Wednesday, 27 November 2013

Political will – does anyone actually know what it is? A development practitioner takes time out to investigate

by Camilla Lindstrom

I recently joined IDS to undertake a PhD which will investigate political will to pro-poor development in the Democratic Republic of Congo and Rwanda. With a background working for the Swedish international development cooperation agency Sida and the UN system, you may wonder why a practitioner like myself is investing all this time and effort into such an academic exercise as undertaking a PhD.

But to me it represents a great opportunity to reflect on real and pressing problems that I have encountered during my working life and which I never got the chance to explore in-depth while working in the ‘development industry’.

Political systems seem unrelated to political elites’ willingness to improve the situation in their countries

Having worked and lived in countries as varied as Lao PDR, one of the world’s few remaining one-party communist countries, Zambia and the conflict-ridden Democratic Republic of Congo (DRC), I have often reflected upon the political will of the elites.

Why is it that some countries, irrespective of whether they are democracies or not, seem to have the political will to improve the situation in their countries whilst others don’t? What are the factors behind it? Is it the elite’s view of the poor? Does it have something to do with how strong the civil society is in a given country or does it have something to do with the institutions and the political set-up?

It was the lack of political will (or the elusive political will)...

To my surprise there was not much research looking into the concept of political will, even though it is constantly mentioned in the literature by academics and donors alike. I myself have lost count of the number of times I have used this concept to explain to colleagues and superiors back at Headquarters why a certain reform process was not moving forward or why a project had not produced the desired results.

Unfortunately most donors seldom look deeper into the reasons behind this perceived lack of political will, and as a consequence avoid getting involved in the political issues. It feels safer to focus on technical solutions to political problems, but by doing so donors miss an important opportunity to constructively engage with recipient governments.

There are some exceptions though: One researcher that has made a substantial contribution towards a better understanding of the concept is Derick Brinkerhoff who has examined the role of political will in relation to anti-corruption reforms, and who has also written a paper where he is untangling ownership and political will in fragile states. The research programme ‘Elites, Production and Poverty’ has also done interesting work on the political will of states to support the development of productive sectors. But in general the literature is consciously vague and political will has been referred to the sina qua non of policy success while never being defined except by its absence (see for example Post et al. in ‘defining political will’).

DRC and Rwanda – perfectly contrasting cases in the narrative of development

But now, at last, I have the chance to explore the concept in-depth, and will hopefully make my own contribution to this paucity of research.

I have decided to focus my research on the DRC and Rwanda as these will provide me with two contrasting case studies. Both countries have had a troubled past (and present!), with colonolisation followed by recurrent violent conflict post-independence. However, while one is praised for the will of its leaders to reduce poverty over the past two decades and is sometimes referred to as a development patrimonialism state (see for example the African Power and Politics Programme), the other is constantly blamed for lacking the necessary political will to do so, and finds itself at the bottom of UNDP’s Human Development Index year after year.

Theoretically, this study will provide an original contribution to the concept of political will and hopefully enhance our understanding of key factors that are creating incentives, as well as disincentives for the political elite to undertake pro-poor reforms. I also hope that it will help donors and practitioners to reflect more critically on the concept of political will, thereby having a better chance of improving the politics of poverty reduction.


Thursday, 10 October 2013

Wanted Worldwide: Sensible Property Taxes, and a Property Tax Champion

By Mick Moore 

What are property taxes? Broadly, they are taxes on the ownership, occupation or legal transfer of land and buildings. They take many forms, and go under many different names.

The most familiar are regular annual charges payable by the owners or occupiers of urban residential or commercial premises. In Britain we call this the Council Tax. Some governments levy taxes on the legal change of property ownership: in Britain these are termed stamp duties. A few national and big-city governments practice what were once known in Britain as betterment levies: they increase property tax charges in localities where large public investments in infrastructure – like new shopping malls, improved transport links – increase the value of nearby residential or commercial premises.

In virtually all property tax systems, charges are calibrated according to some measure of the value of individual properties – and often according to other criteria also, including, for example, how many people live there, whether the owner is a widow, a pensioner or a war veteran, or whether the property is rented out or used for commercial purposes.

Viewed from close up, property taxes are diverse and complex. However, a bird’s eye view leads us to two clear and simple conclusions: they are good taxes; and they are under-used. That case is very well made in the most thorough recent review of the British tax system – the 2011 Mirrlees Review produced by the Institute of Fiscal Studies

Why are property taxes good?

  • They distort patterns of economic activity less than virtually all alternative major sources of tax revenue. Property is not mobile, and so cannot be moved around just to avoid tax. Taxing the occupation or ownership of land, houses or buildings generally has positive incentive effects. It encourages people to make the best use of those scarce resources, and not simply to accumulate them.
  • Unlike most other taxes, the main burdens fall on more wealthy people.
  • They are difficult to evade. Unlike many other assets, land and property cannot easily be hidden from any modestly competent tax authority.
  • Almost worldwide, they are the main single actual or potential revenue source for sub-national governments. In historical and comparative perspective, sub-national governments in most of contemporary Africa and Asia – and to a lesser extent Latin America – are grossly under-powered and under-funded. A revival of property tax revenues would almost inevitably signal a resurgence of district, provincial, municipal and metropolitan governments.

Why are property taxes under-used?

Property taxes account for about 2% of GDP in OECD countries, less than 0.7% in developing and transitional economies, and for derisory sums in many low income countries(i). Why so low? And why especially low in low income countries? The answer certainly does not lie in any lack of expertise, research or literature on the subject. We have plenty of all three. Neither does it lie in lack of technology. Digital technologies in general, and GPS (global positioning systems) in particular, recently have made it much easier to locate and record properties and maintain and update property registers.

The most obvious reason for low property taxes is that they are especially likely to stimulate political opposition, in two ways:
  1. Because property taxes are almost always controlled by urban, local or district governments, local elites are especially well-placed to oppose them – notably by resisting the increased assessments needed to compensate for inflation and by delaying revaluations of properties.
  2. Most of the tax burdens borne by ordinary people do not require them directly to hand money over to a tax agency. They ‘pay’ the taxes in the sense that taxes reduce their spending power. But someone else actually transmits the money to the tax collector on their behalf. Most personal income and social security taxes are deducted from salary cheques and channelled to government by employers; sales and value added taxes are collected mainly by wholesalers and retailers; excise taxes on alcohol, tobacco or fuel are paid to government by producers, importers or wholesalers; and import duties are collected from importers. Property taxes are an exception: taxpayers need either to hand over the cash in quarterly or annual instalments, or make arrangements for their bank to do so. Property taxes are thus very visible. They irritate and upset people even when the sums of money involved are small.
But I don’t think political resistance is the whole story.

There is another side to the same coin, especially relevant to developing countries: property taxes have no powerful institutional champions. The international agencies (IMF, World Bank, OECD) and the aid agencies that have contributed to effective national level tax reform in many developing countries (as I've discussed in an IDS Working Paper) have barely touched sub-national/property taxes, for understandable reasons. These issues are largely beyond their reach. National level politicians typically are not enthusiastic about helping sub-national governments to a larger share of fiscal resources. And sub-national governments, lacking a good revenue base in property taxes, are generally too weak to champion their own cause. They tend rather to put their energies into trying to obtain larger financial transfers from higher levels of government.

There are success stories about property tax reform in developing countries (see for example, M. Govinda Rao’s account from India). But they are scattered and local. The people directly involved have few ways of communicating with their peers in other provinces or countries. Success does not easily spread and cumulate.

