accounting profession has a strong role
to play in supporting business entities as they
seek to shift and enhance performance.
Social Contract. The social contract is an
idea that dates back to the ancient Greeks,
and refers to the implicit agreement among
members of a society that defines their
relationship with each other and the state.
When the social contract is broken and an
imbalance exists between what citizens
provide to the government in the way of
financial and popular support and the
benefits and rights which the government
grants to them, development and growth
suffer and citizens may seek to establish a
new social order. For example, in MENA,
lagging private sector growth was related to
the autocratic nature of the regimes. In
particular, friends and families of autocrats
benefited through monopoly rents in
domestic industries, undermining export
competitiveness and employment creation.
These actions laid the foundation for the
Arab Spring. As MENA countries seek to
determine a new social contract and correct
existing imbalances, the accounting
profession may play a key role in supporting
the development of legal and regulatory
frameworks which encourage competition
and transparency in business, create systems
30
for redistributing wealth and providing vital
services, and streamline and increase the
efficiency of governments and state-owned
enterprises (SOEs).
Lagging Regions. Countries around the world
are challenged by regional inequalities in
providing opportunities and outcomes for
their citizens. Although some inequality
among regions is inevitable, when disparity
becomes extreme, it may negatively impact
national unity, economic development and
social harmony. As policy-makers seek to
measure disparity and design policies to
balance the opportunities and quality of life
in leading and lagging regions, the
accounting profession may play a strong role
in supporting government efforts to quantify
and measure differences between regions.
For instance, it can bolster the profession
and businesses in lagging regions and
contribute to national efforts to strengthen
lagging regions.
Risks. In order for businesses to be successful
during times of instability, they must be able
to determine risks in advance, and
communicate their potential impact. They
must also be resilient in their responses to
facilitate
more
positive
outcomes.
Supporting accountants in attaining sectoral
and industry specific knowledge and
improving communication and soft skills may
best enable them to work as a true partner
of the business community. As such, they can
help in managing risks and contributing to
economic growth and development.
CV MENA: The OECT Congress touched upon
another subject, namely efforts to combat
corruption in business and government.
Indeed, corruption presently challenges to
countries within MENA and around the
world. In your opinion, what role can the
accountancy profession play in helping to
contribute to strong governance within the
public and private sectors?
Financial accountability and reporting are at
the core of any system of governance. As
such, professional accountants play a central
role in building strong governance systems in
their countries.
Around the world, governments are seeking
to combat corruption through modernizing
accounting and reporting systems, adopting
and implementing International Public
Sector Accounting Standards (IPSAS), and
meeting the financial and non-financial
information needs of parliaments and civil
society. The overriding objective of these
efforts is to increase transparency and
accountability in the public sector, and to
reduce the opportunities and incentives for
corruption. As accountants and auditors
often hold the knowledge and ability to
support such reform efforts, involving the
31
Summit calls on all countries to regulate the
professional service sectors, including the
accounting sector, to be alert to sectors
emerging as vulnerable sectors that could
be used for facilitating or laundering the
proceeds of corruption. In this regard, they
also committed to driving out professional
service providers, including accountants,
who facilitate or are complicit in corruption.
Closely linked to corruption is the issue of
illicit financial flows (IFFs) which include
taxes owed, but not paid and/or embezzled.
Such IFFs are particularly detrimental to
developing
countries.
Professional
accountants, external auditors, and company
and forensic accountants who are bound by
high standards including financial
reporting, auditing and assurance, ethical
Integrated Reporting
Counting What Counts
Lydia Habhab
Public Sector Analyst, World Bank
Monika Kumar
Environmental Specialist, World Bank
32
their stock exchanges to provide nonfinancial reports on a comply or explain2
basis. The Integrated Reporting <IR>
Community of Practice at the World Bank
has been working to bring non-financial
reporting on the same plane as traditional
financial reporting. This starts with raising
awareness and breaking down silos to
achieve improved governance of an entitys
inputs, outputs, and sustainable outcomes
for the greater good. At the recent <IR>
Community of Practice event on NonFinancial Reporting in the Public Sector at the
Sub-National Level, experts reflected on
some of the cited barriers to entry and
incentives for embarking on non-financial
reporting for organizations in the private and
public sector alike. Despite noted challenges
in realizing standardized reporting guidelines
and having multiple reporting entities and
platforms, the overwhelming consensus
during the conference was that the journey
toward reaching the report is just as
important and worthwhile as the report
itself.
Internally, looking at the organization as a
whole can break down silos. An organization
that involves employees and is transparent
MENA SMPs
MENA Region Results from the International Federation of
Accountants (IFAC) Global SMP Survey
Gabriella Kusz
Senior Financial Management Specialist,
World Bank
33
international activities. The 2015 survey was
conducted in 22 languages including
Arabic and French from October
November 2015. This years poll included
329 respondents from the Middle East and
North Africa (MENA)1 region. Select analysis
of MENA region responses was undertaken
by the World Bank and the results are
presented herewith.
Around the world, we are now seeing the
role of the accountant undergo a significant
shift. Building on the role of auditor and tax
preparer,
todays
accountants
are
increasingly called upon to act as trusted
business advisors to provide support in
financial and succession planning, business
strategy and organizational growth and
development. Not surprisingly, in the MENA
region, survey results confirmed the
increasing role of accountants in the regions
10
20
30
40
50
60
Source: IFAC data. Note: The figure represents the authors depiction of the data.
Source: IFAC data. Note: The figure represents the authors depiction of the data.
46
48
34
These results were comparable to the global
averages which also noted these challenges
as significant to their business operations.
Indeed, around the world, SMP firms appear
to be struggling with business development
and cost management. In the MENA region,
additional support to SMPs in this area may
aid in strengthening SMPs and supporting
firm growth.
The ability to anticipate challenges and
adjust accordingly to meet emerging issues is
critical to effective SMP operation and
management. Through the SMP Quick Poll
Survey, MENA region respondents were
asked to note the extent to which specific
challenges would impact SMP operations in
the next 5 years. The top three challenges
noted as either high or very high included:
technological developments (47 percent),
perceived trust and credibility of the
profession (43 percent) and globalization (41
percent).
FOOTNOTE
For the purposes of this article the MENA region is defined
to include the countries of: Algeria, Bahrain, Djibouti,
Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco,
Oman, Qatar, Saudi Arabia, Tunisia, the United Arab
Emirates, the West Bank and Gaza and Yemen.
Interview
Rajeev Swami
Lead Financial Management Specialist, World Bank
Corporate Governance and Financial Reporting (CGFR)
in East Asia and the Pacific (EAP)
Please tell us about the Corporate
Governance and Financial Reporting (CGFR)
work program in the East Asia and Pacific
(EAP) region. How did it get started? What
have been your key objectives and goals
with regard to the program?
When I joined the EAP region about two and
a half years ago, the regions Corporate
Governance and Financial Reporting
program was still in its infancy. There were
some programs to support Professional
Accounting Organizations (PAOs), and maybe
a small grant here or there, but no significant
or systematic approach to facilitating CGFR
development in the region. CGFR
development was largely done in a
piecemeal fashion with some of the latest
analytical work being undertaken in 20092010.
When I reflected on the region and
considered how I wanted to structure a CGFR
program to meet the regions needs, I noted
that there was significant economic
firepower in the EAP region in particular,
dynamism in the Association of Southeast
Asian Nations (ASEAN) economic block.
ASEAN is a regional organization which
promotes
both
intergovernmental
cooperation and economic integration
among its ten member states (including
Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore,
Thailand, and Vietnam). Among its principal
aims are accelerating economic growth, and
achieving social progress and socio-cultural
35
to its economic and financial largess, there is
significant demand for proper standards, as
well as trained and qualified professional
accountants and auditors.
To address these needs, our unit built a
program which addressed the challenges of
the EAP region not only at the country level,
but also at the regional level taking into
consideration the challenges and needs
which ASEAN posed for CGFR reform and
development. We engaged not only with the
profession, but also with the ministries of
finance. Within the World Bank, we worked
across the Global Practices with our
colleagues in Finance and Markets (F&M) to
build
partnerships
which
could
comprehensively address the challenges
faced by our client countries. We also
recognized the importance of results
although we undertook and continue to
undertake analytical work, we do this in a
much targeted manner. We try to calibrate
the specific analytical work (Report on the
Observance of. Standards and Codes - ROSC
Assessments, policy notes, and so on) with
the provision of technical assistance, which
builds upon the results of analytical work.
What have been some of the more notable
projects and activities that you have
undertaken which have helped to lay a solid
foundation for CGFR work in the EAP
region?
There are several projects that I believe
highlight the progress and development that
we have seen in CGFR in the EAP region. One
of the more interesting has been the work
we undertook in Papua New Guinea. A few
years back, we undertook an Accounting and
Auditing Report on the Standards and Codes
(AA ROSC) assessment, which was well
received by the World Bank Country office
and stakeholders. We used the delivery of
the AA ROSC to re-engage stakeholders on
the topics of CGFR and public financial
management. In addition to revitalizing the
countrys stakeholders on the subject, we
also built a strong partnership with the World
Bank private sector arm, the International
Finance Corporation (IFC), which shares our
passion for and interest in CGFR. Ultimately
our efforts resulted in the management of a
joint World Bank / IFC program for the
simplification of business reporting for small
and medium enterprises (SMEs) in the
country. In Vietnam, we have had similar
successes. We are in the process of
concluding our AA ROSC assessment for the
country, which has included a unique
addition namely, the creation of a
roadmap for International Financial
Reporting Standards (IFRS) adoption and
implementation of the IFRS for the countrys
largest state-owned enterprise (SOE). This
IFRS Roadmap was presented to the Minister
of Finance, who was so pleased with this
36
Chris Austin
IAESB Chair
Insurance Accounting
37
Gabriella Kusz
Senior Financial Management Specialist,
World Bank
The insurance market in the Middle East and
North Africa (MENA) region has been
characterized by slow growth and
development. World Bank reports note that
the slow development of MENAs insurance
sector may be due to numerous factors,
including regulatory policies, market
structure, the impact of the lack of a broad
financial sector on the insurance market,
social and human development factors, as
well as cultural and religious factors1.
Although the regions insurance penetration
levels remain relatively low, it should be
noted that recent research indicates that
insurance sector growth may actually be
improving. As noted by the Qatar Financial
Centre (QFC) MENA Insurance Barometer
2016 An Annual Survey, in the five-year
period from 20092014, total non-life and
life insurance premium volumes in the region
expanded by almost 60 percent (or roughly
US$ 51 billion). This translates to a sector
growth of more than 2 times that of regional
gross domestic product (GDP) and,
optimistically, this growth trend is expected
to continue through 20172. As MENA
insurance markets continue to develop and
increase their prominence within both the
national and regional spheres, strong
accounting and auditing will be crucial to
ensuring transparency, accountability and
sound investments.
Given the increasing prominence of the
insurance market in the MENA region, recent
efforts by the International Accounting
Standards Board (IASB) to strengthen and
improve accounting for insurance contracts
should be of significant interest. The IASBs
Insurance Contracts Project has consisted of
two phases: Phase I which resulted in the
issuance of International Financing Reporting
Standards (IFRS) 4 (as an interim standard to
be applied for insurance accounting), and
Phase II, which is currently being undertaken
to address key challenges in insurance
accounting and will result in the creation
of a new standard to replace IFRS 4.
Challenges such as the diversity in
accounting models applied to different types
of contracts, the reliance on estimates
determined at contract inception, and the
lack of discounting for non-life liabilities
presently contribute to the complexity and
38
Walid Al-Najar
Financial Management Specialist,
World Bank
Moad Alrubaidi
Senior Financial Management Specialist,
World Bank
Yemen is a fragile state that has recently
descended into a full-fledged conflict. The
conflict has caused a humanitarian crisis,
massive physical damage, and has
devastated the economy. In the midst of a
war, public accountants and accountancy
associations in Yemen have demonstrated
extraordinary resilience and a remarkable
passion for the future of the profession. This
unplanned suspension of normal life has
given practitioners a chance to reflect on
their career paths and visualize their
future. The practitioners found themselves
coming together to exchange concerns and
brainstorm about the way forward. Aware of
the emerging situation and needs of its
members, the two accountancy associations
in the country the Yemeni Association for
Certified Public Accountants (YACPA) and the
Yemeni Association of Internal Auditors
(YAIA) explored opportunities to support
the career and business development of its
members.
The Yemen Association for Certified Public
Accountants (YACPA)
With very limited resources, but enthusiastic
volunteers, the YACPA was able to gather its
active members and experienced financial
experts through a social media platform
39
IFRS for SMEs amidst the war?! For the first
time, the YACPA successfully organized a
training event on IFRS for SMEs for more
than 150 of its members. Training was
conducted at its own training center
premises. The YACPA planned for a total of
70 participants. However, due to very high
demand, more than 150 participants
registered and participated. Practitioners
were encouraged to continue seeking
professional development opportunities and
to update their practices. The intensive 3-day
training event was conducted by a qualified
local trainer that covered all of the
standards. This event was exceptional in
nature,
considering
the
security
circumstances
and
continuous
bombardment which did not prevent
participants from physically attending
throughout all three days. Moreover, the
training gave the participants a spark of hope
for a better future.
The Yemen Association of Internal Auditors
(YAIA)
The newly established YAIA continued its
momentum to keep inspiring the
professional society in Yemen. Indeed, the
YAIA provides an example of hope for other
associations to consider moving forward
with their development regardless of the
security circumstances. The YAIA leadership
adopts an inclusive approach which
encourages creativity, and welcomes
40
Education
10 Steps to Finding a Career Development Mentor
By The American Institute of Certified
Public Accountants (AICPA)
2.
3.
4.
5.
6.
MSME Audits
41
Enhancing the Quality of Micro, Small and Medium Enterprise (MSME) Audits:
Increase Access to Small and Medium-sized Accountancy Practice (SMP)
Audit Software
Gabriella Kusz
Senior Financial Management Specialist,
World Bank
the
French
Professional
Accountancy Organizations (PAOs). It
concerned remarks by representatives of the
DDPI who noted that their organizations had
developed software specifically suited to the
needs of accountancy small and medium
practices (SMPs) for their micro, small and
medium enterprise (MSME) clients which
allows for high quality audits on this smaller
scale. MENA regional audit professionals
noted that they had been struggling with this
same challenge, specifically how to deliver
high quality audits for MSME clients when
the market does not provide for costeffective and accessible audit software for
SMP practitioners.
