Thursday, June 24, 2010
The World Bank Ghana Country Office’s Conference Room was the scene of lively discussions and startling revelations on Friday last week (18th June 2010).
It emerged in a fascinating exchange between senior officials of the Ministry of Finance (past and present) and the country program manager of the Bank, Katherine Bain, that considerable amounts of monies approved for various projects in the country were still sitting idly in various accounts at the Ministry, several months after they were earmarked for disbursement towards critical development projects.
What is worse, Ghana is paying huge amounts to consultants (ranging from more than $5,000 a month for Ghanaian consultants to $12,000 for expatriates) brought in to manage so-called “project implementation units”. In addition, the country is responsible for making interest payments to service the loan components of these underperforming projects.
There are projects, such as the Budget & Public Expenditure Management System, for which virtually no disbursements have been made since their approval a significant while ago. At one point in the discussion, senior officials of the Ministry of Finance disclosed that the disbursement rate of project loans have dropped from just under 30% through 12% and now hovered below 5%. Virtually no World Bank funded project in Ghana presently is really on track judging from the disbursement rate.
To understand this situation, it is important to distinguish between “projects” and “programs” in Bank parlance. The “programs” are essentially sector-wide policy initiatives delivered through the government of Ghana’s own budget process. They cover broad areas like education, energy, infrastructure, social and health, etc. “Projects”, on the other hand, are narrower undertakings (a water provision scheme here, an electricity access venture there) with tighter outcomes and may involve significant non-government actors.
A belief, not entirely unjustified, that the public sector, despite its control of over 10% of our GDP resources, lacks the management capacity to effectively implement these projects, has led to a culture where Ministries, Departments and Agencies advertise for expertise in the press for external managers to lead so-called “project implementation units”. Furthermore, to combat perceived high levels of corruption and other unethical practices, strict guidelines regarding project design, appraisal, execution, supervision and evaluation have been developed by the World Bank based on which consultants are expected to execute their responsibilities as implementation team leaders.
It would appear that these guidelines and the fervour in attracting external expertise notwithstanding, the execution of World Bank funded projects in this country continue to suffer severe setbacks. This is more worrisome considering that the World Bank is the acknowledged shining star amongst multilateral and bilateral donors in our part of the world.
A baffling insight that emerged in the half-day consultative workshop on June 18th was in a suggestion that the guidelines themselves and the reliance on external consultants to operationalise them may actually be major contributors to the problems of slow funds disbursement and severe project underperformance.
Most participants in the meeting, part of a series of consultations aimed at influencing the scope and direction of a new 3-year African strategy for the World Bank, who were not very familiar with the donor system and development industry generally found the state of affairs where the country, in such dire need for development projects, could expend time and resources to secure funds, hire so-called experts, and consent to interest payments, and then spend months doing nothing with the funds, even as they continued to make interest and other payments, as completely befuddling.
When told that the stringency of the procurement guidelines interfered with the ability of most project team members and leaders to actually execute the projects for which the funds were intended, they were divided between calls for such project managers to be sacked after a few months of demonstrated non-performance and suggestions that the entire procurement system should be re-designed.
After two hours of extensive brainstorming, the motley crowd of entrepreneurs, NGO leaders, top international diplomats, former Ministers of State, investment bankers, trade unionists, leading business executives, technocrats and intellectuals of all shades had come up with a whole range of ideas about improving how donor money can be better put to use, but serious issues still remained. And there were a great many other confusions inherent in Ghana’s (and by extension Africa’s) relationship with the World Bank as part of its wider quest to attain development that the consultative meeting had yet to touch on.
The discussions about funds disbursement in donor-funded projects formed part of the first session of the meeting, provocatively dubbed “Public sector vs. Private sector”. The other two sessions were entitled: “Regional Integration” and “Social Accountability”.
As you might imagine the juicy disclosures about public sector project inefficiencies led to participants spending a greater amount of their time and energy on session one than any of the others. But the sensationalism aside, this was also probably because prior consultations (on June 4th in Accra and June 7th in Abuja) had flagged this issue as central to the development question in Africa today, and most participants were therefore likely to have encountered the debate in one form or another prior to June 18th meeting.
Curiously though, the lead discussants seemed more eager debunking the suggestion that antagonism was the sentiment that most accurately characterised the public-private sector relationship in the minds of most observers than anything else.
More than one person felt obliged to put the issue as one of “determining the proper role for each of the two sectors in a synergistic partnership for development”, or phrases to the same effect. A revered ex-public sector finance Czar conceded that drawing the line between the “proper roles” of each sector was an activity fraught with intense debate and dispute across the globe. Did he have any clear insights, or at least rule of thumb, about how we may resolve the tensions that emanate from some of the overlaps in roles between the two sectors? He skirted around the issue in many fine words but seemed to settle on the notion that “governments shouldn’t be involved in commercial enterprises”.
