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Tuesday, 10 July 2007

Governance....how has Mwanawasa performed so far?

The latest World Bank indicators on governance provides a new and exciting opportunity to assess how well President Mwanawasa has performed since he took charge towards the back end of 2001. We know that Africa as a whole has improved, especially in the area of corruption, but how far has Zambia progressed under Mwanawasa's leadership? In answering this question, my aim is to provide a short non partisan progressive appraisal of Mwanawasa's leadership in the area of governance over the last five years as indicated by the World Bank's newly publicly available data.

The table below from the World Bank database tells the story of Zambia since 2000 focusing on six governance indicators, as released today. The percentile rank indicates the percentage of countries worldwide that score below Zambia. So if we take a rank of 37 in 2006 on "voice and accountability", what it basically says is that 37% of countries scored worse than Zambia on this score and 63% were better than us. So this measure is very much a relative measure on how well we are doing with respective to other nations.

A quick scan of the table provides a rather interesting mix of the good, the bad and the ugly in President Mwanawasa's performance. The good news is that since Mwanawasa assumed command, political stability has drastically improved. In 2000 before Mwanawasa came to power, 68% of nations were more politically stable than Zambia. Fast forward to 2006 and only 44% can make that claim. The dramatic change over such short period cannot be by accident. Clearly Mwanawasa has done "something" to encourage greater political stability.


The increase in political stability is good news because foreign investors like political stability. It reduces the risk of their investment. From Zambia's perspective, it also encourages the right sort of foreign investment. If you can think of foreign investors as falling in two camps : goodies and the baddies. The baddies like war zones and corrupt regimes because that is where they do shady deals. The goodies are attracted to nice calm places and stay there for long. By Zambia being politically stable we have more chance of getting a greater pool of the good investors, which is a good thing in the long term because they tend to stick around and don't cut and run.

However, in crediting Mwanawasa with greater political stability, we must also recognise that democracy is naturally consolidating in Zambia and some of that undoubtedly is due to the current Government's openness to engage other political parties and encourage dialogue. But it may also be due to greater political patronage or what someone has called "politics of poverty". In other words Zambia is following the Botswana type of stability where electoral competition is eroded but the country remains at peace. Whether this is desirable or not is a matter of person opinion. Personally I favour greater checks and balances before electoral competition, although it is good for government to change hands once in a while in order to deepen the nation's democratic roots.

Another area where Mwanawasa has made progress is on the area of Government effectiveness. Admittedly Zambia is still performing much weaker compared to other nations. In 2006 nearly 75% of the rest of the world was performing better than Zambia. However, in terms of the position he inherited in 2000, Zambia has clearly improved. This should come as no surprise. Government effectiveness measures the "quality of public services, the quality of the civil service and the degree of independence from political pressures, the quality of policy formulation and implementation, and the credibility of the Government's commitment to such policies". Zambia's completion of HIPC point and subsequent debt relief coupled with the greater independence of the Central Bank provides sufficient evidence of the strides he has made in this area.

However the low ranking continues to highlight that Mwanawasa has yet to make the big strides especially in the area of public sector reform. I have previously argued that there's more to be done in this area focusing on a narrower Government, more independence of the civil service and the move towards participatory budgeting. Others have called for much more radical decentralisation aimed at streamlining Government and making it more effective.

I would add that crucially Government has to ensure that the Civil Service is an attractive area for the best talent to work. In the old days people longed to work in the Civil Service, but as the system became more and more corrupt the best talent were no longer attracted to the civil service and what we are left with is a poor system manned by not-the-best-talent Zambia has to offer. We need to reform and introduce greater competition within it and make it a first class service.

That's the good news. The bad news is that despite the supposed strident fight against corruption very little progress appears to have been made in this area since 2000. Indeed between the period 2000 and 2002 the situation appeared to have worsened with more countries performing better than Zambia in controlling corruption. It does appear that in the initial reign of President Mwanawasa, Zambia's fight against corruption stagnated or did not improve as much compared to other nations. Its therefore interesting to note, that between 2000 and 2006, Zambia only gained on 2% of other countries. That is to say it overtook 2% of other nations in the fight against corruption, of which all of these are nations are among the worst performers in terms of corruption. Its therefore fair to conclude that Zambia is not making the sort of progress we have been led to believe in this area since President Mwanawasa took over.

What could be the reason for this apparent stagnation? My initial view is that this is partly over emphasis on corruption fight itself. The media fixation with the Chiluba trial has probably meant the nation as a whole as lost focus on the fight against corruption. In the blog corruption wars, I argued that the key focus should be on institutional reform which would help put sufficient checks and balances in place, and not pointless witch hunts. There's no doubt that the lack of national wide institutional reform in form of a more robust constitution, lack of clear separation of responsibilities between agencies , and absence of more professional and independent civil service is to blame for our poor score in this area. These are the areas Zambia should be focusing on instead of spending money spent on never ending task forces, which panders to the media but achieves very little for the very poor in our rural areas.