42
Interview
La Reforme du Systeme Comptable Public Tunisien, une Realite
Mme. Halima Bahar
Charge de mission auprs du cabinet du
Ministre de Finances et Directeur General
la Direction Gnrale de la Comptabilit
Publique et du Recouvrement.
43
Islamic Finance
Accounting and Auditing Reform
Nadi Mashni
Financial Management Specialist,
World Bank
Gabriella Kusz
Senior Financial Management
Specialist, World Bank
FOOTNOTE
44
the World Bank Islamic Finance Development Center. This
event willutilize the Video-Conference (VC) capability of
the World Bank Country Offices.
Public Sector
Regulatory Reform
KRG-IRAQ:
Guide to Legislative Drafting
Emmanuel Cuvillier
Senior Public Sector Specialist,
World Bank
Salam Almaroof
Operations Analyst,
World Bank
45
help the Shura Council prepare legislation
that is to be used as a reference in drafting
legal texts. The manual of the National
Palestinian Authority (NPA)7 and the
Tunisian Guide to Legislative Drafting8
served as examples.
This new guide offers a clear methodology to
prepare and draft legislative acts submitted
to the KRG Shura Council in order to improve
their quality and ensure that they are
consistent with the current legislative order
and relevant public policies. The guide is to
serve as a compendium of sound drafting
techniques and recommendations to meet
any current challenges that legislative
drafters may face. The guide will also
contribute to consolidating legal provisions
and avoiding differences and contradictions
in interpreting legal texts, as well as in
devising provisions to simplify the task of
those dealing with them. Furthermore, the
guide also offers a vehicle for continuous
improvement of legislative drafting
techniques by consolidating in a single text
all future improvements to the initial version
which has now been published.
This guide is generally tailored to all legal
drafters in the KRG, as well as to
parliamentarians, governmental advisors
and legal departments in ministries and
departments in the KRG. The guide is
addressed in particular to councilors of the
KRG Shura Council who are in charge of
legislative drafting. The first version of the
guide9, published in Arabic (200 pages) and
English (170 pages) in April 2016, runs to a
total of 170 pages and is composed of eight
chapters as follows:
principles
for
policymaking
(called
legislative policy in the Kurdistan Region)
are based on specific philosophical ideas,
drawing upon Islamic thought and
democratic political values, and reflecting
the clear impact of the internal and external
political, economic and social conditions of
the Kurdistan Region of Iraq.
Chapter 4 - Draft Legislation Action Plan:
Before preparing a new piece of legislation,
a number of requirements are to be fulfilled
and several steps taken in this context. To
this end, this chapter is divided into two
subchapters. The first covers the steps of the
preliminary phase of legislation preparation
and the second covers the commencement
of legislation preparation and drafting.
Introduction
The quality of legislation is of the utmost
importance to all those members of society
who need to understand or apply the law,
both in spirit and in letter, as they cannot
plead ignorance of the law as a reason for
not being in compliance (Ignorantia juris
non excusat).
REFERENCES
1 The Shura Council of the Kurdistan Region of Iraq was
established through Law No. 14 of 2008 as part of the
process of federalization in this semi-autonomous region.
It is an independent government body, but
administratively it falls under the jurisdiction of the KRG
Ministry of Justice.
3 The Code of Hammurabi is a Babylonian law code of
ancient Mesopotamia, dating to about 1754 BC. It is one
of the worlds oldest deciphered writings of significant
length.
4 As Iraq was part of the Ottoman Empire, the Ottoman
Judicial Decisions Magazine of 1869, known in Arabic as
Majalat Al-Ahkam Al-Adlieh, was applicable in Iraq and
was, in fact, its law. The Ottoman Empire adopted AlMajalat, which was based on Islamic Sharia law and
the Hanafi Fiqh, or jurisprudence. According to scholars,
the Majalat was very advanced and constituted a rich
sample for legal drafting and codification of the Hanafi
Fiqh. At that time, the rulings of the Majalat governed
most of the Arab countries that were under the Ottoman
Empire. However, the strong link of Iraqi law to Islamic
Sharia law and Fiqh through the adoption of the
Majalat later influenced, to a great extent, the adoption
of the new Iraqi civil law based on the Napoleonic Code,
after the independence treaty with England in 1930.
Accordingly, Iraqi civil law benefited from both the Islamic
Fiqh and Western laws in drafting and codification, unlike
that of Egypt, whose independence from the Ottoman
Empire prevented application of the Majalat.
5 The Iraqi Legal Database (ILD) is the first comprehensive
and electronic legal database created in the Arab region
under the supervision of the Iraqi Higher Judicial Council.
The objective is to make the entire corpus of Iraqi law
available to judges, lawyers, academics, lawmakers, and
interested individuals or institutions. The ILD was
published online in September 2008, and makes available
27,433 legal texts, including 7,136 laws, 4,265 ministerial
instructions, 3,268 regulations, 5,029 declarations, etc. It
includes every Iraqi legal text since 1917.
6 Refer to KRG Cabinet Decision No 90 of 9th June 2016.
7 Palestine: a) Legislative [or 'Legislation'?] Drafting
Manual Ministry of Justice and Institute of Law Bir Zeit
University (2000); and b) Secondary Legislation [or
'Legislative'?] Drafting Manual The Institute of Law, Bir
Zeit University (2004).
8 Tunisia: Guide de Lgistique (2011).
9 The publication of a second, improved version is already
envisaged for 2017.
46
The Governance Perspective
Elisabetta Marmolo
Governance Adviser, Governance Global
Practice, GGODR, World Bank
LAGGING REGIONS
47
LAGGING REGIONS
A
Governance
and
Anticorruption
Strategy
evaluation (World Bank 2011b)
found interventions in this
space to be generally less successful than
other governance reforms (with only 30
percent having achieved their objectives). In
the presence of a conducive environment,
the Bank should liaise with clients to ensure
that accountability institutions address
issues that are relevant to lagging regions in
their work; that they are present in lagging
regions, as appropriate; and that the
enabling framework for their effectiveness
including transparency, disclosure of
information and citizen engagementis in
place. In other cases, the Bank should
advocate for such reforms in cooperation
with internal constituencies.
Finally, rule of law and justice to rebuild
trust. Significant variance can be observed in
the capacity of courts, enforcement of the
law, and citizen access to and trust in the
justice system within MENA countries
with courts often not even physically present
in lagging regions. Lack of access to justice
can be viewed as a key dimension of poverty
(World Bank 2012). The presence of a strong
justice system is an important indicator of
state capacity and accountability. In lagging
regions where biased policies and neglect
have caused a breach in the social contract
between the state and its citizens, promoting
access to justice on an equal basis is a key
element of rebuilding trust in public
institutions and social cohesiveness.
The rule of law and clear definition and
enforcement of property rights are also
essential to private sector-led growth and
development in lagging regions. The justice
sector is a relatively new area for Bank
engagement.
Lessons from the experience so far (for
example, in Afghanistan) point to the need
for the Bank to: more clearly identify its niche
and comparative advantage; adequately
resource its engagement in the sector; and
track and monitor results more closely.
48
LAGGING REGIONS
REFERENCES
Ahmad, J., S. Devarajan, S. Khemani, and S. Shah. 2006.
Decentralization and Service Delivery. In Ahmad, E. and
Brosio, G., eds. Handbook of Fiscal Federalism. Edward
Elgar.
Brixi, H., E. Lust, and M. Woolcock.2015. Trust, Voice and
Incentives: Learning from Local Success Stories in Service
Delivery in the Middle East and North Africa, World Bank,
Washington, D.C.
Platteau, J. 2004. Monitoring Elite Capture in
Community-Driven Development. Development and
Change, 35(2): 223246.
Rodden, J., E. Gunnar, and K. Litvack, eds. 2003.
Decentralization and Hard Budget Constraints.
Cambridge, MA: MIT Press.
_______.2015. Economic and Social Inclusion for Peace
and Stability in the Middle East and North Africa A New
Strategy for the World Bank Group. (SecM2015-0279,
September 21, 2015).
______.2014. World Bank Group Assistance to Low
Income Fragile and Conflict-Affected States An
Independent Evaluation, Washington, DC.
______.2012. New Directions in Justice Reform,
Washington DC.
______.2011a. MENA Development Report: Poor Places,
Thriving People How Can the Middle East and North
Africa Rise Above Spatial Disparities? Washington, DC.
______.2011b. World Bank Country-Level Engagement on
Governance and Anticorruption An Evaluation of the
2007 Strategy and Implementation Plan, Washington DC.
______.2009. World Development Report: Reshaping
Economic Geography. Washington, DC.
Figure 1: Governance Strategy for MENAs Lagging Regions - Source: World Bank Authors Figure.
Ayah Mahgoub
Urban Economist, Middle East and North
Africa, World Bank
LAGGING
LAGGING REGIONS
REGIONS
49
50
LAGGING REGIONS
REFERENCES
1 A spatial approach is oriented toward diagnosing
constraints and/or intervening to relax them on a
territorial rather than a purely sectoral basis.
2 Reshaping Economic Geography. World Development
Report. World Bank Group. 2009.
3 Mark Roberts. Measuring the Economic Potential of
Indian Districts. World Bank Policy Research Working
Paper. 2016.
4 Tunisia Development Policy Review: The Unfinished
Revolution. World Bank Group. 2014. See also:
Regional Disparities in Tunisia Note. World Bank
Group. 2015.
5 Pathways to Shared Prosperity. World Bank Group.
2009.
6 Poor Places, Thriving People. World Bank Group. 2010.
51
LAGGING REGIONS
52
Tunisia
From Secrecy to Openness:
The Government of Tunisia Heeds Citizen Calls for Transparency
In response to citizen calls for fiscal
transparency and greater government
accountability that surfaced following the
political revolution in 2011, the Ministry of
Finance in Tunisia collaborated with the
World Bank to create the country and the
regions first open budget portal
(Mizaniatouna or Our Budget). It is
designed
to
communicate,
through
accessible and user-friendly formats, data
and information about public spending to its
citizens. The Mizaniatouna portal received
the World Bank Equitable Growth, Finance &
Institutions (EFI) vice presidency award for
2016.
Since the 2010 Jasmine Revolution, the
World Bank has been steadfast in supporting
the governance transition, taking the lead in
formulating and supporting policies that will
foster a more open and inclusive mode of
governance and improve the quality of public
services that citizens receive. This
engagement
covered
the
different
dimensions of open governance, including
access to information, fiscal transparency
and citizen engagement. Indeed, it has
resulted in Tunisias qualification for the
Open Government Partnership in 2014.
The Bank has since remained engaged and
supported the implementation of these new
policies, including those pertaining to fiscal
transparency. The Mizaniatouna portal, a
result of collaboration with the Government
of Tunisia over the past three years, is one
example of how World Bank support to the
country has materialized. The portal enables
citizens to understand where their
governments money goes, how it is spent. It
represents an improvement in transparency
and accountability of key public programs
and services.
Mizaniatouna was officially launched in its
French and Arabic versions on Tuesday,
December 15, 2015, at the Eighth Meeting of
the Joint Committee on Fiscal Transparency
and Open Governance, chaired by the
Minister of Finance of Tunisia. Thus far, it has
been visited by over 7,000 new users.
Raising fiscal transparency standards in
Tunisia
Over the last few years, the Government of
Tunisia has made important strides in
releasing and publishing information.
However, it has not yet adequately
addressed barriers to consumption by nontraditional actors such as civil society.
Aggregate
Trends Interactive
overview of the governments fiscal
situation.
Where does the money go? Multilevel tree map that allows users to
identify and look deeper into
government spending by administrative
and economic category.
Budget Execution Statistics and
infographics on government current
and capital spending, with a special
focus on the composition of
government subsidies.
Funds Infographic that allows users to
monitor the budget composition and
profile of special treasury funds.
Parastatals - Infographic that allows
users to monitor the budget
composition and profile of public
agencies.
Pivot Table Table allows users to
access and download the entire Tunisia
BOOST database via a web-based
interactive/pivot table.
53
society organizations, the media and donor
organizations.
To this end, the World Bank worked closely
with the Ministry of Finance to support and
accompany
the
Ministrys
external
communication efforts. This includes,
notably, the production of an animated video
explaining the budget process and the
importance of fiscal transparency. The video
was launched in three languages: Arabic,
English, and French and has attracted over
38,000 views.
To facilitate learning and understanding of
the content of the Mizaniatouna portal,
several informational and learning tools
were also embedded on the website. These
include:
Budget data
dissemination in
simple and
intuitive formats
Rebuilding
citizen trust
in
government
Improved participation
and accountability in
the budget process
54
Reforms
The Political Economy of Reforms:
Bringing Interests, Institutions and History Back into the Picture
Diane Zovighian
Governance Specialist,
GGP, MENA, World Bank
Interests
Interest heterogeneity is a basic feature of all
polities: people have different tastes,
preferences, and endowments, which lead
them to prefer different types of
redistributive policies (Drazen 2000). The
critical political economy question is how
these conflicting interests are aggregated
and how they affect the choice and
implementation of a reform or project.
55
skewed accountability relationship between
the rulers and the ruled. In regimes that are
dominated by a few, how can space for
reforms be created to foster more inclusive
policies that help reduce poverty and
increase shared prosperity? How can risks of
capture and distortion be mitigated? How
can the voice of the ultimate project
beneficiaries the poor and vulnerable
be heard and their needs incorporated into
project design? What category of nonelectoral accountability mechanism might be
feasible and useful?
Making institutions effective.
Beyond the nature of political accountability
and competition, political systems also have
different levels of capacities. Existing
systems of power in World Bank client
countries are different from the Weberian
ideal of state1, as well as from the Western
European and North American states. Some
states do not have full control over their
entire territories; others have a failing state
apparatus,
including
an
inefficient
administration; many depend on a range of
informal or traditional authorities to exercise
power and redistribute resources. In short,
states often fall short of being strong,
rational, and cohesive structures. Instead,
they are a blend of pockets of efficiency and
poorly-managed and over-staffed structures;
and traditional patronage structures may
coexist with modern institutions.
For reforms and projects to make progress,
this institutional reality must be taken into
account. Are bureaucratic capacities aligned
with reform or projects needs at different
levels of government (for example, national,
regional, and/or municipal)? How can they
be enhanced? What non-state power holders
does the State rely on and for what? What
are the risks associated with state weakness
and the reliance on non-state actors? How
can such risks be mitigated?
