22.03.2022 Seite 1 Strengthening Institutions David Nguyen-Thanh GIZ, Sector Program Public Finance, Division Good Governance and Human Rights Presentation held at the Annual Meeting of the Practitioners Network of European Development Cooperation Luxembourg, April 20, 2012
Strengthening Institutions. David Nguyen-Thanh GIZ, Sector Program Public Finance, Division Good Governance and Human Rights Presentation held at the Annual Meeting of the Practitioners Network of European Development Cooperation Luxembourg, April 20, 2012. - PowerPoint PPT Presentation
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19.04.2023 Seite 1
Strengthening Institutions
David Nguyen-Thanh
GIZ, Sector Program Public Finance,
Division Good Governance and Human Rights
Presentation held at the Annual Meeting of the Practitioners Network of European Development Cooperation
Luxembourg, April 20, 2012
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I. Institutions, Ownership and the role of Aid
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Why care about institutions?
Institutions: different concepts Narrow: public organisation (e.g. ministry of
Institutions are believed to play an important role in promoting development outcomes
Plausible assumption helpful to use impact chain to assess role of
institutions in specific contexts
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Example: Complex Theory of Change for Resource Governance Strengthened regulatory
& policy environment
Timely and regular information on revenue flows
EITI compliance achieved
EITI reconciliation reports produced
EITI activities managed and coordinated
Greater public awareness
Publication and disemination of EITI reports
Reduced corruption
Recovery of financial discrepancies
Government, companies and civil society engage in EITI process
New policies and regulations
Strengthened stakeholder capacity to engage in EITI process, eg by trainings
Identification of financial discrepancies
EITI Validation reports produced
Increased FDI
better natural resource governance
Sustainable growth
Reduced poverty
More inclusive and better informed debate & dialogue
Risks + Activities
Risks + Activities
Risks + Activities Risks +
ActivitiesRisks +
Activities
Risks + Activities
AssumptionEx.: Reports are understood by broad public Assumption
Assumption
Assumption
Assumption
AssumptionEx.: Trainings
reach relevant actors
Assumption
Risks + Activities
Risks + Activities
AssumptionEx.: New laws are effectively implemented and adhered to
… so far so good!
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…where does aid come in?
If there is sufficient ownership, then countries may ‚build‘ institutions and eventually achieve desired outcomes …
… so the dev‘t challenge of strengthening institutions boils down to a financing problem. Really?
Evidence suggests that lack of ownership may be the problem
Why? Political economy: vested interests, neo-patrimonial
state collective action problems – Booth (2011)
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Can development partners contribute to ownership?
Booth (2011): third party (e.g. development partners) may be best fit to unlock ‚bad equilbria‘ (not conducive to long-term interest) which involved stakeholders may not overcome due to lack of trust, awareness or mechnisms of cooperation
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…which suggest for the role of development partners:
Identify the nature of problems incl. collective action problem (political-economy analysis; capacity assessments)
Stand ready to engage as honest broker (multi-stakeholder
dialogue) initiate trust-building activities, and suggest ways of establishing forms of cooperation
that will be mutually beneficial in the long-term
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II. Busan and the Building Block ‚Effective Institutions‘
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Busan and the Building Block ‚Effective Institutions‘
A new consensus on supporting and strengthening institutions and policies to ensure they are effective in delivering or enabling the delivery of public services was endorsed.
Effective public institutions are pivotal and indispensable for development in Partner Countries.
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What is meant by effective institutions?
Effective Institutions: Enable effectively the delivery of public services. Catalyze the leveraging of financial and other
resources for sustainable development. Capitalize on the opportunities created by the
changing global landscape. Improve accountability and fight corruption through
effective internal and external oversight. Are based on solutions specifically tailored to the
country context and local processes.
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Busan: A new approach to supporting and strengthening institutions and policies
1. A focus on factors that make reforms and capacity development happen: e.g. PFM, political economy, dom resource mobilization, parliaments
2. Partner-led joint assessments of country institutions
3. Country-based partner-led evidence-gathering on institutional performance and capacity development to inform decision making, accountability, transparency and accessibility.
