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Governance Global Practice

Middle East & North Africa
Issue 4
June 2015

The Governance Global Practice

Unity in Diversity

Connecting Voices (CV) Middle East and North Africa (MENA) is a
regional initiative and partnership that promotes governance and
improved financial management practices in the public and private
sectors. The ultimate aim is to support the demands of citizens
throughout the Arab World for jobs, better governance, a voice in
public affairs, and social and economic inclusion as reflected in the
World Banks MENA Regional strategy. CV MENA plans to seize on the
windows of opportunity available in the region. It will support capacity
building in the area of governance, facilitate the development of a
professional community, as well as the sharing and transfer of
knowledge both within countries and within the region as a whole. CV
MENA will help foster greater transparency and accountability, thereby
engendering enhanced public trust. In addition, building public and
private sector governance and financial management capacity will also
help attract and provide comfort to much-needed foreign direct
investment in the region.

CVMENA won the World Banks 2013 MENA

Vice President Team Award

The Exchange is a major annual forum that provides a channel for dialogue,
enabling countries to share experiences and promote societal-governmental
consensus building. It fosters intra-regional cooperation and stimulates
interest in improving public sctor governance, public financial management,
and corporate governance and financial reporting in MENA. The Exchange
facilitates knowledge-sharing from transitional democracies and showcases
successful experiences from fragile and conflict states. The Exchange starts
where public sector and public financial management diagnostics leave off,
that is, in supporting the creation of an enabling environment for reforms to
move from concept to reality. It helps catalyze innovative activities to develop
regional public goods and enables the World Bank to fulfill its mission as a
Solutions Bank.

A Boot Camp is a practical and innovative concept. It involves gathering a

group of decision-makers and experts to address a particular issue through
focused and intensive discussion that takes into account both technical and
non-technical factors. After thoroughly examining the issue, the group
develops possible solutions and a work program to help implement them. The
experience is documented in a Solutions Papera brief note describing how
a specific challenge or problem is addressed in a collaborative and pragmatic
fashion. The Boot Camps, together with the Solutions Lab and discussions in
Maarefah (knowledge in Arabic), feed into the design of the Exchange and
CV MENAs workprogram.

In partnership with the Wold Banks Global Development and Learning

Network (GDLN), CV MENA connects participants across the MENA region
(once each quarter) in finding solutions on topics related to public sector,
financial management, and corporate governqance and financial reporting.
The Solutions Lab realizes that an answer is not necessarily the solution: a
time-tested best practice may not be optimal in a particular situation
because it may not be politically or socially feasible at the time. The Labs help
our clients fashion an attainable solutionan alternative answer to the
problemby bringing in other perspectives and different, yet relevant,
experiences from other countries. The Labs also feed into the design of The

Maarefah responds to the need to implement, sustain, and build on the

results of The Exchange, as well as to extend these benefits to those unable to
personally attend Boot Camps and Solutions Labs. Maarefah (knowledge in
Arabic) is a Community of Practice (CoP) that serves as a forum for ongoing
dialogue and continuous peer-to-peer and expert knowledge exchange. The
CoPestablished by the Financial Management Unit of the World Banks
Middle East and North Africa Region in 2011 as a response to popular demand
for change, accountability, transparency, and inclusivenessis designed to
serve as a robust base for extending the dialogue and refocusing it on the
needs of CV MENA.

Publisher: Governance Global Practcie, MENA, The World Bank

Managing Editor: Hisham Waly
Art Director: Denis Largeron
Contributing Photographers: Denis Largeron
Images: World Bank Images, Shutterstock

Note: The posts in the Connecting Voices magazine should not be reported as representing the views of The World Bank.
The views expressed are those of the authors and do not necessarily represent those of the The World Bank or its policy.

Editors Note
Hisham WALY
Practice Manager
Governance Global Practice / MENA
The World Bank

The concept of VUCA volatility,
uncertainty, complexity, and ambiguity
was introduced in the late 1990s after the
end of the Cold War. It followed a shift
from a world of problems which
elimination of uncertainty, to a world of
dilemmas which demand patience, sensemaking, and an engagement in the midst
of uncertainty. Volatility (the rate of
change), uncertainty (a lack of clarity
about the present situation and future
outcomes), complexity (a multiplicity of
key decision factors), and ambiguity
(conflicting interpretations) shape the
new normal in many parts of the world
where attempts to develop elegant,
immediate and complete solutions are
unrealistic, nave and even detrimental (1)
Today in the Middle East and North Africa
(MENA) region, we are living mostly in a
VUCA environment, where we are faced
with a diverse and discouraging picture
especially with Iraq, Libya, Syria and
Yemen mired in violent conflicts that are
devastating peoples lives, infrastructure
and national economies. Conflict
spillovers are also impacting neighboring
countries such as Jordan, Lebanon and
Tunisia. The transition countries of Egypt,
Jordan, Morocco and Tunisia are slowly
but steadily reforming their economies,
albeit in a context of anemic growth, high
fiscal deficits, rising youth unemployment
and security concerns. Also, low oil prices
are dragging down economic growth in
oil-exporting countries.
The Gulf

Cooperation Council (GCC) countries are

expected to lose about US$215 billion or
14 percent of their combined GDP from
lower oil prices this year. In addition, the
Palestinians are still feeling the impact of
the 2014 Gaza war and attendant
precarious political and security situation

In addition, the Arab Spring showed that

the old social contract, where the state
provided jobs, free health care and
education, and subsidized food and fuel,
in return for limited voice and
accountability to citizens is broken.
However, developing a new social
contract between the state and its
citizenry (vertical process) is challenging
in a region where a number of countries
have limited social cohesion between
different societal groups due to diverse
identities (religious, ethnic, or tribal), and
with little trust in the state. In this
context, a new social covenant where the
major groups within a society come
together and agree on a new framework
for cooperation is crucial (horizontal
In the World Bank, we are faced with the
challenge of finding ways to operate in
this VUCA environment, and to respond
in an adaptive and timely manner to help
the people and institutions of MENA
mitigate, adapt to and recover from
exogenous and endogenous shocks and
stresses in a manner that reduces chronic
vulnerability. In other words, we are
working to enhance resilience and reduce
The Organization for Economic Cooperation and Development (OECD)
defines a resilient state as one that is
capable of absorbing shocks and
transforming and channeling radical
change or challenges, while maintaining
political stability and preventing violence.

Resilient states exhibit the capacity and
legitimacy of governing a population and
its territory. They can manage and adapt
expectations, shifts in elite and other
political agreements, and growing
institutional complexity. (3)
Strengthening resilience thus demands a
twin-track approach. On the one hand, it
is important to create policies that place
resilience center stage (for example,
those that are based on an assessment of
the risks to which a country is exposed
and its relative vulnerability).
On the other hand, the adaptive capacity
needs to be reinforced so as to
strengthen a states inherent ability to
take decisions and renew itself in light of
changes in its environment ( for example,
at the subnational level). It is important
to note that there is a risk that too much
emphasis will be placed on the resilience
of state institutions while other sources
of resilience outside the state will be
ignored. (4)
According to a World Bank 2009 Policy
Note on The Global Economic Crisis:
Assessing Vulnerability with a Poverty
Lens, the capacity of governments to
cope with the impacts of the crisis on
poverty depends on: (i) the fiscal
capacity/space to incur an increased
fiscal deficit; and (ii) institutional capacity
to implement programs aimed at
mitigating the poverty impact of the
crisis. This includes the countrys
institutional abilities to manage the
budget process, design and implement
policies, provide services, and deliver
accountable and transparent government

indicators tend to have lower scores,

particularly in areas such as transparency,
government effectiveness, civil liberties,
media freedom, participation and social
accountability. As a consequence, overall
governmental accountability, trust in
government institutions, and public
sector service delivery are all negatively
Complicating matters, the VUCA
difficulties, bringing one crisis after the
other. In some instances, this has acted as
a trigger for embarking on reforms,
whereas in other cases, it has made the
design and implementation of programs
much more challenging.
Although not unique to MENA countries,
most suffer from significant gaps
between laws and procedures (de jure)
and actual practice and implementation
(de facto). Another issue is the low
execution rate of investment budgets due
management systems.
On the corporate governance and
financial reporting (CGFR) front, there are
serious deficiencies in structure and
function of the CGFR framework, as well
as a lack of awareness among national
policy makers of its importance. For
instance, a mere 20 percent of countries
maintain independent audit regulators.

In Iraq, the country is currently faced with

volatility in oil prices at a time when oil
accounts for more than 90 percent of
total government revenues. The conflict
is also affecting its non-oil economy (for
example, in the destruction of
infrastructure), and is leading to more
spending on security and humanitarian
In this context, the ability of governments activities. Also, Iraqs wage bill is very
to design and implement the right high. At an average of 30 percent of total
combination of short-, medium- and long- expenditures or 18 percent of gross
term policy measures is critical, yet domestic product (GDP) during 200510,
complex. On the one hand, it requires it is the most rapidly growing budget
specific technical capacities in the item. In the past, higher oil revenues
institutions and, on the other, it is translated into higher wage bills.
affected by the overall functioning of However, payroll and human resource
country systems (for example, the civil practices are weak as a result, and now
service, public financial management, significant resources are being wasted
procurement mechanisms), institutional through
qualities (performance, adaptability and including ghost workers and double
stability) and governance structures that dippers. A World Bank policy note
largely set the rules of the game (6).
estimated the potential cost to the
government to be as much as US$260
Compared to a number of other regions million a year (7).
of the world, MENAs governance

Having sound public administration
systems, including civil service and public
financial management systems, can help
enhance Iraqs macroeconomic stability,
efficient allocation of resources, service
delivery and state-building activities.
These measures would help Iraq become
more resilient and better equipped in
handling future crises.

to provide effective educational systems,

efficient healthcare systems, clean
drinking water and sanitation, reliable
energy, and modern and resilient
throughout MENA have expressed
significant dissatisfaction with service
delivery,. Indeed, such socio-economic
grievances were the triggers of many of
the uprisings in 2011 (8). The participants
We realize that operating in a protracted agreed that helping governments provide
VUCA environment is challenging and these basic services to citizens will be
draining. To continue the dialogue on this crucial, both for building stronger and
important topic, we just completed our more credible institutions and for
annual Connecting Voices conference reaching the most underprivileged
The Exchange in Tunisia from May 27- populations and regions. This means not
28 2015 under the theme: From only providing greater access for citizens,
Vulnerability to Resilience. This was an but also fostering more accountable and
opportunity to engage with members of efficient governance regarding basic
the executive, legislative, judiciary, media public services (World Bank, 2015b). To
and civil society organizations in the this end, several measures were reflected
region. Discussions helped us define the upon: (i) ending the cycle of poor
best way to refine our vision, enhance our performance; (ii) rebuilding trust in
understanding, gain clarity and be more governments;
agile in supporting the people and accountability; (iv) supporting better
institutions of the MENA region as they management of human resources; and (v)
seek to rebound from crises.
promoting citizen feedback (9).
At the Exchange conference, we focused
on five key areas that we believe
constitute the pillars of our future
intervention in MENA to enhance
Rule of Law
Citizen Engagement
State Institutions
Service Delivery
Jobs and the Private Sector
In our discussions, we reflected on the
critical challenges, lessons learned from
previous interventions, and successes we
can we build on in the future.
In the Jobs and the Private Sector session,
we discussed ways of shielding the
private sector policies from privileges,
discretion, and unequal treatment
operational entry points. We reflected on
an organizing framework consisting of: (i)
policy formulation (for example,
transparency, inclusion and consultation
in the process of policy design); (ii) policy
implementation (that is, delivery systems
and compliance); and (iii) corrective
measures (for example, access to
information and data).
At the Service Delivery session, we
discussed how MENA states over the last
decade have been unable, in many cases,

aspects of engagement between public

institutions and citizens. This positions
the GGP at the heart of the discussion
regarding helping the people and
institutions of MENA become more
In the cover story, we interview Mario
Marcel, Senior Director of the GGP. We
discuss with him a number of topics from
a global and regional perspective, ranging
from ways to give governance more
weight in the development agenda, to a
new generation of governance reforms,
to lessons from the Latin America and
Caribbean (LAC) region that might be
useful to MENA countries. Then we
reached out to World Bank senior
management from outside the GGP (for
example, MENAs Strategy Director,
Country Directors and Practice Managers)
to better understand their perspectives
on governance what it is and why it
matters. We received responses from
around the region and other Global
Practices (GPs), reflecting local, regional
and international perspectives on the
issue. Our staff in the GGP had their say
as well. Five governance staff conversed
about the opportunities, challenges and
future of the governance agenda in the
MENA region. Last but not least, we
highlight a recent event attended by 250
MENA governance professionals at which
we introduced the GGP. We listened to
and learned from our clients about their
expectations and received valuable
feedback on the mandate, structure and
plans for the GGP.
We hope you enjoy this issue of
Connecting Voices.


A cross-cutting theme of discussions

concerned governance, with the World
Banks new Governance Global Practice
(GGP) leading the agenda.
Our cover story for this issue is the
formation of the GGP in July 1, 2014. The
GGP aims to support countries in building
open, effective, and accountable
institutions for inclusive development. In
this context, the GGP takes an inclusive
approach to governance issues by
concentrating on the fundamental







Paul Kinsinger and Karen Walch of the Thunderbird School

of Global Management.
MENA Economic Monitor 2015. Towards a New Social
Contract. The World Bank. By: Shantayanan Devarajan and
Lili Mottaghi. April.
OECD. (2011). State-building in fragile contexts: key terms
and concepts. In Supporting State-building in Situations of
Conflict and Fragility: Policy Guidance.
Resilience: a Trojan horse for a new way of thinking. By:
Frauke de Weijer. ECDPM Discussion Paper No. 139. World
The World Bank (2009) Policy Note was prepared by Louise
Cord, Marijn Verhoeven, Camilla Blomquist and Bob Rijkers,
with inputs by Vivek Suri.
Towards Human Resilience: Sustaining MDG Progress in an
Age of Economic Uncertainty. UNDP. September 2011.
Republic of Iraq, Public Expenditure Review: Toward More
Efficient Spending for Better Service Delivery. The World
Bank (2014).
Hessling, L. (2013), Water and the Arab Uprisings the
Human Right to Water and Sanitation in Post-Transition
The World Bank (2015a), Trust, Voice, and Incentives:
Learning from Local Success Stories in Service Delivery in the
Middle East and North Africa

Public Financial
Management (PFM)

Corporate Governance
& Financial Reporting (CGFR)

08 Performance-Based Budgeting
Strengthening External and Internal
Accountability along Service Delivery Chain

19 State-Owned Enterprises
Numerous Reform Attempts,
but Limited Results
21 Audit Committees
The Significance of Audit Committees in
Improving Governance in MENA



10 PFM Reform
Fragile-, Conflict- and
Violence-Affected Environments
22 Small & Medium Practices
SMP Quick Poll 2014 MENA

35 Overview
Centrality of Governance in
Sustainable Development

24 Integrated Reporting
Three Facts Every MENA Company Should
Know About Integrated Reporting

12 Procurement under
Public Private Partnerships
MENA Shares Global Knowledge

37 Interview
Mario MARCEL, Senior Director
Governance Global Practice
26 Sustainability Reporting
A Corporate Tool for Communicating
Sustainability Performance and Impacts

Public Sector
14 Procurement
A strategy to rebalance implementation
support and institutional development and
capacity building

28 Civil Service
Behaviour Bias

15 Pathways to Fiscal
Challenges and Opportunities

30 Rule of Law
Its all about the Politics
33 Anti-Corruption
Role of technology
in the Fight against Corruption





Why Governance Matters

Perspectives from
World Bank Management

51 Libya

69 Kuwait

A Snapshot of Public Investment

Management in Libya

Supporting Kuwaits
Capital Projects

53 Morocco
More than Ten Years after Moroccos
Family Code Reforms

70 Islamic Finance
Introducing the Newly Launched (IASB)
Consultative Group on Shariah-Compliant
Instruments and Transactions

55 Morocco & Tunisia

The Evolving Field of Audit Regulation
56 Libya
Helping Libya Build Strong, Effective and
Accountable State Institutions

70 Islamic Finance and the IMF

Role of the International Monetary Fund

74 Exchange
Integrated Reporting <IR>

43 Point-of-View
A Conversation about Governance
with the GGP Staff

59 Lebanon
Interview: Internal Audit Developments
61 Jordan
Working with Universities to Strengthen the
Accounting Curriculum in Jordan

46 Maarefah

Face-to-Face Meeting

81 Maarefah
81 Solutions Lab
82 Bootcamps

62 Egypt
Launching Program and Performance
Budgeting in Egypt

89 Books

Introducing the Governance Global

Practice to Governance Professionals
Across the MENA Region

Suggested New Books

65 KRG-Iraq
Interview: Supreme Audit Institutes
67 Iraq
Supreme Audit Institution Parlementary

93 In Their Own Words

Governance, Fragility and Conflict

Public Financial

PBB 08
PFM Reform 10
Procurement 12
Decentralization 15

Performance-Based Bugeting
Strengthening External and Internal Accountability
along the Service Delivery Chain
Senior Public Sector Specialist

Senior Public Sector Specialist
Strategic Objectives
Every year, governments across the MENA
region spend billions of dollars for the
provision of key public programs and
development. However, the results indicate
uneven outcomes across countries, sectors
and over time. Thus, both governments and
parliaments are now considering new ways
to: (i) improve the allocative efficiency of
scarce public resources to priority policies
and services; (ii) strengthen the operational
efficiency of public expenditures and
services; and (iii) improve the responsibility
and accountability for results across the
public sector. A forth objective is also gaining
momentum increasing fiscal transparency
and citizen voice/engagement in the
budgetary process. Demand for quality
public services and programs is increasing
even as governments operate in a fiscally
constrained environment. The public sector
is being asked to modernize its public
financial management systems in order to
strengthen fiscal sustainability, while at the
same time improving allocative and
operational efficiency and accountability for
results. In parallel, there is an increase in the
complexity of service delivery and financing,
further exacerbating the challenges of
existing management and accountability
frameworks. Performance-based budgeting
may be the answer, as it can help strengthen
both external and internal accountability

along the service delivery chain. In many

countries, the public service delivery
function suffers from weaknesses in the
accountability chain and information
asymmetry from planning to evaluation.
Citizens and their representatives in
Parliament have a hard time assessing the
link between policy priorities and
resources let alone the allocative
efficiency of the line item budgets. Ministries
of finance also have a difficult time assessing
the performance of service providers and the
efficiency of their expenditures. The
spending units of service providers often lack
visibility and flexibility regarding the
allocation of resources, which undermines
managerial flexibility and accountability for
results. Users lack information on the
services they are supposed to receive, as well
as the means to provide feedback to the
providers or the State. Performanceinformed budgeting is seen by many

countries as a potential lever to address

these weaknesses in the accountability
framework. It is seen as a way of improving
transparency and accountability regarding
the allocation and use of scarce public
resources. Indeed, it can help strengthen the
incentive for more efficient and effective
service delivery across the public sector.
However, international experience shows
that this requires strong fundamentals, as
well as a high level and long-term
commitment to reform, especially as the
public sector ship is not easy to steer. In this
context, public service users and taxpayers
(both citizens and firms) have an important
role to play in terms of demanding change
and providing feedback. Strengthening
budgeting and performance is a multidimensional
Therefore, it requires a holistic and
integrated approach over the medium term.
Performance budgeting usually includes the

following dimensions: strategic budget
program costing and budgeting; managerial
flexibility and responsibility of program
development of multi-annual performance
objectives and indicators (external and
performance monitoring and evaluation;
and information systems. Maximizing the
synergies of these mutually reinforcing
reform levers requires careful planning,
coordination and change management.
Experience shows that such complex reforms
require a sequenced iterative and adaptive
approach. Those involved in the process
should seek to avoid the capability trap1
during implementation or worse,
isomorphic mimicry,2 or giving the illusion of
Fortunately, there is a wealth of knowledge
performance budgeting, its components,
reform elements, and implementation
process knowledge and experience that
MENA countries can use.

countries where PFM systems are semiadvancedsuch as Lebanon and the United
Arab Emirates work can focus on themes
Frameworks, gaps in the budget system law,
multi-year budgeting, and complete Chart of
Accounts classification. The TP can also
support countries that are considered to be
the most advanced in terms of their PFM
systems, such as Morocco and Tunisia. For
these, the TP can engage in program
performance monitoring and evaluation, and
implementation support to the Ministries of
Finance as well as the line ministries.

learned). The TP will also provide

advice, expertise and knowledge
resources to colleagues from the
Governance Global Practice (GGP) and
other Global Practices in order to
respond to priority client demands.
Notably, colleagues can request TP
members to peer review their
operations that have a budgeting and
performance dimension. The TP will
also seek to develop and share
operational tools, guidebooks and
training material that might be used in
proposals or to help in deliverables.

The Performance and Budgeting Technical

Practice in MENA
The Bank set up a new Technical Practice to
foster this exchange of knowledge and
experience globally and within the region as
well. Bank teams and operations are now
better positioned to respond to client
demands in this area. Specifically, the work
will evolve around three dimensions:

Public Financial Management (PFM) systems

in the MENA region are at varying stages of
development, depending on the country.
Corresponding World Bank engagement
enables the Technical Practices (TP) to
provide technical support for each level of

Strategic priorities: The TP will

contribute to the World Bank regional
strategy and associated annual plans.
The TP will work very closely with
management to define the thematic

Knowledge exchange: The TP will

engage in the knowledge agenda, reach
out to experts and other Global
Practices in the World Bank, mentor
staff, and take part in relevant events
and activities. The TP will organize and
participate in internal and external
knowledge exchange events such as
Webinars, workshops and seminar
knowledge products. Further, it will
seek to develop a knowledge repository
on the subject matter. Such knowledge
activities will be closely coordinated
with relevant existing Communities of
Practice (CoP) and TPs, such as the
Global Performance and Budgeting CoP,
and the Performance Monitoring and
Public Investment Management CoP.
The TP will maximize synergies with
existing knowledge platforms and
instruments, such as Maarefah,
Connecting Voices and the Banks

For more information please contact the

Technical Practice coordinators: Fabian
Seiderer and Joey


development. For instance, in countries that

do not have the basics, the work of the TP
would focus on planning, guiding principles,
charts of accounts, economic and functional
classifications, a basic Medium-Term
Financial Framework, and the like. This
would be the case for most Gulf Cooperation
Council (GCC) and Mashrek countries. In


engagement: The TP will coordinate
with staff on the agenda design and
assurance through peer review, and
contribute to proposals (for example,
by sharing documents, providing
feedback, and transferring lessons

countries in the world remain in state

capability traps in which the capability of the state to
implement is both severely limited and improving (if at
all) only very slowly: at their current pace of progress
such countries would take hundreds (if not thousands) of
years to reach the levels of high capability countries.
Capability Traps? The Mechanisms of Persistent
Implementation Failure, Paper by Lant Pritchett, Harvard
Kennedy School, Michael Woolcock, World Bank, and
Matt Andrews, Harvard Kennedy School, Harvard
Kennedy School of Government. 2010. See:
2 isomorphic mimicry as a technique of failure: the
adoption of the forms of other functional states and
organizations which camouflages a persistent lack of
function. Capability Traps? The Mechanisms of
Persistent Implementation Failure, Paper by Lant
Pritchett, Harvard Kennedy School, Michael Woolcock,
World Bank, and Matt Andrews, Harvard Kennedy
School, Harvard Kennedy School of Government. 2010.


Public Financial Management Reform

Fragile-, Conflict- and Violence-Affected Environments
Mohamed YEHIA
Senior Financial Management Specialist

Senior Public Sector Specialist

Senior Public Sector Specialist

Fragile-, Conflict-, and Violence (FCV)affected environments share many of the

public financial management (PFM) reform
challenges encountered in other countries.
However, many issues tend to be more
pronounced, especially in the initial near
absence of technical capacity that face most
conflict-affected countries.
This article
briefly summarizes some of the principal
findings that have recently emerged. It also
reviews some drivers of PFM reforms in
fragile public administration environments
and seeks to address the question as to
whether public financial management
reforms are merely a luxury or a necessary
precondition for enhancing stability.
Most conflict-affected countries are
characterized by low state capacity,
depleted social capital, and a lack of
accurate information and data.
In the aftermath of conflict, the short-term
objectives of assistance are generally
directed toward supporting the political
settlement, setting in motion the beginning
of an economic recovery, and laying the
development. Under such circumstances,
the gradual rebuilding of institutions and
establishment of systems are crucial in
enabling economic recovery, restoring
political stability and reducing the likelihood
of renewed conflicts. In addition, laying the
foundations for governance and anticorruption measures is indispensable in
restoring public trust in the state. In this
context, the appropriate sequencing of
reforms is critical to the successful
restoration and long-term sustainability of
reforms. The primary core functions (that
are necessary but not sufficient) that need to
be reestablished in a post-fragile /conflict
/violent environment include: coordination
at the national (central) government level,
development and improvement of public
financial management, re-establishment of

the civil service and public administration,

and local governance reforms.
Countries in relatively early conflictaffected periods have a valuable window of
opportunity for incorporating improved
public financial management operations.
The momentum created in the aftermath of
conflicts can be more conducive to launching
reforms. The openness observed at such
times represents an opportune time to
advocate for transparency, participation and
accountability. However, progress will
generally be uneven. For example, in
middle-income countries that still have a
relatively high level of political volatility,
there is an opportunity for PFM reforms, but
the high degree of volatility means that
progress may be more limited (for example,
Libya). Figure 1 presents a matrix regarding
the potential contextual features of PFM
interventions in countries that fit different
parameters of fragile and conflict-affected
Conflict-affected situations can offer a
window of opportunity for reforms related
to budgetary formulation and execution.
However, while budget accountability is
regarded as very important in bolstering
state governance legitimacy, this aspect of
the budget cycle is most dependent on a
broader political commitment, as well as on
the wider functioning of checks and balances
in the system. Remedying key weaknesses in
the primary PFM structures and systems is a
critical and necessary feature for every

especially because government revenues fall
significantly during civil conflict (IMF 2004).
General misuse of public financial resources
will undermine the credibility of any newly
installed government, as well as impede the
recovery of the private sector.
Can public financial reform processes
continue to take place in an environment
where political dynamics are in continuous
There are two broad schools of thought on
the matter of how rapidly reform progress
can be made even under the best of
circumstances in post-conflict environments.
Schick (1998) and others emphasize the
difficulty of short-term reforms, and the
need for internally consistent basic budget
structures that reflect their equally basic
public sector context. A second school of
thought looks at PFM reforms as having a
relatively clear end point that is achievable
within the scope and timeframe of
contemporary budget reforms. The IMF
(2004) affirms that fragile states must follow
a three-step sequence, starting with a
reformed legal framework, then establishing
a strong central fiscal authority, and finally
designing appropriate fiscal policies.
A critical feature of public financial
management intervention in FCV-affected
environments is to achieve a measure of
expenditure control, especially in low
capacity situations.

transparency and building stakeholder
interests; and

The choice of public financial

management measures should be
dictated by the conditions on the
ground, but also significantly flexible to
(UN/World Bank, 2014). FCV-affected
environments call for an unusual
degree of inventiveness, creativity, and
patience in implementing public
financial management reforms, while at
the same time respecting the
established principles of good fiscal and
expenditure management.


In environments with more adequate

capacity, where a primary expenditure
control system exists or has been
implemented, additional public financial
management features including the issues of
resource allocation and operational
efficiency can be added. In FCV-affected
environments, public financial management
reforms are a necessary pre-condition for
building national stability. However, in
environments that remain unstable, a focus
on PFM options should be limited to
measures that can yield very short-term
tangible results. Opportunities are likely to
be limited to only selected aspects of the
budget cycle (execution and/or preparation).
As such, PFM reforms should be very
targeted and limited with the expectation of
achieving only modest success.

Introducing an orderly budgetary process in

FCV-affected states has revealed a number
of core guiding principles:

It is essential to be selective (and

gradual) in introducing budgetary
reforms in an environment of low-levels
of information and high levels of
uncertainty. Introducing too many
reforms at once can risk loss of
credibility (World Bank, 2011);

The limited capacity in many FCVaffected states, whether high or low

income, requires that public financial
management interventions be simple.
Simple systems are more conducive to

Allen, R. 2009. The Challenge of Reforming Budgetary

Institutions in Developing Countries. IMF Working Paper
09/96. Washington, D.C.
DFID (Department for International Development, UK).
2005. A Platform Approach to Improving Public Financial
IMF (International Monetary Fund). 2004. Rebuilding Fiscal
Institutions in Post-conflict Countries. Fiscal Affairs
Department. Washington D.C.: IMF. Available at:
Schick, A. 1998. A Contemporary Approach to Public
Expenditure Management. Washington, D.C.: World Bank.
United Nations and World Bank. 2014. Rebuilding Core
Government Functions in the Immediate Aftermath of
Conflict: Key Issues and Priorities.
World Bank. 2013. Beyond the Annual Budget A Review of
Global Experience with Medium-Term Expenditure
Frameworks. Washington, D.C.
________.2012a. Public Expenditure Reforms in PostConflict Countries-Synthesis Report. Washington, D.C.
Management in Post-Conflict Countries-Synthesis Report.
Washington, DC.
________.2011. Conflict, Security and Development. World
Development Report. Washington, D.C.

Figure 1: Public Financial Management Dimensions in Fragile-, Conflict- and Violence-Affected Environments

High Reform Commitment
(High Incentives)

Middle Income

Intermediate Reform
(High Volatility)

Low Reform Commitment

(weak Incentives)

Low Income

Substantial opportunity to engage in

various public financial management
National Government can lead these

Traction only with a few key areas in PFM

Reform steps with shorter implementation
periods are likely to be more successful.
Long-termreforms are unlikely to be

Government likely to accept only limited

support for PFM reforms.
Limited traction and sustainability for any
Building stakeholder interests in and
appreciation for PFM Reforms are
necessary preconditions.

Source: World Bank, 2012a and author compilation.

Opportunity to engage in a number of PFM

Shared sovereignity arrangements may be the
most appropriate path.
Stop gap measures likely to be needed.
Shared sovereigity arrangements not only
desirable but required to engage in reforms.
Reforms likely to be difficult and should focus
on shorter implementation measures.
Government likely to accept PFM reform
assistance in order to obtain donor financing,
but reforms may not gain long-term traction.
Building stakeholder interests and
appreciation for PFM reforms are necessary


Procurement under Public Private Partnerships

MENA Shares Global Knowledge
Nazaneen Ismail ALI
Senior Procurement Specialist

Procurement Specialist

Procurement Specialist
Introduction: This article highlights the key
lessons learned from the workshop entitled:
Procurement Under Public private
Partnerships (PPP): A Learning Event for the
Water and Energy Sectors, held in Beirut,
Lebanon on October 13-15, 2014. The event
was organized by the Governance Global
Practice Team at the World Bank Office in
Beirut in coordination with the Public-Private
Partnership Cross Cutting Solutions Area
(GPCDR-PPP-CCSA). The event provided a
platform to expose clients to best practices
on PPP procurement, particularly in projects,
sectors, and countries with upcoming PPP
operations, as well as in countries that are
exploring the possibility of utilizing PPP
arrangements and are interested to learn
more about the approach and the legal
framework to support it.
Responding to client needs: The workshop
had its roots in the efforts of the Kurdistan
Regional Government (KRG) of Iraq to
modernize its legal framework for
procurement. This has been a long-term
engagement between the KRG and the
World Bank, as part of the Iraq Technical
Assistance and Capacity Building Fund
(TACBF). The program aims to build capacity
and develop practices to bring about more
efficient and effective management and use
of Iraqs public resources. Over the course of
this dialogue, PPPs emerged as an area of
particular interest and importance for the
KRG. The government viewed PPPs as a
critical opportunity to close both funding and
capacity gaps by collaborating with the
private sector to deliver needed public
services and infrastructure.
However, the KRGs current legal framework
does not provide an adequate foundation to
establish these kinds of long-term
partnerships and contracts. Understanding
the complexity of the subject and task, the
KRG Ministry of Planning made a formal
request to the World Bank for support on
this important topic. The KRG government
was interested in learning from international
examples of legal provisions for PPP
procurement. They also requested support

on capacity building for public officials in

various KRG ministries who would be
responsible both for writing the KRGs new
procurement law and regulations and for
implementing future PPP projects particularly in the water and energy sectors.
In responding to this request, the World
Bank Team surmised that the KRG was likely
not the only client facing challenges in
designing or updating their procurement
system to facilitate PPPs. Recognizing that
other clients and staff could benefit from this
event, the team decided to extend the
invitation to a global audience. Within just a
few weeks, the workshop organizers
mobilized a diverse team from across the
Bank and the world to convene in Beirut. The
workshop featured participants and
presenters from India, Indonesia Lebanon,
Pakistan, Sri Lanka, the United Arab
Emirates, staff from Washington D.C., and
included government officials currently
working on PPP tenders and legislation from
Yemen, Lebanon, and Iraq, including from
both Baghdad and Erbil.