That's the bad news. Unfortunately, what remains is rather ugly. In the three remaining governance indicators Zambia has actually got worse relative to other countries since President Mwanawasa came to power. When President Mwanawasa took over the nation "rule of law was a big theme". Zambia was going to be a country of laws rather than of men. The World Bank defines the rule of law indicator as "the extent to which agents have confidence and abide by the rules of society, and in particular the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence". In 2000 we were better than 34% of other countries, in 2006 we are 32% better than others countries. Zambia appears to be taking a backward step in this area since President Mwanawasa took over - at the very least we relatively walking backwards!

We also find evidence of poor performance in other areas. President Mwanawasa has not made progress in terms of giving people a greater voice ( voice and accountability) and also regulatory quality has declined relative to other nations . Both of theses area are well documented on this blog. In terms of "voice and responsibility" the Government's continuous hold over state media continues to limit people's freedom of expression. We recently heard that a radio station was threatened with being shut down for interviewing the Leader of the Opposition on one their shows. In an era in which we are trying to encourage openness and greater democratisation, there's no place for Government control of what people watch through their television sets and hear through their radios. This is especially the case in rural areas, where ZNBC remains the main source of information. Threatening to shut down radio stations is not acceptable.

Much also needs to be done to improve regulatory quality. In communications for example, we have argued for greater empowerment of the Communications Authority of Zambia and similar bodies. Much of that discussion can be found here.

So in light of this assessment, how well has Mwanawasa performed in the area of governance, since he took over? The answer is 2.5/6. Out of the 6 key indicators, Zambia has only made substantial strides on 2 - on the key area of corruption that has been celebrated by the World Bank today, Zambia has actually stayed the same relative to other countries. And on the questions of rule of law, regulatory quality and voice and accountability, Zambia has actually performed much worse than other nations since President Mwanawasa took over. The challenge now is for Zambians to realise that we are there yet. Yes we have made a few steps forward since President Mwanawasa took charge, but relative to the general performance of the rest of class we are certainly not scoring a "c" - we somewhere between a "d" or an "e". The good news is that with the new publicly available world bank data, we have no excuse for not holding Government to account in this important area of governance. Let us start today.

13 comments:

  1. A lot of improvements have been based on organic structures as opposed to mechanistic ones ... more like; anyone could have achieved the same under the circumstances.

    No proper command and control structures are still in place, there relative peace is a derivative of the natural inclination of the progressive Zambian people themselves ... thanks a trillion

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  2. It makes me laugh that they recorded the numbers to the tenth decimal. :P

    A lot of the measurements are subjective like estimating the chance of a terrorist attack divided by the dedication of the police force. Some of the come from biased stuff like "import restrictions hurt development?" when really it should be "cheap highly subsidized foreign goods hurt local markets?". Also the numbers for regulatory quality are just silly and make no sense...

    Out of the six catagories, I worry about violent crimes (Rule of Law) and control of corruption.

    I think the corruption stuff is improving... What Chifungula is doing it makes me optomistic. At least it's clear numbers and some place to start. And I'm happy about efforts to improve payroll management. Little things.

    Also I think that there has been corruption involved with some of the mining agreements and I'm happy that the government is renegotiating some of those.

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  3. Brainplus,

    I was extremely generous in crediting Mwanawasa with peace and stability. You are absolutely right. Zambians are just peace loving.

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  4. error27,

    always sceptical of statistical techniques :)
    the results are based on 95% confidence interval I am told.....

    "Also the numbers for regulatory quality are just silly and make no sense..."

    Please explain?


    "I think the corruption stuff is improving... "

    "think" is the key word. The best available evidence shows the contrary. There's no better database out there at the moment than the new database..

    Personally I don't think we have made progress. We have had one or two high profile cases that have wasted a lot of money, but at the point of delivery where services to the people matter, the system is very corrupt.

    Incidentally the electoral process is a classic example where elections of prominent ministers have had to be annulled.

    On the plus side, I don't think corruption is as a big deal as peace and stability and general rule of law. These are the main areas Zambia is likely to benefit from.

    On rule of law, I was particularly shocked.

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  5. Cho
    ... you are right too my friend. Otherwise if command and control was in place those figures would have been transformed into a better PPI, CPI and other important economic indices including annualized GDP growth above 6% by now ... thanks a trillion

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  6. From their website, it seems most of their data on Zambia comes from a few expert reports rather than polling and sampling. And the catagories are a bit subjective...

    It's great to put a number on things but it silly to put a decimal. :)

    We have had one or two high profile cases that have wasted a lot of money.

