House of Commons - DFID's Programme in Bangladesh - International Development Committee

DFID's Programme in Bangladesh - International Development Committee Contents

2 GOVERNANCE AND DEVELOPMENT

The state of governance

9. Governance, or the lack of it, presents a challenge to achieving poverty reduction objectives and Bangladesh provides a clear example of this. DFID's 2008 Country Governance Analysis notes that Bangladesh is a fragile state with widespread social and political marginalisation of the poor, which has the potential to feed into political conflict.[10] Government capability is weak and accountability is poor. These factors, coupled with unstable politics "have restricted growth potential and limited those who benefit from growth."[11]

10. DFID's 2009 White Paper says that: "to reduce poverty effectively, and allow each person to achieve their full potential, we need states that are capable, accountable and responsive and where a flourishing civil society empowers citizens to realise their rights."[12] It notes that this requires DFID to "work more politically" since conflict and fragility are about how power and resources are distributed. This chapter looks at the state of governance in Bangladesh and at how DFID works "more politically" in this context to improve accountability and state responsiveness.

THE POLITICAL CONTEXT

11. Bangladesh experienced about 15 years of multi-party democracy before 2006 when, because of fears of a rigged election, a military-supported Caretaker Government (CTG) was installed. The CTG stayed in power until the December 2008 elections. During this period, it attempted a series of institutional governance reforms with donor support.[13] The Awami League won the December 2008 elections. We were told that since then: "the rule of law has deteriorated quite rapidly in the last nine or ten months, and some of the efforts at governance reform do seem to have been stalled or, in some cases, reversed."[14] We were also told that the performance of the Awami League-led government was worse than that of the Caretaker Government. Professor Wood, from the University of Bath, described the party's rule as being based on "kinship, patrimonialism and widespread corruption."[15]

12. A study by the Institute of Governance Studies in Bangladesh in 2008 commented that Bangladesh had moved from a minimalist democracy with regular free and contested elections to an illiberal democracy characterised by "the misuse of state power for partisan and personal gain; and institutions brought under partisan political pressure." The study concluded that the practice of partisan politics had "severely undermined the accountability mechanisms of the political system and rendered it largely dysfunctional."[16]

13. Typically, when in government, each of the two main political parties stifles debate and dialogue and the opposition party refuses to participate in political processes. When we visited Bangladesh the opposition party, the Bangladesh National Party (BNP), had not taken up its seats in the National Assembly. It wanted seven frontbench seats instead of the five it had been allocated. As a result the parliament was operating as a one-party system and there had been no effective opposition since the 2008 elections. This situation, which has occurred previously, allows all the major state institutions to be dominated by the ruling party and used to benefit its supporters.

14. This extreme form of party politics is not uncommon in developing countries and means that additional, credible mechanisms for accountability need to be established to check the executive and ensure the public, especially the poor, can participate in political processes. At present ordinary people's expectations of what formal state institutions will deliver are low and they resort instead to alternative, less formal channels to achieve desired outcomes.[17] We urge all political parties in Bangladesh to engage meaningfully in the political process. Without an effective opposition, democracy and the reputation of parliament is diminished. Bangladesh should respect its democratic history and it is incumbent on its political parties to find ways to work together for the benefit of all the people of Bangladesh.

DFID's support for governance reform

15. DFID says that better government is the key to poverty reduction.[18] Its programme in Bangladesh includes a specific focus on governance and strengthening the institutions of accountability. It spends about £20 million per year on programmes in these areas including: support for media and elections, public financial management, improving tax administration, civil service strengthening, police and justice sector reform and increasing the voice of civil society. The remainder of this chapter will review the effectiveness of these interventions.

