HOW-TO NOTES Using Demand-Side Governance Approaches to Identify and Manage Risks in Projects

Transcription

DEALING WITH GOVERNANCE AND CORRUPTION RISKS IN PROJECT LENDING
http://dfgg
http://gacinprojects
HOW-TO NOTES
Using Demand-Side Governance
Approaches to Identify and
Manage Risks in Projects
This note was prepared by Warren A. Van Wicklin III, of the World Bank’s Social Development Department
(SDV), as part of the effort by SDV’s Social Accountability and Demand for Good Governance team and
OPCS’s GAC-in-Projects team to provide guidance on ways to improve governance and accountability in Bank
operations. Zach Neumann (OPCS) conducted the review of recent Operation Risk Assessment Frameworks
(ORAFs). Sanjay Agarwal and Hélène Grandvoinnet (SDV) provided overall guidance for the review and this
note, as well as extensive comments and guidance on earlier drafts. The author is grateful to peer reviewers
Steven Burgess, Maria Del Carmen Minoso, Angela Khaminwa, Sahr Kpundeh, Samia Melhem, Naseer Rana,
and Matthew Stephens for their invaluable insights and comments. The author would also like to thank Laura
Johnson for editorial assistance.
Using Demand-Side Governance Approaches to Identify and Manage Risks in Projects 1
Introduction
This note offers task teams a process-oriented guide for using demand-for-goodgovernance (DFGG) and social accountability1 approaches to identify and manage risks
in World Bank-financed projects. Its objective is to help task teams use DFGG to: (1)
identify risk-management considerations early in the project preparation phase; (2) assess
what types of risks DFGG approaches could help manage; and (3) select appropriate
DFGG measures that will manage risks and improve governance and accountability. The
approach outlined in this note is advisory rather than prescriptive and is meant to complement the Operational Risk Assessment Framework (ORAF). As a how-to aid for project
planning, the approaches offered are not quick fixes or ready-made solutions to complex
issues but is instead a tool to assist teams maximize the success of project outcomes.2
Following a brief introduction to DFGG and the rationale for its use in helping to manage
risk, this note describes how DFGG approaches can help identify project risks. Guidance
is separated into sections that correspond to the four main categories of risk as identified in the ORAF matrix: project stakeholder, operating environment, implementation
agency, and project. Each section summarizes the main risks that are amenable to DFGG
approaches, describes the general DFGG approach to managing these risks, and suggests specific DFGG tools and methods that can be employed to address them. Annex
1 contains a glossary of 25 common DFGG tools and approaches. Annex 2 presents a
summary table of DFGG strategies and tools for managing risks in Bank projects, including project examples of DFGG risk-mitigation measures.
What is DFGG?
DFGG refers to the extent and capability of citizens to hold the state accountable and
make it more responsive.3 It complements and strengthens traditional supply-side efforts
in this regard. Integrating DFGG into projects involves setting up systems to ensure that
citizens have a greater voice, that the project is downwardly accountable to them, and
that it is responsive to their needs. The three pillars of DFGG are transparency, participation, and accountability, also known as the TAP framework (see box 1).
DFGG mechanisms can be initiated and supported by the state, citizens, or both, but they
are usually demand-driven, operating from the bottom up. DFGG therefore strengthens
the capacity of civil society organizations (CSOs), the media, local communities, and the
private sector to hold authorities accountable for better development results and, at the
same time, enhances state capacity to become more transparent, accountable, and participatory in response to community demands.
A DFGG approach can manifest itself in numerous ways. Beneficiaries can be consulted
about project design,4 involved in implementation, mobilized to demand rights and entitle1. This note uses the terms demand for good governance (DFGG) and social accountability interchangeably.
2. The Social Accountability and DFGG Team in the Social Development Department (SDV) can direct Bank staff
to additional resource materials, many of which are on the SA/DFGG website: http://dfggdb. More detailed guidance is found in other DFGG guidance notes about specific DFGG tools as well as in other resource materials.
3. For more information about social accountability, see Social Accountability: An Introduction to the Concept and
Emerging Practice (Malena with Forster and Singh 2004).
4. For recent guidance on consulting with a variety of stakeholders, see Stakeholder Consultations in Investment
Operations Guidance Note (Gill and Ninio 2011).
2 How-to Notes
Box 1
The Pillars of Demand-Side Governance: Transparency, Participation, and Accountability
Transparency refers to the availability and clarity of information about government rules, regulations, and decisions to the general
public. It is the foundation upon which accountability and participation are built. The availability of information in the public domain
is the currency of transparency and it, along with an open and visible decision-making processes, can be viewed as signals that a
government is not hiding anything. There are three dimensions to transparency: (1) disclosure of information: the level of government
transparency regarding, for example, budgets, expenditures, or programs; (2) demystification of information: the strengthening of
citizen awareness and understanding about laws, rights, budgets, policies, and the like; and (3) dissemination of information to the
public: the spreading of information about, for example, governance issues, processes, finances, or laws. The dissemination of information should be followed by citizen action and advocacy based on this information in order to promote transparency.
Participation refers to citizens influencing decisions, policies, budgets, and government activities that affect them. Citizen participation
should be rigorous, of high quality, and able to affect change. The benefits of participation are well documented and vital when decisions are being made regarding the types of investment projects to be selected, their design and implementation, and their operation
and maintenance. The involvement of CSOs, consumer groups, project beneficiaries, and affected communities at all stages of Bankfinanced projects can simultaneously improve development outcomes and reduce the potential for fraud and corruption.
Accountability can be defined as the obligation of power-holders to account or take responsibility for their actions. These power-holders
include the conventional type (such as politicians and bureaucrats) but can also encompass local power-holders like members of
service-user committees or contractors for community projects; these local power-holders can be held accountable for their conduct
(that is, they must obey the law and not abuse their powers), and their performance (that is, they must serve the public interest efficiently,
effectively, and fairly). In return, citizens have rights (to information, to organize, and to services) and responsibilities (in terms of an obligation to uphold their responsibilities as citizens).
ments, or asked to provide feedback. The project can address beneficiary complaints,
ensure that incentives in project and sector agency structures respond to their needs, and
help to create a culture of serving clients.
Why Use DFGG to Identify and Manage Risks?
A great deal of the early guidance on the use of the ORAF focused on supply-side (government) approaches for improving governance and preventing corruption. Over the past
decade, the Bank and other development organizations have been increasingly supplementing these supply-side approaches to improving governance with demand-side (nongovernment) approaches, also known as DFGG or social accountability. While ORAF
guidance includes DFGG approaches, this note attempts to expand and elaborate on the
range of risk-management measures available using them.
DFGG complements the ORAF by promoting the use of communities, CSOs and individual citizens to identify, monitor, and take actions to manage and reduce risks. This can
greatly enhance both the capacity and incentives to achieve better project performance
and development objectives. Feedback from citizens can alert implementing agencies
and the Bank to important concerns. DFGG can identify key risks, including the vulnerability of project beneficiaries and project-affected people, public misunderstanding about
the project, and elite capture of project benefits. A DFGG approach can help manage
risks through mechanisms like structured feedback systems and participatory monitoring.
Some types of risks are better mitigated by DFGG at the local level; examples include
ensuring that project benefits reach intended targets, that service delivery meets user
needs, and that service users can voice their concerns and have a means by which they
can have their grievances redressed. DFGG can help mitigate risks even when citizens
and CSOs are not the lead actors, as in the case of weak implementing agencies or a
lack of government accountability. DFGG also contributes to a healthier environment for
good governance at the sector and national levels. Task teams are limited in their ability to
control risks at these levels, but projects can be designed to account for them and strategies adopted to minimize and manage them.
DFGG is suited for most types of risks covered by the ORAF, and while the majority of
risks cited in the ORAF are related to governance, not all are. There are also some risks
listed in the ORAF matrix that are not usually amenable to demand-side governance
measures, including donor collaboration and delivery, national security, economic management, implementing agency (IA) resources, program dependencies, and project measurability. But there are exceptions to this as well.
Beyond risk management, DFGG tools and approaches can also be used for a much
broader set of purposes. Another SDV/GAC guidance note provides advice on integrating DFGG approaches into Bank projects more generally.5 The ORAF and DFGG present
overlapping concerns that produce a subset of ORAF risks that DFGG measures can
mitigate. DFGG focuses primarily on the promotion of transparency, accountability, and
citizen participation rather than on managing risks. Therefore, DFGG and ORAF contributions to better governance and project outcomes often complement one another.
DFGG should not be viewed as a toolbox from which various strategies and methods can
be chosen in order to address one type of risk or another. Rather, DFGG is a demand-side
approach to determining and managing risks, and the guidance presented in this note is
offered with this perspective.