    I agree that we can't just have two or three cases and say "Ok. We caught the guys everything is fixed now." And obviously I agree with you that we need to fix the processes more than relying on individuals.

    Still the corruption cases set an important precident. It would be better if the cash was going to build schools and hospitals but it's not like there is a choice except to prosecute. So yes, it's a waste but the blame goes to the criminals.

    Incidentally the electoral process is a classic example where elections of prominent ministers have had to be annulled.

    I think there was a period in Zambian history where those elections would not have been annulled...

    Speaking of elections, when you think about Sakism don't a unfortunate amount of government funds already go to fund re-election campaigns? Ah well. :P

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  7. "From their website, it seems most of their data on Zambia comes from a few expert reports rather than polling and sampling. And the catagories are a bit subjective..."

    The data is sourced from other indices. The key therefore is to understand the sources of those other indices!

    So if you take "political stability" - it's quite clear the Economist Intelligence Unit's index on "Peace" feeds into this. The question is well that index is which itself is drawn from other sources.

    Its not an exact science but this is the best we have got at the moment to do cross country comparison. Like all methods it can be improved. The challenge is for Zambians to start tracking these measures for ourselves using the methods you suggest.

    "It's great to put a number on things but it silly to put a decimal."

    Economists generally have no problems with decimals as long as the results are statistically significant and the magnitude of the changes allows for that. But of course policy makers round them off, as I did in my assessment.

    "I agree that we can't just have two or three cases and say "Ok ".

    The point I was making is that its not "ok", that is why we cannot say that Zambia has really moved in this area. Aside from the two famous cases, there's not much to be said on what Zambia has achieved in this area. I say this while being clear that corruption is probably overstated as a cause of underdevelopment. Its important to achieve lower levels of corruption, but its impact on development compared to say "political inequality" [i.e. consolidation of power by a single party] is negligible.

    "I think there was a period in Zambian history where those elections would not have been annulled..."

    Agreed. But Zambia needs to be judged on how well it is doing relative to other nations, not on its past. This is why the governance indicators depart from others. It’s a moving average so to speak. It does not matter whether we are doing better than we did. Are we moving at a better pace compared to other nations in this area?

    "Speaking of elections, when you think about Sakism don't a unfortunate amount of government funds already go to fund re-election campaigns?"

    An added cost of corruption indeed!

    But then what else can one do? I think we should keep having re-elections for seats which annulled. But I don't think we should do the same when a member crosses the floor. Under those circumstances, the seat should stay with the party. Although this gets us into interesting issues about who people vote for and so forth. All very fascinating indeed :)

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  8. Here are a few relevant metrics. :)

    1) Domestic Investement / GDP

    What is the level of re-investment of the money earned from goods and services in Zambia? In other words, how attractive is Zambia itself as an investment destination for domestic cash?

    Highly successful economies have the characteristic that they either trade with themselves a lot (preferrable), or save most of their earnings.

    In the United States 80% of GDP comes from internal trade, not exports. On the other hand, if you look at Saudi Arabia, or China, they are externalising lots of money, because they have exhausted their domestic investment destinations.

    2) Regional Trade / GDP

    What percentage of GDP comes from regional trade? Markets that are closer are more dependable (and at least in theory cheaper to trade with) than distant markets.

    Also, I am impressed with the Saudi model, where they used the massive amounts of cash they earned from owning a significant chunk of their national oil company, ARAMCO, to buy greater and greater stakes when the world economy took a downturn.

    Because under Magande, the Zambian state receives no money from the copper mines, it will be impossible to buy bigger stakes in Equinox, KCM and other companies when the price of copper turns down again.

    Also, it would be beneficial to have one single claim for the entire country, like DEBSWANA in Botswana, so there is much more transparancy in the mining industry.


    Anyway, here is a recent file on investment in Zambia from UNCTAD:

    http://www.unctad.org/en/docs/iteipczambia_en.pdf

    They mention some of the (perceived?) constraints on economic growth in Zambia specifically.

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  9. Thanks for bringing that report to our attention. I have a read. Looks very comprehensive at first sight.

    Very interesting link you draw between transparency and the form of ownership! I will hold my comment till I read the report on UNCTAD to ger a "broader" view of where we are with FDI :)

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  10. Cho,

    I wonder if you might expound a bit on your comments about improving the Civil Service:

    "I would add that crucially Government has to ensure that the Civil Service is an attractive area for the best talent to work. In the old days people longed to work in the Civil Service, but as the system became more and more corrupt the best talent were no longer attracted to the civil service and what we are left with is a poor system manned by not-the-best-talent Zambia has to offer. We need to reform and introduce greater competition within it and make it a first class service."

    You have written elsewhere about reforming the roles of several CS branches, such as the Electoral Commission, Communication Authority and Corruption Commissions. What mechanisms would you recommend for one or all of these in order to inject the proper balance of competition and accountability into their operations?

