I. INTRODUCTION
The United
Nations Development Programme (UNDP) has been at the forefront of the growing
international consensus that good governance and sustainable good economic
governance (human development) are indivisible. And we believe that developing
the capacity for good governance can be - and should be - the primary way to
eliminate poverty. Notions of good governance and the link between governance
and sustainable good economic governance (human development) vary greatly,
however, both in academic literature and among development practitioners.
Economic
growth is a means to sustainable human development - not an end in itself. Human
Development Report 1996 showed that economic growth does not automatically
lead to sustainable human development and the elimination of poverty. For
example, countries that do well when ranked by per capita income often slip
down the ladder when ranked by the human development index. There are,
moreover, marked disparities within countries - rich and poor alike - and these
become striking when human development among indigenous peoples and ethnic
minorities is evaluated separately.
Good governance is considered synonymous with sound development
management. However, economic governance of national state is facing serious
problems because its traditional sovereignty over economic affairs has been
imperceptibly eroded to other levels of world economy. Globalization represents a growing constraint
on countries to utilize their own country specific national policies which can
be overridden by the power of foreign government and foreign based
multinational corporations. As a result,
the search for effective governance has to proceed at the institutional and
territorial levels, in addition to the nation state.
II. GOOD ECONOMIC GOVERNANCE
So, what is sustainable good
economic governance (human development)?
We define human development as expanding the choices for all
people in society. This means that men and women - particularly the poor and
vulnerable - are at the centre of the development process. It also means
"protection of the life opportunities of future generations...and...the
natural systems on which all life depends" (UNDP, Human Development Report
1996). This makes the central purpose of development the creation of an
enabling environment in which all can enjoy long, healthy and creative lives[1].
There are five aspects to sustainable good economic governance(
human development) - all affecting the lives of the poor and vulnerable:
- Empowerment -
The expansion of men and women's capabilities and choices increases their
ability to exercise those choices free of hunger, want and deprivation. It
also increases their opportunity to participate in, or endorse,
decision-making affecting their lives.
- Co-operation -
With a sense of belonging important for personal fulfillment, well-being
and a sense of purpose and meaning, human development is concerned with
the ways in which people work together and interact.
- Equity -
The expansion of capabilities and opportunities means more than income -
it also means equity, such as an educational system to which everybody
should have access.
- Sustainability -
The needs of this generation must be met without compromising the right of
future generations to be free of poverty and deprivation and to exercise
their basic capabilities.
- Security -
Particularly the security of livelihood. People need to be freed from
threats, such as disease or repression and from sudden harmful disruptions
in their lives.
UNDP
focuses on four critical elements of sustainable good
economic governance( human development): eliminating
poverty, creating jobs and sustaining livelihoods, protecting and regenerating
the environment, and promoting the advancement of women. Developing the
capacities for good governance underpins all these objectives.
Good economic governance, including transparency in financial
management, is an essential pre-requisite for promoting economic growth and
reducing poverty.
Mindful of this, there are five key objectives pursued:
1.
Promote macroeconomic
policies that support sustainable development
2.
Implement transparent,
predictable and credible government economic policies
3.
Promote sound public
finance management
4.
Fight corruption and
money laundering
5.
Accelerate regional
integration by participating in the harmonization of monetary, trade and
investment policies amongst the participating states
The slow economic growth in developing and transitional economy
countries and its negative global implications has alerted the international
financial organizations to promote and implement action oriented responses to
enable these countries to enhance financial resources mobilization and their
efficient, effective and rational utilization to achieve sustainable economic development
with social justice[2].
An important constituent of economic governance –
public expenditure management has its approaches and recommendations solidly
anchored on the economic, social, and administrative and implementation
capacity realities of the country concerned.
With a view to ensuring that the government’s financial resources are
used lawfully, efficiently and effectively and with transparency and
accountability, it would be necessary to devise strategic method of public
financial management and control.
