33081 Capacity Enhancement b r i e f s S H A R I N G B E S T P R A C T I C E S A N D L E S S O N S L E A R N E D CAPACITY ENHANCEMENT AT THE INSTITUTIONAL LEVEL Three Case Studies in Telecommunications Vera Wilhelm, Senior Economist, PRMVP and Susanne D. Mueller, PREM How can the Bank or other development agencies more effectively support capacity enhancement (CE) in client countries? Is there a more systematic way to design and track capacity enhancement activities? Experience in telecom reform in Mali, Mauritania, and Morocco provides insights into the different opportunities and constraints that different countries face in implementing very similar reforms. It forms the basis for proposing a three-way framework for analyzing needs and planning capacity enhancement assistance. Capacity enhancement has been defined in multiple Figure 1: Ingredients of Capacity Enhancement ways; its ultimate purpose is to leave behind better skilled and oriented individuals, more responsive and effective institutions, and a better policy environment Institutional Environment for pursuing development goals. For the purposes of 1 ˇ Political Leadership this brief, capacity enhancement denotes the develop- ˇ Administrative ˇ Economic ment of formal and informal institutions and organi- ˇ Social Resources and ˇ Stakeholders zations--that is, changes in the rules of the game and Motivations Capabilities and organizational behavior that lead to improvements in ˇ Human ˇ Incentives/Pressures Technology service delivery to the public and in the country's ˇ Infrastructure Capacity ˇ Financial ˇ Finance ˇ Merit investment climate. Capacity enhancement at the Enhancement ˇ Intersection of ˇ Competition Reputation institutional or policy level has three main ingredients linkages ˇ ˇ Public voice (see figure 1): ˇ The country's resources and capabilities ˇ An enabling institutional environment Improved Improved ˇ Motivations and incentives/pressures that promote Delivery of Service Investment to the Public Climate and help to sustain behavioral change. To isolate factors that affect success and failure in ited information available on the country studies, capacity enhancement, this three-way framework was however, this note focuses primarily on the elements used to analyze experience in telecommunications influencing capacity enhancement at the institutional reform in three countries--Mali, Mauritania, and level. Telecoms was chosen as a sector in which Morocco (see box 1). It is important to note that the understanding on how to sequence reforms aimed at framework was designed to capture the three main deregulation and privatization and how to maximize levels at which capacity enhancement occurs: individ- the impact of reforms seems to be well advanced. The ual, organizational, and institutional. Due to the lim- following three lessons for capacity building emerged: D E C E M B E R 2 0 0 3 N U M B E R 2 Figure 2: World Bank Role in Capacity support used a participatory process to identify Enhancement* existing capacity, develop options for filling gaps, and understand possible implications for stakeholders. Bank teams and management need ˇ International best practice: ˇ Define CE objectives to allow enough flexibility and time for such an ˇ Telecom ˇ Assess risks and constraints assessment. handbook/toolkit ˇ Map client commitment ˇ OED/OEG sector ˇ Identify key actors and constituencies ˇ Assess client commitment and ownership. The evaluation ˇ Develop risk mitigation strategy information needed to make this assessment is Adapt global knowledge locally: often hard to acquire, especially when vested ˇ Quick response ˇ Identify client interests are at work. Even when the client takes briefings Institutional incentive, Environment ˇ Technical assistance supporters and the initiative, actions should be monitored to be ˇ Communities of Resources Motivations opponents & & Incentives/ sure that deeds match words. practice Capabilities ˇ Build trust Capacity Pressures ˇ Study tours Enhancement ˇ Broaden reform ˇ Support key actors. Bank teams and management, ˇ Participatory tools ˇ Use the media ˇ Web sites ˇ Be prepared to exit based on their country knowledge and sectoral expertise, should encourage clients to innovate Improved Delivery of Improved Investment Services to the Public Climate and take responsibility for their own actions. 3. Use Incentives and Pressures *Applied to Telecommunications The assessment of the institutional environment should provide the basis for developing a strategy to 1. Strengthen Resources and Capabilities build ownership and reduce the risks to successful The Bank has a menu of resources available to help implementation of reforms. Such a strategy can center support capacity enhancement in a country (see fig- on support for the key champions of reform--as in ure 2). A good deal of knowledge on international Morocco and Mauritania--and on the careful use of best practices is readily obtainable, and knowledge incentives (development assistance, debt relief, and transfer can greatly impact behavior, but only if it is international reputation) and pressures (suspension applied to the local institutional environment and of project, loss of heavily indebted poor country combined with a country-specific strategy for building (HIPC) debt relief, and public opinion) to motivate the stakeholder commitment and ownership and address- supporters and opponents of reform. ing risks. A New Approach? In Mali, Mauritania, and Morocco, making the best use of international knowledge required a process of The arrows in figure 2 show the role the Bank plays joint and continuous