History
Reforms and projects do not occur in a
vacuum: they are embedded in, and inherit a
legacy of institutions and practices that tend
to be sticky and difficult to change. As
Pierson (2004) maintains, in a context of
complex social interdependence, new
institutions and policies often entail high
fixed or start up costs and they involve
considerable learning effects, coordination
effects
and
adaptive
expectations.
Established institutions generate powerful
inducements that reinforce their own
stability and further development. In short,
historical legacies can render change
difficult.
REFERENCES
Andrews, Matt. 2013. The Limits of Institutional Reform in
Development: Changing Rules for Realistic Solutions.
Cambridge: Cambridge University Press.
Bain, Kathy. The Implications for Large Aid Organisations
of Doing Development Differently: The Case of the World
Banks Nigeria Country Team. Draft. Overseas
Development Institute.
Drazen,
Allan.
2000.
Political
Economy
in
Macroeconomics. Princeton University Press.
Pierson, Paul. 2000. Increasing Returns, Path
Dependence, and the Study of Politics. The American
Political Science Review, Vol. 94, No. 2.
Pritchett, Lant. 2013. Folk and the Formula: Fact and
Fiction in Development. WIDER Annual Lecture, No. 16
(April).
FOOTNOTES
1 For
Concluding Thoughts:
Challenging the Everyday Practices of
Development Actors
Development is politically disruptive. It
redistributes power and resources. As such,
it challenges the interests of people and the
habits of institutions. The challenge for
donors and governments is to understand
CITIZEN
ENGAGEMENT
56
Citizen Engagement
and Public Service
Delivery in the
Context of Fragility:
WEST BANK AND
GAZA
Background
In the West Bank and Gaza, waste is piling up.
With a high population density of an average
of 713 persons per square kilometer (km)
and several thousand tons of solid waste
generated per day, the solid waste
management system is under stress. Unless
waste is properly collected, transported and
disposed in sanitary landfills, it poses a
hazard to health and the environment. This is
why the World Bank has been supporting the
Palestinian Authority in solid waste
management in the Governorates of
Bethlehem. Of this amount, US$12 million
comes from World Bank funding and US$
15.342 million from co-financing by other
Hebron through a US$ 27.342 million
investment project.
The project includes, among other things:
strengthening the institutional capacity of
the agency tasked with waste management;
constructing a new sanitary landfill;
providing related infrastructure; and raising
awareness about ways to minimize waste
and encourage recycling and composting.
Recent discussions concern the possibilities
of deriving energy from landfill gas and an
additional grant has been made available to
strengthen financial management and
sustainability.
The project has been engaging citizens in
three main ways: through community-based
CITIZEN
ENGAGEMENT
57
CITIZEN
ENGAGEMENT
Using a range of different ICT channels for
citizen engagement has been another
success. The telephone calls to conduct the
satisfaction survey reached 20,000 citizens,
as did the SMS messages with information on
solid waste management and recycling. The
Facebook page has received over 5,400 likes
and the toll-free hotline number enables
anyone with access to a phone to leave
feedback and register complaints without
any cost.
As movement is restricted or complicated in
large parts of West Bank and Gaza, ICT offers
an alternative way for government to reach
citizens and for citizens to contact and be
in
conversation
with
government
independent of their physical location. In the
Palestinian
Territories,
strengthening
capacities for service delivery at the
municipal level has been central to the World
Bank strategy.
Municipalities have historically played an
important role in governance in the region,
are closest to the citizens and provide a
constant
in
an
otherwise
fragile
environment. In addition to projects focused
on specific services such as solid waste
management, the World Bank has also been
supporting municipal development more
generally. Given this focus on municipalities,
institutionalizing citizen engagement at the
municipal level is all the more important.
Within the framework of the solid waste
management project, citizen outreach has
been done through the installation of the
toll-free number that citizens can call to
report shortcomings and provide feedback
on
waste
management
in
their
neighborhoods, as well as through the
institutionalization and computerization of
the GRM. Throughout the project, the
Palestinian counterparts have been
champions of the citizen engagement
agenda. Fragility does not have to be an
impediment to citizen engagement. To the
contrary, the World Bank experience with
citizen engagement in West Bank and Gaza
indicates that it can bear fruit, especially at
the local level.
Rebuilding Trust
between Citizens and
Government:
MOROCCO
Background
The people want change, Moroccans
chanted in 2011 during the protests that took
place in the context of the Arab Spring. The
Moroccan Government responded with farreaching amendments to the Constitution to
enable greater transparency, accountability
and participation. Most notably, the new
Constitution stipulates that citizens have the
right to information, the right to petition,
and should be included in the policy-making
process through public consultations.
Significant changes to the Constitution have
thus been achieved.
Translating these new constitutional
provisions into laws and implementing the
laws, however, is an ongoing process. The
World Bank has supported this reform
process through the Hakama Development
Policy Loan (DPL) series. The DPL series is
supporting governance reforms across the
public sector from the central to the local
level. In addition, the Bank has provided
policy advice and technical assistance for the
design of most policy measures and laws
supported by the DPL, with support from the
Middle East and North Africa (MENA) MultiDonor Trust Fund. A second Hakama policy
loan of US$200 million is under preparation
58
CITIZEN
ENGAGEMENT
Rather, they are based on the outcomes of a
one-year participatory nation-wide dialogue.
Establishing a commission on consultation
and conducting a structured, transparent
and inclusive consultation process were
required measures for the DPL. Around
10,000
Moroccans
participated
in
consultations taking place in different
regions. They also presented memorandums
through an online portal, and joined
thematic workshops on various policies.
The outcomes of these public consultations
were compiled in a book that was handed to
the head of Government and is now available
to the public. The World Bank provided
technical assistance on how to structure and
implement such a dialogue and organized
thematic workshops with practitioners and
experts from other countries in order to
enable cross-learning and inform the
development of these new citizen
engagement policies.
Following the dialogue, the Ministry in
Charge of Relations with Parliament and Civil
Society drafted laws responding to the
priorities voiced by citizens, such as the right
to petition, the right to propose legislative
motions to Parliament and the right of public
consultation. The draft laws on petitions and
legislative motions were then submitted for
Cabinet review and adoption, prior to their
submission to Parliament in June 2015 for
adoption. The right to petition local
governments and to be consulted was also
included in the new organic laws on
communes, provinces and regions to foster
more participatory local governance.
Throughout this process, the World Bank has
been providing advice and input to the drafts
based on international good practices, as
well as the outcomes of the consultations.
Use of Surveys
Morocco is marked by great differences
between urban and rural regions, between
different education levels, socio-economic
status, gender roles, and connected to all
of these varying degrees of access to and
use of the Internet. In addition to the
National Dialogue, which gathered citizens in
public physical spaces all over Morocco, the
World Bank developed two surveys to solicit
feedback from citizens regarding their
interest in public engagement. One was
designed for businesses and asked specific
questions about their perspective on access
to
information.
The
responses
overwhelmingly confirmed that access to
information is seen as a lever for better
economic performance due to increased
transparency, data on households and the
Moroccan economy, as well as a reduction in
costs for paying for information.
The other survey was a Nano Survey that
appeared on the screens of 15,000 randomly
selected Moroccan internet users, of which
almost 4000 responded to the questionnaire.
The outcomes highlight the fact that many
would like to participate more in the
decision-making process, and have access to
more public information, especially online.
At the same time, there is limited awareness
of the right of access to information and the
right of petition, as well as very little prior
experience in public engagement.
Thus, the results point to the relevance of
implementing the reforms and continuing
the pursuit of the open government and egovernment agendas, especially in reaching
the predominantly young and urban
population that was represented in the
sample. The most important audience of
the reform agenda are urban educated
youth. These are the same people who went
59
CITIZEN
ENGAGEMENT
Petitions
The Arab Spring was marked by protests,
which is one possible way of mass
expression. Another, more institutionalized
avenue for mass expression in participatory
democracies is petitioning. It is a wellestablished international practice and
enables citizens to peacefully demand
change and shape policy-making from the
bottom up. Morocco has gone a step further
than many countries by including the right of
petition in its Constitution. It applies at both
the central and local levels, as well as with
the Parliament, and supersedes potential
contradictory laws.
Dr. Chafik Rachadi, Deputy Speaker of the
House of Representatives, affirms the
commitment of Parliament to these reforms:
The subject of petitions and legislative
motions is an integral dimension of
Moroccan political and social history in
regards to the [transition] towards
participatory
democracy
and
the
concretization of the new rights introduced in
the new Constitution of 2011. For the House
of Representatives, these reforms help to
reinforce the eParliament initiative which is
currently underway in Morocco, and
constitutes a fundamental pillar of Open
Parliament and public engagement. Through
the implementation of these reforms, the
House of Representatives will enter the phase
of the institutionalization of mechanisms for
citizen and civil society engagement. This is
an essential aspect of my work in advancing
legislative affairs and parliamentary
oversight.
The right has been included in the organic
law on regions and communes and in an
organic law on public petitions that has been
adopted by the Council of Government. The
World Bank will continue supporting the
development of by-laws and their
implementation through the DPL, as well as
through technical assistance. Next steps
include the establishment of a centralized epetitions platform, a petitions committee,
implementing regulations, as well as training
and guidelines for public officials and
Members of Parliament.
E-government
The reforms initiated by the constitutional
changes signify a higher involvement and
expectation of both citizens and the state.
Citizens desire to be more engaged in policymaking through access to information and an
increased voice. They also expect the state
to deliver services in a transparent and
Lessons Learned
Timing and Expectations
Since 2011, Morocco has been in a state of
transition. Its experience is different from
some other countries in the region that
underwent sudden regime change, including
partially violent aftermaths. The Moroccan
leadership has focused on gradual legal,
political and socio-economic change. This
approach promises more stability, yet comes
with its own challenges. Translating
constitutional changes into laws that have to
be agreed on by various public entities, and
subsequently implementing these laws, is a
long process. It requires both patience and
persistence.
A Moroccan activist calls attention to the
careful review of draft laws: The danger is to
focus on quantity instead of quality. Rankings
can be a great way to push an agenda, but in
the end it is about the substance of the laws.
The devil is in the detail. Now is an
opportunity to review the draft laws and
ensure they are in conformity with
international standards and citizens
expectations. Driving the reform agenda
forward and at the same time managing
public expectations, especially regarding
timing, is a difficult balance to strike. It
demands good communication and
transparency about how the reform process
is faring, what the next steps are, and why
the government is tackling issues in a certain
order.
60
61
What?
A holistic approach to better governance
and sustainability in the public sector
through reporting on value of financial,
natural, manufacturing, intellectual,
human, and social capital
Why?
To breakdown traditional management,
decision-making, and reporting silos
Who?
Peer-to-peer and expert knowledge
exchange
CoPIR@worldbank.org
62
Cover Story
Corruption & Development
63
Big Picture 64
Participation 71
Themes 76
Views from the Field 89
Institutions 94
Sectors 101
Operations 111
Views from Outside 115
Events 120
64
BIG PICTURE
COVER STORY
Overview
Corruption: Yesterday, Today and Tomorrow
Francesca Recanatini
Senior Economist, World Bank
65
still are from a world free of corruption and
how urgent the situation really is.
FOOTNOTES
1
66
Speech
Remarks by World Bank Group President Jim Yong Kim at AntiCorruption Summit 2016, London, United Kingdom
Twenty years ago, my predecessor James
Wolfensohn delivered a ground-breaking
speech in which he called on the world to
take action against the quote cancer of
corruption. Since his speech, we have
turned aspirations into action: committing
to zero tolerance for corruption, opening the
World Bank to scrutiny, and also influencing
governments and the private sector to take
wide-ranging steps to prevent corruption.
Corruption is stealing
from the poor.
It undermines growth and
prosperity twice over not
only in the act of siphoning
away resources from their
intended purposes, but in
the long-term effects of
services not delivered
the vaccines that are not
received, the school
supplies that are not
delivered, the roads never
built.
As I travel the world, I see the corrosive
impact of corruption on the lives of the poor
and the resulting sharp decline of trust that
citizens have in their governments.
67
Interview
Debbie Wetzel,
Senior Director, Governance Global Practice, World Bank
that change the incentives of people vested
with public authority and trust.
68
ability to make a difference and affects the
most vulnerable.
Engaging with countries and sub-national
governments to reduce the risk of
corruption can happen at different levels: at
the global level (through the signing and
implementation of conventions and
agreements); at the country level, at the
sub-national level and at the sector level.
This typology of engagement requires a
medium-term vision and commitment
and often broad consultation. How can the
GGP reconcile this medium-term approach
with the desire for short-term success that
all organizations face?
Addressing corruption is not always a linear
process. As is true for most public sector
reforms, confronting corruption involves
changing how individuals and organizations
function. These transition processes take
years to accomplish, and are composed of a
large number of much smaller changes.
Reducing corruption may involve improving
the functioning of the legal system, or
changing the public procurement process, or
reshaping when and how information gets
shared. Each of these changes need years to
be implemented. Projects supported by the
World Bank can help countries take the steps
necessary for medium-term success.
However, the Banks project work, in areas
such as improving health or infrastructure,
generates a wealth of information about the
ground realities of governance, and are
fundamental to reality-testing broader
strategies for changing the interactions
among government and its citizens. Our
work to reach short- and medium-term goals
helps us to identify and calibrate the broader
and more long-term objectives that are
required.
69
understanding of corruption at the local,
national, and international levels.
Many people are currently thinking about
governance and corruption indicators. We
will explore ways to work with others in
developing new ways of measuring
corruption that are robust and relevant to
individuals, leaders, and organizations. In
this way, perhaps we will gain some fresh
perspectives.
Corruption is a complex and multi-faceted
phenomenon. The GGP has been taking the
lead within the World Bank on addressing
the risk of corruption at the country level.
However, this is not a task that the GGP can
successfully carry out on its own. How do
you plan to create better collaboration with
colleagues and practitioners from other
World Bank Global Practices?
information, but they really only scratch the
surface of how information can be used to
improve public sector performance and
accountability. New initiatives, such as Open
Contracting, and the Open Government
Partnership, represent the leading edge in
improving governance and accountability
through better use of information.
The GGP currently supports work on open
government, citizen engagement, electronic
governance, and accountability. We have
helped our clients develop electronic
systems for such things as financial
management, receiving and responding to
complaints, and tracking service provision. At
the same time, we have strengthened the
ability of civil society organizations and
private sector firms to produce and use
information. As we move forward, we will
need to establish greater linkages among
these strands of work in order to fully
operationalize our move toward radical
transparency.