CIVIL SERVICE STRENGTHENING

16. DFID is spending £2.5 million in 2009-10 on strengthening the Bangladesh civil service. One of the programmes it funds is Management at the Top (MATT) to which it has allocated £15 million over 5 years. The programme aims to create a cadre of committed, like-minded senior civil servants in Bangladesh and focuses on those identified as being likely to move into more senior positions.[19] Professor Wood, from the University of Bath, commented on the importance of such programmes, saying that DFID:

DFID says that UK support has helped to train 800 out of 4,100 civil servants in the administration cadre. It aims to train 2,000 in total. The programme also seeks to address the problems of frequent staff rotation and weak performance management.[21] Dr Greeley from the Institute of Development Studies, commented:

17. At our public meeting in Birmingham it was suggested that participants in the MATT programme should have a work placement period in the UK civil service, in addition to their theoretical training at UK universities. However, Professor Wood suggested that undertaking the study period abroad should be forgone in favour of building up Bangladeshi training capacity, for example through the BRAC Institute of Government Studies or the Public Administration Institute at Dhaka University. He thought the training period abroad was "a treat for the civil servants".[23] At our public meeting in London, local Bangladeshis said there were many well-trained Bangladeshi people in the UK who could be used to provide training in Bangladesh if an appropriate secondment programme was developed.

18. We discussed a number of these issues with DFID. We were told that donors had secured an agreement from the adviser to the Prime Minister that no civil service project managers trained under the DFID programme would be rotated to take up their promotions but would be expected to take up their promotions in their current ministries.[24] This would reduce turnover and bring greater benefit to ministries from civil servants who completed the Management at the Top Programme. DFID also said it would consider the proposal, with the Government of Bangladesh, of using well-qualified Bangladeshis living in the UK to help train civil servants in Bangladesh, thus reducing the costs of sending them to the UK or Singapore for training.[25]

19. DFID's programme to help train civil servants is making good progress and has now achieved nearly half of its target number. We appreciate that this is a long term project and that the benefits may not be immediately felt. It is nevertheless valuable if it can provide a group of well-trained civil servants to advise successive governments. We would urge DFID to take forward the suggestion of using appropriately qualified Bangladeshis living and working in the UK to help train civil servants in Bangladesh as one possible and potentially less costly alternative to sending civil servants abroad for training.

IMPROVING ACCOUNTABILITY: PARLIAMENT AND PARLIAMENTARIANS

20. As previously noted the absence of the main opposition party from normal parliamentary processes means there is little parliamentary scrutiny of the executive. One of the ways in which DFID is helping to strengthen government accountability is through support to the Election Commission and National Assembly.[26] DFID explained to us that it was spending more in these areas as a result of issues flagged up in its country governance assessment.[27]

21. When we met her in Bangladesh, the Prime Minister HE Sheikh Hasina expressed her strong support for the Westminster system of democracy. She told us about the changes she had made, including increasing the powers of select committees and the introduction of Prime Minister's question time. The Prime Minister supported our suggestion that Bangladesh's poverty reduction strategy could usefully be monitored through a parliamentary poverty reduction committee.

22. DFID will spend approximately £20 million over five years on its programmes for strengthening political participation. Of this, approximately £10 million will be channelled through USAID for institutional strengthening and £7.5 million will go to Transparency International.[28] DFID is currently discussing a six year £1.5 million programme with the Westminster Foundation for Democracy (WFD) for political party and parliamentary support. According to WFD this would provide strategic and technical assistance to the parliament in Bangladesh and would complement existing programmes provided by USAID and UNDP.[29]

23. WFD told us that it would like a greater level of engagement from DFID:

We have long advocated an increased DFID focus on parliamentary strengthening because it is an essential element in proper governance.[31] We discussed with DFID its future relationship with WFD and stressed the importance of ensuring that political and parliamentary strengthening should be country-specific and locally owned. We were told that discussions were ongoing and that DFID might seek to increase the relationship on a project-by-project basis over time.[32]

24. We have on a number of occasions expressed our belief that DFID should allocate more funding to parliamentary strengthening initiatives which are central to improving governance. We believe that, in a country such as Bangladesh where Ministers and parliamentarians are keen to learn from the Westminster system, a more strategic relationship with the Westminster Foundation for Democracy (WFD) would be beneficial. We recommend that DFID take forward the WFD proposal and explore the possibility of enhancing the relationship in the near future. We request that DFID reports back to us on the outcomes of its discussions with the Foundation in its response to this Report.

