66767
IEG Working Paper 2011/7
Bangladesh: World Bank Engagement on Governance and
Anticorruption
Clay Wescott
Mary Breeding
© 2011
Independent Evaluation Group, The World Bank Group
1818 H St., NW
Washington, DC 20433
1 2 3 4 16 17 11
IEG: Improving Development Results Through Excellence in Evaluation
The Independent Evaluation Group is an independent unit within the World Bank Group; it reports
directly to the Bank’s Board of Executive Directors. IEG assesses what works, and what does not;
how a borrower plans to run and maintain a project; and the lasting contribution of the Bank to a
country’s overall development. The goals of evaluation are to learn from experience, to provide an
objective basis for assessing the results of the Bank’s work, and to provide accountability in the
achievement of its objectives. It also improves Bank work by identifying and disseminating the
lessons learned from experience and by framing recommendations drawn from evaluation findings.
IEG Working Papers are an informal series to disseminate the findings of work in progress to
encourage the exchange of ideas about development effectiveness through evaluation.
The findings, interpretations, and conclusions expressed here are those of the author(s) and do not
necessarily reflect the views of the Board of Executive Directors of the World Bank or the
governments they represent, or IEG management.
IEG cannot guarantee the accuracy of the data included in this work. The boundaries, colors,
denominations, and other information shown on any map in this work do not imply on the part of
the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of
such boundaries.
ISBN 13:978-1-60244-204-7
ISBN 10: 1-60244-204-5
Contact: IEG Communication, Learning and Strategies
E-mail: ieg@worldbank.org
Telephone: 202-458-4497
Facsimile: 202-522-3125
http://ieg.worldbankgroup.org
ii
Contents
Abbreviations .......................................................................................................................... v
Preface .................................................................................................................................... vii
Summary ................................................................................................................................. ix
1. Introduction ......................................................................................................................... 1
2. Country Context.................................................................................................................. 5
Public Sector Governance ................................................................................................. 6
Basic Service Delivery ...................................................................................................... 9
Investment Climate ......................................................................................................... 12
3. Relevance of World Bank Engagement on GAC Issues ................................................ 13
Country-Level Relevance ................................................................................................ 13
Sector-Level Relevance ................................................................................................... 14
Project-Level Relevance.................................................................................................. 21
4. Effectiveness of World Bank Efforts ............................................................................... 23
Country-Level Effectiveness ........................................................................................... 23
Sector-Level Effectiveness .............................................................................................. 23
Project-Level Effectiveness ............................................................................................. 28
5. Impact of the 2007 GAC Strategy Implementation ....................................................... 30
6. Lessons Learned ................................................................................................................ 31
References .............................................................................................................................. 33
Figures
Figure 1.1 Bangladesh-Key Investment Climate Constraints and Comparisons with Other
Regional and Low-Income Countries ..................................................................................... 12
Table
Table S.1 Bangladesh—Summary IEG Assessment ................................................................ x
Appendixes
Appendix A. Persons Interviewed .......................................................................................... 35
Appendix B. GAC in Projects Incidence Mapping Based on Desk Review .......................... 37
Appendix C. Bangladesh—Country Data Sheet, IEG Ratings of GAC Responsiveness, 2004-
2010......................................................................................................................................... 38
Appendix D. Statistical Tables ............................................................................................... 39
iv
Abbreviations
AAA Analytic and advisory activities
ACC Anticorruption Commission
ADB Asian Development Bank
ANSA-EAP Affiliated Network for Social Accountability in East Asia and the Pacific
APL Adaptable program loan
ASYCUDA Automated system for customs data
BICF Bangladesh Investment Climate Fund
BNP Bangladesh Nationalist Party
BPDB Bangladesh Power Development Board
CAS Country Assistance Strategies
CASCR CAS Completion Report
CFAA Country Financial Accountability Assessment (World Bank)
CGAC Country Governance and Anticorruption
CIDA Canadian International Development Agency
CORBEC Committee on Reforms in Budgeting and Expenditure Control
CPAR Country Procurement Assessment Report (World Bank)
CPIA Country Policy and Institutional Assessment (World Bank)
CPS Country Partnership Strategy (World Bank)
CPTU Central procurement technical unit
CSO Civil society organization
DAC Development Assistance Committee
DANIDA Danish International Development Agency
DfID Department for International Development (UK)
DPL Development Policy Loan
DSC Development Support Credit
EBRD European Bank for Reconstruction and Development
EMTAP Economic Management Technical Assistance Program
ESAF Enhanced Structural Adjustment Facility
ESW Economic and sector work
EU European Union
FY Fiscal year
GAC Governance and anticorruption
GAVI Global Alliance for Vaccines and Immunization
GDP Gross domestic product
GEF Global Environment Facility
GPF Governance Partnership Facility
IBRD International Bank for Reconstruction and Development
ICA Investment Climate Assessment
ICR Implementation Completion and Results
IDA International Development Association
IEG Independent Evaluation Group (World Bank Group)
IFAD International Fund for Agricultural Development
IFC International Finance Corporation
ILO International Labor Organization
IMF International Monetary Fund
INT Department of Institutional Integrity (World Bank)
IPP Independent Power Producer
IPFF Investment Promotion and Financing Facility
IPSAS International Public Sector Accounting Standards
LGED Local Government Engineering Department
LGSP Local Government Support Project
LIL Learning and Innovation Loan
MTBF Medium-Term Budget Framework
v
MTEF Medium Term Expenditure Framework
NBR National Bureau of Revenue
NGO Nongovernment organization
ODA Official development assistance
OECD Organisation for Economic Co-operation and Development
ORMAP Operational risk mitigation action plan
ORA Operational risk assessment
PDEP Primary Education Development Project
PEFA Public Expenditure and Financial Accountability assessment
PER Public Expenditure Review
PETS Public Expenditure Tracking Survey
PFM Public financial management
PIP Public Investment Program
PIU Project implementation unit
PPR Public Procurement Rules
PRGF Poverty Reduction and Growth Facility
PRSP Poverty Reduction Strategy Paper
RHD Roads and Highways Department
ROSCP Reaching Out of School Children Project
RTI Right to Information
RTIP Rural Transport Improvement Project
SAF Structural Adjustment Facility
SPEMP Strengthening Public Expenditure Management Program
SWaP Sectorwide Approach (World Bank)
TSC Transitional Support Credit
TTL Task team leader (World Bank)
UNAIDS United Nations Program on HIV/AIDS
UNDP United Nations Development Program
UNFPA United Nations Population Fund
UNHCR United Nations High Commissioner for Refugees
UNICEF United Nations Children’s Fund
UNODC United Nations Office on Drugs and Crime
USAID United States Agency for International Development
USD United States Dollar
VAT Value added tax
WDR World Development Report (World Bank)
WFP World Food Program
WTO World Trade Organization
vi
Preface
This case study summarizes the findings of desk reviews and a country field visit carried out
in February 2011 as part of the Independent Evaluation Group’s (IEG’s) evaluation of the
2007 Governance and Anticorruption (GAC) Strategy. The case study sought to evaluate the
relevance and effectiveness of Bank support for governance and anticorruption efforts over
the FY2004-10 period, to assess the contributions of 2007 GAC strategy implementation, and
to identify early outcomes and lessons.
The Bangladesh case study was prepared by Clay Wescott (lead) and Mary Breeding as a
background paper for IEG’s GAC evaluation. The report was prepared under the supervision
of Navin Girishankar and the overall guidance of Cheryl Gray and Ali Khadr.
The authors are grateful to officials from the Government of Bangladesh and the World
Bank’s Country Team for constructive discussions. The paper benefitted from comments
from the Bank’s Dhaka Country Office. The authors are also grateful for comments from the
IEG’s GAC Evaluation team members. Barbara Balaj provided editorial support and Aimeé
Niane provided administrative support.
The findings, interpretations, and conclusions expressed in this paper are entirely those of the
authors and do not represent the views of the World Bank, its Executive Directors, or the
countries they represent.
vii
Summary
Bangladesh is one of the world’s poorest and most densely populated countries, and subject
to annual cyclones and flooding. Despite these challenges, it benefits from strong economic
growth, good performance on health and education, and poverty reduction— alongside weak
governance and pervasive corruption. The reasons include strong macroeconomic policy,
pro-poor spending, credible elections, export growth and remittances, improved capacity for
managing natural disasters, and a stronger civil society than comparable countries.
After over a decade of intense engagement with the Bank on governance, Bangladesh
adopted in 2006 a governance-oriented Country Assistance Strategy (CAS) with four main
objectives: to improve implementation capacity; to “tackle corruption�? by fully
operationalizing the Anti-Corruption Commission; to lay the foundation for comprehensive
legal and judicial reform; and to strengthen “voice, empowerment and participation.�? The
choice of a wide range of instruments and areas of intervention was appropriate, given the
political instability at the time of 2006 CAS preparation. The Bank signaled it was ready to
engage in all areas, and could scale up or pull back depending on emerging political and
bureaucratic commitment. The 2006 CAS yielded mixed results, and the subsequent Country
Partnership Strategy (CPS) has been more selective on GAC issues. At the project level,
governance has been a key priority, in line with the South Asia region’s heavy emphasis on
GAC-in-Projects. Investments in GAC-in-primary education, a local government project,
anti-corruption efforts in the power sector, and projects strengthening the investment climate
have yielded positive results. Investments in GAC-in-roads projects have had mixed results
in terms of effectiveness. GAC activities were mainly adopted prior to the 2007 GAC
Strategy. Although Bangladesh was a Country Governance and Anticorruption (CGAC)
country, the country team chose not to use CGAC funds because the country had already
been intensively using GAC approaches well before the GAC strategy was adopted.
ix
Table S.1 Bangladesh—Summary IEG Assessment
IEG Ratings
GAC Elements
Relevance Effectiveness
1. GAC at Country Level: ■■■ ■■
2. GAC in Sector Level:
Core Public Sector
Public Financial Management ■■■■ ■■■
Revenue Management ■■■ ■■■
Decentralization ■■■■ ■■■
Procurement ■■■■ ■■■
Civil Service Reform ■■ ■
Basic Service Delivery
Roads ■■ ■■
Primary Education ■■■■ ■■■
Power ■■■ ■■
Investment Climate ■■■■ ■■■
Independent Accountability Mechanisms ■■ ■■
3. GAC at Project Level
Operational Risk Management Plan ■■■ ■■
Senior Governance Advisor/Specialist ■■■ ■■■
Demand for Good Governance ■■ ■
4. 2007 GAC Strategy Implementation
Staff attitudes towards GAC issues ■■ ■■
Enhancing quality of operational response ■■ ■■
Ratings: ■ negligible ||| ■■ moderate ||| ■■■ substantial ||| ■■■■ high
Source: IEG
x
1. Introduction
Background: 2007 GAC Strategy and Implementation Plan
1.1 The 2007 strategy—a corporate strategy—set forth several objectives relating to the
development of capable and accountable states and committed the Bank to seven principles
of engagement on GAC issues (Box 1). In response to shareholder concerns about the
perceived arbitrariness of senior management decisions to cut off lending to certain
countries, the strategy reiterated the Bank’s use of rules-based criteria for allocating
resources, as well as its aim to stay engaged even in poorly governed countries to ensure that
the “poor do not pay twice.�? At the same time, the strategy placed considerable emphasis—
more than earlier strategies—on safeguarding Bank funds from fiduciary risks. Early on, it
was acknowledged that, to achieve its “vision of success,�? the strategy required a more
detailed implementation plan.
Box 1.1 The Multiple Objectives and Guiding Principles of the 2007 GAC
Strategy
1. The GAC strategy had several objectives:
“to support poverty reduction….�?
“…[by] developing capable and accountable states ….[undertaking] sound policies,
improving service delivery, [establishing] rules for markets, combating corruption,�?
and
“…to ensure that its funds are used for their intended purposes.�?
2. In addition, the “GAC guiding principles�? were as follows:
Focus on “[a] capable and accountable state to create opportunities for poor people,
provide better services, and improve development outcomes.�?
Country ownership and leadership are key. Country government is the principal
counterpart.
Remaining engaged so the poor do not pay twice.
Consistent approach across countries, even though one size does not fit all.
Engage broad set of stakeholders with focus on transparency, accountability, and
participation.
Strengthen rather than bypass country systems.
Harmonization (the Bank will not act in isolation).
Source: World Bank documents.
1.2 The implementation plan (IP) sought to define concrete steps for “what the World
Bank itself will do to support the GAC agenda, and how it will work with governments,
domestic stakeholders, and development partners to support country-level governance
improvements and regional and global initiatives.�? The plan’s success was to be measured by
(i) a significant and growing number of countries seriously addressing key governance
impediments to development effectiveness and poverty reduction; (ii) Bank-supported
projects and programs increasingly addressing GAC impediments; and (iii) countries and
global partners valuing and respecting the Bank’s capacity in this area (World Bank 2007a).
1
It was envisaged that these objectives would eventually be reflected empirically in
improvements in country governance performance.
1.3 To this end, the IP proposed to deliver guidance materials, tools, training, incremental
resources, and strategic staffing to help deepen Bank engagement in the following areas:
GAC-in-Countries. These initiatives sought to enhance Bank-country engagement on
governance and anticorruption issues. Initially, country-GAC (CGAC) processes—
comprising joint workshops, peer-to-peer learning events, clinics, and upstream
assessment activities—were launched in 27 countries to help Bank teams
systematically diagnose governance challenges and identify ways of addressing
them through CAS design, sector strategies, and project preparation. The CGAC
processes were intended to deepen the Bank’s understanding of what can be done to
strengthen GAC in CASs and help identify governance entry points (for example,
core public management and accountability institutions, private sector engagement,
and demand-side capacities and frameworks). Following the CGACs, a more
targeted effort involving 18 countries sought to enhance GAC responsiveness with
the help of considerable support provided under the Window One facility of the
Governance Partnership Facility (GPF).1
GAC-in-Sectors and GAC-in-Projects. These efforts aimed to strengthen incentive and
accountability frameworks in sector dialogue and project design, as well as
systematic risk assessment and management (for example, through the use of
political economy analysis, actionable governance indicators, and demand-side
measures). Guidance notes and toolkits were designed to advise Bank teams on how
to address GAC issues in the sectors and to support cross-cutting concerns, such as
social accountability (World Bank 2008b and 2009c). Also included were handbooks,
tools, and training to support efforts to prevent fraud and corruption in projects.2 A
2009 Quality Assurance Group (QAG) survey of projects approved in FY08 aimed to
establish a baseline for incorporation of “generic�? GAC elements in projects (World
Bank 2009f).
Global GAC Efforts. The Bank proposed to increase its involvement in peer learning
networks and collaborative governance initiatives. These included the Extractive
Industries Transparency Initiative (EITI) and global and regional legal conventions
such as the Stolen Asset Recovery (StAR) Initiative,3 Medicines Transparency
Alliance (MeTA), and Construction Sector Transparency (CoST) Initiative. In
addition, the Bank sought to harmonize GAC policies (for example, on cross-
1
World Bank (2008a); IEG, Back-to-Office Report, October 2010.
2
Recent efforts included the introduction of new procurement and financial management risk management
systems (P-RAMS and PRIMA).