Contrast this with the world of the national and international tax specialists. Here we find a global ‘epistemic community’ of accountants, economists, lawyers, and tax administrators who work in the IMF, the OECD, consultancy companies, transnational auditing and professional services firms (e.g. the Big 4), associations of tax professionals, national tax administrations and ministries of finance. Members of this community meet and communicate with one another frequently, and mainly in English, French or Spanish. Ideas are tested and experiences exchanged. Success travels.  

Property taxes need more institutional champions, nationally, regionally and globally. But what would these champions look like, and who will create them?

(i) Bahl, R., and J. Martinez-Vasquez. 2008. The Determinants of Revenue Performance. In Making the PropertyTax Work. Experiences in Developing and Transitional Countries, edited by R. Bahl, J. Martinez-Vasquez and J. Youngman. Cambridge MA: Lincoln Institute of Land Policy.

Mick Moore is a Professorial Research Fellow at the Institute of Development Studies and Chief Executive Officer of the International Centre for Tax and Development.

Previous blogs on tax policy by the same author include:

Monday, 7 October 2013

Inconvenient truths for Kenya after Westgate attack

By Jeremy Lind 

Two weeks after Al-Shabaab militants murdered over 60 shoppers and diners and laid waste to one of Nairobi’s smartest malls, a reckoning has begun: how could an attack of such ferocious brutality happen in the heart of one of the city’s wealthiest enclaves? Could it happen again and, if so, how can an attack of a similar magnitude be prevented? And what does the Westgate massacre say about the state and condition of Kenya as a nation and people?

With the fate of 39 missing civilians as well as the number, fate and identity of the militants still unknown, these are the questions Kenyans have begun asking each other as well as the country’s divided political establishment. The search for answers will expose a number of inconvenient truths.

Violence and insecurity deeply imprinted in contemporary Kenyan life

The first of these is that violence and insecurity are deeply imprinted in contemporary Kenyan life. Even before the Westgate attack, a number of conflicts and low-level violence were bubbling away at the margins. In recent years militants have attacked churches, bars, bus stations, and police posts in Nairobi, Mombasa, Garissa, Mandera among other towns and cities. Authorities were uncertain and feeble in responding to the violence, even as it encroached further and further into the country and claimed many lives.

Yusuf Hasan, MP for Nairobi’s Kamukunji constituency, told the Guardian, "In the past two years, there have been 11 bomb attacks in my constituency. Yet there have been no arrests, and not one single person brought to court. What does that tell you about the state of the investigations? The government told us it was al-Shabaab and that that was the end of the story. It's not good enough."

All the while, across the border in Somalia Al Shabaab was honing its capacities to execute sophisticated attacks. This year it has launched several devastating assaults, including on the UNDP compound in Mogadishu in June that killed 15.

While attacks by militants have rocked many cities, violence has continued to flare in Kenya’s north. Devolution under its new constitution was meant to devolve decision-making and resources leading to improved accountability, as well spreading development funds more equitably between the country’s agrarian, highland core and the long marginalised dryland areas.

It is still too early to tell if Kenya’s devolution experiment will be a success. So far, there has been uneven progress, with genuine innovation and dynamic leadership by governors in some counties. However, ethnic and clan fault-lines old and new have opened up in many places, leading to clashes and displacement. Hundreds are feared to have been killed in recent months.

Violence often pays in Kenya's broken political system

A second inconvenient truth is that violence is as an effective technique and strategy to advance discrete political and economic interests in Kenya. Close and even casual observers of Kenya’s politics will recognise the simple reality that violence pays in Kenya’s broken political system. But how can this system reform itself when it harbours and provides sanctuary to people whose very position has been secured in part through violence?

Some openly speculate that the Westgate attacks may in fact provide leverage to a campaign to dismiss the cases of Kenya’s President Uhuru Kenyatta and Vice President William Ruto before the International Criminal Court. The dismaying revelation of widespread looting of Westgate’s luxury shops during the rescue operation by Kenyan Defence Forces to free hostages gives the impression of indiscipline and corruption run amok in Kenya’s military institutions. It has been pointed out that the same structures that allow a customs inspector at the port or a border official or a policeman looking at a truck of goods on the highway to turn a blind eye for a bribe are the structures that terrorists exploit to their advantage.

The Kenyan journalist Bertha Kang'ong'oi wrote, “Westgate exposed our shame. It was the most visible display of the country's failed systems, which have been allowed or tolerated for too long.” The structures that permit ivory poaching, car hijacking, organised crime, tax evasion, and the siphoning of funds are the same ones the Westgate militants used to stash a weapons cache in a shop in the mall before the attack, to collude with a shop employee, and to otherwise form partnerships to carry out such a complex attack in the middle of Nairobi. Any meaningful plan to strengthen security needs to get to grips with Kenya’s culture of violence and impunity more widely.

Strengthening security in Kenya will require more than tinkering at the edges

In the immediate aftermath of the Westgate attack, the world’s attention and that of many Kenyans focused on Al Shabaab and international terrorism more broadly. As the days passed, Kenyans increasingly looked at themselves for answers on how the attack could have happened. As questions mounted, President Kenyatta launched a Commission of Inquiry, which has been met with some cynicism. Some wonder whether the attack will give impetus to reform the country’s security architecture and culture, something advocated by members of the National Assembly.

Yet, the problem runs deeper.

Strengthening security in Kenya will require more than tinkering at the edges of its security and intelligence structures, or expanding military operations in Somalia. Kenya’s military involvement in the African Union Mission in Somalia, ostensibly to create a buffer between Kenya and violence-plagued southern Somalia, has failed to prevent terrorist attacks in Nairobi and elsewhere.

Kenya’s political leaders should also resist the urge to rush through further anti-terrorism laws, or resort to punitive policing of its Muslim populations. Effective security requires getting the basic functions of government to work better for all Kenyans, not just its embattled political establishment. The Westgate attack has touched the very top of Kenyan society. Let us hope they will act in ways that meaningfully improve security not only for Nairobi’s well-heeled but also a wider citizenry terrorised by extremist violence and spreading conflict.

Jeremy Lind is a Research Fellow at the Institute of Development Studies, and has worked for over 10 years on both conflict and Kenya.

Thursday, 19 September 2013

Do you want to know how to design an impact evaluation of a development intervention?

by Edoardo Masset

Following the success of the first offering of the Impact Evaluation Design Course at the Institute of Development Studies, I am delighted to announce that we will run the course again this year from 31 March to 4 April 2014. Joining me will be Professor Robert Chambers (IDS), Dee Jupp and Dr Jean-Pierre Tranchant (IDS).

My experience and expertise

I have worked on the evaluation of development programmes over the last 10 years and I have witnessed, and happily joined, the emergence of the movement towards the use of evidence-based policy making in international development.  I have designed and conducted a number of impact evaluations in different countries and fields and I have employed a wide range of methods. My expertise is mostly quantitative and my colleagues Robert and Dee will bring the needed expertise in qualitative methods.

What the course will cover

The focus is on how to design a rigorous impact evaluation in a developing country. This includes things like theory of change, experiments and quasi-experiments, and sampling. In addition, my colleagues will illustrate the use of old and new qualitative evaluation methods such as reality checks. The goal is to design an evaluation that incorporates the best of qualitative and quantitative research and possibly integrating them.


Group work enables participants to learn from one another

Teaching experience suggests that students don’t learn what the teacher says but what they do. When you learn how to draw or how to drive a car, you surely need some classes by some expert, but ultimately what you need is practice, practice and more practice. Impact evaluation is not different. A key aspect of this course is group work and an enquiry-based learning style. Participants will form working groups and will identify a policy relevant issue and a specific public intervention to evaluate.

