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p. 8 of 13 BACK | NEXT I. Introduction II. ADB's Governance Policy III. Implementation of ADB's Governance Policy 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)

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IV. Lessons Learned

ADB has learned several important lessons from the implementation of projects with governance objectives, reviews of ongoing projects, and special evaluation studies by the Operations Evaluations Office³⁵. Evaluations of earlier capacity building and governance interventions also provide useful information.

A. Accounting for DMCs' Political Realities

74. Reform of the public sector may require measures that have negative social impacts in the short term (e.g., dealing with overstaffing, privatizing SOEs, or reducing service levels) before long-term benefits can be realized. In a democracy, even where there is a champion for a set of proposed reforms, the political costs of public sector reform need to be addressed through effective planning and public relations. However, reluctant officials should not be allowed to use the political difficulty of these reforms as an excuse for inaction.

75. Governance reforms can provoke political sensitivity even when their social impact is not necessarily negative. Some issues, for example, official secrecy and freedom of information, unproductive expenditure, and money laundering, must be addressed decisively, while avoiding unnecessary confrontation.

B. Making Reform Programs Realistic

76. In developing reform programs, attention needs to be paid to the implementation capacity of the country and, where possible, efforts should be devoted to enhance that capacity. Setting overambitious targets should be avoided because it can stretch the capabilities of the public officials and the public sector machinery, and cause disruptions in the smooth functioning of the government or result in compromised quality of output. On the other hand, targets that are not ambitious enough can lower the quality or delay the results of reforms and lead to public disillusionment. Therefore, in designing reform measures, staff should base their reform recommendations on a thorough assessment and study of needs and available capacity.

C. Improving Governance Requires Commitment

The greater the commitment of a country's leadership to governance reform, the more likely it is that reforms will take root. Where commitment is absent, ADB's best response is to strengthen and reinforce constituencies for reform and maintain policy dialogue. Only when there is a critical mass of support for reform will ADB's financial support bear fruit. More than any other form of policy reform, governance reforms require shared commitments across the political spectrum, including the opposition and the individual parliamentarians. However, at times, lack of commitment results from a lack of awareness about the issues, rather than an unwillingness to address them. Therefore, efforts at raising awareness can have an important role in strengthening commitment.

D. Improving Governance Systems Requires Resources

Public sector reform involves a complex set of activities. Momentum, once gained, needs to be sustained. Because agencies have only a limited number of competent staff, these are usually assigned to areas critical to day-to-day operations. Governments find it difficult to release staff from short-term crisis management to areas where benefits are slow to materialize. In the absence of competent local staff assigned full time to the process, reforms will suffer. Where management cadres are weak, great emphasis needs to be directed at building capacity.

E. Importing Recommended Practices Should Be Done Cautiously

79. Policy reforms and technical improvements in the functions of the government, even when proven to be successful in one environment, should not be blindly duplicated in another. For example, budgetary practices requiring trained accountants and a culture of absence of corruption cannot be directly introduced in financial environments where there are few trained accountants, embedded traditions of corruption, and the government has difficulty even managing expenditures on an input basis. In a similar vein, enhancing business transactions between the public and private sectors (outsourcing public activities, and partial privatization of SOEs and public utilities) should be followed cautiously when principles of avoiding conflict of interest are unknown or new to the public officials.

Several variables act as constraints in such cases. Organizational culture, management style, staff and systems' capacities, internal processes, and external linkages all require careful analysis before embarking on radical redesign of an operating environment. A number of ADB studies have stressed the importance of prior diagnostic analysis. Effective reform also requires careful, incremental sequencing of steps.

F. Capacity Building Requires Broad-Based Interventions

81. Effective capacity building requires more than training and introduction of information technology systems. The general government environment affects the capacity of an agency to perform and is often a significant barrier to change at the agency level. Hence, a diagnostic study needs to extend beyond the confines of a particular agency. Interventions must also address the total system from an agency perspective, if they are to be effective.

G. Collating Governance Experience

82. ADB's studies of capacity building have found little systematic collation of material, partly because staff time is fully committed elsewhere. Development of databases on governance and institutional environments of the DMCs needs to be incorporated into the business process. Additionally, the impact of individual reform programs must be monitored more systematically. ADB has increased the use of project performance monitoring systems to develop the indicators needed for monitoring progress under each program and the impact of reforms. This increased attention to monitoring of impacts and outputs is a basic change in ADB's focus, away from an input-based approach to one based on outcomes achieved.

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