3
Closely related were efforts to help strengthen the integrity of financial sectors in developing countries through
a sound Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime. More
recently, the Bank helped launch of the International Corruption Hunters’ Network to facilitate closer
cooperation among enforcement agencies around the world.
2
debarment) with other multilateral development banks, and to establish common
response principles for high-risk countries under the auspices of Gov-Net.
1.4 Internal Reforms. Other important internal reforms were carried out as complements
to the GAC agenda, including implementation of Volcker Panel recommendations on
strengthening the Integrity Vice Presidency,4 launch of a new WBI strategy emphasizing
multi-stakeholder engagements (World Bank 2009a), update of the Bank’s disclosure policy,
launch of a new Operational Risk Assessment Framework (ORAF) for investment lending,5
the recruitment of a Chief Risk Officer, an annual integrated risk monitoring report, and other
efforts to modernize investment lending (World Bank 2011a).
1.5 Resourcing the Strategy. Significant incremental budgetary and donor resources were
deployed over the FY08–12 period to support GAC implementation. This comprised $54
million in incremental Bank budget as well as $61 million in donor funds allocated through
the GPF. The GPF was supported by the United Kingdom, the Netherlands, and Norway.
1.6 Change Management. GAC implementation was viewed as a significant change
management agenda. Institutional arrangements to support this Bank-wide initiative
prominently featured a GAC Council, consisting of the Vice Presidents and chaired by the
Managing Directors. The Council was supported by a GAC Secretariat, various other
partnership secretariat units, and GAC focal points in Regional and network units. The Bank
also periodically sought the advice of a Group of External Advisers, an Independent
Advisory Board (that advises the President and Audit Committee on Integrity Vice
Presidency performance), and an International Technical Advisory Group (that advises on the
Use of Country Systems pilot).
IEG GAC Evaluation and Country Case Studies
1.7 The evaluation aims to help enhance the Bank’s approach to governance and
anticorruption and to improve its effectiveness in helping countries develop capable and
accountable states that create opportunities for the poor. Pursuant to this objective, the
evaluation assessed the relevance of the 2007 GAC strategy and implementation plan, as well
as the efficiency and effectiveness of implementation efforts in making Bank engagement
with countries and other development partners more responsive to GAC concerns. It also
sought to identify early lessons about what works and what does not in helping to promote
good governance and reduce corruption.
1.8 A key component of the evaluation involved case studies of six country programs over
the FY04-10 period: these case studies assessed the quality of Bank country engagement on
4
Recommendations included the establishment of an Independent Advisory Board; appointment of an external
member of the Sanctions Board as the chairperson; development of a confidentiality protocol; transfer of the
responsibility for staff misconduct from the Integrity Vice Presidency to Bank’s office of Ethics and Business
Conduct ; enhancement of selected staff rights to improve fairness of internal investigations; expansion of the
Preventive Services Unit; strengthening of communication between the Integrity Vice Presidency and the
Regions; and refinement of Integrity Vice Presidency results metrics. See Volcker and others (2007).
5
Four out of 11 ORAF risks relate to GAC: country risk, sector/multisector institutional, implementing agency
governance risks, and implementing agency fraud, and corruption risks.
3
GAC issues, and identified what has worked and what has not in implementing GAC efforts.
Case studies were selected from a quasi-random sample of twelve candidate countries, which
sought to ensure representation across geographic regions and countries that received special
GAC support over the FY07-10 period. Based on IEG’s desk review of GAC
responsiveness, country programs with documentary evidence of some degree of GAC-
responsiveness over the pre- and post-GAC periods were selected for case studies.
Accordingly, case studies were conducted in Azerbaijan, Bangladesh, Cambodia, Guatemala,
Liberia, and Moldova. Field missions to these countries were undertaken between December
2010 and February 2011. Case studies were reviews from World Bank country teams and
comments were duly incorporated.
1.9 The Bangladesh case study is based on an extensive desk review as well as a field
visit to Dhaka from February 6-15, 2011. It evaluates the relevance and effectiveness of Bank
support for governance and anticorruption efforts since the launch of the Bank’s Governance
and Anticorruption (GAC) Strategy in 2007. It elaborates on a desk review of the GAC
responsiveness of the Bank’s Bangladesh program and reviews the following GAC entry
points: core public sector reform (public financial management and procurement); GAC in
sectors (roads, education, and electric power); investment climate; and accountability
institutions. The case study also examined the extent to which the Bank’s GAC Strategy has
made a difference in staff attitudes toward addressing GAC issues in their operational work.
The mission interviewed development partners, nongovernmental organizations (NGOs),
government officials, and staff of project implementation units (PIUs), and the Bank Country
Office to better understand how the Bank has responded to the governance challenges.
1.10 The mission reviewed work by the Bank and other development partners in core
public sector areas and the possible links with improvements in service delivery. Also
reviewed were opportunities for using country systems, third-party monitoring mechanisms,
enhanced donor coordination, and other processes that are part of the GAC agenda. The
mission also examined strategic elements that might affect the willingness of the government
to reform, and the leverage that the Bank and other donors might have in promoting reform.
1.11 This evaluation reviewed the work by the Bank and other donors in core public sector
areas and possible links with improvements in service delivery. The mission looked at the
opportunities for using country systems, third-party monitoring mechanisms, enhanced donor
coordination, and other processes that are part of the GAC agenda. Also examined were
geographic effects and other strategic elements that might affect the willingness of the
government to reform, and the leverage that the Bank and other donors might have in
promoting reform. Finally, the mission assessed whether opportunistic responses to
governance challenges might contribute to a future portfolio-wide approach to improving
governance.
4
2. Bangladesh Country Context
2.1 Bangladesh is one of the world’s poorest and most densely populated countries with
an annual per capita income of $652 (Atlas method), and 160 million inhabitants living in a
landmass area of 147,570 square kilometers. The geography of Bangladesh is especially
relevant to its political and socioeconomic background. The topography of the country
consists of five major river systems that drain over 700 rivers, mostly into the Bay of Bengal.
This includes three major rivers: the Ganges, Brahmaputra, and Meghna. Bangladesh forms
only a small part of a large regional hydrologic system—less than 10 percent of the river
basin falls within the national territory. The land consists of alluvial plain. Given the
country’s geographic location it is subject to annual cyclones and flooding. Bangladesh
consists of primarily one ethnic group, Bengalis, who comprise 98 percent of the population,
and a small minority tribal population comprising approximately 2 percent of the population.
2.2 Bangladesh, formerly known as East Pakistan and before that as the East Bengal
region of British India, gained its independence from Pakistan following a civil war in
December 1971. The country has experienced a variety of forms of government since
independence. The current system is the outcome of a parliamentary system that was re-
introduced in 1991. Democratic elections in 1991, 1996, and 2001 followed two decades of
authoritarian rule. A Caretaker Government was instituted for 90 days in late 2006 to oversee
an election. Due to civil unrest, it stayed in office through the end of 2008, backed by the
military, with the aim of restoring peace and democracy. Elections were held in 2008 and
were deemed free and fair by international observers. The election outcomes resulted in a
peaceful transfer of power to an Awami League government led by Prime Minister Sheikh
Hasina Wajed. The Awami League won 230 out of a possible 300 seats in the Parliament,
granting it an absolute majority.
2.3 Although Bangladesh has a multi-party parliamentary system, the government
alternates between the two major parties—the Bangladesh Awami League and the
Bangladesh Nationalist Party (BNP)—with smaller parties joining coalitions to support them.
The political system is characterized by divisive party politics. Rivalrous political discourse
between the parties creates a fragile and contentious political environment. When in
opposition, both parties have sought to regain political control through parliamentary
boycotts, political demonstrations, hartals (labor strikes), and transport blockades. These
activities have often succeeded in disrupting economic activities and immobilizing the
government.
2.4 At first glance Bangladesh is a paradox, with strong economic growth (real gross
domestic product (GDP) growth about 6 percent since 2003, up from an average 4.2 percent
from 1986-96), good performance on health and education, poverty reduction (from 60
percent in 1990 to 40 percent in 2005), and a reduction in official development assistance to
less than 2 percent of GDP— alongside weak governance and pervasive corruption. The
reasons include strong macroeconomic policy, pro-poor spending, credible elections, export
growth and remittances, improved capacity for managing natural disasters, and a stronger
5
civil society than comparable countries, including nongovernmental organizations (NGOs)
such as Grameen and Brac delivering world-class services to the poor. 6
2.5 Institutional oversight is weak in Bangladesh. Competition between political parties
has hindered development of strong mechanisms for domestic accountability, although there
has been some progress in recent years. The transfer of power at the time of elections in
Bangladesh creates a “winner-take-all�? system. The last election has resulted in a state driven
by party interests, in which the ruling party uses state institutions for its own interests rather
than building institutions with appropriate checks and balances. Public institutions have very
few formal oversight mechanisms that the opposition can use to hold the government
accountable. Parliament and the judiciary do not provide significant oversight of executive
power. Nongovernmental organizations, professional associations, and the media provide
alternative checks and oversight on Parliament and the executive, but most are allied with
partisan interests, and there are other major constraints.
2.6 Parliament is regularly brought to a halt by actions of the opposition. Three years
before Bangladesh’s next election, the BNP opposition party is regularly holding political
demonstrations, actively seeking to dislodge the Awami League. Hartals regularly disrupt
businesses and slow progress. Many external development partners have adopted a “wait-
and-see�? attitude while actively encouraging better governance and involvement from local
stakeholders.
PUBLIC SECTOR GOVERNANCE
2.7 Public Financial Management. The strengths of public financial management
include fiscal discipline and funds allocation to sectoral priorities, despite a low revenue-to-
GDP ratio of approximately 10 percent. Improved budget classification and computerization
of some accounting transactions and reporting processes has improved reporting on budget
execution. A 2006 assessment by the U.K. Department for International Development (DfID)
based on the Public Expenditure and Financial Accountability (PEFA) methodology found an
orderly budget calendar, linking overall expenditure outturns, and expenditure composition,
to budgets. There was also effective monitoring of arrears, minimal use of extra-budgetary
funds, and use of independent review panels to handle procurement complaints. However,
efforts to increase revenues are constrained by continuing reliance on import-based taxes (45
percent), along with leakages and weak tax administration. Development spending declined
from 6.6 percent of GDP in FY017 to 3.4 percent in FY08, with 20-25 percent under-
spending of budgeted amounts each year. Inter-sectoral spending allocations and usage often
are not aligned with sector policy. Centralized processes, coupled with weak administrative
and personnel practices in spending ministries, limit operational efficiency. Contingent
liabilities are building up through off-budget mechanisms such as bank and enterprise
borrowings. Weaknesses in both internal and external audit limit accountability (Bangladesh
Government and DfID 2007, World Bank 2010a: 153-164).
6
Of five countries closely rated on UNDP’s human development index, Bangladesh rates significantly higher
on voice and accountability than Nepal, Pakistan, and Sudan; only Ghana rates higher. World Bank, 2008b.
World Governance Indicators, 2007.
7
Refers to the Government of Bangladesh’s fiscal year, July 1 to June 30.
6
2.8 At independence, the civil service had reasonable capacity, including a core of
capable professionals able to implement national priorities, such as disaster relief and
mitigation, and, unusually for the region, land reform. Over the past 15 years, this core has
diminished in strength, leading to capacity decline as a result of increasing political
interference and uncompetitive compensation. Also, the government has been resistant to
working with development partners for civil service reform (Wescott, Siddique and Rahman,
2007).
2.9 The government now has 41 ministries and divisions and a large number of
directorates, departments, autonomous bodies, boards, commissions, and the like. An
extensive, central public administration system reaches down to the subdistrict (Upazila)
level. Total public sector employment is around 1.2 million, of which about 70 percent are
employed in the civil service, 20 percent in state-owned enterprises, and 10 percent in the
armed forces. Although expenditure on the civil service is not excessive by international
standards (average 2.5 percent of GDP, FY07-FY10), its effectiveness is held back by over-
employment at lower levels of staff, many of whom are not hired on merit, and outdated
management practices, including lack of authority to carry out assigned tasks properly.
Although basic pay is low, there are extensive fringe benefits, particularly for higher-level
staff. Survey data (World Bank 2000) indicate that only 8 percent of civil servants are
actively looking for a job in the private sector.
2.10 The Public Service Commission is the central recruiting body for civil servants, and
the Establishment Division sets civil service regulations. Most of the laws, rules, and
regulations pertaining to the civil service are old and need to be amended and updated. The
army acts with more restraint and with a more modest claim on budgetary resources than in
neighboring countries, held in check by the prospect of lucrative, overseas postings on
United Nations peacekeeping missions.
2.11 Public administration challenges include monopolization of the government, political
parties, and means of production by a small, tightly knit elite; a weak human resource
management system and a limited management information system, including lack of career
planning, irregularities in performance measurement, irregularities in promotions, poor
training, excessive transfers, lack of effective implementation of and contradictions in
administrative rules and regulations, and widespread corruption. In addition, there has been a
decline in routine oversight and inspection functions because of weak supervision, distraction
from protocol duties, and a lack of resources to undertake inspection visits (Schiavo-Campo,
Tommaso, and Mukherjee 1997; World Bank 2000: Chapter 6; People’s Participation
Research Centre 2007; World Bank 2010; IMF 2010).
2.12 Although successive governments routinely call for reform (see, for example,
Bangladesh Government 2002), progress is hindered by various constraints. First, some
ministries pursued reforms led by technocrats and without political consensus, and progress
was therefore slow. Second, in these and other ministries, many civil servants focused on
collecting rents to cover the debts they had incurred in securing their positions, their
campaign expenses, and their personal needs. Senior posts can sell for $10,000 and
ministerial posts for $1 million. Any reforms that would hinder such rent-seeking were
opposed (Wescott Siddique and Rahman 2007).
7
2.13 The system of local government is made up of 64 district jurisdictions, with no direct
political representation. These are divided into 482 Upazilas (subdistricts), with elected
officers since 2009. Further subdivisions include 4,498 Union Parishads (unions) with
elected members, and 68,000 gram sarkar (village) committees with no direct political
representation (each has a council chaired by a union member). There are also 6 municipal
corporations with elected mayors and corporators, and within these, 309 pourashavas
(towns) responsible for water supply, solid waste, sanitation, public health, roads, drains, tree
plantation, community development, and poverty reduction. The pourashavas also include
elected chairpersons and councilors. Although quality of governance varies across these
multiple jurisdictional levels, weaknesses in democratic accountability are pervasive often
stemming from low levels of citizen participation and weak management of revenue,
expenditure, audit, and procurement (World Bank 2006c and 2008c).
2.14 Audit reporting by the Comptroller and Auditor General is improving, but is subject
to long delays. Technical work is dependent on external support because the budget for
hiring staff rests with the executive branch of government. As for February 2011, the Public
Accounts Committee of Parliament has reviewed annual audited accounts through 2006. In
cases of audit objections, auditors and auditees come together to agree on steps to be taken.
In about 5 percent of cases, recommendations are made for disciplinary action. No public
debate issues are reported by the Comptroller and Auditor General, and the Independent
Evaluation Group (IEG) was unable to determine whether any subsequent action was taken
to resolve these issues.