IMPROVING ACCOUNTABILITY: CIVIL SOCIETY ORGANISATIONS

25. One of the ways in which the accountability of the government as a policy maker can be increased is through the presence of active and engaged civil society organisations (CSOs), composed of individuals and organisations who are not part of local, national, or other levels of government. This includes community-based and non-governmental organisations (NGOs), trade unions, religious groups, academic institutions and other private and voluntary groups.

26. DFID has allocated £7.5 million to strengthening civil society voice for 2009-10.[33] DFID told us this was used, amongst other things, to support the work of the Bangladesh branch of Transparency International, which works with civil society groups to increase the demand for political change, and also to support the BBC World Trust to hold a "Question Time equivalent programme" with politicians.[34] DFID has created a Challenge Fund Programme for Rights and Governance which works with over 100 local NGOs and supports local community groups.[35]

27. Dr Hossain, from the Institute of Development Studies, University of Sussex, told us that DFID has made important progress in this area:

However she went on to question whether DFID had done enough to generate demand for improved governance among the poor or whether its programmes had focused on those aspects of governance which were most important to the poor.[37] She pointed out that DFID tended to focus on trying to improve formal institutions of accountability and service delivery without always understanding the extent to which, where such formal institutions were weak, ordinary people used informal mechanisms and arrangements to access services and gain accountability. She also discussed the ways in which poor people already exerted pressure on public service providers and suggested that DFID should seek to understand these better and perhaps even use this knowledge to develop performance accountability measures which could more effectively monitor public service provision.[38] She said, "stuff goes on on the ground that we really do not have a good handle on because our gaze is always at this level of the formal accountability mechanisms which are just defunct."[39]

28. One World Action argued that DFID should broaden the range of constituents with whom it consults to help change the nature of political dialogue and political processes while remaining politically neutral:

This point was also made to us in our meeting with NGOs in Dhaka. We were told that 4,000 organisations had applied for funding from DFID's Challenge Fund but only 150 were awarded a grant. Smaller NGOs had found the application process difficult. While it is not necessarily the case that these smaller NGOs are better placed to help the poorest, it is likely that some can communicate with sectors of the population which larger NGOs and multilaterals do not reach.

29. Improving the ability of civil society, broadly defined, to hold the providers of public services to account is an essential component of better governance and for ensuring the poor can access the services they need. Donor initiatives in this area have made some progress, for example in terms of raising awareness of corruption and the need for public accountability. DFID must build on this success and ensure that its programmes help to raise the demand for accountability among the poorest and for those aspects of governance which are most important to the poor. Working with smaller NGOs may provide one means of doing this and may not require a large amount of funding. We appreciate the economies of scale which DFID gains from working through larger NGOs but believe that it should nevertheless seek to ensure smaller community groups and non-governmental organisations have access to donor funds.

INCREASING THE TAX BASE

30. Robust public finance management is an essential component of good governance. Governments with a low rate of tax revenue collection also tend to be less responsive to their electorate.[41] As DFID noted, "the one way in which we in the UK have a real vested interest in holding government to account is because of the taxpayers' cash that we give to the government."[42] According to the IMF, Bangladesh's tax to GDP ratio is around 8.5% which is 4% lower than comparable regional economies and one of the lowest for developing countries.[43] We were also told that the tax collection rate had not increased despite economic growth. This severely constrains the government's capacity to fund key sectors of the economy as well as its ability to focus on poverty reduction.

31. We were told that the Caretaker Government had made more effort to collect taxes, but now there was less political will to take on vested interests. For example, we were told that parliamentarians were now required to pay taxes but were given a voucher to claim these back. The problem had been compounded by one section of the National Board of Revenue (NBR) being unable to hire people due to a legal dispute. Continuing staff shortages were having an adverse impact on the NBR's overall operations and service delivery and impeding the Board's efforts to identify and engage with potential tax payers, and thus widen the tax base. NBR's ability to detect and penalise tax evasion, and provide effective tax payer services was also limited due to this problem.[44] DFID assured us this would not directly affect its projects with the Board.