There is widespread awareness that lack of
accountability, good governance and transparency in government operations
hinder the progress towards sustainable economic development. Traditionally, international financial
organizations have advised member countries to pursue sound economic policies –
policies that promote growth through low inflation, sound and prudent monetary
and fiscal policies and a sustainable balance of payments position. Presently, in the context of changed economic
environment, it is necessary to broaden the scope of the economic policies to
include other elements, popularly known as “second generation reforms” which
are considered vital for economic growth and financial stability, namely:
1.
Reduction
in extravagant and unproductive government expenditure;
2.
Higher
spending on primary health and education; and adequate social protection for
the poor, the unemployed and other vulnerable underserved sections of the
society;
3.
The
creation of a more level playing field for the private sector activity, by
increasing the openness, stepping up the privatization process, reducing the
power of monopolies through appropriate legal and administrative measures, and
setting up more transparent and simpler legal and regulatory systems and frameworks;
4.
Stronger
banking sector which protects small savers and other depositors, and reduce
risks for shareholders and creditors by enforcing stricter prudential standards
and information disclosure requirements;
5.
Reform
of tax systems to make them more efficient, effective, equitable and fairly
comprehensible; and
6.
Greater
transparency and accountability in government and corporate affairs. These
elements could be considered to constitute the basic framework of good economic
governance.
One of the major problems before the developing
countries and the transitional economies
is to create a conducive economic environment for economic growth and
social progress. Each country must
ascertain and evaluate its stock of natural, physical and financial resources
and formulate its strategy for economic growth on the basis of its ability for
capacity building, resource mobilisation, strengthening of the institutional
framework and administrative capability.
There should be positive steps taken to promote private sector
development by creating conducive atmosphere for its nurture and healthy
growth. Wherever possible, attempts
should be made to encourage and foster private-public sector partnership and
establish adequate legal and regulatory framework to provide a level-playing
field to both public and private sectors of the economy. Economic governance consists of the entire
institutional framework of the government engaged in the evolution and
implementation of the general economic policy in all its manifestations
affecting its internal and international economic relations. Economic
governance would also necessitate evolving on a permanent basis harmonious
fiscal, monetary and trade policies and establishment of a monitoring authority
for effective co-ordination between different economic activities. In the
interest of decentralisation of functions, the central bank of the country
should be endowed with a great deal of autonomy and authority to implement
monetary policy as recent experiences of the developed countries have shown.
Wherever there is an independent planning authority entrusted with medium and
long-term planning of the national resources, there is further necessity for
close coordination with such planning authority.
Effective economic governance, in this context,
would seek to evolve well structures, harmonious and complementary fiscal,
monetary and trade policies and establishment of monitoring and regulatory
authorities for promotion and coordination of difference economic activities.
III. GOOD POLITICAL GOVERNANCE
This thematic area ensures that the respective
national constitutions reflect the democratic ethos and provide for
demonstrably accountable governance, and that political representation is
promoted, thus providing for all citizens to participate in the political
process in a free and fair political environment.
The aim is to enforce strict adherence to the
position of the African Union (AU) on unconstitutional changes of government
and other decisions of our continental organization aimed at promoting
democracy, good governance.
What,
then, is governance? And what is good governance?
The
challenge for all societies is to create a system of governance that promotes,
supports and sustains human development - especially for the poorest and most
marginal. But the search for a clearly articulated concept of governance has
just begun.
Governance
can be seen as the exercise of economic, political and administrative authority
to manage a country's affairs at all levels. It comprises the mechanisms,
processes and institutions through which citizens and groups articulate their
interests, exercise their legal rights, meet their obligations and mediate
their differences.
Good
governance is, among other things, participatory, transparent and accountable.
It is also effective and equitable. And it promotes the rule of law. Good
governance ensures that political, social and economic priorities are based on
broad consensus in society and that the voices of the poorest and the most
vulnerable are heard in decision-making over the allocation of development
resources.
Governance
has three legs: economic, political and administrative. Economic governance
includes decision-making processes that affect a country's economic activities
and its relationships with other economies. It clearly has major implications
for equity, poverty and quality of life. Political governance is the process of
decision-making to formulate policy. Administrative governance is the system of
policy implementation. Encompassing all three, good governance defines the
processes and structures that guide political and socio-economic relationships.