Working in groups is a great way to learn from your fellow practitioners as well as applying what you will learn around how to build the components of a full evaluation design. The idea is to and construct a design document during these practical sessions by applying the information learned in class. The teaching team will facilitate the group work and will provide individual feed-back on the evaluation designs using standards of assessment by organisations such as the World Bank, DFID and 3ie.

Previous participants’ comments

“It has been a very enjoyable and well organised week!”

“It's a very useful and practical course.” 

“Inspiring teaching, enabling knowledge building through lectures, learning-by-doing and group interactions. I really enjoyed it”

“The combination of lecture, discussion, Q&A and group work were particularly useful and helpful.”

So if you’re interested in learning more about Impact Evaluation design why not take a look at our web page and find out more about this course.

Finally, we are glad to announce that 3ie is willing to offer three bursaries for participants from low income countries.


Thursday, 5 September 2013

Global Peacebuilding III: Syria - Doing the Right Thing?

by Markus Schultze-Kraft

As the leaders of the world’s twenty most powerful nations are flocking to St Petersburg, the UK’s international development secretary, Justine Greening, made a valiant effort to reduce the toxic political fallout of her prime minister’s fiasco over British policy vis-a-vis Syria this week - and perhaps also to save her own skin after failing to vote for the government’s motion. In an op-ed published in The Guardian on 4 September she drew attention to the unspeakable plight and suffering of millions of Syrian civilians directly affected by the brutal war between the Assad regime and the armed opposition, calling for a major international response to a relentlessly unfolding humanitarian disaster.

Kudos to Secretary Greening for raising this fundamental concern loudly and clearly - it has not figured anywhere near as much as it should have in the heated debates about the international response to the recent chemical weapons attack on civilians in Damascus.

However, Ms Greening ends her statement by saying ‘our government will continue to make the case internationally for a robust response to the use of chemical weapons by the regime. We will do everything possible to work with international partners to bring all sides together to achieve the political solution that is needed to end the conflict. And we will spare no effort to ensure that the urgent humanitarian needs of the people of Syria are met’.

This looks like someone trying to square the circle and please everyone. Such an approach cannot work and carries the high risk of undermining any well-meaning response by the international development community to the humanitarian crisis in Syria.

Presumably, the ‘robust response’ the secretary refers to is a military strike on Syrian regime positions along the lines proposed by Prime Minister David Cameron and Presidents Obama and Hollande. Yet the International Crisis Group, a global conflict prevention and resolution organization, convincingly warned in a recent statement on Syria, that there is a high likelihood that such a military response would make achieving a ‘political solution’ impossible and drag out or escalate the conflict.
‘The principal question regarding the possible military strike’, writes the Crisis Group, ‘is whether diplomatic efforts to resolve the conflict can be re-energised in its aftermath. Smart money says they will not: in the wake of an attack they condemn as illegal and illegitimate, the regime and its allies arguably will not be in a mood to negotiate with the U.S. Carefully calibrating the strike to hurt enough to change their calculations but not enough to prompt retaliation or impede diplomacy is appealing in theory. In practice, it almost certainly is not feasible’.

A military attack on the Assad regime could likely also lead to more suffering for civilians in Syria. It could ‘trigger violent escalation within [the country] as the regime might exact revenge on rebels and rebel-held areas, while the opposition seeks to seize the opportunity to make its own gains’. And the major humanitarian response to the crisis in Syria Secretary Greening envisages could be severely jeopardised.

Hence, the Crisis Group’s argument that ‘the only exit is political’ is compelling. This requires ‘far-reaching concessions and a lowering of demands from all parties’ and ‘priority must be given to ensuring that no component of Syrian society is targeted for retaliation, discrimination or marginalization in the context of a negotiated settlement’. The international development community could support such a strategy by providing urgently needed humanitarian assistance to civilians in and outside Syria. 

Beyond the immediate concerns about the ‘right’ international response to the chemical weapons attack and the massive human suffering Syria’s brutal war has caused in the past eighteen months, there is another issue that Secretary Greening and the UK’s Department for International Development should reflect on.

Trying to square the circle by (apparently) supporting military action while at the same time calling for a political solution and large-scale humanitarian intervention undermines the credibility of one of Europe’s large international development agencies. Unfortunately, in our world of realpolitik tough policy choices have to be made, and international development organizations should be very clear about which of the options they are prepared to support, and which not.

Military action in a highly unpredictable and volatile context such as in Syria, even if it cannot be taken at present by the UK government itself, does not strike me as an option. Instead, all international development efforts by the UK and other countries should be focused on mitigating the humanitarian crisis and preparing for the arduous task of helping to rebuild Syria and guarantee the livelihoods of millions of Syrians once the armed conflict has come to an end – by political means.

This blog was originally published on Huffington Post UK.

Thursday, 29 August 2013

Will paying for results help build better institutions?

By Alan Whaites*

Results-based aid (RBA) has tended to be seen as too focused on simple measures of impact to work for governance. With signs of progress on indicators, and a little juggling of the concept, could there be a place for RBA in institutional reform?

Given the growing demand for evidence of development impact, some organisations are looking seriously at results-based aid. Traditional aid supports developing countries mainly by providing inputs (money, expertise etc.) With RBA, a set of targets are agreed by the partners and then the donor steps aside, leaving the partner country to manage its own development. Money only changes hands when the agreed targets are achieved.

Intuitively, this seems attractive: with RBA, ownership rests with the developing country and donor taxpayers are reassured that their money is well spent. The US took a step in this direction with the prequalification criteria for the Millennium Challenge Corporation, launched by President George W. Bush. In 2012 the World Bank launched its Programme for Results (PforR), which is now backing schemes – e.g. for clean water – that would previously have received up-front loans.

Pitfalls of results-based aid

There are, of course, potential pitfalls. An obvious one is the assumption that the partner country can cover the initial cost of the programme, when in reality this may not be the case. A proposed way around this is to create Development Impact Bonds, a concept promoted by the think tank the Centre for Global Development (CGD). With DIBs private investors assume the initial costs of a programme, also contracting whatever additional support is needed to make it happen. In return for taking on the risks and initial costs, the investor eventually receives a payment – based on the results – that includes a profit.

Even if you solve the initial cash-flow issues, however, there is a second problem with RBA: the outputs need to be measurable in order to determine when acceptable results have been achieved. This is easy enough with things like water supply – where the quality of the water, the pressure of supply and the number of working outlets can all be recorded. It is less straightforward in relation to ‘governance’, the catch-all term for everything from capacity development to democratisation.

Stephan Klingebiel of the German Development Institute (DIE) argues in a paper (PDF) on the issue that in governance, the devil – the potential ‘mis-incentives’ created by RBA – is in the detail. This is particularly true when measurement is complicated by at least three theoretically potential areas of ‘gaming’, or playing the system. In the first of these, the agreement on results is skewed to the easiest areas of reform (e.g. drafting a new strategy which may never be implemented). The second involves achieving only at the minimum level (paving the way for further programmes). While both donor and partner governments are vulnerable to these risks, they could mitigate them through careful selection and tracking of final targets.

The third problem is capacity ‘displacement’ – risks associated with the advisers employed by the investor to help implement the programme. Advisers might deliver all the agreed outputs and outcomes in order to guarantee payment – but without improving the systems involved.  Displacement can be a serious problem for the partner country involved, running contrary to the need for capacity development and providing a quick fix that may not last (e.g. the programme ends, the consultants disappear and the process collapses).

Turning risks into opportunities?