A One World Bank Group Event: Given the

crucial role that governance arrangements
play in the successful execution of PPPs, the
team brought in expertise to facilitate
collaboration across different parts of the
World Bank Group. Nazaneen Ismail Ali,
Senior Procurement Specialist in the Public
Integrity and Openness (PIO) Department of
the Governance Global Practice (GGP) led
the preparation and delivery of the
workshop from Beirut, in close coordination
with Mark Moseley, Lead Counsel of the
Public-Private Partnership CCSA.
International Finance Corporation (IFC) also
played a major role through their PPP
Advisory Services Division, represented in
Beirut by Carrie Farley, Senior Investment
Each collaborating group brought diverse
and valuable perspectives to the discussion.
The GGP-PIO staff shared their expert
technical knowledge on good procurement
practices, as well as lessons from their reallife
challenging legal frameworks and complex
procurements. The IFC brought a keen
understanding of the market, what attracts

investors, and extensive client-facing
Sameh Mobarek, Senior
Counsel in the Energy & Extractives Global
Practice added a unique view that integrated
his PPP experience (including in the Morocco
Noor solar project) and combined legal and
power engineering training. The PPP CCSA
knowledge of PPP and sector legislation and
regulation. The CCSA also shared valuable
resources with participants, including their
PPP Infrastructure Resource Center (IRC)
data base which features sample publicprivate partnership (PPP) agreements and
concessions, checklists, sample clauses,
terms of references, risk matrices, standard
government agencies and sample PPP
legislation. Finally, the staff of the MENA
region hosted the event, and provided
information to make the learning more
concrete for the participants.
The Importance of PPP for the MENA Region:
This workshop came at an important time for
MENA countries. Meeting the exponentially
growing demands for infrastructure will
continue to strain the pocketbooks of MENA
governments in the coming years.3 In the
infrastructure investment for electricity
alone is estimated at US$ 130 billion by
20205. Quite simply, the public budget will
not be able to meet these needs by itself.
Therefore, PPP is becoming an important
project financing option for governments in
MENA to respond to the large financing
needs to improve infrastructure and service
delivery in water, energy, transport, solid
waste management and others. In some
cases, the public sector budgetary
constraints can mean that the only
alternative to a PPP project is no project at
However, the infrastructure financing gap is
not the only reason why governments in
MENA have started to think more seriously
about PPPs. PPPs are often more effective
than traditional projects in delivering ontime and on-budget project implementation.
A European Investment Bank study found
that only three of ten PPP projects financed
by the Bank experienced time delay and cost
overruns (which were borne by private
contractor). In comparison, 60% of the 50
public infrastructure projects under
conventional procurement were more than
one year late.6 Similarly, a study of 50 large
public procurements in the UK found that
capital expenditure for the PPPs in the
sample was only 1% over budget, on
average, compared to an average cost
overrun of 47% for traditional procurement.7
Given this context, its not surprising that
MENA countries like Jordan, Morocco,
Oman, and Saudi Arabia have embarked on,

implemented PPP projects. Today we see
other countries like Egypt, Iran, Iraq and
Lebanon actively pursuing private sector
investment in infrastructure.
Unfortunately, though, many governments
in MENA have faced obstacles to successfully
procuring PPPs, including a lack of technical
know-how to implement these complex,
long-term arrangements, and outdated legal
and regulatory frameworks. Systemic
governance challenges are also prevalent,
and lack of transparency can open doors to
corruption as well as major delays and
inefficiencies. When the private sector
perceives that the system is not open and
fair, they are less likely to participate in the
bidding process. In 2010 an IFC Survey of PPP

investors in Africa found that the

investment was the primary factor affecting
the decision to pursue investment
opportunities in a particular country, ranking
above even the political and economic
stability of the country.1
Tailoring the Workshop to Realities on the
Ground: The Arab Spring opened up the
possibility of revamping the traditional ties
between the state and businesses and
establish a level playing field2 So far,
however, the current political and economic
environment has not been conducive to
attracting private investors to MENA. The
uncertainty and insecurity in the region
makes it more difficult to establish adequate
risk management frameworks and secure
the long-term commitments necessary to
engage in PPPs. This is particularly true in a
country like Iraq, which made it especially
crucial that the workshop in Beirut was
tailored and responsive to these unique

Since the event focused on procurement

Partnerships (PPP), the sessions aimed to
help participants better understand PPP as a
public procurement method and explain
how to create a competitive and fair process.
As requested by the KRG Government, the
workshop included comparative examples of
different legislative, institutional and
regulatory arrangements for procurement,
as well as commentary on the differences
between PPP procurement and conventional
public infrastructure projects. Thanks to
Sepehr Fotovat (Senior Procurement
Specialist), participants also learned about
the different private sector arrangements for
infrastructure projects such as Build, Own
and Operate (BOO), Build, Own and Transfer
(BOT); and Build, Own, Operate and Transfer

(BOOT). Other sessions focused on a general

approach to preparing and tendering PPP
transactions, as well as on prioritizing
different infrastructure projects and how to
determine which ones might be suitable for
To illustrate these practices, a number of
different case studies were presented from
the World Banks portfolio in the MENA
region and beyond, as well as external
examples. These included both PPP Success
Stories, plus instances in which PPP
arrangements had failed to bring about the
desired results. The two principal cases
featured were the Morocco - NoorOuarzazate Concentrated Solar Power Plant
and the New Cairo Waste Water Plant.
Anand Kumar Srivastava, PPP Nodal Point on
the Procurement Team in Delhi, India, also
shared Indias mixed experience with PPPs in
water and energy over the past decade and
a half, including both operations financed by
the Bank as well as projects funded through
other means.

The Road Ahead: This workshop was only the
beginning of a long work plan ahead for the
KRG. Implementation of PPP procurement
will have to be systematic and gradual,
starting with the current commitment to
promulgate a proper legal framework. To
ensure success, public officials will need to
recognize the potential need for private
participation, familiarize themselves with
other countries experience and establish a
national capacity building program on how
to plan and implement PPP agreements. All

of this would have to take place with a keen

focus on transparency and accountability.
This is crucial to ensure that the expansion of
the role of the private sector in delivering
needed infrastructure and public services is
successful and sustainable.


4 The Mashreq countries include Iraq, Jordan, Lebanon,
and Syria.
5 Over the Horizon: A New Levant.

A strategy to rebalance implementation support and
institutional development and capacity building
Yolanda TAYLER
Practice Manager, PIO, GGP
In August 2014 the Public Integrity and
Openness Department (PIO) of the
established a Task Force to design a
comprehensive and actionable strategy to
rebalance implementation support and
institutional development and capacity
building. The Transition Strategy is a
culmination of dialogues, contributions, and
advice from World Bank colleagues. It is bold
and ambitious while remaining grounded in
reality and what is feasibly possible. It seeks
to demonstrate that procurement is a
powerful tool that, when executed well, can
have profound, positive repercussions for
governance and inclusive economic growth
in countries. The Transition Strategy
envisions that this will be realized through
Engagements and creating Global Talent
Pools (GTPs).

The ideas set forth in the Transition Strategy

are under the backdrop of the four trends at
the World Bank: the new twin goals, the new
structure which allows for a global approach,
the emphasis on output and results-based
aid, and the new Procurement Policy
Framework. This is an opportune time to
implement the Transition Strategy! The Task
Force developed four Transformational
Engagements, or thematic areas, that are of
high impact and unmet client demand. The
Performance Measurement and Data
Analytics; e-Procurement and Value from
Innovation; and Open Contracting. For these
to be truly transformational they need to be
operationalized in projects to ensure a more
sustainable approach to capacity building
and institutional development.
Global Talent Pools will be comprised of staff
with technical expertise in certain thematic
areas who will be deployed either physically
or virtually on an as-needed basis to help
projects overcome obstacles. The thematic
areas will be determined with due

consideration of the needs and demands of

the GPs. The technical skills needed will likely
align with those of the Transformational
Engagements but will be adjusted as needed.
Engagement with the GPs at the technical
and senior level is critical to informing which
thematic areas the GTPs will include and to
Engagements. For the GPs, working on these
issues can result in better delivery of
projects, since both are aimed at improving
procurement in client countries. And, how
well procurement works in a client country
has a direct impact on how successful a
project is delivered.
Engagements and creating Global Talent
Pools, and making sure that they are
mainstreamed in Bank projects, will result in
a wholesale, sustainable approach. Stay
tuned for more updates and the positive
impact were having!


Payhways to Fiscal Decentralization

Challenges and Opportunities
Senior Financial Management Specialist

Financial Management Specialist,

Resident Advisor

Fiscal decentralization is the empowerment

of people through the empowerment of
their local governments to services. It is
about the central governments passing
budgetary authority to elected subnational
governments in the form of the power to
make taxing and spending decisions. 1 Does
decentralization thrive amid political and
economic challenges? An old question gains
momentum within the changing context of
the MENA region. At the strategic level, new
draft and amended constitutions in Egypt,
Morocco, Tunisia and Yemen enshrined
decentralization and created the framework
for implementation. Do countries take the
same pathways to decentralization? A wellknown principle is that decentralization
reform and sequencing must be tailored to a
countrys circumstances.

To determine the countrys pathway, one

must answer questions such as these: Why
decentralization? What to decentralize?
When to decentralize? How to decentralize?
The success of decentralization depends on
a comprehensive approach to political,
administrative and fiscal aspects.2 Designing
and implementing decentralization is a
complicated process as it is multidisciplinary,
comprehensive, and involves multiple
stakeholders. It could also be risky as it could
cause potential problems such as
regional inequality and conflicts, declining
service levels, increased corruption and elite
capture. Therefore, developing a design and
implementation strategy is critical and the
result must be country specific. In practice,
decentralization is very diverse, and
pathways may have similar triggers and
threats depending on the countrys
development status, as illustrated in Table 1.

What is the relevance of decentralization in

the context of post Arab Spring in MENA? Is
Decentralization the appropriate solution?

Most of the literature supports the argument

that decentralization reforms improve the
efficiency, effectiveness and accountability
of local governments. Indeed, most experts
argue the same is applicable to the Arab
Spring Countries and that this may be the
only way to stabilize such countries.
However, some argue that such reforms
have been pushed by international
organizations and experts without taking
into consideration the countrys history,
current governance structures and complex
political economy. Mr. Farea Al-Muslimi, a
Yemeni activist and journalist, published an
article on The unwarranted embrace of
decentralization - Ulterior motives threaten
the viability of a federal Yemen. In it, he
emphasizes that the decision to transform
Yemen into a federal state was not based on
a comprehensive assessment or a strategic
approach. He gives an example of the
tensions that led to the recent issues in
South Yemen, posing the question about
whether it was due to an overly centralized
government. Specifically, he believes that
land disputes, military officers fired from
their jobs, local identities quashed and a
whole host of other issues played a more
important role. He concludes that as the
conversations around federalism continue, it
will be important to keep in mind that
governing a territory as large and complex as
Yemen will require much more than mere
economic and political challenges facing
Yemen and other states in the Arab region
will not be resolved by a simple move to
decentralize power. Dr. Yossef Ben-Meir, in

an article entitled Decentralization is Key to

Implement Community Development in Arab
Spring Countries, notes that while
governments may be reluctant to
decentralize out of a concern that this
process could promote secession and
become a cause of conflict, more often it is
precisely the lack of empowerment in
decision-making at the local level that
heightens political resistance, tension and
sectarian conflict and violence.
Would the conflicts that exist in some of the
MENA countries be fewer or even absent
had the governments adopted a
decentralized system before 2011?
As unachievable as it seems at the present
time, decentralization of power to subprovincial levels, that is, as close to the
people as possible, appears to be the only
viable way for citizens to feel more in control
of their lives. A form of legitimate local
autonomy within an overall context of
national sovereignty could have the effect of
decreasing the violence and conflict. Taking
the case of Yemen as an example, both
arguments made by Al-Muslimi and BenMeir though they appear to be
conflicting are actually saying similar
things. In essence, if the decentralization
efforts which started in the year 2000 in
Yemen had been implemented effectively, it
is possible that Yemen would have been in a
better situation to deal with the events of
the Arab Spring as many of the triggers
would have been mitigated through

Table 1: Fiscal Decentralization in Developed, Developing and Fragile and Conflict Countries

Triggers for




Fragile &


Efficient and effective service

delivery is the main concern.
Reflects citizen empowerment.
Financial accountability.

Driven by need to address

national equity and
marginalization issues.
Need for acceleration of
economic development.
Citizen demands and
empowerment of civil society.
Service delivery benefits are not
reaching to the lowest levels
(for example, villages), so
improving access to service
delivery is the concern.
The need to manage newlydiscovered natural resources

Driven by the need for cease

fire management.
Having a large number of
powers negatively impacting the
countrys development.
Pressure from international


Likely to follow normative approach.

The principle focus is on administrative and
fiscal decentralization.
Deliberate and structured.
Timeline to implement is relatively efficient.

Low public participation.

Abuse of discretion.

Likely to follow normative approach.

National debate is critical due to the contested
nature of issues and the need for consensus.
Most likely will require constitutional change.
Likely sequencing would start with political
and fiscal decentralization.
Decentralize expenditure allocation first; then
heavy reliance on intergovernmental transfers
with limited borrowing allowed.
Timeline is relatively long.
Deconcentration helps maintain service
Critical to establish governance of local
government and budget rules.

Capacity concerns.
Elite capture and devolved
Issues with Finance Follows
Function and unfunded
Contest and confusion over
functions and mandates.
Low taxing powers as threats to

Not likely to follow normative approach.

Debate is conducted between power elites
with heavy involvement of regional and
international stakeholders.
Likely to start with political decentralization
and a focus on revenue allocations.
Likely motive is to decentralize authority and
powers within a unified country.
New or amended constitutions are expected.
Critical to start enforcement of rule of law.
Best to decentralize to the lowest levels
possible as opposed to regions.

Could cause return to violence

and further separation of the
Temptation to continue political
decentralization alone by keeping
political elite content.
Perverse incentive not to grow

Source: Drawn from Duke University, Sanford School of Public Policy,

Fiscal Decentralization & Local Government Financial Management (PFD) Program.

Decentralization Experiences and

Challenges: The Case of Yemen
Decentralization efforts started in the year
2000 when the Local Authority Law was
passed. The idea was to translate the
principles of decentralization and the
general framework of the local authority as
prescribed in the countrys Constitution at
the time. The Local Authority Law of 2000
sought to fiscally decentralize the Yemeni
government by increasing local budgetary
autonomy. The law provides for local
authorities to keep revenues collected at the
local level. Portions of monies collected by
the central government will be distributed to
districts based on population density. As a
result of the Local Authority Law and its
bylaws, local administrative units were given
fiscal powers and authorities which define
the scope and nature of their expenditures
and sources of funding.

Key challenges of the Yemeni

decentralization experience of the year
Yemen faced a number of challenges in
decentralization including:

Lack of a comprehensive strategic

vision for the transition into a
decentralized system.
Lack of country resources and poor
investment environment for both local
and foreign investors.
Lack of a good governance system,
including a judicial and courts system.
Lack of a good land management
Poor citizen awareness of the
decentralization system and the roles
and responsibilities of both the citizens
and the Government which is one of
the major factors in ensuring a
successful implementation of a
decentralized or even a centralized
The intervention of some traditional

tribesmen and their leaders in the work

of the local government.

Although the local administration law

supersedes others laws, it conflicts with
a number of other laws resulting in poor
collaboration between local and central
government, a duplication of roles and
responsibilities and a complicated
governance structure.

Yemens Transition into a Federal Regime

As a result of the challenges of the 2000
decentralization experience and the recent
political upheaval, Yemens pathway to
decentralization is following the fragile and
conflict approach. The speed and
effectiveness of Yemens transition to
federalism will depend heavily on the
political agreements and attendant
availability of appropriate funding for the
newly-devolved governments. Plans to
create a federal Yemen will require a major
effort to clarify the current fiscal

expenditures), as well as developing better
systems for their management. While there
have been a number of reform efforts
conducted in conjunction with the World
Bank and the International Monetary Fund,
more work will be required to restructure
the country into a federal system.

Doing so will require consideration of the

philosophy of fiscal federalism and issues
such as fiscal discretion and accountability at
the local levels. Capacity building for public
financial management at the local levels

The Palestinian Territories Case

Local governments in the Palestinian
Territories have a long history, and actually
predate the establishment of the Palestinian
Authority (PA). Indeed, some Local
Government Units were created as early as
1950. Over decades, these local authorities
performed governing tasks under the
complexities of different political and legal
regimes. In historical Palestine, there were
22 local councils under the British Mandate
(1920-1948). During the Israeli occupation,
Palestinian municipalities were the only
administrative institutions that were allowed

to provide better services to their citizens.

The World Bank and other development
partners support local governments in the
Palestinian Territories in improving basic
local infrastructure and services. For
example, the Municipal Development
Program, managed by the Municipal
Development and Lending Fund (MDLF),
provides investment funds to municipalities
through a transparent performance-based
municipalities qualify for a higher share of
funds and capacity building in line with their
administrative, service delivery, and financial
performance. However, despite this support,
local authorities continue to face significant
investment needs. Although the 135
municipalities have access to funds provided
by the MDLF, no systematic funding
mechanism exists to finance investments in
small Local Government Units, that is, Village
Councils. Village Councils cannot access
funds under the MDP. This leaves a funding
gap for the 243 villages and marginalized
communities. At the same time, it would not
be viable to continue approaching these
small communities without a special
emphasis on leveraging economies of scale.
The majority of villages are too small, with an
average population of less than 3,000. This
makes it difficult to provide core local
infrastructure services in an efficient and
financially viable manner.

Key Challenges for Palestinian Local Service

must be a priority. To succeed, the
philosophy of fiscal decentralization must
also be embraced by the national
government. It is inevitable that most
revenues will be raised by the central
This means that all
governmental levels will have a joint interest
in a more efficient, effective and transparent
tax regime, especially given the fall in
petroleum revenues. A system for allocating
revenues to the regional governments will
need to be developed. It can include some
combination of tax sharing, unconditional
fiscal transfers and conditional fiscal
transfers. The formula for sharing petroleum
revenues is especially sensitive. The sharing
issue will focus attention on the current
structure of government spending. The local
governments will press for more funds for
their responsibilities, which will in turn put
pressure on the central government to
address problematic areas, such as
overstaffing and subsidies. Decisions will
also need to be made on the restructuring of
the civil service, with significant numbers of
those now employed by the central
government being transferred to the local
levels. This will pose additional challenges,
including obligations to take unwanted staff
and dealing with the ghost worker

to officially exist and function. After the

signing of the Oslo Agreements in September
1993 and following the establishment of the
first Palestinian central government
administration, the Ministry of Local
Government was created in 1994. After its
establishment, the role of the Ministry of
Local Government was to increase the
territorial administration under the PAs
autonomous control with a particular focus
centers and
communities adjacent to East Jerusalem.
After Oslo, local governments were
particularly weak and their legitimacy was
undermined, as many Palestinians viewed
them as a legacy of the occupation forces.
The political and geographic fragmentation
of the Palestinian Territories in connection
with the implementation of the Oslo
Agreements has meant that local
government units play a predominant role in
service delivery, especially in areas where
the relatively young central government was
politically, geographically, and fiscally
constrained. Today, there are 378 Local
Government Units in the Palestinian
Territories, out of which 353 are located in
the West Bank (110 municipalities and 243
villages), and 25 in Gaza (all municipalities).
At a 74 percent urbanization rate, Local
Government Units face increasing pressures

The large number of Local Government

Units makes it difficult to achieve
economies of scale in service delivery.

No consistent
structure exists.

There is a lack of vision for viable and

sustainable service delivery at the small
Local Government Unit level.

Quality and access to services remains

an issue in small Local Government

The current Local Government Unit

consolidation approach progressed
with only mixed results. There is a
shortage in the availability of land for
physical and spatial planning and local
economic development.



The Case of Egypt

Although Egypt is known as a highly
centralized country, the concept of
decentralization has always been a part of
the political scene. The constitutional
amendment introduced in 2007 to Article


162 in the Chapter on Local Administration

assured the direction of a movement in
political power to the local administration. It
requests a change in the pertinent law to
fulfill this requirement. Could the dynamics
now in Egypt be seen as a thrust toward the
strong reemergence of this concept? This
could be taken as an opportunity as much
as it also creates challenges. The surge
toward decentralization is based on high
expectations regarding the public voice to
bring government accountability as close as
possible to the citizenry.
Decentralization is regarded as a political
instrument for power sharing, as well as a
means for improving service delivery.
However, striking the proper mix between
these two overarching targets is a real
challenge. Additionally, most of the Arab
societies have not experienced a strong
deconcentration, whereby power is shared
vertically within the central government
between the center and the peripheries. This
makes the horizontal share of power
between the central government and local
councils representing their communities a
true shift not just in the mode of
management, but also in governing. This in
turn raises many questions about
sequencing of reforms. Is it better to start
with a fully functioning deconcentration?
What would be the reaction of the political
parties? Or would it be preferable to begin
immediately with devolution so as not to

lose the momentum? What complicates the

dialogue more is the presence of parallel
stakeholders (for example, the private
sector, civil society, non-governmental
organizations [NGOs]) operating side by side
with the government? Thus, central and
local governments are not the sole players in
the decentralized framework. Elsewhere in
the new democracies of Eastern Europe, for
example, a European Union assessment
noted that for decentralization to deliver
results, local governments should be capable
of engaging with both the private sector and
the civil society.
The new 2014 Constitution, as well as the
revoked 2013 Constitution, positioned
decentralization prominently in separate
chapters with elaboration of fiscal and
political decentralization. Local councils are
to be empowered with the capacity to raise
local revenues in addition to receiving
intergovernmental transfers to fulfill their
roles and responsibilities in local service
delivery. Administrative decentralization
was not explicitly addressed. Market
decentralization, which set the wider
institutional relationship between local
governments and the private sector and civil
society, including NGOs, was not
addressed despite the 2014 Constitution
and chapters recognizing the importance of
the private sector to growth and
employment. Also, it acknowledges the role
of civil society. It is not clear whether this is

a new direction that emerged along with the

Arab Spring. The concept has been always
there, with different understandings and a
variety of applications.
In conclusion, although different countries
may have different triggers and pathways for
decentralization, some things are common
across the board including the citizens
demand to have a say and participate in the
process of budget allocations, monitoring
and use of public resources. The best way to
respond to this need is to bring the
government closer to the people through
fiscal decentralization.

The Pillars of Fiscal Decentralization, Roy Bahl,

December 2008.
2 See Boex and Yilmaz, An Analytical Framework for
ssessing Decentralized Local Governance and the Local
Public Sector, Urban Institute, IDG WP 2010-06.
3 Deconcentration of decision-making and service
delivery powers within a Ministry.
Deconcentration, which is often considered to be the
weakest form of decentralization and is used most
frequently in unitary states-- redistributes decision
making authority and financial and management
responsibilities among different levels of the central
government. It can merely shift responsibilities from
central government officials in the capital city to those
working in regions, provinces or districts, or it can create
strong field administration or local administrative
capacity under the supervision of central government
ministries. See:


Corporate Governance
& Financial Reporting

State-Owned Enterprises 19
Audit Committees 21
Small & Medium Practices 22
Integrated Reporting 24
Sustanability Reporting 26

State-Owned Enterprises
Numerous Reform Attempts, but Limited Results
Public Sector Analyst
The MENA region has seen the rise and fall
(and rise again) of State-Owned Enterprises
(SOEs) beginning as early as the 1950s. SOEs
play a dominant role in the region,
accounting for 20-25 percent of economic
value added and close to 30 percent of total
employment. SOEs span a wide array of
sectors including tourism, manufacturing,
transport, banking, public utilities, and retail,
to name a few.
Given the central and strategic role that SOEs
play in the social, political, and economic
fabric of the region, maximizing their
performance and efficiency could be a
potential entry point to addressing
challenges, such as high unemployment,
limited fiscal space, and lack of
competition all of which have been
exacerbated since the Arab Spring.
With regard to assessing performance and
efficiency, the latest World Bank study looks
at the governance structure of SOEs in four
MENA countries: Egypt, Iraq, Morocco, and
The study analyzes the legal and institutional
framework of SOEs along four of the
Organization for Economic Co-operation and
Development (OECD)-formulated corporate
governance guidelines:

Transforming the states role from

management to ownership;
(ii) Increasing SOE autonomy vis--vis the
state in the areas of staffing, public controls,
and procurement;
strengthening the role of boards of directors;

(iv) Increasing transparency

financial reporting /disclosure.


In theory, these good practice guidelines

are meant to make SOEs operate in a more
competitive and accountable manner,
limiting discretion and opportunity for
political interference.
Many reform attempts have taken place in
the past decade. (See Table 1). Along the
lines of these 4 guidelines, Morocco has
transparency, the professionalization of
SOEs, monitoring, and the provision of more
autonomy to some SOE management. By
contrast, Egypt, Iraq, and Tunisia have not
improved much, despite some reforms on
paper. Indeed, they continue with a
governance style characterized mainly by
strong political interference and opacity. In
this context, States intrinsically continue to
manage and monitor SOEs without a

permanent or well-staffed structure. Most

SOEs suffer from limited autonomy from the
State. The powers of the boards of directors
remain limited, despite corporatization and
ample board mandates on paper. Likewise,
transparency and disclosure of information
remain limited. It is important to note that
when operating in a low governance
environment, which is the case for most
MENA countries, it is difficult to empirically
link economic and social efficiencies with
good SOE governance practices, as indicated
in the OECD guidelines above. For example,
it is less likely that increasing transparency
on subsidies or performance contracts will
improve SOE spending efficiency if no real
civil society environment exists to scrutinize
the information, or if political interference
prevails over any changes in disclosure

Moreover, in the MENA region, most SOEs
operate in a noncompetitive environment
and derive part of their revenues from a
monopoly situation. There is no pressure to
performance. Even given a monopoly
situation, many SOEs still operate at a loss
due to a vicious circle whereby a poor
governance system results in poor public
resource management. This can lead to
strengthened political controls, divesting
managers of responsibilities and further

recapitalizations and/or subsidies would
then be given to keep SOEs afloat despite
the weakened financial and economic
situation and inefficiencies so the State
can achieve its social or political objectives.
In terms of a way forward, one must take
into consideration the broader political
context of operations, in order to make
reforms effective. It is important to avoid
institutional mimicry, whereby there is a
gap between what is on paper and what is

actually implemented. Mimicking private

sector practices is unlikely to succeed. As
long as politicians continue to interfere in
SOE management to generate employment,
subsidize parts of the population directly (or
indirectly) to win votes and popular support,
or interfere in public procurement, reforms
will probably not have a strong impact on the

Table 1. Study Findings of Country Practices following OECD Guidelines (in law and in practice)



1. State as Owner
(a.) Central permanent structure monitoring SOEs
(b.) Frequent Reporting on SOEs
(c.) Performance contracting between the State and SOEs
(d.) Monitoring of contracts
2. SOE Autonomy vis-a-via the State
(a.) Did not increase employment substantially in the last 2 years
(b.) No frequent recapitalizations or cross-subsidies
3. Corporatization and Boards
(a.) Independent board members
(b.) Board decisions not legally subject to minister's approval
4. Transparency and Disclosure
(a.) Financial statements published regularly without delays
(b.) Annual published reports on SOEs
Partial Implementation

Figure 1: Share of Total SOE Losses as a Share of Gross Domestic Product (GDP) in Selected MENA Countries





Egypt, Arab Rep.




Source: Authors calculations from World Bank (2015), Governance Reforms of SOEs in MNA: Limited Results Despite Numerous Reforms.
Note: Figures for Egypt, Iraq, and Morocco are for 2011; for Tunisia, 2007.


Audit Committees
The Significance of Audit Committees
in Improving Governance in MENA
Financial Management Specialist

Senior Risk Management Specialist
Audit committees, a common practice in the
private sector, central banks and stateowned enterprises (SOEs), play an important
role in effective governance.
strengthen oversight of financial reporting,
external and internal auditors, internal
control, risk management, and compliance.
Public sector entities have been establishing
audit committees or similar oversight
arrangements as a mechanism for improving
Since the Arab Spring, voices in the MENA
public and private sectors have being calling
for implementing transparent and effective
governance processes. The establishment of
audit committees was one of these requests.
Keen interest in the formation of audit
committees has been expressed by the
champions of development of the internal
audit profession in MENA. They appreciate
the importance of mutual reliance between
the audit committees and internal auditors
in the development of the internal audit
Likewise, audit committees in organizations
without internal audit functions usually
support the development of the internal

audit function that could help them carry out

oversight responsibilities and provide
assurances regarding financial reporting,
compliance, and effectiveness of internal
organizations such as the Organization for
Economic Co-operation and Development
(OECD), the Center for International Private
Enterprise and the International Finance
Corporation (IFC) have made support to
good governance, including audit committee
development in MENA, a particular priority.
In the future, regulators in MENA will likely
be pressured to include covenants requiring
organizations to form and develop audit
committees, whether in SOEs, public
agencies or medium-sized companies. As for
large companies listed with the stock
markets, most MENA countries have laws or
codes that require listed companies to
establish an independent audit committee
within its governance structure. By and
large, these audit committees are involved
only in financial reporting and auditing
In the rapidly shifting oversight and audit
committees, with the exception of those in
the banking industry, may consider
expanding their oversight role. They could
benefit from the experience of audit
committees in developed countries which
have already expanded their roles in both
the financial and operational oversight.
However, these audit committees now have


to make an extra effort beyond financial

reporting and internal control effectiveness.
They have to tackle challenges starting from
the expanded oversight of compliance to the
analysis of growth and sustainability,
economic and political issues and risk
tolerance and risk-mitigating measures.
Looking at the broader picture, boards of
directors have expanded the scope of the
governance agenda, including technical
aspects. Audit committees have turned their
focus toward external factors and
management preparedness, while still
keeping a close eye on internal processes
such as effective internal control, audit
performance, and compliance with laws and
regulations. Audit committees are now
working more closely with third-party
assurance reviewers, including external and
internal auditors to put all of the pieces
Thus, audit committees are expected to lead
the corporate agenda on compliance, risk
management, efficiency and business
valuation improvements for the foreseeable
Many audit committees in
developed countries have assumed new
roles that include social and governance
factors. In many instances, they have also
assumed the responsibilities of a risk
committee. For example, a few audit
committees have begun looking at cyber
security risks. Audit committees are also
overseeing adequate and consistent

disclosures from annual financial reports and
proxy statements to corporate responsibility
reports and investor presentations. Further,
they support the move from financial toward
integrated reporting. In this context, audit
committees for multinational companies
have been keen to consider macroeconomic
issues such as market turmoil, transfer
pricing, interest rates, as well as observe
global compliance issues.
Boards of directors and management might
need to look into the broadening mandate of
the audit committee, review its cost-benefit
analysis, rationale for the mandate

expansion, the audit committee composition

and needs for new expertise. The expanded
audit committees might consider forming
specialized sub-committees with industry
Since such mandate
expansions are driven by the stakeholders, it
helps companies to determine the best
arrangements for their audit committees.
However, there is the risk of stretching the
audit committee responsibilities too thin,
thereby making this function more of a
burden for operations.
As audit committees are shifting from a
proxy and reactive function to a more

proactive contributor to good governance,

their traditional areas of responsibility are
also changing. The evolving changes need to
be carefully managed so that the audit
committees stay focused on serving
organizational objectives and enhancing
growth. This evolution has caught the
attention of the main players in the
governance and internal audit profession.
Indeed, the Institute of Internal Auditors
association, and the Big 4 audit firms, have
provided practical insights and resources for
the evolving audit committees.

Small & Medium Practices

SMP Quick Poll 2014
Middle East & North Africa

Financial Management Specialist
The accounting profession plays an
important role in the growth and
development of any economy and high
quality accountancy services are needed by
both businesses and government. Small &
Medium Practices (SMPs) typically make up
a majority of accounting firms in a country.
These firms face unique challenges.
Recognizing the importance of SMPs and the
importance of understanding the issues that
face them, the Governance Global Practice
and specifically the Corporate Financial
Reporting (CFR) technical practice teamed
up with the International Federation of
Accountants (IFAC) SMP Committee to
collect feedback for the 2013 SMP Quick Poll
which IFAC conducts on an annual basis. The
2014 SMP Quick Poll results have also been
released which creates an opportunity to

compare results and highlight any recurring

Small & Medium Enterprises (SMEs) and
SMP Relationship
SMEs are an important part of an economy
and can contribute substantially to GDP
growth. In the Middle East & North Africa,
SMEs comprise a vast majority of
businesses1. The relationship between SMPs
and SMEs is an important one. SMPs are
firms that cater to the needs of SMEs and
provide services such as statutory audit,
business accounting and taxes. The SMP role
is evolving and more are providing business
advisory services to meet the needs of SMEs
in a changing environment. SMPs are facing
new challenges in meeting the needs of
The SMP Quick Poll was an open poll in which
any SMP could participate. The MENA region
poll results focus on six countries; Egypt,
Jordan, Lebanon, Morocco, Tunisia and

Yemen. In 2013, there were 403 responses

from MENA countries and in 2014, 383 SMPs
from MENA responded to the survey. Most
SMP respondents were either sole
practitioners or had 5 or less professional
staff (55% of all respondents).
Challenges Facing SMEs & SMPs
One of the first questions asked by the poll is
the greatest challenges facing SME clients.
Economic uncertainty and competition were
the highest ranked challenges that SMPs
identified for their clients during the last two
years. Other highly ranked challenges
included compliance with regulation and
rising costs. Compliance with regulation was
not highly ranked in 2013 which shows an
interesting change as it could mean that
regulators are more active in regulating
businesses or that there is a push for
businesses to comply with regulations. The
SMPs were also asked the same question
about the challenges facing their practice.

Attracting new clients and retaining clients
were highly ranked as key challenges which
is similar to the prior year. Keeping up with
new regulations and standards was also a
key challenge identified in the current year.
Again, this is an interesting change from
prior year where only 7% of those surveyed
stated that as a challenge. This could also
mean that regulators in this industry are
more active and that SMPs are more aware
of the regulations they have to keep up with.

existing clients would be the main driver of

Technology & Topics of Online Research
In the 2013 poll, SMPs were asked what
topics they are most likely to research online,
which is a good indication of what topics are
of high interest and what areas additional
capacity building may be needed. The results
showed that the most researched topic was
auditing, closely followed by tax consulting
and business development.

that they expect business to be the same or

better than prior year (86%).
When asked about what outside influences
will impact their practices in the coming 5
years, unsurprisingly almost 70% responded
that political instability will have a very high
impact on their businesses. Perceived trust
and credibility in the profession and
competition were ranked 2 and 3
respectively in potentially having a very high
impact on their practices.

Sources of Revenue & Drivers of Profitability

Audit and assurance services ranked as the
most likely to see a significant increase in
revenue in the next year with advisory and
consulting services coming in second. This is
a change from prior year where most SMPs
felt that accounting, compilation and other
non-assurance and related services would
show the most increase in revenue.

In terms of technology being used, the 2014

poll asked what technologies will have the
biggest impact on SMPs in the next five
years. The response indicated that SMPs
expected cloud computing to have the
highest impact with business intelligence
and data analysis software and tools coming
in as the second area of highest impact.