Governance
encompasses the state, but it transcends the state by including the private
sector and civil society organisations. What constitutes the state is widely
debated. Here, the state is defined to include political and public sector
institutions. UNDP's primary interest lies in how effectively the state serves
the needs of its people. The private sector covers private enterprises
(manufacturing, trade, banking, cooperatives and so on) and the informal sector
in the marketplace. Some say that the private sector is part of civil society.
But the private sector is separate to the extent that private sector players
influence social, economic and political policies in ways that create a more
conducive environment for the marketplace and enterprises.
Civil
society, lying between the individual and the state, comprises individuals and
groups (organised or unorganised) interacting socially, politically and
economically - regulated by formal and informal rules and laws.
Civil
society organisations are the host of associations around which society
voluntarily organises. They include trade unions; non-governmental
organisations; gender, language, cultural and religious groups; charities;
business associations; social and sports clubs; cooperatives and community
development organisations; environmental groups; professional associations;
academic and policy institutions; and media outlets. Political parties are also
included, although they straddle civil society and the state if they are
represented in parliament.
The
institutions of governance in the three domains (state, civil society and the
private sector) must be designed to contribute to sustainable human development
by establishing the political, legal, economic and social circumstances for
poverty reduction, job creation, environmental protection and the advancement
of women.
Much
has been written about the characteristics of efficient government, successful
businesses and effective civil society organisations, but the characteristics
of good governance defined in societal terms remain elusive. The
characteristics of good governance are[3]:
- Participation -
All men and women should have a voice in decision-making, either directly
or through legitimate intermediate institutions that represent their
interests. Such broad participation is built on freedom of association and
speech, as well as capacities to participate constructively.
- Rule of law -
Legal frameworks should be fair and enforced impartially, particularly the
laws on human rights.
- Transparency -
Transparency is built on the free flow of information. Processes,
institutions and information are directly accessible to those concerned
with them, and enough information is provided to understand and monitor
them.
- Responsiveness -
Institutions and processes try to serve all stakeholders.
- Consensus orientation -
Good governance mediates differing interests to reach a broad consensus on
what is in the best interests of the group and, where possible, on
policies and procedures.
- Equity -
All men and women have opportunities to improve or maintain their
well-being.
- Effectiveness and efficiency -
Processes and institutions produce results that meet needs while making
the best use of resources.
- Accountability -
Decision-makers in government, the private sector and civil society
organisations are accountable to the public, as well as to institutional
stakeholders. This accountability differs depending on the organisation
and whether the decision is internal or external to an organisation.
- Strategic vision -
Leaders and the public have a broad and long-term perspective on good
governance and human development, along with a sense of what is needed for
such development. There is also an understanding of the historical,
cultural and social complexities in which that perspective is grounded.
Interrelated,
these core characteristics are mutually reinforcing and cannot stand alone. For
example, accessible information means more transparency, broader participation
and more effective decision-making. Broad participation contributes both to the
exchange of information needed for effective decision-making and for the
legitimacy of those decisions. Legitimacy, in turn, means effective
implementation and encourages further participation. And responsive
institutions must be transparent and function according to the rule of law if
they are to be equitable.
These
core characteristics represent the ideal - and no society has them all. Even
so, UNDP believes that societies should aim, through broad-based
consensus-building, to define which of the core features are most important to
them, what the best balance is between the state and the market, how each
socio-cultural and economic setting can move from here to there.
UNDP
is faced increasingly with post-crisis situations and disintegrating societies.
For them, the issue is not developing good governance - it is building the
basic institutions of governance. The first step is towards reconciliation -
building society's ability to carry on a dialogue on the meaning of governance
and the needs of all citizens.
Peace and security. It also aims at establishing and
strengthening appropriate electoral administrations and oversight bodies in our
respective countries, and providing the necessary resources and capacity to
conduct elections that are free, fair and credible.
There are 9 key objectives in this thematic area:
1.
Prevent and reduce
intra- and inter-country conflicts
2.
Constitutional democracy,
including periodic political competition and opportunity for choice, the rule
of law, a Bill of Rights and the supremacy of the constitution are firmly
established in the constitution.
3.
Promote and protect
economic, social, cultural, civil and political rights as enshrined in all
African and international human rights instruments.