A new aid instrument such as development impact bonds would, therefore, need to offset the problem of initial resourcing, while also mitigating the potential risks of displacement. One way of doing this would be to develop measures of genuine capacity development and then link those measures to the risks borne by investors. The World Bank is developing new indicators for public-sector reform (modelled on existing Public Expenditure and Financial Accountability indicators) that look at the qualitative performance of an institution, rather than just final tangible programme outputs.

The way these measures are linked to investor payments could also help to address displacement – which as a risk is nothing new. Today large sums are spent by donors on `technical co-operation’, including dedicated technical advisors within partner institutions who work to mentor and advise local colleagues (sometimes in directly risky situations).   These advisers may already have to contend with potential perverse incentives.  Not least to bypass counterparts in order to deliver results or to extend their role by going-slow on skills transfer.

Development impact bonds could turn these capacity risks around by asking the large consultancy companies that provide advisers to act as the initial investor (raising new capital if needed). Then, instead of measuring just the final output of the Ministries, the programme would also measure the skills transferred (using the new World Bank indicators). Only when the partner government is happy that its institution has acquired greater capacity (verified by the indicators) would the consultancy company get paid. For consultants this would help finally to lay to rest any doubts about their role, and offer clear validation of their achievements.  

So, if partner governments are to be assured that advisers are trying to work themselves out of a job, then maybe financial risks should shift from donors and local institutions to the companies who stand to make the profit. A case, perhaps, for pilot programmes to test this out.

*Alan Whaites is the Team Leader of the Governance for Development and Peace Team (G4DP), Global Partnerships and Policy Division, OECD-DCD.   

Interested in writing a guest blog for Governance and Development?
Contact Caroline Martin or Emilie Wilson for more information. 

Friday, 19 July 2013

Measuring the Performance of Tax Collectors: Good Sense, Quietly Buried

by Mick Moore

Does Argentina collect its taxes more efficiently and effectively than Azerbaijan? Brazil than Burundi? Chad than Colombia?

You can find some numbers that throw some light on the question. In particular, for the countries of the OECD and now for Latin America we have relatively good data on the money consumed by tax agencies relative to the revenue they collect. But, beyond that, we are largely in the dark because while lots of data is available on the Web, it is far from clear what it actually tells us.

Every year, the World Bank and PWC (formerly PriceWaterhouseCoopers, the professional services firm) publish a report called Paying Taxes (an offshoot of the annual Doing Business report). Looking at the world from the perspective of business people, Paying Taxes provides information on three variables for 185 countries: 
  1. the total company tax rate (where lower is considered better);
  2. the number of separate tax transfers (‘payments’) that a representative small company has to make to government each year;
  3. the number of person hours that the company devotes each year to sorting out its tax affairs.
It also combines these three measures to produce an overall ranking.
You might be a little surprised to see that in 2013 the top three rankings were awarded to the United Arab Emirates, Qatar and Saudi Arabia respectively. Are the oil-rich kingdoms of the Gulf renowned for the quality of their tax administrations? Not in the least. Compared to most other countries, their tax administrations are skeletal. It is hard to believe that these countries provide the best taxing models for governments that actually need to raise more revenue.

Interpreting the figures and national rankings in Paying Taxes

Some sensible analysis of the figures is to be found in the report of the Independent Panel Review of the Doing Business Report that became publicly available in June. In sum, the Panel found the data and the rankings relating to tax to be misleading and in need of major revision. While some of their criticisms are complex and technical their main conclusions are easily summarised.

Let us take first the ‘total tax rate’. There are two major criticisms. First, it is very controversial to assume that companies are always better off if they pay less taxes. If low taxes mean that governments cannot afford to maintain roads, educate children for employment or provide a competent policing service, business – and the national economy, and human welfare – will suffer.

The second criticism is that the ‘total tax rate’ used in Paying Taxes is not a good indicator of the actual corporate tax burden. The figures on the ‘total tax rate’ are based on the ‘headline’, normal rates for individual taxes, such as corporate income tax, payroll taxes or VAT. But many companies do not pay ‘headline’ rates. Every country has a variable range of tax exemptions, tax ‘incentives’, tax holidays, tax credits, etc. There can be large differences between ‘headline’ rates and what the typical or average company actually pays. For example, the main rate for corporate income tax in the UK at present is 23%. But larger UK-based companies that pay more than half that figure will in most cases be sending warning signals to the senior staff of their tax divisions about career prospects.

What about the Paying Taxes practice of taking, as one measure of the tax-paying burden on business, the number of separate tax payments that the representative company has to make to government in a given year? At first that might sound sensible. But read what the Independent Panel has to say on this:
“The number of tax payments a business has to make is a poor measure of the ease of doing business. Some corporations may prefer to file and pay on a monthly basis rather than on a once-off annual basis. Furthermore, taxes like VAT are structured in a way that requires periodic rather than once-off payments. It is also relatively easy to affect this indicator by artificially amalgamating the payments of different taxes into one payment schedule. For the purposes of this indicator, countries with provisions for electronic filing and payment of tax automatically receive a measure of one transaction per year. The Panel questions this assumption because providing an option for electronic filing and assessment does not mean that the majority of firms will use it. This is why many countries have felt the need to make electronic filing mandatory.”

‘Number of payments’ is in fact a misleading measure of the costs of paying taxes. There seems little doubt that it has been used as an indicator in large part because it generates a simple number with relatively little effort.

There is a real need for good indicators on tax agencies

I have more sympathy with the people who compile Paying Taxes than my tone might imply. It is genuinely very difficult to find reliable measures of those aspects of tax agency performance that we really would like to monitor.

In the absence of better measures, tax agencies will be judged wholly or mainly by the amounts of money they raise, and whether this meets the targets set for them. Tax agencies that are judged by collections alone have insufficient incentives to engage constructively with taxpayers and find ways of changing their policies and practices to benefit everyone involved: taxpayers, collectors, and the public treasury. More diverse and nuanced indicators are needed.

It is then fortunate that the Independent Panel are rather in favour of the third indicator used in Paying Taxes: the number of person hours that representative small companies have to devote annually to sorting out their tax affairs. In 2013, the average for all 185 countries surveyed was 267 hours, but Brazil came bottom of the rankings, at 2600 hours. Brazil could and should do better, and it does seem a good idea for the World Bank to publicise such extraordinary numbers.

Will the World Bank improve the measures on tax agency performance?

Unfortunately, we have to be sceptical. It is not that the Independent Panel failed to make a good case. But tax indicators were only part of its mandate, and the details of how the different aspects of regulation are measured have been controversial for years.

This latest review was politically sensitive from the beginning. There were concerns from the Government of China – that is still only ranked 91 on the aggregate Doing Business measure despite its stellar macroeconomic performance. And the perception that the World Bank was under pressure to either cease ranking countries or even completely drop the whole Doing Business report generated public lobbying.

The World Bank found itself in the middle of an unwelcome political spat over an issue in which it also has an institutional interest. The Bank is fond of the publicity that is generated when Doing Business and Paying Taxes are published each year. The financial press at least run articles pointing out which countries have moved up in the rankings and which have moved down.

The World Bank responded to these contradictory pressures by trying to play down the Independent Panel’s report. It was launched in London not in Washington, to a hastily convened and very small press conference. The media coverage was slight.

The World Bank President said that he needs time to think about the report. That is quite understandable. It will however be a great pity if the broader political scuffles lead to a quiet burial for this very sensible document.

Wednesday, 26 June 2013

Global Drug Policy V: Drug policy reform momentum: where is the international development community?

By Markus Schultze-Kraft

Drug policy reform advocates have some reason to be upbeat these days. Momentum for reassessing the existing prohibitionist international policy framework is gathering in different corners of the world. New, unusual suspects are joining the debate, providing fresh perspectives and challenging entrenched positions.