In 2013, SMPs response to a question asking

about the main drivers of profitability was
that acquisition of new clients would be the
top driver with better retention of existing
clients coming in as a distant second. This
contrasted with global results in that most
global respondents stated that retaining

The SMPs were asked how their revenue

streams changed from prior year. Most
stated that they either stayed the same or
increased moderately (72%). In 2013, the
question asked about the outlook for the
following year and most answered positively

A better understanding of the challenges

facing SMEs and SMPs and their areas of
weakness and expectations for the future
will lead to better designed programs to
address their needs. By now having two
years of data from the SMP Quick Poll, we
are able to see some trends, recurring issues
and have a better grasp of what areas
present the biggest challenges to SMPs and
what will affect their growth and
development in the future.
1. Q. Saleem, (2013) Overcoming Constraints to SME
Development in MENA Countries and Enhancing Access to
Finance p. 2 - IFC

In The News
MENA Day at the Forthcoming World Banks Law, Justice and
Development Week in November 2015
Each year, the World Bank sponsors a Law, Justice and Development
(LJD) week that brings together partners of the Global Forum on Law,
Justice and Development (GFLJD), Bank staff and senior officials from
international financial institutions, international
government officials, lawyers, judges, scholars and representatives
from civil society.

Each year, LJD Week takes an in-depth look at legal, economic and
social developments in a particular country or region. This year, LJD
Week will focus on the Middle East and North Africa.
Possible themes to be discussed on MENA Day include:

As in previous years, LJD Week 2015 will be organized by the Legal

Departments of the World Bank Group. LJD Week 2015 will take place
from Monday November 16 through Thursday November 19, 2015,
at the World Bank in Washington, DC (LJD Week 2015).

Fragile and Conflict States / Reconstruction and Conflict

resolution / Security
Forced Displacement and Property Disputes
Extractives / Energy / Oil
Addressing Climate Change in the Middle East and North
Water and Sanitation
Governance and Anti-Corruption
Rule of Law / Capacity Building
Empowering Women / Gender
Development of Human Rights in the Middle East and North
Employment: Child Labor / Women in the Workforce
Millennial Development Goals / Sustainable Development
Goals in MNA
Middle Income Agenda

For more information, see:


Integrated Reporting
Three Facts Every MENA Company Should Know
About Integrated Reporting
Director--Business Reporting,
Assurance & Advisory Services and
XBRL at the American Institute of CPAs

Chief Sustainability and Compliance
Officer for Aramex

The International Integrated Reporting (IR)

Framework is a tool that can help local and
regional companies go global and compete
on a much larger scale. Although it is not now
being widely used in the Middle East and
North Africa (MENA), companies in the
region have good reason to gain a greater
understanding of it and consider what it
could mean to them. The best way to
promote awareness of IR is to gain a
perspective on what it has to offer, consider
the challenges and opportunities associated
with IR and understand the practical aspects
of implementation. With that in mind, this
article will consider three facts that many
companies may not know about IR.

to the IIRC, an integrated report is a concise

communication about how an organization's
strategy, governance, performance and
prospects, in the context of its external
environment, lead to the creation of value in
the short, medium and long term.

perspective, making it possible to

monitor key performance indicators
across the company, and, ultimately, to
communicate more effectively with key
external stakeholders.

The starting point for IR is integrated

thinking. It is not possible to report
externally using the IR model without having
effective internal communication across
departments and divisions, as well as a
coherent strategy to understand what drives
value across the business. Even though IR
focuses on communicating meaningful value
for external stakeholders, the effort starts
internally. The advantages of IR for
organizations of any size are twofold.

Telling your story. IR allows companies

to do a better job of communicating
with external stakeholders as to how
they create value. The traditional
financial reporting framework focuses
on the short term. When companies
invest in projects and initiatives that will
offer benefits in the future, the returns
on those investments are not reflected
in quarterly earnings. IR reflects the
value creation potential of the company
across the short, medium and long
term, allowing companies to express

Fact #1: IR Is All About Value

One critical purpose of integrated reporting
is to allow organizations to communicate to
investors and other key stakeholders about
value creation over time. Lets take a
moment to clarify that IR should not be
confused with sustainability reporting, which
environmental, social and governance
performance to a variety of interested
stakeholders such as customers, suppliers,
employees, regulators, and others. An
integrated report, is intended primarily for
providers of financial capital, and offers a
holistic view of the company and its value
creation potential into the future. IR covers
elements of sustainability reporting to the
extent that management considers them
material to the ability of the organization to
create value over time.
The International Integrated Reporting
Council (IIRC), a global coalition of
regulators, investors, companies, standard
setters, the accounting profession and nongovernmental
believes that communication about value
creation should be the next step in the
evolution of corporate reporting. According

A foundation for integrated thinking.

When the IIRC conducted a Pilot
Programme in which organizations
tested IR, the shift to internal
integrated thinking over the short and
long term and the resulting internal
coordination was one of the greatest
benefits that participants reported.
Internally, the organization is now
better able to communicate across
departments and to eliminate silos. IR
and integrated thinking offer a strategic

how they are focused on investing in

the future profitability of the business
in addition to covering short-term

Fact #2: IR Is Not Only for Large

One of the main challenges for reporting in
the MENA region is that most corporations

there are privately owned, and the majority
are small and medium-sized entities. There is
a common misperception that IR is designed
for large public companies. While many of
the U.S. companies that participated in the
IIRC's Pilot Programme on IR were large,
there is a growing excitement about IR
among many private companies in the
United States and elsewhere. IR helps
companies of any size better manage and
communicate with stakeholders, lenders and
customers and proprietors. In the United
States, Certified Public Accountants (CPAs)
are increasingly recognizing the value of the
IR framework in internal communications
and coordination across departments and
divisions to improve strategic planning and
decision making.
Organizations can also broaden their lens to
look at all forms of capital and how the
company's management of such capital
relates to its ability to create value in the
short, medium and long term. For CPAs in
industry, this richer perspective is also of
great interest in external reporting to
providers of financial capital and other key
stakeholders. For private companies, the
benefits of IR include improving external
reporting to creditors, so that they can
consider elements of IR in lending
decisions. (The IIRC is also preparing to
launch an IR public sector initiative.)

Fact #3: IR Is Not an Added Report

Smaller companies may see a new approach

to reporting as an extra activity in addition to
existing financial reporting processes. In the
United States, there are concerns about
perceived legal liability from disclosing
information that is not legally required, and
it is safe to say that organizations
everywhere have concerns about the need
to prepare and report more information.
It is important to remember, however, that
IR is not necessarily an extra report, but truly
something that is meant to provide context
to the foundation of financial reporting.
Private companies are often already
gathering the information required for IR.
However, they are not doing it consistently
because they do not have a framework in
place. IR makes it possible to get a fuller
picture over time without spending a lot of
money, as well as to incorporate that
broader context into their existing reporting
practice. (The IR framework and the related
resources are free.) The IR framework is
flexible and allows a company to put it to
work in ways that are most useful to it. Some
companies also express concerns about the
intelligence, but IR is not about revealing
trade secrets. It simply offers insights that
are not now consistently available. For
companies operating in the MENA region
and in many other parts of the world, it is
true that there is a lack of technical expertise
related to IR reports, which means that many
companies will turn first to multinational
consultants for help. Although this may be

costly, it should involve only an initial outlay

for an analysis of a companys activities.
Once this step is accomplished, the
implementation of IR strategy and activities,
accompanied by proper data analysis, can
ultimately offer companies ways to cut costs
and become more efficient. The initial
investment will pay off, directly and
competitiveness, brand trust and resilience.
A Powerful Tool
One way to promote the wider adoption of
IR in MENA might be to follow the model of
South Africa, where all listed companies are
required to undertake integrated reporting
in order to maintain their listing. Over the
past three years, South African companies
have experienced a radical shift in thinking,
brought about by the introduction of
integrated reporting to the countrys code of
corporate governance, according to an
article in the March 2014 international
edition of Accounting and Business
magazine. This change has had far-reaching
consequences, forcing companies not only to
report--but to think--in an integrated way.
With more and more multinational
companies requiring their suppliers to be
more active in sustainability and more
transparent in their business practices
overall, IR can be a powerful tool to help
regional companies compete on an
international level.

Did You Know?

Remittances in MENA
Remittances to the Middle East and North Africa region will slow
considerably in 2015, rising 1.1 percent to $53 billion. The modest
growth this year follows a surge in 2014 of 7.7 percent, the fastest
growth amongst all regions, largely due to a strong 10 percent growth
in inflows to Egypt, the worlds 6th largest recipient in 2014 with $20
billion received. Lebanon saw a 13 percent increase in remittances to
$9 billion in 2014, making it the worlds 10th largest recipient for the
year. Looking ahead, continued low oil prices could reduce
remittances from the GCC countries in the medium-to-long term. In
the short term, however, significant foreign exchange reserves and
strong fiscal positions could support current spending, thus delaying
the negative impact of low oil revenues on migrant employment.
Remittances to the region are expected to grow to $55 billion in 2016
and $57 billion in 2017. Conflicts in the region are resulting in
international displacement and forced migration across borders, and
remain a major risk factor to the outlook for remittances in the region.

World Bank Press April 2015


Sustainability Reporting
A Corporate Tool for Communicating Sustainability
Performance and Impacts
Financial Management Specialist

Sustainability reporting is a relatively new

concept that has rapidly evolved due to
increased expectations for public disclosure
about the role of business in society. Indeed,
there is a growing need for greater
responsibility in business coming from
different stakeholders be they investors,
customers, employees, civil society or other
business partners. Sustainability reporting
draws together in a single focused report all
aspects of a companys economic, social and
environmental operations, its values,

governance model, and commitment to a

stakeholders a holistic and non-financial
view of a companys sustainability
performance and impact.
What is Sustainability Reporting?
According to the Global Reporting Initiative
(GRI)1, sustainability reporting is the
practice of measuring, disclosing, and being

accountable to internal and external

stakeholders for organizational performance
Sustainable development involves meeting
the needs of the present without
compromising the ability of future
generations to meet their own needs.
Through a sustainability report, a
company or organization reports on the
economic, environmental and social impacts
caused by its everyday activities3. Although
this is not a mandatory report, companies
are increasingly opting for disclosing nonfinancial information through a sustainability
report mainly because of the wide range of
benefits that it offers. Sustainability
reporting has external as well as internal
benefits for a company. Externally, it has the

internally communicating on sustainability

matters may have a positive impact with
regard to employee loyalty, recruitment and
sustainability reporting are evident, there
remain some barriers that need to be
addressed in order to ensure increased
sustainability disclosure worldwide. In this
regard, the wide range of reporting
frameworks along with the rapidly evolving
reporting standards and guidelines may
constitute one of the main challenges
sustainability data because it makes the
information gathering process quite
complex. Therefore, the harmonization and
standardization of approaches in the quality,
quantity, timeliness and relevance of

potential to help organizations improve

financial performance and access to capital,
build or restore company reputation and
consumer trust, and promote stakeholder
Internally, it may help firms in driving
innovation, efficiency and waste reduction
through a more efficient decision-making
process, as well as a more informed
assessment of emerging risks and
opportunities emanating from sustainabilityrelated dimensions of business. Finally,

information to be disclosed will be key to

increasing acceptance of sustainability
reporting. At present, the Global Reporting
Initiative has led the sustainability reporting
agenda and has developed a comprehensive
Sustainability Reporting Framework that is
widely used. The Framework consists of
guidelines and sector advice that set out the
principles and indicators that organizations
should use to measure, report and disclose
regarding its sustainability performance. The
framework prompts companies to cover key

sustainability issues that most stakeholders
are concerned with, and to use globallyaccepted performance indicators and
methods for calculating performance and
reporting in a way that it can be compared
with peer organizations.
What is the future of Sustainability
Sustainability reports are stand-alone
reports currently disconnected from the
environmental and social issues have an
impact on a companys ability to operate and
generate profit, it appears necessary to
ensure an alignment of business reporting
with business strategy. This helps to show
performance and business value. To reach
this point, sustainability reporting needs to
move from a view that essentially shows the
relationship between a business, society, the
economy and environment to a more
integrated vision that can help stakeholders
understand how this relationship is being
managed, as well as the impact that this may
have on the creation of value and
sustainability of a business. Some advocates
of sustainability reporting believe that the
next step for sustainability reporting is for
this information to be combined into an
Integrated Report. As defined by the
International Integrated Reporting Council
(IIRC), integrated reporting or IR is a process
founded on integrated thinking that results
in a periodic integrated report by an
organization about value creation over time
and related communications regarding
aspects of value creation.4 This IR report
provides concise communication about how
an organizations strategy, governance,
performance and prospects, in the context of
its external environment, leads to the
creation of value in the short, medium and
long term.5 Regardless of the next steps that
Sustainability Reporting takes, what is sure is

the positive impact that this form of

reporting has had and will likely have on
increasing the knowledge and understanding
of the sustainability practices and impacts of
businesses around the world.
The World Banks current initiatives in the
field of integrated reporting aims to bring
together the principles of Sustainability
Reporting with traditional financial reporting
principles and thereby present a
comprehensive picture of an organizations

1 The GRI is a leading organization in the sustainability

field that promotes the use of sustainable reporting as a
way for organizations to become more sustainable and
contribute to sustainable development.
2 Sustainability Reporting Guidelines, Global Reporting
3 GRI Reporting Guidelines V3.1
4 The International Integrated Reporting Council (IIRC),
About IR. See:
5 The International Integrated Reporting Council (IIRC) is
a global coalition of regulators, investors, companies,
standard setters, the accounting profession and NGOs.
Together, this coalition shares the view that
communication about value creation should be the next
step in the evolution of corporate reporting.

New Paper
Economic Effects of the Syrian War and the Spread of the Islamic
State on the Levant
World Bank Policy Research Working Paper 7135,
By Elena Ianchovichina and Maros Ivanic,
December 2014.
This Paper uses a global computable general-equilibrium framework
with new detail on six countries the Arab Republic of Egypt, Iraq,
Jordan, Lebanon, the Syrian Arab Republic, and Turkey to quantify
the direct and indirect economic effects of the Syrian war and the
advance of the Islamic State on the Levant. Syria and Iraq bear the
brunt of the direct economic costs, while the other Levant countries
lose in per capita but not in aggregate terms.

The fact that the Islamic State's spread has undermined regional trade
adds in varying degrees to the direct costs in all Levant economies and,
in the case of Syria and Iraq, doubles the welfare losses. All of these
countries are foregoing opportunities to expand intra-Levant trade
and the associated gains in economic efficiency and diversification.
The average welfare effects are not indicative of within-country
incidence, which varies among workers, landowners, and capitalists.
For the entire Paper, see:


Public Sector

Civil Service 28
Rule of Law 30
Anti-Corruption 33

Civil Service
Behaviour Bias
employment agencies, or encourage people
to take out supplementary pensions etc., all
of which should be done at minimal cost4. In
the UK, for instance, it has been shown how
a letter sent to people who were overdue
with their income tax payments mentioning
that most UK taxpayers paid their taxes on
time reduced the number of late payers by
an average 15%. Social norms have a big
impact on taxpayers behaviour.
How is it relevant to the design of public

Senior Public Sector Specialit
How behavioural biases are important for
civil service reforms?
Neo-classical economic models are based on
the economic rationality of individuals.
However, laboratory experiments show that
rationality is often limited, especially from
choices made in the face of risk and
uncertainty. These results have therefore
demonstrated the importance of taking
account of the cognitive limitations of
individuals, the role of emotions in making
decisions, and the influence of social
interactions on individual choices. The 2015

World Bank World Development Report

(WDR)1 documents the behavioral biases
and shows that there is enormous scope for
psychologically and socially inspired polices
and interventionssocial norms campaigns,
educational entertainment, aspirational
messages, reminders, new default options,
commitment devicesto help people make
choices that promote their own interests2.
Experimental economics has been the
subject of growing interest in recent years,
with the creation of nudge units, the most
well-known being the United Kingdom (UK)
unit set up in 20103. Drawing from the work
of psychology and behavioural economics,
inter alia, their task is to nudge people into
modifying their behaviour, in order to raise
tax revenues, improve the effectiveness of

Behavioural economics allows a better

understanding of why some reforms do not
always produce the expected results.
Researchers Saugato Datta and Sendhil
Mullainathan (2012) have notably given
examples of the application of behavioural
economics in the field of development
economics5. Individuals are subject to
behavioural biases, such as risk aversion,
optimism bias, dynamics of groups and
reputation effects, confirmation bias, sunk
cost bias and so on6. They are all relevant for
civil service reforms but also equally
neglected, in general, by policy-makers and
donors agencies. As examples of behavioural
biases, in a context of uncertainty, over the
decades one element has been consistent in
research results: individuals have an
aversion to risk. And so the person at the
head of an institution prefers inertia and the
status quo to any future improvement of
that institution because he or she perceives
that it is easier to be viewed as preserving
the status quo than to actually initiate

reform that is synonymous with significant
short-term risks. Behavioural economics also
teaches us that the individual, by simplifying
reality, often suffers from being too
optimistic, that is, individuals always think
they can do more than they actually can.
Thus, in a context of public sector reform,
bureaucrats and donors have a chronic
tendency to be over-optimistic about what
can be done. And so, together, they may lay
down a huge programme of reforms but it
will only be partially implemented and, at
the end of the project, the blame will often
be placed on a lack of political will rather
than on the fact that the programme was
overly optimistic in the first place. Similarly,
experiments demonstrate the dynamics of
groups. Group decisions can diminish
collective well-being because groups form
around shared individual interests which
they then defend and are more rational than
individuals. For instance, in trust games
groups send and return lower amounts of
money than individuals. Finally, behavioural
economics demonstrates the importance of
cultural norms and of the impacts of
reputation: individuals take decisions in a
specific socio-cultural environment and have
to take account of their reputation in that
environment when doing so, which can
greatly bias their decisions. A decision which
may appear irrational at first sight can, on
the contrary, be totally rational in view of
these factors. Non-financial incentives and
building good reputations for certain officials
is also crucial. It is increasingly becoming
clear that officials in public administrations
often have motivations which differ from
those in the private sector, and that the
feeling of being part of a State elite and being
recognized as such is very important. Hence,
communication campaigns (internal and
external) must be fully-fledged components
of reforms to give credit to the reformers of
the institution. There is often a
disproportionate focus on the issue of
wages. Although financial incentives are one
element, they are not the only element.
Social recognition within the institution and
outside count as much. Behavioural
economics is important because it reminds
us that an institution it is made up of
individuals. Thus, the simple fact of setting
up an institutional structure does not mean
that behaviours and practices will change.
For example, the fact that an autonomous
agency integrating Customs and taxation is
created does not mean that the services will
cooperate. The fact that post-clearance
control appears on an organizational chart
does not mean that it actually happens in
practice, etc. there are countless potential
examples. Therefore, any reform process has
to identify the behaviour of an individual in a
given context then seek to change it (at the
margin), which is obviously much more
difficult than creating a new institution on an
organizational chart. In practice, these

concepts are very relevant both for decisionmakers and for donor representatives.
The potential consequences on donorfunded civil service reforms...
As mentioned in the World Bank strategy on
public sector reforms (World Bank 2012), it is
challenging to change the actual behaviour
of public agents since they may be built on
beliefs/social norms that change slowly.
Most of the time such behavioural biases are
not even considered as actual constraints for
projects design and implementation.
However, as Varun Gauri, one of the codirectors of the WDR 2015, mentioned:
sadly, we ourselves development
professionals are not exempt from this
universal phenomenon [of behavioral
biases]. In our survey of World Bank staff,
which many staff members were game
enough to participate in, the WDR team
found that we, too, are susceptible to
confirmation bias, sunk cost bias, and other
cognitive illusions. In addition, our models of
how poor individuals think and behave are
sometimes inaccurate7.
First, it is important for donors
representatives to remember that people
have mental models consciously or
unconsciously influencing their thoughts,
perceptions and actions, and that the
application) of international best practices
may very well not work in another context.
Thus, it is important not to simply think that
an institutional model which works in
country A will also work in country B. That
does not mean either that some principles of
reforms do not apply but the best practices
cannot be transplanted as such in various
countries. Moreover, to achieve successful

reform, it is essential above all to understand

social and cultural norms and local practices.
This is where the use of institutional
sociology or anthropology can be useful.
Without detailed knowledge of the
practices, and of the origins of these
practices, reform is bound to fail. To limit risk
aversion, starting reform with a pilot project
is crucial because it helps convince people
that change is possible, but if it fails the risk
overall is low. Conversely, a sweeping reform
potentially puts the spotlight on a Minister
or Director because the risk is higher. To
counter the bias of excess optimism,
designing a project with limited ambitions is
the first thing to do (other goals can be
added after the projects initial successes).
Some possible examples of donor-funded
Recently, we published a World Bank
working paper presenting the lessons of two
projects implemented in Cameroon on
customs reforms implemented at the same
time but with a completely different design8.
One succeeded in bringing about change,
while the other failed. The successful one
was a pilot project, implementing individual
inspectors in Douala port with a large
number of non-financial incentives to create
a good reputation effect. Such projects are
not numerous since they are quite counterintuitive for task team leaders and
management in donor agencies. Like the
2015 WDR states that since development
practitioners themselves face cognitive
constraints, abide by social norms, and use
mental models in their work, development
organizations may need to change their
incentives structures, budget processes, and
institutional structure to promote better

diagnosis and experimentation so that
evidence can feed back into midcourse
adaptations and future intervention
designs. (World Bank 2014, p. 193).
However, this is easier said than done but
should be increasingly taken into account to
make more successful aid projects in this
field of public sector reform projects.

3. See the website of the UK behavioural insights
4. Benefits for the State must be more than 10 times
higher than their cost in the UK.
5. Behavioral Design - A New Approach to Development
Policy, CGD Policy Paper 16, available at
6. For more details on those biases, see the WDR 2015.
8. Raballand, Gael and Rajaram, Anand, 2013. "Behavioral
economics and public sector reform: an accidental
experiment and lessons from Cameroon,", Policy
Research Working Paper Series 6595, The World Bank.

Rule of Law
Its all about the Politics:
Laws, Policies and their Implementation in MENA
Senior Public Sector Specialist
Rule of Law Definitions
The rule of law is a multifaceted concept that
has taken time to gel. In their recent survey
of the rule of law and development,
Trebilcock and Daniels differentiate between
thick and thin definitions. With thick
definitions, the rule of law is viewed as the
backbone of a just and open society. The
open-access order theory of North, Wallis,
and Weingast (2009) provides a good
example: the rule of law ensures open
access and equality of opportunity for
individuals in the political, economic, and
social domains. Thin definitions of the rule
of law focus more on specific laws and
institutions, as well as on their beneficial
effects on economic outcomes. These rules
do not have to be just or promote open
access; their positive impact comes from the
fact that they regulate human interactions,
thus promoting better coordination within
society. Property rights are a prime example
of this.
The Rule of Law in the Middle East and
North Africa
The MENA region performs poorly on rule of
law measures for developing countries. With
the exception of the United Arab Emirates,
all MENA countries rank below the
developing country average for all aggregate
measures on the rule of law according to the
Global Integrity (GI), an international NGO
(Table 1). The average for the aggregate
Overall Score was 50 in MENA as opposed
to 67 for all other developing countries.
Going beyond aggregate indicators, it is
analytically useful to distinguish between
formal rules on paper and their application
on the ground. Nobel Prize winner Douglas
North (1990), for instance, defined an
institution (or a law) as the combination of a
formal rule, an informal norm, and an
enforcement mechanism. All three are
needed simultaneously in order for a formal

rule to be successful. Hence, one key aspect

to ensure outcomes is that formal laws are
consistently enforced, all citizens are equal
under the law, and arbitrary application of
rules such as favoring powerful or wellconnected individuals is minimized.
Following this conceptual distinction, the
Global Integrity Indicators include measures
for both the existence, quality and
transparency of formal laws (de jure), as well
as for their actual enforcement (de facto).
The average for the Legal Framework score,
a de jure measure of which laws have been
passed, was 60 in MENA as opposed to 80 for
all other developing countries. The average
for the Actual Implementation score, a de
facto measure of which laws are actually
implemented, was 37 in MENA as opposed
to 50 in all developing countries.
MENA countries are clearly lagging with
regards to their rule of law measurements on
both the Legal Framework and Actual
Implementation areas. This is troubling as
rule of law is a necessary condition for many
beneficial outcomes, such as ensuring good
governance, human rights, public safety,
freedom of expression and religion, quality

education and health outcomes. It may also

improve economic outcomes. Although the
causal link between the rule of law and
economic growth is not fully complete, much
evidence exists to support the claim that the
rule of law is beneficial to economic growth
(Rodrik, Subramanian, and Trebbi, 2004).
Some of the most common mechanisms by
which the rule of law can promote growth
are: the protection of property rights, the
reduction in levels of violence, institutional
checks on government, and the reduction of
incentives to distort public policy, such as
from corruption.
A political economy perspective
A political economy perspective helps
understanding the main drivers of MENAs
poor performance in rule of law outcomes,
just as it helps understanding the key
institutional incentives that lead to
underperformance. According to such a
perspective, if a regulatory outcome goes
against powerful political interests, the law
may be either prevented from being
legislated in the first place or, if the law is
passed, it may be prevented from being
properly implemented or enforced.

Conversely, if a rule, law or regulation
provides concrete benefits to entrenched
political stakeholders, it is more likely to be
systematically implemented. This approach
builds on the assumption that he adoption
and implementation of formal rules is always
the outcome of negotiations and struggles
between converging or opposing interests,
and often results in some actors losing out
for example in situations where corruption
and rent extraction are used as a means to
support powerful interests Consequently,
the identification of specific political
economy variables that determine which,
whether and to what extent laws are passed,
applied and enforced is necessary to better
understand the rule of law and its influence
on economic development outcomes.
Numerous quantitative and qualitative
studies found that the following factors
affect governments willingness or the
incentives of leaders to pass and enforce the
rule of law:
The citizens willingness to comply
and the governments anticipation of it: In
some cases, leaders deliberately decide not
to enforce rules and regulations because, in
the absence of bureaucratic capacity, they
cannot take political credit for tangible and
visible policy outcomes (Tsai, 2001). Other
times, the lack of willingness to enforce
comes from pragmatic policy calculations of
anticipated low societal compliance with the
law (Tsai 2007, 2010; Von Oenen 2001;
Yashar 2005; Mares and Carnes 2009).

The nature of the regulatory
agency and the type of service it delivers:
the international visibility of the
enforcement agency is likely to drive
effective enforcement. Similarly, its location
in the policy domain is expected to lead to
better implementation. If the agency
governs an economic sector perceived as
vital for the state, applicable laws and
regulations are more likely to be
systematically enforced (Schrank 2009,
Gingerich 2007, Hydemann 2004, Hibou
2006). The MENA region seems to be
particularly well-suited for a test of these
hypotheses. The tourism industry is central
to the economies of Egypt, Jordan, and
Morocco, whereas Tunisia developed
different regulatory regimes for on-shore
and off-shore investors, the latter
contributing significantly to economic
The threat of collective action from
key groups in society: one of the most robust
results in political economy argues that
policy outcomes often favor powerful groups
who can effectively mobilize and lobby, to
the detriment of the diffuse interests of
ordinary citizens. A similar logic is likely to
apply in the case of law enforcement; if elite
groups organize effectively and resist
regulatory implementation, governments
may not be willing to go against them
(Lieberman 2003, 2009; Levitsky and Murillo
Political survival considerations
and regime type: in non-democratic regimes,

Table 1

incumbents need to reward key elites in

order to stay in power: therefore, the
regulatory enforcement of policies/laws that
generate rents to core political supporters or
prevent threats from opponents, is likely to
be more systematic (Lieberman 2003, 2009;
Levitsky and Murillo 2009).
The electoral saliency of the
specific law and the timing of elections:
regulatory policies prioritized by electoral
agendas are more likely to be enforced by
incumbent parties than less salient issues, as
elections approach.
studies indicate that enforcement of laws
and regulations in areas characterized by
ethnic, linguistic, or religious heterogeneity
may not be systematic. In some cases, the
identity of incumbent political leaders leads
members of other groups; in other cases,
poor enforcement occurs at the micro-level,
and stems from the interactions between
enforcement agents and ordinary citizens on
the ground (Wilkinson 2006).
In conclusion, the implementation of laws
and regulations is induced by political
incentives. If systematic enforcement aligns
with such incentives in some policy areas,
good implementation may occur. In contrast,
arbitrary enforcement of de jure laws in
other policy areas is likely to be driven by a
misalignment between outcomes and
political interests of key stakeholders.

Global Integrity Indicators for MENA



Overall Score

Legal Framework



United Arab Emirates







West Bank
































MENA Average
Other Developing Average



In the News
An Additional US$77 Million in Budget Support
to the Palestinian Authority
PRESS RELEASE (source: World
WASHINGTON, May 20, 2015 The World Bank transferred today an amount of about US$77 million to the Palestinian Authority from the
Palestinian Reform and Development Plan Trust Fund (PRDP-MDTF), a multi-donor budget support mechanism administered by the Bank. The
funds contributed by the governments of Norway, Australia, Japan, Kuwait and the United Kingdom, will help support the urgent budget needs
of the Palestinian Authority (PA), providing inter alia support for ongoing macroeconomic and public financial management reforms. The World
Bank PRDP Trust Fund was established on April 10, 2008, through an agreement signed between the World Bank and the Palestinian Authority.
It is a central component of a World Banks effort to support the ongoing Palestinian Reform and Development Plan. Currently, the PRDP-MDTF
donors are the governments of Australia, France, Kuwait, Norway, the United Kingdom, and Japan. With the new tranche release, the PRDPMDTF will have disbursed about US$1.36 billion.
For further information on the PRDP MDTF and the World Banks program in the Palestinian Territories, please visit:

New Report
Plunging Oil Prices Bring Gains and Losses to MENA
Yemen and Libya are among the most vulnerable oil producers, while
Iran and Iraq could experience a worsening of the oil trade balance
(net oil exports) in excess of 10 percent of GDP in 2015. The oilexporting countries of the GCC are in a much better position due to
their ample reserves, but they too could endure over a US$215 billion
loss in oil revenues more than 14 percent of their combined GDP.

The over-50 percent decline in world oil pricesfrom US$115 a barrel

in June 2014 to less than US$50 todaywill have significant
consequences for the economies of the MENA region. According to
the World Banks latest MENA Quarterly Economic Brief, the oil
importers that are expected to gain include Egypt, Jordan, Lebanon
and Tunisia. The trade balances for these countries could improve by
up to 2 percent of GDP. The oil exporters will likely run larger fiscal
and current account deficits or their surpluses will shrink substantially.
Oil importers will benefit from lower import and fuel subsidy bills,
while exporterssome of whom depend on oil for 80 percent of their
incomewill lose export and fiscal revenues, said Shanta Devarajan,
World Bank Chief Economist for the Middle East and North Africa
The report, Plunging Oil Prices, focuses on the implications of low oil
prices for eight developing countries, or the MENA-8 (oil importers:
Egypt, Jordan, Lebanon and Tunisia; and oil exporters: Iran, Iraq, Libya
and Yemen) and the economies of the Gulf Cooperation Council (GCC)
countries, who play a major role in providing funds in the form of aid,
investment, tourism revenues and remittances to the rest of the
countries of the region.

The oil shock could threaten the ability of some of the oil exporters
to meet domestic spending commitments, said Lili Mottaghi, World
Bank MENA Economist and the author of the report. Their options
include drawing down reserves, accumulating debt, and cutting
spending on fuel subsidies and public-sector salaries.
Oil importers such as Egypt, Jordan and Lebanon face a risk as their
economies receive large flows of remittances and aid from the GCC.
However, based on previous episodes, the MENA Quarterly Brief
concludes that lower oil prices will likely lead to slower growth, but
not a decline in remittances.
For more information, see the World Banks Quarterly MENA Brief:


Role of Technology in the Fight against Corruption
by Victoria Lemieux,
Senior Public Sector Specialist GGODR,
professor, the university of British Columbia


.2013 - 2012

/ 2014










: ISO15489













Cover Story
Global Practice

Overview 35
Interview 37
Perspectives 41
Points-of-View 43
Maarefah 46


Centrality of Governance in Sustainable Development
The recognition that governance is a
key element in sustainable economic
development has been gaining in
ascendance. As part of a recent
World Bank Group reorganization into
14 Global Practices (GPs) and 5 CrossCutting Areas, governance has
assumed a central role. The new
Governance Global Practice (GGP) is
the largest of all of the new GPs,
bringing together professionals in
procurement, financial management,
taxation, public sector management,
regulatory policy, transparency,
development, anticorruption, and
social accountability to develop
innovative, integrated solutions to
In our cover story we present an
overview of the new GPs, including
the GGP; an interview with Mario
Marcel, Senior Director of the Governance Global Practice; as well as Senior Management and Staff views and perspectives on governance and
its role in economic development in general, and with respect to the World Banks twin goals of eliminating extreme poverty and boosting shared
prosperity, in particular.

Introducing the World Bank Groups New Global Practices

In July 2014, the World Bank Group

embarked on an ambitious reorganization
with the aim of breaking down internal
bureaucratic silos. The idea behind this
organizational change is to mobilize the
worlds best experts and global knowledge
and make them more accessible to client
countries. The World Bank Groups new
Global Practices bring together knowledge
and expertise in 14 sectors and 5 crosscutting areas. The goal is to help developing
countries find solutions to the toughest
global and local development challenges
from adapting to climate change to boosting
food security or increasing access to energy.
The new Global Practices (GPs) include:
Extractives; Environment and Natural

Population; Macroeconomics and Fiscal

Management; Poverty; Social Protection and
Labor; Social, Urban, Rural, and Resilience;
Trade and Competitiveness; Transport and
Technologies; and Water. In addition, the
new GPs work in tandem with all of the
Regions including MENA and CrossCutting Solutions Areas, comprising: Climate
Change; Fragility, Conflict and Violence;
Good Governance and Good Economics
Well-established studies on institutions and
growth demonstrate a strong and positive
correlation between the principles of good
governance and a countrys gross domestic
product (GDP) per capita, as well as the

quality of its health and education services.

In short, good governance is good
economics. The inextricable link between
poor governance and persistent poverty is
widely acknowledged but often difficult to
break. Countries capable of controlling
corruption are able to use their human and
financial resources more efficiently, with
fewer losses and distortions. They are able to
attract more foreign and domestic
investment, and on average, grow more
rapidly. Countries with strong institutions
prosper by creating an enabling environment
that facilitates private sector growth and
poverty reduction, delivering valuable
services, and by earning the confidence of
their citizens a relationship of trust that is
created when people can participate in
government decision-making and know their
voices are heard on issues that affect them.