The gathering was told that the Ministry of Finance had supervisory oversight over the Divestiture Implementation Committee. Senior Officials of that Ministry were thus especially clued up about the residual contention over whether the “state has any business being in business”. This former top-ranking manager of our country’s finances was completely adamant that profit-making ventures were, most of the time, no-go areas for government. “When I first confronted the Divestiture List, I was shocked by the sheer range of businesses governments in Ghana had saddled themselves with in the past – everything ranging from laundries to restaurants!” declaimed the former Czar.
Though the sentiment appeared to enjoy some support, a good number of participants were at the same time of the view that “public – private partnerships” were a good thing. Even the former finance bigshot thought so too. So what about profit-making public – private, partnerships? What about Ghana International Airways, STX-Ghana, GCB etc etc.?
This was the ghost that could not be exorcised in the session on public – private relationship management: role determination. Nearly everyone believed that the government had a duty to perform as far as “creating an enabling environment” for private sector enterprises to thrive was concerned, and no one disputed the fact that government conduct could often undermine the growth of private enterprises, and that it was regrettable that this was so. The confusion was about what all this means in practice.
For instance, a senior technocrat made the observation that the usual charge that the World Bank dealt exclusively with sovereign Governments and therefore provided little in the way of direct financial support to the private sector was false, since the bulk of monies handed to governments ended up with private sector contractors anyway. But there was a counterargument about the mode and mechanism by which such funds were eventually transmitted to the private sector being highly inefficient and fraught with administrative and transaction costs such that the value is diminished.
The above contention is an important one in the ongoing consultations about designing a new strategy for the World Bank – Africa relationship going forward. To fully appreciate the dispute it is important to note that when the moniker, “World Bank”, is used in this discussion we are usually referring to the International Bank for Reconstruction & Development (IBRD) and the International Development Association (IDA), the two “frontal” agencies of the “World Bank Group”, which has five agencies in all. The other 3 agencies usually have parallel activities and management structures at country level. They also have extensive dealings with the private sector in such areas as underwriting political risk through project insurance, helping solve investment disputes and making significant investments in large-scale projects with anticipated systemic impact.
While the World Bank – IDA+IBRD – gives grants to the non-government actors, they only provide loans, their main activity, to governments under sovereign guarantee. Their notion of “government” is narrowly defined as the executive branch, according to a senior bank official who was at the consultations. Therefore parliamentary and judicial actors are considered “civil society stakeholders” in this sense.
The question on the table therefore was whether this notion of an inter-sovereign framework for pushing development in host countries, as per the World Bank’s charter, was a sustainable one in today’s world of pluralism, where legitimacy is dispersed amongst a vast array of formal and informal institutions.
The World Bank is of course technically part of the UN system, having emerged in the same post World War II search for a stable global architecture. Like other UN agencies, it is an association of governments, who are its shareholders. And governments narrowly defined too. Governments are the members of its Board of Executive Directors (small countries like Ghana would usually be represented in groups by one of the 24 Executive Directors).
In that perspective, it can only lend to Governments. Yet, its goal is development, which all concede cannot be solely delivered by governments.
To dispel the notion of what seems like a congenital defect at the heart of the Bank’s character, a Senior Official in the World Bank’s Country Office in Nigeria responded, on videoconference call, that, in truth, in many of the countries where the Bank operates today in Africa it has only three real assets it can leverage: a bit of money (in Nigeria the World Bank contributes only about 1% of the country’s budget), access (to senior host government officials, that is) and global expertise (of staff members). This it could make available to the host country only with regard to spurring already ongoing activity. That the World Bank has stopped believing that it can “cause” development appeared to be what he was saying. It has a few assets that “may” be useful to countries in their own home-grown quests to attain development, but only to the extent that these local efforts are themselves sound and properly coordinated. Intriguing.
What about in countries, such as Sierra Leone, where it contributes close to 50% of the national budget? Odd case. Some analysts are already reporting that the African Development Bank’s lending program has outstripped that of the World Bank on the continent. Generally speaking therefore, while the Bank remains important and powerful, its greatest source of influence shall not for long remain the size of its purse.
So the gathering returned to the question: how may the World Bank’s work better complement Africa’s efforts towards accelerated development?
A respected technology entrepreneur invited to put the private sector’s perspective felt that a clear commitment to an “exit strategy” for the Bank shall help focus its operational mindset.