2.15 The Anti Corruption Commission (ACC), created by Parliamentary Act in 2004, is an
independent body reporting to Parliament with wide support from the development partner
community and civil society. The ACC took some time to get established, facing many
challenges, including an unclear mandate in relation to other agencies. The ACC gained
considerable momentum under the Caretaker Government. With full support from the Chief
Adviser (equivalent to the Prime Minister), the ACC conducted unprecedented investigations
leading to tens of thousands of arrests, including more than 200 government and business
leaders, as well as the two previous prime ministers. It successfully prosecuted prominent
officials and politicians. However, following the election of the current government, many
convictions were overturned by the courts. Parliament has taken steps to reduce the
independence and authority of the ACC and is considering further such steps.
2.16 Since the 1990s, many civil society organizations have become active in addressing
local and national governance issues and have lobbied state agencies, promoted transparency,
advocated election reform, supported activities aimed at protecting human rights, stimulated
public debate, and created constituencies for governance reforms. An estimated 2,000
development NGOs are working in Bangladesh, and a few of them are among the largest
such organizations in the world. The NGOs’ activities are recognized globally for the scale of
their work, and for their ability to develop innovative services for the poor in both rural and
urban areas. Think tanks, advocacy organizations, and research organizations also undertake
various activities pertaining to raising awareness about various issues, including creating
demand for good governance. They undertake advocacy activities to help people understand
their political, economic, and social rights and responsibilities and play an important role in
8
democratization through election campaigning and monitoring. Many work at the grassroots
level to help give the poor a voice in community affairs.
2.17 However, many civil society organizations have significant weaknesses. For example,
many are politicized and are not credible to carry out independent third-party monitoring.
NGOs that receive funding from donors are accused of carrying out donor agendas, and
NGOs that are involved in service delivery obtained with funding from the government find
it difficult to criticize the government. Good governance is also an issue for NGO finances,
recruitment, and management. In some cases, NGOs engage in various profit-making
activities but are exempt from paying taxes. Numerous professional associations represent
private sector interests, but they tend to be dominated by powerful business leaders, and do
not necessarily represent the interests of the small businesses that make up the majority of
Bangladesh’s private sector.
BASIC SERVICE DELIVERY
2.18 One reason for Bangladesh’s comparatively good performance in growth and poverty
reduction has been the effective delivery of pro-poor services, adequately resourced by
government, and delivered both by government and civil society. As with public sector
management, maintaining a balance between basic service delivery and high fiduciary risks
has been a challenge across different sectors.
2.19 As of 2007, the roads sector in Bangladesh covered 270,565 kilometers and consisted
of 20,735 roads, 30 percent of which were paved and 39 percent of which were all-season-
access roads (World Bank Bangladesh Website 2010). The roads network has been
substantially expanded and improved upon since reforms in 1991, but the lack of
maintenance and resource allocation threatens sustainability. Also, growth in the urban
population has surpassed the capacity for existing urban roads and highways, and there is a
considerable need for reducing congestion and regulating transportation services in Dhaka.
Statistics reveal that the fatality rate is more than 100 deaths per 10,000 registered motor
vehicles each year (Government of Bangladesh 2011).
2.20 Improvement of roads and highways is a struggle in Bangladesh largely due to weak
governance and lack of transparency both in the government and the private sector.8 Two
executive bodies, the Roads and Highways Department (RHD) and the Local Government
Engineering Department (LGED) maintain roads and highways. RHD manages major
highways and urban areas, and LGED is responsible for the rural roads network.
2.21 The two agencies have different reputations. RHD has a reputation for being corrupt,
particularly in the awarding of large contracts for road construction and maintenance. An
Operational Risk Assessment conducted by the World Bank in 2007 found serious
allegations and mismanagement of government funds in RHD. Problems reported include
lack of coordination across government bodies, labor unions, and corruption and lack of
8
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/EXTSARREGTOPTRAN
SPORT/0,,contentMDK:20674801~menuPK:868784~pagePK:34004173~piPK:34003707~theSitePK:579598,0
0.html
9
transparency in bidding for contracts (World Bank 2007a). LGED has a more favorable
reputation (World Bank 2009a). LGED has district-level offices throughout the country and
manages a large number of databases, including detailed geographic information system and
mapping data. LGED’s work in the roads sector is largely managing small contracts, and
according to audit reports it is one of the best-managed agencies in the country.
2.22 Bangladesh’s primary education is comparable to that of other nations in the region.
The expected years of schooling for children is 8.1, compared to 6.8 in Pakistan and 10.3 in
India (United Nations Development Programme (UNDP) 2010 Human Development
Report).9 Learning outcomes are poor, particularly for minority groups. The primary school
completion rate is only 52 percent, with only 20 percent at the secondary level (World Bank
2010b). Transition rates are also low, at 44 percent for primary to lower secondary, 27
percent from lower to upper secondary, and only 6 percent to tertiary. The opportunity costs
of schooling remain high for many families who can otherwise send their children to work or
for marriage. As a result there are many out-of-school children.
2.23 Several factors potentially contribute to poor schooling outcomes: underperforming
public sector institutions, public management constraints, participation and accountability at
the school level, and weak checks and balances. Public sector institutions for primary
education have improved in recent years, but they still perform well below their potential
(World Bank 2010c). Two ministries manage education, the Ministry of Primary and Mass
Education and the Ministry of Education. The former is responsible for primary and informal
education, and the latter handles all post-primary and university-level education. These
ministries have worked closely with development partners to improve the education
environment. However, two weaknesses persist within the ministries: poor information
management systems and low investments in workforce development. At present, the
government maintains limited information on schools and pupils, and information tracking is
weak. Although there have been investments in workforce development—setting minimum
standards for teachers—teacher training and oversight over teacher quality are limited.
2.24 Two public management constraints appear to further slow progress in primary
education: teachers’ wages and centralized decision making. In addition to little oversight,
teachers’ wages are low and teachers lack incentives for performance and attendance. As
with other sectors, development partners have tried to make headway on civil service reform
issues with little success. Teacher absenteeism and poor performance pose challenges to
school quality (Chaudhury 2006). Equally problematic, decision-making for primary
education remains highly centralized. There is little transparency in the appointment of
teachers to schools, and as a result, there is rent-seeking for teacher positions—although the
government has been working to make this process more transparent. Schools are managed
by established School Management Committees. These committees are in turn managed by
lay community members and overseen by a government official (assistant Upazila officers).
As of 2009, each Upazila officer was to manage 15 to 20 schools, but in reality they were
managing as many as 40 schools (World Bank 2010c, 57).
9
http://hdrstats.undp.org/en/indicators/69706.html
10
2.25 Participation, accountability, and transparency at the school level are low, though
there is a recognized need for demand-side pressures at the facility level. Both the Ministry
of Primary and Mass Education and the Ministry of Education have worked with
development partners to create demand-driven policies and to improve participation and
accountability. These have had success since the mid-1990s—particularly for school
enrollment and girls’ participation in school.
2.26 The gross enrollment rate for primary school increased from 76 percent in 1991 to 98
percent in 2008 (with net enrollment at 91 percent). At the secondary level, gross enrollment
was 57 percent in 2008, representing a threefold increase since 1980. Much of the gain at the
secondary level was due to a sevenfold increase in girls’ enrollments since 1980. Demand-
side interventions since the early 1990s, including a gender-targeted secondary stipend
program, have been met with expanded supply, particularly through private channels. The
share of girls in total enrollments is now 52 percent in primary and 55 percent in secondary
education, compared to fewer than 40 percent in the early 1990s. The substantial
improvement in access to education, however, has not been accompanied by similar
improvements in the quality of education.
2.27 Power. The electric power sector is overseen by the Power Division of the Ministry
of Power, Energy, and Mineral Resources, with support from other bodies in gas production
and distribution, electric power generation and distribution, and regulatory issues. The
country has 5,719 megawatts of installed capacity producing 4,162 megawatts of available
generation in 2008-09, compared with a peak demand of 5,500-5,800 megawatts. Shortfalls
are due to inadequate supplies of natural gas, the principal fuel, and inadequate maintenance
of facilities. The present government has promised to add 7,000 megawatts of new
generating capacity during its five-year term, relying mainly on public-private partnerships.
2.28 The Bangladesh Power Development Board (BPDB) is the main aggregator of bulk
power. Its costs to purchase power from suppliers considerably exceed its revenues from
retail customers, with estimated accumulated losses of Tk 101 billion ($1.56 billion) as of
June 2009. The BPDB is only able to meet payments to power generators through a receipt of
loans from the Ministry of Finance, but these are a weight on BPDB’s balance sheet with no
possibility of repayment.
2.29 There have been some positive advances in the sector; for example, the Power Grid
Company of Bangladesh, Ltd., a company owned by the BPDB and established in 1996 to
operate, maintain, and develop power transmission systems, has become one of the country’s
best-run state-owned enterprises. Likewise, the Dhaka Electric Supply Company, Ltd.,
established in 1996, and since 2006 listed on the Dhaka and Chittagong stock exchanges, has
done better than its comparators due to its accountability to private shareholders, successful
management of its outsourcing contracts, and low tolerance for poor service among Dhaka’s
elite customers. There have also been advances in rural connections, supported by 70 rural
power cooperatives and financed by the Rural Electricity Board. Another institutional
development has been the establishment in 2007 of the Bangladesh Energy Regulatory
Commission, which is responsible for setting power tariffs.
11
INVESTMENT CLIMATE
2.30 Since independence, Bangladesh has made respectable progress in improving its
macroeconomic, trade, and investment climate. A major area of success has been the
readymade garments sector, which accounts for about 75 percent of exports and more than 40
percent of manufacturing employment. This sector started taking off in the late 1970s
because of a combination of deliberate and accidental factors, including financing
instruments, trade liberalization, and political factors that ensured the transfer of tacit
knowledge to, and high levels of effort by, early investors. Yet, the challenges to achieving
further improvements in this and other sectors are considerable.
2.31 Foreign direct investment in Bangladesh in 2009 is estimated at only $716 million, or
about 3 percent of gross fixed capital formation. This is less than one-third of foreign direct
investment in Pakistan (over 8 percent of gross fixed capital formation) and less than half of
that in Ghana (over 36 percent of gross fixed capital formation) over the same period
(UNCTAD 2010). Regarding global competitiveness, Bangladesh ranks 106 out of 133
countries (World Economic Forum 2009), and it ranks 134 out of 178 countries on
Transparency International’s (2010) corruption perception index (compared to 87 for India
and 62 for Ghana). Analytic work by the World Bank Group highlights many constraints
affecting Bangladesh’s competitiveness, with unreliability of electricity the most often-
mentioned constraint (Figure 2.1; see also World Bank 2003, 2007b, 2008a).
Figure 2.1 Bangladesh-Key Investment Climate Constraints and Comparisons with
Other Regional and Low-Income Countries
12
3. Relevance of World Bank Engagement on GAC Issues
Country-Level Relevance
3.1 Bangladesh had an innovative and ambitious governance agenda, which was in place
well before the introduction of the 2007 GAC Strategy. World Bank support to improving
core public sector management goes back to the early 1990s, and specifically to two
Institutional and Governance Reviews (World Bank 1996, 2000). The importance of cross-
cutting governance improvements was featured in the CAS for the period 2001-03, both
because of the importance of sound governance to development results and because of the
requirements of the Bank for consideration of increased lending. Governance became the
focal point in the CAS for the period 2006-09. Indeed, this CAS is often referred to as the
“governance CAS�? (World Bank 2006b).
3.2 The governance CAS had four main objectives: to improve implementation capacity;
to “tackle corruption�? by fully operationalizing the ACC; to lay the foundation for
comprehensive legal and judicial reform; and to strengthen “voice, empowerment, and
participation�? (World Bank 2006b; World Bank 2010c).
3.3 This approach is judged to be substantially relevant. The choice of a wide range of
instruments and areas of intervention was appropriate, given the political instability at the
time of 2006 CAS preparation. The Bank signaled it was ready to engage in all areas, and
could scale up or pull back depending on emerging political and bureaucratic commitment.
3.4 A deeper understanding of how formal and informal institutions have evolved in
Bangladesh would have given the Bank’s program greater relevance. On the one hand, the
program led to some GAC improvements in public financial management, procurement, local
government, investment climate, rural roads, and primary education. On the other hand, the
program was less successful in attaining GAC improvements in national highways and
independent accountability institutions. The strict approach to fiduciary risk increased the
confidence of the Bank’s shareholders, helping to enable a tenfold increase in Bank lending
since 2001 and the creation of new trust funds under the Bank’s management. Yet, the same
strict fiduciary standards led to the Bank’s withdrawal from support to national highways,
meaning that the Bank now has little influence over a binding constraint for economic
development and poverty reduction.
3.5 The preparation of the 2006 CAS also signaled the imperative of harmonizing the
Bank’s governance support with the work of other development partners, including the
creation of a joint strategic framework with DfID, the Asian Development Bank (ADB), and
Japan.
3.6 The current Country Partnership Strategy, adopted in July 2010, was prepared in a
more stable political environment, with a government elected in 2009 following substantial,
internationally acclaimed electoral reforms. The CPS proposes to focus on areas where there
is political commitment from the current government: public financial management (PFM),
procurement, local government and service delivery, and civil society, for example, its
13
demand for good governance. However, the CPS lacks contextually sensitive analytics that
could answer questions such as: Why should political commitment evidenced over the last
few years in areas such as PFM and procurement continue over the next few years? Might
this strategy run into greater resistance to change? Why is there an opportunity for scaling up
demand for good governance from civil society when it has not been a prominent feature in
Bangladesh to date? Why has there been no response to the Integrity unit’s (INT’s) referrals
of the findings of its investigations on corruption which implicated government officials?
Sector-Level Relevance
3.7 Public Sector Reform. Core public sector reform—comprising PFM and
procurement—served as key GAC entry points for the Bank’s engagement in Bangladesh
between 2004 and 2010. The PFM work built on 15 years of engagement, starting with the
work beginning in 1990 of the Committee on Reforms in Budgeting and Expenditure
Control, led by the Ministry of Finance, to address weaknesses in PFM. Building on its
recommendations, and the government’s need for budgetary support, the Public Resource
Management Adjustment Credit was approved in FY92, had as its goal institutional
strengthening for budgeting, accounting, investment programming, tax administration
(including introduction of value-added tax, or VAT), and debt management. This work was
expanded through DfID technical assistance beginning in 1996 and sustained to the present.
3.8 The Bank provided Public Expenditure Reviews (PERs) in FY91, FY96, FY97
(update), FY02 (joint with ADB), FY03, and FY10. Initially focusing on allocation of
resources consistent with policy priorities and improving fiscal discipline, each subsequent
PER provided more detailed institutional analysis and recommendations. However, the FY03
PER pointed out10 that most of the key institutional recommendations of the previous PER
and update had not been adopted, including measures needed to: (i) restore fiscal
sustainability; (ii) adopt a strategic medium-term framework; (iii) strengthen participation by
line ministries in budget preparation; (iv) ensure better estimation of project-related operating
and maintenance costs, and their inclusion in the revenue budget, and; (v) strengthening
public procurement practices, budget accounting, budget oversight, monitoring, and
evaluation.