The New Governance
Global Practice
Good governance is at the
heart of the development
agenda so it is an integral
part of the World Bank
Group's twin goals of
ending extreme poverty
Practice (GGP) aims to
building open, effective,
institutions for inclusive
development. In this
context, the GGP will take
a new, more inclusive
approach to governance
issues by concentrating on
the fundamental aspects
institutions and citizens.
This approach will place
increased emphasis on
engaging citizens and civil
society organizations as
part of the solution, and
focus on the political
transparency and social
accountability, which will
lead to improved design of
institutional reforms. The
governance, law and
anticorruption, and social
accountability to develop
solutions to pernicious
Governance is the Banks
largest and most diverse
GP, bringing together
roughly 770 staff in 97 countries, and
providing lending, fiduciary, knowledge,
advisory, and technical assistance services
(including Economic and Sector Work,
Reimbursable Advisory Services, and
Technical Assistance).
The practice utilizes a problem-driven,
diagnostic approach, combining global

strengthening the composition,

management and reporting of
procurement processes to
ensure sustainable funding for
public programs.
(ii) Effective Service Delivery and
Policy Implementation through
the strengthening of both core
agencies and line departments.
The GGP seeks to improve public
effectiveness by supporting
reforms in public management,
human resource management,
regulatory reform, ICT solutions
approaches, and other areas.
(iii) Open and Accountable
Governments by facilitating
collaboration to foster social
accountability and citizencentric development. This work
stream includes government
responsiveness, strengthening
key accountability institutions
(including parliaments and the
performance and enabling
citizens to participate effectively
in government decision-making.

Scope and Strategy

comparative knowledge of reform successes

and failures with keen understanding of the
institutional challenges and opportunities of
developing countries. Specifically, the GGP
provides support in:
Management by improving analytic and
policy capacity in public finance;

Drawing upon the World Bank

Groups unparalleled convening
power, thought leadership, and
multi-disciplinary expertise, the
knowledge, and partnerships to
implement practical solutions to
complex governance challenges
within each client country. The
dissemination of client results,
to promote progress in other
countries and foster collaborative dialogue
to build a stronger global knowledge base
from which all will benefit. Since 2010, the
World Bank Group has been active in
promoting governance and public sector
reform in over 114 countries. The GGP
supervises procurement and financial
management of roughly 1600 operations
with a total envelope of $182 billion.


Mario Marcel
Senior Director - Governance Global Practice
By Manuel Vargas,
Lead Financial Management Specialist
CV MENA: Please share with us some of your
reflections as a leader of this new global
practice in these first few months.
Mario Marcel: I would say that when I came
onboard, I felt the weight of the responsibility
because the Governance Global Practice
represented one of the most substantial
changes from the previous structure of the
World Bank. Therefore, we had a number of
challenges that perhaps other GPs did not
have in terms of building a cohesive team,
creating an agenda, and updating the Bank's
narrative on governance issues. I would say
that during this time, even though there were
so many things that were necessary in terms
of dedicating time to organization, resources
and so on, I became very impressed with the
reach of the Bank across different countries,
regions, and cultures and by the wealth of
knowledge that our staff have. I have worked
with very capable teams in different places,
but in terms of being able to have a deep
discussion on many governance issues, I feel
that the response that I am getting from our
Bank colleagues is extremely heartening.
CV MENA: The two goals of the World Bank
are to end extreme poverty and to boost
shared prosperity. How do you see the links
between these objectives and the
governance agenda?
Mario Marcel: I would say that the
governance agenda has to do with basically
two things. It has to do with the ability to
deliver public policies, and with the capacity
to build inclusive institutions. I think that the
main connection with the poverty reduction
goal is in terms of the need to mobilize
resources and capabilities to provide better
services to the poor. The impact of good
institutions is very significant when it comes to
addressing inequity and contributing to
inclusive development. Institutions can
overcome the kind of divisions that are
sometimes generated by market forces. When
citizens come to these institutions,
independently of their wealth and power or
influence, it represents a huge difference in
terms of inclusive growth.
CV MENA: When looking at the global
perspective beyond the World Bank, what
should be done to give governance more
weight in the development agenda?

Mario Marcel: First of all, I think that the

weight that is given to governance in
development does not necessarily come from
international organizations, but from what
policy-makers are trying to do in the field.
What I see is a lot of energy in many parts of
the world in trying to build institutions that
are more inclusive, more effective, and that
can help deliver services to the poor. I think
that it is important to see that governance
needs to be understood in terms of
ownership, specifically having the countries in
the drivers seat. Our mandate and response
should be viewed in this context. The
development agenda should be understood as
something that essentially comes from
countries and that is not pushed on them by
the international organizations.
In this
context, I think that it is very important for rebalancing the way we understand the
development agenda, and the way in which
we articulate our work. In the case of the
Governance Global Practice, we have
translated it into a mission statement that
emphasizes that the Bank is basically there to
support countries in their efforts of building

more transparent, effective and inclusive

institutions. We are already working under
this basic principle.
CV MENA: What are your thoughts on
governance issues in the future and a new
generation of governance reforms?
Mario Marcel: The new generation of reforms
will essentially come from a change in the
focus that we give to governance because
many of the main pieces of work on
governance come from the supply side of it.
They derive from the disciplines, the systems,
and the specialties. We speak about budgets,
about audits, and about procurement, all of
which are hugely relevant. However, what I
think is missing and it would be crucial in
meeting the governance agenda into the
future is to integrate the citizen's
perspective or the demand side of governance
into the picture. The citizen perspective is not
only about consultation or participant review
mechanisms. For example, when we look at
audits I think that we should all ask ourselves
the question: What does this mean to citizens,
and why they should care about this? Perhaps

when we do this, we will discover new
perspectives in the work on audit of which we
were not previously so much aware. These
may in turn feed into the kind of projects that
we support in client countries. Similarly with
any of the other issues, including also our role
with regard to the ability to integrate these
different elements, when citizens interact
with public institutions, they do not see
human resource management, audit, or
procurement. They may be seeing whether
governments are being fair, or whether they
can be trusted. I think that combining and
integrating citizen perspectives opens up a
whole world of new issues and ways of
articulating governance responsiveness.
CV MENA: Regarding the Banks Governance
Global Practice specifically, you mentioned
some of the new challenges of bringing
different groups together. How are you
tackling these initial challenges?
Mario Marcel: Indeed, this Global Practice is
more diverse in its original configuration
because we are not the immediate successor
of anything that existed before. People usually
refer to the three big strands of work related
to procurement, financial management and
public sector management. However, this
Global Practice goes beyond these three
functions. It comprises eight different groups
because we also have colleagues joining us
from the Legal Department, the World Bank
Institute, and others. So, there is actually a
large diversity. In terms of our global
footprint, you will see that we are also the
most decentralized of all 14 GPs. To me,
diversity and decentralization are two very
positive elements. However, they are also
important challenges because in order to
build cohesion and make diversity and
decentralization work for better outcomes,
we need ways of building dialogue and
knowledge inside of the Global Practice. This
has been the focus of a lot of my attention
over these first few months. I think that one
important part of this is building a new
narrative for the Bank on governance issues.
Previously, the Bank lacked such a narrative.
We had the strategy on public sector
management, on financial management, and
the governance and anti-corruption (GAC)
agenda. However, in terms of having a
narrative that is able to integrate all of these
different elements and connect with the
development challenges, I think that it is now
a very central part of what we are trying to do.
Integration has an administration perspective
and dimension. It has a cultural dimension
too, but also a dimension in terms of the
substance of what we do and how we organize
ourselves to deliver results.
CV MENA: The governance agenda is quite
vast. How do you ensure that there is
prioritization and focus in terms of what the
Governance Global Practice delivers for the
Bank and its clients?

Mario Marcel: I would say that the first

priority is to listen to our clients and connect
with what is happening in our client countries,
because the country perspective is a natural
unifier. Of course, when looking at what is
going on in these countries one can see many
reforms and changes taking place. However,
these changes do not necessarily fit with the
traditional sectors or disciplines. For instance,
decentralization has a number of dimensions.
It has a financial dimension, and a
management dimension. It involves a
different relationship with civil society. We
cannot think of the governance agenda as
something so homogeneous across the world
as to warrant a single set of priorities. One
must respond to the actual needs and
opportunities in different regions. One of the
things that we are trying to do is to tailor our
support to the regions, and adopt a regional
engagement approach. What we are trying to
do is to help our Practice Managers and our
specialists in the field to concentrate their
efforts in certain areas where we can provide
a better response.

policy development is that we need to persist,

as there is no magic wand that can change
things overnight. An important role of public
finance is to provide a basis for good public
policies to maintain continuity so that they
can have a lasting effect on development.

CV MENA: In your welcome video when

joining the World Bank, you mentioned the
connection between public finance and
public management. Would you elaborate on
this topic and how you see the Governance
Global Practice contributing to this
Mario Marcel: I will say that public financial
management is at the core and a very central
piece of governance anywhere. It is very
difficult to think of institutions that can
operate in the absence of financial
management. Now, as countries evolve, I
think that they find that public finance is not
enough. It is a means that creates possibilities
for other things to happen. Some of them are
in the governance field. When you have a
stable financial framework, then you can build
solid institutions. However, it is also important
in supporting sustainable public policies
everywhere. One thing that we know about

countries work with us they see those

opportunities, and in many cases there is
demand that comes to us from seeing our
procurement and financial management
mechanisms at work. I have met people in the
field who say that they come to the Bank not
necessarily because of financial need, but
because they like our ability to make projects
work. Second, we also engage with other
Global Practices and sectors by contributing or
developing some governance or institutional
components into the operations. I think that
we can exploit this opportunity by essentially
providing added value. This means being
helpful in solving problems in the execution of
sector programs, solving institutional
bottlenecks that may have to do with capacity
or with systems or procedures, and also
identifying the right mechanisms to do that.

CV MENA: As you know, a significant part of

the staff of the Governance Global Practice
provides operational support to other
practices, or what used to be known as
sectors. How do you think this advantage can
be exploited even further?
Mario Marcel: I will say that there are two
ways. First, even though we may originally
start by focusing our fiduciary support on
World Bank operations and how to ensure
that they are delivered in a transparent and
efficient way, we are dealing with the systems
that go beyond the Bank projects. There is a
great opportunity to go beyond what we do
with a single project in building capacity and
move toward a better management of public
resources, procurement, a more transparent
public management, and so on.

CV MENA: Building upon the structure and
the narrative of the Governance Global
Practice, how do you see these efforts being
reflected in terms of the services that are
provided to clients? What would you like to
hear from the clients in terms of how they
perceive the services received from the
Mario Marcel:
I have been a client of the
Bank and other international organizations, so
I can articulate this from the perspective of
what I saw from that role. Normally, one seeks
a couple of supporting mechanisms from
international organizations.
One is to help you frame
problems and link these to
solutions. Sometimes, as a
policy-maker one is trying to
perhaps not seeing all the
perspectives and solutions.
One is not aware of the
alternatives to address them. I
development institutions may
be especially helpful in this
regard. The second element,
which is particularly strong
with the World Bank, is the
ability to mobilize global
knowledge to address local
needs. Policy-makers do not
have the time or political
Sometimes they cannot afford
to innovate completely. Also,
the penalty for failure is too
big. Therefore, the Bank can
be an asset in providing global
knowledge, of knowing what
others have done that works or does not
work in a specific area. Now that we are
organized globally, we can mobilize our staff
across the world. This was not easy in the
previous structure. Now, we may need to look
even beyond our own knowledge base of
operations, because not everything happens
through us. We need to reach out and learn
from those valuable experiences and then use
this knowledge in support of our clients. This
is why I also attach great importance to
supporting policy networks at the regional and
global levels as a way of engaging with policymakers, enabling them to share with us
experiences beyond their direct involvement
with the Bank.
CV MENA: Regarding the MENA Region, as
you know very well, many countries are
affected by vulnerability, uncertainty, and
What are your thoughts on
advancing governance reforms in such
difficult circumstances?
Mario Marcel: MENA is a region that faces
many challenges. It has undergone major
political changes in the last few years, changes
that will continue for some time. We do not

know how the situation will evolve, but we

always have the opportunity to provide and
add value to the policy and institutional
debate in these countries. Sometimes this
support may be technical. It may be in areas
that are not so affected by politics as others.
However, to the extent that people see the
value of institution building, I think that we
can hope to see it growing into something that
helps the country on its development path. I
think that what many countries in the MENA
region are seeing is a very deep challenge to
past institutions, but not a very clear view of

what may be built instead. The Bank can be of

great assistance because it is not enough to
dismantle institutions that were prone to
abuse or corruption. What is needed is a
rebuilding or replacement of institutions that
people can start to trust. This is a long-term
challenge, and will involve bottom-up work,
for example through engagement in sector
governance or service delivery in certain key
areas, or some building blocks in state
CV MENA: Speaking about political
transitions, what are the lessons from the
Latin America and Caribbean (LAC) region
that might be useful to MENA countries?
Mario Marcel: When I joined the Organization
for Economic Co-operation and Development
(OECD) in 2011, it was the beginning of the
Arab Spring. One of the first things that I did
was to write a piece comparing political
change in MENA countries with what we
experienced in Latin America in the 1980s. I
witnessed that transition. My reflections on
that time, which I think remain valid, are that
we need to think not only about what we want
to change, but where we want to go and what
we want to build. It is essential to provide
some basic elements of stability. By stability, I

mean stability as seen from the perspective of

citizens, specifically economic stability and
stability regarding some of the essential things
that states are supposed to provide, such as
security. Political change is not only about
moving from a lack of institutions to create
new institutions. Sometimes, it involves
replacing a given set of institutions for
another kind, but one that still makes sense to
citizens. In this context, one cannot always
draw from different political systems or
cultures. One must actually try to address and
connect with what are the basic, founding
elements of a country's
culture. There are still so many
Of course,
America, but Latin America
took many years to stabilize. It
took many years to build basic
confidence in the new set of
institutions, but it eventually
CV MENA: You recently
visited Kuwait, a high-income
country in which the Bank
engages on the basis of
Services (RAS). What are your
impressions from the mission
and the RAS possibilities for
Practice in general?
Mario Marcel: I give RAS a
very high importance because
it is a way of engaging with
countries that may not have
financial needs, but that still face important
development challenges. It is also a way to
rebuild demand. From the point of view of the
international financial institutions, one always
wonders about the extent to which clients are
coming to the Bank because they need the
loans and financing, or because they need
advice on policy, support for implementation,
and the like. RAS is a very straight forward way
to respond to specific country needs, a good
tool that can be used in different countries
and settings. In the case of Kuwait, it involves
a country that has a number of governance
challenges. Kuwait has a large public sector
that needs to work and operate in a more
efficient way. Given the per capita income of
the country, I think that the county could get
much better services for the resources that
are invested. During this mission, I could see
what we were doing to support revenue
administration, public financial management
and procurement. There were a number of
ideas on how to support governance systems.
This is a country that has a very active
Parliament. I had meetings with the Members
of Parliament, as well as with the Executive
Branch. I could see the opportunities for

constructive cooperation. They articulated a
need to invest in systems, knowledge, and
capacity. The Bank is seeking to meet these
CV MENA: Is there any other message that
you would like to convey to the governance
Mario Marcel: I would say that one of the
problems that the governance agenda has had
over time is that it tends to be subject to
certain waves. It ascends in the development
agenda, and then a few years later it goes
down again. I have seen that, over time, one
of the big challenges that we face is how to
build a consistent governance agenda that is
able to withstand these trends, that is, how
we can remain engaged in a more systematic
way over time. Regarding the Sustainable
Development Goals (SDGs), many actors in
this process have been very actively
supporting the inclusion of governance. I
foresee that governance will have a much
greater role and recognition that it had with
the Millennium Development Goals (MDGs).
This will be a great opportunity to update our
agenda, and to maintain awareness about
working on governance issues in a sustainable
way, so that it does not get lost or replaced in
years to come.

Banks Global Practice, renewing our vision

and connecting more directly with the needs
and the perspectives of ordinary citizens. We
need to do this in a constructive and
sustainable way over time. Perhaps this would
our collective achievement. We have a very

capable team with a very strong global

footprint, and the ability to mobilize
knowledge from across the world. I see us
making a lasting difference in terms of how
governance is seen as part of the
development agenda.

CV MENA: Looking into the future, what

would you see as your achievements or
legacy as the leader of the GGP?
Mario Marcel: What I would like to see is a
legacy of this generation of governance
specialists coming together at the World

The Governance Global Practice

Vision, Mission, and Delivery Structure
Trustworthy Institutions for Developement.

Support countries in building open, effective, and
accountable institutions for inclusive

1. Region Focused: Practice Managers and Teams
2. Global Solutions Groups (Technical Streams)
3. Global programs and partnerships supporting
Regional Practice Managers and the Global
Solutions Group
4. Cross support to all Global Practices and Bank
5. Collaboration and joint operations with other
Global Practices


Why Governance Matters

Perspectives from World Bank Management
CV MENA recently reached out to World Bank senior management to better understand their perspectives on governance what it is and
why it matters. We received responses from around the region, reflecting local, regional and international perspectives on the issue.

Steven Schonberger
Practice Manager, Water Global Practice:
Governance matters because it is the basis
for trust between government and the
citizenry and amongst the citizenry. When
people believe that others are acting fairly,
they become constructive participants and
contributors to development.
governance is broken, everyone believes
they are justified in focusing only on their
immediate, narrow personal interests
even at the expense of others and the
basic collective action needed to build a
healthy and wealthy country is impossible.
Therefore, it is particularly important to build
confidence in good governance amongst
young people, who naturally tend toward
collective action, and whose energy and
impatience inevitably drive a countrys

Nadir Mohammed
Country Director, MNA Strategic
Cooperation Department:

trajectories varied based on the two factors

that I highlighted (and, of course, both are
also linked). Governance in particular
matters for many reasons. First, good public
financial management (PFM) systems,
effective public administration, transparent
rules and regulations, modern procurement
systems, rule of law, autonomy of regulators
and state institutions, anti-corruption
measures and legislation are all critical
governance elements for efficient and
effective service delivery and better
outcomes from public resources.
Second, citizens' trust in government, their
attitude toward work and delivery, and
accountability in the use of public resources
largely depend on existing governance
structures. Third, good governance is key for
political stability and social cohesion, which
are key prerequisites for economic progress.
Fourth, poor governance not only impacts
public services but also stifles competition in
the private sector, deters foreign direct
investment (FDI) and private initiatives
because of fear of state capture. Fifth, good
governance also correlates with peace.
There is evidence that conflict and civil war
erupt in many countries because of the
perception of unequal distribution of wealth
and political power that emanate from weak
governance structures (both in terms of rules
and implementation of rules).

Neil Simon M. Gray,

Director, Budget, Performance Review and
Strategic Planning:

Governance matters for development and, in

my opinion, it is the most pivotal
determinant of development outcomes and
the World Banks twin goals of eliminating
extreme poverty and boosting shared
experience in different parts of the world, I
came to the realization that leadership (and
vision) and governance structures explain
most of the differences in economic progress
of various countries. Even in my most recent
experience in the GCC countries, which have
similar endowments in terms of their human

Governance in its broadest sense, right from

voice through to accountability, is critical to
ensuring that government (at all levels) and
development partners are doing right by the
poor and disadvantaged.
As a senior Moroccan official recently said:
Since 2011, citizens speak up and speak up
assertively. This makes my work much more
effective. Example: I now know if a rural road
is heading in the right direction, being
correctly built and the funds properly used.
Communities make themselves heard,
holding us responsible.

Eileen Murray
Country Manager, Tunisia:

Good governance matters because it ensures

the perspective of the common good is not
forgotten in our development work, and also
gives the common citizen some comfort of
inclusiveness in the sense that their voices
are being heard in terms of better
transparency and good governance. The
quality of governance has a demonstrable
positive impact in the efficacy of public
spending and development effectiveness.
Results in primary education, health, water,
or infrastructure are weaker and less
sustainable in contexts where governance is
poor, whereas good governance gives a
sense of inclusion to those citizens who are
the primary beneficiaries of these public
services that the quality of the service
rendered has improved.

Ferid Belhaj
Country Director, Iran, Iraq, Jordan,
Lebanon, Syria:

Governance matters for it is the only
development. The rule of law, transparency
in transactions, open and predictable due
processes and accountability for all. All are
one, forming the compounded and
indivisible underpinning of governance.
Without it, we, as the World Bank, a leading
international community at large, would not
be in any position to help achieve our goal of
providing a credible way to prosperity, and a
compelling argument for eradicating
Haleh Z. Bridi,
Director, Regional Programs and

where checks and balances exist, where

institutions function and where corruption is
limited. Improving governance is therefore
fundamental to restoring prosperity and
bringing stability to the MENA region.

Senior Regional Advisor,

MENA Vice Presidency:

Steen Lau Jorgensen

Country Director, West Bank and Gaza:
Governance matters because without good
governance there is poor service delivery,
poor job creation and poor development in
general. That is also the problem though
that governance is often most visible when it
is poor. When there is good governance,
things work and get done it is invisible. So
we need to keep reminding ourselves and
our partners about the essential role of
governance in delivering development
solutions, even when we have made
progress. There is no development without
good governance.

Gerard A. Byam
Director, Strategy and Operations,
MENA Vice Presidency:

Formal and sustainable jobs, especially for

youth and women in the MENA region, will
be created through private investment. Yet,
investment will go where it is protected,

Franck Bousquet

Governance matters because it is about

accountability, which is at the core of
ensuring the sustainability of our support.
The thrust of all of our efforts is to help
governments to deliver effective services to
their citizens. To achieve and sustain the
desired results, the institutions of service
delivery must be accountable to the
beneficiaries of those services. That is why
governance matters.

Governance is a critical issue that relates to

several of the key areas of focus for the
MENA region, such as improving service
delivery, and fostering accountable and
transparent institutions. It is important to
note that citizens hold their governments
accountable for delivering basic public
services and promoting inclusive growth that
crowds-in all sectors of society.
To this end, recent history in the region
serves as a reminder that the alternative to
inclusive governance is often social unrest
and, in extreme cases, violent conflict. For
this reason, focusing on governance and
promoting greater citizen engagement is of
paramount importance.

The Governance Global Practice

Portfolio and Engagement


A Conversation with the GGP Staff

Rima Koteiche
Senior Financial
Management Specialist

Pierre Messali
Senior Public Sector

What does the term governance

mean to you?
Rima Koteiche: In the public sense, it means
to deliver public services in an efficient and
effective manner. And as World Bank
President, Dr. Jim Kim, recently noted: It
means protecting citizens from violence and
ensuring the rule of law. It means choosing
wise policies and investments; maintaining
public assets and ensuring that civil servants
are skilled. It means directly confronting
corruption so that citizens have faith in their
leaders and systems.
Pierre Messali: I would add that governance
also refers to a legal and regulatory
framework publicly developed, whereby the
decisions toward society and citizens are
made by responsible authorities. Usually the
word governance is associated with a
virtuous process whereby the society and
citizens effectively control the decisionmaking process; it is meant to feature a
good governance system. But the word
governance can also be viewed in a more
neutral way as a system that defines the
mechanisms and procedures by which
decisions are made and it is often associated
bad governance, especially in
authoritarian systems.
Rachel Lipson: This seems like an easy
question, but it is actually a really tough one.
But I think the answer has to center around
institutions, and how those institutions
respond to communities and their needs,
and how they safeguard individual rights.
These institutions are guided by their
responsibilities for public goods provision,
and, to a varying extent, democratic
Moad Alrubaidi: In the Arabic language,
governance means Haokama or Hokm,

Rachel Lipson
Analyst, Public Integrity
and Openness

Moad Alrubaidi
Senior Financial
Management Specialist

which is a reference to authority, control,

and power to make decisions. Governance is
the structure whereby an organization
(private/public/other) has a defined
methodology of making decisions to execute
its mandate.
Francesca Recanatini: I must agree with my
colleagues: governance is a complex concept
dimensions. Each of them has highlighted an
important aspect of governance. In my
mind, governance encompasses the
traditions and institutions by which authority
in a country is exercised, and by which
citizens and businesses can participate in the
governing of the country.

What role do governance reforms

play in strengthening and
supporting development of MENA
region countries?
Rima Koteiche: Governance reforms play an
important role in the development of the

Francesca Recanatini
Senior Public Sector

MENA region. However, any governance

reform plans need to be backed by the
political will and commitment from political
leaders and legislators to implement such
reforms. In the absence of a strong political
will, any reform efforts will have a weak
impact. In addition, the MENA countries are
going through a transitional period, with
frequent political alternation. This is an
impediment to reform, especially if the
elected leaders are enacting reforms to curb
corruption, thereby challenging vested
Pierre Messali: Governance reforms should
also have an impact on economic
development if they establish a renewed
reliance on and trust in the government.
Some of the more challenging reforms in the
region touching upon subsidy reductions and
tax increases urgently require ownership by
and support from the citizenry.
Rachel Lipson: Governance reforms should
help to deliver needed goods and services
more quickly, at better quality, and at a

lower price to the taxpayer. Such reforms
should also help to foster an open and fair
environment where new ideas and
innovation can thrive, thereby creating the
space for economic growth, job creation,
and shared prosperity.
Moad Alrubaidi: While we may have good
constitutions and regulatory frameworks in
the MENA region, often what is lacking is the
implementation of such regulations, as well
as an accountability and sanctions process.

In a loose environment, individuals can have

a pervasive impact based on random
decisions. Such flexibility may be perceived
to be good when the individuals with the
power are leveraging their power to do the
right thing, but with power comes
responsibility and that is why you need good
Francesca Recanatini: It is widely recognized
that poor governance and corruption can be
harmful for standards of living and the
distribution of income of citizens reducing
literacy and per capita income, while
increasing infant mortality. Whats more,
expenditures and increases poverty, thus
reducing investment efficiency. Thus,
governance reforms are key for the
development and stability of the MENA

What are the top three challenges

facing governance reforms in
MENA in your opinion? Why?
Rima Koteiche: (i) Political instabilitythe
changes in governments and the Arab Spring
voices reflect the citizen needs for good
governance. However, transition countries
remain mired in political and economic crises
hindering institutional and economic
development. (ii) Decreasing security and

emergence of armed militants and

terrorists this renders the MENA region an
unsafe place for international donors and
development communities to step in and
carry out governance and other reforms. (iii)
Confessionalism domestic and regional
dynamics of conflict are a major and overarching constraint to economic growth and
development, especially in Lebanon.
Pierre Messali: I would add political
fragmentation to the problem of
Rachel Lipson: To me, one of the major
challenges regarding governance in MENA
relates to how closely the state, business,
and political power are connected and
intertwined (in some cases, with corruption
being the glue to these relationships). In my
view, future growth and prosperity will
depend to a large extent on countries

abilities to challenge some of the traditional

public-private relationships, and open up
doors for new firms to compete, innovate,
and create jobs. Other top challenges I see
include: sectarian tensions; lack of shared
national vision/conception of where the
country should be going; a limited sense of
citizen agency (that is, do people feel like
they really have the ability to change
things?); and inter-agency tensions and turf
wars over policy areas.

Moad Alrubaidi: (i) Good Governance

means more structure and controls which in
turn means less random decision-making. In
the MENA region, many prefer to be free
from restrictions, enabling them to make
decisions as desired. (ii) Governance reforms
are pervasive across all sectors and require a
strong and comprehensive vision by the
people and their leaders to develop and
implement short-, medium- and long-term
plans in multiple sectors. This is challenging
in a fragile and fluid political and security
environment. (iii) If it is not broken, do not
fix it. Some countries were content to leave
things as they were, and found ways to
sustain their privileges. Of course, such
privileges were challenged during the 2011
events. Countries with previous strong
efforts regarding governance reforms were
able to quickly take the necessary actions to
respond to the demands of the citizens.

What are the top three factors for
governance reform success in your
opinion? Why?
Rima Koteiche: In my view, it would be: (i)
Political will: if it exists, then the consent of
the legislators, regulators and executives will
be obtained and reforms will be passed
smoothly and successfully. (ii) Building
institutions so that governments can
efficiently deliver public goods, and conduct
sound economic management. Regulators
ensure the rule of law, and the legislators can
provide leadership and oversight. Capable
and accountable states also constitute the
strongest defense against corruption. (iii)
Participation and citizen engagement:
Greater participation and oversight by civil
society and media that have adequate access
to information regarding the operation of
state institutions can play a crucial role in
fostering accountability.
Moad Alrubaidi: I believe that the top three
factors for governance reform success must
involve: (i) Development of the relevant
strategic plan for the country context and a
commitment to it. (ii)
Focus on the
priority areas where governance reforms will
have the most impact. (iii) Leading by
Rachel Lipson: I would add to that: (i)
Leadership buy-in and commitment. (ii)
High-profile driving forces and demand for
change (which could come from the media,
or social sentiment). (iii) Visibility to citizens,
that is, changes and reforms have to be
tangible and produce some initial results for
people for the momentum to continue.

Francesca Recanatini: One must also look at

the governance reform process. The overall
reform process needs to receive strong
political support from the leadership both in
terms of messages and resources. Moreover,
the information used to help design the
reforms should be shared and used by a wide
range of stakeholders who could help
identify the most appropriate policy
measures. Participatory processes should
also be used at the implementation stage so
that clear channels of communication
between citizens and the government are
established. This approach, based on
political commitment, participation, and
coordination and collaboration among
different actors; and, in turn, it will reduce
the risks associated with the political
economy issues. It will also increase the
ownership of the reform process, ensuring
greater sustainability over time.

In your opinion, how will the new

Governance Global Practice (GGP)
structure further World Bank
governance reform activities?
Rima Koteiche: With its global and diverse
resources and knowledge, the GGP will need
to engage in developing capable and
accountable states and institutions that can
set out and implement sound policies,
thereby ensuring the efficient and effective
service delivery of public goods. They should
also be capable of combating corruption. In
these ways, they can help to reduce extreme
poverty and contribute to shared prosperity.
The pool of experts in this GP, as well as the
contributions of cross support, gives it a
competitive advantage in delivering the best

advice and support for client countries with

issues related to governance in all of its
aspects thus completing a governance
chain that reduces the gaps and harmonizes
the outputs and outcomes.
Francesca Recanatini: I would like to add
one caveat to Rimas comment. While the
new structure introduced by the GPs should
facilitate the sharing of expertise and
knowledge by pooling together experts, we
are still struggling to implement fully such a
structure. We knew this aspect of the
transition to a GP would be challenging and
we need to focus now on making the Global
Practice a fully functioning reality within the
World Bank.
Moad Alrubaidi: The GGP structure is still
new and will evolve over time. A lot of work
has gone into establishing the new GGP
structure with the idea that it will help the
World Bank Group provide client countries
with an integrated value. We have started to
see such a value, as we are now working
closer with colleagues from other
departments within the GGP. Such
collaboration needs to continue and we
need to reach out to other GPs, as
governance work is not limited to the GGP.
Rachel Lipson: I agree. We also need to
provide integrated approaches to crosscutting issues. The new GGP should help us
to look at problems from different angles,
involving new and different stakeholders in
the process. Hopefully, this will also help us
to develop more innovative solutions.
Finally, I think that the new GGP will help to
provide us with greater accessibility to global
knowledge on what has and has not worked.

The Gouvernance Global Practice

Staffing and Global Reach
767 staff
62% in 97 country offices.
Financial Management & Procurement specialists account for more than half of all staff but also highly decentralized.


Maarefah Member Face-to-Face Meeting

Introducing the Governance Global Practice
To Governance Professionals
Across the MENA Region
Natacha DRAGHI
Maarefah Coordinator

Gabriella Kusz
Senior Financial Management Specialist

Sarah Mousa
The Maarefah Community of Practice (CoP)
is a vibrant, interactive online platform
introduced by the World Bank to facilitate
dialogue and provide resources for
governance practitioners and stakeholders
in the Middle East and North Africa (MENA).
Specifically, the online platform addresses
the topics of: procurement reform, public
sector management, public financial
corporate financial reporting. The World
Bank developed this innovative platform in
response to the need for a collaborating and
sharing common governance knowledge,
experiences and lessons among MENA

Since its establishment in September 2013,

Maarefah has served as the platform for
numerous discussions, events and activities,

all online. It has achieved its aim of

facilitating sustained and continuous peerto-peer dialogue and capacity development
plus expert knowledge transfer
through the most cost-effective, accessible,
flexible and adaptable mechanism available.
Through its online activities, Maarefah has
offered key governance stakeholders,
counterparts and World Bank MENA staff
the opportunity to maintain a dialogue and
exchange of knowledge and ideas on the
subject of governance on an ongoing basis.
Early last year, in recognition of the need
to continuously improve and build a
stronger, more active Community, the
World Bank decided to draw together
members of the Maarefah CoP in a faceto-face event. This approach aligns with
best practice in the area of CoP research
and development. It offers an innovative
way to complement the online activities of
the CoP and to build strong bonds and
relationships between members.

Maarefah Event Objectives

enables enhanced cooperation, a more

timely exchange of information, the

For the World Banks GGP, the Member

Face-to-Face Meeting was also an

building of local and global knowledge that

can be adapted to client circumstances,
the development of more integrated and
innovative yet realistic interventions and
solutions for real problems, and more
timely evaluation of results.

important opportunity to gauge client

reactions to the structural changes in
general, and the formation of the GGP in
particular. Client perspectives on these
changes present an important source of
insight and feedback for the GGP.

Not only did the Member Face-to-Face

Meeting offer an introduction to the GGP,
but it also gave MENA practitioners
involved in the Maarefah CoP a glimpse of
the new GGP in action. Event sessions
showcased the subjects that now fall
within the scope of the new GGP. They
also demonstrated the
knowledge base of the GGP and improved
services that the GGP can offer to client

In terms of gathering CoP members face-toface, the event successfully drew a total of
250 participants from the region. The
participants included key governance
stakeholders, CoP members, and World Bank
staff from all countries in the MENA region.
The event served as an important platform
for generating dialogue and knowledge
exchange about key governance issues and
challenges facing the region.