Consider, for instance, the Organization of American States (OAS), not precisely known for its propensity to challenge the status quo in the Western Hemisphere. In May it released a nuanced yet frank report on the drug problem in the Americas and the devastating effects of drug-related organized crime and violence in producer and transit countries, calling for a more flexible approach to drug policy.

In a similar vein, at the end of last year the UK House of Commons Home Affairs Select Committee came out (PDF) urging Her Majesty's Government to monitor closely the legalization and regulation of cannabis for non-medical use in several US states as well as Portugal’s experience with depenalisation.

Led by regional powerhouse Mexico where drug wars have killed some 60,000 in the past seven years alone, several Latin American governments successfully pushed for holding the next UN General Assembly Special Session (UNGASS) on Drugs in 2016 and not 2019, as originally planned. No doubt, the momentum for drug policy change is building up.

The international development community is conspicuously absent from the debate

Yet, one sector has been conspicuously absent from this quest: the international development community. With some notable exceptions like Germany’s Gesellschaft für Internationale Zusammenarbeit (GIZ) (PDF), bilateral and multilateral aid agencies have resisted participating in the debate, shying away from acknowledging that the production, trade and use of illicit drugs is their business too.

Poverty, inequality and economic shocks can increase the vulnerability of countries vis-à-vis drugs and the associated public health problems, as well as organized crime and violence. And drugs and repressive counter-drug policies are known to contribute to deepening underdevelopment through, for instance, corruption, violence and macroeconomic instability.

Of particularly concern for development agencies should be that there are indications that the effectiveness of development programmes may be undermined by not integrating drug issues. A few non-governmental development organizations and research centers are just beginning to grasp some of these inconvenient truths.

What explains this reticence on the part of the development community to engage with drugs issues? Why is there so little interest in spite of the fact that in a growing number of countries reducing poverty, strengthening governance and curbing corruption is also dependent on tackling complex drugs and drug policy problems?

The Global Drug and Development Policy Roundup, held at the Sussex-based Institute of Development Studies in February, provided insights into why it is difficult for the development community to engage with drugs and drug policy issues, and what would be actionable ways to increase much-needed cooperation between development and drug policy experts and practitioners.

Despite a shared commitment to human wellbeing the two policy communities are not on the same wavelength

Many people working in international development do not readily see what their role could and should be in addressing problems related to the production, trade and use of drugs that impact negatively on poverty reduction, livelihoods and governance. Their focus is essentially operational and on development issues and activities in individual countries, and not on the larger, global policy issues that are at the core of the work of drug policy reformers. The latter’s principal aim is to reform the existing ineffective and harmful prohibitionist international drug control regime. Development practitioners lack the time, expertise and leverage to take on broader drug policy reform issues and are, if anything, concerned with the question of how development could be achieved in drugs-affected environments.

Further, many governments still stigmatize drug users, portraying and treating them as offenders rather than people in need of health and social attention. For the most part bilateral aid agencies find it difficult to come to terms with illicit drugs, an issue which for many governments and politicians remains an anathema. It is easier and politically less risky to defend the stance, however mistaken, that the production, trade and use of illicit drugs – and the associated corruption and organized crime - are essentially law enforcement and security problems which fall within the remit of police forces, and defense and foreign ministries.

Short term policy cycles too work against building commitment to necessarily longer-term strategies of integrating drug and development policies. The mainstreaming of illicit drugs issues into development programmes in source countries, such as Afghanistan and Colombia, has had little success thus far.

Motivated by their own fundamental interest in enhancing human wellbeing and reducing poverty many more development organizations should start focusing systematically on drugs issues, thereby seeking to contribute to mitigating the negative impact drugs and drug policies have on poverty reduction and development.

A Global Drugs and Development Network could help bridge the gap

A Global Drugs and Development Policy Network, championed by development organizations (including one or two donor agencies) with policy capacity, convening power and an interest in making a bold contribution to moving the debate forward and identifying inroads for policy reform, would be a step in the right direction.

Such a network should look at producing quality and operational research, including on how tackling poverty in countries affected by drug problems can relate to global drug policy reform,  mobilizing stakeholders in different world regions and promoting dialogue on the nexus between drugs and development to strengthen much-needed comparative perspectives. Let’s bring development in – there’s no way round it.

This blog was originally published on Huffington Post UK.

Previous blogs on global drug policy by the same author:

Thursday, 6 June 2013

Signs of change in Pakistani politics: a story from the Punjab

by Shandana Khan Mohmand

Pakistani politics is popularly perceived to be based on the local power of landed bigwigs. But an unusual thing happened in the lead up to the May 2013 election in a constituency in central Punjab.

The Pakistan Muslim League-Nawaz (PML-N) (which eventually won) issued a party ticket for a provincial seat to a relative, a usual enough occurrence. But in this case the ticket went to someone who was not locally popular. He was elected from this constituency in 2002 and was the runner-up in 2008. Yet, he has no real performance record. According to most people I spoke to, he has a “feudal mentality” and has not delivered in return for votes. To top it off, he lives and works in distant Lahore, and is considered an outsider.

Opposing him was a local man, a member of one of the area’s largest biraderis (kinship groups). He ran for the first time in 2008, as an independent candidate, and despite receiving only 2800 votes in that election, he built a reputation over the last five years as a “worker”. He is easily accessible and well connected. His family has been part of the local government system and his two brothers are high-ranking bureaucrats, and he has used his contacts in the state to deliver. This has swung support strongly in his favour within the constituency. Encouraged by this, he approached the PML-N for a ticket, only to be refused in favour of a relative who had contested the previous two elections on a rival party’s ticket.

The local man decided to go ahead anyway and contested again as an independent, and began a campaign that grew quickly in strength and soon made him a stronger contender than the ex-member of the provincial assembly. Ten days before the election a member of the PML-N’s leadership stopped by the constituency for an election rally. According to my local sources, PML-N’s youth wing allegedly reported to him that they were bound to lose this seat because of the party’s decision to go with their relative. The party’s rally was also boycotted by the local candidate’s large biraderi.

A few days later the party issued a statement “opening” the seat. This meant that the party was no longer backing its own candidate, nor opposing the local man (who, rumour had it, was invited to join the PML-N in the case of a win).

Local will, it seemed, had prevailed over what in Pakistan is called the “jaagirdarana nizam”, or a ‘feudal system’ of politics. Different biraderis of the constituency had come together against a veteran, landed politician who had provided little and remained inaccessible to his voters. Instead, a man with far less experience but an apparent will to deliver was now set to win. And win he did.

Increasing competitiveness

Beyond this, however, something more has changed too. This local candidate was only one of many new candidates on almost all provincial seats in this district. In the three provincial constituencies where I spent some time in the run up to the election, the average number of candidates in 2002 was 5.3, in 2008 it was 4.6, and this time it was a whopping 15.6. Many of these candidates have never run before, or if they have, it was as part of the now defunct local government system.

Connecting with voters

The explosion of candidates for provincial assembly (PA) seats has heralded a number of visible changes. While the competition for national assembly (NA) seats was still being managed by local bigwigs, that for PA seats was far more open this time around. People appeared to be choosing and aligning more freely. Almost everywhere we found that while an entire village was voting for a single candidate for the NA seat, or at the most two candidates, at the provincial level the village was divided into multiple small groups that were aligned to different candidates. More importantly, these groups usually had direct contact with these candidates, who were all out and about the countryside, conducting small meetings in every village. Door-to-door campaigns are still rare, but such face-to-face contact between rural voters and candidates was also a rarity until the 2008 election.