Since 2011, the countries in the Middle East
and North Africa (MENA) region have been
undergoing a significant transition. This has
created considerable instability and
tension. While the focus for the GGP has
been on supporting this transition by
strengthening institutions in general, which
areas do you think could be an entry point
for engagement on corruption in MENA?
Citizen
engagement
and
greater
transparency, as noted, are very important.
However, in the MENA region, I think the key
issue is helping governments understand
that being transparent and interacting with
civil society are something that can help
them to deliver services and to use their
resources more effectively and is not
70
71
PARTICIPATION
COVER STORY
72
records and audits for the cash-for-work
program were all clean!
Photo: Facilitators running one of the
focus group discussions for the community
scorecard in Malawi
73
The author would like to thank Dr. Pulavarti
and the PAF for verifying and correcting the
details of the Nirmal Bharat Abhiyan (NBA)
story, as well as for sharing the associated
photos.
FOOTNOTES
See for instance: World Bank (2010): Good Practice Note
- Governance and Anti-Corruption Innovations in the
Malawi Social Action Fund Project, Social Development
Note No. 131, June 2010.
2 For more information on community scorecards, see:
World Bank: Rapid Feedback: The Role of Community
Photo: Not one toilet on the ground. But an Official claims to have personally verified, and sends the PAF team to the village!
Villagers are angry and demand the officials phone number.
Open Government
Transparency and Open Government for Accountability
Stephanie E. Trapnell
Consultant, Governance and
Public Sector Group
74
expectations: does an agent (government)
act in the best interest of a principal (citizen)
who has conferred upon him some decisionmaking authority? If not, accountability
mechanisms are strengthened, usually
horizontally through oversight institutions or
audits.
This definition of accountability is common
in bureaucracies, where institutions are held
to account by an external forum. However,
these models are also reflected in conflict of
interest restrictions that allow governmental
organizations to hold their employees to a
certain standard expected of public office
holders. Similarly, financial disclosure
systems monitor the behavior of officials for
conflicts that may compromise their
integrity and/or instances of illicit gain.
Principal-agent models such as these focus
on a theory of change that involves setting
standards, obtaining information about
behavior, making judgments about whether
such behavior violated accepted norms, and
applying effective sanctions for violations
(Moore and Teskey 2006; Schedler 1999).
Transparency can serve as a foundation for
streamlining procedures that eliminate or
curtail discretionary behavior by public
officials and elected politicians. Proactive
disclosure of data or information allows for
data mash-ups or comparative analysis
that plays an important role in the scrutiny
of government operations (from allocation
of public resources, delivery of services and
the formation of laws and regulations). This
is particularly important for the monitoring
of public management systems such as
budgets, expenditures, procurement and
revenue mobilization. Access to information
is often the first step in exposing corrupt
behavior allowing both civil society and
enforcement agencies to investigate
75
76
THEMES
COVER STORY
PFM
The Impact of Corruption on Public Finance
Michael Schaeffer
Senior Public Sector Specialist, World Bank
77
Areas of Tax Corruption
Taxes based on clear laws including those
not requiring direct contacts between
taxpayers and tax inspectors are less
likely to lead to corruption. Tanzi (1998)
notes that corruption is likely to be a
problem in tax and customs administration
when laws are difficult to understand, and
can be interpreted differently so that
taxpayers need assistance in complying with
them.2 In addition, when the administrative
procedures (for example, the criteria for the
selection of taxpayer audits) lack
transparency and are not closely monitored
within the tax or customs administration,
the potential for corruption is likely to
increase. Most importantly, public sector
corruption will be pervasive when acts of
fraud on the part of the tax administrators
are ignored, not easily discovered, or when
discovered penalized, but only mildly.
Tax and customs departments are often the
locus of major fraud and corruption, and
should therefore be potential candidates
for inclusion in national strategies to
combat corruption. Malfeasance in the tax
and customs departments can be
addressed by potentially providing greater
managerial freedom to the revenue
agency (through the hiring and firing of
personnel), and by establishing a meritbased public sector employment system
while, at the same time, subjecting the
agencys performance to close scrutiny. By
controlling the possibilities for theft, good
financial management systems c a n
change the economics of bribery. The
computerization of t h e tax and customs
administration is also an important
element of capacity building and revenue
administration, and can help in reducing
corruption.
Tax
computerization
projects
are
effectively tax administration projects.
Their timing depends on the status of legal
and administrative reforms of the tax
system. As a result, tax policy reforms
during the installation of an information
technology system could negatively affect
the potentially positive impacts of
developing a computerized system.3
Ideally, tax computerization should follow
and support tax policy reform.
Public Expenditure Management
Public expenditure management is
instrumental to effective public service
delivery and lowering the potential for
corruption. Access to information about the
content and performance of government
expenditures is critical to achieving
government accountability. The public
needs to know what goods and services are
provided, how well they are provided, who
the beneficiaries are, and how much they
cost.
To
promote
government
78
including all revenues and expenditures
of the government, whatever the
arrangements may be for managing some
particular programs. Operational efficiency
requires taking into account the specific
characteristics of different expenditure
programs
when
designing
budget
management rules (for example, rules
concerning transfers of resources from one
budget item to another).
Unclear lines of accountability and overlaps
in the distribution of responsibility can all
contribute to increases in corruption with
regard to public financial management.
Mechanisms for budgeting and policy
formulation should be explicitly designed to
reinforce coordination and cohesion in the
decision-making process. Strengthening the
budget preparation process requires
improvements as follows: (i) decisions that
have a fiscal impact should be scrutinized
together with direct expenditure programs;
(ii) spending limits must be built into the
budget formulation process from the very
start, and should be consistent with policy
priorities and resource availability; and (iii)
operational
efficiency
requires
line
ministries to be held accountable for
implementing their programs. However,
they can be held accountable only if they
have participated in designing the programs
and have authority for managing them. In
this context, a number of countries will
need to review and revise the distribution of
responsibilities in their budget preparation
processes.
FOOTNOTES
Asian Development Bank (ADB), (1999). Governance,
Corruption and Public Financial Management, p. 6.
2 Vito Tanzi (1998). Corruption around the World. IMF
Staff Papers. Vol. 45, Number 4.
3 Vito Tanzi (1998). Corruption around the World. IMF
Staff Papers. Vol. 45, Number 4, p. 37.
4 Paulo Mauro (1997). Why Worry About Corruption?
International Monetary Fund.
REFERENCES
ADB (Asian Development Bank). 2005 Asian
Development Outlook 2005 Manila, Philippines: ADB.
______. 2004. Country Strategy and Program Update
2005-2006 Republic of Azerbaijan. Manila, Philippines:
ADB.
______. 2003. Country Strategy and Program Update
2004-2006 Republic of Azerbaijan. Manila, Philippines:
ADB.
______. 2001. Improving Public Administration in a
Competitive World, edited by S. Schiavo-Campo and
P.S.A. Sundaram. ADB Press
______. 1999. Governance, Corruption and Public
Financial Management, edited by S. Schiavo-Campo ADB
Press.
______. 1998. Anticorruption: Our Framework Policies
and Strategies. Manila, Philippines: ADB.
Mauro, Paulo. 1998. Corruption: Causes, Consequence,
and Agenda for Further Research. Washington D.C.:
International Monetary Fund.
______. 1997. Why worry about corruption?
Washington D.C.: International Monetary Fund.
Tanzi, Vito. 2000. A Primer on Tax Evasion in Tanzi, V.
(2000) Policies Institutions and the Dark Side of
Economics, Cheltenham pp. 154170.
______. 1998. Corruption Around the World: Causes,
Consequences, Scope, and Cures. IMF Staff Papers. Vol.
45, Number 4. Washington, D.C.: IMF.
Tanzi ,Vito and Hamid Davoodi. 1998. Corruption,
Growth, and Public Finances. IMF Working Paper.
Washington D.C.: IMF.
Tax Administration
Designing an Anti-Corruption Strategy
for Tax Administration
Raul Felix Junquera-Varela
Lead Public Sector Specialist, World Bank
79
that can potentially reduce
motives and opportunities for
corruption (World Bank 2009).
Institutions can address the
motives for corruption through
transparent
budget
procedures, competitive base
pay, and effective sanctions.
Institutions can also design low
and few tax rates with limited
exemptions, limited contact
with taxpayers and suppliers,
computerization
and
automation, or independent
internal and external audits
(see Table 1).
Technology also plays a key
role in helping to achieve the
objectives of an anti-corruption strategy.
Automation of core business processes limits
contacts between taxpayers and tax officials
and reduces administration and the costs of
compliance. It can also help enable tax
administrations to better control key
procedures, such as taxpayer registration,
VAT refunds, or selection of tax audits. As a
result, tax administrations are less exposed to
corrupt practices.
Political economy variables and cultural
norms also play a key role in the design of an
effective anti-corruption strategy. In some
countries, cultural norms foster patronage.
For instance, political interference in civil
service appointments and career paths can
undermine the independence of the public
service. In many cases, patronage is
considered to be an obligation of tax officials
and widely accepted as normal behavior. In
light of this, cultural elements have to be
Georgias
anti-corruption
strategy demonstrates the
Ten Tenets of success. These
ingredients
include:
a
foundation of strong political will; establishing
credibility early; launching a frontal assault on
corruption; attracting new staff; limiting the
role of the State; adopting unconventional
methods; developing unity of purpose and
close coordination; tailoring international
experience to local conditions; harnessing the
use of technology; and using communications
strategically.
REFERENCE
Das-Gupta, Arindam, Michael Engelschalk, and William
Mayville. 1999. An Anticorruption Strategy for Revenue
Administration, PREM Note 33, Washington, DC: The World
Bank.
Fjeldstad, Odd-Helge. 2002. Fighting Fiscal Corruption: The
Case of the Tanzania Revenue Authority. CMI Working
Paper.
James, Sebastian S. 2009. A Handbook for Tax
Simplification. Washington, DC: World Bank.
World Bank. 2012. Fighting Corruption in Public Service:
Chronicling Georgia's Reforms. Directions in development:
public sector governance. Washington, DC: World Bank.
Positive incentives
Organizational autonomy
Transparent budget procedures and performance-linked budgets
Performance-linked compensation
Competitive base pay
Transparent and non-arbitrary reward procedures
Negative incentives
Effectives sanctions for corruption
Stronger taxpayer voice through independent surveys
Citizen review and oversight
Supply-side elements
Effective sanctions for bribe payers
Independent institutions to protect taxpayers from harassment and
extortion
Publicity for penalties
80
Gregory V. Kisunko
Senior Public Sector Specialist, World
Bank
Israel I. Marques
Research Fellow, National Research
University, Higher School of Economics,
Russia
Andrei A. Yakovlev
Director, Institute for Industrial and
Market Studies at the National
Research University Higher School of
Economics, Russia
Which is more important for business
investment decisions the magnitude of
the regulatory burden placed on them or the
consistency with which regulations are
enforced? On the one hand, a large body of
work built on the theory of transaction costs
(Coase 1960) suggests that excessive
regulation can serve as a barrier to
investment. On the other hand, an emerging
body of work has pointed to regulatory
uncertainty that is, uncertainty about how
regulation will change or be enforced as a
key barrier to investment. To answer this
question, we focused on:
(1) Levels of well-ordered and predictable
corruption, which may be seen as an
expected part of the cost of doing business,
similar to an administrative burden; and
(2)Differences in region-specific variation of
experiences
with
decentralized
and
unconstrained (that is, administrative)
corruption, which follow from rent-seeking
by low-level officials and can therefore be
seen as a proxy for uncertainty of existing
rules.
Levels of predictable corruption can be
viewed as any other business expense,
whereas variations in the experience of
corruption
can
inhibit
economic
development because greater differences in
firms experiences with intraregional
corruption provide less certainty about the
enforcement of regulations. We then posed
the following two hypotheses:
Hypothesis 1: The greater the regulatory
burden on firms, the less likely they are to
invest.
81
1 through 4 illustrate the significance of
these results.
Figure 1 shows that an increase in the
average regional percentage of firms
reporting that they paid a bribe from low to
high results in a decrease in the probability of
investment of about 8 percentage points.
Figure 2 indicates that a change in the
average reported bribe tax from low to high
results in an increased probability of
investment of about 3 percent.
Figure 1: Firm's
Probability to Invest as a
Function of Bribe
Incidence by Region
50%
40%
30%
20%
43%
39%
35%
low
average
high
Figure 2: Firm's
Probability to Invest as a
Function of Bribe Tax
Levels by Region
50%
40%
30%
20%
38%
low
39%
average
41%
high
Figure 3: Firm's
Probability to Invest as a
Function of Bribe Tax
Variation by Region
50%
40%
30%
20%
45%
low
39%
average
34%
high
Figure 4: Firm's
Probability to Invest as a
Function of Frequency of
Corporate Raiders' Attacks
by Region
50%
40%
30%
20%
47%
low
39%
average
32%
high
FOOTNOTES
1
Wasta
A key Challenge for Iraqs Civil Service
Anya Vodopyanov
Governance Expert, World Bank
82
83
The fundamental challenge with regard to
Iraqs wasta epidemic is the limited
incentives that key actors have now in Iraq to
change the existing arrangements. (Mansour
and Jabar 2016). Political elites and political
parties supported and even reinforced
the status quo because building clientelistic
networks through wasta has been key to
growing their own personal prestige and
wealth.
Dislodging
the
present
unwelcome
equilibrium will be challenging and may take
a long time. Still, the ingredients for positive
change do exist, and can deliver results if
deployed strategically. One very important
ingredient is Premier Haider Abadis
commitment to reform. A reformist drive at
the center of government is essential for
REFERENCES
Brixi, Hana, Ellen Lust, and Michael Woolcock. 2015. Trust,
Voice, and Incentives: Learning from Local Success Stories
in Service Delivery in the Middle East and North Africa.
Washington, DC: World Bank.
Mansour, Renad and Faleh A. Jabar. 2016. Abadis
Gamble with Technocracy. Carnegie Endowment for
International Peace. http://carnegiemec.org/syriaincrisis/63447
UNDP. 2013. Corruption and Integrity hallenges in the
Public Sector of Iraq: An EvidenceBased Study.
United Nations Office on Drugs and Crime.
World Bank. 2015. Iraq - Emergency Fiscal Stabilization,
Energy Sustainability, and State-Owned Enterprise
Transparency Development Policy Financing Project.