32. DFID is providing technical assistance to help the government increase the number of registered tax payers from three to five million people by 2014. However it pointed out that, although there were three million people registered to pay tax, only 700,000 of these actually paid. DFID said that this was due to tax avoidance and it was also an indication of the extent of poverty in the country with 80 million people living on less than $2 per day and unable to pay tax.[45]

33. It is not possible to change people's attitude to paying taxes overnight. Witnesses believed that such efforts should be seen as long-term investments over 10 to 25 years rather than something which could be achieved in three or four years and that donor support should reflect this.[46] They also took the view that the government should begin to tax its rising middle classes.

34. We broadly support DFID in its efforts to increase the tax base from 3 to 5 million. Once this target has been achieved a new, ambitious, target should be set to ensure the number of people paying taxes steadily increases over time. Changing entrenched attitudes to taxation is a long term process and the tax base in Bangladesh is likely to remain small for a long period. However, the state is not currently able to provide services in a number of key areas and it will not increase its ability to do so unless and until it widens the tax base. This would also help achieve a stronger and more direct relationship between the government and its citizens. We urge the Government of Bangladesh to make progress on widening its tax base, with appropriate support from donors.

Good governance: a long-term objective

35. Improving governance and changing the way political systems operate in Bangladesh will require long-term engagement from donors. Professor Hulme, from Manchester University, told us that in countries such as Bangladesh donors should not be aiming for good governance so much as for good enough governance:

36. According to Dr Hossain the litmus test of good governance in Bangladesh should be "how are the poor being affected by governance reforms [and] how governance is affected by poverty."[48] Despite weak governance Bangladesh has made some progress in terms of poverty reduction, but this has not been sufficient. Large numbers of people remain desperately poor and unable to take advantage of the opportunities provided by economic growth. The poorest people in Bangladesh do not necessarily have a relationship with their National Assembly representative or their local councillor. The way in which they engage with, or seek accountability from, those whom they see as responsible for providing services, is often informal and unofficial. Importantly, in many cases there is no expectation that the state will protect or provide for them. Change is needed.

37. We were therefore concerned when we were told in relation to our inquiry into DFID's Annual Report that in carrying out its annual review of its programmes, those found to be failing would be cut if they repeatedly performed poorly.[49] While we understand the principle, we wanted to know more about how DFID would characterise a failing project in the area of governance given that outcomes are difficult to measure and there are many external variables. Both Dr Greeley and Professor Wood agreed that, while donors could have some influence in terms of encouraging the government to focus on important issues such as poverty reduction, it was equally possible for politicians to ignore such donor appeals.[50]

38. Programmes to improve governance are complicated, resource-intensive and rarely produce immediate results. They are nevertheless important in countries such as Bangladesh and should be viewed as long-term projects where the benefits might not be reaped for 10 or more years. When evaluating programmes in this area benchmarks must be realistic so that programmes are not cut prematurely.

39. DFID Bangladesh has developed a significant and broad governance programme. It is to be commended for its initiatives in this area since it is clear to us that the poor quality of governance and the weakness of politics there both act as substantial impediments to the successful implementation of development partnerships. We broadly endorse its efforts, recognising that DFID is operating in a complex and difficult political environment.

10 DFID, Bangladesh: Country Governance Analysis, 2008 Back

11 Ibid, p 2 Back

12 DFID, Eliminating World Poverty: building our common future, Cm 7656, July 2009 Back

13 Q 3 Back

14 Q 3 Back

15 Q 77 Back

16 Institute of Governance Studies, The State of Governance in Bangladesh: 2008, BRAC University, Bangladesh, p xv Back

17 Qs 9-11 Back

18 Ev 67 Back

19 Q 80 Back

20 Q 80 Back

21 Ev 68 Back