The first three-day Maarefah Member

Face-to-Face Meeting was held on
December 15-17, 2014 in Amman, Jordan.
The objectives of the event were threefold: to officially launch the CoP, to offer
an opportunity for Maarefah CoP to
connect in person and further fortify their
online engagement and activities, and to
introduce and familiarize members of the
Maarefah CoP with the newly formed
World Bank Governance Global Practice
The Member Face-to-Face Meeting
presented an important opportunity for
the GGP to familiarize governance
practitioners in the MENA region with the
new structural organization of the World
Bank, specifically what this means for
governance-related projects and activities.
The Member Face-to-Face Meeting
introduced the CoP to the new design of
the GGP, including its advantages and
The CoP was informed about the new
reorganization, which has sought to
overcome the fragmentation of the past
structure. Previously, governance-relevant
professionals were spread among several
sectors and regional units. The previous
system made it difficult to coordinate and
exchange information, and to cooperate in
order to maximize the potential of a given
project or task.
The new GGP structure solves this
fragmentation by interconnecting the
functions of financial management,
procurement, and the public sector. For
practitioners in the MENA region, this
means that the GGP will be able to more
effectively serve their needs. The new GGP

The regional event promoted integrated

knowledge-sharing on governance issues
and institution-building, and fostered
regional and country-level dialogue on these
issues. The event also provided the
opportunity to: disseminate regional and
global expertise; share key relevant regional
experiences; increase awareness regarding
the different aspects related to the design
and implementation of governance reforms;
and reflect on the ways forward for the
countries involved.
The event agenda was structured to offer a
multifaceted view of governance. Event
sessions focused on a number of different
topics that reflected the scope of the new
GGP including:

Designing and Implementing

Public Financial and Investment


The Role of Audit Institutions and


Natural Resource Management

State-Owned Enterprises

Justice Sector Reform

Exploring New Frontiers

Corporate Financial Reporting

Public Procurement Capacity,

Innovations, and Enabling Public
Procurement Implementation

Using Information and Data on

Governance and Quality of


Internal Controls

Procurement Transparency
Budget Execution

Strengthening Transparency and

Accountability in Morocco as a
Case Study

their keen interest in engaging more actively

in the Maarefah CoP. This was reflected in
the surge in the number of discussion
threads by Maarefah members and the rise
in the number of new membership requests

reflects positively on the structure of the

new GGP and its ability to garner knowledge
for the enhancement of governance

both during and after the Maarefah

Member Face-to-Face event. In their
feedback, participants praised the meetings
successful approach to combining online and
face-to-face meeting mechanisms as a
means of enhancing peer-to-peer dialogue
and capacity building. Finally, participants
noted that the opportunity for multi-sectoral
experience sharing was very innovative. It
offered a chance for participants to break
out of their sector perspective and obtain a
broader view regarding the impact and
activities of their discipline. This feedback

Following the conclusion of this successful

event, Maarefah will continue to encourage
active communication and dialogue between
members. It will seek to provide high quality
online events and opportunities for
engagement. A key component of
Maarefahs success is its membership. We
invite Connecting Voices MENA Magazine
readers to join Ma'arefah. Please see the
details below to log on and join today.



Maarefah Event Outcomes

Overall, participants were highly satisfied
with the event. Indeed, many expressed

Your participation in Maarefah is essential to achieving our common goal of sharing knowledge on governance, financial management
and procurement in the MENA region.
The membership procedure is quick and only takes a few minutes.
If you are not already a member, please join us today at: page


Maarefah Event
Day 1

Day 2

Day 3


Justice Sector Reform


Hisham Waly, Practice Manager,

Governance Global Practice, World Bank

Connecting Voices and Maarefah

Manuel Vargas, Lead Financial

Management Specialist, Governance
Global Practice
Gabriella Kusz, Sr. Financial Management
Specialist, Governance Global Practice

Paul Prettitore, Sr. Public Sector Specialist,

World Bank
Amit Mukherjee, Lead Public Sector
Specialist, World Bank
Hadeel Abdelaziz, Director, Justice Center
for Legal Aid

Rama Krishnan, Lead Financial

Management Specialist, World Bank
Bjorn Philippe, Sr. Urban Specialist
Franck Bessette, Sr. Financial Management
Specialist, World Bank
Abd AL Moghni Nofal, Palestine Municipal
Development Fund

Coffee Break

Coffee Break

Coffee Break

Designing and implementing Public

Financial Management, Public
Investment Management

Exploring New Frontiers in Corporate

Financial Reporting

Internal Controls

Manuel Vargas, Lead FMS, World Bank

Emmanuel Cuvillier, Sr. Public Sector
Specialist World Bank
Table Discussion

Riham Hussein, Financial Management

Specialist, World Bank
Gabriella Kusz, Sr. Financial Management
Specialist, World Bank
Iyad A Shehadeh, Director, Risk Assurance
Services, PWC, Jordan
Husam Al-Khadash, Head of Department of
Accounting, Hashemite University of

Pierre Messali, Sr. Public Sector Specialist,

World Bank
Hosam Diaa, Sr. Financial Management
Specialist, World Bank
Karem Mahmood, Head of Accounts and
Financial Directorates at the Ministry of
Finance, Egypt

Procurement Transparency in Budget


Tawfiq Jaber, High Authority for Tender

Control (Yemen)




The Role of Audit Institutions and

Demand-Side Governance Institutions

Public Procurement Capacity,

Innovations, and Enabling Public
Procurement Implementation

Strengthening Transparency and

Accountability in Morocco

Mona El-Chami, Sr. Financial Management

Specialist, World Bank
Yngvild Arnesen, Financial Management
Specialist, World Bank
Lida Bteddini, Public Sector Specialist,
World Bank
Zineb Mahrez, ICT4DEV-Mundiapolis

Regional Procurement Reform Update

World Bank Governance Global Practice,
Public Integrity & Openness Team
MENA Network of Public Procurement
Institute des Finances
Enabling Public Procurement
Sepehr Fotovat, Sr.
Procurement Specialist
Khadija Faridi, Procurement
Specialist, World Bank

Coffee Break

Coffee Break

Natural Resource Management

Using Information and Data on

Governance and Quality of

Franck Bessette, Sr. Financial Management


State-Owned Enterprises

Lydia Habhab, Public Sector Analyst, World

Peter Mousley, Program Leader, World

Francesca Recanatini, Sr. Public Sector

Specialist, WB
Edouard al-Dahdah, Sr. Public Sector
Specialist, WB

Fabian Seiderer, Sr. Public Sector

Specialist, World Bank
Khadija Faridi, Procurement Specialist,
World Bank
Mohamed Tangi, SGG
Houcine Ennaciri, MCRP
Panel Discussion (Lahcen Kers, Mohamed
Bousta, Rachid el Mellouki, Brahim Labiz,)

Concluding Remarks and the Way


Hisham Waly, Practice Manager, World






Libya 51
Morocco 53
Tunisia 55
Libya 56

A Snapshot of Public Investment Management in Libya
Michael Schaeffer
Senior Public Sector Specialist

Wesal Ashur
Public Sector Analyst
From 2003-2011, public expenditure in
Libya was high by international standards.
At 39 percent of gross domestic product
(GDP) on average during 200305 (and 35
percent in 2008), consolidated public
expenditure was among the highest in the
This level of public spending
exceeded levels recorded in economies in
transition in Eastern Europe and Central
Asia, as well as in fast-growing Middle East
and North African (MENA) countries, such as
Algeria and Tunisia. However, due to the
ongoing nature of political turmoil over the
past few years, development budget
spending during fiscal year (FY) 2012-2014
virtually collapsed as a share of total budget
spending (Figure 1).
Figure 2: Libyan Development Spending as
a Percent of Total Budget (FY 2012-2014)
Source: Ministries of Finance and Planning,
Libya, 2015.
Although the annual recurrent and
development budgets in Libya are
presented and approved as a single
document, their preparation follows
parallel, bottom-up approaches.
annual budget itself is still split between
recurrent and development expenditures,
with preparation of the recurrent budget
covering wages (Chapter I), goods and
services (Chapter II), and subsidies and
transfers (Chapter IV) under
responsibility of the Ministry of Finances
Budget Department. The preparation of the
development budget (Chapter III) is the
responsibility of the Budget and Follow-up

Departments of the Ministry of Planning.

Development budget execution rates are
relatively low, at approximately 25 percent
of those budgeted over the past few years.
A diagnosis of the Public Investment
Management (PIM) System against the
World Bank 28 Public Investment
Management Drill-Down1 indicator set was
conducted in December 2013-February
2014.2 The Public Investment Management
Diagnostic was designed to assist
governments in determining how their PIM
systems operate. The World Bank tool
encompasses a set of indicators used to
identify areas of relative public investment
weaknesses and strengths. The indicators
enable a drill-down of the PIM system so
that bottlenecks and gaps can be more easily
identified. The indicators are still in a
relatively early stage of development. Over
time both indicators, and the criteria used
for scoring against each indictor, will be

augmented in line with experiences from its

application. The diagnostic followed the
evaluation framework suggested by the
World Bank (2010)3 and is based on semistructured interviews of government
officials and a review of relevant publications
and written responses by the Ministry of
Planning to a PIM questionnaire.
Each indicator and subcomponent is
allocated a score between A and D. A score
of A indicates that the element of the PIM
system being assessed is very well developed
with few if any areas for improvement.
There are very few countries where a score
of A would be allocated across all of the
indicators (for example, Chile and the United
Kingdom). A score of D suggests that there
are no processes of even informal
requirements in place to ensure that the PIM
element being assessed is completed. A
score of B or C is given when there are

some systems and measures in place, but
there are still areas that need strengthening.
There are fewer areas that need bolstering if
a score of B is given compared to a score of
The PIM diagnostic revealed substantial
arrangements for public investment
management. As provided in the diagnostic,
Libya is experiencing a significant degree of
fragmented institutional arrangements. An
integrated approach to public investment
ensures that an appropriate balance
between recurrent and development
expenditure is achieved within expenditure
programs and that operating and
maintenance costs of investment proposals
are not forgotten. An integrated approach
needs to be introduced at four levels4, the
first two of which have implications for the
way public investment management is
organized at the center of government: (i)
organizational and staffing integration, (that
is, no separation of responsibilities for
capital and recurrent expenditure between
organizations or between departments); (ii)
integrated budget preparation, (that is, the
same staff are responsible for recurrent and
capital budgeting); (iii) unified budget
documentation and presentation; and (iv)
unified reporting and accounting systems.

PIM 11 Guidance and
preliminary screening
PIM 12 Formal project
PIM 13 Independent review
of appraisal
PIM 16 Project selection and
PIM 17 Project
PIM 21 Adjustment for
changes in project


PIM 22 Facility operation


PIM 23 Ex post assessment


Figure 2: Libyas Eight Core Public

Investment Management Indicators
Source: Libya: Public Investment Management
Performance Assessment. Michael Schaeffer and
Wesal Ashur, World Bank, 2013.

Figure 2 presents a snapshot of the Eight (8)

Core Public Investment Management
indicators. A central feature of the Libya
public investment management system is
that it is non-uniformly based on the term
contract rather than on the standard
budgetary term of project. This can be
explained by the fact that small contracts

tend to prevail as they fit inside a lower value

threshold that exempts them from obtaining
prior approval before release of their initial
resource proceeds. However, not all sectors
have applied this term uniformly.
The excessive fragmentation of public
projects resulting from the extensive use of
contracts in the public investment system is
conceptually flawed and unnecessarily
Conceptually, the standard definition of a
project includes its goals, a complete list of
its physical targets, human resources and
implementation, and projected starting and
ending dates. These parameters allow for
monitoring and evaluation during and after
implementation. In exchange, a contract
often contains a smaller subset of these
Thus, while the final goals of a project are
formulated in relation to its different
components and inputs, a contract often
addresses an intermediary goal associated to
a specific component. In addition, while the
inputs of a project represent commitments
to the final output, the inputs of a contract
are commitments to partial outputs. It is
obvious that the actual number of public
projects is much lower than the thousands of
contracts registered in the Libyan PIM
preparation, monitoring, and evaluation.
Libya features dual budgeting, which
represents a significant obstacle to budget
modernization as well as to efficient public
investment planning and implementation.
Not only is the development budget
prepared as a separate budget from the
operating (current) budget, but the
administrative and financial in nature,

whereas the development budget is

classified by sector. In practical terms, these
divisions prevent proper joint programming
for operating and capital expenditures. The
classification impedes the linkage of
resources with specific sectoral policy
Despite the current political turmoil, the
World Bank continues to provide technical
assistance to Libya. The on-going work has
been selective in content and with
counterparts, focusing on the strengthening
of the public financial management system,
where strong working relations had been
established before the political crisis
materialized. In particular, the World Bank
has implemented programs for: (i) the
introduction of a small-scale management
information system linking treasury,
accounts, and budget departments at the
Ministry of Finance; (ii) a modified budget
coding structure; and (iii) the preparation of
the primary elements of public investment
guidelines, as well as guidelines for dealing
with the build-up of legacy infrastructure
projects. However, due to the recurrence of
conflict and enhanced political uncertainty,
the underlying budget coding structure
(while in place) remains largely unused.

Drill down is an expression used to mean to examine

data in greater detail.
2Schaeffer, Michael and Wesal Ashur, Libya: Public
Investment Management Performance Assessment.
World Bank (2013).
3 Rajaram, A., T. Minh Le, J. Brumby and N. Biletska, A
Diagnostic Framework for Assessing Public Investment
Management, World Bank Policy Research Working
Paper No. 5397, 2010.

Integration of Capital and Recurrent Development

Budgets: Issues, Problems, Country Experience and Way
Forward, Public Expenditure Working Group, World
Bank, 2005.

More than Ten Years after
Moroccos Family Code Reforms:
Are Gender Gaps Closing?
Senior Public Sector Specialist

Introduction: In 2004, the Government of

Morocco made major amendments to its
Family Code, known as the Moudawana,
which covers personal status issues such as
marriage, divorce, alimony, child support,
child custody and inheritance. The reforms
covered a broad array of personal status
issues that are important from the
perspective of gender equality.
Womens rights within the household
improved on two levels. The first was that
husbands and wives were provided joint
responsibility in family matters, making
both de jure heads of the household.
Theoretically, this could provide a basis for
wives to exert more influence in household
decision-making. The second was that
women were no longer required to be
obedient to their husbands, a concept which
had been a key element of the earlier law
and continues to exist in other family codes
in the region. Obedience had been used as a
justification for husbands to, among other
things, forbid wives from working, traveling,
controlling their own incomes and acquiring
economic assets. Failure of a wife to display
obedience had been legal grounds for a wife
to lose access to her alimony financial
resources to care for the family which a
husband is legally required to provide.
Restrictive social norms are at least partially
limiting the ability of women to exercise
these new rights. For example, a 2009
survey found that 19 percent of urban
women and 15 percent of rural women
reported domestic violence linked to the
exercise of their new rights under the
Moudawana.1 Further, public sector services
linked to these rights are often inadequate.
The Family Solidarity Fund, established to
directly assist vulnerable divorced women,
had only around 800 beneficiaries as of the
end of 2013, a relatively small number given
the weak enforcement of decisions providing
alimony and child support.
implementation of the reforms remains
difficult due to a general lack of
comprehensive data. Comprehensive data
on the implementation of reforms are
lacking, but what limited data are available
shed some light on reforms aimed at greater


gender parity, namely: procedures for

entering into marriage; management of
marital property; and access to divorce.
Marriage Procedures: Women were given
the right to sign their own marriage
contracts, effectively eliminating the
requirement for consent from a male
relative acting as a legal guardian. This could
increase a womans bargaining power both

the ages of fifteen to eighteen with the

consent of a judge. However, courts have
not been an effective check on the increase
in underage marriages. The number of
underage marriages per year increased from
38,331 in 2007 to 44,134 in 2010.
Moreover, the vast majority of applications
for underage marriages are accepted by
courts 89 percent in 2007 and 92 percent

before and during marriage, since the

contracts regulate a number of factors such
as financial maintenance of the wife by the
husband and dowries. Women can also
place a number of stipulations in the
marriage contract that can protect their
interests during marriage, including
forbidding polygamy and allowing a wife
unilateral repudiation as a form of divorce.
There are no comprehensive data to assess
the levels to which women are indeed
adding such stipulations and the impact of
doing so. However, women are not yet
signing marriage contracts on their own in
large numbers, with women only doing so in
around 21 percent of marriages in 2010, a
level mostly unchanged since 2007.2 One
possible factor is the strength of social norms
that counter this new right for women.

in 2010. In this context, the burden of

underage marriage falls almost exclusively
on girls. In 2010, 99 percent of requests for
approval of underage marriage made to
courts involved girls, a percentage that has
not changed since 2007.3 Girls married as
minors face certain risks. Data shows that
marriages involving minor girls tend to result
in divorce and re-marriage, with 62 percent
of women in a second or greater marriage
reporting their first marriage took place
before age eighteen.4 Domestic violence
rates for married women are highest among
younger women, particularly for those
between the ages of eighteen and twentyfour. Although girls under the age of
eighteen were not included in the survey,
data suggests that the younger the age of a
woman at marriage, the more likely she is to
be subjected to domestic violence.

Although the Moudawana raised the

minimum age of marriage for girls from
fifteen to eighteen, equalizing it with that for
boys, an exception was reserved allowing
both boys and girls to be married between

Control of Marital Property: The default

marital property regime in Morocco remains
separate property, under which spouses
remain the legal owners of any assets

registered to them acquired during, or prior
to, their marriage. In case of divorce, each
party takes from the marriage any assets
registered under their names. The
Moudawana now allows married couples to
sign a contract separate from the marriage
contract establishing the terms under
which assets acquired during marriage are
managed. One option is for married couples
to establish a community property regime
whereby any assets acquired during the
marriage are considered jointly-owned and
evenly divided upon divorce.
A community property regime is particularly
beneficial to a spouse who is outside of the
formal labor force, and performs primarily
non-compensated tasks related to the
organizations (CSOs) have offered assistance
to women in arranging favorable provisions
in these contracts. However, there are no
comprehensive data available as to the
extent to which married couples are entering
into such agreements. Given the relatively
low labor force participation of women,
these arrangements could prove beneficial
in terms of increasing womens control of
economic assets both during marriage and
after divorce.

Access to Divorce: The primary effect of the

changes to the Moudawana on divorce was
to provide women with the ability to initiate
divorce without having to show some type of
cause by their husbands, such as lack of
financial support, failure to abide by the
marriage contract, abandonment, harm or
absence all of which have placed
considerable burdens on women. Apart
from showing cause, women could obtain
divorce only by renouncing their financial
rights, such as rights to their dowries and
alimony, through a process known as khul.
However, for many women, especially the
poor, these interests might be the only
considerable financial asset for the divorced
woman, especially given the low labor force
participation of married women in Morocco.
Women can now seek divorce by mutual
consent, which requires the consent of both

parties, and by citing irreconcilable

differences, which can be initiated by either
husband or wife.5 Available data suggests a
positive trend away from khul and toward
divorce based on the mutual consent of
husband and wife, with the latter allowing
women access to financial assets. In 2007,
nearly one-third of divorces were done
through the khul process, with this rate
dropping to just over 20 percent in 2010.6 In
the meantime, divorces based on mutual
consent of the spouses rose from 30 percent
of divorces in 2007 to 46 percent in 2010.

Enqute nationale sur la prvalence de la violence

lgard des femmes (ENPVEF), Haut Commissariat au
Plan (2009).
2 Femme Marocaine en Chiffres, Tendances dvolution
des caractristiques dmographiques et
socioprofessionelles, Journe Nationale de la Femme,
Haut-Commissariat au Plan, Royaume du Maroc (2012).
3 La Femme Marocaine en Chiffres, Tendances
dvolution des caractristiques dmographiques et
socioprofessionelles, Journe Nationale de la Femme,
Haut-Commissariat au Plan, Royaume du Maroc (2012).
4 ENPVEF, Haut Commissariat au Plan (2009).
5 Men can still unilaterally repudiate the marriage,
though this now requires judicial consent whereas
before it could be done verbally in the presence of
witnesses. Women are provided this option only if this
stipulation is included in the marriage contract, which in
turn requires a husbands consent.
6 Ibid, Footnote 2.

New Paper
The Quest for Subsidy Reforms in Libya
World Bank Policy Research Working Paper 7725, By Abdelkrim
Araar, Nada Choueiri, and Paolo Verme, March 2015
Shortly before the 2011 Libyan revolution, consumer subsidies were
rapidly increased by the regime in an effort to reduce social
discontent. In the aftermath of the revolution, these subsidies became
important for people's subsistence, but were also a very heavy burden
for the state budget. Since then, the Libyan government has been
confronted with the necessity of reforming subsidies in a politically
and socially complex environment. The Paper uses household survey
data to provide a distributional analysis of food and energy subsidies
and a simulation of the impact of subsidy reforms on household wellbeing, poverty, and the government's budget. Despite the focus on
direct effects only, the results indicate that subsidy reforms would
have a major impact on household welfare and government revenues.
The elimination of food subsidies would reduce household
expenditure by about 10 percent and double the poverty rate while
saving the equivalent of about 2 percent of the government budget.
The elimination of energy subsidies would have a similar effect on
household welfare, but a larger effect on poverty. Government
savings would be almost 4 percent of the budget. The size of these
effects, the weakness of market institutions, and the current political
instability make subsidy reforms extremely complex in Libya. It is also
clear that subsidy reforms will call for some form of compensation for

the poor in a gradual rather than a big-bang approach, as well as a

product-by-product sequence of reforms rather than an all-inclusive

To read the full report, see:


Morocco & Tunisia

The Evolving Field of Audit Regulation:
Charting the Path toward Independent Audit Regulation
in Morocco and Tunisia with a View to Enhancing Audit Quality
for Small and Medium Practices (SMP) and Large Practice Firms
Gabriella KUSZ
Senior Financial Management Specialist
Under the broad umbrella of seeking to
strengthen audit quality for audit firms of all
sizes (in particular, small and medium
practices [SMPs]) throughout Morocco and
Tunisia, the World Bank MENA Governance
Global Practice recently facilitated a
Workshop on The Evolving Field of Audit
Regulation. The Workshop was supported
and financed by the MENA Micro-, Smalland Medium Enterprise (MSME) Facility in
cooperation with the International Forum of
Independent Audit Regulators (IFIAR) and
the Conseil Suprieur de lOrdre des ExpertsComptables (CSOEC) France and the French
Compagnie Nationale des Commissaires aux
Comptes (CNCC). This event brought
together more than 25 representatives from
the profession, as well as officials from the
Ministries of Finance, Central Banks, Capital
Markets Authorities, Supreme Audit
Institutions and other relevant stakeholders.
During the Workshop, participants discussed
the evolution of audit regulation within
these two countries, opening a dialogue and
discussion on country progression toward
independent audit regulation.
This event was structured as a 2-day
Workshop and offered the following:

An opportunity for the Ordre des

Experts Comptables Maroc (OECM) and
the Ordre des Experts Comptables Tunis
(OECT) to commence dialogue on the
subject of independent audit regulation
by opening with an overview of the
current state of audit regulation in their
respective countries;
A presentation and insight from the
CNCC-CSOEC France regarding the role
Organizations (PAOs) in supporting and
An introduction to the subject of
independent audit regulation, what it
means for the development of audit
regulation in emerging countries, and
an overview of IFIAR as an organization;

Insight into the systems of independent

audit regulation in France, Germany,
the Netherlands and the United
Kingdom; and

of reducing the mandatory audit threshold

from 50 Million Dirhams to levels more
appropriate to the size and needs of the
Moroccan MSME sector.

A national discussion on how to

gradually progress toward a system of
independent audit regulation.

The three tangible next steps agreed by the

Tunisian working group included:

As key aspect of this event was to identify

tangible next steps which may guide the
evolution of audit regulation in these two
In brief, the three tangible next steps agreed
upon by the Moroccan working group
(i) Enhancing the audit quality assurance
system of the OECM by including external
representatives on their Control Committee
which is responsible for overseeing the
system of audit quality assurance;
(ii) Updating of the World Bank Accounting
and Auditing Report on the Observance of
Standards and Codes (AA ROSC) so as to
obtain a systems-view of the countrys
current accountancy environment; and
(iii) Enhancing transparency of the financial
performance of entities by engaging with
other stakeholders to discuss the possibility

(i) Organizing local events in order to raise

awareness among different stakeholders
(public and private sector) about the need
and importance of an independent audit
regulation system;
(ii) Exploring the opportunity to have access
to the DDPI (Direction du Developpement et
des Partenariats Internationaux) quality
assurance software in order to enhance the
audit quality assurance system among Small
and Medium Audit Practitioners (SMPs); and
(iii) Speeding up the approval process for the
new version of the law governing the
accounting profession in Tunisia.
These tangible next steps will be captured
along with other relevant details in the form
of a Solutions Paper which will outline how
Morocco and Tunisia may progress in a
gentle shift toward independent audit


Helping Libya Build Strong, Effective and Accountable
State Institutions
In April 2015, the World Bank organized a
capacity building activity for Libyan civil
servants in Istanbul, Turkey. The event was
funded by the multi-donor World Bankadministered State and Peace Building Fund.
The objective of the event was to offer an
overview of how governments work in liberal
democracies, specifically how some
countries have built their state institutions
and public administrations after years of
autocratic rule and severe wars.
Transition and conflict-affected country
experts from the World Bank, the United
Nations Development Program, the
International Republican Institute, as well as
from countries such as Croatia, Romania and
Turkey shared their experiences and
knowledge with Libyan officials. Participants
had the opportunity to discuss and explore
how experiences from other countries might
be relevant and applicable to the current
Libyan context.
Twenty-eight Libyan senior civil servants and
representatives from these agencies: the
Bureau of Statistics and Census, Vision 2030,
the National Audit Bureau, State Property
Authority, and the General Information
Authority. Participants also came from a
number of Libyan government ministries,

including: Planning, Local Governance,

Labor, Economy, Communications, Oil and
Gas, Finance, Industry, Electricity, Health,
Education, and Housing.
The workshop included nine sessions
dealing with the following topics: (i) Setting
the stage: experiences, expectations and
questions; (ii) An overview of functioning
governments, that is, the importance of
establishing a strong and effective center of
government at an early stage in the
management, dealing with issues of
implementing job cuts, dilemmas regarding
salary raises and retention, ghost workers,
transparency, and regulation; (iv) Budget
process, including budget reform, the need
to separate the budget function, and budget
strategies; (v) Local governance and
decentralization, including issues of subnational public financial management and
communications and staffing; (vi) Role of
institutional checks and balances, including
ex-post and ex-ante oversight, financial
oversight, the stages of the annual budget
process, the oversight role of the parliament
in conflict settings, supreme audit
institutions organization and good practices,
and so on; (vii) Role of information and

communication within the government for

policy design and monitoring, including the
experiences of Turkey and Romania; (viii) a
discussion of Vision 2030,one of Libyas
strategic planning document for social
development, institutions and economy; and
(ix) Fragile and post-conflict countries,
presenting the transition experience of
countries like Croatia and Romania, and the
challenges encountered during this process,
solutions implemented, and how steps were
The Libyan participants expressed great
satisfaction with the workshop, the topics
covered during the discussions and the
interactive format of the workshop. They
showed an interest in learning more from
international best practices on building basic
government functions, as well as from the
experience of individual countries that have
gone through similar transition processes.
They also expressed an interest in technical
assistance and training regarding the
implementation of budget reforms.
Additional activities and workshops are
planned for Libyan officials to delve deeper
into such issues, again utilizing comparator
transition and conflict-affected countries
involving experts from international donor
agencies and comparator countries.

Storyboard of the Worshop

Libyan State Institutions
Istanbul April 2015



In The News
Advancing the Fiscal Transparency Agenda:
A World Bank and Tunisian Government Partnership
The World Bank and Tunisias Ministry of Finance organized a two-day
orientation workshop in February 2015 entitled Advancing Public
Participation in the Budget ProcessLinking Budget Analysis to
Service Delivery Outcomes. The training aimed to empower civil
society and improve accountability by addressing the institutional
bottlenecks and capacity gaps of stakeholders.

This training workshop was also seen as a first step towards

supporting an open government initiative in a decentralized
government environment. It aimed to contribute toward creating
foundations for citizen engagement in the decentralization process,
and to encourage debate in forthcoming local elections.

With greater budget transparency worldwide, new opportunities have

emerged for broader, more effective public participation to help
influence budgetary outcomes. Budgets are key documents that lay
out a governments priorities in terms of policies and programs.
Democratizing the budget process gives citizens a say in both policy
and resource allocation, particularly at local levels. Budget
transparency is a prerequisite for public participation and
Establishing a budget from a revenue perspective is essential said
Mrs. Olfa Soukri, parliamentarian and rapporteur to the finance
committee within the House of Peoples Representatives. Citizens
need to be able to access budget details per project and ministry but
more importantly per region, governorate and district.
In the aftermath of the 2011 revolution, Tunisia has seen an
impressive increase in civil society organizations covering a multitude
of sectors including fiscal transparency, access to financial
information, local budget monitoring, and budget analyses. The
activities of these societies range from monitoring how funds are
allocated and spent from the grassroots to national levels. Tunisia has
joined the Open Government Partnership (OGP) and listed disclosure
of budget information as key to its OGP action plan.

The objective was also to expand the capacity of think tanks and civil
society organizations working on issues related to fiscal transparency.
Transparency mechanisms include using existing data on budget
allocation and expenditure; understanding key entry points for budget
analysis to help motivate social accountability; knowing how to
present and disseminate such analysis in an user friendly format using
budget briefs; and becoming enablers of public dialogue by
learning how to argue for improvement.

Eileen Murray, Resident Representative at the World Bank office in

Tunis, opened the workshop, saying Tunisia was to be one of the first
countries in the region to make budget data available to the public in
user friendly formats. The World Bank is very pleased to have had the
opportunity to support the Ministry of Finance in this initiative for the
development of the Tunisia Open Budget Portal, she said. The portal
will allow the public free access to budget data through the Ministry
of Finance official webpage.

Mrs Aicha Karafi, Director General and the Ministry of Finance

representative to the OGP Pilot Finance Committee highlighted "The
development of the Open Budget Platform and putting it online
contributed to the achievement of the ministrys financial
transparency policy and constitutes a key commitment for Tunisias
OGP action plan.


Lebanon 59
Jordan 61
Egypt 62
KRG-Iraq 65
Iraq 67


Internal Audit Developments

President IIA Lebanon

CVMENA: Could you please provide us with

some background on the Institute of
Internal Auditors (IIA) of Lebanon?
Malek Costa (MC): The Institute of Internal
Auditors (IIA Global) is an international
professional association established in 1941
in the United States. IIA Global is the global

voice of Internal Audit, having currently

more than 180,000 members in over 165
countries. IIA-Lebanon was established in
2001 as a local chapter of IIA Global. It is an
association of individual members that aims
to link the internal audit profession to
different industries. All members commit to
follow the IIA Code of Ethics and
Framework (IPPF). Currently IIA-Lebanon
has more than 270 members originating
from different business sectors. Any person
can become a member if they have a
Certified Internal Auditor (CIA) certificate
or one year of experience in internal audit
and a clean legal record.
CVMENA: What is IIA-Lebanons strategic
direction for the country and how is this
reflected in the role it is currently playing?
MC: Our objective is to promote the internal
auditing function in government and the
private sector through the application of the
IIA Code of Ethics and the IPPF. IIA-Lebanon
offers annual training and seminars to assist
accomplishing their duties, and to inform the
public about the importance of the internal
auditor role and key responsibilities. The
public learns about what internal auditors do
in terms of providing value-added services,
evaluating the risk management process,
assessing the ethical climate, assessing the
effectiveness and efficiency of operations,
serving as a safety net for compliance with
rules, regulations, and best business
practices, performing consultative activities,
being a cornerstone of strong governance,
and so on.

CVMENA: As experts in the area of internal

audit, how do you see IIA-Lebanon
contribute to promoting and supporting
private and public governance in Lebanon?
MC: In 2012, The IIA released a practice
guide called Assessing Organizational
Governance in the Private Sector. It was
designed to provide Chief Audit Executives
(CAEs) in the private sector with direction on
how to assess and make recommendations
for improving governance.
In 2014, the IIA released a new guide,
Assessing Organizational Governance in the
Public Sector. This practice guide addresses
the following:

It adapts Assessing Organizational

Governance in the Private Sector to
suit the unique needs of the public

It is designed to help public sector

boards, audit committees, CAEs, and
audit staffs assess governance; and

It is intended to be fully applicable to

government and all publicly-controlled
enterprises, and other entities that
deliver public programs, goods, or

IIA-Lebanon will use these resources, and the

IPPF and its expertise in promoting and
ensuring compliance with the practice
guides related to governance in both the
private and public sectors.

CVMENA: To what extent is IIA-Lebanon
reaching out to and coordinating with
universities in Lebanon?
MC: IIA-Lebanon is working in coordination
with the universities to launch the Internal
Auditing Education Partnership (IAEP)
program, developed to respond to the
growing interest in internal audit education
at institutions of higher learning. The
program also addresses a general need by
practitioners interested in hiring students
who possess a well-rounded skill set for
conducting internal auditing.
The IAEP program prepares students with
the skills and knowledge to help them
conduct basic internal audits immediately
upon hire. It also provides a foundation to
begin preparing them for the Certified
Internal Auditor (CIA) examination. Currently
this program is being taught by the Lebanese
American University and our aim is expand it
to most universities in Lebanon.
CVMENA: As you know, Lebanon is
committed to establishing the internal
audit function in the public sector in the
near future with the support of a World
Bank-financed project entitled Public
Financial Management Reform II. How can
IIA-Lebanon contribute to this reform?
MC: Internal auditing of the public sector is
arguably one of the most challenging
segments of the audit industry especially
with the constant media attention and the
eyes of the citizens sharply focused on their
governments operations and finances. IIA
has developed the Internal Audit Capability
Model (IA-CM) which is intended to be used
globally as a basis for implementing and
institutionalizing effective internal auditing
in the public sector, and as a road map for

orderly improvement to strengthen

capabilities within internal auditing. As such,
the IA-CM is a framework that describes the
fundamentals needed for effective internal
auditing. It outlines an evolutionary path for
a public sector organization to follow in
developing effective internal auditing to
meet the governance needs of the
organization and professional expectations.
IIA-Lebanon, with the guidance of IIA Global,
remains committed to assisting public sector
auditors in the effective discharge of their
important duties and will continue to take
proactive efforts toward enhancing and
elevating the role and stature of auditors in
the public sector. Becoming a Certified
Government Auditing Professional (CGAP)
through the IIA has never been more vital for
public sector auditors in demonstrating their
commitment, competence, and credibility.

CVMENA: What has IIA-Lebanon achieved

on the regional level?
MC: IIA-Lebanon is a leading institute in the
region, where we are members of the
following organizations:

IIA Global Committees: charged with

specific missions and work to enable
The Institute to meet the changing
needs of its membership. The
committees assist the board in the
decision-making process by providing
information, recommending courses of
action, and undertaking specific
projects or tasks;
Union Francophone de lAudit Interne
(UFAI): Established in 1988 with the
objective of promoting and developing
the professional practice of internal

auditing in those countries that are fully

or partly French-speaking; and

Founding member of the Federation of

Arab Institute of Internal Auditors
(FAIIA): the main objectives of the
federation include creating an Arab task
force within IIA Global to ensure that
regulations and laws related to the
internal audit function in Arab countries
are in conformity with the IPPF.