3.9 Building on a 15-year foundation of analytical work and technical support, the
Economic Management Technical Assistance Program (EMTAP; FY04, $20 million)
supported improvements in tax and customs administration through organizational
improvement, use of information and communications technology, and improved training
and citizen awareness. Public financial management diagnostics were improved through
publication of Bangladesh’s PFM indicators based on the PEFA framework.11 Bank support
has complemented support from DfID and other development partners, and has helped to lay
the groundwork in 2006 for the government to adopt its public finance management vision
and a medium-term rolling action plan with these objectives:
10
FY03 PER: 25.
11
For example, World Bank, 2006b: Attachment 4; World Bank 2010: Appendix 5.
14
To formulate budgets consistent with the medium-term macroeconomic framework,
and to provide greater predictability of resources to executing agencies
To formulate budgets consistent with both national and sectoral policy, and to
gradually enhance delegation of financial management to line ministries
To ensure financial accountability throughout line ministries by using suitably
qualified financial managers; to establish a government financial management
information system consistent with international standards that operates in real time
and encompasses all government revenues and expenditures, to enhance the quality of
financial management information, and to establish a treasury single account
To raise the standard of auditing practices to international standards and to improve
the quality of audits (World Bank 2008b: 6).
3.10 PFM reforms were also supported through policy conditions in the Second
Development Support Credit (FY05, $200 million), the Third Development Support Credit
(FY06, $200 million), the Fourth Development Support Credit (FY07-08, $375 million
including supplementary financing), and the Transitional Support Credit (FY08, $200
million), covering, among other things, improved budget classification, improved alignment
between recurrent and capital spending, support to program budgeting in pilot ministries,
reducing the backlog of responses to audit objections by the Public Accounts Committee of
Parliament, and introducing the Automated System for Customs Data (ASYCUDA), a
system for improved customs administration.
3.11 All of this work has been underpinned by extensive analytical work (such as World
Bank 2005a, 2005b, 2005c, 2007, and 2010). Finally, the Bank is administering the
Strengthening Public Expenditure Management Program (SPEMP; FY09, $95 million)12
financed by a multi-donor trust fund (DfID, European Union, and the Danish International
Development Agency), intending to strengthen system and human capacity for the Ministry
of Finance, line ministries, the Comptroller and Auditor General and Parliamentary
committees (the Public Accounts, Public Undertaking, and Estimate Committees; see World
Bank 2008).
3.12 The Bank’s support to improved revenue management included the International
Finance Corporation’s (IFC’s) Bangladesh Investment Climate Fund (BICF; $54 million
DFID trust fund13), components of the EMTAP, and policy conditions of the development
support credits (DSCs) and Transitional Support Credit (TSC) mentioned above. EMTAP
provided support to the National Bureau of Revenue in information and communications
technology, and improved customs processing and training. BICF has supported analysis of
comparative experience in the use of alternative dispute mechanisms for taxpayer issues—
rather than courts— leading to a draft proposal for adoption. A DSC3-supported policy
trigger supported the National Bureau of Review modernization, and a policy condition
supported expanding the base of income tax and the VAT.
12
For documentation and updates, see http://www.spemp.com/main.php
13
This trust fund is being rolled out in a series of projects
15
3.13 The Bank’s support to procurement built on a Country Procurement Assessment
Report (CPAR)(World Bank 1999). The CPAR found that the lack of a unified procurement
regime, complex bureaucratic procedures, delays in the bidding processes, inadequate
contract administration, and other constraints led to procurement weaknesses that were the
most significant issue affecting public sector performance. These constraints were addressed
through the Public Procurement Reform Project (FY02, $4.5 million), the Public
Procurement Reform 2 (FY08, $23.6 million), a Procurement Capacity Building Policy Note
(2008), the Procurement Monitoring and Evaluation Technical Assistance (2008), and policy
conditions in the DSCs and TSC.
3.14 The Bank also supported civil service reform, local government, development of the
ACC, the Parliamentary Accounts Committee, and the External Audit functions through
policy conditions in the DSCs and TSC. Two policy notes were also prepared with
recommendations on the civil service: one on Class 1 officers and the other on reforming the
Public Service Commission (2008). The 2006 CAS set out to agree on a new personnel
management system that included merit-based promotions and improved transfers,
compensation, and training.
3.15 A World Bank (2006a) study identifies the following actions as helpful to modernize
the domestic accountability role of civil society: improving the regulatory framework,
including that governing microfinance activities; establishing a process for certifying NGOs;
and having NGOs themselves take steps to tackle their governance weaknesses. DCS policy
conditions supported, among other things, setting up an independent NGO foundation to
improve the financing of NGOs, stakeholder consultation on police reform, preparation of a
Freedom of Information Act, appointment of a Board and chief executive for the ACC, and
publication of a time-bound anticorruption action plan endorsed by the Cabinet. In addition,
the Bank supported government efforts to seek the return of stolen public assets through an
international mechanism working with foreign banks and regulators. The Bank has also
undertaken demand for good governance analysis for nine projects and intends to extend it
across the entire portfolio during the present CPS period.
3.16 Relevance. The Bank’s engagement on public sector reform was highly relevant.
3.17 The Bank’s public financial management analytical work, technical assistance, and
policy reform conditions built on a history of engagement since the early 1990s, in close
partnership with DfID, the International Monetary Fund (IMF), and other development
partners. For much of this period, the government chose to rely on DfID for a leading role in
supporting reform efforts because of a desire to use grant funds to support technical
assistance, among other reasons.
3.18 Since 2008, with the approval of trust fund support under the Strengthening Public
Sector Management Program (SPEMP), the Bank has led the effort by development partners
to help advance PFM reforms, with strong commitment from the Finance Minister and other
key stakeholders. Bank support to improve other aspects of public sector reform through
analytical work, technical assistance, and policy conditions was also highly relevant.
Procurement reform was launched with the full support of the previous BNP government and
had been a key plank of the “good governance�? platform that had swept them to power in
16
2001. The procurement reforms were deepened during the Caretaker Government, and have
been mainly preserved under the current regime.
3.19 The government’s (2005) commitment to a Poverty Reduction Strategy highlighted
the need for improved revenue management to increase funding for essential investment in
improved services and infrastructure. The strategy also reiterated the commitment of
previous assessments by the government and the Bank (in 1996 and 2001) that the
modernization of the civil service was crucial for the success of reforms in financial
management, procurement, and improvements in service delivery.
3.20 Support to local government was highly relevant. The provision of block grants, and
support for annual audits, open budget consultations, and citizen satisfaction surveys under
the Local Government Support Project all addressed key constraints to meaningful local
governance.
3.21 Support to non-executive accountability institutions and civil society organizations
was moderately relevant in addressing binding constraints to the effectiveness of public
institutions and the investment climate. Support was built on a tradition of strong citizen
participation in public affairs. There has been modest support to civil society, media, and
Parliament through the World Bank Institute’s Affiliated Network for Social
Accountability—South Asia Region (ANSA). There has also been some support to the Anti-
Corruption Commission. Bank teams in other weak integrity environments have previously
raised doubts about creating such an institution, noting the risks that the ACC will only
selectively investigate corrupt acts based on partisan factors, and that even a sound
investigation will not be supported by other parts of the system (prosecution, trial,
punishment; see for example World Bank 2004a). These challenges were encountered in
Bangladesh, as will be discussed below.
3.22 Basic Service Delivery. The Bank has supported one major roads project in
Bangladesh, the Rural Transport Improvement Project (RTIP; P071435, FY03, $255 million)
since 2007. A second project, the Padma Bridge Project ($1.2 billion), was approved in
February 2011. The RTIP design included three related elements with GAC measures: a
public procurement program with the RHD; the creation of an institutional development plan;
and the preparation and implementation of a financial management project. The project has
worked with both the RHD and LGED.
3.23 The RTIP had a component to enhance the capacity of relevant government
institutions to better manage rural transport infrastructure. It used and sought to strengthen
country systems through procurement. The civil works under this component of the project
had been procured under both international and national competitive bidding procedures,
implemented in multiple phases. An Operational Risk Assessment (ORA) carried out in 2007
rated the procurement risks in RHD as high, and the report found the project implementation
and client engagement unsatisfactory (World Bank 2007d). The release of this report
coincided with the release of the outcomes of four investigations with RHD by the Bank’s
Institutional Integrity Department (INT) and a decision by DfID to withdraw funds
supporting the roads sector in Bangladesh. Given the ORA results, Bank management
decided to disengage from this component of the RTIP and to stop engagement with RHD.
17
3.24 In October 2009, the Bank had to decide how to proceed. The decision was taken that
RHD would have to show improvement in at least two projects before the Bank would re-
engage. Currently the RHD is piloting two smaller projects, and the Bank is providing some
technical assistance and monitoring progress of the projects. A Public Expenditure Tracking
Survey (PETS) carried out by Ernst and Young India is currently underway and preliminary
results are expected in March 2011.
3.25 Implementation with the LGED has been more satisfactory (World Bank 2007d). This
project is scheduled to close in FY11. An ORA carried out with funding from a DfID trust
fund found that there is no real oversight of roads (World Bank 2007d). At present there is no
internal control mechanism in LGED. It is not clear why technical audit and oversight were
not picked up in the Bank’s project but were left to the government. It was noted in
discussions with Bank staff that a failure to incorporate a technical audit is one flaw of the
RTIP. The other two project components and work with LGED were reported to be operating
in a satisfactory manner.
3.26 The Caretaker Government created a window of opportunity for making some
progress on procurement in roads with the RTIP. Under the Caretaker Government, 60 road
contracts were cancelled for not performing, and more transparency was introduced. This has
continued under the current government. Drawing on the GAC strategy and the option of
disengagement, a decision was taken in this particular project to disengage on component one
of the project. Four years of initial work on the component were lost after disengagement.
3.27 The RHD ORA coincided with four concurrent INT investigations. The INT
investigations created a particularly tense environment in Bank-client relations.
Harmonization and alignment issues arose after the Bank’s decision to disengage. The ADB
had also been working with RHD and picked up some of the work that the Bank left in
disengaging. There have been negative reputational effects in the sector following the Bank’s
disengagement.
3.28 Relevance. The Bank’s engagement in the roads sector was moderately relevant. The
objectives of the RTIP are relevant. However, the fit to country context in the RHD
component was questionable in balancing service delivery and management of fiduciary
risks. The high fiduciary risks involved with the project were made apparent in the ORA of
RHD and in the outcomes of the INT investigations. The decision to withdraw has sent a
strong signal that fundamental reforms are needed in RHD, while the Bank continues to
provide some support through a PETS, and a piloting of e-procurement through the Public
Procurement Reform Project. However, it is valid to ask whether the Bank could have taken
an alternative path to focus on more fundamental institutional reforms in this crucial sector
rather than the carrot-and-stick approach presented with the analytic and advisory activities
and the requirement for RHD to show progress before continuing engagement.
3.29 Education. The Bank supports GAC issues in five education projects, two of which
address primary education, the Primary Education Development Project (PDEP) II (P074966,
FY04, $1,815 million) and the Reaching Out of School Children (ROSC) Project (FY04).
PDEP II is a large multi-donor coordinated sector-wide approach ( SWAp) working to help
18
Bangladesh reach the Millennium Development Goals.14 The project has three objectives: to
improve the quality of teaching and learning and raise student achievement; to increase
access to schooling for the disadvantaged; and to strengthen planning and management of
primary education, including establishing a national monitoring and evaluation system for
primary education. The project introduced an annual school census covering schools that 80
percent of children are estimated to attend. This is part of an effort to help improve the
quality of schools and better target the neediest areas. Also the project consists of a large
subsidy scheme to households providing Tk 100 ($1.50) to households that enroll children in
school (World Bank 2004b).
3.30 GAC issues include management and information tracking systems, demand for good
governance, and harmonization and alignment. The project has worked to strengthen the
management and information systems in the country. Positive lessons were adapted from the
Sindh and Punjab education projects in Pakistan (World Bank 2009c). In addition, the project
relies on a conditional cash transfer to stimulate demand and get parents to enroll their
children in school. The project, being a larger multi-partner SWAp requires harmonization
and alignment across 10 development partners and the government.
3.31 The ROSC project is funded by a supplemental grant. It provides basic education to
out-of-school children. ROSC is a conditional cash transfer program that rewards the
households of children who attend ROSC schools. The schools are established by qualified
NGOs that work with trained community members. The community members lead a
Learning Center Management Committee responsible for working with the NGOs and
teachers in the ROSC project. The project involves coordination between the Ministry of
Primary and Mass Education, NGOs providing school services, a large national Bank (Sonali
Bank), district LGEDs, and households to collect data on school attendance and to provide
cash transfers to Bank accounts belonging to children’s mothers. School services are
provided in fagelas (lowest administrative unit in Bangladesh) to the neediest children.
LGED offices are responsible for collecting information about children’s attendance at the
school. ROSC has achieved some degree of success in meeting results indicators. The next
phase of ROSC is currently under consideration at Bangladesh’s National Planning
Commission and is slotted to be a scheme in the next five-year plan. The World Bank has
also proposed to incorporate ROSC into the PDEP III.
3.32 Relevance. The Bank’s engagement in the education sector was highly relevant.
Components of both the PDEP II and ROSC projects were relevant to country needs in
primary education. The strategies reflected in the design of both projects were reasonable.
The FY06 CAS outlined several objectives for improved governance in primary education:
establishing quality assurance mechanisms for monitoring study learning and carrying out
impact assessments; ensuring teachers are selected through a merit-based transparent process;
providing public subsidies to schools linked to learning outcomes; and continuing an ongoing
subsidy scheme to girls for attending and staying in school (World Bank 2006b). PDEP II
and ROSC were closely aligned with these objectives.
14
http://web.worldbank.org/external/projects/main?Projectid=P074966&theSitePK=40941
&piPK=64302772&pagePK=64330670&menuPK=64282135&Type=Financial
19
3.33 Power Sector. In addition to investment climate support, the Bank supported the
Power Sector Development Technical Assistance (FY04, $15.6 million), Siddhirganj Peaking
Power Project (FY09, $350 million), and policy conditions in the Power Sector Development
Policy Loan (FY08, $120 million). Bank support also helped ensure government transfers for
prompt payment to independent power producers. It supported the registration of the South
Zone Power Distribution Company as a public limited company, strengthened the
Bangladesh Energy Regulatory Commission, and supported increases in electricity tariffs to
reduce the gap with the cost of supply.
3.34 Relevance. The relevance of the World Bank’s work in power sector development is
substantial, given that power shortages cost the economy an estimated 2 percent of GDP.
Since the Bank’s Power Policy was adopted by the Board in 1993, the Bank’s approach to
the sector in many countries has focused on unbundling, arm’s length regulation,
competition, and privatization or corporatization. The Bank’s work in Bangladesh was
consistent with this approach. Helping spin off corporate entities from ministries in the power
sector was a relevant response to inefficiency. Yet, poor service and persistent losses
continue. Regulatory improvements were relevant as a step toward reducing the burden of
subsidies on the budget, and the risk of financial insolvency of entities such as the BPDB.
