|John S. Morlu, II |
ODI and BBC World Service Trust Discussion Series
On “Dual Accountability: Aid Effectiveness”
British Academy, London, England
25 July 2011
I want to thank ODI and the BBC World Service Trust for hosting these series, as they are vital for a new and improved thinking on how to make aid effective. I am hopeful that these discussions will lay a good foundation for Busan. I will also like to thank ODI and BBC World Service Trust for inviting me to participate in these discussions.
I am neither a theorist on development nor a researcher on development. I am invited to give practical discussions on the issues of the dual demand in this accountability era -where demands for results are now part of the aid agenda. This is a good development in that without results donors are just putting money down a deep black hole, which has been the case in many instances around the world. The emphasis especially on value for money is significant in making aid more effective. But the challenge is how we satisfy the expectations of taxpayers in both donor and recipient countries. Both taxpayers want results but can differ in terms of timeframe and type of results they expect. That is the dilemma.
I will now provide some of the practical things that we need to understand as the world pushes this ambiguous agenda of making aid effective, as all countries are not similarly situated.
First, what are we measuring?:An important aspect of accountability is to be able to report on a series of results. But this becomes much more difficult in a country like Liberia, which is considered a fragile country. There is not much data on many things in Liberia. And where you have data, the integrity and the reliability of the data is in serious doubt.
Let me give you a good example.
I read in the papers that a former first lady of America spoke along with the Liberian President at an Africare event in Liberia in 2008. The former first lady indicated that enrollment in Liberia among girls has increased by a certain percentage. As a person who likes to question numbers; I started to ask where she got that number. This is because I had asked the Minister of Education to give me data on the number of schools in Liberia. He bluntly told me he does not know the number of schools in Liberia. But then I wonder, if the Minister does not know the number of schools in Liberia, then how the former first lady could be so determinative in the percentage of girls’ enrollment.
The fact of the matter is that the percentage increase of girls in schools was probably a good enough number that could sell. It could demonstrate to American taxpayers that indeed the American taxpayers’ dollars were at work in Liberia, delivering genuine results. So when an Auditor General like I was who is focused on evidence based results comes and starts to push for evidence to substantiate the percentage of girls enrollment, you get a slap in the face and then people start to question your motives as though it was against the law to do so.
Additionally, we have to be careful as to what results we are measuring even if we have good data. Let me clarify with the same example as I have given previously. Is the rate of enrollment of girls a good measure in Liberia? I would say no. I believe the rate of dropout should be a good measure for results. For instance, how many of these girls who are enrolled each school year actually end the school year in Liberia?
From audits, I noted that sometimes the distances between schools have caused some students to drop because they have to walk far distances to another town to go to school and then come back to go to the farm to help their parents. Some students in Monrovia also leave school to sell in the markets, as so many children have become breadwinners, acting as street vendors.
Further still, we could measure how long a day, a student stays in school. For instance, I noted in Todee District, wherein more students go to school at 9am but leave on or before 11am to go on the farms.
Essentially, because of the demand for results, we have to be careful not to measure the wrong indicators, as enrollment for girls could be a better measure in America than in Liberia. And in countries like Liberia where data is lacking or the integrity of the data is often in doubt, we have find non-quantitative yardsticks that will not necessary create a headline and get foreign taxpayers to buy into more aids. But if we do not, we will create a sense of false accountability, as taxpayers in donor and recipient countries will be given the wrong information and therefore the wrong impression that things are better when in fact they are not better.
Second, International Best Practices: It is hard to find a Government that is heavily dependent on donors that will say I do not want international best practice standards. So when the IMF, World Bank, EU, US, etc come and say I think you need so and so international standards, our governments quickly jump at it without thinking about the implications. Let me hammer home this point with a few examples. International partners said for Liberia to meet HIPC requirement, there should be an audit of all Government agencies.
