Governance is a tangible commodity

(working paper 2014)

Governance, the ability of governments to provide basic public goods and services such as (but not limited to) energy, water, transport, health or education and their efficiency in so doing can be measured, tracked and as a result improved in a tangible and practical manner. At a time when metrics to gauge corruption or the ease of doing business have been developed, the gap in governance analytics and metrics is a major blind spot in our understanding of Globalization and of the operating environment multinationals face in Emerging and Frontier Markets. (EMs and FMs).

Recent spectacular examples of governance turnarounds indicate how strategic the issue is: over five years, Rwanda has posted the world’s second fastest growth after China for two consecutive years, lifted 1 million people out of poverty and produced more universities and college graduates over that period than in the previous 45 years. The country is now on course to becoming to becoming an African and global hub for ICT. The Indian state Gujarat attracted half of India’s FDI over the last decade with only 5% of the country’s population, in addition to registering continuous power over-supply, and soon to come universal service in rural areas for power, water, cellphone and wifi coverage.

For Africa in particular, grasping fully the mechanics of Better Governance offers the promise of accelerated growth, greater human development and multiplied opportunities to connect with global firms at a time of record investor interest in the continent. Hence, all the continent’s stakeholders should be invested in mastering these mechanics: government bureaucracies, multinationals and portfolio investors, local entrepreneurs and civil societies. Drawing from examples in Africa and Asia, this paper/article will examine these mechanics along four lanes: how to measure Governance, how to track it, how to improve it, the pay-off and finally recommendations for the way forward.

Though an analysis of Better Governance cannot be complete without factoring for the political-military context, this paper will purposely focus only on its civilian aspects. Basic security and stability are pre-requisites for growth in any market, especially so in FMs and EMs. As a result, policies for Growth and Peace reinforce each other and must be coordinated; but that coordination necessitates its own separate analysis, beyond the scope of this one.

How to measure it: translating principles into indicators fit to your circumstances

The Annual Global Ease of Doing Business Report offers a methodology in how to assess Governance systematically, whether in Africa or anywhere else. The Report translates the ease of doing business into key frontline government administrative services such as the time and cost to get a business license or those to enforce contracts. A similar focus on frontline services in power, water, transport or communication is essential in translating governance into tangible and achievable objectives.

Though in general a mix of quantitative (gallons/Megawatts/number of paved roads/number of cellphones towers… per inhabitant, etc) and qualitative indicators (% of clean water/ sustainability of power supply/ caretaking of roads/ national cellphone network coverage %, etc…) will be recommended, they will vary greatly depending on the sector and the country.

For water and power for example, time and cost of delivery will be less relevant than metrics like how many cities and villages have access to it continuously and for how long at a time.

In transport, assessment gets even trickier given the multiplicity of media available, roads, rail, ports, airports or river lanes.

Here more varied indicators might be more useful: how many of given country’s cities and villages are connected to at least one major internal or external transport medium; whether highway, airport, port, etc… Cellphone and wifi coverage offers an example most closely resembling the Ease of Doing Business Report, as coverage and network efficiency provide strong measurement tools.

And of course whether the country surveyed is Rwanda (size of Vermont) or the Congo-Kinshasa (size of western Europe) will impact which measures are most appropriate. There are no one-size-fits-all metrics, but general principles when translated properly to a country’s specific circumstances offer a good chance to measure progress.

The effective implementation of these methodologies and principles leads to the second crucial phase in governance delivery and improvement: how to track it.

How to track it: breaking down the measures and communicating the objectives

Once the indicators are set, the task of translation then moves from national aggregates to specific objectives in every administrative level of execution. Rwanda is the country which has pushed this exercise the farthest, breaking down each Millenium Development Goal (MDG) into time specific targets for each sector, in each government ministry, each region, each district. This effort was managed entirely by a special unit under the president’s authority. The result of this comprehensive breakdown was a governance masterplan called The Economic Development and Poverty Reduction Strategy (EDPRS) which regroups all the specific goals to be reached. A performance contract was then signed by each and every government worker which included quantitative and qualitative goals, the Imihigo.