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  11. Yakima,

    A very important and searching question!

    Let me try!
    I think when I approach the question of institutional reform there are essentially two issues that comes to mind. The first one relates to ensuring there’s clear independence between the various branches and also between the branches and the Executive. The second is to ensure that within those organisations sufficient incentives are embedded that encourages the best talent to emerge or makes the place attractive for people to go there.

    So on the first issue of independence – I envision the following for each of the three you have mentioned.

    1. Electoral Commission of Zambia : the Mungomba Draft Constitution para 112 – 119 provides a solid basis. Essentially the ECZ is independent of the Executive. It is appointed by the Appointments Committee, which is appointed by the National Assembly.

    2. Communications Authority of Zambia : The problem with the institutional set up of the CAZ is two fold. First it has a weak regulatory mandate. The enforcement and regulatory capacity of the CAZ needs to be improved. CAZ was created by the Telecommunications of 1994. The ACT mandated the regulator to promote competition among providers of telecommunication services and infrastructure to ensure the benefits of the telecommunication sector accrue to all of our people and the economy in general, and to take reasonable steps to extend the provision of services in rural and urban areas. These objectives will never be achieved unless CAZ is fully independent. At the moment CAZ does not have the power to issue and enforce regulations without the approval of the Ministry of Communications and Transport. It also can’t compel the operators to behave in certain way. This needs to change. The other area relates to some clarity between CAZ’s role and the Zambia Competition Commission (ZCC). The general trend in other countries has been for the sector regulator to take the lead in enforcing economic regulation if the sector is at an early stage of development. Implementing the basic elements necessary to ensure a competitive environment, such as drafting interconnection rules and creating a licensing framework, requires a high degree of expertise. Once there is full competition and the market has developed, the competition commission would tend to play a more significant role in enforcing competition law, working in tandem with the sector regulator.

    3. Anti Corruption Commission and Drug Enforcement Commission : The Patriotic Front Manifesto proposal is my preferred approach. Para 3.4 states “ Watchdog institutions will not fall under the Ministry of Home Affairs but instead there shall be an autonomous board reporting to Parliament. To this end the PF government will enact enabling legislation to provide for the appointment of the members of the Board. The above institutions shall have power to investigate, arrest, and prosecute without reference to any other authority”. This in my view is the only way to strengthen their independence.

    Let me pause…….I’ll return with “intra institutional” reform. But note that in all these cases, there’s a need to improve the quality and expertise of the bodies and that can only come with greater competition for places. Especially with the CAZ - but its not just them even the Ministry itself can do with some help given the news we had recently they couldn't find Zambian trade economists to help with EU negotiations!

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  12. Cho,

    A very persuasive set of proposals, I particularly agree that the success of any Civil Service reform will hinge on competitive hiring practices. In the case of legal enforcement agencies such as those described in your third point, successful completion of all three stages of enforcement (investigation, arrest, and prosecution) within the same agency will require highly competent individuals at every level.

    Do you see the potential for competition between agencies with duplicative functions for the same limited pool of highly qualified individuals in specialized professions (such as prosecutors) as a net positive or negative factor in encouraging successful enforcement across all agencies?

    Would you include other enforcement agencies within the scope of ACC's authority? For that matter what mechanism(s) should there be to provide for oversight of the ACC's own actions? What if any reforms of Judicial structure or practice are needed to ensure that such independant agencies make responsible use of their authority?

    Thanks!

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  13. "Do you see the potential for competition between agencies with duplicative functions for the same limited pool of highly qualified individuals in specialized professions (such as prosecutors) as a net positive or negative factor in encouraging successful enforcement across all agencies?"

    A searching question!

    The assumption there i guess is "limited pool". One would certainly hope that reform of these institutions would make them an attractive place to work in the long term, which should make for more elastic supply of solicitors. However, accepting the short term inelasticity of supply, I think that will depend on how the leadership of these organisations respond. Independence need not eliminate collaboration. In fact I have often found that institutional independence breeds specialisation which in turns allows for greater collaboration.

    "Would you include other enforcement agencies within the scope of ACC's authority? "

    Absolutely. Thats the implication of the PF statement. For example, the ACC should be able to arrest and prosecute the police without fear.

    "For that matter what mechanism(s) should there be to provide for oversight of the ACC's own actions?"

    The key I think is to ensure the head of the ACC is appointed through open competition of course and ratified through parliament. But in terms of oversight, I think the ACC should report on a Quarterly basis to Parliament's select committee and should answer only to the Parliament.

    "What if any reforms of Judicial structure or practice are needed to ensure that such independant agencies make responsible use of their authority?"

    I think there's no substitute for parliamentary scrutiny. But there's a wider issue about how the Chief Justice is appointed - that possibly requires some reform to ensure true judicial independence in the land.

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