learning, in which the Bank and the methods it uses for each of the three areas of played the role of a facilitator making best practices capacity enhancement. In most of these areas, diag- available, while the clients adapted these practices for nostic and process tools have been developed in dif- 2 a good fit to local circumstances. ferent parts of the Bank (see box 2). These tools and the thinking that has gone into their design could be 2. Understand the Institutional Environment used more deliberately to define CE objectives better, Before knowledge and best practices can be usefully capture existing capacity and gaps, shape preparation shared, it is important to: of CE activities, and help mitigate risks. Sector- and ˇ Gather information to understand the political, task-specific selection, adaptation, and integration of country, and sector risks that are likely to affect these tools, especially if used jointly with the client, the outcome of reforms. could help to generate and track information that ˇ Understand and use incentives and conditionality would make it easier to learn from success and fail- to influence the behavior of key actors and orga- ures. This learning process could not only shape nizations. Bank strategy, but also help to broaden client owner- ˇ Assess risks and define the problem. Understand ship and commitment. In addition, clearer guidelines the main constraints that affect the implementa- for staff on the preconditions for engagement (i.e., tion of a policy and identify the supporters and client readiness for reform) and triggers on which to opponents of reform and the underlying risks. build an exit strategy could support risk management ˇ Understand the institutional context. In Mauri- and policy dialogue. tania and Mali, successful capacity enhancement D E C E M B E R 2 0 0 3 N U M B E R 2 Box 1: Telecom Reforms in the Three Countries Mauritania is now covered by mobile communications services. In In 1998 Mauritania had only five telephone lines per 1,000 August 1999 a consortium of investors paid $1.1 billion for a inhabitants--one of the lowest ratios in the world. At first, fifteen-year license to provide mobile telephone services the key decisionmakers were loath to liberalize the telecom alongside the newly privatized state operating company. This sector, because of its potential to threaten the country's was one of the highest prices ever paid per inhabitant, in a tightly managed security. But in discussions of Mauritania's region not known for attracting great investor interest. The economic prospects as the basis for a new World Bank coun- mobile market grew from 150,000 to 6,500,000 customers try assistance strategy, they came to see telecom reform as a within a few years. Morocco's initial success stemmed from magnet for foreign investment and a means for economic having set up a transparent regulatory framework and bid- development. ding process, as well as its willingness to offer a license with Mauritania had no institutions with experience in liberaliz- attractive terms. Although the reforms on the mobile market ing, privatizing, or introducing competition in this or other were highly successful, they resulted in a debacle in the sectors. Even so, it introduced genuine competition in tele- Internet market, where the incumbent operator grew its coms and established a transparent regulatory framework in market share to about 70 percent due to unfair competition little more than two years--widely regarded as a record. The practices. investments generated by the new operators amounted to 10 The initial keys to success were a long and sustained set of percent of Mauritania's GDP in the first two years and dou- continuous actions by King Hassan II and his advisors, bled existing telecom services in the first four months of the demonstrating clear objectives and commitment to reform; reform program. the Bank's support in the form of analytical work and knowl- The Bank's main contribution was to codify global knowl- edge to the champions of reform, using windows of opportu- edge into actionable steps that helped to close institutional nity; and the King's identification of the vested interests gaps, while building up stakeholders' commitment and own- opposed to reform and the design of a strategy to derail ership and supporting an autonomous process of local learn- them. ing. The support of the country's President and other key By mid-2002, however, Morocco's reforms were backslid- decisionmakers was critical in Mauritania's highly central- ing. The two directors of the regulatory agency Agence ized system. Unlike in Mali and Morocco, incentives were Nationale de Réglementation des Télécommunications mainly positive, such as the lure of resources from the HIPC (ANRT) previously ranked as the most independent in Initiative and prospects for the country to attract foreign Africa, resigned due to excessive government interference. investment and create jobs. Other success factors included In the end, ANRT was not able to protect fair competition in the commitment of key decisionmakers, which kept vested the Internet market. The experience illustrates the fragility interests at bay, and the very favorable international context of institutional capacity building and the vulnerability of for telecom reform at the time. new rules of the game when faced with vested political interests and a weak institutional environment. The Bank's Mali strategy of supporting a few key actors and champions of The Bank went into Mali in 1998 with higher expectations reform and involving civil society in the process showed lim- than it had in