Not many people today recall that the World Bank’s first, and some say largest to-date, loan was to war-battered France. Today, the Bank, though certainly not the IMF, has nearly no significant activities in North America and Europe. Development has become a euphemism for “poverty nursing” and the World Bank has gradually become associated with a “losers club” mentality.
Can this change? Can the Bank come to be seen as an Investment Driver and Knowledge Repository in an Africa much more buoyed by an agenda of wealth creation rather than a mission of poverty mitigation? And there are many who say that it is really “poverty subsidisation”, so that no matter how vigorously the Bank’s existing strategy is renewed, little will change should the Bank’s key mechanism for its work on the continent remain the depressingly named: “Poverty Reduction Strategies”.
Even the MDGs inspire ambivalence at best. While the framework is highly favoured by development industry elites, the mood at the June 18th consultations clearly demonstrated that the vast majority of actors and stakeholders in Ghana have no psychic bond to the MDG system. There is low awareness, limited interest and non-existent enthusiasm among the majority of people outside the small priesthood of development technocrats for the revered checklist. Simply put the MDGs may be attained without recourse to the MDGs. Yet the existing Africa Action Plan (AAP) which the June 18th consultations and those prior to it were meant to renew is anchored to the MDGs framework. Is that another sign of the World Bank being too confined to its Ivory tower, and only venturing out via the airbridge that leads to the cloisters of other narrow technocratic edifices in the countries where it works?
There was no doubt amongst participants at the consultative meeting that the new AAP is doomed to insignificance if it does not, upon outdooring, represent a significant break with the past on the crucial issue of public – private sector relationship.
A businessman lamented that so long as tax-money wasn’t by far the main source of income for the government he would lose in the competition for the attention of public sector officials and senior politicians to donor agencies like the Bank.
The senior technocrat referred to earlier lamented the lack of real commitment to upgrading capacity in the public sector while sustaining it by rational remuneration. She was of the view that consultants shall continue to flounder because the present system was fundamentally flawed. “You can’t go and bring a consultant and pay them 10 times what the people they come to meet who knows the ins and outs of the situation earn, and expect the outcome to be team harmony and project success” said she. “Every time the World Bank pays us a visit they are moaning about the number of people in the public sector and demanding a reduction. Those who remain to do the extra work, are we going to pay them motivational wages?”
But the Bank had its own uncharitable observations too. A Senior Official at the Country Office placed on record that because of the continued insistence of the government of Ghana, more than 60% of task team leaders were now based locally rather than in Washington, and delays in requisite clearances needed for various project actions have declined as a result. She was of the view that harmonisation and synchronisation problems plagued the different levels of government itself much more than they afflicted the Bank – Country relationship.
She cited instances of local and municipal authorities working at cross-purposes with central government and lacking the wherewithal to manage the development decentralisation process. Grants meant for civil society and private actors were still gathering dust at the Ministry of Finance because these non-state actors are unable to meet the requirements for access, nor is anyone making any effort to ensure that things change. The most egregious part of the whole affair was of course the inability of central government itself to execute when and where it matters.
A respected political scientist who has had significant exposure to Bank – Government activity corroborated this point. He cited a project under the Ministry of Trade’s Micro, Small & Medium Scale Enterprises Program with regard to which commitment fees had been paid by the government but not a single dollar has been disbursed in 4 years. He wasn’t surprised that public sector performance was such a mess considering that even the data upon which development activity was supposed to run lacked all integrity. Apparently the system of national accounts hasn’t been comprehensively reviewed for 3 decades.
But isn’t this why the mantra of Public Sector Reform became the principal tune of latter-day government in Ghana? A very senior politician who had fought in the thick of public sector reform believed “technology” was central to the remedying of the whole debacle. What happened to e-Ghana, someone asked. I run my business on a shoestring budget yet maintain a website and respond to email enquires so surely a whole government Ministry should be able to manage such basic technologies without insisting on perennial multi-million dollar budget allocations as a pre-condition, said another. The top politician said something about “promoting a culture” that insisted on results.
The high-ranking former Finance Czar added that “capacity was available in sufficient quantities in this country just inefficiently and inequitably distributed”. Then he broadened the subject to encompass the consistency of reform itself. Apparently he had once happily relied on the demands of one World Bank – promoted reform program – the Financial Sector Reform Program – which called for the deepening of the financial sector through, amongst other measures, the promotion of capital markets, to scuttle another suggestion by the Bank: that the 3 main State-owned banks be privatised by divestiture through a strategic investor. This, we were told, is the true history of how the Ghana Commercial Bank came to find itself on the Ghana Stock Exchange.