Washington, D.C.: World Bank Group.
______. 2014. Republic of Iraq Public Expenditure
Review: Toward more efficient spending for better service
delivery. Washington D.C.: World Bank Group.
FOOTNOTES
1
84
Figure 1. Percent of Polled Civil Servants Receiving Help for
Recruitment from Different Sources (by year of recruitment)
0.0
Importance of merit to upward
social mobility
OECD
UMIC
Iraq
OECD
UMIC
MENA
Iraq
Figure 5. Hurdles to doing business and interacting with government (low=best, high=worst).
200
180
160
140
120
100
80
60
40
20
0
Ease of Doing
Business Rank
Starting a
Business
Dealing with
Construction
Permits
Getting
Electricity
UMIC Average
Source: Doing Business 2016.
Protecting
Investors
MNA Average
Iraq
Enforcing
Contracts
Resolving
Insolvency
85
Global Issue
86
87
The World Bank, like many other
organizations, has been and continues to be
engaged in the area of IFFs. Indeed, it has
substantial experience working on antimoney laundering and asset recovery issues.
It has an extensive portfolio of activities to
help clients design and implement reforms
that address the activities that generate
illegal revenues. These engagements
encompass assistance to clients in
strengthening
accountability
and
governance
to
support
improved
management, control, and oversight of
specific activities. Core engagements include
support for anti-corruption efforts and
improved auditing, and assistance on policies
relating to the transparency of public
finance, tax evasion, public procurement,
trade facilitation and border crossing, natural
resource management and economic
regulation. (See Box 1).
The World Banks work provides an informed
perspective on what is needed in order to
promote change and address the challenges
REFERENCES
African Development Bank, the Asian Development Bank,
the European Bank for Reconstruction and Development,
the European Investment Bank, the Inter-American
Development Bank, the International Monetary Fund, and
the World Bank Group. 2015. From Billions to Trillions:
Transforming Development Finance. Post-2015 Financing
for Development: Multilateral Development Finance.
African Union and United Nations Economic Commission
for Africa. 2015. Report of the High Level Panel on Illicit
Financial Flows from Africa.
Global Financial Integrity. 2015. Illicit Financial Flows:
The Most Damaging Economic Condition Facing the
Developing World.
______. 2014. Illicit Financial Flows from Developing
Countries:
2003-2012.
http://www.gfintegrity.org/report/2014-global-reportillicit-financial-flows-from-developing-countries-20032012/
Huther, Jeff and A. Shah. 2000. Anti-Corruption Policies
and Programs: A Framework for Evaluation. World Bank
Policy Research Working Paper Series, No. 2501.
World Bank. 2016. The World Bank Groups Response to
Illicit Financial Flows: A Stocktaking. Board Paper.
88
"Here is a conjecture: corruption is a way for many economists and policymakers to talk
about bad political outcomes without talking about politics. As long as the discussion is not
about politics, there can always be a simple, non-political solution, often designed and
operated by some impartial clever politicians, advisers or economists. If there is corruption,
then maybe bureaucrats should be paid a higher wage (to create better incentives), or
more clever remuneration and promotion schemes should be designed (and yes you
guessed it by some well-meaning impartial policymakers and economists), or maybe better
information can detect them being corrupt. Corruption is thus viewed as a malfunction,
just like a market failure, which can be solved by a clever intervention, without
fundamentally changing the political economy or the politics of a society. Corruption
is an attractive talking point for both politicians and many economists because it is
fundamentally viewed as apolitical. But poverty, alas, is not."
Daron Acemoglu and James Robinson, Authors of Why Nations Fail.
COVER STORY
89
Interview
Asad Alam,
World Bank Country Director for Egypt, Djibouti and Yemen
90
changes, as well as the specific
administrative measures and reforms that
were introduced to root out corruption in
many areas of the public sector. I think that
in general we need to share a lot more of
these experiences and connect the
practitioners across different countries and
regions.
Third, when we engage with governments on
issues of corruption and propose
recommendations, we need to be careful
that we do so in a way that is applicable to
that countrys context. It has to be very
specific and focus on things they can actually
do. Now, we at the World Bank like to think
in terms of simple frameworks that can be
used. These frameworks can be very helpful
when talking about corruption, whether we
are promoting transparency, or enhancing
voice and participation, or fostering
accountability. We should then use these
frameworks to come up with solutions that
are real, tangible and practical. This becomes
extremely important when we engage with
government officials.
What do you think the Banks approach and
priorities should be when dealing with the
issue of corruption in fragile or post-conflict
environments?
I think every country is different, thus we
need to think very carefully about the
specific country context especially those
that are fragile or post-conflict. We need to
base our diagnosis and recommendations on
the evidence at hand. For example, what is
the type of corruption we are talking about?
Are we talking about a political regime that is
the source of corruption? Are we talking
about a system that has very closed
connections to the powers that be? Or are
we talking about petty corruption or
corruption that comes from distorted
economic policies? This would help us
develop an approach that is very country
specific, addressing the fundamental drivers
of corruption, and developing very tailored
recommendations for the country.
One of the things I found in my work in
several countries is that the incentives for
corruption often arise from excessive
government interventions in the economy,
which often lead to distortions and economic
inefficiencies. If economic incentives are
distorted
and
create
rent-seeking
opportunities going back to classical
economic development literature on
corruption and rent-seeking behavior and
if we can eliminate those policy distortions,
we can eliminate the problem of corruption
itself. Thus, I think that a precise diagnosis of
the problem is very helpful as a starting point
for any engagement, especially when
conditions on the ground are challenging and
fragile.
However, regardless of what the diagnosis is,
there are a set of actions that are always
good to perform.
Transparency and
accountability in the public sector should be
promoted. This, in my view, cannot be overexaggerated because of the importance
these factors can have. The transparency of
the public accounts, the transparency of the
procurement process, the transparency of
audit reports, the transparency of the
government budget all these aspects are
absolutely key because it is through
transparency that a whole system or culture
of accountability can be unleashed
throughout the society. This will help
promote voice and participation too. This
will necessarily take time, but it is essential in
order to promote good governance.
Therefore, transparency, accountability and
participation should be at the center of our
efforts.
You witnessed firsthand and supported the
institutional reform efforts that took place
in Georgia and South Africa. Are there any
lessons from these experiences for our
colleagues working in the MENA region?
From our own work on institutional reforms
and fighting corruption in the countries you
mentioned and some of the other countries
where I have worked, there are some lessons
that are ubiquitous and can be applied to
different countries.
First, one cannot
underscore enough the importance of
leadership, broadly defined. I am stressing
this aspect because we often talk only about
political leadership, which is of course
91
necessary adjustments to the reforms. This
will help create a virtuous cycle of change
which would sustain the reform process.
Third, it is key to ensure that the incentives
in the system are aligned in a way that is
sustainable over time. Sometimes, you may
have a very special effort to address
corruption in a particular sector or in a
particular project which is driven from a high
level. Then, the energy disappears. If instead
you create a system of governance, a system
of public service delivery, for instance, that
has a set of incentives that are mutually
reinforcing and supporting the right types of
results, then the anti-corruption efforts
would have a greater chance of achieving
success and being sustainable. Now, this
may seem self-evident, but in some ways
these back-to-basics aspects are forgotten.
Some people may also think that this is just
common sense. However, so much of good
Interview
Jesko Hentschel,
World Bank Country Director, Argentina, Paraguay and Uruguay
92
constructive ways to work with our
counterparts?
I am in the lucky position of working with
three governments that have prioritized anticorruption efforts as one of the key areas to
work on with the World Bank. In Argentina,
with the recent change of government, the
Macri administration has placed a strong
emphasis on transparency and anticorruption. President Macri says that, in a
couple of years, he wants Argentina to be
among the top ten countries in the world in
terms of transparency. There is a new office
of Anti-Corruption that has been established
and empowered. A strong public official has
been appointed and takes the job very
seriously, going after and examining
corruption scandals of the past but also
thinking about the incentive system to root
out corruption in the public sector today.
Uruguay is considered to be one of the top
countries in Latin America when it comes to
good governance. The government is very
open to highlighting Uruguays success in
fighting corruption and promoting good
governance.
Two months ago, the
government, together with the Bank,
organized a large conference Cuentas
Claras (Clear Accounts), inviting AntiCorruption agencies and Ministry of Finance
representatives from the region to talk about
effective ways to improve governance and
deal with corruption. This is the type of open
space in which the World Bank is operating in
Uruguay. In Paraguay, where historically
there are more challenges when it comes to
governance as many indicators highlight, the
current government has advanced with
important transparency and access-toinformation measures. We were able to
support an important access-to-information
law through a Development Policy Loan
(DPL) and significant accompanying technical
assistance. Today, we are working in the
country on the demand side of transparency
with different agencies and nongovernmental organizations (NGOs) that are
using the new Information Law. Moreover,
the Law has already had quite an impact on
improving accountability. For example, the
Rector of the National University of Asuncin
had to resign last year because of allegations
of improper use of public funds. This Law has
created several new entry points where we
can now engage. Such developments in the
Southern Cone are part of a general wave in
the Latin America and Caribbean (LAC) region
and globally of a different relationship
between citizens and their elected officials. I
think that when we started to talk about
accountability and good governance 20 years
ago, it was something new and unknown.
This created a lot of hesitation among public
policy-makers. Now it is almost the opposite.
Indeed, we are living in an environment in
which we almost have a consensus about the
93
As opposed to the scandals making the headlines, quiet corruption refers to the failure of public servants
to effectively deliver goods and services, which have previously been paid for by the government or donors.
The most prominent examples are absentee teachers in public schools and absentee doctors in primary
clinics. Quiet corruption also refers to the black markets and the cases when sanitary material or medicines
disappear before being used for patients, or when fertilizer gets watered down in many rounds before it
gets by then rather uselesslyto the fields it was allocated for. Those affected are often the most
vulnerable.
Shantayanan Devarajan, Chief Economist of the World Banks MENA region.
94
INSTITUTIONS
COVER STORY
Introduction
For the World Bank, corruption is considered
a major challenge to institutional goals of
ending extreme poverty by 2030 and
boosting shared prosperity for the poorest
40 percent in developing countries1. Anticorruption efforts are also at the heart of the
recently
established
Sustainable
Development Goals and achieving the
ambitious targets set for Financing for
Development. This concerted effort to
address corruption head-on requires the
active involvement of all key stakeholders for
a sustained improvement in governance. It
also necessitates the pro-active engagement
of key oversight institutions in reducing
avenues for corruption.
International experience has illustrated the
importance of effective and representative
legislatures in strengthening governance
systems and in improving democratic
95
as supreme audit institutions, civil society,
and the media is also an important
dimension to the oversight function.
Furthermore, many parliaments have the
constitutional mandate to promote
transparency of government through such
mechanisms as public hearings. Citizens and
the media can also play a significant role in
reinforcing the role of parliament in its
oversight effort. For example, in the case of
Malawi, the investigations of the Public
Accounts Committee were publicized to the
media and public to help reinforce the
impact of such efforts3.
The function that parliament has in
overseeing the budget is integral to anticorruption efforts. The role of the legislature
in most countries is to scrutinize and
authorize revenues and expenditures, and to
ensure that the national budget is properly
implemented. It is in the national budget
that decisions about tax levels, spending
priorities, and policy prioritization is
SAIs
Strengthening the Role of Supreme Audit Institutions in the Fight
against Fraud and Corruption
Mona El-Chami
Senior Financial Management Specialist
Francis Grogan
Consultant
Manuel Vargas
Lead Financial Management Specialist
World Bank
How are Global Actors Working to Fight
Corruption?
Corruption is at the heart of so many of the
worlds problems. It erodes public trust in
government, undermines the rule of law, and
may give rise to political and economic
grievances that may, in conjunction with
other factors, fuel violent extremism.
Tackling corruption is vital for sustaining
economic stability and growth, maintaining
security of societies, protecting human
rights, reducing poverty, protecting the
environment for future generations and
addressing serious and organized crime1.
Global actors have been trying to address
corruption for decades. Through their
efforts, a number of milestones have been
reached including the adoption of the United
Nations Convention against Corruption in
2003 which aimed to promote and
96
The International Organization of Supreme
Audit Institutions (INTOSAI), of which the
World Bank is an associate member, has
supported SAIs in strengthening their
capacity to fight corruption through various
policy positions, initiatives and programs.
Most important among these has been
INTOSAIs advocacy of the independence of
SAIs. Supporting SAI independence allows
the entities to more fully hold governments
to account for their use of public funds and
provides them with greater latitude in regard
to strengthening public management.
To reinforce both the concept and practice of
SAI independence, INTOSAI has developed
and defined a set of prerequisites and
conditions that should be in place to secure
that independence. Its Mexico Declaration
codified these and was subsequently
endorsed by the United Nations in special
Resolutions of the General Assembly and by
the Global Initiative for Fiscal Transparency.
INTOSAIs Mexico Declaration stipulates that
SAIs should have statutory independence
from the executive branch of government, as
well as the mandate, access to information,
and appropriate resources to audit and
report publicly on the raising and
commitment of public funds. SAIs need to be
able to operate in an independent,
accountable and transparent manner.
INTOSAI has also recognized that
independence alone is not sufficient to
securing effective and impactful SAI
performance. A strong professional ethos
and capacity, as well as the application of
professional audit methods and practices,
are necessary as well. Accordingly, in recent
years, INTOSAI has done much to develop,
adopt and promote the use of common
international
auditing
standards
(International Standards of Supreme Audit
Institutions, ISSAIs), and to generally help
improve the quality of public audits available
to parliaments and citizens. However, SAI
capacities vary. Attention must be given to
SAIs that lack the skilled staff to implement
the new auditing standards and the
independence and powers to produce timely
audit reports, which can then be made
REFERENCES
1
https://www.gov.uk/government/uploads/system/uploa
ds/attachment_data/file/522791/FINAL__AC_Summit_Communique_-_May_2016.pdf
2
http://www.intosai.org/news/130516-12-anticorruption-summit-in-london.html
Source: Concept Note on Strengthening the Role of SAIs in the Fight against Fraud and Corruption.
97
Ombudsman
Corruption and the Role of Ombudsman
Elin Bergman
Governance Specialist, Governance Global
Practice, World Bank
Anti-Corruption Agencies
98
99
Other, less often emphasized factors can
affect ACA effectiveness. The existence of a
broad anti-corruption policy and an
adequate budget that is independently
managed can help sustain ACA efforts. The
work of the ACAs should be closely linked
and relied on with regard to ongoing anticorruption efforts.