Using DFGG to
Identify and
Manage
Risks in Projects:
A Process
Framework
This section describes a step-by-step approach for using demand-side governance measures to identify and manage risks in Bank-funded projects. The four-step process is
designed to help project teams determine the applicability of various DFGG tools and
methods to address risks, most of which should have already been identified using the
ORAF:
Step 1:
Step 2:
Step 3:
Step 4:
Use DFGG to identify project risks from a citizen or beneficiary perspective.
Assess the political, legal, and social environment for DFGG activities.
Choose a general DFGG strategy or approach to manage risks.
Select specific DFGG risk-management measures, tools, and activities.
5. See How, When, and Why to Use Demand-Side Governance Approaches in Projects (World Bank 2011c).
This guidance note also provides more detailed guidance on assessing the environment for DFGG and choosing
DFGG tools.
4 How-to Notes
Step 1: Use DFGG to Identify Project Risks from a Citizen
or Beneficiary Perspective.
The first step is to use DFGG to determine if any risks or concerns associated with project
activities have not yet been identified. The ORAF matrix with guiding questions (annex 2,
column 3) is an excellent resource for identifying risks, but using a DFGG lens allows the
task team to think about risks and mitigation measures from the perspective of project
beneficiaries, project-affected persons, and the general public—an approach critical for
a project’s full success.6 Some specific questions about government and anticorruption
(GAC) risks and concerns are:7
•
•
•
•
•
•
•
•
•
What type of social tensions is the project likely to create or exacerbate, particularly
among stakeholder groups competing for project resources?
Which stakeholder groups are likely to support or resist the project?
How will the team communicate with and inform citizens and communities about the
project?
How will stakeholder views be solicited and incorporated into project design and
implementation?
How will project beneficiary targeting and selection be done to avoid corruption and
favoritism?
How will people’s grievances, complaints, and concerns about the project be
addressed?
What entitlements and rights are available to service users and project beneficiaries?
How will the project team inform people about their rights and assist in the protection
of them?
How will the rights of project beneficiaries and vulnerable groups be protected?
The key is using DFGG to identify risks that are emerging or that were not previously
identified during the project appraisal or by any other means. DFGG adds an extra layer of
risk-management protection since it is not possible to foresee or identify all potential risks
during the preparation phase. Each of the four DFGG pillars can be beneficial:
•
•
•
•
Information disclosure and dissemination to improve project transparency
Consultation, feedback, and grievance-redress mechanisms to alert project staff to
problems identified by beneficiaries, affected people, and other stakeholders
Participatory planning to ensure the project meets the needs of beneficiaries
Participatory monitoring to identify problems
Consultations with a wide range of stakeholders during the project preparation phase
(especially with intended beneficiaries, affected people, and members of communities
where the project will occur as well as with CSOs knowledgeable about the stakeholders and the project area) will likely be useful in identifying potential project risks. These
stakeholders will probably have useful knowledge about the social, political, cultural, and
6. For the argument on enhancing citizen voice and client orientation, see Goetz and Gaventa (2001).
7. Many of these questions can be answered by a social assessment; therefore it is a tool for analyzing and
managing risks.
even technical factors that could undermine a project’s effectiveness, its impact, and
its sustainability. This is even more likely in projects that rely on social change and other
social aspects rather than ones that are highly technical and that have little social impact.
Focus group discussions and interviews with key informants are simple but highly effective methods for obtaining valuable information cheaply, quickly, and efficiently. See box
2 on how a participatory assessment and socioeconomic assessment (SEA) used DFGG
approaches and tools to identify risks, inform project design, and incorporate risk-management measures.
Step 2: Assess the Political, Legal, and Social Environment for
DFGG Activities.
The second step is an assessment of the country context in which the project will be
implemented to determine what DFGG approaches are the most feasible and what preparations should be made to establish an enabling environment for them. Factors to be
considered include: (1) legal factors, such as laws on the right to information, freedom of
the press, the right to organize, and space for CSOs to operate; (2) political factors, such
as the government’s willingness and capacity to be held accountable, to accept social
accountability activities, and to allow for civic engagement; and (3) social factors, including
social norms and the capacity of citizens and CSOs to engage in DFGG. This assessment
is based mainly on existing information rather than on a separately conducted assessment; resources include parts of the Country and Policy Institutional Assessment (CPIA),
country social analysis (CSA), DFGG Country-at-a-Glance profiles, Poverty and Social
Impact Analysis (PSIA), and project social assessment.
The two-page Country-at-a-Glance profiles of DFGG indicators describe the state of
DFGG at the country level. These profiles are similar to the country-at-a-glance tables
found toward the end of PADs, except they are focused on DFGG indicators.8 The set
of almost 90 indicators compare DFGG data for an individual country to the region and
to countries with a similar income level. It covers the state of media; access to information; anticorruption measures; the political environment; civil liberties; civil society; civic
engagement; voting and the political environment; the role of women and minorities in the
political process; attitudes about government and citizens; and summary indicators on
development, transparency, accountability, and anticorruption. Sources for these indicators include the Arab Barometer, the Bertelsmann Transformation Index, Freedom House,
Global Integrity, the International Budget Partnership, Reporters without Borders, the
United Nations, and the World Bank.
Step 3: Choose a General DFGG Strategy or Approach to
Manage Risks.
The third step is to choose a feasible and context-appropriate DFGG strategy tailored
to the identified risks and environment. DFGG usually involves communication between
the government or project team and citizens to promote transparency, accountability,
8. Indicators for the DFGG Country-at-a-Glance can be found at http://agidata.info/Site/Reports.aspx.
6 How-to Notes
Box 2
Using DFGG to Identify Risks and Inform Design in the Bangladesh NARI Project
The Bangladesh NARI-Northern Areas Reduction-of-Poverty Initiative Projecta seeks to link the growth poles of Bangladesh’s rapidly expanding garment sector to one of the poorest and most vulnerable groups in the country. The project faces unusual risks because it
asks young single women to move from poor rural villages to distant cities populated with millions of people to work in garment factories.
These women face the risk of becoming the victims of exploitation, violence, and crime. With these considerations in mind, the project
team used DFGG approaches to identify multiple risks and help guide the design of the project to minimize and manage them.
Nongovernmental organizations (NGOs) and researchers with knowledge about women’s employment in the garment sector conducted a participatory assessment that recorded, collected, and analyzed the voices of an extensive range of stakeholders, including
potential and current female garment workers, their male family members, other community members and leaders, employers and
coworkers, CSOs, private-sector firms and trade associations, donors, and key government ministries and agencies. The methodology
included: (1) a literature review; (2) stakeholder analysis; (3) interviews and focus group discussions; (4) local workshops; (5) participatory
project design; and (6) dissemination of lessons learned. Particular efforts were directed at developing a better understanding of the
social, cultural, and gender factors that can facilitate or hinder a young woman’s transition from an isolated rural setting to an industrial
urban one, including barriers faced by women in their home communities and in the workplace.
This work was funded by a Bank Gender Action Program Just-in-Time grant for operations. The participatory assessment was supplemented by a SEA conducted by the same team of experienced NGOs and researchers and funded by the U.K. Department for International
Development (DFID) as part of its sector analytical work. The key components of a SEA, based on the DFGG approach of identifying,
minimizing, and managing risks, include the design of an information and education campaign (IEC) to increase project awareness
among stakeholders, the creation of a beneficiary targeting and selection mechanism, and the development of a vulnerability map of
the labor supply chain. Neither the participatory assessment nor the SEA were specifically commissioned to identify risks, but they were
central in the development of the ORAF project, the risk-management section of the Project Appraisal Document and the governance
and accountability action plan (annex 11) for the project. They are also helpful tools during risk assessment and project design.
The Governance and Accountability Action Plan (GAAP), summarized in the ORAF, contains numerous DFGG measures to mitigate and
manage risks:
• The IEC will inform communities and potential beneficiaries of their rights and eligibility under the project, increasing transparency
and helping to combat fraud and corruption.
• Implementation agency websites will post information on key project activities, beneficiary targeting, selection criteria and processes, methods for accessing project services, implementation status with expenditure data, monitoring procedures and reports,
grievance procedures, and so on.
• A vulnerability map and risk-mitigation plan have been prepared to identify risks at every stage of the labor supply chain and to
design mitigation measures to protect the rights of beneficiaries.
• The project will establish a system for receiving regular feedback from trainees and training program graduates as well as from workers and employers at the garment factories.
• A complaint system will be established to address any type of complaint received about the project; these complaints and the
status of follow-up efforts to address them will be made available to the public.
• NGOs and communities will continue to participate in the planning and development of most project components.
• NGOs and project beneficiaries will play a significant role by providing feedback on the overall project performance.
a. Nari means women in Bengali.
Sources: World Bank (2011d), Maxwell Stamp (2010).
and civic participation. These goals can be achieved with measures that: (1) promote the
disclosure, dissemination, and demystification of information; (2) create and strengthen
mechanisms for citizen feedback, consultation, and the address of grievances; (3) encourage government or project agencies to respond to citizen demands through participatory planning, incentives to make government or service providers more responsive and
accountable, and other innovations to improve service delivery; and (4) enable citizens
and CSOs to monitor or have formal oversight over government performance and to
conduct independent budgetary and policy analysis.