3.35 Giving the private sector leadership in power generation is contestable. By 2010, 38
percent of the country’s electricity was generated by privately-owned firms, in part as a result
of the country accepting advice from the World Bank and other development partners
regarding the desirability of private participation in the sector15. Yet, by comparison,
although private firms in India generated less than 15 percent of electricity, there is a closer
match between demand and supply as a result of considerable public investment in the sector.
Given the risks inherent in the sector, particularly in large generating plants with expected
lives of 20 to 30 years, it may not be reasonable for the Government to be planning such a
large and expanding role for private financing of investment in the sector in Bangladesh.
3.36 Investment Climate. World Bank Group support to improve the investment climate
was a priority. Operations approved earlier, but continuing during the period between 2004
and 2010 include: Financial Institutions Development (closed FY06), Private Sector
Infrastructure Development (closed FY07), Microfinance II (additional financing in FY07,
$15 million), Financial Services for the Poorest (closed FY08), and Central Bank
Strengthening Project (active, $46 million). New operations approved during the period
include: EMTAP (listed above), Enterprise Growth and Bank Modernization (FY04, $250
million), Investment Promotion Financing Facility (FY06, $50 million), and policy
conditions in the DSCs and TSC. Among the objectives of this wide-ranging support was to
finance the Infrastructure Development Company, Ltd., which provided subordinated foreign
currency debt to priority infrastructure projects, and the Infrastructure Investment Facilitation
Center. It provided transactions support to line ministries and private infrastructure
developers in competitive bidding, marketing subprojects, and managing the process of
structuring, documenting, bidding, negotiating, and awarding concessions. Bank support also
15
The Bank supports both small privately-owned power plants through its Investment Promotion and Financing
Facility Project, and large schemes such as Bibiyana, for which the Bank has provided advisory support. The
Bank’s largest engagement is under the Siddhirganj Power project, which is a government- owned facility.
20
helped to strengthen the accounting and audit profession. The Bank also supported these and
other objectives through economic and sector work (ESW), including an Investment Climate
Assessment (2008), a Pharmaceutical Competitiveness report (2008), and technical
assistance on pricing reforms in oil and gas (2006).16
3.37 Relevance. The World Bank’s support to improving the investment climate was a
highly relevant response to policy, regulatory, financing, and infrastructure constraints that
hampered the private sector. Streamlining tax and customs administration, expanding the
private banking network, better management of the container terminal, and streamlining
processes at the Board of Investment, Export Processing Zone Authority, and Registrar of
Joint Stock Companies were all relevant responses to facilitate trade and investment.
Project-Level Relevance
3.38 Since the 2006-09 CAS was adopted, the Bank has taken a number of steps to
strengthen GAC responsiveness across the portfolio. These were motivated by a regional
approach taken following the India Detailed Implementation Review (DIR) and reflected its
findings. In addition, it reflected a long-standing commitment from 1996 with the first of
two country governance assessments and a desire to heighten fiduciary processes as a step
toward building stakeholder support for major increases in the Bank’s lending. The measures
include strengthening the operational risk management framework, appointing a senior
governance advisor to the Country Office, and heightening demand for good governance
measures within projects.
3.39 Operational Risk Management Framework. First, the Bank’s country team set up
an Operational Risk Mitigation Team to guide the process of implementing a rolling
Operational Risk Mitigation Action Plan (ORMAP) to manage risk systematically throughout
the portfolio. The ORMAP consisted of a systematic analysis of corruption risk through
analytical work and heightened attention during project preparation, smart project design,
stronger supervision, more rigorous identification of red flags, and enhanced information
disclosure. A shortcoming is that in the case of the Padma Bridge, the largest project
currently being implemented by the government, and the largest International Development
Association (IDA) project in the country, no Governance and Accountability Plan (GAAP)
was prepared during three years of project preparation until it was recommended by the
Integrity Unit (INT) at the Operations Committee meeting —although there were fiduciary
measures and risk mitigation actions in the procurement framework that had been developed
during implementation that were later given a special focus and strengthened in the separate
GAAP . This initial omission of a GAAP raises concerns given evidence of corruption in the
Ministry of Communications. A more general shortcoming was that many risk mitigation
measures took effect after project effectiveness, thereby exposing the project to risks of
inappropriate advance procurement and mobilization payments to contractors. Furthermore,
plans to use supervision consultants hired by the government agency risked undermining
16
Although the IFC is not being evaluated here, it played an important complementary role to IDA support for
investment climate reforms, mainly through a DfID trust fund, BICF, to provide advisory services on improving
business regulations, enhancing economic zones, and building capacity through, among other things, public
private consultative forums.
21
independence of their assessments. It remains to be seen whether the subsequent efforts
strengthen the GAAP address these concerns.17
3.40 In 2009, a version of ORMAP was rolled out Bank-wide in the format of the
Operational Risk Assessment Framework. The Bangladesh country team then reconstituted
ORMAP as an Operations Leadership Team to provide cross-support to task teams in
navigating operational risks prevalent in Bangladesh.
3.41 In-country Senior Governance Advisor/Specialists. Bangladesh was one of the first
Country Offices to appoint a senior staff member to provide support on GAC issues. The role
of the Governance Advisor/Specialist has varied to respond to the demands of the three
different country directors since 2006 and has included building analytical capacity for GAC
work in a local university, supporting government efforts to work with U.K. banks to return
stolen government assets,18 and providing GAC-related support to Bank task teams,
including support in implementing the Governance and Anticorruption Plan for the Padma
Bridge project. The Advisor/Specialist has not acted as team leader for large public sector
projects. That role has been filled by a Senior Public Sector Specialist in the office.
3.42 Demand for Good Governance. Features to promote transparency, participation, and
accountability (stakeholder consultation, community involvement in planning and
monitoring, information disclosure) have been built into projects in some sectors, including
education, local government, and rural roads. . These features have also been a part of
procurement reforms supported by the Bank (complaints mechanism), and land acquisition
and resettlement associated with Bank investments. However, these features have not been as
well accepted by client ministries as the enhanced procurement and financial management
measures that have been the focus of the ORMAP.
17
Although reported on here, the Padma Multipurpose Bridge Project was approved in FY2011, and was
therefore not evaluated by IEG in this evaluation of the Bank’s country engagement through FY2010.
18
Although this work was ongoing as the Bank was creating its Stolen Assets Recovery Initiative (StAR),
Bangladesh never formally asked to join this initiative.
22
4. Effectiveness of World Bank Efforts
Country-Level Effectiveness
4.1 Overall, Bank efforts from 2004 to 2010 had a moderate impact on governance in
Bangladesh. There has been progress in select GAC reform areas, including PFM,
procurement, the investment climate, rural roads, and primary education.
4.2 The effectiveness of the joint programming with the ADB, Japan, and DfID carried
out for the 2006 CAS was somewhat reduced by the lack of robust joint monitoring and
follow-up mechanisms among the partners. There has been good progress on GAC aid
coordination in PFM, but more work is needed in better coordinating aid to local governance,
justice, and women’s empowerment. Although there was a Governance Sub-Group of the
Local Consultative Group that met regularly to share information on project status and other
processes, there was no up-to-date joint program status database maintained, no joint
portfolio reviews, and no strategy for joint policy dialogue with authorities to address key
constraints in governance reforms (The Policy Practice and others 2010).
4.3 The current CPS is more selective after mixed results in implementation of the 2006
CAS (World Bank 2010c). Although governance remains a pillar, the emphasis is
narrower—supporting procurement, public financial management, and GAC in selected
sectors where there is thought to be possibilities for progress.
Sector-Level Effectiveness
4.4 Core Public Sector Reform. The effectiveness of Bank support in PFM was
substantial. A 2006 assessment based on the PEFA methodology found eight of 28 indicators
rated as “B�?19 providing a good foundation to build on. Recommendations are given on how
to improve Bangladesh’s ratings for the lagging indicators (World Bank 2006b). Since then,
there has been further progress in meeting the objectives of the government’s 2006 PFM
reform program, including a new budget system now used by 20 ministries. Many remaining
challenges are being addressed under the SPEMP, including: (i) the consolidation and
amendment of the PFM regulatory framework; (ii) the computerization of the budget process
and introduction of a new budget classification system; (iii) the introduction of new laws to
ensure the accountability of public resources to Parliament; and (vi) the development and
piloting of strengthened expenditure management through a Medium-Term Budget
Framework (MTBF) (World Bank 2010a).
4.5 A shortcoming in the Bank’s work was the initial application of PEFA in 2005, which
had limited ownership. The government was reportedly concerned that there were unique
considerations in Bangladesh’s PFM system that were not captured by the standard PEFA
methodology. After much discussion, the government agreed to a modified PEFA
methodology, but concerns remained about the validity of scores, so the report was not
published except for a summary table as an annex to the 2006 CAS. Since then, PFM
19
On an “A�? to “D�? scale, with “A�? the highest rating.
23
diagnostics have been carried out covering some of the same ground as the PEFA (such as
Government of Bangladesh and DfID 2007 and DfID 2009). The government recently agreed
to a full PEFA to provide baseline information for implementation of the SPEMP, and as an
input to donors considering potential budget support. However, cognizant of the
government’s lingering doubts about the methodology, the Bank team does not plan to use
PEFA as a key part of the PFM policy dialogue. These difficulties might have been avoided
or mitigated by better communicating the purpose, strengths, and weaknesses of the PEFA
methodology to key stakeholders.
4.6 Procurement support was highly effective. Initial procurement reforms supported by
the Bank included the creation of a Central Procurement Technical Unit of the Ministry of
Planning and public procurement regulations effective from 2003. These were enacted as
law in 2006, and expanded in the Public Procurement Rules (PPR) in 2008. The rules
establish public procurement processing and approval procedures, including the bid
evaluation committees, checklists, and a timetable for the procurement procedures. The time
required for awarding contracts has been reduced. Competition and publicity have increased,
and complainants are encouraged to address any shortcomings in the process.
4.7 A six-tiered training program has been successfully rolled out, and 3000 staff trained
(featured as a best practice case in IEG’s 2008 Training Evaluation). A procurement
performance monitoring system is being piloted in four government bodies comprising 60-70
percent of the value of all government procurements. Online connectivity has been
established with 300 procurement entities in these bodies, facilitating real-time monitoring.
E-procurement is being piloted and will be formally launched in 70 entities in February 2011.
A communications and awareness strategy is being implemented countrywide, using radio,
television, billboards, and community meetings, and supported by media training. The Bank
continues to focus support on implementation and monitoring of the procurement law in key
sector ministries, including the operation of a recently established Public-Private
Stakeholders Committee.
4.8 Since the current administration came to power in 2009, there has been some
backsliding on procurement reforms, including an end to the requirement for prior
qualifications for bidding on small contracts. The government had initially sought 40
changes, but these demands were significantly reduced following the consideration of
objections raised by the Central Procurement Technical Unit, development partners including
the Bank, and other stakeholders.
4.9 The effectiveness of support to revenue management is rated as substantial. The Bank
worked over the review period with DfID and the IMF to prepare a strategic development
plan for the National Bureau of Review, and a large Taxpayer Unit was created. There has
been progress in customs automation in Chittagong, Dhaka, Khulna, and one of the land
ports, but this work has mainly resulted from support from the relevant Chambers of
Commerce. BICF support to alternative dispute resolution seems promising, but it is too
early to judge its outcome. Extensive training has been carried out, though selection of
trainees could have been more rigorous. Automation of income tax has been done on a pilot
basis and in two VAT offices. Taxpayer identification numbers have been introduced, and
they are being linked with the voter identifications (IDs) that all Bangladeshi adult citizens
24
were given in 2008. Software has been developed for online registration and submission of
monthly VAT returns. As a result of these and other reforms, as well as improved VAT and
income tax collections, the tax-to-GDP ratio rose from 8.6 percent to 9.4 percent from FY09
to FY10 (World Bank 2010d).
4.10 Progress on local governance was substantial. All Union Parishads now undertake
annual audits, and 1,187 carried out quality assurance reviews in FY10, exceeding the target
of 860. Transparency was improved with notice boards in 75 percent of Local Government
Support Project Union Parishads, where all expenditures are disclosed. Seventy-five percent
of Union Parishads received block grants, with the average amount doubled from FY07-08
to FY09-10. About 60,000 officials and other stakeholders have been trained to facilitate
these improvements (World Bank 2010e).
4.11 Progress on civil service reform is rated as negligible. Working with DFID and the
United Nations Development Programme (UNDP), policy notes were prepared, and high-
level dialogue with the Caretaker Government was pursued. However, there was no interest
in reform.
4.12 The effectiveness of support to independent accountability mechanisms is rated as
moderate. The enactment of the Right to Information Act in 2009 is a major achievement,
although progress on implementation has been very slow. Although the ACC sent a strong
signal of the risks of corrupt acts, this message has been blurred by the draconian methods
used, shortcomings in legal process, and the overturning of most convictions. Partly in
response, the powers of the ACC are being reduced under the current government. Support to
the Comptroller and Auditor General under SPEMP has been well coordinated with ongoing
support from the Canadian International Development Agency (CIDA), but has yet to get
underway. Support to the parliamentary Public Accounts Committee has reduced the backlog
of audit reports under consideration, but the extent to which audit recommendations have
been implemented by auditees is unknown. The work of ANSA to support domestic
accountability has been restricted to direct support to two NGOs, completion of an
international workshop on implementing social accountability programs (including strategies,
approaches and methodologies), and a domestic workshop on engaging with citizens for
improving service delivery (for 50 mid-career civil servants). There was also a theatrical
performance in Dhaka entitled “Information is Everyone’s Right.�?
4.13 Bangladesh has the smallest number of NGO grant recipients of participating
countries, in part because most of the targeted NGOs focus on much larger service delivery
contracts. In addition, the project has faced serious delays. Although the ANSA grant
agreement was signed in February 2009, implementation was held up by cumbersome
administrative procedures of the grant recipient, BRAC University. The ANSA Network was
only officially launched in March 2010, and it is too early to judge achievements. The
secretariat role of BRAC University is expected to be transferred to another contractor in a
different country in the region due to administrative challenges working with BRAC; this is
expected to further delay implementation of ANSA work in Bangladesh.
4.14 Basic Service Delivery. Education. Effectiveness of support to GAC in primary
education is rated as substantial. Outcomes from the FY06-09 CAS and project
25
Implementation Status and Results reports highlight that there has been modest achievement
in governance and institutional reforms and continued effort toward achievement (World
Bank 2010c: 61). Improving the quality of education reforms is the main focus of the
governance in the primary education agenda, but most of the governance issues addressed are
outside of the purview of school quality. As a result, many of the proposed governance
reforms in PDEP II have yet to be fully addressed, though there have been improvements in
some areas, such as transparency in teacher placement. Education remains highly centralized
despite existing management committees at the school level and government oversight at the
district (Upazila) level.
4.15 During the 2006-09 CAS period the Bank’s investments in reforming teacher
selection were successful. Teachers are now selected through a merit-based process.