There is also a growing consensus that an
essential part of an anticorruption effort
involves establishing a program requiring
senior public officials cabinet ministers,
legislators, judges, and top level civil
servants and judges to disclose their
income and assets to competent authorities,
including identifying and managing potential
conflicts of interest. While the better
practice is to vest responsibility for the
management of this issue with an ethics unit,
the anticorruption agency should also have a
needs-based access to all materials
submitted by filers. In this regard, it should
also establish close working relationships
with the ethics entity.
100
Corruption has in many ways become the defining issue of the 21st century,
just as the 20th century was characterised by large ideological struggles
between democracy, fascism and communism.
Today a majority of the worlds nations accept the legitimacy of democracy
and at least pretend to hold competitive elections.
What really distinguishes political systems from one another is the degree to which
the elites ruling them seek to use their power in the service of a broad public interest
or simply to enrich themselves, their friends and their families.
Francis Fukuyama
Senior Fellow at Stanford University
Director of its Center on Democracy, Development and the Rule of Law.
101
SECTORS
COVER STORY
Service Delivery
Lessons from the MENA Region
Jumana Alaref
Research Analyst
Hana Brixi
Practice Manager, Social Protection,
Labor and Jobs Global Practice, World
Bank
We are often forced to pay bribes and give
out gifts to get our paperwork done at
governmental departments, especially the
traffic and real estate departments, where
corruption is rampant. This was one of
many comments received on the World
Bank Middle East and North Africa (MENA)
Facebook page during online consultations
for its Trust, Voice and Incentives report
(Brixi and others 2015) examining
governance and service delivery in the
region. Citizens have a role to play in
changing the current reality of institutions
by fighting all forms of corruption and
bribery. Service delivery problems will not
be resolved when citizens keep giving bribes
to public officials.
Corruption partly explains why quality
improvements in service delivery have been
so difficult to achieve in spite of often wellcrafted government strategies and policies
as well as large public expenditures. The
link between poor outcomes and corruption
has been established empirically, as well as
theoretically, in many countries around the
102
have wasta can gain university admission,
obtain a business license, and manage more
2)
Strengthen
monitoring,
internal
controls and performance management
in the public sector.
Introduce
mechanisms to collect user feedback
and
disseminate
disaggregated
performance information to provide a
rigorous basis for citizen action.
3)
REFERENCES
Azfar, Omar, and Tugrul Gurgur. 2005. Does Corruption
Affect Health and Education Outcomes in the
Philippines? Social Science Research Network Working
Paper. Available at:
http://unpan1.un.org/intradoc/groups/public/document
s/APCITY/UNPAN024529.pdf
Brixi, Hana, Ellen Lust, Michael Woolcock. 2015. Trust,
Voice, and Incentives: Learning from Local Success
Stories in Service Delivery in the Middle East and North
Africa. Washington, DC: World Bank.
Davis, Jennifer. 2003. Corruption in Public Service
Delivery: Experience from South Asias Water and
Sanitation Sector. World Development 32 (1): 5371.
Meles, Meshal. 2007. Understanding Peoples Attitudes
towards the Use of Wasta. Masters Degree Thesis,
Cranfield School of Management, Bedford, U.K.
Pritchett, Lant. 1996. Mind your Ps and Qs: The Cost of
Public Investment is Not the Value of Public Capital.
Policy Research Working Paper 1660. Washington, DC:
World Bank.
Reinikka, Ritva, Jacob Svensson. 2005. Fighting
Corruption to Improve Schooling: Evidence from a
Newspaper Campaign in Uganda. Journal of European
Economic Association 3 (2-3): 259 267.
World Bank. 2014. The Unfinished Revolution: Bringing
Opportunity, Good Jobs, and Greater Wealth to All
Tunisians. Washington, DC: World Bank.
DATA SOURCES
Develop
effective
accountability
institutions such as courts, independent
auditors, and ombudsmen to monitor
and subject to public scrutiny the
performance of service providers and
public servants as well as provide
tools for the resolution of citizen
complaints and grievances.
103
Construction
The Construction Sector Transparency
Initiative (CoST):
Corruption and the Role of Ombudsman
Promoting Greater Efficiency in Public Infrastructure
Low-income
countries
(Malawi,
Tanzania, Zambia);
Developed economies (UK);
Post-conflict
states
(Ethiopia,
Guatemala);
Societies with an advanced civil society
and transparency agenda (Philippines);
and
Countries with low civil society
participation (Ethiopia, Vietnam).
104
is centered on the tender requirements, with
information from the implementation phase
almost never disclosed. In this context, then,
procurement reform needs to be
complemented by enhanced project
disclosure information.
The Construction Sector Transparency
Initiative (CoST) is designed to promote the
disclosure of relevant infrastructure project
information. It comprises three core features
which provide a global standard for
transparency and accountability in the
delivery of public infrastructure. First, CoST
discloses forty data points at key stages
throughout the project cycle, as set out in
the CoST Infrastructure Data Standard (IDS).
Over time, a national CoST program
establishes a disclosure requirement for
public infrastructure that is appropriate to
local conditions and that can achieve a
credible and substantial level of compliance.
Second, CoST promotes accountability
through an independent review of the
disclosed data. Using this "assurance"
Justice
Corruption and the Justice Sector:
The Role of an Independent Judiciary
David S. Bernstein1
Lead Public Sector Specialist, World Bank
105
following the fall of the Suharto government.
In 2002, following the example of a number
of Asian countries, the Indonesian
government created an independent anticorruption
agency,
the
Corruption
Eradication Commission, or KPK.3 The KPK
was given broad authority to both
investigate and prosecute high-level
corruption cases. In light of the culture of
corruption that permeated Suhartos court
system, Indonesia went a step further and
created an independent anti-corruption
court in the capital Jakarta. This anticorruption court was given special
jurisdiction over all KPK prosecutions in
order to ensure that cases brought by the
KPK would receive an impartial hearing.
Working in this new court, the KPK earned a
100 percent conviction rate for the first 86
cases that it brought to the court.4 At the
same time, the creation of a new court (and
eventually a series of provincial anticorruption courts) was costly. It also raised a
number of concerns regarding the anticorruption courts protection of the rights of
those accused of corruption by the KPP and
the equal treatment of those accused of
corruption by the general prosecutors in
other Indonesian courts.5
In most countries, the universal safeguard
for a fair, impartial and uncorrupted judiciary
is to ensure that the judiciary is
independent from the other branches of
government and from commercial interests
and corrupt individuals. At the same time,
an independent judiciary must remain
accountable for its actions and decisions.
But what exactly do we mean by ensuring
the independence of the judiciary? What
does an independent judiciary look like
and how do we measure independence?
More to the point, what sort of
independence should a country create for its
justice system to provide comfort to its
citizens that the system will be able to
withstand corruption internally and, at the
same time, actively and effectively combat
corruption by impartially adjudicating
corruption cases brought into the court
system?
An independent justice system generally has
some degree of three different types of
independence:
de
jure
or
legal
independence, structural independence and
operational independence.
The United
Nations
Basic
Principles
on
the
Independence of the Judiciary note that
judicial independence should be enshrined
in the Constitution or the law of the
country.6 Such de jure independence can
usually be found in Constitutions or judicial
codes. It is the usual starting point when
trying to determine whether a country has a
justice system that can be impartial and
combat corruption.
independence.
In
the
European
Commissions European Union (EU) Justice
Scoreboard9, the key characteristics of a
judicial council including its composition
and powers are measured to identify the
level of structural independence in each EU
member states judiciary. According to the
EU Justice Scoreboard, key powers that
judicial councils should exercise to help
ensure the independence of the judiciary
are: the discipline and removal of judges; the
setting of ethical standards; and the
management of court administration.
Although judicial councils may also play a
role in the appointment of judges, the other
branches of government can and usually do
have primary authority in this area.
Beyond the legal and institutional
safeguards, in order for a judiciary to be
considered impartial and free of outside
influences, it should also be able to exercise
a level of functional or operational
independence.
Such
operational
independence usually includes the power to
administer its own rules, as well as to
manage its human and financial resources
and infrastructure. According to the EU
Justice
Scoreboard,
the
European
Commission has defined operational
independence by identifying a number of
situations
in
which
a
judiciarys
independence may be at risk or
compromised by interference from other
branches or from outside influences. The
Commission uses the Scoreboard to identify
and measure whether an EU member state
judiciary
has
sufficient
operational
safeguards in these situations. The situations
covered by the EU Justice Scoreboard
include:
106
withdrawal and recusal of judges from
specific cases; and
allocation of cases across judges in a
court.10
Policy Capture
Privilege-Resistant Economic Policy-Making in the
Middle East and North Africa Region
Syed Akhtar Mahmood
Lead Private Sector Specialist
Najy Benhassine
Practice Manager,
World Bank
Unemployment rates in the Middle East and
North Africa (MENA) region are among the
highest in the world, especially for young
graduates.
Indeed,
regional
youth
unemployment rates range from 15 to 25
percent. Recent empirical work suggests that
an important reason for this is a policy system
that is vulnerable to capture by a small
number of politically-connected firms that
enjoy a variety of privileges (World Bank
2009). Studies done in Egypt and Tunisia have
documented the existence of politicallyconnected firms and the nature of privileges
obtained by them (Diwan, Keefer and
Schiffbauer 2013; Rijkers, Freund, Nucifora
2014; World Bank 2014).
A recent flagship report explores the
economic consequences of this phenomenon
107
Inspired by this and building upon previous
work on policy capture, ongoing work in the
World Banks MENA region (PrivilegeResistant Economic Policy) seeks to answer
the following question: What good
governance features should be instilled in
private sector policy and institutions to help
shield them from capture, discretion and
arbitrary implementation? It applies the
motto What gets measured gets done to
the private sector governance space, and
attempts a systemic measurement of various
Stakeholder
consultation
Grievance redress
mechanisms
Public information
sharing
Integrity
mechanisms
Box 1: Privileged Access to Investment Incentives: Why they persist in the MENA Region
Politically-connected businesses often obtain privileged access to investment incentives, such as tax breaks and subsidies. The likelihood of such
privileged discretionary awards is increased by the lack of a good policy framework that clearly articulates the principles of the award process.
To counteract this activity, provisions should be made for: (i) publishing information regarding the incentives offered; (ii) a periodic review of
the incentive regime in order to assess results; and (iii) reform of the incentive regime when and as needed. The first provision makes the award
process transparent, thereby constraining the ability to award incentives on a purely discretionary basis. The latter two provisions may help
prevent perpetuation of a flawed or outdated incentive regime. Examples of questions that should be asked with regard to investment incentives
include the following:
Does the government have an incentives policy in place stating clearly and publicly the objectives of the incentives regime?
Does the government perform a regular review of the relevance and appropriateness of the incentives policy in pursuing its investment
policy objectives?
Does the government make the results of the review available to the public?
Does the government conduct an assessment of the fiscal costs associated with the incentives regime (for example, reviewing tax
expenditures and the cost of financial incentives) on a regular basis?
Figure 2 shows how MENA country scores progressively decline as one moves from the existence of an incentive policy, to the quality of that
policy (on paper), to the actual implementation of the policy.
The operational implications are clear. There appears to be three broad agendas. For Jordan, Lebanon and Oman, putting a good de jure incentive
policy into place appears to be the immediate agenda. For Algeria, Morocco and Tunisia, it is about ensuring de facto implementation. Finally,
for Egypt and Kuwait, it is about further deepening the de facto implementation.
108
Figure 2: Incentive Regime and the Legislative Framework
% score
80
60
40
20
0
Morocco
Tunisia
Algeria
Incentive policy
Egypt
Kuwait
Lebanon
Jordan
Oman
Algeria, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Tunisia and four comparator countries (France, Italy, Portugal and Spain). Although the study is focused on the MENA region,
its methodology and insights are likely to have broader geographic relevance.
Tunisian
National
Leila Baghdadi
Associate Professor, WTO Chair, Tunis
Business School
Gael Raballand
Senior Public Sector Specialist, Global Tax
Unit, Tax Administration Group, World Bank
Bob Rijkers
Economist, Trade
and
International
Integration Unit, Development Research
Group (DEC), World Bank
109
perpetrators a cost advantage over those
who are compliant an advantage that is
not based on performance.
Detecting Tax Evasion
Verifying tax declarations is notoriously
difficult, since objective information on what
firms should declare is typically not available.
In Tunisia, information-sharing between (and
within) different government agencies was
extremely limited during the Ben Ali era. Yet,
Tunisia has a wealth of administrative data,
which it is now being used to combat tax
fraud. This in turn
facilitates testing for
tax evasion through
an examination of
discrepancies
between
declarations made to
different
government
agencies.
More
specifically,
triangulating reports
made to the social
security and customs
administrations with
tax records enables
us to assess the
prevalence of nonand under-reporting.
Missing
declarations.
Non-reporting is
widespread; 9
percent of non-connected firms did not
submit a tax declaration, despite being
economically active. This is defined as
reporting the hiring of at least one
worker to the social security
administration, and/or registering an
import and/or export transaction with
customs. Non-reporting is even more
widespread among active Ben Aliowned firms; with other conditions
remaining the same, they are 4.6
percentage points more likely than nonconnected firms to have a missing tax
declaration in spite of being active.
Tariff Evasion
Mirror Statistics. In addition to assessing
domestic tax evasion, we examined evasion
of import tariffs by comparing import
transaction records with counterpart
declarations by exporters, who have limited
incentives to lie about how much they have
sold abroad. If imports are reported
correctly, they must be very close to exports
reported in countries that send goods to
Tunisia. However, if imports are declared
incorrectly or not at all then so-called
evasion gaps may arise. These are
measured as the difference between exports
reported in countries selling goods to Tunisia
and imports of those same goods reported in
Tunisia; the higher this difference, the more
imports are missing and the less revenue
Tunisian customs collects. Such evasion gaps
are typically largest for goods subject to high
tariffs, where evasion is most lucrative. In
this context, they have become a standard
proxy for tax evasion.
REFERENCES
Rijkers, Bob, Leila Baghdadi, and Gael J.R.F. Raballand.
2015. Political Connections and Tariff Evasion:
Evidence from Tunisia. World Bank Economic Review.
Rijkers, Bob, Hassen Arouri, and Leila Baghdadi. 2016.