Step 4: Select Specific DFGG Risk-Management Measures,
Tools, and Activities.
The fourth step is to select the best DFGG tools and mechanisms to use based on the
assessed risks and environment for DFGG. Among the characteristics that should be
considered during the selection process are: (1) the primary objective of the DFGG tool,
(2) the level of difficulty to implement and the complexity of the DFGG activity, (3) DFGG
capacity and experience among stakeholders implementing the DFGG activity, and (4) the
extent to which a DFGG initiative is dependent on government cooperation.
One way to narrow the choice of DFGG tools is to prioritize those that best address the
identified risks. Most tools and methodologies can be divided into three categories by
DFGG objective: (1) those that increase transparency; (2) those that enhance serviceprovider accountability to citizens; and (3) those that improve participation. Within these
three main categories are subsets of tools clustered around a GAC concern or risk. An
example of this would be the use of participatory monitoring to increase government or
service-provider accountability to service users or to help prevent corruption, fraud, and
waste. However, it can be challenging to categorize DFGG tool in only one of the three
TAP categories; they often belong in two or all three of them.
Within the broad categories, there are even more distinctions that can help guide the
DFGG tool selection process. Some tools are more appropriate at a sector or national
scale while others are better suited for the local level. Among participatory monitoring
tools, community-based monitoring and community scorecards are more useful at the
community level because of the importance of face-to-face interactions. Citizen report
cards are more effective when addressing larger populations with sampling methods and
quantitative approaches. Some projects have used multiple strategies and have even
developed hybrid tools. There are no hard and fast rules about which tools to use; the
key is to match DFGG tools to the risks identified in the ORAF. DFGG approaches that
can best help address risks center around the three demand-side governance pillars:
transparency, accountability, and participation. See figure 1 for examples of each of the
four steps.
Figure 1
Steps in Using
Demand-Side
Measures to Identify
and Manage Risks
Use DFGG
to Identify Risks
• Stakeholder competition
• Support for or resistance
to the project
• Rights and entitlements
• Beneficiary targeting
and selection
• Stakeholder grievances
• Citizen views and voices
• Stakeholder vulnerabilities
Assess the
Environment
for DFGG
• Legal factors (laws on
right to information,
freedom of the press
and right to organize)
• Political factors
(government attitudes
about and capacity
to respond to DFGG)
• Social factors (citizen
and CSO capacity for
DFGG)
Choose a DFGG
Risk Management
Strategy
• Information disclosure,
dissemination, and
demystification
• Mechanisms for citizen
feedback, consultation,
and grievance redress
• Governance
performance
incentives
• Citizen monitoring
and oversight
Use DFGG
to Identify Risks
• Information disclosure,
dissemination, and
demystification
• Mechanisms for
citizen feedback,
consultation, and
grievance redress
• Governance
performance
incentives
• Citizen monitoring
and oversight
8 How-to Notes
Once the DFGG tools and approaches have been chosen, the task team needs to decide
on implementation modalities, such as who will conduct the DFGG activities, what the
budget and timing will be, and so on. Supervision and monitoring of DFGG tools is necessary to ensure that they are being effectively used to manage existing risks and to identify
new ones. DFGG tools should include indicators in the results framework to help focus
monitoring and supervision. The final step is to decide on follow-up efforts aimed at institutionalizing DFGG activities, but this step is beyond the scope of this note, having been
covered in the previously-mentioned note about integrating demand-side governance
approaches in projects.9
DFGG Strategies
and Tools for Risk
Management
This section follows the structure of the ORAF matrix and suggests DFGG strategies and
tools that could be used to help manage risks for each category listed in the ORAF matrix.
Annex 2 lists the main types of risks identified in the ORAF, general DFGG approaches,
DFGG tools to help manage those risks, and examples of projects using the tools and
approaches.
Project Stakeholder Risk
Project stakeholder risk refers to the Bank’s relationships with borrowers, donors, and
other key stakeholders that can affect the outcome of project development objectives.
Stakeholder objectives can conflict with those of the project. Borrowers might have concerns about their internal and external image; there is potential for public misunderstanding; and negative perceptions or outright opposition to the project by stakeholders can
pose problems. These risks can reduce support for the Bank and threaten the ability of
the project to achieve its development objectives.
The general DFGG approach for managing project stakeholder risks is to increase public
awareness, understanding, and support for the project and for key project actors through
greater transparency, information dissemination, consultations with stakeholders, participatory project planning, and efforts to ensure citizen rights. DFGG mechanisms can be
used to improve transparency about the motivations of the borrower and the Bank for
supporting the proposed operation, thereby fostering trust and support among a variety
of stakeholders (including the general public). Consultation and participatory project planning should usually include CSOs; this helps lay the foundation for other DFGG mechanisms that can reduce project risk and avoid potential points of tension surrounding the
project.
Specific DFGG measures that can address project stakeholder risks include: (1) explaining project objectives through an information campaign that involves the media, public
displays of information, and other communication channels; (2) improving the borrower’s
reputation through transparency measures like right to information laws and public disclosure standards; and (3) developing citizen charters to establish service standards and
citizen rights. (The development of the citizen charters reassures citizens and others that
certain rights and services will be protected or even enhanced by the project.) Box 3
9. See also World Bank (forthcoming).
Box 3
Using Consultations to Gain Support for the Nigeria Erosion and Watershed Management Project
The Project Concept Note for the Nigeria Erosion and Watershed Management Project explains how a stakeholder communications
strategy was developed during the preparation phase of the project. Ample consultations with stakeholders, including potential project
beneficiaries, project-affected persons, communities, NGOs and CBOs, are planned. Consultations will continue during project implementation. Involvement from a broad group of stakeholders will be sought during project implementation and monitoring; NGOs and
CSOs would be involved in project supervision and monitoring. Communities will be involved to prevent, identify, and manage gully
formation at early stages.
The ORAF states that the risk of corruption and fraud is high but can be mitigated by support for strengthening procurement, financial
management (FM), and oversight systems. The development of a strong communications and consultation strategy, the meaningful
involvement of a broad base of stakeholders, and the use of CSOs familiar with the region and the affected communities will also help
to mitigate the risk.
Source: World Bank (2010a).
provides an example of an effective use of consultations and participation by beneficiaries and CSOs in project implementation and monitoring that supported the project and
mitigated risks.
Operating Environment Risks
National and sector-level risks in the operating environment are the most macro-level type
listed in the ORAF. Most DFGG measures are aimed at the project or agency level, but
DFGG can also be a valuable tool for identifying and managing risks at higher levels. In
fact, many of the risks in the ORAF at these levels suggest the need for DFGG. For example, risks caused by systemic fraud and corruption, lack of accountability or oversight,
and restrictions on CSOs demonstrate the need for greater transparency, accountability,
and an enhanced role for CSOs and citizens.
Country Risks
Country risks are systemic risks at the national level that affect the achievement of project
development objectives. They include fraud and corruption, domestic politics and governance, societal and security issues, civil society capacity, and the national environmental
and social safeguard framework. The analysis of country risk in the ORAF tends to focus
on legal and political systems from a stability and security perspective; DFGG differs
from the ORAF in that it takes the perspective of citizen and CSO rights. For example a
DFGG country-risk analysis might examine a country’s legal framework in terms of citizen
access to information, freedom of the media, freedom of association, and the legal status
of CSOs. A DFGG country-risk analysis would also include factors like the environment
for civic engagement, the role of CSOs in national planning and budgeting, public perceptions about corruption and accountability, and the presence of transparency measures. The Civil Society Assessment Tool (CSAT), developed by the Social Development
Department, is a useful method for assessing civil society capacity and the environment
for civic engagement.10
10. See the Social Development Participation and Civic Engagement website page on the CSAT at http://web.
worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALDEVELOPMENT/EXTPCENG/0,,contentMDK:205365
62~pagePK:148956~piPK:216618~theSitePK:410306,00.html.
10 How-to Notes
DFGG measures can help manage country risks with a country assistance strategy, sector strategies and programs, analytical and advisory services, policy dialogue, and projects. DFGG approaches to greater political and governance stability and predictability
can involve: (1) citizens charters that ensure citizen rights and service standards; (2) laws
ensuring the right to information, the right to organize (e.g., CSOs), and greater accountability of government agencies; and (3) enhanced transparency measures, including the
posting of laws, regulations, service standards, budgets, and other information on websites, government offices, and other locations where they will likely be seen by citizens.
DFGG tools that provide a greater role for CSO participation in national strategy and planning include participatory planning, participatory budgeting, and independent budgeting.
Box 4 provides an example of a country-level DFGG strategy in Bangladesh.
