Improving all aspects of governance is vital to reducing poverty and promoting sustainable development for the benefit of poor women, men and children. The public sector is at the heart of this challenge. The quality of public-sector management and administration is crucial to achieving the Millennium Development Goals, as public-sector entities are, in most countries, responsible for delivering services, such as health and education, for laying down a regulatory framework that fosters private-sector development, for ensuring and upholding the rule of law, as well as for promoting gender equality.
The challenges faced by the public sector in developing countries are significant. Poor service delivery is a visible sign of this, as is corruption. Capacity must be developed, not necessarily to expand the public sector, but to help nurture an effective and accountable public sector capable of contributing to the reduction of poverty.
Processes of change, aimed at improving governance and reducing poverty, take time and have to be built from within each country. The public sector is obviously at the core of these processes. However, on its own, the public sector cannot deliver results. Civil-society groups and other non-state actors, such as the private sector and the media, are critical in holding the public sector accountable and in advocating needs and priorities.
The vision of the Danish support to strengthening public sector performance in partner countries is embedded in the 2007 strategy “Effective and Accountable Public-Sector Management – Strategic Priorities for Danish Support to Good Governance”. Specifically, the strategy defines three core areas for support to public-sector management:
- the fight against corruption
- local service delivery and governance
- public financial management
In these three areas, the Danish Ministry of Foreign Affairs will seek to develop particular competencies and expertise to become a competent, relevant and respected partner capable of acting as lead donor at the level of partner countries and internationally. Accordingly, Denmark will be less ambitious in terms of technical capacity in other areas of public-sector management.
The following principles guide the Danish support to public sector management in partner countries:
- Promote the goal of poverty reduction, i.e. ensure that changes and reforms are as pro-poor, gender sensitive and environmentally sustainable as possible.
- Support public-sector management in all programme countries.
- Provide support in the three selected core areas based on an understanding of their interaction and interdependence with the governance situation as a whole.
- Make increased use of analyses of the political economy
- Base all support on thorough and preferably joint capacity assessments in order to adapt the provision of resources for capacity development to each situation.
- Facilitate and support the active inclusion of the ‘demand side’ of governance in change and reform initiatives at the country level.
- Promote gender equality and special interventions aimed at supporting women’s equal access to resources, influence and rights in all interventions based on thorough analyses of opportunities and constraints.
- Apply the approaches of the Strategy to other Danish support for the partner countries, not least to the sector programme support.
- Intensify efforts at the international level to promote the principles enshrined in the Strategy
- Identify and implement actions that contribute to improving the governance of donors.
- Create easy access for the press, civil society and others in each partner country to information relating to the disbursement of Danish development assistance to national and other institutions and organisations in partner
Local Service Delivery and Governance
Denmark has a long history of transferring public functions to locally elected governments, thus gaining experience of striking a proper balance in the division of labour between the various levels of public authority both politically and administratively.
Combined with Denmark’s long-standing development cooperation with decentralisation programmes in partner countries, this domestic experience provides a particular vantage point for Danish support in this area, as well as for the dialogue with partner countries and other development partners. Local Service Delivery & Governance is chosen as one of the three components in the policy document “Effective and Accountable Public-Sector Management: Strategic Priorities for Danish Support for Good Governance” prepared in 2007.
Reforms aiming at improving local service delivery and governance are currently being implemented in the majority of developing countries, including Danish partner countries. The nature of reforms varies greatly, ranging from mere technical adjustments of the public administration, mainly in the form of de-concentration, to radical devolution of political power to relatively autonomous local governments.
Decentralisation in Danish bilateral development assistance mainly takes the form of sector programme support (primarily within education, health, environment, agriculture, roads and water), but Denmark also supports specific ‘decentralisation/local governance reform programmes’ in a number of countries.
Donor agencies have increasingly recognised the importance of working with decentralisation, either through direct support to decentralisation reforms, as part of support to wider public sector reforms or good governance programmes, or as part of sector programmes. In many countries, however, support to decentralisation is still mainly provided in the form of individual projects supported by different donors, and only few efforts have been made to pursue better-harmonised and better-aligned programmatic support in line with the statements of the Paris Declaration on Aid Effectiveness.