Mauritania. Mali--with its more developed ited results overall. The institutional constraints proved too economy, larger market, more participatory political process, strong to allow the independent regulator to consolidate its and well-developed media--appeared more attractive to role or civil society and consumer groups to exert effective investors. It had good export revenues from cotton and gold pressures. The lack of transparent institutions and processes and enjoyed good relations with the donor community. But ultimately jeopardized the broader success of Bank-sup- despite the government's expressions of enthusiasm for tele- ported reforms. com reform and a good deal of technical work, the words did not translate into action and the reforms stalled. Two factors Common Lessons eventually turned things around: the government's need to The overall experience in the three countries highlights the maintain good relations with the donor community, espe- importance of the following: cially in view of HIPC, and an outcry from civil society and labor unions. By August 2002 Mali had garnered $44 million ˇ Clear objectives, in particular those relating to capacity for the license of a second national telecom operator, along- enhancement, which are often embedded in broader side the yet-to-be privatized state operator. goals Mali's case illustrates how reforms that have been derailed can be brought back on track through the use of incentives ˇ Good understanding of the institutional environment and and pressures by civil society and donors. It also illustrates the realistic assessment of the implicit risks related to importance of disseminating information through the media, implementation team and consensus building through dialogue and cross- country consultation, and high-level political commitment. ˇ Increasing leverage by engaging civil society and the donor community Morocco Morocco's telecom liberalization in 1999 brought a huge ˇ Role of successful communication and knowledge sharing expansion in service; more than 90 percent of the population to engage and empower the client. Box 2: Capacity Enhancement Tools and Handbooks Bank documents: ------. A User's Guide to Poverty and Social Assessment Krueger, Richard A., Mary Anne Casey, Jonathan Donner, Analysis. Poverty Reduction Group and Social Development Stuart Kirsch, and Jonathan N. Maack. 2001. "Social Department. http://poverty.worldbank.org/files/12685_psia_ Analysis: Selected Tools and Techniques." Social users_guide.pdf. Washington, D.C. Development Papers. No. 36. http://lnweb18.worldbank.org/ ESSD/essdext.nsf/61DocByUnid/228B6562B7E162BC85256 External Handbooks: C0D005A312C/$FILE/SDP-36.pdf. Washington, D.C.: World Department for International Development. 2002. Tools for Bank. Development: Handbook for Those Engaged in Development Public Expenditure and Financial Accountability (PEFA) Activity. Performance and Effectiveness Department. Secretariat. 2003. Assessing Public Expenditure, http://www.dfid.gov.uk/foi/tools/tools_pdf/DFID_ Procurement, and Financial Accountability: A Review of ToolsforDevelopment.pdf. London, U.K. Diagnostic Instruments (PEFA). http://www.pefa.org/ Hopkins, Dr. Thomas J. 1994. Handbook on Capacity mappingpaper.pdf. Washington, D.C. Assessment Methodologies: An Analytical Review. United World Bank. 1996. The World Bank Participation Nations Development Programme. http://magnet.undp.org/ Sourcebook. Environmentally Sustainable Development. cdrb/CAPMET%7E1.htm. New York, NY. http://www.worldbank.org/wbi/sourcebook/sbpdf.htm. Inter-American Development Bank. Resource Book on Washington, D.C. Participation. http://www.iadb.org/exr/english/policies/ ------. 2002. Monitoring & Evaluation: Some Tools, participate/. Washington, D.C. Methods, and Approaches. Operations Evaluation United Nations Development Programme, 2003. Capacity Department. http://lnweb18.worldbank.org/oed/ Development Resource Book. http://magnet.undp.org/cdrb/ oeddoclib.nsf/24cc3bb1f94ae11c85256808006a0046/ Default.htm. New York, NY. a5efbb5d776b67d285256b1e0079c9a3/$FILE/MandE_tools_ methods_approaches.pdf. Washington, D.C. Peer reviewers: Carlo Maria Rossotto, Regulatory 1. This CE Brief summarizes the 2003 publication, The Economist, Global Information & Communications Ingredients of Capacity Enhancement: Three Case Studies in Telecommunications, World Bank Institute, Washington, D.C. Technologies, and Poul Engberg-Pederson, Senior 2. WBI is creating an inventory of tools for task managers, Public Sector Specialist, PRMPS classified by purpose. See . About World Bank Institute (WBI): Unleashing the Power of Knowledge to Enable a World Free of Poverty WBI helps people, institutions, and countries to diagnose problems that keep communities poor, to make informed choices to solve those problems, and to share what they learn with others. Through traditional and distance learning methods, WBI and its partners in many countries deliver knowledge-based options to policymakers, technical experts, business and community leaders, and civil society stakeholders; fos- tering analytical and networking skills to help them make sound decisions, design effective socioeconomic policies and programs, and unleash the productive potential of their societies. WBI Contacts: David Potten, Lead Specialist, Country Programs Tel: 202-458-7873, Email: dpotten@worldbank.org Imtiazuddin Ahmad, Sr. Operations Officer Tel: 202-458-1878, E-mail: Iahmad2@worldbank.org Visit our website for more information and download the electronic copies of all Capacity Enhancement Briefs: http://www.worldbank.org/capacity D E C E M B E R 2 0 0 3 N U M B E R 2