While DFGG measures are limited in their ability to affect national security, their effects
can be significant in a number of ways. Consultations with dissident groups can pinpoint
their objections to the government or the project. Local NGOs can undertake situation
assessments in project districts, develop communication strategies and outreach campaigns, provide implementation support, and operate in conflict areas where the Bank
and government may not.
Institutional Risk
Institutional risk at sector and multisectoral levels involves concerns about weak institutions, inadequate ownership and commitment, insufficient accountability and oversight,
lack of capacity, ineffective controls on fraud and corruption, and poor decision-making abilities. In broad terms, DFGG can promote a client orientation and institutional
accountability (that is, being answerable for policy decisions, the use of resources, and
Box 4
Addressing Country Risks through Demand-Side Governance In Bangladesh
Bangladesh faces some of the greatest governance challenges of any country. In 2010, Transparency International rated Bangladesh
134th out of 180 countries in terms of perceived corruption. In addition, the government is highly politicized and tends to place the
parochial interests of political parties ahead of those of the public.
Governance was center stage in the 2006 Country Assistance Strategy. It stated that the World Bank would: (1) attempt to enhance accountability by helping citizens participate in decision making and hold service providers to account; (2) enhance the voice of citizens
and participation through additional community-driven development (CDD) operations; (3) support capacity development aimed at
strengthening accountability and transparency in local governance; (4) work more closely with civil society, academia, and think tanks
to build consensus around governance reforms and to monitor progress; and (5) explore how public access to information could be
enhanced and greater transparency brought to the budget, public procurement, and the public policymaking processes. Almost all
Bank projects now include DFGG activities and many PADs now include GAAPs.
Promoting DFGG with this multipronged approach led to a number of positive outcomes. The Right to Information Act was passed in
March 2009. The Bank commissioned BRAC University’s Institute of Governance Studies (IGS) to produce annual reports on the state of
governance in Bangladesh that included many DFGG indicators partially obtained by conducting broad-based surveys of citizens and
experts. The IGS also conducted workshops to promote debate around institutions of accountability. The Bank created and promoted
a civil society network to foster CSO participation in DFGG activities, complemented by a trust fund grant to incorporate DFGG activities into Bank projects and to promote networking, capacity building, and knowledge sharing about DFGG among CSOs. Expenditure
tracking surveys of the health and education sectors were conducted. Charters of public service providers were enacted in several
government departments. There is now more procurement data and other information available online. And the national dialogue on
DFGG has intensified, though much still remains to be done to increase this further.
Sources: World Bank (2006, 2009), BRAC University IGS (2009).
performance). DFGG approaches include access to information, transparency, user feedback, user voice, and oversight.
DFGG can promote greater sector accountability and oversight by enhancing civil society engagement with sector institutions. CSOs and other citizen representatives can be
members of multistakeholder steering committees, particularly ones that develop sector
policies. DFGG approaches that can be used to promote more accountable service and
performance include: (1) developing staff performance incentives and codes of conduct
aligned with a client orientation; (2) using information dissemination tools to enhance service-user understanding of service-provider rules, resources, processes, and systems;
and (3) developing citizen charters to establish service standards and a client orientation.
DFGG tends to manage fraud and corruption risks at IA and project levels, but some
efforts can be made at the sector level as well, including: (1) establishing grievance mechanisms to allow citizens to identify corruption risks; (2) educating citizens and the media
on the basics of proper procurement so they will not accept corruption and bribes as
normal; (3) increasing media capacity to investigate and report on government fraud and
corruption; and (4) putting budgets, expenditures, and procurement information on websites, public information boards, and other outlets.
Implementing Agency Risks
Implementing agency risks concern IA capacity, governance, fraud, and corruption.
These intermediate-level risks (as defined in ORAF) are basically the same as institutional risks but at the IA level.11 DFGG approaches to risk are therefore similar to those
mentioned in the previous section: greater transparency and citizen participation in order
to hold agencies accountable. While DFGG approaches are not relevant for addressing
agency-capacity risks, they are well suited for identifying and managing governance and
corruption risks.
Governance Risk
Governance risks involve decision making processes, accountability, oversight, and the
behavior and norms of staff. From a DFGG perspective, the implied risk is that decision
making does not reflect the needs and priorities of project beneficiaries, is not accountable to them, and is part of an organizational culture that does not promote a client
orientation.
DFGG approaches can help ensure that decisions made reflect the priorities of project
beneficiaries by incorporating participatory decision-making mechanisms into the process, including consultations, community management, user-management committees,
and the inclusion of citizens (users) in decision-making bodies. Participatory monitoring
11. DFGG can assess implementing agencies to identify their willingness to use DFGG approaches and even
select agencies partially on these grounds. For example, the Bangladesh Social Investment Program Project has
been able to use more DFGG approaches because it is working with a client oriented government agency: the
Social Development Foundation.
12 How-to Notes
tools (such as community-based monitoring, community scorecards, citizen report cards,
and social audits) give voice and mechanisms to citizens, allowing them to provide feedback to decision makers; this then makes the decision makers more accountable to
the community. Making project information publicly available is another way to promote
accountability.
The DFGG strategy to address concerns about staff norms and behavior involves the use
of tools that promote staff accountability and responsiveness to citizens and that give citizens recourse if staff behavior or norms are deemed unacceptable. Specific DFGG mechanisms for mitigating risks in this area include: (1) setting up staff performance incentives
that align efforts with a client orientation; (2) developing citizen charters to establish service standards and a client orientation; and (3) creating grievance-redress mechanisms
that allow citizens and CSOs to lodge complaints about implementing agencies. Box 5
shows how a range of these DFGG measures will be utilized to address governance challenges in an irrigation project in Nepal and a road project in India.
Fraud and Corruption Risks
Risks related to fraud and corruption include: a prevalence of mismanagement and poor
practices by implementing agencies that can lead to internal fraud and corruption, inadequate or nontransparent fraud and corruption controls by the IA, and poor FM. Sound
FM is measured by the extent to which there is: (1) an effective system to ensure that the
budget is implemented as intended in a controlled and predictable way; (2) timely and
accurate accounting and fiscal reporting, including audited public accounts; (3) effective procurement practices; and (4) sound contract management. There are many DFGG
approaches to managing the risk of fraud and corruption and these approaches usually
apply to FM risks as well.12
Increased transparency limits opportunities for fraud and corruption, accountability measures act as a check on mismanagement practices, and civil society can monitor fiduciary
practices and promote transparency and accountability. Managing fiduciary risk begins
with transparency efforts that are easier and do not require the redesign of systems.
DFGG transparency measures include disclosure and dissemination of information about
procurement and bidding, including invitations to bid, bid documents, requests for proposals, procurement plans, detailed contract award information, contractors with poor
performance ratings, and a list of debarred firms. Audit results can also be made publicly
available. Lastly, the media can play a critical role by publicizing cases of corruption and
financial mismanagement or by conducting their own investigations.
Financial monitoring by CSOs and communities increases transparency and promotes
accountability for reducing fiduciary risks. DFGG tools for participatory FM include procurement monitoring, participatory physical audits, public-expenditure tracking, and input
tracking. However, not all corruption is fiduciary. Community members can also monitor
the selection of project beneficiaries and the flow of project benefits to ensure they are
12. More detailed guidance is found in Preparing Your Project Governance and Accountability Action Plan:
Reducing Fiduciary Risk through Increased Transparency and Accountability (Rana 2009).
meeting their intended targets. Community oversight, such as school committees that
monitor the receipt of scholarships and stipends, is another an effective DFGG tool for
reducing fraud and corruption.
Direct engagement of the community in financial decisions through, for example, community management and community contracting is another DFGG approach for managing corruption risks. With community contracting, either the community carries out the
implementation tasks itself or contracts out the delivery of goods and services. Finally,
grievance-redress mechanisms allow citizens and CSOs to lodge complaints about the
IA or project. Box 6 describes a number of DFGG measures that are being utilized to
address the potential for corruption in a water and irrigation project in Indonesia.
Project Risks
Project risks are the micro-level risks in the ORAF; they relate to the project design, environmental and social safeguards, and quality of project delivery (including contract management). Project risks are also the most direct type of risk to a project’s success, but
they are also usually the easiest for task teams to manage. Even higher-level risks to projects (such as those at the sector and implementation-agency levels) can be addressed
through project design. Most risks amenable to DFGG approaches can be addressed
through consultation, participatory planning, and feedback through participatory monitoring. Boxes 5 and 6 depict projects that addressed implementation agency risks through
DFGG measures in project design.