4.
Uphold the separation of
powers, including the protection of the independence of the judiciary and of an
effective Parliament
5.
Ensure accountable,
efficient and effective public office holders and civil servants
6.
Fight corruption in the
political sphere
7.
Promote and protect the
rights of women
8.
Promote and protect the
rights of the child and of young persons
9.
Promote and protect the
rights of vulnerable groups, including displaced persons and refugees
“Corruption”
most often applied to abuse of public power by politicians and civil servants
for personal gain, is motivated by greed and by the desire to retain or
increase one’s power. Controlling
corruption has emerged as one of the most important concerns within the
international community. Corruption is a
pervasive phenomenon which can be found in a wide spectrum of countries of
vastly differing ideologies, economic conditions and social development. There has been unmistakable attitudinal
change towards corruption: governments
have become unable to conceal evidence of corrupt practices, level of public
tolerance for corruption has declined and spread of democratic process affords
less opportunity for practicing corruption.
Higher public investment, regimes of regulations and authorizations,
higher taxes, trade restrictions, lower salaries of public officials and other
discretionary powers wielded by public officials are the main causes of
corruption developing and transitional economy countries should establish
proper institutional framework for fighting corruption and enhance the morale
of public officials by meeting out strict punishment to corrupt officials
CONCEPT OF GOOD
GOVERNANCE
Governance in
broad terms signifies the exercise of political, economic and administrative
authority to manage nation affairs comprising the complex range of mechanisms,
processes, relationships and institutions through which citizens and groups
articulate their interests, exercise rights and obligations and mediate
differences. Governance is not the sole
prerogative of the State but its functions could be assumed by or delegated to
specified institutions and organizations in the private sector and the civil
society.
Good governance has many characteristics. Good
governance systems are participatory in that the members of governance
institutions have a voice in the decision-making process based on democratic
traditions. The procedures and method of
decision making reflect transparency to ensure effective participation. The governance system aims at bringing about
sustainable development. Good governance promotes equity and equality of
treatment to all based on the concept of nondiscrimination. The basic consideration
in good governance is being able to develop the resources and methods of
governance. In the context of social development parameters, it promotes gender
balance, promotes synthesis of diverse perspectives and mobilises resources for
social purposes.
Good
governance strengthens indigenous mechanisms and ensures effective and
efficient use of resources. All
civilised societies are based on rule of law which promotes good governance.
Good governance engenders and commands respect and trust.
The persons
entrusted with the task of taking decisions in government, private sector and
civil society organisations have to be accountable for their actions to the
members of public and institutional stakeholders. Governmental organisations
have to be service oriented, responsive to the hopes and aspirations of the
people, act as facilitative and enabling, regulatory rather than controlling,
take ownership of solutions to national social problems and able to deal with
temporal issues.
IV. THE MAIN LINK BETWEEN GOOD ECONOMIC GOVERNANCE AND GOOD POLITICAL
GOVERNANCE
The
reduction of the role of government in the economic sphere and the recognition
of private sector as ‘engine of economic growth’ has meant that government has
a new vital role in creating an effective legal and regulatory framework in
which private sector will be enabled to operate. The need to evolve basic principles and
guidelines for ensuring effective economic governance in developing and
transitional economy countries cannot be over emphasized[4].
The concept of governance in the context of
promotion of sound and sustainable economic development comprises of efficient
government, effective civil society and successful private sector. Good governance is based on participatory and
democratic traditions, promotion of equity and equality, gender balance and
promotion of synthesis of diverse perspectives and mobilization of resources
for social purposes, and in the final analysis based on the rule of law.
The economic consequences of corruption are
increased transactions costs and uncertainty, inefficient economic outcomes,
undermines State’s legitimacy, hampers growth of competitiveness and affects
the performance, integrity and effectiveness of government institutions.
Such organisms operate in a legal or policy
framework defined by the State but having autonomous existence and exercise
political, economic and administrative authority The concept of governance in
the context of promotion of sustainable economic development comprises of the
efficient government, effective civil society and successful private sector.