Teachers took responsibility for a specific number of pupils to enroll in class after 3 months, 6 months, 1 year, 5 years, as well as on the specific skills their students were supposed to have acquired. Doctors and nurses accepted a specific number of patients to be treated per specific pandemic (malaria, HIV, etc…) in their zone of responsibility and what their resulting health prognosis was expected to be. Perhaps more crucially, government engineers took responsibility for a specific number of roads, power lines, water connections, cellphone towers and wifi hotspots to be built in their area and what their state of keep was supposed to be. The time intervals were common to all. And each one of their managers, regional directors, national supervisors, all the way up to the cabinet minister in charge, had to answer for their aggregated results (and still does). If any failed to reach their objectives, they had to justify why at every interval.

There are other approaches which have produced results as well. Then-Chief minister of Gujarat, Narendra Modi concentrated oversight with himself and his immediate staff but in a less rigid system. After having defined with the Gujarat bureaucracy a vision including universal water connection and sanitation services, continuous power supply, a comprehensive transport system and WI-FI coverage in rural areas, Chief Minister Modi personally visited half of his state’s 14,000 villages over his 12 year tenure to verify how the bureaucrats were translating his vision into frontline services. Another potential model is Malaysia which set up the Performance Management and Delivery Unit (Pemandu) under the prime minister’s authority, to set specific department goals, coordinate and review their implementation.

Each of these governments relied on tools and skills specific to their context: Rwanda’s centennial tradition of strong administration, India’s British inherited civil service, in Malaysia a mix of both; but all shared a continued focus on delivering practical results. The process overseeing the translation of governance into tangible goals mattered less than delivering frontline services at a specific time. A context specific oversight structure also enabled another key feature they share: continuous follow-up and follow through by the central authority on goal implementation. Only thus can a unity of action and purpose be established.

When such unity is achieved from all relevant parts of government, the focus can at last turn to actually improving governance.

How to improve it: the benefits of comprehensive overview and a feedback loop

The first benefit of successfully carrying through both stages of governance translation is that underperformance and inefficiencies become visible almost immediately. Those doctors, teachers, engineers or bureaucrats who are not delivering on their objectives can be singled out for reformation or dismissal. The government of Paul Kagame’s vigor in discarding non-performing government officers played a big part in rallying Rwanda’s bureaucracy towards his goals.

But more important than the sanctions are the opportunities which arise when structural problems become visible. Non-performance is often specific to or more widespread in particular geographic areas, a specific region may represent one third of citizens without power or concentrate half of those without running water. Alternatively, specific sectors such as healthcare or education may be chronically underperforming as a result of a chronic lack of properly trained doctors or teachers.

In practice, the two phenomenons are often conjoined, with the same regions accumulating underperformance in education, health, energy, water, etc… Specific frameworks addressing the structural nature of underperformance in those areas and sectors which are lagging is a central step to turning around frontline services delivery. As specific regions can concentrate underperforming governance, giving priority to governance implementation efforts in these across different sectors, education, health, power, water and others relevant, can lead to a turnaround whose general uplift effect will be immediate and will help mainstream faster the new norms required by the governance goals.

There is also a positive version of this phenomenon: other regions can concentrate better governance results along the same parameters. These can be used as baselines for the underperforming ones and as launching pads for further advances. For example, if any regions already have round the clock power supply, they can be the first to enjoy, wifi coverage, e-banking or tablets-for-students initiatives, and the officers in those areas can be used as experts in the lagging ones.

Another source of opportunities for improvement are operational synergies, which develop naturally as a masterplan is implemented across different sectors. A current and telling example is the Indian government’s decision to build water-pipes and wifi cables along projected highways, saving money and time to all stakeholders.

Last but not least, there is the feedback loop of governance implementation. The process of assessing and mobilizing action must become a continuous one, for new problems requiring new solutions arise constantly.

The experience of Rwanda here too, presents a (very stringent) model: there’s an annual interactive conference between the government and the people where cabinet ministers, the prime minister and the president answer direct questions from the people; there are semi-annual government seminars to oversee the implementation of EDPRS; and there are annual summits between the government, business, unions and other civil society groups to exchange on how EDPRS is affecting them.

As a consequence, Rwandan authorities enjoy a comprehensive picture from all sectors of society on how their policies are impacting people’s lives, where new needs may be, where to accelerate or slow down. As goals are attained, governance gains its own momentum and becomes self-sustainable.

One additional step can even further accelerate progress: a holistic view.

The Vision Thing: The Added Value of Being holistic

Being holistic about governance delivery and improvement, having an overall vision encompassing all basic public goods, (education, healthcare, water, power, cellphone and wifi coverage, etc) provides a powerful tool of communication and for mobilization.