Design Risk
Design risks are those posed by the project’s technical complexity, scope, and coverage
as well as by implementation and institutional arrangements. Risks that arise from the
complexity of a project’s design can be reduced through extensive consultations with
project beneficiaries, project-affected people, CSOs, and other stakeholders during the
project preparation to learn the lessons of previous projects. Participatory planning offers
a similar approach. DFGG approaches that can be helpful after the project is underway
include the adoption of service-user and citizen feedback mechanisms that provide information about adjustments that the project team may need to make. These mechanisms
include service-user surveys and participatory monitoring tools like community monitoring, community scorecards, citizen report cards, and social audits.
DFGG approaches can also help identify other project design and implementation risks,
including poor targeting of intended beneficiaries, elite capture or corruption in the distribution of project benefits, and the vulnerabilities of project beneficiaries and other projectaffected people. While consultation and participatory monitoring can help alert project
implementers to problems, the selection of beneficiaries through involvement of the local
population and communities can promote transparency and reduce the risk of corruption or poor targeting. Making the selection criteria and beneficiary lists publicly available
at the local level is another effective DFGG method. Determining the allocation of project
funds based on community-assessed needs and priorities promotes participation and
empowers citizens. This approach is also likely to reduce the risk of corruption and poor
14 How-to Notes
Box 5
Addressing Governance Challenges for Projects in Nepal and India
Nepal
The PAD for the Nepal Irrigation Schemes Modernization Project states that, at the local level, the project will require cooperation between
the project office, local government bodies, and line agencies of government. This will be a governance challenge. Some community
members are also raising the issue of growing political party interests in the project, mainly due to the project’s large budget. The major
political parties, especially those advocating for the rights of the indigenous group Tharu, are very interested in the project and threaten
to politicize the project and the Water User Associations (WUAs) for political gain.
The PAD contains a GAAP (annex 7) that includes a matrix of planned actions (summarized in the ORAF). The GAAP’s main objective is
to help strengthen governance and accountability systems in the project and beyond. It will achieve this objective by: ensuring that
resources allocated by the project are spent for the intended purposes and directed to the beneficiaries of the project; strengthening
coordination efforts between national and local agencies; and improving feedback mechanisms between beneficiaries, civil society,
and project authorities.
The government’s irrigation policy recognizes the community management of irrigation systems. Local communities own their systems
and are fully responsible for managing the resources. WUAs develop and implement their own management rules and regulations
based on community consensus. Capacity support will be provided to women and other marginalized communities through training
programs, with the goal of achieving meaningful participation. Project beneficiaries will be involved in monitoring project activities.
The traditional trust-based system in Nepal is not sufficient to handle every type of dispute. Developing a system to settle disputes and
handle grievances is one of the management improvements being promoted by the project. There are plans to set up a grievancehandling system as well as a monitoring program for it. The ORAF contains several measures to enhance the transparency of the project:
•
•
•
•
•
•
•
•
An information officer will be designated according to the provisions of the Right to Information Act.
Guidance and methodologies for information disclosure will be captured in the operations manual.
Relevant project information will be made available on the project website.
Other media, including newspapers and electronic media, will disseminate information.
Brochures will be available for the public in different languages.
Disclosure boards with project information will be put up at all project sites.
RTI-compliance will be assessed annually.
Project outcomes with lessons learned will be widely publicized on an annual basis.
India
The PAD for the India PMGSY (the Prime Minister’s) Rural Roads Project includes a GAAP (annex 8) to improve overall risk management,
enhance efficiency and development impact, and ensure allocated resources are spent for the intended purpose and directed to
beneficiaries. The GAAP includes a matrix of planned actions.
The PMGSY has successfully developed and deployed a number of social accountability mechanisms that help beneficiaries and communities hold government agencies accountable for progress and efficiency in program implementation. However, according to an
evaluation conducted by the Public Affairs Centre in Orissa and Karnataka, these mechanisms (such as citizen monitoring, social audits,
and complaint redress mechanisms) could still be improved, even in the most advanced states. The mainstreaming of these mechanisms will be encouraged in all project-affected states. Social audits will be triggered by grievance-redress mechanisms mobilized at the
local, state, and central levels. The ORAF proposes numerous information and transparency measures including:
• Ensure all project documents are disclosed in accordance with the Right to Information Act.
• Comply with safeguard provisions on the project website, at public information centers situated near project roads, and on billboards
at project sites.
• Provide general public with a wide variety of means to access project information and to submit feedback, including radio, text
messages, billboards, and so on.
• Develop a communication strategy and outreach materials in local languages to better engage project-affected communities in
monitoring activities.
The transparency measures are closely related to accountability measures, which include:
• third party oversight, citizen report cards, social audits, and so forth;
• e-governance to make the interface between citizens and providers more efficient; and
• development and usage of a grievance-redress system to track complaints.
It is the combination of transparency, accountability, and participation that gives DFGG measures their strength.
Sources: World Bank (2010b, 2011b).
Box 6
Addressing Corruption Risks in the Indonesia Water Resources and Irrigation Sector Management Program
The PAD for the Indonesian Water Resources and Irrigation Sector Management Program asserts that the main project risks are related
to fraud and corruption, procurement and FM capacity, social safeguards management, and the flow of funds. The ORAF proposes
several demand-side measures to address these risks:
• Raise public awareness and support for the reform through consultations, involvement, and media dissemination of project information.
• Promote participatory procurement and oversight by communities and CSOs.
• Disclose project information on website.
• Independently monitor project results.
The Better Governance Action Plan (annex 8) and the corruption matrix for mapping corruption risks (summarized in the ORAF) elaborate
on these strategies. The project team plans to address corruption risks through multistakeholder organizations that encourage participation in the management of water supplies (including planning and budgeting), the introduction of participatory procurement for small
and medium-sized contracts, and construction supervision for larger contracts. Transparency, accountability, and participation measures will be combined to promote DFGG and to reduce corruption risks.
The project team intends to use transparency measures, including the development of a project website, manuals, and a training program, to support monitoring efforts. The existing website will be updated to reflect project-related information, including implementing
agencies, locations, activities, procurement-related announcements, reports, and contacts. Program progress reports in the form of
data, a narrative, and pictures will be posted on the website. Project information brochures will be made available to stakeholders. At
the district and Water User Association Federation (WUAF) levels, critical information, such as invitations to bid, list of expenditures, and
progress reports, will be displayed on notice boards. Selection criteria for beneficiaries will be clearly stated in the project management
manual (PMM) and communicated through meetings and on the website.
The distribution of a clear PMM and the participation of stakeholders and beneficiaries in decision making and monitoring through
WUAFs, irrigation commissions, and basin committees, will provide oversight and address concerns about corruption. These groups
can also engage local academics and NGOs in independent monitoring and oversight efforts. The project will continue to promote
beneficiary participation efforts that were initiated in Phase I (when beneficiaries observed the procurement process and the handover
of completed works or delivered goods).
A complaint-handling mechanism established in each district will help address corruption risks by monitoring the recording, handling,
and tracking of complaints. Alternative conduits for receiving complaints—including a telephone hotline, a dedicated e-mail address,
and a post office box—will be widely publicized. Strict procedures will be enforced to guarantee the anonymity of informants. A central
database will be developed to analyze trends and patterns. Responses to complaints will be professional and timely (based on the
service standards for acting on complaints explained in the PMM), and whistleblowers will not risk reprisals of any kind. Complaints with
indications of corruption will be referred to the inspectorate general, the central government auditing agency, and/or other relevant
authorities for investigation. The Impact Monitoring and Evaluation Unit will monitor the status of complaints, including response time and
outcomes as part of its routine monitoring efforts.
Source: World Bank (2011a)
targeting, assuming there are community-level mechanisms to provide oversight and prevent local elite capture.
Safeguard Risks
Safeguard risks involve environmental, social, and other issues that have not been evaluated with due diligence. This category includes safeguards that have not been properly applied, situations in which safeguard work has not been funded or is inadequately
staffed by the IA, and situations in which the Bank safeguard implementation support is
not adequately funded. While the specific risks of environmental, social, and other safeguard issues will vary, the DFGG approaches are similar and include: (1) consultations and
participatory planning with project-affected people, CSOs, and other stakeholders during
the project preparation phase in order to understand any potential safeguard issues; (2)
feedback and monitoring by these stakeholders during project implementation; and (3)
grievance-redress mechanisms that allow people to voice complaints about the design or
implementation of safeguard measures.
16 How-to Notes
Delivery-Quality Risk
Delivery-quality risk applies to projects that lack adequate sustainability, measurability, or
contract management. DFGG has little to do with the ability of implementing agencies
to adequately sustain efforts (even though participatory implementation does promote
sustainability), but DFGG approaches can help project managers precisely and accurately monitor the implementation and delivery of goods, works, and services in order to
verify quantity, quality, and timeliness. Similar to the DFGG tools for managing fiduciary
risks, possible DFGG approaches include: (1) direct community involvement, including
community contracting and community management; (2) participatory FM tools, including procurement monitoring, participatory physical audits, and community oversight to
monitor quality of service delivery; (3) participatory monitoring tools, including community
monitoring, community scorecards, citizen report cards, and social audits; and (4) grievance-redress mechanisms to enable citizens and CSOs to provide feedback on contract
implementation.