Direct contact between voters and candidates has even greater significance in the post-18th Amendment environment, in which almost all ministries related to the delivery of public services were devolved from the centre to the provinces in 2010. This means that voters are now connecting directly not only to their representatives, but also to those that will have a direct say in the delivery of most rural services. The increased competitiveness on these seats means greater choice for the voter, and consequently, a greater ability to hold candidates directly accountable for their delivery records.

Emergence of new politicians

It also means a larger space for new politicians. If this trend crystallises, it could mean the injection of many new politicians within existing parties, as exemplified by the story above. Initially, this will probably include people with connections in the state, and large biraderis to draw upon. Slowly, however, it may start to draw in non-dynastic, unconnected first-timers. If the new government now brings back the system of local government – the usual route for the emergence of newer, less wealthy candidates – we may see the emergence of a dynamic, vibrant political scene that could work to marginalise the landed elite from politics without the need for structural reforms.

Writing for the Guardian, Jason Burke quoted a landlord politician as saying, "Politics has become such a dirty game. It's getting so hard". The man seems to be referring to exactly this trend. That, for the rest of us, is very good news.

(This is a modified version of an article that appeared in the Dawn Newspaper (Pakistan) on May 12th 2013) .

Wednesday, 29 May 2013

Digging deeper: what is Democracy?

by Susanne Schirmer*

This blog also appears on the Participation Power and Social Change Team blog.

Recently several of my IDS colleagues and I attended network meeting organised by the Decentralisation, Democratisation and Local Governance Network (DLGN) of the Swiss Development Cooperation (SDC) in Aswan, Egypt. It brought together about 80 practitioners, policy makers and academics working on good governance and decentralisation from SDC and their partner organisations worldwide. The topic for the meeting was based on the quote ‘Democracy is when accountable local leaders promote inclusive participation’.

The meeting was set in the historic location of Elephantine Island in the middle of the river Nile, where excavations show layers upon layers of history from the 5th millennium BC up to colonial buildings from the 20th Century and a still inhabited Nubian village. Each civilisation destroyed, recycled or built upon the previous settlements, therefore leading to about 20m of historic settlements, one on top of the other. To me, the excavation was a good image for development work, showing that it sometimes takes quite a bit of ‘digging down’ to get through the various layers to the heart of an issue.

IDS colleagues from the Governance and the Participation, Power and Social Change teams attended the meeting to present research which did exactly that, i.e. ‘digging down’ into various related topics to explore hidden layers and to stimulate innovative thinking on how to produce improved, inclusive, transparent and sustainable development interventions at the local level. The research was undertaken as part of the DLGN funded project ‘The Governance of Service Delivery’.

Here is a summary of the research my colleagues presented:

Andrés Mejia Acosta and Jethro Pettit: A Combined Approach to Political Economy and Power Analysis

The purpose of political economy and power analyses (PEPA) is to explain power relations and political dynamics in the formulation, adoption and implementation of development initiatives. Despite having different backgrounds and methodologies, both frameworks share the common objective of unpacking the visible, invisible and hidden relationships between key actors involved in producing (or blocking) meaningful changes.

Anuradha Joshi: Context matters: A Casual Chain Approach to Unpacking Social Accountability Interventions

A common premise of development interventions is that context matters for development outcomes, yet there is little understanding of how exactly ‘context’ affects outcomes and which contextual factors matter most. The paper focuses on social accountability interventions, to explore macro and micro contextual factors. On the macro side, accountability processes need to take into account larger histories of citizen state engagement and related political processes. At the micro level, local factors can clearly drive the way certain social accountability interventions unfold and the extent to which they are successful, even within otherwise broadly similar contexts.

Mariz Tadros: Egypt’s Unfinished Transition or Unfinished Revolution? Unruly Politics and Capturing the Pulses on the Street

The paper focuses on Egypt’s transition, and cautions that if external political analysis fails to capture the pulse of the street in Egypt today, a situation much like that at the wake of the uprising of January 2011, where change happens through actors, spaces and mechanisms that are least expected, could come around again.

Rosemary McGee and Jethro Pettit: Outcome Measurement in Local Governance Programmes: A Power Dimension

This paper explores how outcome measurement is understood in several SDC local governance programmes, reviewed in a HELVETAS Learning Project. This critical review assesses the extent to which power issues are recognised, understood and tracked within such programmes and suggests ways to enhance this.

Shandana Khan Mohmand and Snezana Misic Mihajlovic: Connecting Citizens to the State: Informal Local Governance Institutions in the Western Balkans

Informal institutions, that lie wholly or partly outside formal state structures, have tremendous potential to strengthen citizen participation, encourage inclusive decision-making and promote improved service delivery at the local level. The authors discovered that local informal governance institutions are widespread throughout former Yugoslav countries, but empirical research on these models is limited. The paper reviews the existing literature and reported practice in Bosnia and Herzegovina, Croatia, Macedonia and Serbia. The authors’ key question is, ‘how do informal local governance institutions facilitate relations between citizens and the state around service provision and other governance functions’?

Joanna Wheeler: using visual methods

Joanna presented two different projects that use visual methods as part of their process. The first, a digital storytelling project in Mozambique, and the second, a capitalisation project in Bosnia Herzegovina where Joanna Wheeler and Tessa Lewin have been working with OneWorldSEE and MDPi on a project that uses both digital storytelling and participatory video

More research undertaken as part of the SDC funded project can be downloaded from the project page.

*Sue Schirmer is Project Coordinator for the project 'The Governance of Service Delivery'. She is also Communications Coordinator for the Participation, Power and Social Change team at IDS.

Friday, 24 May 2013

The Great Tax Awakening? Three Reservations

By Mick Moore 

Never has there been such extensive popular and political interest in tax reform. Never have so many governments declared that they intend to change the global tax system and ensure that transnational corporations pay their fair share. Never have arcane issues like ‘transfer mispricing’ received so much media coverage. And never have there been so many promising indicators of real policy change. 

Pressures from American and European legislators and tax authorities have cracked open banking secrecy in Switzerland and Luxembourg, and may end it entirely. Other tax havens are facing the same prospect. The European Union is contemplating a major shift toward a form of ‘unitary taxation’ of transnational corporations. Large British companies have lost much of their appetite for battling with Her Majesty’s Revenue and Customs, and are complying in cases that they would have contested only a couple of years ago. The forthcoming G8 and G20 meetings have crystallised concerns that have been building since the 2008 financial crises, and raised hopes of reforms that will benefit rich and poor governments alike, and ordinary people and businesses worldwide. There is still a good chance that these reforms will happen. But we need to watch out on three fronts in particular.

Most pressing (and feasible) tax reforms gradual, procedural and legal

First, the reforms that are needed now in the global systems for taxing transnational corporations and high net worth individuals are not the dramatic ‘stroke of the pen’ changes that we can easily monitor. It may make sense in the long term to move to a completely new system of ‘unitary taxation’ for transnational corporations. But that will be in the long term. Most of the reforms that are feasible and needed at this moment take the form of legal and procedural changes in complex domains accessible mainly to specialist professionals.

We should, for example:
  • greatly extend mechanisms for the automatic exchange of information among national tax authorities; find ways of putting an end to ‘beneficial ownership’ – secrecy about the real ownership of companies, foundations and trusts; 
  • motivate transnational corporations to account for their activities and profits in detail, and in a common format, for each country in which they operate; 
  • create a mechanism to make it possible to revise the thousands of bilateral tax treaties in existence without re-negotiating each one separately; 
  • agree on a common global anti-abuse rule and a way of sharing information among tax authorities about aggressive tax avoidance schemes; 
  • make it easier for tax and police authorities to share the information they need to tackle the inter-related problems of corruption, money laundering and tax evasion. 
It would be easy for governments to make grand declarations, but not do all the follow up work that is needed for effective delivery. How will we know whether they really are are putting their money where their mouths are?