Are Politically Connected Firms More Likely to
Evade Taxes? World Bank Economic Review, ABCDE
Supplement.
110
111
OPERATIONS
COVER STORY
Integrity
The Role of the World Banks Integrity Unit
in Addressing Corruption in Bank Projects
Mohamed El Maini
Senior Investigator, Integrity Vice Presidency
World Bank
112
project officials during tendering and project
implementation. The Bank requires that
bidders disclose their use of third-party
agents, as well as the fees that such agents are
paid. However, some companies intentionally
hide the use of these agents or fail to
accurately report fees paid to them which
in turn makes it easier for agents to act as
conduits for bribe payments and manipulate
contract awards and amendments. Other
schemes investigated by INT revealed that
bidders
submitted
fraudulent
bank
guarantees or inflated financial information.
In one case involving a multi-million dollar
project, the project implementation unit was
unable to cash multiple false bank guarantees
submitted by a contractor at the bidding
stage. The contractor had failed to implement
its obligations, resulting in an important loss
for the project that could not even be partly
compensated. In cases where bidders inflate
their financial capacity, there is the risk that
the contractor may not have the ability to
implement the contract. It may even go
bankrupt while executing the contract,
thereby
endangering
the
projects
development objectives. Other issues
encountered involved project officials
soliciting bribes from bidders and contractors,
the submission of fraudulent experience
certificates by bidders, contractors delivering
substandard works or equipment, and the
misuse and/or mismanagement of project
the
project
FOOTNOTE
1
113
and of itself? Are there numerous press
articles about corruption in government, or
does there exist a 'coziness' (for instance, too
close a tie between government and the
private sector, implying a conflict of interest)
with private sector entities? Does a
proposed operation include a large number
of contracts for civil works of high value?
Based on previous projects (even those
funded by other donors), is there a likelihood
of leading to F/C allegations? Was there an
INT investigation in the same country and
sector? If so, were sanctions initiated? The
design of any new operation needs to ask
and answer these questions. While "risk" is
on the agenda at decision meetings for
authorizing
project
appraisal
and
negotiations, it is almost always the last item
to be discussed. Indeed, only in exceptional
circumstances or with an exceptional
Chair does it get the attention it deserves.
Another entry point and natural partner are
Project Implementing Units (PIUs), which can
be either allies or a cause for concern. For
example, is the same project manager who
was implicated in an INT investigation still in
charge of a new project? The Bank's
mandate does not include the sanction of
public officials, and PIU staff may or may not
be seen as "public officials". Nonetheless,
PIUs and Bank staff alike are too frequently
uninformed about the application of the
Bank's Anti-Corruption Guidelines (ACGs) on
preventing and combating fraud and
corruption. The ACGs for investment lending
(that is, Investment Project Financing- IPF)
were originally adopted in 2006 (and revised
in 2011 and July 2016). It is troubling that
many task teams do not seem to even know
of the existence of these Guidelines, even
when their own projects are being
investigated.
Solutions and Innovations in Procurement Group, Governance Global Practice, World Bank
114
Many countries are stuck in a political tragedy of the commons. Corrupt systems require people to act as if they
thought bribery were good, extortion were permitted, and cheating were the norm. Once corrupt behavior is
embedded, an individual may have little choice but to go along. When we encounter a corrupt equilibrium, it is wrong
and ineffective to decry the culture of those stuck in that equilibrium. Wrong, because their individual ethics may be
superior to our own; their culture in that sense is not necessarily what needs changing. Ineffective, because the
structure of payoffs makes pay the bribe the dominant strategy. We need to change structures, not cultures.
Robert Klitgaard is a University Professor at Claremont Graduate University in California.
Formerly a professor at Harvard and Yale and Dean at the RAND Corporation
115
COVER STORY
Interview
Susan Rose Ackerman,
Henry R. Luce Professor of Jurisprudence Law School and
Department of Political Science, Yale University
Interview
conducted
by
Francesca
Recanatini, Senior Public Sector Specialist,
World Bank
116
Fostering a more transparent financial
117
bribe that is paid is not the only measure.
The real effect of corruption is not just that
money changes hands, but rather that the
bribe is buying something of value. Policy
makers need to ask themselves: What losses
are imposed on society by this exchange of
money? By the beneficial projects that are
never completed or are carried out in very
inefficient and costly ways? By the rules and
regulations that are undermined by payoffs?
Furthermore, reformers need to ask if some
rules have become pure bribe generators;
they may not make policy sense and may be
overly complex. Such rules could be repealed
and replaced by others that are simpler and
more transparent. Where is corruption
causing the biggest losses for society and for
the country?
The second condition for reform is
identifying allies. No one can deal with
corruption alone. It is important to identify
the windows that exist in any country to fight
corruption. To do so, reformers must
identify their allies and supporters and enlist
them in the effort.
There are cases from the history of Great
Britain, some Latin American countries, and
the United States in which reformist
governments were able to make major
changes. The reformers had allies who were
ideological allies (progressive reformers who
cared about a clean, democratic government
and who would work hard to make it
happen). However, change only occurred
because policy makers also had support from
other portions of society, such as business
Interview
with Alina Mungiu-Pippidi, Professor of Policy Analysis and
Democracy, Hertie School of Governance, Berlin
Interview conducted by Francesca
Recanatini, Senior Public Sector Specialist,
World Bank
118
particular event or activity that made you
realize the importance of integrating the
issue of corruption in development work?
When I returned from my Harvard studies to
my first public office in my post-communist
country, I eventually had to deal with my first
big contract to allocate. It was for the offsourcing of advertising for public
broadcasting, which was still very strong at
the time. It involved a rent on all counts, due
to the nice commission out of guaranteed big
sales. And it was at that point when I saw the
situation get out of control. I had calls from
everybody, not just the usual ministers who
had interests in companies, but even
ambassadors of major Western powers who
alluded that my country would not be
accepted to join the North Atlantic Treaty
Organization (NATO) unless I granted the
contract to a company from their country.
When placed in a situation in which
influence-peddling
shapes
outcomes,
everyone will make calls and all developing
countries are like this. Competitive markets
should not be presumed. Indeed,
asymmetrical power has always determined
who gets what. In old democracies, a system
of reciprocal constraints enables fairer
competition, and gains from open abuse of
influence disappear. But the drive for undue
profit never goes away.
You have an unusual background and
training, including a medical degree and a
119
Traditionally, public officials have been somewhat nervous about discussing corruption
openly. Over the past several years, however, I have been struck by the extent to which
world leaders are now willing to talk candidly about this problem. It is not just that the
economic costs have become self-evident. It is also because there is an increasing demand
for change. In a recent global survey, corruption was regarded as the topic most frequently
discussed by the public, ahead of poverty and unemployment. Given that both poverty
and unemployment can be symptoms of chronic corruption, my view is that the priority
given to this problem by the public is entirely justified.
Christine Lagarde, Managing Director, IMF
120
EVENTS
COVER STORY
Anti-Corruption Collective
Action Conference
International Bar
Association (IBA) AsiaPacific Regional Forum on
Anti-Corruption, Compliance
and Enforcement Conference
November 3-4, 2016,
Seoul, South Korea
The International Bar Association conference
will address the following topics:
http://www.ibanet.org/Conferences/conf74
5.aspx
Event
Event
International Conference on
the Foreign Corrupt
Practices Act
November 29 -December 2, 2016,
Washington, DC, United States
Some 600+ members of the anti-corruption
community from the U.S. and abroad will
gather to network and benchmark with
government decision-makers, industry
executives and outside counsel involved in
the most high-profile cases in recent
memory. Speakers include representatives
from the U.S. Department of Justice, U.S.
Securities and Exchange Commission, US
Federal Bureau of Investigation, Serious
Fraud Office (UK), and the Organisation for
Economic Co-operation and Development
(OECD).
http://fcpaconference.com/
121
enforcement updates from around the
world. Regional experiences that will be
shared including: Brazil: The Anti-Corruption
Compliance and Enforcement Landscapes;
China:
Anti-Bribery,
Whistleblower
Complaints and Reporting Obligations:
Status and Impact of Legislative and
Regulatory Changes, and the New Judicial
Interpretation; Southeast Asia: Critical
Updates and Risk Factors; South Korea: New
Requirements for Gifts and Entertainment;
Eastern Europe: Updates on Heightened
Corruption Enforcement Activity and the
Evolving Regulatory Landscape; Argentina,
Colombia and Mexico: New and Ongoing
Legal, Regulatory and Political Changes
Affecting Your Local Anti-Corruption
Compliance Status; and the United Arab
Emirates and Saudi Arabia: New AntiCorruption Initiatives and the Increased
Regional Focus on Compliance.
http://fcpaconference.com/seminar.html
Event
December 2, 2016 ,
Washington, WA, United States
The event will include discussions of the
most critical anti-corruption regulatory and
Event
Meetings
Event
Event
Open Government
Partnership Global Summit
December 7-9, 2016,
Paris, France
The Open Government Partnership (OGP)
The Open Government Partnership (OGP)
Global Summit will bring together
representatives from governments, civil
society, academia and international
122
Events
Quality Financial Reporting A Catalyst for Growth
An Overview of the 2016 Ministerial Conference
Organized by the
World Banks Centre for Financial Reporting Reform
123
.
From left to right: Dusan Vujovic, Minister of
Finance, Serbia; Avdullah Hoti, Minister of
Finance, Kosovo; Jelka Milicevic, Minister of
Finance, Federation of Bosnia and
Herzegovina; Vjekoslav Bevanda, Minister of
Finance and Treasury, Bosnia and
Herzegovina: and Samia Msadek, Director,
Governance Global Practice Group, World
Bank (Moderator).
124
125
regional catalyst in support of the
modernization of public sector accounting
and financial reporting practices for its
member countries. The Network aims to
achieve this goal by facilitating learning and
knowledge exchanges, strengthening and
fostering peer-to-peer collaboration, and
identifying cost-effective solutions. In these
ways, the Network helps members deal with
public sector accounting challenges as they
implement accounting and financial
reporting reform within the larger
framework of adopting international
accounting
and
financial
reporting
standards.
The FOCAL III conference took place in
Asuncion, Paraguay from July 27- 29, 2016. It
was held jointly with the VII Annual Forum of
the Government Treasurers of Latin America
Network (FOTEGAL). In fact, this year was the
first time that both networks events, (FOCAL
and FOTEGAL), were held jointly. The
conference brought together the regional
treasurers and accountants general with the
aim of learning and exchanging knowledge
and best practices on topics of common
interest, including fiscal policy and its
regional challenges, and information
technology and other tools for building a
modern, efficient and more transparent
management of public finances.
Conference participants included treasurers
and government accountants from 15
countries in Latin America, as well as
representatives and specialists from the IDB,
IMF and World Bank. Other participants
included the President of the International
Public Sector Accounting Standards Board
(IPSASB) and other international experts.
The opening ceremony was attended by the
President of the Republic of Paraguay, Mr.
Horacio Carts; the Minister of Finance,
Santiago Pea Palacios; former Finance
Minister of Uruguay, Mr. Fernando Lorenzo;
representatives from the IMF, IDB, the World
Bank's Country Director, J. Humberto Lpez,
the Banks Resident Representative for
Paraguay, Ms. Celia Ortega Sots, as well as
international experts and specialists from the
three multilateral development institutions.
In the opening ceremony, Minister Pea
emphasized that " Our interest in hosting
both forums together is to exploit the
synergies which are generated in this
exchange of experiences on treasury and
governmental accounting topics
A first plenary session on the Challenges of
Fiscal Policy in the World Economic and
Regional Context was held with the
participation of Finance Minister of
Paraguay, Mr. Santiago Pea Palacios;
former Minister of Economy and Finance of
Uruguay, Mr. Fernando Lorenzo; and World
Bank Country Director for Central America,
Mr. J. Humberto Lpez.
126
Cross-Cutting
Syrians
Will Forcibly Displaced Syrians get their Land Back?
Paul Prettitore
Senior Public Sector Specialist,
World Bank
With half of the population of Syria forced
from their homes as a result of the five-yearlong civil war, and now living either as
refugees or internally displaced persons
(IDPs), many are asking, Will we be able to
return to our original homes? Recent
changes to the legal framework in Syria
governing the sale and purchase of private
land raise concerns both for the
protection of land owned or long-occupied
by displaced persons and for the
development of any post-conflict land
restitution process. Such regulations may
also compound post-conflict reform of land
administration
practices,
and
bring
uncertainty to one of the few economic
assets of displaced households.
Even before the conflict, Syrias private land
administration was not particularly effective.
According to rough pre-war estimates by the
Ministry of Local Government, only about 50
percent of land in Syria was officially
registered. Another 40 percent had
boundaries demarcated, but had not yet
been registered. The multiple land registries
were paper-based and often not properly
stored. Plans for automation and
simplification of registration procedures
were interrupted by the conflict.
Popular practices at times undermined the
accuracy of the land registries and weakened
the security of land tenure. Land passed
through inheritance was not always
subdivided among heirs and registered
accordingly. Married couples did not
127
them being labeled as anti-regime.
Moreover, government forces are alleged to
be involved in the confiscation of property
belonging to the displaced.
Second, the Ministry of Local Development
has the power to suspend private land
transactions in conflict-affected areas. In
such instances, the official land registry
would be frozen and new transactions would
instead be registered in a supplemental daily
record of transactions. This means recording
in institutions inside government-controlled
territory any transactions in private land
located outside of government control. It
remains unclear what legal and procedural
protections would be afforded displaced
land owners. Anyone objecting to the
authenticity of an entry in the record would
need to file an appeal in a local court, again
presumably
in
government-controlled
territory.
There is a legitimate state interest in
suspending land transactions in areas of
conflict, for example, to prevent transactions
conducted through fraud or duress. Similar
action was taken by the Colombian
government to protect the land of its
Syrians
International Community Endorses New Initiative to Support
Refugees, Host Communities, and Recovery and
Reconstruction in the Middle East and North Africa
In April 2016, 8 nations and the European
Commission pledged a package of more than
US$1 billion including US$141 million in
grants, US$1 billion in soft loans, and US$500
million in guarantees to a World Bank-led
financing initiative in support of Syrian
refugees and host communities in Jordan
and Lebanon, as well as recovery and
reconstruction across the region. The
package means that the new facility will be
able to generate up to US$800 million in
concessional loans in the next year.