Conclusion
In sum, DFGG is an effective instrument for addressing many—but far from all—risks
identified by the ORAF. The ORAF and DFGG are complementary tools that focus on
transparency, accountability, and participation. They share many of the same concerns,
and demand-side approaches naturally supplement supply-side ones. However, project
conditions must meet certain conditions if DFGG efforts are to succeed. Challenging conditions call for different DFGG approaches, but this does not mean that DFGG should not
be utilized. In fact, even in the most difficult contexts, DFGG can provide approaches that
make information more widely available and create more space for civil society to play a
role in development project planning, implementation, and monitoring.
References
BRAC University Institute of Governance Studies. 2009. Confrontation, Competition, Accountability: The State of Governance in Bangladesh 2008. Dhaka: Bangladesh Rural Advancement Committee (BRAC) University Institute of Governance Studies.
Gill, Maninder, and Alberto Ninio. 2011. Stakeholder Consultations in Investment Operations. Guidance Note. World Bank, Washington, DC.
Goetz, Anne Marie, and John Gaventa. 2001. Bringing Citizen Voice and Client Focus into Service Delivery. IDS Working Paper 138. Institute for Development
Studies, Sussex.
Malena, Carmen, with Reiner Forster and Janmejay Singh. 2004. Social Accountability: An Introduction to the Concept and Emerging Practice. Social Development Paper No. 76. World Bank, Washington, DC.
Maxwell Stamp Limited in association with the Center for Natural Resource Studies. 2010. Socio-Economic Assessment for Project Design Linking Northern Areas
to Garment Sector Jobs in Bangladesh. Dhaka: Maxwell Stamp.
Rama, Naseer Ahmad. 2009. Preparing Your Project Governance and Accountability Action Plan: Reducing Fiduciary Risk through Increased Transparency and
Accountability. India Country Department, World Bank, Washington, DC.
World Bank. 2006. World Bank Country Assistance Strategy for the People’s Republic of Bangladesh (FY06–09). South Asia Region, Bangladesh Country Management Unit. World Bank, Washington, DC.
————. 2009. Engaging the Poor for Good Governance and Fighting Corruption in South Asia. Japanese Social Development Fund Grant Funding Request. South
Asia Region, Sustainable Development Department. World Bank, Washington, DC.
————. 2010a. Nigeria Erosion and Watershed Management Project Concept Note. Africa Region, Environment Unit. World Bank, Washington, DC.
————. 2010b. India PMGSY Rural Roads Project Appraisal Document. South Asia Region, Sustainable Development Unit, Transport Unit. World Bank, Washington, DC.
————. 2011a. Indonesia Water Resources and Irrigation Sector Management Program (Phase II) Appraisal Document. East Asia Region, Sustainable Development Department. World Bank, Washington, DC.
————. 2011b. Nepal Modernization of Rani Jamara Kulariya Irrigation Scheme – Phase I Project Appraisal Document. Washington, DC: World Bank, South Asia
Region, Sustainable Development Department.
————. 2011c. How, When and Why to Use Demand Side Governance Approaches in Projects, Washington, DC: World Bank, Social Development Department.
————. 2011d. Bangladesh NARI-Northern Areas Reduction-of-Poverty Initiative Women’s Economic Empowerment Project Appraisal Document. Washington,
DC: World Bank, South Asia Region, Sustainable Development Department.
————. (forthcoming). How to Design and Implement Project Monitoring by Non-State Actors, Washington, DC: World Bank, Social Development Department.
Annex 1.
Glossary of
DFGG Tools
NOTE: Refer to http://dfggdb for more detailed information on the following DFGG tools.
Budget literacy campaigns are efforts, usually by civil society, academics, or research institutes, to build
citizen and civil society capacity to understand budgets in order to influence budget priorities and so that
the government can be held accountable for budget commitments.
A citizen charter is a document that informs citizens about their entitlements as users of public services,
including the standards they can expect for a service (e.g., timeframe and quality); remedies available for the
provider not adhering to standards; and the procedures, costs, and charges for services. Citizen charters
entitle users to an explanation—and in some cases compensation—if standards are not met.
Citizen juries are groups of select community members who propose recommendations and action proposals to decision makers after conducting investigations. A citizen jury is a deliberative participatory instrument that supplements the conventional democratic process.
A citizen report card is an assessment of public services by users (citizens) through client feedback surveys. In addition to its data collection function, it can be an instrument for exacting public accountability
when extensive media coverage and civil society advocacy accompanies the process.
Citizen/user membership in decision-making bodies is a method for ensuring accountability by allowing people who are able to represent user interests to sit on committees that make decisions about project
activities under implementation (project-level arrangement) or utility boards (sector-level arrangement).
Community contracting is when community groups are contracted for the provision of services or when
community groups contract service providers for the construction of infrastructure.
Community management is the full ownership or management of services by service users or communities. Through the formation of cooperatives, consumers can own the service-delivery entity directly (with
each customer owning one share of the business).
Community monitoring is a system of measuring, recording, collecting, and analyzing information and
then communicating and acting on it to improve performance. It holds government institutions accountable,
provides ongoing feedback, shares control over monitoring and evaluation (M&E), engages in identifying
and taking corrective actions, and facilitates dialogue between citizens and project authorities.
Community oversight is the monitoring of publicly-funded construction projects by citizens or communitybased CSOs directly or indirectly participating in exacting accountability. It applies across all stages of the
project cycle but with a focus on the construction phase.
A community scorecard is a community-based monitoring tool that assesses services, projects, and
government performance by analyzing qualitative data obtained in focus group discussions with the community. The process usually includes interface meetings between service providers and users to formulate
action plans that will address identified problems and shortcomings.
A grievance-redress mechanism (or complaint-handling mechanism) is a system for responding to
queries or providing clarifications about projects, resolving implementation problems, and efficiently and
effectively addressing complaints and grievances.
Independent budget analysis is a process by which civil society stakeholders research, explain, monitor,
and disseminate information about public expenditures and investments in order to influence the allocation
of public funds.
Information campaigns are processes to provide citizens with information about government plans, projects, laws, activities, services, and so on. A variety of approaches can be used, such as public meetings,
mass media, printed materials, public performances, and information kiosks.
18 How-to Notes
Input tracking refers to the monitoring of the flow of physical assets and service inputs from central to local
levels. It is also called input monitoring.
Integrity pacts are a transparency tool that allows participants and public officials to agree on rules that will
be applied to a specific procurement. It includes an honesty pledge in which parties pledge to neither offer
nor demand bribes. Bidders promise not to collude to win contracts and, if they do secure the contract, to
avoid abusive practices during its execution.
Participatory budgeting is a process by which citizens directly participate in the formulation, decisionmaking process, and monitoring of the execution of budgets, creating a channel for citizens to give voice
to their priorities.
Participatory physical audits involve community members playing a role in the physical inspection of
project sites, especially when there is not a sufficient number of professional auditors to inspect all facilities.
Citizens can measure the quantity and quality of construction materials, infrastructure, and facilities.
Participatory planning involves convening a broad base of key stakeholders on an iterative basis in order
to generate a diagnosis for the existing situation and to develop appropriate strategies to solve jointlyidentified problems. Project components, objectives, and strategies are designed in collaboration with
stakeholders.
Procurement monitoring, in the context of DFGG, refers to independent, third-party monitoring of procurement activities by citizens, communities, and CSOs to ensure there are no leakages or violations of
procurement rules.
Public display of information is the posting of government information, usually regarding projects or services, in public areas (on billboards and in government offices, schools, health centers, community centers,
project sites, and other places where communities receive services or discuss government affairs).
Public expenditure tracking surveys involve citizen groups tracing the flow of public resources for the
provision of public goods and services from origin to destination. It can help detect bottlenecks, inefficiencies, and corruption.
Public hearings, often an element in social audit initiatives, are community-level formal meetings where
local officials and citizens can exchange information and opinions about community affairs.
Public reporting of expenditures refers to the disclosure and dissemination of information about government expenditures, enabling citizens to hold the government accountable.
A social audit (also called social accounting) is a monitoring process by which organizational or project
information is collected, analyzed, and publicly shared in a participatory manner. Community members
conduct investigative work and the findings are then publicly shared and discussed.
User-management committees refer to consumer groups taking on long-term management roles to initiate, implement, operate, and maintain services. The committees are as much for increasing participation as
they are for promoting accountability and financial controls.
Annex 2.
Operational Risk-Assessment Framework (ORAF) with Examples of Suggested
DFGG Measures to Manage Risks
ORAF Risk Levels
Rating Explanation
ORAF Guiding Questions
DFGG Risk-Management Strategies/Tools
with Project Examples
1. Project stakeholder risks
1.1.