Northern domination the global tax system - who will reforms benefit?

Second, all the changes mentioned above are driven, directly or indirectly, by the urgent needs of most rich country governments to raise more revenue to meet their huge fiscal deficits. Those governments, along with the EU and the OECD, dominate the global tax system. There are reasons to be optimistic that the kinds of reforms they are contemplating will also be of benefit to developing countries. We can be fairly sure that the national tax administrations of the BRICs (Brazil, Russia, India, China and South Africa) and other large, middle income countries like Turkey will welcome and be able to cope with these changes. They have the skilled personnel and the IT systems needed effectively to process the large increases in inflows and outflows of information that the reforms require. But it is far from certain that the same is true of most poorer, smaller developing countries. They are anyway almost unrepresented in the current global debate. Their national tax administrations could be overwhelmed by the outcomes, and find themselves net losers, devoting so many resources to supplying data to the rest of the world that they are unable to take advantage of the wider access to information that they will nominally enjoy.

The extension of the principle of automatic information exchange among tax authorities will anyway have to be carefully calibrated. It cannot be automatic, for all countries, instantaneously. The information that is used to collect taxes can also be employed for purposes of blackmail and extortion. We already see a few governments using Interpol international arrest warrants to harass political opponents rather than to apprehend criminals. Concerns about the possibility of tax information being misused are legitimate – but could also become a pretext for excluding many poor developing countries from international arrangements to exchange tax information. Those that are excluded will be at a real disadvantage.

Can the political momentum be sustained?

Third, the coalition of forces that has helped make tax so prominent on the contemporary political agenda may not endure over the period needed to ensure that reforms are real and sustained. National governments have not generally played leading roles in creating the reform agenda. We owe much more to the combination of (a) a very impressive set of advocacy and campaigning organisations like Action Aid (who have published a report on tax havens today), Christian Aid, Oxfam, Global Witness, Tax Justice Network and UK Uncut and (b) authoritative international organisations like the European Union, the IMF and the OECD. But the two do not always work well together. In particular, some of the advocacy organisations also campaign actively against the international organisations, sometimes on grounds that I would characterise as populist and diversionary – most notably in criticising the extent to which the IMF has been an active proponent of Value-added taxes.

It is a good time to celebrate the progress that is being made in setting the stage for serious global tax reform. But it is not the time to relax, to assume that the interests of the poorer countries will really be taken into account, or to indulge in fractious politics over minor issues.

Mick Moore is CEO of the International Centre for Tax and Development (ICTD) and Research Fellow at IDS.

Other Governance and Development posts on tax:

Wednesday, 22 May 2013

The good and bad news from Pakistan's May 2013 elections

by Shandana Khan Mohmand

The Pakistani election of 11 May 2013 marked many positives in Pakistan’s political development, and just as many negatives.

Tentative steps towards democracy

It has been depicted as the making of history, for the fact that it marked the end of the first ever completed term of a democratically elected government, and the first ever democratic transition of power. This is only partly true. The oft-repeated fact of this being Pakistan’s first ever full 5-year term has been intriguing right from the start. Zulfiqar Ali Bhutto’s government, elected in 1970, completed a full term, albeit after a very shaky start during which the country split into two (with the creation of Bangladesh). Previous elections have also been far more historically significant. The 1970 election marked an incredibly dramatic transition from the 11-year military rule of General Ayub Khan, and brought into power Pakistan’s first ever elected government. The 1988 and 2008 elections were significant for the same reason, and marked the transition to democratic rule from the military dictatorships of Generals Zia-ul-Haq and Pervez Musharraf respectively.

The historical significance of this most recent election lies in the fact of one democratically elected government completing its 5-year term and then peacefully handing over power through an election to another elected government, with the election result and handover being accepted by all concerned parties, barring a few allegations of rigging. That certainly has never happened before. While the three elections mentioned above marked transitions to democracy, this is the first to signal Pakistan’s tentative move towards the consolidation of democracy.

Strong voter turnout despite the threats of violence

Other positives include a phenomenal increase in voter turnout. The average turnout for the 8 elections held between 1977 and 2008 was 40%, with the highest being 47% in the 1977 election (International IDEA). Since then fewer and fewer Pakistani voters have chosen to step out and vote on election day. This time the figure is about 55% (according to some closer to 60%), and this despite the fact that it was an election with the greatest ever threat to the regular voter.

Since about April, the Taliban were reported to have distributed pamphlets in various cities warning people against coming out to vote. There was a strong fear that voters would be targeted as they lined up at polling booths. And yet over 50 million voters lined up on 11th May, earning Pakistan the label “the world’s bravest democracy” from one columnist.

Emergence of a third national party

The turnout has much to do with the emergence of a new party – the ex-cricket captain Imran Khan’s PTI – that ran a strong campaign to get out the vote. Its main incentive for doing so was the perception that its largest vote bank lies within Pakistan’s young voters – 48% of Pakistan’s voters are below the age of 35 – and if they could get this group to vote, the party could get quite close to a majority win.

The irony is that though they managed to get the vote out, not all new voters cast their vote for the PTI, choosing in many cases to vote instead for the country’s older parties. Nevertheless, the larger voter turnout and the emergence of a significant third force in what was fast becoming a two-party competition between the Pakistan People’s Party (PPP) and the Pakistan Muslim League – Nawaz (PML-N), are definite contributions of the PTI.

Lack of a level playing field

There are two main negatives, besides of course the allegations of rigging and the fact that the winning party’s seat tally is beyond many expectations (an expert survey by a leading news magazine, published on the eve of the election, gave the triumphant PML-N an average of 35% of the seats in the National Assembly. It ended up getting 45%, or 125 out of 272 seats).

First, it seems no party except the winning PML-N had a level playing field. The PTI and its supporters believe that they have been cheated out of seats that they had expected to sweep, and have directed these allegations against both the PML-N in Punjab and the MQM in Sindh. More importantly, the incumbent PPP, along with two other secular parties, the ANP and MQM, were unable to run campaigns because of terrorist threats and the targeting and execution of some of their candidates. The impact was clearly reflected in their abysmal seat tallies.

Conservative values supported by the youth vote

Second, the election was won by parties on the right, and revealed the growing number of youth to be particularly right leaning. The major electoral agendas that carried the day were corruption, drone attacks, nationalism and anti-Americanism, and promises of infrastructure development. Poverty reduction, labour issues, minority rights and tax reforms were almost entirely absent from the electoral discourse. The winners are admittedly not religious fundamentalist parties (who received less than 0.05% of seats in the National Assembly), but they are certainly conservative and promise nothing in their agendas that can be considered socially transformative. And this the newly mobilised youth has no issues with.

Shandana will be giving a seminar on the elections at the Institute of Development Studies on 23 May.

Thursday, 18 April 2013

We need to strengthen our public institutions before the withdrawal of foreign troops from Afghanistan

By Baseer Ahmad*

At the end of 2014 the majority of existing foreign troops will be withdrawn from Afghanistan. The international community (an amalgam of security, humanitarian and development agencies) arrived in Afghanistan to help build a stable and long-lasting Afghan state, capable of representing its people. Ousting the Taliban that ruled the country from 1996 till 2001 was one of its biggest achievements.