Relationships
between governance and human development
Each
domain of governance - the state, the private sector and civil society - has a
unique role in promoting sustainable good economic governance
(human development).
The state
In
countries where electoral processes exist, the state is composed of an elected
government and an executive branch. The state's functions are manifold - among
them, being the focus of the social contract that defines citizenship, being
the authority that is mandated to control and exert force, having
responsibility for public services and creating an enabling environment for
sustainable human development. The latter means establishing and maintaining
stable, effective and fair legal-regulatory frameworks for public and private
activity. It means ensuring stability and equity in the marketplace. It means
mediating interests for the public good. And it means providing effective and
accountable public services. In all four roles, the state faces a challenge -
ensuring that good governance addresses the concerns and needs of the poorest
by increasing the opportunities for people to seek, achieve and sustain the
kind of life they aspire to.
The
state, of course, can do much in such areas as upholding the rights of the
vulnerable, protecting the environment, maintaining stable macroeconomic
conditions, maintaining standards of public health and safety for all at an
affordable cost, mobilizing resources to provide essential public services and
infrastructure and maintaining order, security and social harmony.
State
institutions can also empower the people they are meant to serve - providing
equal opportunities and ensuring social, economic and political inclusion and
access to resources. But people can be empowered only if their legislatures,
electoral processes and legal and judicial systems work properly. Parliaments
of freely and fairly elected members representing different parties are crucial
to popular participation and government accountability. Effective legal and
judicial systems protect the rule of law and the rights of all. Open elections
mean public confidence and trust - and so political legitimacy. States should
also decentralise political and economic systems to be more responsive to
citizens' demands and to changing economic conditions.
In
developed and developing countries alike, the state is being compelled to
redefine its role in social and economic activity - to reduce it, reorient it, and
reconfigure it. The pressures for change stem from three sources:
- The private sector wants a more
conducive market environment and a better balance between state and
market.
- Citizens want
increased accountability and responsiveness from government, as well as
greater decentralisation.
- Global pressures from
supranationals and worldwide social and economic trends are challenging
the identity and nature of the state.
The private sector
The
state is a big force for development - but it is not the only one. Sustainable
human development depends in part on creating jobs that provide enough income
to improve living standards. Most states now recognise that the private sector
is the primary source of opportunities for productive employment. Economic
globalisation is fundamentally changing the ways in which industries and
enterprises operate. In many developing countries, private enterprise must be
encouraged and supported to be more transparent and competitive in the
international marketplace.
Equitable
growth, gender balance, environmental preservation, expansion of the private
sector and responsible and effective participation in international commerce
cannot be achieved by the market alone, however. States can foster private
sector development that is sustainable by:
- Creating a stable macroeconomic environment.
- Maintaining competitive markets.
- Ensuring that the poor (especially women) have easy
access to credit.
- Nurturing enterprises that generate the most jobs and
opportunities.
- Attracting investment and helping to transfer knowledge
and technologies, particularly to the poor.
- Enforcing the rule of law.
- Providing incentives for human resource development.
- Protecting the environment and natural resources.
Civil
society
Civil
society also has to protect the rights of all citizens. As the state and the
private sector are being reshaped and their relationships redefined, civil
society is changing in important ways. Unresponsive government and unrelenting
economic and social pressure have undermined some traditional civil society
organisations and strengthened others - and in many cases forced people to
organise in new ways. Civil society is thus more than just society. It is the
part of society that connects individuals with the public realm and the state -
it is the political face of society.
Civil
society organisations channel people's participation in economic and social
activities and organise them into more powerful groups to influence public
policies and gain access to public resources, especially for the poor. They can
provide checks and balances on government power and monitor social abuses. They
also offer opportunities for people to develop their capacities and improve
their standards of living - by monitoring the environment, assisting the
disadvantaged, developing human resources, helping communication among business
people.
More
fundamentally, civic networks ease the dilemmas of collective action by
institutionalising social interaction, reducing opportunism, fostering trust
and making political and economic transactions easier. Well-developed civic
networks also amplify flows of information - the basis for reliable political,
economic and social collaboration and public participation of civil society
members. These relationships and social norms make up a nation's social
capital.
Civil
society organisations do not always pursue the qualities of good governance.