A governance vision enables communication to and buy in from all the stakeholders by defining a clear purpose for a wide set of varied and often arcane policy measures. A governance vision can be repeated as many times as necessary. And a governance vision can both galvanize domestic stakeholders and attract external ones.

In Rwanda this took the form of Rwanda Vision 2020; in the Indian state Gujarat, it was Vibrant Gujarat, both a conference and an outline of authorities’ long term plans. Since developing such a comprehensive vision is long and complex at first, there’s often the temptation to focus on just one or a few sectors as the solution; education and healthcare or water and power infrastructure.

Such an approach is a mistake which leads to missed operational synergies, missed opportunities in domestic mobilization and with the private sector, local and global. Kenya’s initiative to equip all its pupils with tablets is a telling current negative example. It is stalling because many regions don’t have basic power; what’s more the recent devolution of power has made identifying the officials in charge and getting clear answers even murkier. Many investors who wanted to participate in the program are now on the fence or retreating.

With a comprehensive vision, these issues could have been anticipated or remedied faster.

A holistic vision can be sequential, it doesn’t have to be done all at the same time. Rwanda’s EDPRS II prioritizes different sectors from the EDPRS I, but all of them were part of the Vision 2020 blueprint. Having that holistic vision at hand helped tell every government official what he was working toward and as success gathered in one area, it carried over into others that much quicker.

Different national experiences with the current Ebola outbreak make these themes apparent. After a deadly Ebola outbreak in 2000, Ugandan authorities developed a vision to manage and defeat all future epidemics on their own. They then translated that vision into a comprehensive system from the president down to each village and rigorously tracked the system’s implementation. As a result since 2000, multiple Ebola outbreaks in Uganda have caused only a few dozen deaths. Along the way, Uganda’s efficiency has attracted to it funding and new technology from the US Center for Disease Control and the World Health Organization but also from pharmaceutical multinationals, turning the country into a hub for epidemics management and rare disease research. The fault of Liberia, Sierra Leone, and Guinea-Conakry, countries where the current outbreak has spiraled to thousands of deaths coupled with social and economic unrest reaching beyond Africa, is thus one of governance: phases one and two weren’t carried out. But Uganda’s governance is also at fault: the principles which had produced the spectacular turnaround in health, in spite of fighting Joseph Kony’s insurgency, was not broadened to all other basic public goods. Uganda failed to be holistic though the opportunity was glaring, at an enduring cost to the country’s takeoff.

For governance itself is more than the sum of its parts or costs, its pay-off goes far beyond better administration.

The pay-off: Growth, Stability and Purpose.

Better governance means a government that has a strategy for growth and which can set priorities and see them implemented; one that understands its constituents’ needs more fully, and has a clear understanding of how they acquire their goods and services and what their skills sets are; one.

The first benefit of these attributes is growth, a lot more of it. For those are precisely the qualities private capital, especially global capital is looking for when assessing the investment potential of FMs and EMs. A predictable and comprehensive governance framework will mobilize lenders convinced by the government’s vision; companies with the specific professional skills to realize or accelerate the vision’s sectorial or operational objectives (transport, power, water, wifi, healthcare, etc); and last but not least, galvanize the investors looking to leverage the better governance environment to expand their markets, enhance their own operations or exploit local resources. It must be emphasized that the most important among those investors will be the domestic ones. It is their buy in that will ultimately power local growth sustainably, because they know the environment the best but also because of the often high degree of dead capital in FMs and EMs. Rwanda’s Agaciro Fund set up with local savings to finance rural infrastructure and business or Cameroon’s domestic bonds to finance national infrastructure demonstrate the clear financial pay off from getting the buy in of domestic capital.

The benefits of better governance extend beyond the economy: better governance also reinforces government’s overall legitimacy and stability. As the delivery of basic public goods improves, the trust and authority gained is often extended to other policy areas, resulting in greater consent overall for the central authorities’ agenda. The pattern is consistent across the last 40 years: double-digit growth re-legitimized Communist party rule in China after long periods of internal strife; the successes of Paul Kagame’s 2020 vision have rallied genocide-torn Rwanda to an extent thought impossible after the 1994 Genocide; in spite of Gujarat’s legacy of communal violence, Narendra Modi’s successful governance turnaround earned him three landslide electoral victories in his state and now one as the head of India’s first majority cabinet in 30 years.

Whatever its political orientation, it is in the self-interest of any government to deliver Better Governance.