The uneasy journey to establish democracy and build peace in this fragile country began in 2001. The main successes so far have been the drafting of a new democratic constitution (2004) and the presidential and parliamentary elections (2004/5 and 2009/10).  However, attempts at building democracy and democratic institutions do not always translate into ‘governments of the people, by the people and for the people’. 

While most experts on Afghanistan identify institutional deficit as the main factor behind the limited functioning of the Afghan Government and its inability to deliver basic services to its people; in my view, it is the fact that most state institutions are run by individuals rather than on organisational mandates which is a key problem. Most of the mandates that exist are not operational, and it is individual leaders and executives who play an important role in formulating and executing public policies. However, many of them are incompetent and, in some cases, are former warlords, and the fact that they govern many of the central and provincial institutions by resorting to patronage, for example, hinders the ‘effective’ functioning of government.

A growing concern that public institutions are being monopolised by individuals

There are many concerns about the impact of the 2014 international withdrawal and predictions for the country’s future are difficult to make. UK Defense Secretary Philip Hammond recently said that nobody could say "with certainty what the future for Afghanistan" would be. One of the major concerns is the reversal of the current achievements and the recurrence of a civil war.

I see the source of this fear coming both from historical precedent and the recent developments around the monopolisation of institutions by ruling elites who are difficult to hold to account. Warlords, commanders, local militias and religious groups were the initial power-fillers after the Taliban regime was toppled in 2001. These informal powerbrokers have transformed into formal actors and become the main representatives of  Afghans to the international community. Supported by the international community in the fight against Taliban, they gained more power. After 2014, it seems likely that these warlords will play a more influential and active role in further monopolising institutions. However, it is uncertain whether these elites will remain united after their resources dwindle in 2014 and beyond. It is also likely that they would use their leverage and influence over the current Afghan National Army (ANA) and fragment it along ethnic lines. If this happens we could potentially face another civil conflict, which will reverse the achievements, made so far.

Is there an exit strategy for Afghanistan?

The exit strategy of the international community emphasises the negotiating and signing of bilateral strategic agreements which will chart out their future engagements and document their commitments to the Afghan state after 2014.

One major bilateral agreement that will determine Afghan security after 2014 is the current security pact under negotiation with the United States. While many in Afghanistan believe that a security pact should be signed with the USA following the bilateral strategic agreement (signed in May 2012), the immunity of the American forces remaining in Afghanistan continues to be a bone of contention between the two states, so the security pact has not yet been signed. Even so, Afghanistan has already been declared a major non-NATO ally which will enable access to US military training, military supplies, equipment loans, and financing for loans.

While the negotiations, debates and rifts define the recent relationship between Afghanistan and the USA, much less has been done to address the fundamental problems. The key issue that Afghan people are concerned with is who is representing them in these negotiations, which will ultimately determine their future security and prosperity. The current exit strategy and even the peace process excludes the majority of the societal actors representing the Afghan people. Instead the process includes groups which have dubious legitimacy and controversial histories.

Building accountable, effective and legitimate institutions

Building accountable, effective and legitimate institutions in Afghanistan should focus on moving beyond the ‘individual centric’ nature which has characterised them so far. Endeavours should be made to restrict the monopolisation of particular individuals and groups over institutions. The more "institutionalised" the institutions, the more deliberative, representative, consensual and legitimate the decisions will be. By "institutionalised",  I mean institutions that are run by mandates not by individual or groups.

Building post-conflict Afghanistan requires taking on board all interests and groups. But at the same time a balance between these interests and groups is critical to the stability of the country. Neutralising the enormous spoiling capability that the warlords have gained so far cannot and will not be addressed unless and until there are institutionalised institutions in place - with the ability to operate along the lines of their mandates rather than being at the whim of their leaders.

*Baseer Ahmad is currently undertaking an MA in Governance and Development at the Institute of Development Studies.

Tuesday, 9 April 2013

Is the World Bank's attitude towards Participatory Development changing?

By Ila Patlolla*

The recently launched World Bank Policy Research Report titled ‘Localizing Development: Does Participation Work?’ by Ghazala Mansuri and Vijayendra Rao (who also gave a Sussex Development Lecture on the same topic a few weeks back) is both unusual and groundbreaking.

Looking at quantitative evaluations of various participatory development projects (both within and outside the Bank) that are touted to help reduce poverty and inequalities, improve service delivery and build capacity for collective community action, Mansuri and Rao not only push the World Bank to accept what is not working in their approach and admit mistakes, but also bring to the fore key challenges and possible solutions.

In their report, Mansuri and Rao distinguish between “induced” and “organic” participation, where one is driven by external agents (by pumping in money/resources), while the other occurs ‘naturally’ (arising out of the needs and initiative of the community). Recognition of this difference is important, given that the World Bank alone has invested over $85 billion on development assistance for participation. For such induced participation to be effective and sustainable, the World Bank and other external agents need to change their approach to development- to one that is long-term, context sensitive, accepts failure and learns from mistakes. The reasons behind this are:

  1. Participatory projects often fail to be truly inclusive. The wealthier, more educated, higher social status, politically connected, and generally male, tend to benefit. This is where local and national ‘context’ (geography, political system, local power dynamics, etc.) plays an important role in determining outcomes of development projects, as these factors determine who decides, how and for whom. Projects funded by the World Bank also often adopt strikingly similar project designs across regions and projects. This undermines the very fact that the needs and requirements of every community are different, and for projects to work and reach intended beneficiaries, one needs to tailor-make them to fit the context.

  2. Participatory projects are often unsustainable. During the course of the project, cash or other material incentives may induce people to participate and build networks, but when these are withdrawn the whole system collapses. This calls for a need for capacity building, where communities are equipped with the skills and resources to sustain systems beyond the life of the project. The World Bank and other donor agencies are also known for focusing on short-term, more tangible goals that can be measured and funded as per schedule, rather than long-term, more qualitative goals of changing socio-political systems and attitudes, that may or may not be possible to measure.

  3. Participatory projects are often unaccountable to the beneficiaries.  There are no clear mechanisms for downward accountability. Incentives are directed at improving upward accountability, rather than increasing discretionary powers at the lower levels. Planning and reporting requirements are also so complex that they’re beyond the capacity of local field staff often leading to too much time spent doing unnecessary paperwork and delays in decision-making. Project facilitators are also often told what the community think they want to hear, and aren’t always given the exact picture, which makes it hard to assess the impact of the project. This usually happens when project staff fear failure or negative feedback, without realizing that it is only the knowledge of their shortcomings that can lead to improvement.

  4. Participatory projects seldom recognise monitoring and evaluation systems as vital to the project, with poor incentives for honest, comprehensive and regular monitoring and evaluation. New, cost-effective and innovative mechanisms are needed in this regard, with adequate importance and priority given by senior management, such that projects can constantly be monitored and improved upon.

  5. Most importantly, participatory projects don’t have a predictable trajectory and it is often difficult and unrealistic to expect clear, measurable outcomes within a given timeframe. While planning is important, it should allow enough scope for experimentation and ‘learning by doing’.

In order to have a lasting impact, participatory projects need to be flexible enough to adapt to local contexts and reflect the ‘real’ needs of a community rather than ‘perceived’ needs.

Mansuri and Rao also point out that for innovation and evidence-based policy decisions to take place, one needs to create an environment where failure is acknowledged, accepted, and instrumental in leading the way for developing innovative solutions to development problems. While the message itself is not new, it is heartening to see this recognition and acknowledgement coming from within the World Bank.

The real test is whether these lessons will be reflected in changes in incentives, programming and monitoring. Will the rest of the Bank adopt this latest thinking and lead by example?

*Ila Patlolla is currently undertaking an MA in Governance and Development, at the Institute of Development Studies (IDS).