Improvements in teacher registration and recruitment have resulted in more transparent
allocation of teachers to schools (World Bank 2010b). This has reduced opportunities for
corruption in teacher deployment, but it has not resulted in observed improvement in teacher
quality. The proposed PDEP III takes further steps toward improving teacher quality using
more of a results-based financing model. It includes development-lending indicators for
teacher performance. Funding for schools will not be disbursed unless schools can
demonstrate improvements in teacher performance.
4.16 The PDEP II has made some progress in linking subsidies to schools based on
learning outcomes of children through stipend programs. It has been somewhat successful.
However, findings suggest that school attendance and examination pass rates of children are
not always enforced in delivering subsidies.
4.17 Roads. The effectiveness of support to GAC in roads is rated as moderate. By 2006,
70 percent of roads were considered to be in good condition, but road maintenance needed
improvement (World Bank 2006b). The performance of Bank-funded projects in rural roads
has been more successful than that of urban roads under the RHD. Governance objectives
related to roads that were outlined in the FY06-09 CAS have had negligible outcomes and
have been streamlined in the current CPS. These areas included reducing administrative
barriers and improving governance and efficiency of infrastructure services.
4.18 There is no apparent progress in administrative reforms in RHD, but good progress
has been made with the Operational Risk Assessment (ORA) implementation plan in the
Local Government Engineering Department (LGED). In the area of improving governance,
the Bank contributed to improved efficiency and maintenance and private sector participation
in the Social Investment Program Project (now closed). However, with only 1,939
kilometers of roads supported by the program, the contribution of the Bank to this sub-
objective was deemed marginal by IEG (World Bank 2010c: 41).
4.19 The sequencing of three concurrent INT investigations in the roads sector at the same
time as an RHD ORA appears to have had an impact on the ability of project teams to
implement the RTIP and other projects. Although RHD is one of four agencies piloting the
implementation of new procurement rules, the organizational constraints are so severe that
progress has been slow. Instances of mis-procurement, fraud, and corruption in projects
26
created an environment that was difficult for the Bank to operate in, although other donors
continued to work with RHD.
4.20 IEG questions whether disengagement from RHD was the best option for the Bank.
The decision to disengage was taken by senior management and not by the Bank team or
Country Director. Although a strong signal was sent regarding the Bank’s zero tolerance for
corruption, the Bank now has little leverage in a sector that is a binding constraint to
economic development and poverty reduction. There is discussion of sectoral reengagement
in FY15, but this would create a gap of more than eight years between projects and would
require substantial investments in client relations and analytical work.
4.21 Power. Energy prices have been increased, but without automatic pricing adjustment
mechanisms. The Bangladesh Energy Regulatory Commission was strengthened by the
appointment of a full board and complementary staffing. The average bulk supply tariff was
increased by 10 percent and the retail tariff by 5 percent. The commission also carried out
public hearings on retail price increases and issued operating licenses to six distribution
companies. However, many challenges remain. Powertek and Siemens submitted the only
qualified bid for the Bibiyana Independent Power Producer (IPP) contract, leading to a
retendering process that is still ongoing. Moreover, the current government has changed the
leadership and staffing of the Bangladesh Energy Regulatory Commission, leading to a loss
of independence and effectiveness. In addition, the goal of installing meters for 35 percent of
all customers has not been reached, nor has the contract for the supply and installation of
meters been awarded.
4.22 The Investment Promotion and Financing Facility project supported IPPs (11 to 44
megawatts) that have added 178 megawatts of electricity generation capacity to the national
grid and to two special economic zones—the Dhaka Export Processing Zone, and the
Chittagong Export Processing Zone—increasing national electricity generation capacity by
about 5 percent.
4.23 The overall effectiveness of GAC in the power sector is rated as moderate. There has
been progress in corporatizing utilities. For example, the Dhaka Electric Supply Company,
Ltd., initially wholly owned by the Dhaka Electric Supply Authority, known as the Dhaka
Power Distribution Company since 2006, is now one-quarter privately owned and is listed on
the Dhaka and Chittagong stock exchanges. Although the initial public offering was
reportedly tainted by corruption, the Dhaka Electric Supply Company is viewed as far less
corrupt than the Dhaka Power Distribution Company. Reasons include successful
management of its outsourcing contracts, accountability to private shareholders, and low
tolerance by Dhaka’s elite customers for poor service. The BPDB has never missed a
payment to an IPP, although payments are sometimes late. It covers the difference between
the cost and price received for electricity through loans from the government, making it
technically insolvent. Discussions are underway on recapitalizing BPDB, corporatizing its
business units, and converting it into a holding company, but the outcome of these efforts is
uncertain.
4.24 Despite these and many other achievements, the World Bank Group has not
successfully resolved the electric power challenges facing businesses. For example, although
27
the government has ambitious plans of adding 9,000 megawatts of generating capacity by
2015, requiring a large number of 300 megawatt and larger power plants, the World Bank
Group has been unable to finance one since the 360 megawatt Haripur plant more than 10
years ago. The only Bank financing to the power sector since then has been of small IPPs
supported by the Investment Promotion and Financing Facility (IPFF). Political economy and
other diagnostic work is ongoing to understand how the World Bank Group might be more
helpful, but the impact is unknown (World Bank 2010b, 2010c).
4.25 Investment Climate. The effectiveness of World Bank Group support to improving
the investment climate is rated as substantial. Macrostability has been maintained. State-
owned enterprise losses and public debt have been reduced. There has been substantial
progress on reducing trade restrictions and administrative barriers, including a reduction in
average nominal protection, progress in improving the efficiency of customs and port
administration, and a reduction in administrative barriers. Private sector banks now hold a
majority of assets. Public sector banks have not been privatized, although three have been
corporatized. Public-private partnership guidelines were adopted in 2010, and an institutional
framework is being rolled out to implement them, including a new Public-Private Partnership
Unit in the Prime Minister’s Office. The Bangladesh Economic Zone Bill adopted in 2010
will facilitate the creation of special economic zones in Feni, Khulna, and Sylhet districts.
The Bangladesh Infrastructure Finance Fund, Ltd., was approved by the Cabinet in 2010 to
issue bonds, debt instruments, and equity offerings (World Bank 2010d).
4.26 Many reforms have come about through dialogue between the public and private
sectors that has been supported by the World Bank Group since 2005. The Bangladesh Better
Business Forum, which started in 2007, was constituted with 21 private and 20 public
members and chaired by the Prime Minister. In slightly more than a year, the forum held six
meetings that included 46 sessions by five working groups. These deliberations resulted in
290 recommendations of which 209 were approved, 8 were not approved, and 73 are
awaiting decision. Of those approved, 94 have been fully implemented and 115 are being
implemented. However, the forum did not meet once the present government took office and
was formally dissolved in 2010. Another example of dialogue was the Regulatory Reforms
Commission, set up in 2007 with 17 members to prepare recommendations to modernize
government rules and regulations, some of which have been adopted. The Board of
Investment acted as the secretariat of the commission.
Project-Level Effectiveness
4.27 During its first year, the Operational Risk Mitigation Team advised seven project
teams on financial management and procurement risks. During 2007-08, country
management relied on it to vet project concept notes and appraisal packages. The team
lacked a formal terms of reference or allocated staff and financial resources. This, combined
with the difficulty of meeting as a team with key staff split between Dhaka and Washington,
resulted in challenges for implementing the ORMAP. The team helped to sharpen risk
management frameworks but did not contribute to major, strategic go-or-no-go decisions or
to decisions on instrument choice, for example between investment lending and development
policy loans.
28
4.28 The work of the Senior Governance Advisor/Specialist has helped pioneer a new
approach to analytic and advisory activities (AAA) by partnering with a local institution,
BRAC University’s Institute of Governance Studies, where it staged workshops that pulled
together the key stakeholders in different “institutions of accountability�? series. The State of
Governance Report has been published each year since 2007. The report is of high quality,
but its impact is difficult to judge.
4.29 Work relating to the return of stolen assets is inconclusive. Seven seminars and an
exposure visit regarding anti-money laundering work was carried out. A Mutual Legal
Assistance unit was set up in the Attorney General’s Office, with support from the United
States Agency for International Development (USAID). Seven requests received by the unit
were being pursued in the United Kingdom as of December 2008. Progress since then is
unknown.
4.30 The work with the Padma Bridge task team has led to a number of innovative
measures, including compulsory asset disclosures by all principals involved in the project
and appointment of an Integrity Advisor reporting directly to the Prime Minister. These
measures apply to all components of the project, not just those funded by the Bank.
4.31 In addition, an assessment of the effectiveness of GAC in projects was recently
completed by the Bank’s Country Office. Based on a 2010 survey of task teams,
approximately one-third of the 67 GAC mechanisms embedded in active projects were
judged to be fully implemented. Others were partially implemented. Education (67 percent)
and rural roads (43 percent) had the highest rates of fully implemented measures. The work
of the Senior Governance Advisor/Specialist has been flexible in responding to opportunities
and challenges facing the Bank, and to the demands of the three Country Directors. This
flexibility is appropriate given the uncertainties inherent in working in this field.
4.32 The demand for good governance measures, including those supported under the
Local Government Support Project, made some progress at the community level in roads and
education. Other successful experiences include the use of NGOs in the solar power
component of the Rural Electrification Project and the use of NGOs in the Padma Bridge
Project to carry out social benefit and resettlement programs.
4.33 Making additional progress in the future will be a complex process. As discussed
above, civil society organizations focus much more on service delivery than advocacy, both
because the former helps to generate income, and because the latter can put livelihoods and
lives at risk. Government ministries are also accustomed to a directive approach and resist
the extra effort, time, and risks of expanding transparency and participation. Demand for
good governance measures has also been constrained by weak NGO capacity, the co-opting
of NGO partners by political interests, and government interference in subcontracting NGOs.
29
5. Impact of the 2007 GAC Strategy Implementation
5.1 This evaluation sought to assess the impact of the 2007 GAC strategy implementation
efforts on the country program. In particular, Bank staff were interviewed about their
attitudes toward and awareness of GAC issues. The evaluation also sought to determine
whether support provided under the GAC Strategy has made a difference in the Bank’s
responsiveness to GAC issues. As discussed above, the Bank’s work on GAC issues goes
back to the 1990s. This evaluation found the Bank’s portfolio in Bangladesh to be GAC-
responsive to a great extent over the entire 2004-10 review period.
5.2 The relevance and effectiveness of strategy implementation are rated as moderate.
Neither the Second GAC Progress Report, nor the independent GAC stocktaking report cited
Bangladesh as a successful CGAC effort (World Bank 2009b, Lateef 2010). The GAC in
country, sectors, and projects measures reported were mainly adopted before the 2007 GAC
Strategy. Although Bangladesh was a CGAC country, the team chose not to use CGAC funds
because the country had already been intensively using GAC approaches well before the
GAC strategy was adopted.
5.3 Bangladesh is eligible for funding under the regional Implementing RTI (Right to
Information) in South Asia Window 1 project managed from the New Delhi office. An
August-September 2010 diagnostic mission led by the team leader of that project made some
initial recommendations to the RTI Commission, but the outcome is unknown. One
informant reported a lack of coordination between approaches from the New Delhi office to
the Bangladesh RTI Commission, and from the Dhaka office of the ANSA, which is also
interested in providing support. Efforts by either entity have yet to provide any meaningful
support to the Commission, although ANSA has conducted an awareness-raising workshop
for other government stakeholders. A matrix of planned and approved activities and
corresponding counterparts has been circulated among all Bank entities involved.
30
6. Lessons Learned
6.1 Based on this review of the Bangladesh program, the following lessons have been
identified:
�?� Changes in governments – in particular, transitional governments – can create
windows of opportunity to advance Bank-supported reforms over the short-run.
How the Bank responds to these opportunities can affect its longer term relationship
with clients. In Bangladesh, the 2007-2008 military-backed government created a more
stable political environment for advancing PFM and procurement reform. The Bank
capitalized on this opportunity to help strengthen fiduciary controls on its projects, and to
promote deeper reforms in country systems. Although the pace of reforms increased in
some areas, some delays in reform occurred when a popularly elected government
returned in 2008. This has also resulted in some reputational consequences for the World
Bank in Bangladesh, including the perception that the Bank was too close to the military-
backed regime.
�?� Anti-corruption Commissions in weak-integrity environments have a poor track
record. Bank-country agreements to support such institutions should not be seen as
an automatic sign of success in fighting corruption. In Bangladesh, increased support
to the ACC has not resulted in improvements in the corruption environment. Rather the
ACC often only appears to selectively investigate corrupt acts based on partisan factors.
Often even sound investigations are not supported by other parts of the system (that is,
prosecution, trial, and punishment).
�?� Narrow project fiduciary risk management objectives can be at odds with service
delivery objectives. In Bangladesh a strict approach to fiduciary risk management
increased the confidence of the Bank’s shareholders, and facilitated important increases
in Bank lending. Yet, the same strict fiduciary standards led to the Bank’s withdrawal
from national highways, a very important sector for service delivery given the current
development needs in Bangladesh.
�?� Support for strengthening private sector power generation in a country with a weak
investment climate can be a risky strategy. The Bank has not succeeded in bringing a
Bank-financed large power generation project to successful tender for over a decade in
Bangladesh, although it has successfully promoted a number of small generation projects.
It is questionable whether Bank efforts to promote such a large (and expanding) role for
private financing of investment in the sector is the right strategy, particularly given the
risks inherent in obtaining investments for large generating plants with expected lives of
20 to 30 years.
�?� Setting up a team—with sufficient staff and financial resources allocated to allow it
to function-- to coordinate enhanced work on risk mitigation can help to sharpen
risk management frameworks. In Bangladesh, the Operational Risk Mitigation Team
advised seven project teams on financial management and procurement risks. During
2007-08, country management relied on it to vet project concept notes and appraisal
31
packages. The team lacked a formal terms of reference or allocated staff and financial
resources. This, combined with the difficulty of meeting as a team undermined its
effectiveness. However, it should be noted that the posting of a Senior Governance
Specialist/Advisor in the Country office, in particular to advise projects and sectors—
helped to enhance the quality of GAC at the project and sector levels.
�?� Supporting reforms in policy, regulatory, financing, and infrastructure constraints
that hamper the private sector can be highly relevant for GAC intervention by the
Bank. Such reforms include streamlining tax and customs administration, expanding the
private banking network, better management of the container terminal, and streamlining
processes at key regulatory institutions.
�?� As a transitional measure, Country Management Units can benefit from extra
resources in Country Offices to enhance quality at the country, sector, and project
levels. Country Directors should use this resource in a flexible manner to address both
emerging and persistent GAC constraints.
32
References
Asian Development Bank. 2004. Bangladesh Country Governance Assessment. Manila: Asian Development
Bank.
Bangladesh Government. 2002. “21st Century Public Administration: The Challenge and The Response, Report
of the Committee.�? Dhaka: Bangladesh Government.
________. 2005. Unlocking the Potential: National Strategy for Accelerated Poverty Reduction. Dhaka,
Bangladesh: Planning Commission, General Economics Division.
Bangladesh Government and Department for International Development. 2007. “Assessment of the Impact of
Financial Management Reforms in Bangladesh 1992 to 2006.�? Dhaka, Bangladesh: Department for
International Development.