I got to Liberia in April 2007. I met with the President of Liberia and selected international partners, I told them no way Liberia can audit all its institutions at once to meet to meet HIPC. It would be cost prohibitive and time consuming as in post Enron, auditing standards both at the private and Government levels have become tighter. I managed to convince them in a factual way that it was not possible. So I came up with a Risk Matrix that mathematically determined the major riskier institutions from which Five Ministries were selected for audits to meet HIPC, instead of the 90 plus institutions.
But then I also said, although it is international best practice to audit annually, it would be good for Liberia to do a management review as a substitute for audits. The President had repeatedly said there was ‘systemic corruption’ in Government. I had said the Government was 3 times corrupt. Nearly all reports showed massive levels of corruption in Liberia, compounded by a severe lack of systems and control. So I thought it was utterly crazy for international partners and Government to demand audits of Government institutions. No one wanted to accept that simple fact in November 2007, because either they thought it will be like business as usual when audit findings are negotiated or they just did not get it that international auditing standards as prescribed by INTOSAI required rigorous testing of accounts and systems and controls.
I say okay, you want audit, and so we will audit. I started my first audits in 27 November 2007. In less than two days when the audits starter, the President of Liberia had to intervene between me and the Minister of Finance. I said no, I just wanted the documents and the records since I was told to do the audits. I argued then that I said we do management review and all said no.
The point is that they wanted to pretend in a highly corrupt environment, they could go through international best practices, but really were not sure whether I could go through with it. In the end though, I got the blame when it was the international partners and the Government that wanted audits to international standards in a highly corrupt environment. How does one audit an environment where corruption is indicated as being “systemic” and then you do not find massive corruption? Not possible unless you want to compromise audits.
Another good example of international best practices is that developing countries will accept model laws like procurement, auditing laws, financial management laws, etc because they are internationally tested and accepted. But how many of these laws are actually implemented to even 20 percent. Not many. I use to be quite surprise when I hear the President of Liberia and other Government officials say audits are not supposed to be published. In fact, in the press statement sent by the President informing the world that she will not re-nominate me, she said he has studied “audit systems throughout the world,” and that my mode of operations was not consistent with her study. This was a far cry from the truth, as I have been in contact with AGs in America, Europe and Africa and have received a lot of support and guidance from them. So I wondered then, which “auditing systems” was being referenced by the President. Probably it could have been Libya or Burkina Faso auditing standards.
All in all, the President and officials of Government had forgotten that Section 37 (6) of the PFM Law of 2009 says that the Auditor General should handle disclosure of audit reports in these orders: Publish in Gazette; submit to the National Legislature; and then the President. So essentially, the order shows that audit reports be given first to the taxpayers before the Legislature and then the President. But the President and the Government wanted it the other way around. Discuss it first with the President and then Legislature and then never the public. But that would never be international best practice standards that was included in the law and signed by the President and hence such a procedure in reporting audit findings would have been inconsistent with the Liberian laws.
I do not see the Auditor General of America(Comptroller General) or any well performing country discussing audit reports with the President before finalizing it or publishing it. But what the President and others were signaling to me was that indeed we talked about international standards and we put them in our laws but we did not expect you to come and actually try to implement them.
Now, there is a push for performance audit, which is value for money audit. I keep telling fellow auditors general in Africa, Liberia is not even ready for simple financial and regularity audits and you keep pushing for value for money audits. International community wants value for money, as they say. For me, I adopted a go slow approach with brining the Swedish National Audit Office to build over time a performance audit department.
I was not going to immediately venture into performance auditing in a country that was already crying foul with me. A well done value for money audits could have just created even bigger headache for the Government and then I would be accused again and again for trying to bring down Government for doing what was international best practices. Officials are struggling to account and now a performance audit will also expose their incompetency, as performance auditing is about reporting on a minister’s efficiency, effectiveness and economical use of public resources.
Essentially, all these model laws that are introduced in countries like Liberia have a near zero chance of being implemented. There is a general lack of a will to implement them as doing so will limit opportunity for corruption and corruption is a way of life. Additionally, even if some of them wanted to implement, they do not have the capacity to implement them.
But these model laws sell as achievements in convincing taxpayers in donors’ countries that something are being done. For me, as you go Busan, it is far better to develop a set of model laws or practices that are applied to a cluster of countries, such as one model for fragile countries, one for developing countries, one for emerging economies, etc.