CVMENA: What are the IIA-Lebanon

aspirations for the future of the profession
in Lebanon?
MC: IIA-Lebanon aims to have internal
auditors in both the public and private
sectors with the following skills:

Obligatory certification

Strategic thinkers

Boardroom presence

Leadership skills

Business oriented

Unquestionable ethics and integrity

CVMENA: Finally how can cooperation

between the World Bank and the IIALebanon be strengthened in the future?
MC: Potential cooperation could materialize
in relation to the World Bank-financed
project, Public Financial Management
Reform II, whereby IIA-Lebanon and IIA
Global resources, practice guides and
expertise can assist the government in
establishing the internal audit function in the
near future. In addition, IIA-Lebanon is
willing to cooperate with the World Bank in
any project related to the internal auditing
role in control, risk management,
compliance and governance. I would like to
thank World Bank team for this opportunity
and for their continuous efforts in making
the world a better one.


Working with Universities to Strengthen the
Accounting Curriculum in Jordan
Financial Management Specialist
Corporate Financial Reporting or CFR is a
technical practice within the Governance
Global Practice which includes a number of
work-streams. Among the various streams
are ensuring a sound legal and regulatory
environment, promoting high quality
university and technical education in the
accountancy, supporting strong capacity
organizations, and finally enabling regulators
and government entities to oversee the
accounting profession. In the Middle East &
North Africa (MNA), the CFR technical
practice is working on several projects within
these work-streams. One of the projects
undertaken to ensure high quality university
and technical accounting education is an
assessment which was recently conducted
on the academic curriculum in accountancy
in Jordan. This was a project funded by the
World Bank under an Institutional
Development Fund (IDF), working in
cooperation with the Jordan Association of
Certified Public Accountants (JACPA). This
assessment was an important first step in
improving the curriculum and came up with
a number of recommendations which will be
a corner-stone of any future projects in this
Accounting Education in Universities
Accountancy education is one of the core
pillars of good quality CFR. Education in CFR
and specifically in accountancy is governed
by the International Accounting Education
Standards Board (IAESB) International
Education Standards (IESs). IESs assist
professional accountancy organizations,
regulators, employers, academics, and
students by prescribing principles for the
learning and development of professional
accountants.1 They seek to unify standards
globally to reduce differences in the quality
of accounting professionals. This assessment
compared the current accounting curriculum
to identify gaps and divergences that need to
be bridged in order to bring the Jordanian
accounting curriculum in line with IESs and
good practice. Education in universities is the
first important step in the gaining of
professionals. Through its IESs, the IAESB
outlines the key elements of technical
competence; professional skills, and
professional values, ethics and attitudes that

should be achieved as part of professional

education to provide standards which guide
implementation of high quality accounting
education in countries around the world.
Education is also the first step to enter the
accounting profession. In Jordan, there is
good perception of the accounting field with
many students studying accounting.
According to one authority, 19,000 students
are registered currently in accounting out of

(i) Maintaining a written curriculum with 132

credit hours,
(ii) certain foundation courses are to be
(iii) number of staff and a specific
student/staff ratio4.

62,000 students studying business or ~30%2.

After education, entry into the profession in
Jordan is earned by passing the licensing
exam administered by the Jordanian
Association of Certified Public Accountants
(JACPA). Currently, the exam results show
that there is a deficiency in the accounting
education with few passing the exam3. There
is a clear shortage in the accounting
curriculum in covering international
accounting and auditing standards in
addition to accounting professional ethics.

curriculum. A sample of eight universities
and two community colleges were selected.
A mix of private and public universities were
selected with the highest numbers of
accounting students. Only two community
colleges were selected as all accounting
curricula in community colleges is identical.
The accounting curricula was reviewed for
the eight universities and two community
colleges and compared to the standards set
by the accrediting accounting education
programs in Jordanian universities and the
community college standard set by the HEAC
in Jordan.

Higher Education Accreditation Commission

in Jordan (HEAC)
The HEAC is the main quality regulator for
higher education in Jordan. It sets and
monitors the quality of programs at all
institutions of higher learning, both public
and private. It provides accreditation for
private universities and can take away
accreditation if a university is not
maintaining a certain standard. For
accreditation of accounting education
programs, the HEAC set three basic
requirements to be covered over a minimum
of three years. These requirements include

Objective of the Assessment

The main objective of the assessment was to
come up with recommendations in order to

Results of the Assessment

The assessment showed that in all the
universities and community colleges
selected, the total number of credits
provided agree with the number of credit
hours set by the licensing regulations.
However, in terms of content and in
comparison to IESs and good practice, there
are many subject areas that are not included
in the university education system, such as
business ethics, corporate governance, or
strategic decision making among others

which are considered valuable for students
who are considering entering the accounting
profession. Other than the number of credit
hours and the subjects being taught, the
assessment also looked at the method of
teaching. Teaching should provide a student
with the tools for self-directed learning after
graduation. Teaching should also focus on a
broad range of teaching methods which
include case studies and projects while
encouraging group work and the use of
technology. The assessment found that
there was a deficiency in the range of
teaching tools that university professors

The assessment concluded with a number of

recommendations where there was a gap
between international good practice or the
IESs and the Jordanian curriculum. The
recommendations included: a) the need to
focus the accounting curriculum on meeting
the demands of the market, e.g. to include
practical subjects as well as information
technology, b) the need to create awareness
among university academics of the
international education standards and to
include them in the curriculum, c) the
importance of including business ethics in
the subjects being taught; this is currently
not a mandatory subject in any of the
universities. Other topics which are
suggested in the IESs and currently not
included in the curriculum should also be

added. Finally, it suggested that methods of

teaching should also be expanded to include
practical teaching which will give students
the necessary tools to ensure success in the
workplace. Bridging these gaps will require
cooperation between HEAC, JACPA, and
Jordanian universities and will in future allow
accounting graduates to be better
positioned to meet the needs of the market.

1 IAESB Fact Sheet, February 2013

2 Jordanian Accounting Education Assessment World
Bank Project October 2013
3 Jordanian Accounting Education Assessment World
Bank Project October 2013
4 Jordanian Accounting Education Assessment World
Bank Project October 2013

Program and Performance Budgeting in Egypt:
Accounting and Control Considerations
Mohamed YEHIA
Senior Financial Management Specialist

Senior Public Sector Specialist
Program and Performance Budgeting (PPB)
is a useful tool in enabling the alignment of
the national budget with a countrys
strategic priorities and policies. Performance
and output indicators can measure the
extent to which government organizations
pursue value-for-money principles. The PPB
is particularly significant for meeting the
transparency, whereby line ministries can be
held accountable for program delivery and
achieving targeted results within the
approved program budget.
The new Egyptian Constitution of January
2014 specified minimum budget allocations
to certain sectors as percentages of Gross
National Product (GNP), including education,
health, higher education and scientific
percentages are 4, 3, 2 and 1 percent of GNP
respectively. Program budgeting should be
an effective tool to help discharge this
constitutional mandate. However, there is
some overlap in some sectoral programs
between more than one Ministry (for
example, hospitals belonging to entities
other than the Ministry of Health). Similarly,
some economic classifications do not
consistently recognize the sectoral mapping.
For example, part of the grants, subsidies
and social benefits under Chapter 4 of the
budget economic classification can belong to
health or education programs.

According to the Ministry of Finance budget

circular for fiscal year 2015/2016, in order to
ensure better transparency and efficiency of
public spending especially with the
increased allocation to sectors Egypt has
introduced Program and Performance
Budgeting (PPB). It includes the aforementioned four sectors, in addition to a few
other sectors, including transport and
housing. The subject circular noted that the
selection of these sectors was based on their
available medium-term programs and
strategic plans.
The Ministry of Finance
certain requirements from
entities upon submitting
requests. These include:

has mandated
the respective
their budget
(i) presenting

program budgets for all related expenditures

classified per economic classification and
allocated per program; (ii) presenting the
Ministrys 3-5 year strategy, including
implementation time, and costs; and (iii)
indicators. This pilot program will be rolled
out in the future. In this context, its budget
will be published to enable parliamentary
and community oversight and monitoring.
As PPB initiatives had already been
implemented in a number of countries
(Organization for Economic Co-operation
and Development [OECD] members as well
as others, in particular in Jordan and
Morocco in MENA region), there are
available lessons that can be considered.

While moving to program and performance

budgets should contribute to more efficient
spending and clear accountability, its
implementation should be guided by careful
consideration the adaptation of accounting
systems and controls.
Among the key enabling factors is the
existence of accounting and reporting
systems that can support the needs of the
new budget design. A compatible chart of
accounts (CoA) is critical to serve the
reporting requirements of the program
budget, and a prerequisite for effective
monitoring of program performance. The
CoA should have a segment for programs in
order to enable the monitoring of program
commitments and funding status. Program
budgeting at the preparation and
formulation stages would not be effective
and worthwhile unless accurate reporting
is operational.
A key question in developing any program
budgeting system is the level of control
exercised at the center versus at the line
ministries or spending entities. Many experts
argue that the center should concentrate on
the big picture of resource allocation,
while leaving considerable discretion to
spending ministries regarding the details of
fund allocation. The new Egyptian
Constitution already promotes a gradual
shifting to administrative, fiscal and
economic decentralization as per Article 176.

In addition, it provides for gradual

application over a five-year period, as per
transitional Article 242.

Guidance regarding line item controls and

transfers between line items needs to be put
into place in order to grant the program
managers sufficient flexibility to allocate and
redeploy resources as needed. The best
approach would be to accompany the move
to program budgeting with a review of line
item controls which aim to retain only those
controls for which a clear rationale can be
expressed. Management flexibility needs to
be defined and approved in advance.
As noted, among the success factors of this
pilot program will be the ability of the
accounting systems to track the data by
program, and serve the reporting
requirements of the programs. The following
features are crucial for the successful
implementation of this initiative:

Coordination between the different

departments at the time of budget
preparation. This will help to ensure
that the chart of accounts expenditure
classification provides for a programbased coding in addition to the other
traditional coding (in particular
Government Finance Statistics [GFS]based administrative-economic coding
and a Classification of the Functions of
Government [COFOG]-based functional

Ensuring that the expenditure control
system as well as the accounting system
operate on a program basis.
The expenditure control system should
prevent commitments from being made
for spending on programs in excess of
the amount voted by Parliament for
that respective program.
If there are program transfer limits, the
expenditure control system will also
need to manage this. Subject to
appropriate authorization, it should
permit transfers between programs up
to an established limit (percentage), but
not in excess of that stipulated limit.

Given the implementation challenges and

major capacity needs, it is usually better to
start by an indicative program budget that is
presented to the Parliament for information
purposes. At a later stage after the
accounting systems functionality is tested
and pilot program reports are successfully
generated moving to a full program
budgeting can take place. This would include
legislative approvals of program budgets and
budget execution in accordance with the
approved programs.
Government of Egypt. 2014. New Egyptian
________. 2015. Egypt Budget Circular for Fiscal
Year 2015/16.
Robinson, Marc. Performance-Based Budgeting
Manual, Center for Learning on Evaluation and
Results (CLEAR) Training Material.

In The News
World Bank Group Engages Stakeholders on
New Country Strategy for Egypt
The World Bank Groups second round of Country Partnership
Framework (CPF) discussions with various stakeholders throughout
Egypt took place recently in Cairo, Alexandria and Aswan.
Consultations in Upper Egypt demonstrate the significance of lagging
regions as a development priority for Egypt and also underline the
World Banks keen interest in listening to input and feedback from
stakeholders across the country. The consultations around the CPF
were launched last year and benefited from a wide spectrum of input
from the government, civil society, youth, private sector, academia
and development partners. Furthermore, online consultation took
place to maximize reaching out to online users and listen to their
development priorities. The aim of these consultations is to prepare
for a new partnership strategy which will guide the Groups
engagement in the country over the next five years. The Country
Partnership Framework is a joint document of the three WBG
institutions - the World Bank, International Finance Corporation (IFC)
and the Multilateral Investment Guarantee Agency (MIGA) - and will
build on their respective strengths and areas of expertise. The 20152019 CPF aims at supporting Egypts development priorities
consistent with the regional strategy of the World Bank Group in the
Middle East and North Africa as well as the World Bank Groups
overarching goal of ending extreme poverty and boosting shared

prosperity. The purpose of the current consultations is to report back

to the participants from last years meetings on progress thus far, and
how this input has been incorporated. The Country Partnership
Framework will be officially presented to the World Bank Groups
Board of Directors in May 2015 after it has been discussed with the
Government of Egypt.














From The Vault

1966 Iraq Road Project
The economic benefits of the project were many. The roads and the
Fallujah Bridge made valuable contributions to Iraq's primary highway
network. Three of the five roads represented the final stages in the
construction of major highways, linking Baghdad with the next three
largest cities Mosul, Basra and Kirkuk. A fourth road provided the
only connection between the new port of Umm Qasr and the
country's highway network; and the fifth and longest section provided
a much-needed facility between Kut and Nassiriya, serving an
important and developing agricultural area. The new bridge at
Fallujah replaced a 35-year old one-lane structure across the
Euphrates to accommodate the growing volume of commercial and
tourist traffic between Baghdad, Ramadi, and points beyond in
Jordan, Syria and Lebanon.

The first World Bank transport project to Iraq was the $23 million
Road Project of June 23, 1966. The project covered the following five
road sections totaling 390 kilometers scattered from the south to the
north of the country: (i) a link to the new port of Umm Qasr; (ii) the
)reconstruction of the only outlet to the north of the port of Basra; (iii
a new road connecting the Euphrates and Tigris rivers through an
intensively cultivated area; (iv) the final link in the new highway
between Baghdad and the Kirkuk oilfields; and (v) the last leg of the
Baghdad-Mosul highway. In addition, the construction of the Fallujah
Bridge over the Euphrates River was expected to improve Iraq's
communications with the neighboring countries to the west and with
ports on the Mediterranean and the Red Sea. The project also
supported a road transport study, a program for the reorganization of
maintenance operations, and the procurement of maintenance


Supreme Audit Institutes: Interview
Senior Financial Management
Specialist, Governance Global Practice,
The World Bank



. 1991












11 .





























.5 .7 .9















25 /

New Project
Equal Access and Simplified Environment for Investment
(EASE) in Egypt
The Equal Access and Simplified Environment for Investment in Egypt
project aims specifically at addressing regulatory, institutional and
governance issues that have plagued private sector dynamism in Egypt
for years. The current context and the strong will of the government
authorities to address these longstanding regulatory reforms offers a
unique opportunity for making progress in these areas.
A new window of opportunity for ambitious reforms. Egypts Cabinet
recently approved significant amendments to the Investment Law, a
long awaited reform. It is an important step in the right direction to
improve the business climate and level the playing field for investors.
Effective implementation of the amended law will be essential. The
World Bank Group is preparing this Technical Assistance project to
support the Ministry of Investment and the General Authority for
Investment (GAFI) to implement their mandates under the new law.
GAFI aims to reduce stifling bureaucracy and room for discretion in the
licensing and permitting process and land allocation for new
investments. Most importantly, the law aims to empower GAFI to act as a one-stop shop for investors and to empower it to seek the necessary
approvals from various agencies that investors need to obtain. The Project aims to support GAFI in becoming the national platform facilitating
business entry, licensing, and access to investor information at the sub-national level through its One-Stop Shops and GAFI Information Portal.
This would entail addressing GAFIs processes and interfaces with all of the involved regulators, including primarily the Industrial Development
Authority, but also other line ministries and local authorities involved in licensing. Further, it would involve developing an information technology
system to deliver business entry, licensing services, and investor information, as well as capacity building and technical assistance to support the
GAFI in this enhanced client-facing role, particularly of its one-stop shops.




14 / 2014
by Mona El Chami and May Ibrahim







) .














. .


(Source: The World Bank)



Kuwait, Capital Projects 69

Islamic Finance 70

Supporting Kuwaits Capital Projects
In the context of volatile international oil
prices, Kuwait more than ever is seeking
ways to achieve greater efficiency and
improved outcomes for its investment
spending. At the request of the Ministry of
Finance, the World Bank conducted a
comprehensive review of the Capital Project
Implementation Cycle (CPIC).
The review and findings which were
collected over a 3-year period (2011-2014)
and cover all sectors except petroleum and
defense were a joint effort between the
Bank and the government. The Report is
particularly timely given the strong emphasis
placed in Kuwaits National Development
Plan, Strengthening the implementation of
capital projects is a critical step for achieving
Kuwaits national goals of improving social
and physical infrastructure to encourage
more effective service delivery and
productive employment, said Nadir
Mohammad, World Bank Country Director.

Historically, Kuwait made great strides in

infrastructure and service delivery but the
current systems some dating from the
1960s need reform for better results,
according to the report. Findings highlight
how the CPIC in Kuwait is complex, slow and
arrangements need streamlining for better

coordination and responsiveness.

particular, cumbersome and opaque land
processes as part of the CPIC often result in
costly delays and negatively impact
environmental sustainability. The overall
CPIC process was reviewed. Detailed case
studies from three key implementing entities
in Kuwait: the Public Authority for Housing
Welfare, the Ministry of Electricity and
Water, and the Ministry of Public Works,
were included.
We hope that the Kuwaiti Government
takes immediate actions to implement the
recommendations of the report in order to
expedite project implementation, said
Bassam Ramadan, World Bank Country
Manager for Kuwait. In this context, the
report offers several options to improve the
efficiency of the CPIC, including upgrading
personnel skills and training. The Report
presents more than
recommendations which are prioritized by
complexity and impact, and suggests an
recommendations. The CPIC report is a

model for an efficient and effective way of

conducting business to meet clients
practical needs. The study draws on the wide
spectrum of expertise from the Global
Practices covering different sectors and
regions to benefit partner countries. Its the
merit of Global Practice, going after
experience in the Bank without sectorial or
regional barriers, said Hisham Waly,
Governance Practice Manager.

The Report findings were discussed at an
event sponsored by the Ministry of Finance.
The workshop was attended by high level
government representatives including Her
Excellency Hind Al-Sabeeh Minister of Social
Affairs and Labor and Minister of State for
Planning and Development, private sector
experts and Bank staff. The event was very
well received and widely covered in the
The CPIC review was challenging and
rewarding. We learned a lot from this review
and we hope that it ignites discussion on how
to conduct assessments of project
implementation readiness under Bank
financed operations such as Results Based
Lending and Program for Results, said
Majed M. El-Bayya, Task Team Leader and
Lead Procurement Specialist of the World
Banks Governance Public Integrity and
Openness Department (PIO).

The Banks relationship with Kuwait dates

back more than 40 years and represents

some of the best of the Reimbursable

Advisory Services (RAS)

Islamic Finance
Introducing the Newly Launched (IASB) Consultative
Group on Shariah-Compliant Instruments and
consultant with his own practice. In
November 2000, he was appointed Chief
Accountant of the Australian Securities and
Investment Commission, and following that
he was Manager, Financial Management, for
the South Asia region of the World Bank.

Chairman of the International
Accounting Standards Board (IASB)
Consultative Group on ShariahCompliant Instruments and
Transactions and IASB Vice-Chairman
Nadi Mashni, Financial Management
Gabriella Kusz, Senior Financial
Management Specialist
Mr. Mackintosh was formerly Chairman of
the United Kingdoms Accounting Standards
Board (ASB). Originally from New Zealand, he
has spent much of his career in Australia,
first with Coopers & Lybrand, and later as a

Mr. Mackintosh has played an active role in

standard-setting since 1983. He was a
member, and later Deputy Chairman, of the
Australian Accounting Standards Board, as
well as chairing its Urgent Issues Group. Mr.
Mackintosh has substantial public sector
experience, having chaired both the
Australian Public Sector Accounting
Standards Board and the International
Federation of Accountants Public Sector
Today Mr. Mackintosh is the Chairman of the
International Accounting Standards Board
(IASB) Consultative Group on ShariahCompliant Instruments and Transactions
(Consultative Group) and IASB ViceChairman. In his capacity as Chairman of the
Consultative Group, he leads the Groups
efforts to engage with key stakeholders and
practitioners in Islamic Finance. Specifically,
he has worked to further the Consultative
Groups efforts to undertake research, open
a dialogue and expand the degree to which
transactions are being recorded properly

and consistently using International

Financial Reporting Standards (IFRS).
CV MENA: What is the objective / function
of this Consultative Group? How has it come
into being? What were the key triggers /
motivating factors for developing this
important grouping? What is the history
behind it?
Mr. Mackintosh: The Consultative Group
may trace it roots to a 2009 presentation
made by the then Chairman of the Malaysian
Accounting Standards Board (MASB), Mr.
Dato' Mohammad Faiz Azmi, to the IASB on
the subject of Islamic Finance. This
conversation within IASB and among its
stakeholders about how the organization
might address this growing field and what if
anything it could do to support the subject
area of Islamic Finance.

To continue exploration of this important
subject, in 2011, with the strong support of
the MASB and then-Chairman Azmi, the IASB
conducted a consultation about whether the
topic of Islamic Finance should be included in
its technical agenda. The responses to this
consultation from countries where Islamic
Financial activities were taking place was
very positive. These countries were eager for
the IASB to undertake activity and begin
engagement on this important subject. As a
result of this consultation, the IASB Board
decided to enhance its exploratory efforts
through the establishment of the
Consultative Group on Shariah-Compliant
Instruments and Transactions.
In July 2013, the Consultative Group held its
first meeting with a focus on discussing
transactions. The meeting, chaired by the
IASB, was structured to draw those
individuals and organizations working with
transactions together to provide input as to
how this Consultative Group could further
this subject area and provide benefit and
guidance to those in practice. One outcome
of this meeting, was the decision to
undertake research and reflection upon the
issues in the classification of Islamic financial
instruments under IFRS 9 Financial
This research culminated in the Paper
entitled Issues in the Application of IFRS 9 to
Islamic Finance, which posed a series of
issues in the application of IFRS 9 to those
products, and began discussion regarding
what steps (if any) the IASB might take to
clarify this standard. This Paper was
preliminarily discussed during the second
meeting of the Consultative Group held in
Kuala Lumpur, Malaysia in 2014.
Ahead of its third meeting, the Consultative
Group is still in an exploratory stage, seeking
to answer the question: How can the
Consultative Group further support
organizations in applying IFRS to Shariahcompliant instruments and transactions? It is

expected that after this third meeting, the

Consultative Group will have a more focused
direction in terms of areas of research and
CV MENA: How does the Consultative
Group seek to position itself with regard to
The Accounting and Auditing Organization
for Islamic Financial Institutions (AAOIFI)1
and other leaders in the area of Islamic
Finance and accountancy?
Mr. Mackintosh: The IASB is very aware of
AAOIFI, and from the beginning has invited
the organization to participate in
Consultative Group meetings. Recently,
there has been an increase in dialogue
between the Consultative Group and the
AAOIFI including a face-to-face meeting
between our organizations in December
2014. At this point, we have reached
preliminary agreement on how to work
separately as well as together. The AAOIFI
will remain the prime source regarding the
degree to which transactions meet Sharia
law. Our [Consultative Group] role will be to
determine how these transactions may
comply with IFRS standards. As a
demonstration of our cooperation, the
AAOIFI will be hosting the 3rd meeting of the
Consultative Group which will take place on
April 9th in Manama, Bahrain. This meetings
agenda will focus on discussing the Issues in
the Application of IFRS 9 to Islamic Finance
paper. The joint Consultative Group-AAOIFI
invitation recently went out and it is our
hope that we will be able to invite and attract
participation by people who are interested in
development of this Paper and its key
research themes.
CV MENA: One of your early projects
focused on a call for papers and exploration
about whether Islamic products typically
owned by Islamic banks qualify for
amortized-cost classification. Can you tell
us a bit about how this project has

unfolded? What were the findings and any

impacts (or future impacts anticipated) of
this research and dialogue on IFRS 9?
Mr. Mackintosh: In preparation for our first
Consultative Group meeting held in 2013, we
sought to engage with those persons
involved in Shariah-compliant transactions
to garner their perspectives and input
regarding how they are accounting for these
transactions with IFRS, as well as their
challenges, difficulties and needs for
additional guidance. To facilitate this
engagement, we issued a formal call for
papers. However, the responses were
minimal. In order to jump-start the dialogue,
the Consultative Group decided that in this
circumstance, we would begin efforts by
developing the paper Issues in the
Application of IFRS 9 to Islamic Finance.
This Paper addresses issues in the
classification of financial instruments under
IFRS 9 Financial Instruments. It provides
background, sets out what Islamic Banks are
doing in regard to IFRS 9, and provides a
summary of some of the more challenging or
interesting points related to IFRS 9 and its
application to Islamic transactions (for
example, how the question of interest is
being addressed). In addition to a summary
overview, this Paper also undertakes
research into the financial statements of 17
Islamic Banks, demonstrating the relative
importance of Islamic products in their
differences in treatment, and providing
discussion on the types of transactions.
Finally, it poses a series of issues in the
application of IFRS 9 to these products and
what steps the IASB might potentially take to
clarify this standard. As noted, the
Consultative Group has decided that the
questions posed in this Paper will be the
topic of the next jointly hosted Consultative
Group-AAOIFI meeting to be held in April
2015. Strong efforts have been undertaken
to reach out and invite interested accounting
professionals, academics, and bankers to
participate and share their perspectives on
this issue. What will be the outcome of these
discussions? This will depend on the nature
of the proceedings; however, there will likely
be another paper drafted to outline the main
points of the meeting discussion, and
potential recommendations on whether the
IASB needs to do anything to enhance
clarification in the application of IFRS 9 to
Shariah-compliant transactions.
CV MENA: Today, what do you see as the
three most pressing issues / questions of
accounting and application of IFRS for
transactions? How is the Consultative
Group working to address these issues?
Mr. Mackintosh: I believe at this point the
most pressing issue we face is that of

financial instruments. Most Islamic financial
transactions involve financial instruments of
one sort or another, and this is where
Shariah law brings about the greatest
potential for differences in financial
reporting and application of standards.
Other than this issue, we have not heard very
much in regard to significant challenges in
instruments and transactions. For example,
the Kingdom of Saudi Arabia has been
successfully implementing IFRS with small
modifications in order to comply with
Shariah law. Areas of modification are slight,
for example, inclusion of requirements for
additional disclosures on certain relevant
issues. Modifications of standards for
additional disclosure are not a key concern
to the Consultative Group as they do not
change the nature of the application of the
standard. The main issues the Consultative
Group will be directed toward are financial
instruments and will likely seek to answer
the following three questions:

Are purchase and sale contracts with

deferred payment contracts with
customers within the scope of IFRS 15?

Do some of the instruments common to

characteristics-of-the-instrument test
in IFRS 9?

How will income from Islamic Finance


Mr. Mackintosh: Presently, the IASB notes

that more than 114 countries around the
world are applying IFRS standards. At the
same time, Islamic Finance and Shariahcompliant transactions are also taking on a
global nature. Not only does global interest
continue to develop and expand in
Indonesia, Malaysia, large parts of Africa and
the Middle East, but now we are also seeing
interest and the emergence of these
products in the West. As such, we view the
issue of application of IFRS to Islamic Finance
as we view all other important global issues,
that is, through the lens of ensuring the
consistent application of IFRS standards. In
response, we have created a globally
representative Consultative Group on the
subject, and undertaken preliminary
research. We will continue to work to
address the sub-topics and issues of
It is also important to note that the IASB
maintains no enforcement rights or ability

As the Consultative Group is still in its early

stages, we are still seeking to answer this
question and to understand what we may
need to do to support the proper and
consistent application of IFRS standards with
regard to Shariah-compliant instruments
and transactions. It may be that the
Consultative Group discovers that there
needs to be additional guidance to ensure
consistent application around the world. Or,
it may be that we discover that there is no
need for additional guidance that financial
reporting activities are operating effectively
as they are. We do not know yet, but this is
something that the Consultative Group will
continue to focus on in the future.

to compel adherence and appropriate

application of IFRS standards. In this regard,
we rely on regulators (Central Banks, Capital
Markets Authorities, and so on) to ensure
proper and consistent application. As such,
we are always interested in working with
regulators to ensure that these standards
are applied appropriately. Indeed, we are
actively seeking their participation and input
to our Consultative Group.

individuals and organizations interested in

the topic of IFRS application in Islamic
Finance transactions to participate and
provide input into our meetings. We
welcome those with an interest to contact
the IASB and our Consultative Group for
further information.

CV MENA: Are there any key messages you

would like to share with the readers of CV
MENA Magazine?
Mr. Mackintosh: I would like to emphasize
that our Consultative Group is still in its initial
stages. As such, we are actively seeking

CV MENA: Can you please discuss with us

any upcoming projects / calls for papers
which the Consultative Group intends to
focus on? What has been the rationale
behind this focus?
Mr. Mackintosh: At this point, the
Consultative Group will be delving deeper
into the issues related to financial
instruments. It is anticipated that following
the April 2015 Consultative Group meeting,
we will have a better idea of where we are
headed with regard to strategic priorities, a
work plan, and upcoming research and
CV MENA: The expansion of Islamic finance
and banking outside of the MENA region
has been increasing in recent years. In July
2014, Britain became the first country
outside of the Islamic world to issue
sovereign Sukuk.2 In September of the
same year, Goldman Sachs raised $500
million with its debut sale of Islamic bonds,
becoming the first conventional U.S. bank
to issue Sukuk. As Islamic finance and
banking grows outside of the MENA region,
what role does the IASB see itself playing to
ensure that high quality global accountancy
standards are applied to transactions of all
shapes and sizes and that they are
acceptable to countries around the world?

envision at
judging the
could be

Does the Consultative Group

any point a role for itself in
degree to which a transaction
considered to be Shariah-

Mr. Mackintosh: Absolutely not. The

Consultative Groups point of view is that
there is a transaction that is taking place. Our
role is to support IFRS users in answering the
question: How do you financially report that

The Accounting and Auditing Organization for Islamic

Financial Institutions (AAOIFI) is an Islamic international
autonomous non-for-profit corporate body that prepares
accounting, auditing, governance, ethics and Shari'a
standards for Islamic financial institutions and the
industry. For more information on this important
organization, please see the following website:
2 Sukuk commonly refers to the Islamic equivalent of
bonds. However, as opposed to conventional bonds, which
merely confer ownership of a debt, Sukuk grants the
investor a share of an asset, along with the commensurate
cash flows and risk. As such, Sukuk securities adhere to
Islamic laws sometimes referred to as Shariah principles,
which prohibit the charging or payment of interest.


Did You Know?

Islamic Finance and the Role of
the International Monetary Fund (IMF)
Islamic finance has grown rapidly, even though it is still a small share
of the global financial market. The Islamic banking segment has
increased its penetration in many International Monetary Fund (IMF)
member countries. It has become systemically important in Asia and
the Middle East, while the global issuance of Sukuk - the Islamic
equivalent of bonds - is expanding with remarkable international
reach of issuers and investors. This trend is expected to continue,
driven, in particular, by strong economic growth in countries with
large, and relatively unbanked, Muslim populations.
Reflecting the importance of Islamic finance for many of its members,
the IMF has had a long-standing interest in its implications for
macroeconomic and financial stability, and played a key role in the
establishment of the Islamic Financial Services Board (IFSB). The IMF
has also engaged its members on the implications of Islamic finance,
in the context of its policy advice and capacity development efforts,
notably in the areas of regulation and supervision of Islamic banks,
and development of domestic Sukuk markets.

This recent growth of Islamic finance has led to increased demand on

the IMF. To foster its preparedness, the IMF has formed an
Interdepartmental Working Group with the objectives to develop an
institutional view on the industry, build in-house expertise and better
coordinate with different stakeholders. This working group has
stepped up the analytical work on Islamic finance in key areas,
including Islamic banking regulation and supervision, macroprudential policy, safety nets, resolution, financial inclusion,
consumer protection, monetary policy, Sukuk markets, public
financial management, and tax policy. The IMF established an External
Advisory Group, comprised of standard-setters for Islamic finance and
leading international experts, to assist in identifying policy issues and
to enhance coordination with different stakeholders interested in
Islamic Finance.
For more information about this, see:

In The News
Kuwait to Test and Translate the Public Expenditure and
Financial Accountability (PEFA) Upgrade into Arabic
Kuwait has decided to use the upgraded PEFA testing version in
cooperation with the World Bank and the PEFA Secretariat. His
Excellency, Khalifa Hamada, Kuwaits Undersecretary for Finance said,
We have been examining the PEFA methodology for some time and
consider that the upgraded version is most suited to our needs as part
of our PFM strengthening initiative. It will also be useful for
monitoring progress against our PFM goals.
Kuwait will be one of the first Arab countries to apply the upgraded
framework. It will join a select group of countries from Europe and
Central Asia, Africa, South America, South Asia, the Caribbean and the
Pacific Islands which will use the testing version in 2015.
The Kuwaiti government has also decided to sponsor the preparation
of the upgraded PEFA Framework document in Standard Arabic
language. His Excellency, Khalifa Hamada commented, In addition to
applying the PEFA methodology in our own country, we would like to
help people in other Arabic speaking countries to understand and
benefit from PEFA.
The Head of the PEFA Secretariat, Mr. Lewis Hawke said, It is very
encouraging to have Kuwaits support for the upgraded PEFA and we
deeply appreciate their generosity in sponsoring the translation. I am
sure Kuwait experience with PEFA will be of interest to many
countries. Translation of the PEFA testing version will be a very
important expansion of our suite of multi-lingual editions.