Chaudhury, Nazmul, and Dilip Parajuli. 2008. “Conditional Cash Transfers and Female Schooling: The Impact
of the Female School Stipend Programme on Public School Enrolments in Punjab, Pakistan.�? Journal
of Applied Economics 42 (28): 3565-3583.
Department for International Development. 2009. Fiduciary Risk Assessment. London: Department for
International Development.
IMF (International Monetary Fund). 2010. “Staff Report for the 2009 Article IV Consultation.�? Washington,
DC: International Monetary Fund.
Independent Evaluation Group. 2009. Bangladesh Country Assistance Evaluation 2001-2008. Washington, DC:
World Bank
International Budget Partnership. 2008. Open Budget Survey 2008. Washington, DC: International Budget
Partnership.
________. 2010. Open Budget Survey 2010. Washington, DC: International Budget Partnership.
Schiavo-Campo, Salvatore, Giulio de Tommaso, and Amitabha Mukherjee. 1997. “An International Statistical
Survey of Government Employment and Wages.�? Policy Research Working Paper 1806. Washington,
DC: World Bank.
United Nations Conference on Trade and Development. 2010. “World Investment Report 2010.�? Geneva:
UNCTAD.
United Nations Development Program. 2002. “Human Security in Bangladesh: In Search of Justice and
Dignity.�? Dhaka, Bangladesh: UNDP.
Wescott, Clay G., Kaniz Siddique, and Mizanur Rahman. 2007. “Core Governance Project Identification
Mission Report.�? Dhaka: European Commission.
World Bank. 1996. Bangladesh: Government That Works: Reforming the Public Sector. Washington, DC:
World Bank.
______. 1999 (revised 2000, 2001, 2002). Country Procurement Assessment Report. Washington, DC: World
Bank.
______. 2000. Taming Leviathan: Reforming Governance in Bangladesh: An Institutional Review. Washington,
DC: World Bank.
______. 2003. “Improving the Investment Climate in Bangladesh.�? Dhaka, Bangladesh: Bangladesh Enterprise
Institute and World Bank.
______. 2004a. Cambodia at the Crossroads: Strengthening Accountability to Reduce Poverty. Washington,
DC: World Bank.
______. 2004b. “Bangladesh Primary Education Development Project II Project Appraisal Document.�?
Washington, DC: World Bank.
33
______. 2005a. “Bangladesh Poverty Reduction Strategy Paper Forum Economic Update: Recent Developments
and Future Perspectives.�? Washington, DC: World Bank.
______. 2005b. “Bangladesh: Review of Institutional Arrangement for Public Expenditure, Financial
Management, and Procurement. “ Washington, DC: World Bank.
______. 2005c. “Joint IDA-IMF Staff Advisory Note on the Bangladesh Poverty Reduction Strategy Paper.�?
Washington, DC: World Bank.
______. 2006a. Pursuing Common Goals: Strengthening Relations between Government and Development
NGOs. Dhaka, Bangladesh: University Press.
______. 2006b. “Bangladesh, Country Assistance Strategy, 2006-2009.�? Washington, DC, World Bank.
______. 2006c. “Bangladesh — Local Governance Support Project Appraisal Document.�? Washington, DC:
World Bank.
______. 2007a. “To the MDGs and Beyond: Accountability and Institutional Innovation in Bangladesh.�?
Bangladesh Development Series 14. Dhaka, Bangladesh: World Bank.
______. 2007b. “Piloting Reform through the Development and Management of Economic Zones.�? Bangladesh
Development Series 16. Dhaka, Bangladesh: World Bank.
______. 2007c. “Public Sector Accounting and Auditing – A Framework for Gap Analysis between National and
International Standards.�?Washington, DC: World Bank.
______. 2007d. “Bangladesh Operational Risk Assessment of Roads and Highways Investment: Diagnosis and
Recommended Risk Management Plan.�? Washington, DC: World Bank.
______. 2008a. “Harnessing Competitiveness for Stronger Inclusive Growth: Bangladesh Second Investment
Climate Assessment.�? Bangladesh Development Series 25. Dhaka, Bangladesh: World Bank.
______. 2008b. “Strengthening World Bank Group Engagement on Governance and Anticorruption: One-Year
Progress Report.�? Washington, DC: World Bank.
______. 2008c. “Bangladesh Operational Risk Assessment (ORA) for the Local Government Engineering
Department (LGED) Inception Report.�? Dhaka, Bangladesh: World Bank.
______. 2009a. “Operational Risk Assessment of the Local Government Engineering Department.�? Dhaka,
Bangladesh: World Bank.
______. 2009b. “Strengthening World Bank Group Engagement on Governance And Anticorruption Second-
Year Progress Report.�? Washington, DC: World Bank.
______.. 2009c. “Punjab Education Development Program Project Appraisal Document.�? Washington, DC:
World Bank.
______. 2010a. “Bangladesh, Public Expenditure, and Institutional Review, Towards a Better Quality of Public
Expenditure.�? Washington, DC: World Bank.
______. 2010b. “Bangladesh Country Assistance Strategy.�? Washington, DC: World Bank.
______. 2010c. “Bangladesh Economic Update.�? Washington, DC: World Bank.
______. 2010d. “Local Governance Support Project, Implementation Status Report.�? Washington, DC: World
Bank.
World Economic Forum. 2009. The Global Competitiveness Report 2009-2010. Geneva: World Economic
Forum.
34
Appendix A. Persons Interviewed
Name Title/Organization
GOVERNMENT OFFICIALS
Chowdhury Mufad Ahmed Joint Project Director, Primary Education Development Program
(PEDP) II
Dr. Nasir Uddin Ahmed Chairman and Secretary, Internal Resources Division, National Board
of Revenue
Muhiuddin Khan Alamgir Chairman, Public Accounts Committee
Md. Abul Kalam Azad Secretary Power Division, Ministry of Power, Energy and Mineral
Resources
Sohela Begum Secretary to CEO, Infrastructure Investment Facilitation Center
Ranjit Kumar Chakraborty Additional Secretary, Finance Division
Dr. Kamal Abdul Naser Chowdhury Secretary, Ministry of Education
Shahad Chowdhury Controller General of Accounts (CGA), Office of the Controller General
of Accounts
Amulya Kumar Debnath Director General, Central Procurement Technical Unit, Ministry of
Planning
Shyamal Kanti Ghosh Director General, Ministry of Primary Education, PEDP II
Ahmed Ataul Hakeem Comptroller and Auditor General of Bangladesh
Monzur Hossain Planning Secretary, Planning Division, Ministry of Planning
Md. Ghulam Hossain Secretary, Ministry of Commerce
Nazrul Islam Executive Director and CEO, Infrastructure Investment Facilitation
Center
Arastoo Khan Additional Secretary, Economic Relations Division (ERD)
Md. Mozammel Haque Khan Secretary, Ministry of Communications
A K M Abdul Awal Mazumder Secretary, Ministry of Primary and Mass Education
Swapan Kumer Sarkar Project Director, Local Governance Support Project (LGSP)
Ghulam Rahman Chairman, Anticorruption Commission
Md. Wahidur Rahman Chief Engineer, Local Government Engineering Department (LGED)
Hussain Ahmed Member, National Board of Revenue
M. Shahabuddin Chief Engineer, Roads and Highway Department Sarak Bhaban
DONOR OFFICIALS
Firoz Ahmed Senior Public Management Officer, Asian Development Bank
Bangladesh Resident Mission
Mr. Ashrafuzzaman Program Officer, Danish International Development Agency (DANIDA)
Daniel Davis Senior Program Manager, Governance and Human Development, UK
Development for International Development
Amulya Kumar Debnath Director General, Central Procurement Technical Unit
Francis Delaey Head of Office, European Bank for Reconstruction and Development
(EBRD)
Henny de Vries First Secretary, Governance and Gender, Embassy of the Netherlands
Young Hong Assistant Country Director, Democratic Governance Cluster, UNDP
Nazrul Islam Governance Advisor, DANIDA
Julia Jacoby Attaché, Coordination and Aid Effectiveness , European Union
Muhd. Rafiquzzaman UK Development for International development
Sherina Tabassum Governance Advisor, USAID
Doris Voorbraak Deputy Chief of Mission Netherlands Embassy
35
CIVIL SOCIETY REPRESENTATIVES
Shaheen Anam Executive Director, Manusher Jonno Foundation
Rizwan Khair Academic Coordinator, Bangladesh Institute of Development Studies
(BIDS)
Arif Hossain Khan Governance Manager, Manusher Jonno Foundation
Binayek Sen Research Director, Bangladesh Insitutte of Development Studies
(BIDS)
Gopa Kumer Thampi Chief Operating Officer, IGS-BRAC University
OTHER
Bangladesh
Shitangshu Kumar Sur Chowdhury General Manager, Bangladesh Bank
Husne Ara Shikha, Joint Director, Bangladesh Bank
FORMER AND CURRENT WORLD BANK STAFF
Istiaque Ahmed Transport Specialist, ASDT
Joel Hellman Sector Manager, SASGP
Yoko Onizuka Senior Resource
Management Officer,
SARRM
Mohi Uz Zaman Consultant, SASDT
Quazi
Md. Mokhlesur Senior Operations Officer,
Rahman SASED
Dhushyanth Raju Senior Economist, SASED
Naseer Rana Advisor, SASGP
Catherine Revels Lead Water and Sanitation
Specialist, SASDI
Tahseen Sayed Operations Adviser, SACBD
Sofia Shakil Senior Education Specialist,
SASED
Rafeet Sultana Transport Specialist,
SASDT
Charles Underland Senior Governance
Specialist, SASGP
Christine Wallich Director, IEGDG
36
Appendix B. GAC in Projects Incidence Mapping Based on
Desk Review
Board Demand for good governance mechanisms Enhanced Enhanced
Project Sector GAAP
date Transparency Accountability Participation procurement FM
CLOSED PROJECTS
HIV/AIDS Prevention Health 2000 n/a N N Y
Legal and Judicial Legal
2001 n/a N N N
Capacity Building
Post-Literacy and Education
Continuing Education for Feb/01 n/a N Y N
Human Development
Female Secondary School Education
Mar/02 n/a N Y Y
Assistance
Financial Services for the Finance
Jun/02 n/a Y N Y
Poorest
ONGOING PROJECTS
Rural Electric Renewable Energy Jun/02 n/a Y Y Y
Energy Development
Social Investment ARD Mar/03 n/a Y Y Y Y
Program I (SIPP I)
Rural Transport Transport June/03 n/a N Y N Y
Improvement (RTIP)
Primary Education Education Feb/04 n/a Y Y Y Y Y
Development Program
(PEDP II)
Reaching Out-of-School Education Jun/04 n/a Y Y Y Y
Children (ROSC)
Health, Nutrition and Health Apr/05 n/a N Y Y Y Y
Population Sector
Program
Local Governance Urban Jun/06 n/a Y Y Y Y
Support Program (LGSP)
Public Procurement Procurement Jul/07 N Y N Y
Reform (PPRP II)
Water Management ARD Sep/07 Y Y Y Y Y
Improvement (WMIP)
National Agriculture ARD Feb/08 N N Y Y Y Y
Technology (NATP)
Disability and Children at Human Jul/08 N N Y N
Risk Development
Secondary Education Education Jul/08 N Y Y N
Quality and Access
(SEQAEP)
Emergency 2007 Cyclone ARD Nov/08 N Y Y Y
Recovery (ECRRP)
Dhaka Water Supply and Water Dec/08 N N N Y Y
Sanitation (DWSSP)
Higher Education Quality Education Mar/09 N Y N N
Enhancement (HEQEAP)
Clean Air and Sustainable Social May/09 N Y Y Y
Environment (CASE)
Chittagong Water Supply Water Jun/10 N N N Y Y
(CWSP)
TOTALS 22 2 12Y 10N 15Y 7N 16Y 6N 8Y 5Y
Source: World Bank, Bangladesh Country Office; Notes: ARD = Agriculture and Rural Development
Note: Transparency Mechanisms include: Project Websites/Newsletters/Notice Boards, Information Disclosure Policy/Practices,
Public/Stakeholder Information Meetings; Communication Strategy/Outreach Activities.
Accountability Mechanisms include: External/Independent Monitoring, Complaints Handling, Citizen/Community Oversight (for example,
Scorecards); Expenditure Tracking; 3rd Party Enhanced Procurement and FM Measures; Minimal Service Standards, Ombudsmen.