Stakeholder risks
Risk to the Bank’s relations with borrowers, donors, and other key stakeholders that can affect the achievement of
project development objectives.
Other key relations
Number and
influence of other
internal and external
stakeholders and
extent to which their
objectives conflict
with project design
or development
objectives, resulting
in their active
opposition.
General public
perception risk
Risk that the
operation calls
into question
in the public
mind the Bank’s
commitment to its
poverty reduction
mission or its ethical
standards, reducing
support for the Bank
and threatening
the achievement
of the project’s
development
objectives
• How many other potentially
influential internal or external
stakeholders have an interest
in the project?
• To what extent do their
agendas conflict with project
design or development
objectives?
• To what extent are NGOs and
others actively and effectively
campaigning against the
project concept already or
likely to do so as the project is
developed?
• To what extent is there likely
to be a public perception
that the project (design or
development objectives)
does not fit with Bank’s
poverty reduction mandate?
• To what extent are
there already public
misunderstandings of the
project’s development
objectives or design that are
undermining support for the
Bank and the project?
• Raise public awareness of and support
for the reform through consultations and
media dissemination of project information.
[Indonesia Second Water and Irrigation Sector
Management Program Project]
• Foster broad community participation in
planning, implementation, and monitoring
through appropriate social mobilization.
[Nepal Irrigation and Water Resources
Management Project]
• Consult with stakeholders who might object
to the project.
• Use participatory planning to identify any
potential conflicts between project and
stakeholder objectives.
• Explain project objectives and benefits through
an information campaign that includes the
media. [Bangladesh Clean Air and Sustainable
Environment Project]
• Support advocacy and coalition building to
sensitize key groups, including policymakers
and the media. [Bangladesh Avian Influenza
Preparedness and Response Project]
• Improve borrower’s reputation with transparency
measures like right to information laws and
public disclosure standards.
(continued)
20 How-to Notes
2. Operating environment
2.1.
Country risk
Systemic countrywide or sub-national entity wide—if relevant—risk to the achievement of project development
objectives, including that of fraud and corruption, posed by a country’s politics and governance, societal and
security issues, framework for environmental protection, civil society capacity, and economic management.
Politics and
governance
Stability and
predictability of
the processes for
enforcement of
laws, property rights,
and contracts.
• To what extent is there
a rule-based set of laws
and regulations, providing
predictability and
transparency for economic
actors?
• Post laws and regulations on a website.
[Cambodia Trade Facilitation Project]
• Develop citizen charters to establish service
standards and citizen rights. [Peru Recurso
Project]
• Promote laws ensuring the right to information,
the right to organize (for CSOs and others), and
greater accountability of government.
• Promote enhanced transparency measures
such as posting laws, regulations, service
standards, budgets, and other information on
websites.
Society and security
Environmental and
social safeguards
Fragmentation or
polarization of the
general population,
social upheaval and
unrest; will and ability
of law enforcement
organizations to
protect the lives
and property of
inhabitants from
crime and violence
Adequacy of
regulations and
policies for
environmental and
social impacts, and
efficacy of their
execution
• To what extent are there
major groups actively
opposed to the central
government?
ethnic or regional tensions
or differences of views on
development priorities and
policies?
• To what extent does the
government provide
security to citizens from
external threats and internal
violence, notably in areas
of importance for project
implementation?
• To what extent are
environmental and social
regulations and policies in
place, of good quality, and
enforced?
• Use local NGOs as intermediaries to undertake
situation assessments in project districts, develop
communication strategies and outreach
campaigns, and provide implementation
support. [Nepal Irrigation and Water Resources
Management Project]
• Consult dissident groups to help pinpoint their
objections to the government or to the project.
• Use local intermediaries like NGOs to operate in
conflict and insecure environments.
• Use local NGOs to undertake situation assessments in project districts, develop communication strategies and outreach campaigns, and
provide implementation support.
• Consult CSOs when developing environmental
and social safeguard policies and monitoring
enforcement of environmental and social
safeguard regulations.
• Involve CSOs in the development of safeguard
policies and the monitoring of the enforcement
of safeguard regulations.
• Seek public comments from citizens and CSOs
on environmental and social safeguard policies.
Civil society
capacity and
independence
Strength of civil
society capacity
and independence
of civil society from
government
• To what extent are there laws
and regulations in place
and effectively administered
to allow for civil society
organizations (CSOs)?
• Use participatory budgeting, participatory
planning, budget literacy campaigns, and
independent budget analysis by CSOs to help
shape country strategy. [Analysis of the general
budget of Peru]
• To what extent is there a
large and active set of
locally-governed civil society
organizations?
• Use the Civil Society Assessment Tool (CSAT) to
assess the environment for, and the capacity
of, CSOs. [Civil society country assessments
in Albania, Cambodia, Ecuador, Ghana,
Mongolia, Senegal, and Uganda]
• To what extent are these
organizations involved in
country strategy setting and
monitoring government
performance, notably with
regard to delivery of public
services?
• Promote right-to-assembly laws (for NGOs
and others) to promote transparency and
accountability.
• Develop media capacity to investigate and
report on government performance.
(continued)
2.2
Institutional Risk
(sector & multisector level)
Risk that, across the sectors involved in the operation, institutions are weak and organizations lack adequate
ownership and commitment, accountability and oversight, capacity, fraud and corruption controls, or decisionmaking ability.
Accountability and
oversight
Extent to which
organizational
accountability and
oversight systems
are understood
by staff and used
effectively
• To what extent do
organizations understand
their distinct roles and
responsibilities?
Extent to which
sector organizations
have wellunderstood rules of
conduct and an
institutional culture of
service delivery
• To what extent do the
organizations involved
have well-understood rules
of conduct and a shared
institutional culture of service
delivery?
Institutional
capacity
organizational accountability
and oversight systems and
to what extent are they
understood by staff and used
effectively?
• Invite CSOs and other citizen representatives
to be members of a multistakeholder steering
committees. Consult CSOs on sector policy
discussions. [Bangladesh Health, Nutrition and
Population Sector Project]
• Use information dissemination to enhance
service-user understanding of service-provider
rules, resources, processes, and systems.
• Develop code of conduct to be signed by all
project staff at central and local levels, including
contract staff. Create well-defined complaintsubmission and follow-up mechanisms.
[Cambodia Land Allocation for Social and
Economic Development Project]
• Develop staff performance incentives that align
with a client orientation.
• Develop citizen charters to establish service
standards and a client orientation.
Fraud and
corruption
Prevalence of
institutional fraud
and corruption at
the relevant sector
level organizations,
and adequacy
and transparency
of institutional fraud
and corruption
controls
• To what extent is the
institutional culture of the
organizations involved
accepting of fraud and
corruption as a way of doing
business?
• To what extent is there existing
evidence that fraud and
corruption in the sector or
sectors is lower or higher than
that in other sectors?
existing allegations of
fraud and corruption and
how effectively have the
organizations in question
responded?
• To what extent do the
organizations in question
cooperate with national anticorruption bodies?
• Educate citizens and the media on the
basics of proper procurement so that corruption
and bribes are not accepted as normal.
[Bangladesh Public Procurement Reform
Project II]
• Monitor the efficiency of public expenditure
management through collaboration with
ongoing medium-term. [Cambodia Education
Sector Support Project]
• Promote integrity pacts to find agreement
around procurement rules.
• Put budgets, expenditures, and procurement
information on websites, public notice boards,
and other mediums.
• Develop grievance-redress mechanisms so
citizens and CSOs can identify corruption risks.
• Develop media capacity to investigate and
report on government fraud and corruption.
(continued)
22 How-to Notes
3. Implementing Agency Risks (including Financial Management & Procurement Risks)
3.1.
Governance risk
Risk related to the lead IA lacking ownership, appropriate decision making, accountability, or that the behavior
and norms of their staffs are misaligned with Bank expectations.
Decision making
Adequacy of
leadership, skills
and experience,
processes and
governance
structure to facilitate
effective decision
making throughout
project
• Does the governance
structure enable efficient and
effective decision making
and is there adequate
delegation of authority?
• Adopt participatory management mechanisms, such as community management, user
management committees, and citizen and user
membership in decision-making bodies.
[El Salvador EDUCO Project]
leadership have capacity to
make informed decisions?
• Use participatory monitoring tools such as
community monitoring, community scorecards,
citizen report cards, and social audits to give
citizens voice and feedback to decision makers,
which makes them more accountable.
Clarity and
adequacy of IA
responsibilities and
oversight processes
• Does the IA have a clear
system of accountability
with clearly defined
responsibilities? Is the system
used in practice?
• Promote accountability for results and transparency in resource allocation by encouraging
stakeholder feedback mechanisms; public
displays of information; and community outreach efforts regarding services, outcomes,
budgets and expenditures. [Cambodia
Education Sector Support Project]
Accountability and
oversight
• How appropriate to project
implementation is the IA’s
organizational structure and
to what extent are approval
and authorization controls in
place and documented?