Against this backdrop and within the overriding objective of poverty reduction, the following principles guide Danish support to local service delivery & governance:
- Support the development of effective accountability mechanisms. Cooperation will be tailored to match the needs of government organisations (supply side), associations of local governments, CSOs and other non-state actors (demand side).
- Push for increased donor coordination and harmonisation at the partner-country level
- Pursue alignment of support for local service delivery and governance, and, as far as possible, support the level of local government through existing systems.
- Push for and support activities that promote gender equality in local service delivery & governance and decentralisation
- Ensure that all Danish sector programme support (education, health, environment, etc.) is in line with the overall Danish approach to local service delivery and governance
- Take account of the two other core areas in Danish support to Public Sector Management – public financial management and anti-corruption – in Danish support for local service delivery and governance, whenever relevant, seeking to maximise the synergy between efforts in the three areas.
- Actively promote the development of, and agreement on, common guidelines and good practices for support in this area, and generally promote the aforementioned principles in relevant international and regional organisations.
Public Financial Management
A well-functioning public financial-management system is critical to efficient and effective service delivery. It provides relevant and reliable financial information in a timely and consistent manner for control and accountability at all levels. It supports and reinforces other accountability systems regarding budget execution, and thus has a central place in the fight against corruption.
The role of the public financial-management system is to facilitate the planning and budgeting process of the public sector, the recording of financial information, and the controlling of budget execution. It concerns both the revenue and the expenditure side of the budget. The broad objective of a public financial-management system is to achieve overall financial discipline, allocation of resources to priority areas, and efficient and effective use of public resources for the achievement of results.
Financial management is the active use of financial and other information to plan activities and transform inputs and resources into outputs. This is guided by the relevant legislation, the organisation of work, the procedures and systems, the administrative and accounting tools (including IT systems), and the control systems. Procurement of goods, works and services is an important element of a public financial-management system.
There has been a shift in the approach to public-sector management from rule-based administration to focusing more on results and value for money in Danish partner countries as well as in many other places. This has strengthened awareness of the need to enhance public financial-management systems in line with this novel managerial approach. Furthermore, the donors’ commitment to increasing the use of their partners’ national procedures and systems for channelling financial assistance has highlighted the need for sound public financial management. This, in turn, has drawn the donors’ attention to support for public financial-management reforms in partner countries.
Corruption is usually defined as “the misuse of entrusted power for private gain”, the definition used in the Danida Action Plan to Fight Corruption. Though the definition has been criticised for representing a Western tradition of government and administration, it does capture the notion that corruption is based on informal relationships of accountability, which are at odds with formal democratic accountability relationships.
Corruption has been shown to be most detrimental to the poor and vulnerable. It undermines the public sector and economic growth rates, investment rates, the allocation of public resources, and other essential elements of national development. Corruption redistributes resources and welfare away from those already deprived. It has the general effect of reducing the legitimacy of the government and the public sector in the eyes of the rest of society. This scourge is a major risk associated with development assistance.
A number of key international conventions provide the goalposts for Denmark’s support to anti-corruption. Denmark has signed up to and ratified the United Nations Convention against Corruption (58/4 of 31 October 2003), which requires a road map for integrity at the domestic and international levels. Denmark is also a signatory member of the OECD Anti-bribery convention (1999), which commits member countries to criminalize bribery both in domestic as well as international business affairs.
The Danida Action Plan to Fight Corruption is consistent with the principles laid out in the above conventions. The Plan includes three concentric circles, i.e. 1) The Danish Aid Delivery System 2) the handling of Danish aid funds within the partners’ management systems and 3) the partner countries and societies at large. The new Danish governance strategy “Effective and Accountable Public Sector Management - Strategic Priorities for Danish Support to Good Governance” reinforces the strategic focus on anti-corruption in Danish development assistance. In particular, anti-corruption is seen and addressed in the wider context of governance shortcomings and in a political-economy perspective, thereby addressing the systemic issues to curb corruption.