Nor are they always the most effective development agents. That is why states,
while recognising and protecting the democratic rights of civil society
organisations, must also ensure that the rules of law and values that reflect
societal norms are adhered to. Democratic institutions, particularly local
ones, can be important in ensuring that all in society have a voice, as well as
ensuring that there are transparent and fair ways to reach consensus.
Like
private enterprises, civil society organisations need adequate capacities to
fulfill their potential. They also need an enabling environment, including a
legislative and regulatory framework that guarantees the right of association,
incentives to facilitate support and ways for civil society organisations to be
involved in public policy-making and implementation.
Strengthening
the enabling environment for sustainable human development thus depends not
only on a state that governs well and a private sector that provides jobs that
generate income. It also depends on civil society organisations that make
political and social interaction easier and that mobilise society to
participate in economic, social and political activities.
The global context
The transformation from command to
market-oriented economies, the emergence of democratic political regimes in the
former Soviet Union, the rapid development and global proliferation of new
technologies, the pervasive spread of telecommunications systems, the growing importance
of knowledge-based industries and skills and the continuing integration of the
world economy through trade and investment - all these have created the
foundation for a new age of sustainable human development. But all carry risks
as well. Is it to be a breakthrough or a breakdown?
Changes in the world's economic, political and
social systems have indeed brought unprecedented improvements in human living
conditions in both developed and developing countries. Consider the profound
breakthroughs in communications, transport, agriculture, medicine, genetic
engineering, computerisation, environmentally friendly energy systems,
political structures, peace settlements. The list goes on.
But these changes also bring new uncertainties
and challenges as the world steps into the 21st century. Signs of breakdown are
everywhere: disintegration of families; destruction of indigenous societies;
degradation and annihilation of plant and animal life; pollution of rivers,
oceans and the atmosphere; crime, alienation and substance abuse; higher
unemployment; and a widening gap in incomes and capabilities. Not a pretty
picture.
The trend towards globalisation deserves special
attention. It is manifest in the growth of regional blocs that cooperate in
such areas as trade and legal frameworks, in the power of intergovernmental
bodies such as the World Trade Organization and in the spread of transnational
corporations. Globalisation has profound implications for governance the final
impact of which we cannot yet determine. First is the increasing
marginalisation of certain population groups. Those who do not have access to
the technological/information revolution are in danger of becoming part of a
structural underclass. Second is the erosion of state sovereignty as transnational
bodies increasingly mediate national concerns and press for universal laws.
Third is the increased globalisation of social and economic problems, such as
crime, narcotics, infectious diseases and the migration of labour. Finally,
international capital and trade are decreasingly accountable to sovereign
states.
Governance can no longer be considered a closed
system. The state's task is to find a balance between taking advantage of
globalisation and providing a secure and stable social and economic domestic
environment, particularly for the most vulnerable. Globalisation is also
placing governments under greater scrutiny, leading to improved state conduct
and more responsible economic policies.
Because each domain of governance - state,
private sector, civil society - has strengths and weaknesses, the pursuit of
good governance requires greater interaction among the three to define the
right balance among them for sustainable people-centred development. Given that
change is continuous, the ability for the three domains to continuously
interact and adjust must be built-in, thus allowing for long-term stability.
UNDP's Initiatives for Change recognises that the relationships among
government, civil society and the private sector:
Are key determinants in whether a nation is able
to create and sustain equitable opportunities for all of its people. If a
government does not function efficiently and effectively, scarce resources will
be wasted. If it does not have legitimacy in the eyes of the people, it will not
be able to achieve its goals or theirs. If it is unable to build national
consensus around these objectives, no external assistance can help bring them
about. If it is unable to foster a strong social fabric, the society risks
disintegration and chaos. Equally important, if people are not empowered to
take responsibility for their own development within an enabling framework
provided by government, development will not be sustainable.
Developing countries must ensure that
everyone can participate in economic and social development and take advantage
of globalisation. They must build a political system that encourages
government, political, business and civic leaders to articulate and pursue
objectives that are centred around people and a system that promotes public
consensus on these objectives[5].
Prepared by Jean Paul
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