• Is there adequate supervision
to ensure appropriate
monitoring of project
activities and results?
• Are the IA’s financial
statements audited regularly
by an independent auditor
in accordance with
international standards?
• Were there any major
accountability issues brought
out in the audit report of the
past three years and have
they been resolved?
• Develop benefit tracking and monitoring
systems; have social audit committees
confirm compliance to agreed rules and
utilization of funds; conduct peer community
assessments and report cards on service
providers. [Bangladesh Social Investment
Program Project-SIPP]
• Empower communities to demand accountability and make public information disclosure by
local government a condition of grant disbursement. [Bangladesh Local Government Support
Program]
• Train service-user associations in accountability,
transparency, and good governance.
[Zambia Irrigation Development Project]
• Develop a grievance-redress mechanism that
lets citizens and CSOs lodge complaints about
the project. [Bangladesh Social Investment
Program Project]
• Produce External Implementation Status Reports
Plus (EISR+)
• Make project information publicly available to
promote accountability.
Behavior and norms
Extent to which
IA culture and
norms facilitate
implementation
and alignment with
the achievement of
results envisaged by
the project
• Does the agency have
a code of ethics and
standards? How well is it
enforced?
• Is there a formal mechanism
to deal with ethical issues
and is it used?
• Develop citizen charters that ensure citizen rights
and service standards. [Bangladesh Health,
Nutrition and Population Sector Project]
• Develop staff performance incentives that align
with a client orientation.
citizens and CSOs can lodge complaints about
the IA.
(continued)
3.2.
Fraud and
corruption risk
Prevalence of mismanagement, malpractice that leads to fraud and corruption in the IA, and adequacy and
transparency of IA fraud and corruption controls.
Prevalence of fraud
and corruption
Historical incidence
of practices and
weaknesses that
promote fraud and
corruption under
similar projects, and
perception of fraud
and corruption in
ongoing agency key
processes
Transparency and
controls
Adequacy of
controls against
fraud and
corruption, and
transparency of
processes to deal
with fraud and
corruption
• To what extent has fraud
and corruption, or significant
risk of fraud and corruption,
historically occurred in similar
Bank projects undertaken by
the IA? Other donor projects?
What were the lessons
learned? The sector within
which the IA is working?
• To what extent have material
issues been reported in
recent audit reports and what
actions have been taken to
correct these issues?
• Encourage community contracting for procurement of civil works to enable timeliness, quality,
and efficiency in construction. [Malawi Social
Action Fund]
• Conduct a participatory physical audit of
project civil works. [Philippines Road Watch
Committees]
• Conduct a public-expenditure tracking
survey of central funds to local schools.
(schools in Uganda)
• Develop an integrity pact between the
government and all contractors. [Pakistan
Karachi Water Scheme]
• To what extent has there
been a perception of fraud
and corruption at any stage
of the procurement process
but more specifically in the
contract bidding process (for
example, collusion between
bidders or bribes for access
to bidding documents
or favorable treatment in
selection) in this agency?
• Encourage transparent student selection and
use of scholarship funds at the school level.
[Cambodia Education Sector Support Project]
processes and controls to
ensure that procurement
particularly the bidding/
selection process is fair
(for example, consistent
advertisement in media,
sufficient time for bidding,
evaluations conducted
professionally using objective
criteria)?
• Make records publicly available at all sites,
especially those with village offices. Social
audit committees perform community oversight
over all village institutions, ensuring that activities
follow the operational manual guidelines.
They also verify books of accounts and
procurement records. [Bangladesh
Empowerment and Livelihood Improvement
Project]
• Are there laws in the country
governing procurement?
• How adequate are existing
IA controls against fraud
and corruption (for example,
regular internal and external
audit), cooperation with an
anti-corruption agency with
prosecution powers)?
• Increase information access and open a
channel for lodging complaints about the
procurement of goods and services.
[Cambodia Education Sector Support Project]
• Institute mandatory requirements for public
disclosure of audit findings. Hold monthly open
meetings for peer learning, knowledge sharing,
and improving transparency at the local level.
Display information about every infrastructure
scheme. [Bangladesh Local Governance
Support Project]
• Conduct community-based performance
monitoring and evaluation to ensure
transparency around the use of funds. [Nepal
Rural Access Improvement and Decentralization
Project]
• Adopt transparency measures to disclose and
disseminate information about procurement,
bidding, and so on.
• To what extent are audit
results adequate in terms of
timeliness and quality?
(continued)
24 How-to Notes
4. Project Risks
4.1.
Design risk
Risk posed by the project’s technical complexity, scope/coverage, and implementation/institutional
arrangements.
Technical
complexity
Dependence of
project design
on untested
or unfamiliar
technologies or
processes and
adequacy of Bank
and borrower
experience with
similar projects.
• To what extent is the project
design informed by and
incorporated lessons of
previous projects in this sector
or country?
• Consult extensively with CSOs and other
stakeholders during project preparation to learn
relevant lessons from previous projects as well as
what others might be doing. [Bangladesh Clean
Air and Sustainable Environment Project]
Scope or coverage
complexity
Accuracy in
targeting project
benefits and
prevention of elite
capture of benefits.
project design have
measures to target benefits
to the intended project
beneficiaries?
• Utilize a participatory targeting methodology
to pinpoint and track eligible beneficiaries.
[Bangladesh Empowerment and Livelihood
Improvement Project ]
project design have
measures to prevent elite
capture of benefits?
• Select beneficiaries through involvement of
the local people. Make selection criteria and
beneficiary lists publicly available at local
government headquarters. [Bangladesh
Employment Generation Program for the Poorest
Project]
• Allocate project funds determined by a
community assessment of needs and priorities.
[Bangladesh Empowerment and Livelihood
Improvement Project ]
• Use clear operational rules and principles, along
with practical tools of social accountability and
participatory targeting methodology to limit
interference at the local level. [Bangladesh
Social Investment Program Project]
Design flexibility
Ability to adjust
project design
in response to
project or operating
environment risk
changes, and
availability and cost
of alternatives to
do so
• Does this type of project
require any flexibility to
adjust the design during
implementation?
• How easily can aspects of
the project design be refined
during implementation
to accommodate new
developments or learning?
• Adopt service-user and citizen feedback
mechanisms to provide information on needed
project adjustments, including community
monitoring, community scorecards, citizen
report cards, and service user surveys.
[Bangladesh Disability and Children at Risk
Project]
(continued)
4.2.
Safeguard risk
Risk that environmental, social and other safeguard issues are not evaluated with due diligence, safeguards
are not applied properly, safeguard work is not funded or staffed adequately by the IA, or Bank safeguard
implementation support is not adequately funded.
Social,
environmental, and
other safeguard
issues
Adherence
to policy and
appropriateness of
resource allocation
for other safeguards,
and adequacy
of consultation,
disclosure, legal
and institutional
framework for
addressing
safeguards
• What are the environmental
impacts of the project and
can they be easily avoided
or mitigated?
• Consult extensively with CSOs and other
stakeholders during project preparation to
understand safeguard issues. [Nigeria Erosion
and Watershed Management Project]
• What are the social impacts
of the project?
• Use CSOs to monitor project performance on
safeguard issues. [Bangladesh Private Sector
Development Project]
• To what extent will the
project be affected by
other (nonsafeguard) social
impacts and risks, such as
vulnerable people or social
conflicts?
citizens and CSOs can lodge complaints
about environmental and social impacts.
[Bangladesh LGSP]
• Carry out an information campaign and
disclose information about safeguard issues.
4.3.
Delivery-quality
risk
Risk that project lacks adequate sustainability, measurability, or contract management.
Contract
management
Ability of project
managers to
effectively manage
schedule, cost,
and timing of
implementation
milestones
• To what extent are adequate
mechanisms in place for
procurement and/or contract
monitoring?
• Develop grievance-redress mechanisms that
allow citizens and CSOs to lodge complaints
about the IA or the project. [Maldives Pension
and Social Protection Administration Project]
• To what extent do procedures
exist to monitor delivery of
goods, works and services
to verify quantity, quality and
timeliness, and to control
inventories of goods?
• Strengthen oversight, monitoring, and feedback
on project initiatives with demand-side social
accountability. [Cambodia DFGG Project]
• To what extent is there a
track record of implementing
alternative dispute resolution procedures rather than
judicial measures?
• Adopt participatory financial monitoring tools
such as procurement monitoring, participatory
physical audits, public expenditure tracking,
input tracking, community oversight, community
contracting, and integrity pacts to reduce
corruption and increase accountability for the
use of public funds.
• Encourage community participation in contract
management and in the monitoring of contract
implementation.
• Conduct External Implementation Status Reports
Plus (EISR+)

HOW-TO NOTES Using Demand-Side Governance Approaches to Identify and Manage Risks in Projects

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