It is foolhardy to hold Liberia and Ghana to the same international best practice standards. Ghana is far ahead in development and Liberia is deemed as a fragile state. A single international best practice will not work for all countries. I can tell you that the Liberian Government will accept on face value these international best practice standards, because they need donors’ money but will not implement them within the true spirit, intent and meaning of the laws. It is hard to find a Liberian Government institution that can say it has implemented even 10 percent of the Procurement Act, a model law.
So it is best to keep it simple and not ask for international best practices in all countries because all countries are not at the same level in development. Develop international best practice for each cluster of countries that are similarly situated, a kind of “pure play” approach to improving governance.
Third, Diffuse Requirements: The Paris Declarations is supposed to be the foundation for the discussion of aid effectiveness, with harmonization at its core. In reality that is not the case. Donors and other international actors have pressing demands from their respective taxpayers to show results. So even in instances where there is general agreement on a program such as HIPC Requirements, there are also requirements of each international donor that has to be met. For instance, we still have IMF performance requirements and World Bank Prior Actions. USAID, EU, and ADB, etc also have requirements that have to be met.
The risks are several due to competing performance result requirements from each donor. First, we get burned-out and confused as to what is priority. In the case of Liberia, one would wonder which of the following is most important: MDGs, Poverty Reduction Strategy, IMF Performance Requirements, World Bank Prior Actions, ADB Requirements, EU Requirements etc.. Day-out, day-in, we are all stressed-out trying to meet these result requirements.
The second risk is that international donors could report different things for the same performance benchmark, especially when all of these result-focused requirements are not coordinated. Additional risk is that the quality of results is compromised because everyone is trying to meet requirement just for checking off the box or checklisting.
I nearly lost my job over the PFM Act in Liberia. The initial draft was a 21 page “flying sheet” put together by a consultant hired by IMF. I got hold of various PFM laws in the region as the model PFM law produced by the World Bank. I asked EU to recruit for me a legal consultant who was an experienced legislative writer, someone who actually knew how to draft a law. She came in and we took a lot at the PFM and it was done to a poor quality.
I said wait, we need the law to meet HIPC but we need a good law that was not in conflict with existing Liberian laws, as we noted that the draft PFM Law was not only in conflict with several laws but with certain provisions of the Constitution. So the Legislature stood behind me and the GAC to help make it better. And then I was hauled to EU because someone at the IMF had complained that I had hijacked the law. So I explained to EU team that it is a choice between just getting a law to meet HIPC or doing it right the first time. This was to me a classic example of how at times everyone wants result so badly that quality is not much of an issue.
The bottom line is that it is far better to keep it simple on things that can be achieved and then coordinate all requirements, staggering them on the basis of priority. What good it is to pass a national budget to boast that Liberia met the deadline in passing budget and then the same budget which was passed in June collapsed in July. This means it was not done to quality, because officials were moving fast to satisfy some international actor.
Fourth, Local Ownership: We hear a whole lot about local ownership of development projects. That is a good international thinking. But we have to be mindful. Not all countries are willing and capable to take local ownership, because at times the political leadership, especially the President, is constrained by local political considerations. Members of the National Legislature in Liberia complained to me that everything that the Government wants to pass into law, they claimed it is IMF, EU, World Bank, US, etc that is demanding it. So it is easy to pass the buck.
It is politically far better to blame it on IMF or other international actors in a country like Liberia that is emerging out of war with poor understanding of good governance than for the Government to take ownership. So even if the Government says publicly it wants ownership, it is not willing to take ownership because of the political discomfort such ownership brings. There is a need for caution by first understanding the political environment before venturing into ownership talks.
How can EU have a Government to take ownership of the General Auditing Commission when all the main political actors are caught in audit reports and are crying foul? It is therefore far easier for a political leader to say it is EU that recruited so and so and it is EU institution that is creating all of these troubles. Basically, in a fragile country like Liberia, the mentality is to blame what is perceived as poor results on international actors and take credits for the good things that are done by international actors.