4. Systematic regional and global knowledge-sharing, including south-south, international and regional organizations to facilitate learning
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III. Strengthening institutions and the GIZ approach: the case of
Ghana
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The GIZ approach to Capacity Development
„Strengthening partners – developing potential“ Political and social frameworks are essential for
effective and sustainable reforms Any country must be able to organize complex
processes on their own to help itself in the long run
Therefore the GIZ: Supports people to obtain expertise Advises governmental agencies to make their
management/production structures more efficient Advises governments to anchor goals and change
processes in laws and implement them
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Ghana: Process Landscape Financial Governance
Improving Public Financial Mangament to
implement GSGDA
Steering processes
HOM/HOC meetingSteering Committee on GIFMIS and GRA
Reform
MDBS Core Group Steering Committee on Audits of
Selected Flows
Automatisation of
GRA
Support processes
GIFMIS
GRA Reform Implementation
Committee
Macroeconomic Forecast
Training
REVENUEDomesticTax
Rev. Divestiture
of Public AssetsGrants and
LoansTax Policy Non-Tax
RevenueCustoms
EXPENDITURE
Public Procurement
Budget Monitoring
Budget Implementation
MTEF Budget Planning
Budget Regulations
DOMESTIC ACCOUNTABILITYParliamentary
Debate of BudgetPublic
Debate on BudgetEITIParlamentary
Oversight (Audits) External Audition
Improving Public Financial Mangament to
implement GSGDA
PFM Sector Working Group
MDBS Core Group
German Embassy
KfW
GIZ
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GHEITI, GIMPA, Parl.
Centre
Public Accounts
Committee
MOFEP, different Divisions
Ghana Revenue Authority
Tax Policy Unit
MOFEP
Good Financial Governance Programme
Tax Policy Tax Administration Parliament EITI & Oil and
Gas
I. Revenue Pillar II. Budget Pillar III. Domestic Accountability Pillar
Budget planning & execution
Donor Coordination
Ghana: GIZ support (GFG Programme)
PFM Sector Working Group
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Ghana: GIZ/SECO support to tax administration reform (1/2)
Challenge: Low tax ratio due to out-dated / inefficient tax
administration procedures
Objective: Ghana Revenue Authority (GRA) is established and
the integration of the former Internal Revenue Service and the former Value Added Tax Service into a domestic tax department is successful- Increased transparency- Responsiveness of public administration- Effective service delivery
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Ghana: GIZ/SECO support to tax administration reform (2/2)
Approach: GRA support embedded in comprehensive support
programme => good financial governance Technical support (short/long-term experts) Long-term commitment and presence on the ground Sound mix of technical expertise, change
management and facilitation of multi-stakeholder dialogue
Close cooperation with other partners, e.g. IMF, Crown Agents
Delegated cooperation with Switzerland (SECO)
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Relieved burden on citizens and enterprises
Development of HR and IT strategy
Segmentation of taxpayers
Run human resources management campaigns
Technical and financial support to GRA
Sensitization of GRA staff
Information about ongoing and status of reform process
Transparency of taxpayer obligations and liabilities
increase to B
Improve of customer service delivery
Run revenue integration and modernisation
campaigns
Improvement in Doing Business Paying Taxes
Technical and financial input from partners
Adoption of LTU evaluation report
Assistance to Oil and Gas Taxation Issues
More transparent and efficient taxation
More efficient revenue management
GRA Impact ChainIncreased self-financing
capability and economic growth
Reduced dependence on external funding
LTO contributes 60% of total tax revenue
Develop an effective Infrastructure
Facilitate interactive media programmes
Organization of workshop to sensitize civil society
impacts
Outcomes/outputs
inputs
processes, activities
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Ghana: Preliminary results
Increase in domestic revenue Enhanced efficiency of tax collection (e.g. Large
Taxpayer Office)
Source: MoF, IMF
2009 2010 2011
Tax revenues in million GH¢
4,625 5,951 8,706
Tax/GDP ratio 12.6% 13.3% 15.3% / 15.9%
LTO share 51,7% (2008)
52% 58,7%
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Lessons Learnt
Long-term commitment of German government to support country-led efforts towards good financial governance
…Builds trust and enhances understanding of reform needs / bottlenecks and politically feasible approaches
Support centres around comprehensive financial governance programme (avoid silo solutions, exploit linkages)
Reform progress and results are not primarily determined by funding; but: certain degree of funds for TA/TC necessary
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Conclusion (1/2)
GIZ/SECO support in Ghana suggests that it is possible to support country ownership of strenghtening institutions
Support most likely to be meaningful if directed towards capacity development efforts of partner country (use window of opportunity)
While quick wins are possible: reforms take time Much more to be understood about political
economy of reform design / implementation („capacity assessments“)
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Conclusion (2/2)
Strenghtening institutions: two dimensions: Contents-wise: support to key institutions, such as