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p. 5 of 13 BACK | NEXT I. Introduction II. ADB's Governance Policy III. Implementation of ADB's Governance Policy A. ADB's Governance Activities B. Assessing the Impact on the Four Elements of Good Governance C. Addressing Governance Issues-ADB's Instruments D. Developing ADB's Capacity to Address Governance Issues IV. Lessons Learned V. Medium-Term Governance Agenda and Action Plan 2000-2004 VI. Conclusions and Recommendations

Promoting Good Governance: ADB's Medium-Term Agenda and Action Plan (2000) : III. Implementation of ADB's Governance Policy

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B. Assessing the Impact on the Four Elements of Good Governance

52. Impacts of ADB's governance reform interventions are seldom restricted to one area. For example, greater public participation in development processes can lead to improved accountability and transparency, and improved regulatory frameworks, which require better systems of accountability and transparency, can lead to greater public participation in decisions that affect them. Hence, it is not easy to accurately assess the contribution of ADB's governance initiatives to each of the four constituent elements. Nevertheless, an attempt to do so may be instructive.

53. A preliminary observation is that ADB's efforts and the efforts of other aid agencies have prepared the ground for better governance where it has been weak. In most DMCs, the situation has improved in terms of actions taken; however, change in attitudes and behavior of officials proceeds more slowly.

1. Accountability

54. For ADB, accountability is the imperative to make public officials (i) answerable for their performance and behavior, and (ii) subject to the institution from which they derive their authority. What ADB is directly concerned with is executive accountability. This has been addressed through projects that aim to

1. (i) improve budget and expenditure management by focusing on agreed outputs and their consequence, better performance management;
2. (ii) make delivery of public services more responsive to customers (reforms at the local government level have focused on benchmarking and relating performance indicators to customer satisfaction); and
3. (iii) strengthen the capacity of supreme audit institutions and encourage prompt action by the executive branch of the government on audit findings and recommendations by supreme audit institutions; the next stage is to extend this work to the review bodies (e.g., public accounts committees, as is envisaged in Sri Lanka) to help them review individual agency responsibility.

55. ADB has had some success in improving formats, such as the budget processes. Using the budget as a performance management tool, however, has been less successful. A major constraint is often the quality of accounting staff and their capacity to relate, for managers, the link between expenditure and output. Audit improvements have tended to be in compliance and not in effectiveness. Also, there is still a long way to go in relating public sector performance to customer needs, improving public service productivity, and introducing appropriate incentives and sanctions.

2. Participation

56. For ADB, the principle of participation is derived from the fact that people are not only the ultimate beneficiaries of development, but also agents of development. Participation has been promoted through

1. involvement of beneficiaries and affected groups in design and implementation of public programs and projects,
2. decentralization and empowerment of local governments, and
3. cooperation with NGOs.

57. ADB has sought to integrate participation into its operations by establishing a framework to formalize participation at two levels: (i) establishing civil society forums of advice and review, and (ii) ensuring that beneficiaries have a central role in the design of projects. Staff instructions issued by ADB's President (and later disseminated to the public) demonstrate how participatory development processes fit into ADB's business practices, to instill a wider sense of ownership in the development activities that ADB supports. The introduction of such processes into ADB operations will lead to their being absorbed by governments in development management generally at the project, sector, and national levels.

58. Significant strides have been taken to ensure participation in ADB-supported projects. There is now

1. much more participation of stakeholders in project design and implementation; and
2. greater involvement of NGOs in project design and implementation²⁹.

59. However, the extent to which such participatory processes have spread to other (non-ADB-funded) operations of executing agencies, and to other public service providers, is not known. A key test would be customer surveys assessing the satisfaction level of local populations.

60. Strengthening civil society and improving parliamentary processes, however, are more difficult. Both are often deeply embedded in tradition and ADB can do little more than add its voice to others through the policy dialogue. ADB has a greater opportunity of influencing civil society in small DMCs than in large ones. In small DMCs like the Cook Islands and other Pacific DMCs, ADB has successfully promoted forums for representatives of different sectors of society to discuss the reform programs to be introduced to address the economic crises faced by them.

Predictability

61. Predictability refers to the existence of laws, regulations, policies, and procedures with which to regulate society and govern certain kinds of government action; and their fair and consistent application. ADB has promoted this principle by

1. assisting DMCs to develop their legal systems, including commercial law in transition economies;
2. developing and training the professional groups needed to make legal systems work effectively;
3. strengthening regulatory frameworks that govern infrastructure and public service providers (e.g., energy and telecommunications), capital markets, and the natural environment; and
4. supporting access to legal information and increasing legal literacy in the DMCs, and improving the quality of the judicial process by training judges and magistrates.

62. ADB has done substantial work in the field of law and policy reform. It will continue to be a major focus of efforts to improve governance quality in the DMCs. However, putting laws and regulations in place is one thing and having them applied and enforced in practice is another.

3. Transparency

63. Transparency concerns the disclosure of information regarding government rules, regulations, and decisions. It enables interested parties to assure themselves that official processes and procedures have been followed in a predictable way to a fair conclusion.

64. Government procurement is an area where transparency is particularly important. ADB ensures that ADB-financed procurement is undertaken in an open, fair, and competitive environment. Accordingly, ADB has

1. encouraged competition through post- rather than prequalification criteria,
2. provided TA to several DMCs to improve laws and accounting procedures relating to procurement,
3. provided training in newly introduced procurement procedures,
4. helped some DMCs improve the capacity of their tender boards, and
5. encouraged third party monitoring of ADB investment projects through international and local NGOs.

65. Aside from the focus on public procurement and anticorruption, ADB has made modest efforts in directly targeting transparency. As part of ADB's ongoing dialogue with the Government of Pakistan for judicial and legal reforms, ADB canvassed the need for a freedom of information law. As a result, the Government of Pakistan recently issued the Freedom of Information Bill for comments by the public. Similarly, the need for a freedom of information law has also been included in ADB's dialogue with the Government of Nepal in the context of civil service reform. In its ongoing work on governance, ADB will increasingly address broader issues of freedom of information and transparency in government decision-making and public policy implementation.

66. In terms of the four elements of good governance, therefore, ADB can claim some successes. Certainly, the groundwork has been laid, and basic ground rules for improved governance have been established in many DMCs. Intensive dialogue is under way in most areas, and champions of change are more easily found than before. However, this phase is not an end, but a means to the more difficult process of changing attitudes and behavior which, admittedly, proceeds much more slowly. The pace of change will depend largely on the appreciation by DMC leaders of the benefits of better governance and their support for the incentives required to bring about necessary improvements.

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