At present we only have official English, French and Spanish language

editions. We hope this will also extend awareness of PEFA, and
eventually use of the Framework more widely, amongst Arabic
speaking countries.
The Standard Arabic translation of the testing version is expected to
be completed and available on the PEFA website by the end of May
2015. If revisions to the document are necessary after finalizing the
upgraded Framework, the Arabic version will be amended



Exchange 74
Maarefah 81
Solutions Lab 81
Bootcamps 82


Global Conference
Integrated Reporting in the Public Sector:
An Impetus to Introducing Integrated Thinking
in Public Sector Management
World Bank, Washington D.C.,
November 17-18, 2014
Lead Financial Management Specialist
An Introduction to Integrated Reporting
There are growing expectations that
organizations, both public and private, are
responsible for more than the primary
objectives for which they were created. They
must operate and be perceived to
operate in a manner that is responsible,
ethical, and sustainable, that minimizes
negative impacts on the environment, that
takes into consideration the varied needs of
a spectrum of stakeholders, and that
positively contributes to the communities in
which they operate and the planet more
generally. As sustainable value creation
becomes the raison detre of organizations,
they require a different perspective on how
to report their performance and satisfy their
accountability obligations, both regulatory
and social, to their stakeholders. Traditional
financial reporting, comprising financial
statements and audit reports, is inadequate
in dealing with this wider organizational
agenda. This has resulted in the genesis of a
movement toward integrated reporting,
which is a more comprehensive model that
combines traditional financial reporting with
a broader set of reporting measures that

include the environmental, social and

governance aspects of an organizations
business. According to the International
Integrated Reporting Committee (IIRC):
Integrated Reporting demonstrates the
linkages between an organizations strategy,
governance and financial performance and
the social, environmental and economic
context within which it operates. In other
words, integrated reporting (IR) enables an
organization and its stakeholders to forge

clear linkages between the organizations

environmental and social sustainability. It
enables stakeholders to assess clearly the
ability of the organization to create and
sustain value over the short, medium and
long term. A key element of the
integratedreporting approach is the
reporting organizations creation of value
through its use of a number of forms of

manufactured, intellectual, human, social
and relationship, and natural. Integrated
reporting seeks to clarify the relationships
between the six forms of capital, the
organizations business model, external
factors and strategic thinking. IR provides a
window to understanding how these forms
of capital are used by the organization as well
as how these forms of capital, business and
society are impacted through the process of
value creation. An earlier IIRC discussion
paper entitled Towards Integrated
Reporting: Communicating Value in the 21st
Century (2011) highlights a number of areas
where integrated reporting is expected to
challenge current practices:

bureaucratic silos and recognizes the

complexity of an organizations value

creation process.
Stewardship, An Integrated Report
organizations accountability not only
for financial capital, but also for the
other forms of capital (manufactured,
human, intellectual, natural and social).
Focus. An Integrated Report connects
past performance and financial risks
with an organizations strategic
objectives and its ability to create and
sustain value in the future, thereby
providing a more complete perspective.
Timeframe. - Integrated Reporting
factors in short-, medium- and longterm considerations, avoiding an
excessively short-term perspective.
Trust. Integrated Reporting emphasizes
transparency, covering a broad range of

issues and disclosing both positive and

negative information.
promotes a principles-based approach
with an emphasis on an organizations
ability to identify what is material to its
particular sector and activities.
Concise. By focusing on only the most
Reporting aims to be concise, clear and
readily understandable. The prospect is
a more accessible report that clarifies
key aspects and activities.
Reporting seeks to take advantage of
new and emerging technologies to link
information within the integrated
report and to facilitate access to further
detail online.

Figure 1: The complete picture of an organizations value creation process, showing the interaction of the Content Elements and the forms
of capital in the context of the organizations external environment.

Source: The International Integrated Reporting Framework. Copyright December 2013 by the International Integrated Reporting Council
(the IIRC).
Why is IR important for organizations?

IR enables an organization to bridge

within its operations to convey a more
holistic picture of its governance,
operational and financial performance,
as well as the impact of its business on
the surrounding environment and
The result is greater
transparency about an organizations
performance and how it is being
achieved, including social costs and
benefits. As such, the quality of
governance is enhanced.

Adapted from One Report: Integrated Reporting for a

Sustainable Strategy, by Robert G. Eccles and Michael P.
Krzus (2010).

IR provides an integrated set of

organization that result in internal
integrated thinking, as well as full
transparency in external reporting. It
creates commitments to improve in the
future, both through specific targets
that are set, and from the feedback the
organization receives from all of its
stakeholders based on the information
it is making available to them.1
IR leads to an enhanced flow of
integrated information from an
organization that, in turn, generates
trust and fosters partnership between
an organization and its stakeholders.

Integrated Reporting and Public Sector Organizations

Issues for Consideration. (CIPFA,2013)

The result is the facilitation of better

stakeholder participation in the
governance of the organization.
Why is Integrated Reporting relevant to the
public sector?2
Current reports generally tell us little about
how well a public service organization is
equipped to meet future challenges, and
how it will continue meeting its obligations
in terms of delivering services and
supporting communities. In addition, there is
currently no requirement for a single
published document which pulls together all
of the various aspects of a public sector

entitys activities or that interprets for
users what all of the information currently
reported by public service organizations
means holistically. Furthermore, there is an
extent to which public sector reporting
frequently lives in the shadow of the budget.
In the public sector, the budget is usually a
public document setting out the
organization's plans for the provision of
services and/or regulatory activities and
their funding. In many parts of the world, it
is the subject of extensive and sometimes
heated public debate, often including the
consideration of alternative plans and
proposals put forward by political parties in
opposition. The adoption of integrated

equipped to respond to and manage change.

Integrated reporting also offers an
opportunity to consider and review the
interconnectedness of complex multi-service
delivery. It also offers the chance to clarify
goals and identify preferred outcomes within
the wider context of promoting public wellbeing. The question of the level of applied
integrated reporting is of relevance here.
Should integrated reporting focus on those
government bodies engaged in shaping
policy and service choices rather than on the
individual entities (internal or external)
commissioned to deliver specific services for
specific periods? If this is the case, then
perhaps integrated reporting has firstly to be

supplement for public agencies which seeks

to address aspects of public service. What
needs further discussion, however, is which
differences matter in relation to applying
integrated reporting and to what extent
these differences affect the scope and
structure of integrated reporting in public
service organizations. The recognition of the
issues relating to the application of IR in the
public sector convinced the Governance
Global Practice of the World Bank to join
hands with the International Integrated
Reporting Council (IIRC) and organize a
Global Conference on Integrated Reporting
in the Public Sector on November 17-18,
2014 at the World Bank Headquarters in

reporting may provide a way of increasing

interest and engagement in other aspects of
reporting beyond the budget. The recent
work of the International Public Sector
Accounting Standards Board (IPSASB)
regarding its Conceptual Framework, longterm fiscal sustainability of projects, and
reporting service performance reinforces the
view that general purpose financial
statements cannot satisfy all the needs of
users in assessing the efficiency and
effectiveness and future viability of
programs in providing social benefits. 3
Furthermore, the International Federation of
Accountants (IFAC) Sustainability Framework
identifies a key role for the accountancy
profession in challenging conventional
assumptions, integrating sustainability
issues, redefining success, establishing
appropriate performance goals and targets
and ensuring that necessary information,
analysis and insights are available to support
provides a way for public service
organizations to enhance their strategic
planning and consider the long-term fiscal,
social and environmental sustainability of
the organization. Organizations need to
understand likely future drivers and risks,
and identify their options in order to be

embraced at the whole-of-government level,

and then taken to the entity level through
the various intermediate levels of
government. Public bodies already disclose a
great deal of information and produce a
multitude of reports for various service areas
and activities. Integrated reporting can draw
on this material and the expertise already
developed by public service organizations. It
has the potential to provide a way for
citizens and other users of public entity
reports to look to a single place where a
more complete and holistic picture of the
organization and its performance across a
range of dimensions can be accessed. Key to
this approach is providing transparent
information which is contextualized as
opposed to simply providing data without
the appropriate context. The objectives of
public sector organizations are clearly
different from investor-owned business
objectives. As noted with respect to IPSASBs
work, there is already recognition in the
accounting profession of differences
between the public and private sectors.
There is also recognition of differences in
Reporting Initiative (GRI) which produces
sustainability reporting guidelines, for
example, has also produced a sector

Washington DC.


public-finances and Consultation Paper (2011), Reporting

service performance. Available at: IFAC (2011)
Sustainability framework 2.0. Available at:

(2011) ED46 Recommended Practice Guideline,

Reporting on the long term sustainability of public
finances. Available at:

Global Conference on IR
The Conference on Integrated Reporting for
the Public Sector organized by the MENA
Governance Global Practice (GGP) team
helped to bring together several
stakeholders interested in increasing the
acceptance and application of IR in the public
sector. The inaugural Integrated Reporting in
the Public Sector Conference was conducted
in partnership with the Association of
Chartered Certified Accountants (ACCA), and
supported by the International Integrated
Reporting Council (IIRC), the Said Business
School at Oxford University, and the United
Nations Global Compact (UNGC), with
additional support from the American
Institute of Certified Public Accountants
(AICPA). Professor Robert Eccles of the
Harvard Business School along with Samia
Msadek, Director of Public Resources
Mobilization and Management, Governance
Global Practice, and Hisham Waly, Practice
Manager, Governance Global Practice for
the MENA region at the World Bank, led the
discussions. In the same way that integrated
reporting is catalyzing integrated thinking for
private sector companies, this conference,

which combined formal presentations with
interactive engagement from conference
participants, sought to introduce World Bank
staff to key IR concepts. Further, it sought to
increase awareness in the public sector
about how IR can be used to support
integrated thinking to improve the
performance of government agencies, cities
(NGOs). This conference also served as the
official launch of the IIRCs Public Sector
Pioneer Network.
Summary of the main discussion themes
stewardship: Cities and other public sector
organizations create value by their ability to
sustain institutions and infrastructure to
support present and future human activity.
These organizations struggle to find how
best to account for future generations
needs. As highlighted by David Walker4,
Dont tax you, dont tax me, tax the baby on
your knee is a commonly heard phrase
touted as a politically expedient solution to
public finance dilemmas. However, what
happens when we are making decisions for

definition, governments exist for the longterm: they have the right to tax, and their
services are provided well into the future. As
such, are policies they pursue sustainable?
The question remains as to how public sector
leaders make and address an audience for
the forms of capital that do not exist at the
time these decisions are being made.
Structuring the answer to this question goes
to the essence of intergenerational
2. Leadership and adoption: Many public
sector entities express interest in IR, but few
want to make the first move. Unlike the
private sector, there are few pioneering
examples in the public sector. Everyone
wants to be a leader, but no one wants to go
first. How, then, do we get the IR ball rolling?
Solving this conundrum is the aim of the
IIRCs Public Sector Pioneer Network. Fayez
Choudhury6 suggested that you have to talk
quantity, not just quality. One or two highquality outcomes are not as good as a large
number of medium-quality outcomes
progressing in the right direction.
Conversely, Samia Msadek7 stressed the
Power of One. With one or two notable

generations that do not yet exist, or for

trees without voices? Who ensures that
the environment, the social fabric or public
institutions are not destroyed for children
yet to be born? As Judge Mervyn King
emphasized, we have to be advocates for
future generations.5 This foundational
principle of IR was voiced across all sessions.
Though intergenerational equity is germane
to the private sector, it is much more
important for the public sector. By

examples, people can point to best practice

cases that can fuel future expansion of IR in
the public sector. David Walker commented
that we have to move on multiple fronts,
with both early adopters from countries that
are forward-looking and have a plan, as well
as visionary champions in countries that
represent greater challenges. IR can help
make the case to citizens of a country that
their interests, and those of future citizens,
are being recognized and addressed.

Former Comptroller General of the United States.

If our response to the crisis focuses only on the
symptoms rather than the underlying causes of the
crisis, then we shall bequeath to future generations a
serious risk of another crisis even worse than the one we
have experienced. Speech to the Scottish Business
Organisations in Edinburgh, October 20, 2009.

Director, Public Resource Mobilization and

Management, Governance Global Practice, World Bank
8 Per the IIRC: financial capital, manufactured capital,
intellectual capital, social and relationship capital,
human capital, natural capital.
9 Cater Brandon presented the change in total wealth
per capita model, as a macroeconomic indicator of

Countries such as Austria and Canada have

legislation that forces public officials to
adopt a long-range viewpoint. Panelists and
participants suggested the following
approaches to help IR gain traction in the
public sector:

communication strategy and identify
early adopters;

It is easier to apply the concept of IR in

public sector service businesses, for
example, in transport systems and
healthcare, because there are many
non-financial metrics one can use to
assess success and comparability;

The World Bank could take the lead in

introducing countries to the concept
and practice of IR and initiate work with
potential countries and public sector
entities interested in putting IR into
practice; and

The need for an IR-light standard

(that is, a standard which may have
reduced complexity and offer an easier
basis for IR implementation) was
expressed by George Kyriacou and
echoed by many.

3. Links to the six forms of capital8 value

creation: World Bank Lead Economist, Carter
Brandon, noted that the macro-economic
system of national accounts does not
currently reconcile (clearly) with the IIRCs
six forms of capital, in that some of them are
left out of the national accounts standard
categorization, or assumed to be under
other accounts. He also presented one
possible solution9 and highlighted the fact
that there is no agreement on the
assumptions used in his example. There was
much discussion across the sessions
questioning the reporting boundaries for the
entity (nation, city, agency, and state-owned
enterprise [SOE]) in the public sector. As
public financial reporting is a key component
of IR and financial sustainability is core to
sustainable development, then many
institutions (including central banks, the
International Monetary Fund [IMF], the
Development Programme [UNDP], and
others) all have a vested interest in working
to standardize the reconciliation between
the system of national accounts and the six
forms of capital for integrated reporting.

sustainability. In valuing the change in total wealth per

capita, wealth is defined as physical + financial + natural
+ human forms of capital ... Key question: Are we saving
enough [of these capitals] for the future? We note that
five macro-economic capitals were accounted for, with
the IIRCs sixth capital, manufactured capital, assumed to
be part(s) or the other five capitals in the change in
total wealth per capita model.

4. Accountability and incentives in the
public sector: Material nonfinancial value
creation activities are not being accounted
for in the management of cities and other
public sector entities. It is unclear who is
accountable at large, nor is it clear how to
hold public sector managers accountable.
Incentivizing people in the public sector may
be possible by aligning newly transparent
non-financial measures and standards with
opportunities for public officials. Public
sector entities and in particular public
officials have to take a long-term view
with no defined limit since they need to think

about all future generations to come. For

example, if a city builds a road by hiring
private sector companies, it is that citys
responsibility to maintain the road for an
indefinite period of time. While companies
cannot succeed in a society that fails, where
specifically does a private entitys
accountability end and public sector
accountability begin? What can IR do to
clarify these accountability roles, and thus
help align the accountability of public sector
managers? How does one incentivize people
in public sector compensation systems that
are overwhelmingly seniority-based, and
incentives? David Wood suggested that
there are many non-financial, careerbuilding and intangible ways that public
sector management behavior can be
incentivized and aligned. For a public sector
materiality determination process to be
successful, and for that matter for IR to help
governments realize their intergenerational
sustainability potential, it was suggested
that one needs:

corporations. How should we view it in the

public sector and who is responsible for
defining it? What does it mean in the public
context? In order to think about this, we
need to identify the audiences of public
sector IR. Broadly speaking, it is civil society.
However, pragmatically speaking, is it the
legislature? Is it the electorate at large?
Furthermore, some believe that companies
must reach a certain point at which senior
management is speaking in an integrated
thought manner before they can promote IR
outside of the firm. Some questioned how
one would or if it is even possible to
identify this diffuse or cohesive readiness
stage in the public sector. Some cited the
case of the American executive and
legislative branches recent tradition of noncooperation as an example of non-readiness.
Should IR adoption in the public sector be
slowed to require greater consensus before
proceeding? Who in government should be
demonstrating integrated thinking and to
whom? Shareholders can drive change in the
private sector, but a government will not be
voted out of office because they do not

6. What is the value of IR for a city?

Although significant research must be done
to adopt integrated reporting in the public
sector context, Glenelg Partners Public
Sector IR Phase I report notes that cities
provide a promising starting point for the
integration of these themes. How public
sector officials define future value in a city
(rather than accounting for the past) is
another great challenge. How does city value
creation align with the six forms of capital?
Growth creates more jobs. Whereas
economic growth involves fiscal policy,
regulatory policy, trade, immigration,
education, energy, and environmental
policy, we have a tendency not to see these
issues as an integrated whole. Even though
the UN Development Programme, for
example, publishes detailed sustainability
information, it would still require, as George
Kyriacou12 said, tools to elevate the
conversation to the level of strategic matters
that impact the organization. Mitzi Wyman13
gave several examples of how such
integrated thinking is critical to a public
sector organizations ability to elevate the
value conversation to the strategic level.





Technical Director, IPSASB.

CEO of B. Accountability.

Properly designed incentives to

encourage people to do the right thing
Transparency that they do the right
Accountability if they do not do the
right thing.

5. Materiality and public sector governance

analogs: Due to the diffuse nature of power
in the public sector as compared with
company governance structures, it is unclear
regarding the determination of material
issues, a foundational component of IR.
Materiality is owned by the board in

Deputy Director, Finance and Budget Management,

Office of Financial Resources Management, Bureau of
Management, United Nations Development Programme

perform integrated reporting, nor will IR be

the deciding factor in how one votes. (If
Detroit goes bankrupt, it wont cease to
exist unlike a company after corporate
bankruptcy. - Stephanie Fox10). Helle Bank
Jorgensen11 observed that IR helps
companies stay accountable to stakeholders,
suggesting that a way needs to be developed
to make the link more apparent between
society and society as represented by public
sector organizations and institutions. For
many years, reporting has played a role in
keeping companies accountable for how
they manage their finances, but not for how
they manage their resources. In the private
sector, financial reporting is largely effective
at performing the function for which it was
designed namely, giving shareholders the
information they need to make decisions.
Furthermore, the essential although elusive
concept of materiality is a key aspect of
financial reporting, so it makes sense to
move this concept into integrated reporting.
In the public sector, financial reporting in
many polities is shaky at best, as was
presentations and discussion that many
nations have yet to move from cash to
accrual accounting. This is a huge barrier to
the adoption of IR by the public sector.
Where does integrated reporting enter the
picture? Is there room for IR, or even IRlight, in governments where financial
reporting does not meet generally accepted
principles and practices? Materiality is
hardly even discussed in public sector

Leadership Development Specialist, London

Leadership Academy, National Health Service

How can IR help to clarify who helps create,
or destroy, value in a city or public sector
organization? Answering these strategic,
audience-dependent questions requires
public sector governance officials to pass
judgment on materiality. The impacts of one
part or constituency of the city on another
are not evident because, many times, city
government-stakeholder connections are
weak or indirect. Although IR can help clarify
or solve this connectivity challenge, we have
to think about future value by giving the
public sector a framework a plan and
performance metrics to measure the
answers to strategic questions about these
complex systems. Accounting metrics are
indicators of value, but not full indicators
because, besides measuring only past
activity, they do not capture an entitys use
of and impact on all six forms of capital. Here
too, IR can play a key role. However cities
create, sustain, or destroy value, they do so
in a space directly adjacent to their
stakeholders. It is this close physical and
social proximity that provides the greatest
opportunity for IR to empower value
creation for future generations of citizen
stakeholders. IR offers the opportunity to
create an engagement space where it is
possible to see the options in the round
and involve more stakeholders in the
decision-making process, thus reflecting a
wider thought spectrum. IR brings many
positive benefits to the effective
management and engagement in cities,
particularly through: (i) a focus on value
creation; (ii) lateral integration of the six
forms of capital, beyond simply financial
capital; and (iii) long-term planning beyond
current short-term budget processes.
During the discussions, it was repeatedly
emphasized that the integrated thinking to
improve the performance of public sector
organizations that arises from the IR process
is of greater significance than the IR itself. In
this context, the IR framework needs to be
characteristics and challenges of the public
sector. The discussants agreed that IR can
have immediate applicability to public sector
organizations, such as SOEs and cities. The
conference saw the launch of the IIRCs
Public Sector Pioneer Network for sharing
knowledge and experience among all
stakeholders. Though the conference
discussions brought out the various facets of
IR relevant to the public sector, it was also
evident that much more needs to be done to
adapt the IR principles and framework to a
public sector context. Although there were
some participants who suggested that there
should be an IR light for the public sector,
the majority of the participants were of the
opinion that since the IIRC framework is
principles based, there is no need to dilute
the framework to suit the public sector.
Instead, what is required is to help public

sector entities adapt the framework into

their organizational systems by providing
suitable guidance and technical support.
Discussions during the conference made it
clear that there is not much expertise in this
area outside that of the World Bank.
Therefore, it falls within the Banks role to
take the leadership role in applying IR to the
public sector.
Why should the World Bank and the GGP be
involved in IR?

IR fits well with the mission of the World

Bank for the following reasons:

Integrated Reporting provides a great

opportunity for the World Bank to
actualize its stated intentions of
fostering an integrated approach to
governance. Creating and sustaining
strong institutions and institutional
practices for governance are key pieces
of the World Banks strategy for
achieving its twin goals of ending
extreme poverty and boosting shared
prosperity. With its mandate to foster
the development of innovative
integrated solutions to institutional
problems, the GGP supports the setting
up of global standards and practices
that help strengthen the institutional
frameworks for good governance. The
GGPs support to IR will fill a crucial gap
currently in the sphere of public and
private sector accountability systems
arising from gaps in the traditional
forms of financial reporting.
The GGP can bring a unique value
proposition to the existing institutional
realm of IR by providing thought
leadership on the application of IR to
the public sector. Though the pace of
applications of IR in the private sector
has been quick, there is a clear void in
developing the applications of IR to the

public sector. The GGP can provide

thought leadership in areas such the
application of IR to how national and
sub-national governments and SOEs
report their performance. This presents
a unique opportunity for the GGP and
the Bank to take the leadership in the
creation of a global public good and
help client Governments to take an
integrated and holistic approach to
public sector issues.
IR provides a valuable instrument for
the GGP to help build cross-cutting
solution approaches among global
practices. Several global practices such

as Urban, Water, and Energy as well as

cross-cutting solution areas, such as
Climate Change, are already seeing the
emergence of crucial common areas of
interface with the GGP as well as among
themselves. Realizing and expressing
these crossing-cutting areas is critical
for achieving the realization of the
Banks twin goals. IR presents a very
useful instrument in identifying and
expressing the synergies among the
various practices. Indeed, this presents
an opportunity for the GGP to work
across global practices in the design and
implementation of integrated solution
approaches to development problems.
IR presents a viable instrument for the
GGP to bring integrated approaches to
country development strategies. The
GGP can utilize IR as an instrument to
engagements both at the policy and
operational levels. It can be used to
bring about integrated approaches to
address the unique and country-specific
development priorities and challenges.
For example, in the MENA region,
where the Banks strategy is driven by
the goals of growth and jobs,
embedding the principles of IR into
economic policies as well as into


reporting regimes will help ensure that

the principles of sustainability and
participation will be firmly embedded
frameworks. Countries such as
Morocco are already investing in the
creation of green economies that
would require organizations to adopt
reporting frameworks that are
holistic and that emphasize the
impact achieved in the realization of the
sustainable development agenda. In
high-income countries such as the
Qatar, Saudi Arabia and the United Arab
Emirates, where economic growth is
driven by resource revenues, the use of
sustainability principles into country
economic policy regimes. It could also
foster dialogue and discussion among
stakeholders on long-term growth
strategies. Outside the region, in
countries such as China and India where
SOEs play a significant role in the
economy, IR represents a significant
opportunity for the GGP to contribute
to the strengthening of transparency
and accountability across sectors.
becoming a key driver of public policy
globally, the GGP will need to develop
instruments and strengthen the
sustainable governance agenda within
and outside of the Bank. The
anticipated ratification of the United
Nations Sustainable Development

Development of the concepts and

application of IR offers the opportunity
to the GGP (and the Bank) to take the
lead to develop suitable instruments
and practices that can shape the design
of a sustainable governance theme
within the sustainable development
Strengthening IR in the public sector: issues
and challenges: Even though the concept of
IR seems intuitively a good fit for the public
sector, the discussions during the
Conference confirmed that there is very little
knowledge and experience in applying the
concept of IR to the public sector. Even those
delegates at the conference representing
public sector organizations in developed
countries such as the United Kingdom (UK)
and the United States (US), stated that these
efforts are still a work in progress. At the
same time, several developing countries are
already moving forward in areas such as
organizations (such as the Friends of
Paragraph 47) that came about as a follow
up to the Rio+20 conference held at Brazil in
2012. When this is taken together with the
growing acceptance of the International
Public Sector Accounting Standards (IPSAS)
by governments across the world, it is safe to
surmise that that there is a constituency in
the global public sector that would welcome
the introduction of IR, as it would bring
together both these strands of reporting and
help to present an integrated picture of the

Goals in the autumn of 2015 as well as

the increasing acceptance of the UN
Global Compacts LEAD Program in the
corporate sector globally, will result in
increasing demands for strengthening
the governance and institutional
development policies and programs.

However, as brought out in the conference
discussions, there exists a critical knowledge
and experience gap in applying the IIRCs IR
framework to the public sector that needs to
be addressed immediately. This requires the
development of technical notes, practical
guidance and other knowledge material that
are based on a first hand understanding of

the public sector, as well as research on

adapting the principles of IR to the public
sector. This needs to be done on a priority
basis as otherwise the interest generated in
the concept of IR among public sector
entities, especially in the developing
countries, may dissipate for want of
implementation guidance. Therefore, based
on the discussions, the GGP can take the lead
in setting the stage for the implementation
of IR in the public sector in partnership with
other key stakeholders such as the IIRC, the
Chartered Institute of Public Finance and
Accountancy (CIPFA), the International Fund
for Agricultural Development (IFAD) and
academic institutions, such as Harvard
Business School and Said Business School
(Oxford University).
Furthering the implementation of IR in the
public sector next steps: Based on the
discussions regarding the application of IR to
the public sector, Hisham Waly (Practice
Manager GGP MENA) outlined a broad
framework comprised of twelve action areas
that sets the stage for the next steps to
further the efforts to apply IR to the public
sector. The twelve action areas also provide
a road-map for the GGPs lead role in
strengthening the engagement of the Bank
engagement in IR from the perspective of
our clients in the public sector. The twelve
action areas are:
1. Raise Awareness of IR in the World Bank
Group (WBG) and countries; make it a
part of discussions relating to strategy
and policy, such as the Country
Partnership Framework Discussions and
Systematic Country Diagnostics.
2. Develop a convincing and evidencebased answer to the following
questions: Why does IR matter to the
public sector? How can IR support the
WBGs twin goals of ending extreme
3. Manage perceptions about IR in the
WBG and client countries.
4. Strengthen
counterparts (such as the Ministry of
Finance, Professional Accountancy
Organizations, Corporate Governance
Advocacy Groups, and so on).
5. Identify opportunities to support the
implementation of IR (that is, launch
pilots to promote IR and learn from
them to refine concepts and approach.
6. Invest in IR-related research and
analytical work to help develop an
approach to implement IR in general
and in WBG-funded projects, such as
Investment Lending and Program for
Results (PforR) operations, in particular.
7. Identify barriers to the implementation
of IR in the public sector.
8. Find allies to help promote and create
demand for IR in the public sector
through communication, knowledge

dissemination and advocacy with key
stakeholders such as civil society
organizations (CSOs), Parliamentary
bodies, Supreme Audit Institutions, and
so on.
9. Prioritize to ensure that the Bank does
not overwhelm its clients.
10. Engage with other Global Practices
(such as Social, Urban, Rural and
Resilience, Water, and Environment
and others) as well as Controllers in the

Maarefah Online
Basel III and the
for Islamic Banking
April 2015
The World Banks Connecting Voices
Maarefah Community of Practice hosted an
online event in April 2015 in cooperation
with the World Banks Global Islamic Finance
Development Center. It featured Ms. Canan
Ozkan, Senior Financial Sector Specialist,
who presented the recent research she and
the Global Islamic Finance Development
Center have done regarding the implications
of Basel III for Islamic banks.
The discussion was moderated by the
Maarefah Coordinator, Ms. Leila Hanafi. It
highlighted post-Basel III challenges for
Islamic banks, as well as supervisory,
regulatory and accounting standards
challenges. Following the close of the formal
presentation, an interactive question and
answer session was hosted by Ms. Gabriella
Kusz and Mr. Nadi Mashni, Financial
Management Specialists with the World
Bank Governance Global Practice. To view
presentations, participate in the ongoing
dialogue on this subject, and learn more
about Basel III implications for Islamic
banking please visit the Maarefah website
and join our Community of Practice at

11. Coordinate with key players in the IR
area, such as the IIRC, IFAC, CIPFA and
12. Establish a Community of Practice (CoP)
for IR.
Based on these action areas, the GGP in
MENA has taken the initiative to form a CoP
with the aim of bringing together the various

Maarefah Online
Women in AntiCorruption
in the Middle East
and North Africa
March 2015
The World Bank Connecting Voices Maarefah
Community of Practice, in cooperation with
Transparency International (TI), hosted an
online event in March 2015 featuring Ms.
Ghada Zughayer, TIs Regional Director of the
Middle East and North Africa Department.
Ms. Zughayer gave a presentation about the
Womens Project, an influential initiative
that has supported women leaders in
academia, business and the public sector
from throughout the MENA region in
advocating for gender-sensitive strategies to
strengthen integrity in their sectors and on a
national level. The discussion was moderated
by the Maarefah Coordinator Ms. Natacha
Draghi, and highlighted the work that TI and
its partners have done to host sectoral
workshops, encourage sharing of corruption
experiences, develop ideas to address
specific corruption issues and discuss
advocacy plans to implement them.
Following the close of the formal
presentation, an interactive question and
answer session was hosted by Ms. Francesca
Recanatini, Senior Economist with the World
Bank Governance Global Practice and a
member of the European Union Group of
presentations, participate in ongoing
dialogue, and learn more about women in
anti-corruption, please visit the Maarefah
website and join our Community of Practice

constituents within the Bank who are

interested in furthering the practice of IR.
The CoP is also preparing a list of key action
steps to build knowledge and awareness of
IR within the Bank, as well as in client
countries. Further, it will seek to pilot the
implementation of IR in selected countries as
well as, to the extent possible, in Bank

Solutions Lab
Islamic Finance as a
Tool for Financial
Micro-, Small-, and
Medium Enterprise
February 26, 2015
On February 26, 2015, the World Banks
Middle East and North Africa (MENA)
Corporate Financial Reporting (CFR)
Technical Practice, with the support of the
MENA Micro, Small and Medium Enterprise
(MSME) Facility, warmly welcomed over
seventy participants from around the region
to the Solutions Lab virtual conference
event on Islamic Finance as a Tool for
Financial Inclusion for Micro-, Small-, and
Medium Enterprise (MSME) Development.
Participants joined in from Egypt, Jordan,
Lebanon, Morocco, the West Bank and Gaza
and Tunisia. They represented a variety of
institutions including Central Banks, Islamic
Banks, Sharia Boards, Audit Firms,
Professional Accountancy Organizations, and
Solutions Lab events form part of the
Connecting Voices Middle East and North
Africa (CV MENA) initiative, a regional
knowledge platform which aims to
strengthen governance throughout MENA
countries. Solutions Lab events connect
participants from across the MENA region

through the World Bank Global Development
and Learning Network (GDLN) and
videoconferencing technology to share
experiences and lessons learned on key
issues of governance including corporate
financial reporting facing the region.
This particular event was positioned at the
crossroads of accounting and auditing,
Islamic Finance, and MSME business
development. The focus was on the strong
opportunity which the development of
Islamic Finance offers for economic growth,
poverty reduction and shared prosperity in
many developing and emerging economies.
Despite these potential benefits, however,
Islamic Finance in emerging economies faces
several challenges, including a weak and stillevolving regulatory and supervisory
environment, non-standardized corporate
governance practices and a need for skilled
professionals. A common theme which
draws these three challenges together is that
of accountancy. As such, the Solutions Lab
event addressed the accountancy-related
aspects of these challenges by focusing on
the need for:

Robust and internationally accepted

frameworks which embody high quality
accountancy standards and advance
modern oversight and regulation;

Enhanced standardization in the area of

including increased transparency and
accountability in the areas of financial
management, internal audit, and
reporting; and

Education, training and certification in

accountancy, finance, and Sharia Law in
order to ensure well-skilled, capable
and competent professionals.

Several highly respected subject matter

experts were invited to share their
knowledge and experiences regarding the
use of Islamic Finance by MSMEs in the
MENA region. They addressed the role and
importance of accounting and auditing in this
context. The following offers a brief insight
into the topics and issues covered by their

Formal presentations were opened by

Mr. Zamir Iqbal, Lead Financial Sector
Specialist at the World Bank Global
Islamic Finance Development Center,
on the topic of The World Banks
Global Islamic Finance Development
Center as a Means to Enhance Financial
inclusion for MSMEs. The Global
Islamic Finance Development Center
was launched by World Bank President

Jim Yong Kim in October 2013 and is

based in Istanbul, Turkey.

the support of accounting measures for

easier access to finance.

Mr. Musa Abdelaziz Shihadeh, ViceChairman and Chief Executive Officer of

the Jordan Islamic Bank, followed with a
presentation on the subject of
Accounting and Auditing Challenges
Faced by MSMEs in the Context of
Islamic Financing. Using the case study
of the Jordan Islamic Bank (JIB), Mr.
perspective on financial inclusion which
lies predominantly in risk-sharing for
MSMEs. He added that JIBs accounting
standards are in line with the
Accounting and Auditing Organization
for Islamic Financial Institutions
(AAOIFI) Sharia standards on Islamic
finance mechanisms and investments.

In seeking to maintain the momentum on

the subject, next steps will include a
Maarefah Community of Practice online
event which will focus on the accountancy
implications of Basel III for Islamic Finance
Institutions. Such online events are now a
part of the Maarefah Community of Practice
platform which was established to exchange
knowledge and resources on procurement,
financial management and public sector

Mr. Mohammed Abu Dalo, Credit and

Islamic Finance Specialist at Reef
Finance Company, discussed the Value
of Accountancy-Related Corporate
Governance and Human Capacity
Building in Furthering Islamic Finance.
focused specifically on the
Palestinian experience with Islamic
Finance through a two-tiered approach:
The conceptual framework for Financial
Institutions; and main challenges that
hinder the development of Islamic
Finance including the absence of an
economic environment to apply Islamic
finance in compliance with Sharia
requirements; limited variety of Islamic
Financial instruments; and a reluctance
to lend to the MSME sector due to high
risk and lack of collateral.
Ms. Doa Wadi, Executive Director of the
Business Women Forum Palestine
spoke on the subject of Financial
Inclusion and Islamic Banking for
Womens MSMEs in MENA, A Reflection
on Accounting Structures. Ms. Wadi
cited the weak internal controls and
financial management structures in
women-led MSMEs as significant
challenges to access to Islamic Finance
in the MENA region.