The point was of course to establish that the manner in which reform was executed mattered as much as the content of reform. To assert his reformist credentials, the former Czar recounted another story –this time about Continental Hotel – which while in government’s hands was so run down government had to commandeer a wing and refurbish it, with fresh curtains, linens and towels, before the hotel could receive important state guests. Now privatised, the same hotel strives to match global standards, and pays so much in VAT that government would be compensated many times over even if no dividends are declared for the entire life of the investment. In sum, then, the issue is “implementation”.
We had come full circle to where we begun. And now we had to direct our attention to the issue of “regional integration”, the next item on the 3-point agenda. This is a curious area for the Bank to be concerned with, said a renowned academic with a lot of experience in international – particularly regional – diplomacy. No wonder, the Bank has rarely dabbled in the matter. After all, how exactly can it relate to supranational bodies like the AU and ECOWAS, when its charter largely restricted its relations to sovereign governments, which are fundamentally national in scope?
And yet everyone agrees that regional integration was certainly a fundamental component of national development in our African circumstances. Many private sector actors, at least those present during the consultations, were convinced that trans-border infrastructure and the inter-country investment climate were key to any progress.
The Civil Society activists in the room felt, on the other hand, that a people-centred approach was the better rendition of the subject. One lady from this group made the point that the majority of those in the trenches of “market integration” at the transborder level were youth and women engaged in SME trading activity in such basic agribusiness commodities as palm oil and gari. Without a focus on the development of the capacity of such people, including improving their access to capital, all the fanciful notions of regional integration will fail.
The former finance Czar however recounted an anecdote to show that “political will” cannot be discounted. The matter involved one of the multinational-owned manufacturing companies in Ghana. They had sent a batch of their products to Nigeria to feed growing demand there. Unfortunately, after a month or so of trying to clear the goods the consignee had made no headway. So the company petitioned the government of Ghana. The apparent obstacle was a request by the Nigerian port authorities for a particular official document from some obscure agency in Abuja. One month of intense searching had failed to establish the location of this agency. Eventually the President of Ghana had to call the President of Nigeria. Only then did it emerge that said agency was a phantom conjured up by the Nigerian Chamber of Commerce to thwart foreign entrants into a number of lucrative sectors of the country’s economy.
Quite clearly, protocols and treaties are of limited utility in the face of such anti-integration forces. How may the Bank be useful if local actors are unclear about the risks and incentives of integration? A senior civil servant present at the meeting felt however that the protocols and treaties shall be much more useful to the integration process if wider constituencies had a stake in them. The situation where government ministers and heads of state travel over to Abuja and Addis Ababa to sign documents, collect per diem, and religiously neglect to sensitise their citizens about the contents of such political instruments was clearly unhelpful to objective of “carrying the citizenry along”. Indeed, in some instances, political leaders only become aware of entrenched hostile interests in their own countries after they had consented to such agreements. Implementation then becomes a nightmare, and noble ideas are quietly shelved.
Nevertheless, some felt that radical liberalisation shall create its own momentum and carry people along. “Scrap the boarders for just six months as a pilot project – no border-guards, no immigration officers, except in observation mode, just complete, total, freedom of passage,” a top consultant who has had several stints as an entrepreneur challenged African politicians. “And I bet you that trade shall explode ten-fold and criminal activity won’t increase! The folks at the border currently, they let in all the criminals and focus on inconveniencing the honest folk”.
As the discussions took this turn, of participants making bold recommendations that required, foremost, a reform of worldview rather than “institutions”, and the complex and unavoidable bureaucracy the latter entailed, one couldn’t help the feeling that there was a tacit recognition of the gross limitations of the World Bank’s effectiveness in our affairs. Indeed, by the time the gathering reached the session on Social Accountability, and jumped into the fray of how standards for Civil Society Organisations may be promoted and enforced (so that “the watchmen can be watched”), the unstated but palpable feeling was that we as Africans and Ghanaians were the alpha and omega of our development. Institutions like the World Bank can only be incidental.
In the vast majority of cases, when one delves into the deeper structure of our development problems as a society, there is absolutely no evidence that the competence and the capacity of the Bank, especially given how it has been up to function, are anywhere suited to playing a major role in the complex redesign efforts that appear to be needed to substantially transform the fortunes of the continent or our nation, for that matter. It seemed though that once we as a country and a continent were well on our way towards development, the Bank’s resources could provide a supplementary impetus, similar to the effect of reconstruction aid to Western Europe in the middle of the last century.
Seeing that we are, as a continental and national society, quite a distance from “being on our way” to this blissful destination, it seemed to us, as we observed the gathering, that the time could just as well have been spent figuring out ways to prevent the World Bank from adding to our pile of excuses for not setting off.
Franklin Cudjoe, Bright B. Simons and Kofi Bentil are affiliated with IMANI-Ghana and AfricanLiberty.org