Canada, France, Germany, Japan, the
Netherlands, Norway, the United Kingdom,
the United States, and the European
Commission each pledged their initial
financial contributions to the New Financing
Initiative to Support the Middle East and
North Africa Region. The pledging occurred
at a ministerial conference co-chaired by the
President of the World Bank Group, the
Secretary General of the United Nations and
the President of the Islamic Development
Bank Group. The conference brought
together ministers from the G7, Gulf
Cooperation Council, European and Middle
128
ensure access to education and lay the
foundations for sustainable peace and
stability.
Through innovative financing, the initiative
plans to provide concessional financing to
Lebanon and Jordan, the middle-income
countries most severely impacted by the
Syrian refugee crisis, expand the funding
available to countries struggling with slow
growth and high youth unemployment as a
result of instability, and to prepare for postwar reconstruction. An open platform will be
established for the financing of programs,
bringing together multilateral development
Information
Does Superior Information Make Us More Discerning?
What Uber Drivers Can Teach Us
About Learning And Rationality
Roxanne Bauer
Communications Associate, World Bank
In 1957, Herbert A. Simon (Nobel Prize in
economics 1978) introduced the concept of
bounded rationality that recognizes that in
decision making, human rationality is limited
by the information we have, our own
cognitive biases, our training and experience,
and the finite amount of time we have to
make a decision. Individuals and firms do the
best they can with the information they
have, and since they dont have time to
evaluate and rationally pick the optimal
solution, they simplify their choices and go
with one that is satisfactory rather than
rationally optimalthis is calledstastificing.
Behavioral economics accounts for this by
attempting to incorporate psychological
insights. While most economists agree that
there are some limits to the reasoning
capabilities of individuals and firms, there
has been much discussion about where and
how to account for bounded rationality. On
the spectrum between perfect rationality
and the total absence of it, where are
humans?
To explore this question, lets take a look at
cabdrivers and Uber drivers.
Economists have long argued how cabdrivers
and other similar professions, like farmers or
small business owners who regulate their
own hours, decide how much to work each
day. This question gets to the bottom of
whether humans are fundamentally rational
in this case, whether they earn their
incomes efficiently. The question has also
129
However, this was not true for a large portion
of new drivers who appeared to have an
income goal in mind and stopped when they
were near it, regardless of price changes.
These drivers finished sooner when their
hourly wage was high and to worked longer
when their wage was low.
Sheldon did find, though, that this behavior
decreased with experience, suggesting that
income-targeting behavior, if present, was
only temporary. A substantial, although not
most, fraction of partners do in fact come
into the market with income targeting
behavior, but the behavior is then rather
quickly learned away in favor of more
optimal
decision
making.
Greater
experience teaches most drivers how to get
the most out of their shifts and encourages
Interview
Renaud Seligmann,
New Governance Practice Manager for the Middle East
and North Africa (MENA) Region, World Bank
management in Egypt with you, Hisham, so it
is really nice to come full circle.
You joined the MENA region after spending
years in the Africa region. What are the
lessons from the Africa experience that
might be useful to MENA countries?
I would say that the first lesson is that readyto-wear (or a pure best practice approach)
does not work well in development you
have to go for made-to-measure (or a more
tailored approach). While it is really
important to know what has been tried, as
well as what has succeeded and failed in
other countries to solve common challenges,
it is even more important to really take the
time to understand the local context. Who
are the players, and what are the historical,
geographic, social and political forces at
play?
130
Somalia today to 10 years ago, or the Central
African Republic to what it was like in 2013,
it is clear that very significant progress has
been made. This is in large part due to the
incredible work of the teams working on a
daily basis in very risky environments. This is
of course an unfinished agenda, but the
progress we have seen is hugely rewarding
and impactful.
I see governance and institutions as an
essential foundation for the package of
interventions needed to strengthen state
legitimacy and move toward reconstruction,
recovery and reconciliation. Of course,
governance interventions are needed to
build core public sector institutions that
function at a basic level collecting taxes
and spending these funds for the public
good, for example, by paying teachers,
health workers, security personnel and other
civil servants.
Ultimately, good public
financial management and public sector
reforms are at the core of building state
legitimacy.
Inclusive governance is also a critical
complement. It is essential to move away
from decades of neglect of certain groups or
geographic areas that have led to grievances
and a sense of exclusion. This requires an
open mind with regard to service delivery
models, and a strong focus on inclusion,
voice and accountability for service
performance. This should be conducted and
supported in partnership with the World
Banks multiple Global Practices and CrossCutting Solution Areas.
A sound fiduciary assurance framework is
also essential in high-risk environments. It
plays a key role in helping build development
partner confidence and ensuring that
projects achieve their objectives. This needs
to be designed with an eye for the long-term
sustainability of international development
assistance. Thankfully, our teams have a lot
of experience in this area.
PROFILE
Renaud Seligmann is currently Practice Manager in the Governance Global Practice of the World Bank, where he works on the Middle East and
North Africa Region.
A French national, Renaud started his career as a member of the Court of Accounts, the French Supreme Audit Institution, where he focused on
aggregate fiscal risk in the public sector, performance budgeting and the evaluation of public sector reforms. He then became Deputy Director
of External Audit at the United Nations (UN) Board of Auditors, where he led the first UN-wide audit of the response to the South Asian Tsunami
and was in charge of the audit of the UN Secretariat, United Nations Children's Fund (UNICEF) and other funds and programs. He joined the
World Bank in 2007 and was based in Washington, DC and Pretoria, South Africa and worked mostly on public financial management. From 2011
to 2015, he was a Sector Manager for Financial Management, and then Practice Manager in the Governance Global Practice, working on the
Africa region.
Renaud holds a Bachelor of Arts Degree (honors) in Philosophy, Politics and Economics from Oxford University, a Master's Degree in Political
Sociology from Sorbonne-Paris I University and a Master's Degree in Public Policy from the Paris Institute of Political Studies (Sciences-Po). He is
also a graduate of the French National School for Administration (ENA) Executive Leadership Program. Renaud is on the faculty of the Harvard
Kennedy School of Governments Public Financial Management in a Changing World executive education course led by Matt Andrews. He is
also an Honorary Fellow, as well as a Council Member of the Chartered Institute of Public Finance Accountancy (United Kingdom).
BOOK REVIEW
Selection
131
132
Global Inequality: A New Approach for the Age of Globalization, by Branko Milanovic. Harvard University Press.
Global Inequality takes us back hundreds of years, and as far around the world as data allow, to show that inequality
moves in cycles, fueled by war and disease, technological disruption, access to education, and redistribution. The
recent surge of inequality in the West has been driven by the revolution in technology, just as the Industrial
Revolution drove inequality 150 years ago. But even as inequality has soared within nations, it has fallen dramatically
among nations, as middle-class incomes in China and India have drawn closer to the stagnating incomes of the middle
classes in the developed world. A more open migration policy would reduce global inequality even further.
Why Save the Bankers? And Other Essays on Our Economic and Political Crisis, by Thomas Piketty. Houghton Mifflin
Harcourt.
Why Save the Bankers? brings together selected columns, now translated and annotated, from the period bookended by the September 2008 collapse of Lehman Brothers and the Paris attacks of November 2015. In between,
writing from the vantage point of his native France, Piketty brilliantly decodes the European sovereign debt crisis, an
urgent struggle against the tyranny of markets that bears lessons for the world at large. And along the way, he weighs
in on oligarchy in the United States, wonders whether debts actually need to be paid back, and discovers surprising
lessons about inequality by examining the career of Steve Jobs.
The Only Game in Town: Central Bankers, Instability and Avoiding the Next Collapse, by Mohamed A. El-Erian,
Random House.
In The Only Game in Town, El-Erian casts his gaze toward the future of the global economy and markets, outlining the
choices we face both individually and collectively in an era of economic uncertainty and financial insecurity. Beginning
with their response to the 2008 global crisis, El-Erian explains how and why our central banks became the critical
policy actorsand, most important, why they cannot continue is this role alone. They saved the financial system from
collapse in 2008 and a multiyear economic depression, but lack the tools to enable a return to high inclusive growth
and durable financial stability. The time has come for a policy handoff, from a prolonged period of monetary policy
experimentation to a strategy that better targets what ails economies and distorts the financial sectorbefore we
stumble into another crisis.
Inequality: What Everyone Needs to Know, by James K. Galbraith
Inequality expert James K. Galbraith has compiled the latest economic research on inequality and explains his findings
in a way that everyone can understand. He offers a comprehensive introduction to the study of economic inequality,
including its philosophical and theoretical origins, the variety of concepts in wide use, empirical measures and their
advantages and disadvantages, competing modern theories of the causes and effects of rising inequality in the United
States and worldwide, and a range of policy measures.
133
The Morning They Came for Us: Dispatches from Syria, by Janine Di Giovanni. Liveright.
The Morning They Came for Us bears witness to one of the most brutal, internecine conflicts in recent history.
Drawing from years of experience covering Syria, di Giovanni gives a tour de force of war reportage, all told through
the perspective of ordinary peopleamong them a doctor, a nun, a musician, and a student. What emerges is an
extraordinary picture of the devastating human consequences of armed conflict, one that charts an apocalyptic but at
times tender story of life in a jihadist war zone.
Unfinished Revolutions: Yemen, Libya, and Tunisia after the Arab Spring, by Ibrahim Fraihat. Yale University Press.
Post-revolution states often find that once a transition process begins, challenges can arise, such as political
polarization and the threat of civil war. A respected commentator on Middle Eastern politics, Ibrahim Fraihat
compares three countries grappling with political transitions in the wake of the Arab Spring: Yemen, Libya, and
Tunisia. He argues that to attain enduring peace and stability, post-revolution states must engage in inclusive national
reconciliation processes which include a national dialogue, a truth seeking effort, the reparation of victims past
injuries, dealing with the former regime, and institutional reform. Women, civil society, and tribes, among other
social forces, can support the transition process. His research shows how some aspects of transitions have been
politicized and that each country has taken a specific approach, raising or diminishing the chances of civil war or a
healthy transition.
Uneven Odds, Unequal Outcomes: Inequality of Opportunity in the Arab Region, by Nandini Krishnan, Gabriel Lara
Ibarra , Ambar Narayan , Sailesh Tiwari, and Tara Vishwanath.
Perceptions of eroding living standards and low life satisfaction are widespread in the Middle East and North Africa
region today, along with pessimism about prospects for economic mobility. Conventional measures of economic wellbeing offer little in the way of explanation. In most countries in the region, extreme poverty is low and declining and
economic inequality is lower than in other parts of the world.
Circling the Square: Stories from the Egyptian Revolution, by Wendell Steavenson. Ecco.
Circling the Square is the extraordinary story of the recent Egyptian Revolution as experienced by Cairos citizens.
Steavenson takes us to the heart of the Revolution and paints indelible portraits of ordinary Egyptians grappling with
hope and change amid violence and bloodshed. He captures the cacophony of dizzying events as violence and
elections ebbed and flowed around the revolution, tipping it towards democracy and then back into the militarys
hands. Mixing reportage and memoir, anecdotes and incidents and conversations, he shows how the particular and
the personal can illuminate more universal questions: What does democracy mean and what happens when a
revolution throws everything up in the air?
The Reawakening of
the Arab World:
Challenge and
Change in the
Aftermath of the
Arab Spring, by
Samir Amin.
Monthly Review
Press.
Al Qaeda, the
Islamic State, and
the Global Jihadist
Movement: What
Everyone Needs to
Know, by Daniel
Byman. Oxford
University Press.
A History of the
Modern Middle
East: Rulers, Rebels,
and Rogues, by
Betty Anderson.
Stanford University
Press.
Egypt: Contested
Revolution, by Philip
Marfleet. Pluto
Press.
134
Thieves of State: Why Corruption Threatens Global Security, by Sarah Chayes. Norton.
The world is blowing up. Every day a new blaze seems to ignite: the bloody implosion of Iraq and Syria; the East-West
standoff in Ukraine; abducted schoolgirls in Nigeria. Is there some thread tying these frightening international
security crises together? In a riveting account that weaves history with fast-moving reportage and insider accounts
from the Afghanistan war, Sarah Chayes identifies the unexpected link: corruption.
Through deep archival research, Chayes reveals that canonical political thinkers such as John Locke and Machiavelli,
as well as the great medieval Islamic statesman Nizam al-Mulk, all named corruption as a threat to the realm. In a
thrilling argument connecting the Protestant Reformation to the Arab Spring, Thieves of State presents a powerful
new way to understand global extremism. And it makes a compelling case that we must confront corruption, for it is a
causenot a resultof global instability.
Public Access to Information for Development: A Guide to the Effective Implementation of Right to Information Laws
by Victoria L. Lemieux and Stephanie E. Trapnell, Directions in Development Series. World Bank.
With more than 100 right to information (RTI) laws (also called freedom of information or access to information laws)
now in place globally, there is a distinct need to ensure that laws are implemented effectively. This guide, published by
the World Bank in 2016, explores the historical development of RTI laws, the factors that drive passage and effective
implementation of these laws, the operation of the laws, and the impact of these laws in different country contexts
and sectors. Also included is a discussion of sequencing reforms and specific operational and monitoring issues within
the public sector. It is based on two years of research studying how RTI has been implemented in countries in different
regions and with varying income levels. The research aimed to develop a theoretical framework to identify the drivers
of effective implementation of RTI laws and to support the measurement of effective implementation.
IMF Staff Discussion Note - Corruption: Costs and Mitigating Strategies
In an environment in which growth and employment prospects in many countries remain subdued and a number of
high-profile corruption cases have fueled moral outrage, and amid a growing consensus that corruption can seriously
undermine a countrys ability to deliver inclusive economic growth in a number of different areas, addressing
corruption globallyin both developed and developing countrieshas become increasingly urgent. When corruption
impairs government functions, it can adversely affect a number of important determinants of economic performance,
including macrofinancial stability, investment, human capital accumulation, and total factor productivity.
Transformation Index BTI 2016:Political Management in International Comparison
Managing the peaceful transition of authoritarian states to democracy and a market-economic system represents a
tremendous challenge. Whether it comes to reconstituting the coherency of the state following armed conflict,
expanding participation rights and the rule of law in emerging democracies, overcoming corrupt structures, fighting
poverty and inequality, or establishing clear rules for stable market-economic competition, the requirements are
enormous, and the pressure on responsible leaders is intense. After all, the quality of political management makes an
essential contribution to the success or failure of transformation processes.
Comic Relief
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www.cvmena.org