The impact and relevance of this event

cannot be understated. This event was the
first MSME-focused interactive regional
event convened by the World Bank for MENA
representatives to address key issues facing
accountancy within the framework of Islamic
Finance to MSMEs. This initiative helped to
support the development of the MSME
community by providing a combination of
country-focused discussion and good
practice to raise awareness and address key
issues of accountancy and Islamic Finance.
These included discussions to improve the
enabling environment for MSMEs through

If you would like to participate in this

upcoming Maarefah event, register online
and an invitation letter will follow. We look
forward to your membership and upcoming
participation in all future events and

Iraq Accounting
Enhancement (ACE)
Toolkit Workshop
September 29-30, 2014
Dubai, UAE
Enhancement Toolkit Workshop was held in
Dubai, United Arab Emirates on September
29-30, 2014.

The workshop was organized as the final

deliverable under the Iraq Technical
Assistance Capacity Building Fund project for
Component II involving training of Iraqi

university accounting professors and deans.
This workshop was designed to support the
Iraqi Ministry of Higher Education and
Scientific Research representatives, as well
as the heads of all public and private
departments in Iraq who work on
education in line with international
standards and good practices. This two-day
workshop featured speakers from the World
Bank, the International Association of
Accounting Education and Research (IAAER),
and the Global Accountancy Development
Institute at Tillburg University in the

Speakers provided an opportunity for

participants to learn about the findings and
recommendations from the World Bank
report entitled Stocktake Report: The State of
University-Level Accounting Education in

This event was structured as a 2-day

Workshop and offered the following:

This workshop attracted 30 participants, 20

percent of which were female. In total, over
82 percent noted that this event addressed
their professional needs either excellently or
very well, 92 percent of participants noted
that this event was highly relevant to the
mission of their university and department,
and 80 percent of participants were highly
motivated to implement practices and
solutions discussed during the event.

The Evolving Field of
Audit Regulation
Charting the Path toward
Independent Audit Regulation
in Morocco and Tunisia with a
View to Enhancing Audit
Quality for Small and Medium
Practices (SMP) and Large
Practice Firms
By: Gabriella Kusz, Senior Financial
Management Specialist, World Bank

They were also introduced to the tools and

resources provided through the Accounting
Curriculum Enhancement (ACE) Toolkit,
whose objective is to provide detailed
guidance to universities in strengthening
accounting curriculum in line with
international standards. In addition, the
workshop helped participants to become
acquainted with university accounting
reform efforts from around the world.
Discussions were held to consider next steps
for implementing strengthened university
curriculum through moderated and
facilitated discussion.

Under the broad umbrella of seeking to

strengthen audit quality for audit firms of all
sizes (in particular, small and medium
practices [SMPs]) throughout Morocco and
Tunisia, the World Bank MENA Governance
Global Practice recently facilitated a
Workshop on The Evolving Field of Audit
Regulation. The Workshop was supported
and financed by the MENA Micro-, Small- and
Medium Enterprise (MSME) Facility and in
cooperation with the International Forum of
Independent Audit Regulators (IFIAR) and
the Conseil Suprieur de lOrdre des ExpertsComptables (CSOEC) France and the French
Compagnie Nationale des Commissaires aux
Comptes (CNCC). This event brought
together more than 25 representatives from
the profession, as well as officials from the
Ministries of Finance, Central Banks, Capital
Markets Authorities, Supreme Audit
Institutions and other relevant stakeholders.
During the Workshop, participants discussed
the evolution of audit regulation within these
two countries, opening a dialogue and
discussion on country progression toward
independent audit regulation.

An opportunity for the Ordre des

Experts Comptables Maroc (OECM) and
the Ordre des Experts Comptables Tunis
(OECT) to commence dialogue on the
subject of independent audit regulation
by opening with an overview of the
current state of audit regulation in their
respective countries;
A presentation and insight from the
CNCC-CSOEC France regarding the role
Organizations (PAOs) in supporting and
An introduction to the subject of
independent audit regulation, what it
means for the development of audit
regulation in emerging countries, and
an overview of IFIAR as an organization;
Insight into the systems of independent
audit regulation in France, Germany,
the Netherlands and the United
Kingdom; and
A national discussion on how to
gradually progress toward a system of
independent audit regulation.

As key aspect of this event was to identify

tangible next steps which may guide the
evolution of audit regulation in these two
countries. In brief, the three tangible next
steps agreed upon by the Moroccan working
group included:
Enhancing the audit quality assurance
system of the OECM by including
external representatives on their
responsible for overseeing the system
of audit quality assurance;
(ii) (ii) Updating of the World Bank
Accounting and Auditing Report on the
Observance of Standards and Codes
(AA ROSC) so as to obtain a systemsview of the countrys current
accountancy environment; and
(iii) (iii) Enhancing transparency of the
financial performance of entities by
engaging with other stakeholders to
discuss the possibility of reducing the
mandatory audit threshold from 50
Million Dirhams to levels more
appropriate to the size and needs of
the Moroccan MSME sector.
The three tangible next steps agreed by the
Tunisian working group included:
(iv) Organizing local events in order to
raise awareness among different
stakeholders (public and private
about the need and
importance of an independent audit
regulation system;
(v) (ii) Exploring the opportunity to have
access to the DDPI (Direction du
Developpement et des Partenariats



Internationaux) quality assurance

software in order to enhance the audit
quality assurance system among Small
and Medium Audit Practitioners
(SMPs); and
(iii) Speeding up the approval process
for the new version of the law
governing the accounting profession in

These tangible next steps will be captured

along with other relevant details in the form
of a Solutions Paper which will outline how
Morocco and Tunisia may progress in a
gentle shift toward independent audit

Training Egypts
Supreme Audit
Institution in the SAI
PMF Assessment
December 2014
In December 2014, a 4-day International
Organization of Supreme Audit Institutions
(INTOSAI) Development Initiative-certified
training in SAI PMF took place. The main
objective of this training was to increase the
knowledge of Egypts SAI in the SAI PMF
assessment tool. Egypts SAI has expressed
interest in carrying out a SAI PMF selfassessment, and has formed a team of
experienced professionals to familiarize
themselves with the tool before moving
forward with the actual assessment. The
training followed the standard SAI PMF
program developed by the INTOSAI
Development Initiative. In addition to the
standard training program, experiences from
the Bank-led SAI PMF assessment of the
Palestinian SAI were shared.

Pillars of Public
Strategy Workshop
February 2015
A one-day workshop with the Egyptian
Ministry of Finance regarding the pillars of
Public Financial Management (PFM) Strategy
took place in February 2015. The World

Banks Governance Global Practice team

agreed with the Ministry of Finance to
support a PFM reform strategy that brings all
of the stand-alone initiatives under a single,
implementation roadmap. The workshop
was part of this technical assistance work. It
aimed to seek the views of the Ministry's
counterparts, and to validate the preliminary
findings of the assessments conducted by the
Bank team.

Supreme Audit

approach, and wanted to benefit from the

experience of other countries in planning this
process. In addition to facilitating this
exchange with the Brazilian SAI, the World
Bank gave a presentation on the experiences
from the SAIs of Mexico and Slovakia in
conducting the SAI PMF using the selfassessment approach.

Forensic Audit Boot
Camp and Learning
Visit for the Iraq
Federal Board of
Supreme Audit
Rabat, Morocco,
September 22-26, 2014

September 2014
During this workshop which took place in
September 2014, the World Bank provided
an overview of the Supreme Audit
Institutions (SAI) Performance Measurement
Framework (PMF) to a selected team from
specializations and multiple managerial and
operational levels. The workshop covered
the objectives, values and benefits of the SAI
PMF. It also explained the scoring
mechanism and different approaches to
undertake this performance measurement

Connecting the
Supreme Audit
Institutions of Egypt
and Brazil for SAI
PMF KnowledgeSharing
October 2014
A video conference connecting the SAIs of
Egypt and Brazil was held in October 2014.
This was a virtual knowledge exchange
between the Supreme Audit Institutions of
Brazil and Egypt on the topic of how to
conduct a Supreme Audit Institution
Performance Measurement Framework (SAI
PMF) using a self-assessment approach.
Egypt SAI expressed interest in this

A Forensic Audit Boot Camp and Learning
Visit for the benefit of the Iraq Federal Board
of Supreme Audit (FBSA) was recently held in
Rabat, Morocco. The event was supported
by the World Banks Strengthened Financial
Management Project and the Strengthening
External Accountability Component of the
Iraq Technical Assistance and Capacity
Building Fund for Improving Governance. The
objective of these events was to help the
FBSA examine its forensic pilot audits and
revisit its forensic audit manual in light of the
Moroccan experience. In addition, the two
sides shared their knowledge and experience
with relevant risk analysis, investigation
arrangements in relation to the forensic
audit work and report.


Experts and Support

The Moroccan side was led by Mr.
Mohammad Essawabi, Deputy to the First
President of the Morocco Court of Accounts,
and Mr. Brahim Benbih, Chamber Head of
Budgetary Discipline. A group of judges and
consultants to the Morocco Court of
Accounts lent their voice and expertise as
well. In addition, a number of experts from
the Financial Prosecution and National
Agency for the Fight against Corruption
The plenary session was
opened by Mr. Essawabi, representing the
Morocco Court of Accounts, Mr. Ahmad
Dhari representing the Iraq FBSA, and Ms.
Mona El-Chami representing the World
Bank. The session was facilitated by Mr.
Patrick Mordacq, and supported by Ms. Sura
Khuzai, both World Bank Consultants. World
Bank staff included Ms. Amal Chaoul
(Lebanon office) and Ms. Fadoua Lahlou
(Morocco Office), who provided logistical
support. In addition, Ms. Laila Moudden
(Morocco FMS), Mr. Franck Bessette
(Morocco CFMS), and Mr. Jad Mazahreh (Iraq
CFMS) provided advice during the
preparatory stage of the event.

Mr. Ahmad Dhari, Director-General of
Administrative Affairs at the FBSA, headed
the FBSA delegation that comprised 15
participants (including six women), mainly
working on forensic and procurement audits.
The participants evaluated the Boot Camp
and Learning Visit as exemplary, considering
them one of the best peer-to-peer capacity
enhancement events.

Memorandum of Understanding
The Iraqi delegation visited the Moroccan
Court of Account premises, where a
Memorandum of Understanding for further
cooperation on both procurement and
forensic audits was signed between the First
President of the Morocco Court of Accounts,
H.E. Mr. Driss Jettou, and the Iraqi FBSA, with
Dr. AbdulBasit Turki, in the presence of Iraq
Ambassador to Morocco.
Results and the Way Forward
The Boot Camp and Learning Visit achieved
their objectives, with deliverables including:
an in-depth knowledge about the Moroccan
system, an expert review of the forensic
audit manual, as well as a review of the
executed pilot forensic audits. The revised
forensic audit manual is in the works and is
expected to be completed by the end of the
Related summary reports,

presentations, and documents will be made

available at

Egypt: Boot Camp on
Accounting Education
April 2015
A Bootcamp on University Accounting
Education in Egypt took place in April 2015.
stakeholders of accounting education in
Egypt. They discussed the role of accounting
education in promoting strong financial
systems. In addition, they shared insights
regarding the strengths and challenges
facing university accounting education in the
country and possible directions for future
reform activities. An emphasis was placed on
the key role that university accounting
education reform may play in building skills
and capacity for micro, small and medium
enterprise (MSME) development, as well as
broader economic growth and development.

Medium Term
Budget Framework
& Public Investment
Medium Term Budget Framework
December 8 - 11, 2014
Public Investment Management Workshop
December 15 - 18, 2014
Michael Schaeffer - Istanbul, Turkey
Even under the current dual public
administration environment that exists in
Libya today, the World Bank has continued to
develop training programs and capacity
building to help improve public financial
governance in Libya. In December 2014, the
World Bank, in cooperation with the
International Monetary Fund, provided

training for members of Libyas public

administration involving the medium-term
budget framework and public investment
management. The World Banks Governance
Practice in Public Financial Management and
Public Investment Management engaged in a
series of workshops for Libyan higher level
civil servants.
The events, held in Istanbul, Turkey,
consisted of a Medium-Term Budget
Framework Workshop and a Pubic
Roundtable. Participants included 36 Libyan
higher level civil servant counterparts from
various ministries including the Ministry of
Planning, the Ministry of Finance, the
Ministry of Health, the Ministry of Local
Government, and the Central Bank of Libya.
Presenters at the Workshop included staff
from the International Monetary Fund and
World Bank.
Key Objectives of Workshops
The key objective of the Medium-Term
Budget Framework Workshop was to provide
training on how to enhance the effectiveness
of current budget preparation and
expenditure management processes. In

addition, the Workshop examined how to

strengthen the linkages between budgetary
allocations, national priorities, and line
ministry strategic plans. The key objective of
the Public Investment Management
Workshop was to provide guidelines on
improving the effectiveness of current
investment project development and
development budget preparation.
Ongoing Dialogue
These training programs with technical
members of Libyas public administration
have led to a substantial, ongoing dialogue
with the Central Bank of Libya, the public
administration (in Tripoli), and the House of
Representatives (the public administration of
eastern Libya) in maintaining prudent public
financial and governance practices.
The Bank will continue to focus on basic
public financial management transparency
and accountability issues in Libya while also
paying significant attention to the ongoing
multi-stakeholder dialogue. However, in the
near-term, the impacts on government
effectiveness and integrity are likely to be

Projects We Like
Supporting Start-Ups and
Enhancing Access to Finance in Jordan

A new US$50 million assistance package to Jordan will enhance access

to finance for micro, small and medium enterprises (MSMEs). The
project will reach out to underserved governorates and marginalized
segments of society and increase financing for start-up businesses.
The Jordan MSME Development for Inclusive Growth Project is a fiveyear undertaking that is largely geared to rural parts of Jordan, where
living conditions are modest at best. This project will leverage support
from the Arab funds, specifically the Arab Fund for Economic and
Social Development (AFESD), which will provide parallel financing of
US$50 million. Through improved financial intermediation, the
project will enhance the creation of private sector job opportunities,
contributing to inclusive economic growth and supporting poverty
reduction efforts.

Over 1500 entrepreneurs living across Jordan will directly benefit

from this project. It aims at encouraging more Jordanian women and
youth to start MSMEs in Jordan, where such businesses account for
71 percent of all employment, said Ferid Belhaj, Director of the
World Banks Middle East Department. As such, this project has
tremendous potential to boost prosperity across Jordan.
The new financing will scale up the well-performing parent project,
namely the Micro, Small, and Medium Enterprise Development for
Inclusive Growth Project (US$70 million), which came at an opportune
time in Jordan in the aftermath of the recent economic and political
developments in the region, and the associated economic slowdown
and rising unemployment and poverty. Over 6,000 MSMEs benefitted
from the operation59 percent of which are located outside Amman,
85 percent of which were women and 47 percent of were youthinitiated. MSME growth is constrained by various factors, including
timid financing by conservative and risk averse commercial banks. The
challenge is dual: commercial banks' systematic search for secure
lending, and MSMEs lack of capacity to develop viable business plans
and operate on the basis of predictable cash flow. This project aims
at mitigating the impact of these two constraints, and open the way
for further development of this growing industry.
MSMEs grow at faster rates once provided with sufficient funding,
and a conducive environment, this is why it is critical to support their
growth, said Sahar Nasr, World Bank Lead Financial Economist and
Project Team Leader. The parent project has shown commendable
success, creating jobs and sustaining economic growth. We believe
that the additional financing will achieve a greater impact on ground,
through innovative financing mechanisms; outreach venues; and
more effective targeting to underserved segments of society.



In The News
Supporting Better Parliamentary Oversight
Parliaments have played a more important role in some countries in
the Middle East and North Africa since the 2011 Arab Spring. Indeed,
recent events have reinforced the central role parliaments should
have in strengthening the publics voice and its participation, as well
as in introducing reforms linked to oversight. In this context, the
World Bank is working with parliamentarians and administrative staff
to help them assess public policy and government expenditures.
Internationally, the experience of many parliaments testifies to the
role effective, representative legislatures have in strengthening
governance and improving democratic processes. Parliamentary
oversight is considered one of the cornerstones of good governance
an essential link in the chain of accountability. Such oversight is
important in terms of ensuring that a governments policies and
programs achieve their desired effect; in shedding light on the
workings of government through parliamentary debate; on improving
the efficiency and effectiveness of expenditure; and in upholding the
rule of law. The capacity of legislatures to function effectively is still a
major concern, though, in many MENA countries. The international
watchdog, Global Integrity, places most of MENA well below Latin
America and the Caribbean and South Asia.
Capable parliaments are crucial to good governance in MENA.
They foster popular participation in politics and promote a more
responsive style of government. This depends on political and
electoral systems, formal parliamentary powers, political will and
space, and technical capacity.
Hisham Waly, Practice Manager of Governance Global Practice at
the World Bank.
Recent reforms across MENA are slowly encouraging parliaments to
play a more proactive role in parliamentary standards of transparency
and integrity as well. As the only institution with authority to oversee
government and play an active role in budget oversight, parliament is

integral to accountability and development. Promoting public

engagement presents opportunities for creating a more engaged
citizenry, better informed politicians and, hopefully, better
development outcomes.
Supporting Parliamentary Capacity in Morocco
The World Bank is supporting a new project in Morocco dedicated to
building parliaments capacity both for budget oversight and public
engagement. The project supports the skills needed for the new roles
and responsibilities spelled out in Moroccos constitution.
The Banks support focuses on helping parliamentarians and
administrative staff better understand the performance-based
approach to governance, as well as equipping them to carry out
macro-fiscal forecasts and evaluate public policies. International
exchanges and regional initiatives can help them build networks of
practitioners and other links. In the medium-term, the project hopes
to support parliaments capacity for dealing with public petitions and
consultationtwo key mechanisms in public engagement. The new
project targets administrative staff and individual members of
parliament, based on their involvement in public engagement and on
reforms to the right of access to information. The projects intended
outcome includes a better understanding of different ways to engage
the public effectively; better legislative oversight, particularly on
budget formulation and implementation; and more awareness of how
other countries have gone about enacting similar reforms.
Voices of Moroccan Parliamentarians
A delegation of Moroccan parliamentarians recently visited the World
Bank for a workshop on the impact of the countrys new constitution
on the parliament. They shared their views on the current and
potential role of parliaments, the capacities needed to fulfill their
mandate and how a partnership with the World Bank could help meet
their goals.

Dr. Chafik Rachadi,

Deputy Speaker of the House of
Representatives, Parliament of Morocco

Abdellatif Berroho,
Quaestor and Member of the Board,
Parliament of Morocco

Said Khairoun, Chairman of the Finance and

Economic Development Committee,
Parliament of Morocco

"Parliaments play a unifying role,

albeit in different forms depending on
a country's culture, history and
democratic path. Parliament must be
recognized as a forum for democratic
dialogue in which the concerns of
citizens are addressed, and a space for
sharing experience and promoting
sustainable progress for the country."

"The World Bank should not limit its

relationships to governments, as
parliaments need to develop their
capacities to monitor public policies
and government performance. This
would establish a three-party
institutional relationship, with the
World Bank as its axis. Parliaments
have a very important role in
developing democracy.

"The role of Parliament is to legislate

and monitor. It also has a
parliamentarian diplomacy role. Our
visit to the World Bank is to
strengthen our relations and to
develop and strengthen parliament's
role in monitoring fiscal activities."



Books 89
Recommandation 92
In Their Own Words 93

Suggested New Books

Jobs or Privileges: Unleashing the Employment Potential of the Middle East and North Africa. MENA Development Report.
The World Bank.
This report maintains that Middle East and North Africa (MENA) countries face a critical choice in their quest for higher private
sector growth and more jobs: promote competition, equal opportunities for all entrepreneurs and dismantle existing
privileges to specific firms or risk perpetuating the current equilibrium of low job creation. The report shows that policies
which lower competition in MENA also constrain private sector development and job creation. Chapter one analyzes the
dynamics and determinants of job creation and tests whether the fundamentals of job creation in MENA are similar to those
in fast growing developing and high income countries. Chapter two shows how different policies in MENA countries shaped
private sector competition and thus the firm dynamics associated with job growth identified in chapter one. Chapter three documents past
industrial policies in MENA and compare the experiences in MENA with the experiences of East Asian countries, highlighting how the differences
are linked to policy objective, design, and implementation. Chapter four analyzes how privileges to politically connected firms result in policy
distortions that undermine competition and constrain private sector growth and jobs in MENA. The report concludes by laying out the
implications for policy of the various findings and lays out the specific areas for policy reform to the roadmap for more private sector growth
and jobs in MENA.
Islamic Banking Opportunities across Small and Medium Enterprises in MENA. International Finance Corporation, IFC
Advisory Services in MENA.
There is a huge demand for Islamic products by SMEs in the MENA region and, according to this study, approximately 35
percent of such businesses remain excluded from the formal banking sector because of a lack of Shariah-compliant products.
In order to reach out to SMEs demanding Islamic products, and as part of IFCs initiative to enhance its SME investment and
advisory services offerings to Islamic financial institutions, we needed to better understand the market from both the
demand and supply sides in order to identify any gaps or niches where IFC could assist and add value. IFC commissioned a
study in nine countries of the MENA region to better understand the demand and supply for Islamic banking products (both
asset & liability products and other banking services) in the SME sector. The countries chosen for this study are: (1) Iraq, (2) Pakistan, (3) Yemen,
(4) Kingdom of Saudi Arabia, (5) Egypt, (6) Lebanon, (7) Morocco, (8) Tunisia, and (9) Jordan. The scope of the study was to: (i) identify the
countries in the MENA region facing gaps in financing and banking needs of SMEs in the Islamic products space; (ii) conduct a supply side
benchmarking to review current capacity of financial institutions to offer Islamic products to this sector; (iii) conduct a demand side
benchmarking to identify key SME customer needs for Islamic products and see how well they are currently being served; and (iv) review the
current enabling environment and readiness levels of banks in terms of the regulatory framework and Shariah compliance. The study reiterates
several of the now well researched and documented reasons for the lack of access to finance for SMEs. However, more importantly, the study
reveals that, there is a potential gap of $8.63 billion to $13.20 billion for Islamic SME financing, with a corresponding deposit potential of $9.71
billion to $15.05 billion across these countries. This is due to the fact that several un-served and underserved SMEs do not borrow from

conventional banks, owing to religious reasons. This potential is a new to bank funding opportunity, which is still untapped, as banks and other
financial institutions lack adequate strategic focus on this segment to offer Shariah-compliant products.
Regional Economic Outlook: Middle East and Central AsiaLearning to Live with Cheaper Oil amid Weaker Demand.
International Monetary Fund.
A large and possibly persistent decline in oil prices, and slower-than-projected growth in the euro area, China, Japan, and
Russia, have substantially altered the economic context for countries in the Middle East and Central Asia. The appropriate
policy response will depend on whether a country is an oil exporter or importer. A common theme, however, is that these
developments present both an opportunity and an impetus to reform energy subsidies and step up structural reform
efforts to support jobs and growth. Lower oil prices have weakened the external and fiscal balances of oil exporters,
including members of the Gulf Coperation Council (GCC). Large buffers and available financing should allow most oil
exporters to avoid sharp cuts in government spending, limiting the impact on near-term growth and financial stability. Oil
exporters should prudently treat the oil price decline as largely permanent and adjust their medium-term fiscal consolidation plans so as to
prevent major erosion of their buffers and to ensure intergenerational equity. Outside the GCC, a source of risk in Algerias banking system is
the public banks extensive and direct exposures to large state-owned enterprises in various industries, which are subject to fiscal strains as a
result of lower oil prices. Yemen is at high risk because its banks are highly exposed to government debt against the backdrop of a weak fiscal
position and limited financing options. Selected oil-importing countries (such as Egypt, Jordan, and Lebanon) for which remittances are a major
source of liquidity could experience tighter liquidity conditions if remittances decline.

The Arab Uprisings:

What Everyone
Needs to Know, 2/e, by
James L. Gelvin.
Oxford University Press.

Contentious Politics in the
Middle East. Edited by
Marc Lynch. Columbia
University Press.

Voices of the Arab

Spring: Personal Stories
Revolutions, by Asaad
University Press.

Gaza: A History. By JeanPierre

University Press.

Among the Ruins: Syria

Past and Present.
Christian C. Sahner. Oxford
University Press.

The Libyan Revolution

and Its Aftermath, edited
by Peter Cole and Brian
Oxford University Press.

Governance and General Economics

Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy. Francis Fukuyama
This is the second volume of the bestselling landmark work on the history of the modern state. Taking up the essential question
of how societies develop strong, impersonal, and accountable political institutions, Fukuyama follows the story from the French
Revolution to the so-called Arab Spring and the deep dysfunctions of contemporary American politics. He examines the effects
of corruption on governance, and why some societies have been successful at rooting it out. He explores the different legacies
of colonialism in Latin America, Africa, and Asia, and offers a clear-eyed account of why some regions have thrived and
developed more quickly than others. And he boldly reckons with the future of democracy in the face of a rising global middle
class and entrenched political paralysis in the West.

The Shifts and the Shocks: What Weve Learned and Still Have to Learn from the Financial Crisis.
By Martin Wolf. Penguin Press.
From the chief economic commentator for the Financial Times, The Shifts and the Shocks is the tour dhorizon of the new world
economy. Wolf is one of the most farseeing and imaginative economic commentators. Wolf makes us see how partial and
confused our view of the economic events of the last five years has been. No other book offers such a thoroughly global
perspective, nor one that understands the connection between the macroeconomics and the financial system with Wolfs level
of sophistication and insight. It is not a book for those looking for a cheerful prognosis on the future of the European Union, or
any number of other vital issues hanging fire, and it offers solutions that will seem extremely radical to some, but neither is it
without hope. The new global economic order is lifting tens of millions of people out of poverty and creating new winners and losers at an
unimagined scale and pace. Its simply high time, indeed past time, for our economics to keep pace with our economy. Now, with The Shifts and
the Shocks, it has.

The Great Recession:
Lessons for Central
Bankers. Edited by Jacob
Braude, Zvi Eckstein,
Stanley Fischer, and Karnit
Flug. MIT Press.

In the Wake of the Crisis:

Leading Economists
Reassess Economic Policy.
Edited by Olivier
Blanchard, David Romer,
Michael Spence, and
Joseph Stiglitz. MIT Press.

The G-20 Summit at Five:

Leadership. Edited by
Kemal Dervis and Peter
Institution Press.

Life after Debt: The

Origins and Resolutions of
Debt Crises. Edited by
Joseph Stiglitz and Daniel
Heymann. Palgrave

Governance Globally:
Patterns of Potential
Human Progress. Volume
5, by Barry B. Hughes,
Devin K. Joshi, Jonathan D.
Moyer, Timothy D. Sisk
and Jose R. Solorzano.
Paradigm Publishers.

Towards a Better Global

Economy: Policy
Implications for Citizens
Worldwide in the 21st
Century, by Franklin Allen,
Jere A. Behrman, Nancy
Birdsall, Shahrokh
Fardoust, Dani, Rodrik,
Andrew Steer and Arvind
Subramanian. Oxford University Press.

New Paper
Turn Down the Heat in the Arab World
strongly help Arab countries, enabling them to decrease the
vulnerability of their existing energy systems Using wind and solar
energy will also increase electricity production, which is important as
demand in the majority of the countries is expected to increase
steeply in coming decades due to demographic and economic
development as well as to the increasing need for space cooling as
temperatures rise.

Climate change is already affecting the Arab World in dire ways. It will
cause extreme heat to spread across more of the land for longer
periods of time, making some regions unlivable and reducing growing
areas for agriculture. Cities will feel an increasing heat island effect
and most capital cities in the Middle East could face four months of
exceedingly hot days every year. Rising temperatures will put intense
pressure on crops and already scarce water resources, potentially
increasing migration and the risk of conflict.
The World Bank Turn Down the Heat reports warn that without
concerted action, temperatures are on pace to rise to 4C above preindustrial times by the end of this century, and the MENA region will
be hit harder with higher temperatures and more severe droughts.
Arab World countries have some of the highest wind and solar energy
potentials in the world. Exploiting this wind and solar potential would

Air pollution
Sources of air pollution in the Arab World vary from transportation
systems, greenhouse gas emissions, and other gases from industries.
Coupled with a shortage of institutional capabilities to manage air
pollution, air quality has become unbreathable in most MENAs
largest cities, with tremendous impact on peoples health.
Unprecedented unplanned urbanization, industrialization and
migration of traditionally rural peoples and resettlement of refugees
strain city services and give rise to air pollution.
Natural resources
In most MENA countries, scarce fresh water is diverted, misused, and
polluted with hazardous wastes, sewage, agricultural waste, and
other chemicals. Arable land is being lost to desertification and
unplanned urbanization. Coastal zones are mismanaged and polluted
with oil, threatening fragile ecosystems and biodiversity.
As a result of global warming, especially changes in precipitation
patterns, water availability will decrease in most parts of the MENA
region throughout the 21st century, with decreases possibly
exceeding 15 percent in a 2C world and 45% in a 4C world.
To access the full report, go to:


CVMENA Recommends
Opening the Black Box:
The Contextual Drivers of Social Accountability
This publication fills an important knowledge gap by providing guidance on how to assess contextual drivers of
social accountability effectiveness. It aims to strategically support citizen engagement at the country level and for
a specific issue or problem. The report proposes a novel framing of social accountability as the interplay of
constitutive elements: citizen action and state action, supported by three enabling levers: civic mobilization,
interface and information. For each of these constitutive elements, the report identifies 'drivers' of contextual
effectiveness which take into account a broad range of contextual factors (e.g., social, political and interventionbased, including information and communication technologies). Opening the Black Box offers detailed guidance on
how to assess each driver. It also applies the framework at two levels. At the country level, the report looks at
'archetypes' of challenging country contexts, such as regimes with no formal space or full support for citizen-state
engagement and fragile and conflict-affected situations. The report also illustrates the use of the framework to
analyze specific social accountability interventions through four case studies: Sierra Leone, Pakistan, Yemen, and
the Kyrgyz Republic.
April 2015
by Helene Grandvoinnet, Ghazia Aslam, Shomikho Raha


In Their Own Words

Governance, Fragility and Conflict
Dr. Jim Kim,
World Bank Group

Helen Clark,
Administrator, United Nations Development
Programme (UNDP)

The Middle East and North Africa Region is at a crossroads. In

one future scenario, the political crises, violent conflict and
deteriorating economic conditions ... could deepen and
possibly spread to neighboring countries. But theres another
scenario -- the region could build on the political opening of
the Arab transitions, address long-standing problems of
exclusion, mobilize an international effort to end the searing
conflicts and realize its potential for sustained growth. The
World Banks strategy in this region is squarely aimed at that
second scenario a way forward that is supported by the
principles of co-existence, tolerance, compromise,
transparency, good governance, and inclusive economic

the world cannot achieve the eradication of extreme poverty if

corners of our world continue to be wracked by violent conflict
and fragility Poor governance and weak institutions perpetuate
fragility. Governments which cannot execute decisions nor
deliver services effectively, and which tolerate corruption, hold
back development progress
State fragility reinforces societal fragility and vice versa In the
United Nations Development Programmes new strategic plan,
building resilience is a key pillar. Our aim is to help dismantle the
complex conflict-fragility-poverty trap, and enable previously
troubled countries to offer a better future for their people. This
work needs concerted international support. It will not be
possible to eradicate extreme poverty by 2030 or by any other
date if a proportion of the worlds people continue to live in fear
of war, conflict, and armed violence ripping their communities

Christine Lagarde
Managing Director, IMF

On transparency and governance, most of us share the view

that this is an area where the [MENA] region has to improve
significantly to establish more accountability of the state vis-vis its citizens, but also to attract investors and build credibility
around the direction of the economic transitions In addition,
more transparency and better governance in both the public
and the private sector will depend on developing a strong civil
society, including legitimate better representation of youth
and women

Ban Ki-moon,
Secretary-General, United Nations

Conflicts breed where there is poor governance, human rights

abuses and grievances over the unequal distribution of resources,
wealth and power. Tensions simmer where people are excluded,
marginalized and denied meaningful participation in the political
and social life of their countries. Unrest flourishes where people
are poor, jobless and without hope. To prevent conflicts, we must
strengthen democracy, build stronger, more resilient,
accountable State institutions, ensure adequate checks and
balances, promote the rule of law and work to establish effective
democratic control over the armed forces.

New Paper


Transparent Government and Business Regulation:

"Open for Business?"
Policy Research Working Paper 7132, By Carolin Geginat and
Valentina Saltane, December 2014.
This paper presents new indicators for 185 economies measuring the
accessibility of business regulatory information. The paper shows that
the new data can serve as meaningful proxies for the overall
transparency of governments. The new data also have explanatory
power for the quality of business regulation.
The paper finds the regulatory environment to be most opaque in
Sub-Saharan Africa and the Middle East and North Africa, where
businesses can often only access basic regulatory information by
meeting a government official. By contrast, in countries in the
Organisation for Economic Co-operation and Development and
Eastern Europe and Central Asia, access is more direct and can be
obtained through websites, public billboards, and brochures.

Moreover, Organisation for Economic Co-operation and Development

economies are more consistent in their transparency efforts across
government agencies.
The paper also finds that while resources as proxied by income levels
play some role in explaining why some economies make more
information easily accessible than others, those resources are not the
only determining factor; regardless of income, more democratic
governments tend to make greater transparency efforts. Finally,
easier access to basic regulatory information is associated with
greater regulatory quality and less corruption.
Link to the full report:

Comic Relief


A Day in the Life of GGP Staff

ADM: Accountability and Decision-Making Framework
CN: Concept Note
CPF: Country Partnership Framework
CV MENA: Connecting Voices Middele East and North Africa
ETC: Extended Term Consultant
HR: Human Resources
IPF: Investment Project Financing
OCC: Operational Core Curriculum
PFM: Public Financial Management
PAD: Project Appraisal Document

PEFA: Public Expenditure and Financial Accountability

PRIMA: Portfolio Risk Management
RM: Resources Management
ROSC-AA: Report on the Observance of Standards and Codes
SAI PMF: Suprem Audit Institute Performance Man
SCD: Systematic Country Diagnostic
SORT: Systematic Operations Risk-rating Tool
STC: Short Term Consultant
TLAP: Trust Fund Learning and Accreditation Program