37
Appendix C. Bangladesh—Country Data Sheet, IEG Ratings of GAC
Responsiveness, 2004-2010
CAS Desk Review Results Projects: Smart Design Overall Rating
Selectivity Project Smart Design Ratings Pre�?GAC
Pre�?GAC (04�?07) Post�?GAC (08�?10)
Explicit assessments of GPE Results orientation
constraints Highly Incorporates Highly Incorporates Quality of institutional strengthening
Explicit choice of Somewhat
governance entry points Incorporates Highly Incorporates Use of country systems
Mix of financial and Demand�?side of governance
knowledge instruments Highly Incorporates Highly Incorporates
Quality of fiduciary aspects
Results measures Highly Incorporates Highly Incorporates Quality of governance and political economy
analysis
Overall rating of country strengthening
0 1 2 3 4 5 6
Pre�?GAC (04�?07) Post�?GAC (08�?10)
Core public sector N/A Not at all Somewhat To a Great Extent
institutions To a great extent To a great extent
Sectoral state institutions To a great extent To a great extent
Domestic accountancy Project Smart Design Ratings Post�?GAC
institutions To a great extent To a great extent
Results orientation
Civil society Somewhat To a great extent
Investment climate To a great extent To a great extent Quality of institutional strengthening
Overall rating of signaling of GAC concerns and risks through Bank
Use of country systems
portfolio processes
Pre�?GAC (04�?07) Post�?GAC (08�?10) Demand�?side of governance
Portfolio risks are regularly
monitored by the Bank To a great extent To a great extent Quality of fiduciary aspects
Portfolio processes track Quality of governance and political
the progress of governance economy analysis
reforms at sector and 0 1 2 3 4 5
project levels To a great extent To a great extent
Portfolio reviews and N/A Not at all Somewhat To a Great Extent
results monitoring are
regularly disclosed To a great extent To a great extent
2009 Country Policy and Institutional Assessment Ratings
Overall rating on results
for Bangladesh and Comparative
Pre�?GAC (04�?07) Post�?GAC (08�?10)
Quality of indicators Satisfactory Satisfactory
VIETN BANGL PAKIST SRI
Collection of data Satisfactory N/A Country NIGERIA AM ADESH INDIA AN LANKA
Disclosure of data collected Satisfactory N/A Property rights
Overall rating of GAC responsiveness in the CAS and rule-based
government 2.5 3.5 3.0 3.5 2.5 3.5
Pre�?GAC (04�?07) Post�?GAC (08�?10) Quality of
Minimized fiduciary risk To a great extent To a great extent budget and
Selectivity of Bank country financial
management 3.0 4.0 3.0 4.0 3.5 4.0
strategies and programs To a great extent To a great extent
Efficiency of
Signaling of GAC concerns revenue
and risks through Bank mobilization 3.0 4.0 3.0 4.0 3.0 3.5
portfolio processes To a great extent To a great extent Quality of public
Incorporated smart design administration 3.0 3.5 3.0 3.5 3.5 3.0
Transparency,
of programs and projects by accountability,
countries To a great extent To a great extent and corruption
System strengthening To a great extent To a great extent in public sector 3.0 3.0 3.0 3.5 2.5 3.0
Cluster average 2.9 3.6 3.0 3.7 3.0 3.4
Overall rating 3.5 3.8 3.5 3.8 3.2 3.5
38
Appendix D. Statistical Tables
ICR and IEG Project Ratings for Bangladesh FY2004-10
Country CAE Period of evaluation Date of review (FY) CAE Rating
Bangladesh (2001�?2008) 2010 Moderately Satisfactory
CAS Period CASCR Review Period IEG CASCR�?R Rating
(FY06�?00) (FY06�?00) Moderately Unsatisfactory
ICR risk to ICR overall ICR overall IEG overall IEG overall
Total ICR ICR IEG IEG
EXIT Project Lending development bank borrower bank borrower
Project name evaluated outcome sustainability outcome sustainability
FY ID instrument outcome performance performance performance performance
(US$M) rating rating rating rating
rating rating rating rating rating
FY04 P009550 Primary Education Development 91.0 SIL S # L S # MS L S S
FY04 P049790 Export Diversification 29.6 TAL S # L S # MS # S S
FY05 P049587 Aquatic Biodiversity Conservation 0.0 SIL MS S # MS MS MS # # #
FY05 P009524 Dhaka Urban Transport 87.1 SIL S # L S # MU # U U
FY05 P037857 Health and Population Program 222.3 SIL U # L S # U L U U
FY05 P077789 Education Sector Dev. Support Credit 100.8 SAD S # # S S S L S S
FY06 P009468 Fourth Fisheries 16.6 SIL MS S # # # MS # # #
FY06 P037294 Third Road Rehabilitation and Maintenance 223.9 SIL S # L S # MS L S S
FY06 P044811 Financial Institutions Development 46.5 SIL S M # S MS MS # S #
FY06 P050745 Arsenic Mitigation Water Supply 22.9 SIL MS M # S MS MS # # #
FY06 P084567 Education Sector Dev. Support Credit II 99.6 DPL S M # S S S # S #
FY06 P090832 Bangladesh Development Support Cr. III 197.8 DPL S M # S S S # S #
FY07 P044789 BD Private Sector Infrastructure Dev 188.1 SIL MU S # MU MU MU # # #
FY07 P050751 National Nutrition Program 67.9 SIL MU M # MU MU MU # # #
FY07 P100330 BD Railway Reform Programmatic DevPolicy 41.1 DPL MU H # S MS U # # #
FY07 P102541 Education Sector Dev.Support Credit III 99.1 DPL S M # S S S # S #
FY08 P044876 Female Secondary School Assis. II 101.1 SIL S M # S S MS # # #
FY08 P050752 Post-Literacy and Continuing Education 41.6 SIL MU S # S MU MU # # U
FY08 P057833 Air Quality Management Project 3.8 LIL S M # S MS S # # #
FY08 P069933 HIV/AIDS Prevention 21.7 SIL MU M # MU MU U # U U
FY08 P074731 Financial Services for the Poorest 5.7 LIL HS N # S S MS # # S
FY08 P074801 BD DSC IV/DPL 299.5 DPL HS M # S HS S # S S
FY08 P075016 Public Procurement Reform Project 5.0 TAL MS S # MS MS MS # S S
FY08 P107797 Power Sector DPL 118.9 DPL MS N # S S MU # # #
FY08 P110167 BD Transitional Support Credit 196.0 DPL S S # S S MS # S #
FY09 P044810 Legal and Judicial Capacity Building 22.1 SIL U H # U U U # U U
FY09 P059143 Microfinance II 163.1 FIL S N # S S S # S S
FY09 P112761 Bangladesh Food Crisis DSC 0.0 DPL S M # S S S # S S
Source: World Bank data as of 11.23.10.
Note: CAE= Country Assistance Evaluation; CASCR= Country Assistance Strategy Completion Report; DPL = Development Policy Loan; FIL=Financial Intermediary Loan; ICR= Implementation Completion and Results;
IEG= Independent Evaluation Group; LIL= Learning and Innovation Loan; SAD= Sector Adjustment Loan; SIL=Specific Investment Loan; TAL= Technical Assistance Loan.
Ratings: H= High; HS= Highly Satisfactory; MS= Mostly Satisfactory; MU= Mostly Unsatisfactory; N= Negligible to Low;S= Satisfactory; U= Unsatisfactory.
39
40
IEG Project Ratings for Bangladesh and Comparators, FY2004-10
Total
evaluated Total Outcome %
(US$ evaluated satisfactory Outcome % RDO % RDO %
Region million) (number) ($) satisfactory (number) moderate or lower ($) * moderate or lower (number) *
Bangladesh 2,512.9 28.00 67.7 67.86 63.84 63.64
India 10,165.2 61.00 85.0 85.25 71.44 77.42
Sri Lanka 349.9 12.00 40.0 41.67 44.02 33.33
Nigeria 244.0 5.00 52.8 60.00 31.86 50.00
Pakistan 2,411.5 18.00 88.7 94.44 39.81 55.56
Vietnam 1,679.7 24.00 100.0 100.00 85.82 73.68
Region 16,608.8 149.00 81.9 78.52 62.22 57.30
World 96,831.8 1,507.00 85.2 77.79 73.66 63.72
Bank
Source: World Bank data as of 11.23.10.
Note: RDO= Risk to Development Outcome.
* With IEG new methodology for evaluating projects, institutional development impact, and sustainability are no longer rated separately.
Portfolio Status for Bangladesh and Comparators, FY2004-10
Fiscal year 2004 2005 2006 2007 2008 2009 2010
Bangladesh
# Proj 28 26 24 24 21 26 27
Net Comm Amt 2,530.5 2,318.1 2,043.6 1,966.3 1,997.2 2,766.7 3,561.7
# Prob Proj 5 3 4 6 2 1 4
# Proj At Risk 5 3 7 6 3 1 5
% At Risk 17.9 11.5 29.2 25.0 14.3 3.8 18.5
Comm At Risk 597.7 325.3 782.5 463.8 338.6 16.0 741.3
% Commit at Risk 23.6 14.0 38.3 23.6 17.0 0.6 20.8
India
# Proj 60 61 53 65 57 58 70
Net Comm Amt 11,911.1 12,638.7 11,129.2 14,123.4 13,564.3 14,754.8 21,155.6
# Prob Proj 9 9 5 7 13 9 7
# Proj At Risk 10 9 6 8 14 9 8
% At Risk 16.7 14.8 11.3 12.3 24.6 15.5 11.4
Comm At Risk 2,621.2 1,102.0 1,735.9 2,555.2 3,174.1 2,153.1 2,522.1
% Commit at Risk 22.0 8.7 15.6 18.1 23.4 14.6 11.9
Srilanka
# Proj 17 18 16 13 14 13 16
Net Comm Amt 693.4 867.4 806.6 778.4 906.6 953.8 1,187.7
# Prob Proj 2 1 1 2 0 1 1
# Proj At Risk 2 1 1 2 1 1 1
% At Risk 11.8 5.6 6.3 15.4 7.1 7.7 6.3
Comm At Risk 30.8 5.0 64.7 65.6 74.9 32.0 32.0
% Commit at Risk 4.4 0.6 8.0 8.4 8.3 3.4 2.7
Nigeria
# Proj 15 17 19 23 24 27 25
Net Comm Amt 1,228.3 1,503.1 1,824.1 2,574.1 2,944.1 4,049.1 3,953.9
# Prob Proj 5 6 2 1 3 0 1
# Proj At Risk 8 7 8 7 9 9 12
% At Risk 53.3 41.2 42.1 30.4 37.5 33.3 48.0
Comm At Risk 812.6 643.3 480.5 420.1 789.4 1,224.4 1,835.8
% Commit at Risk 66.2 42.8 26.3 16.3 26.8 30.2 46.4
Vietnam
# Proj 27 34 37 36 39 43 46
Net Comm Amt 2,983.2 3,514.7 3,949.5 3,931.0 4,582.0 5,428.0 6,308.2
# Prob Proj 2 0 3 4 4 5 3
# Proj At Risk 2 0 3 4 4 5 4
% At Risk 7.4 - 8.1 11.1 10.3 11.6 8.7
Comm At Risk 220.0 - 285.0 662.0 388.2 601.0 421.5
% Commit at Risk 7.4 - 7.2 16.8 8.5 11.1 6.7
SAR
# Proj 149 156 145 161 160 171 183
Net Comm Amt 17,562.0 18,041.1 17,190.0 20,473.8 20,768.0 24,030.7 31,679.2
# Prob Proj 18 16 15 20 23 24 26
# Proj At Risk 20 18 19 24 32 30 40
% At Risk 13.4 11.5 13.1 14.9 20.0 17.5 21.9
Comm At Risk 3,625.0 1,745.0 2,858.3 3,366.3 4,162.6 3,120.0 4,807.0
% Commit at Risk 20.6 9.7 16.6 16.4 20.0 13.0 15.2
Source: World Bank data as of 11/24/2010.
40
IBRD/IDA Net Disbursements and Charges Summary Report for Bangladesh (in US$
Mil)
FY Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer
2004
228.34 137.22 91.11 60.07 3.99 27.06
2005
691.58 153.18 538.39 63.42 6.18 468.80
2006
560.45 160.52 399.93 63.08 4.25 332.60
2007
630.29 181.53 448.76 69.56 2.93 376.26
2008
729.81 205.77 524.03 35.27 40.57 448.19
2009
375.66 220.68 154.98 0.00 75.81 79.16
2010
374.68 239.28 135.40 0.00 81.46 53.94
Total (2004-10) 3,590.8 1,298.2 2,292.6 291.4 215.2 1,786.0
Source: World Bank Loan Kiosk, Net Disbursement and Charges Report as of 11/24/10.
41
42
43
ODA Disbursement Amount type Current Prices (USD millions)
Year 2003 2004 2005 2006 2007 2008 2009
Donor
All Donors, Total 1392.15 1413.78 1317.65 1219.83 1514.59 2061.4 381.24
DAC Countries, Total 705.05 656.21 580.33 478.51 673.88 822.54 198.47
Multilateral Agencies, Total 685.31 750.51 735.07 740.23 823.4 1224.06 182.77
Non-DAC Countries, Total 1.79 7.06 2.25 1.09 17.31 14.8 ..
G7, Total 510.4 429.51 348.31 257.22 393.32 537.93 67.3
DAC EU Members, Total 448.97 421.33 389.88 320.72 464.29 510.81 183.61
Australia 11.95 24.6 15.09 9.06 35.15 45.14 ..
Austria 1.84 1.15 2.75 0.6 0.65 0.66 0.58
Belgium 1.26 -0.1 -0.32 -0.64 -0.43 3.61 -2.65
Canada 38.42 48.92 50.75 56.74 60.24 82.06 ..
Denmark 45.27 45.67 50.36 44.05 41.96 47.2 47.41
Finland 0.71 0.67 0.98 0.81 1.17 1.39 ..
France 7.16 0.87 -1.79 -2.19 -0.87 -3.68 ..
Germany 32.37 25.2 46.07 29.14 43.06 65.89 67.3
Greece 0.5 0.1 0.03 0.07 0.41 0.35 ..
Ireland 1.29 1.77 1.58 2.22 6.16 3.19 ..
Italy 0.1 0.72 1.87 0.14 2.77 6.81 ..
Japan 115.27 38.23 -1.01 -7.45 -6.59 41.13 ..
Korea 10.07 23.51 31.94 22.19 10 8.05 13.55
Luxembourg 0.24 0.61 0.3 0.22 0.45 0.57 0.62
Netherlands 57.45 65.23 60.68 67.45 99.45 84.74 70.35
New Zealand 0.74 1 0.92 0.67 1.69 1.08 1.31
Norway 12.15 23.94 32.91 21.41 39.83 23.2 ..
Spain 5.25 0.09 0.21 1.4 12.15 9.44 ..
Sweden 35.06 26.63 23.89 38.38 11.79 38.11 ..
Switzerland 10.87 11.83 10.7 13.4 20.13 17.88 ..
United Kingdom 260.47 252.72 203.27 139.07 245.57 252.53 ..
United States 56.61 62.85 49.15 41.77 49.14 93.19 ..
EU Institutions 52.33 58.19 78.31 100.88 101.45 194.48 ..
Czech Republic 0.16 0.22 0.01 0.07 0.17 0.01 ..
Hungary .. .. .. .. .. 0.03 ..
Poland 0 .. 0.01 0.02 0.3 0.07 ..
Slovak Republic .. 0.26 .. .. 0.08 .. ..
Turkey .. 0.11 0.07 1.92 2.14 1.44 ..
Arab Countries 1.63 6.47 2.16 -1.07 14.23 12.93 ..
Other Donor Countries, Total .. .. .. 0.15 0.39 0.32 ..
Arab Agencies -7.34 2.75 8.96 0.32 -6.51 -6.2 ..
AsDF (Asian Dev. Fund) 96.08 -4.47 68.81 195.07 204.38 305.07 ..
GEF .. .. 0.22 .. 3.35 1.09 ..
GAVI .. .. .. .. 8.99 28.28 27.1
Global Fund 0.1 9.25 9.42 12.29 24.93 33.82 24.04
IDA 394.74 474.33 397.83 231.47 420.53 623.52 94.3
IFAD 8.43 8.37 8.54 3.03 6.26 5.83 9.01
IMF (SAF,ESAF,PRGF) 65.28 146.6 99.37 148.5 .. -7.82 ..
Nordic Dev. Fund 0.8 1.44 2.62 8.22 0.2 1.23 -0.2
UNAIDS .. .. 0.4 0.14 0.8 0.37 ..
UNDP 15.89 19.59 16 11.83 16.42 5.9 ..
UNFPA 22.31 6.31 4.71 6.25 6.12 6.56 6.33
UNHCR 2.17 .. 0.08 0.27 0.49 0.21 ..
UNICEF 10.86 10.95 11.55 11.77 16.04 20.75 22.19
UNTA 7.54 7.26 10.07 4.65 7.65 0.81 ..
WFP 16.12 9.94 18.18 5.07 11.6 9.63 ..
IDA as share of ODA 28% 34% 30% 19% 28% 30% 25%
Data extracted on 02 Dec 2010 21:13 UTC (GMT) from OECD.Sta
Note: Note: DAC= Development Assistance Committee; ESAF= Enhanced Structural Adjustment Facility; EU= European Union; GAVI=Global Alliance for
Vaccines and Immunization; GEF= Global Environmental Fund; IDA= International Development Association; IFAD= International Fund for Agricultural
Development; IMF= International Monetary Fund; ODA= official development assistance; PRGF= Poverty Reduction and Growth Facility; SAF= Structural
Adjustment Facility; UNAIDS=United Nations Program on HIV/AIDS; UNDP= United Nations Development Programme; UNFPA= United Nations
Population Fund; UNHCR= United Nations High Commissioner for Refugees; UNICEF= United Nations Children’s Fund; UNTA=United Nations Program
for Technical Assistance; WFP= World Food Programme.
44