The second factor that we need to take into consideration is that even if the Government is willing to take ownership, it is not capable to take ownership. I used to find it quite paradoxical when a Liberian Government official will defend the lack of accounting for public resources on the lack of competent manpower but then the same official will also say we need to take ownership of the development process. How can a person takes ownership when he claimed his country lacks the capacity to deliver on the ownership, beats my imagination.
Essentially, while at some point ownership has to be turned over to the Government, it is important to take a gradual approach. For instance, it could start with 10 percent ownership in 2 years to 30 percent ownership in five years and then 100 percent ownership in 20 years, because that is a reasonable time frame to normalize a country coming out of war. But how can you pass on ownership in a country that its President says is characterized with “systemic corruption” and a country where everyone seems to blame failures and corruption on the lack of capacity to build effective systems and controls.
Complete ownership comes with complete risks being transferred. What would happen to DFID if its taxpayers learned that 90 percent of its donation to a country was stolen or mismanaged? Someone will lose his job at DFID. There is a case in Liberia wherein 90 percent of money provided to World Vision by the US taxpayers was stolen.
We have heard that there are polls showing the declining support by British citizens for aid. Well, I can understand that. I paid taxes in America that is also used to provide aid to a country like Liberia. I too will be angry and in less support of aid when a government official from Liberia come in my neighborhood in America and purchase an expensive home along with big expensive vehicles. In the developing world, it is sad that people use stolen monies to build mansions all around the world .
Again, ownership is a buzz word, a “sexy” internationally accepted phrase. But is it practical in all cases? This should be considered at Busan. For me, for those who are advocating ownership, I say it is better done through direct budget support wherein all funds are given to the Government and the Government is sanctioned for not accounting for them.
Direct budget support has a carrot and stick. It is political win for a President to get direct budget support. It is a big political loss of confidence for budget support to be withdrawn. Withdrawing support is deadlier than giving direct budget support, especially in countries like Liberia that depend on donor support a lot and that survives only on international acceptance.
Finally, Short-Term Versus Long Term: From my experience, I saw that the high demand for results from taxpayers in donors is leading so many to focus on areas that show the quickest results. It is almost similar to thinking that calls for a shorter payback period on an investment in a risk business or country. We hear President Obama say that institutional reform is the best way to build an accountable and transparent system. I agree. But how many international actors are willing to invest time and resources into institutional reform, wherein the actual benefits will come in 10 to 20 years, not in 1-2 years?
Furthermore, the risk of investing in institutional reform is higher than the short term, “trigger happy” approach wherein there is concentration on quick fixes, tweaking on the edges. But again it is as simple an interpretation as borrowing from portfolio and investment theory: There is a tradeoff between Risk and Return. Institutional reform has a high risk and therefore its long term reward to Liberia is much higher than the short term approach that focused on meeting this or that benchmark.
This is why today when Liberian politicians running for President ask me how to fight corruption, I say to them do not say “Zero Tolerance” or “Public Enemy Number One.” Instead I tell them to say, we will fix the corruption problem through institutional and structural reforms, supported by gradual legal sanctions. This is a more long term approach. But again, EU has experimented with development assistance focused on institutional reform when it decided to support the General Auditing Commission (GAC). The benefits will not be immediate but it will save Liberia millions and will help strengthen the long term viability of Liberian democracy.
So I say to international actors, it is far better to communicate with your taxpayers that in some countries like Liberia there are no quick results if they are committed to see real changes in the lives of the people they are trying to assist through their taxes. International Actors should balance their results requirements, biased toward long term institutional reconstruction. But that will be a hard sell in a global environment where a single dime stolen from funds provided by American or European taxpayers can make the headlines on CNN, BBC, VoA, etc.
I hope I have highlighted a few considerations in the dual accountability debate. I believe these considerations can better assist both taxpayers in donor and recipient countries get the real results they want from their Governments. It will help to bridge the expectation gap.
Honest discussions on these issues is the best way forward.
I thank you again for the invitation.
Speech Delivered by John S. Morlu, II