Good governance a necessary precondition for socio-economic development and poverty eradication

State Secretary Olav Kjørven, Trondheim 13. November 2002

Ladies and gentlemen,

The fight against poverty is this century’s single most important task.

Hunger, poverty and lack of basic health care are the hard facts and reality for 1.2 billion people who are living in absolute poverty. They are all individual human beings with the right to a life in dignity, just like you and me. While our rights are fulfilled and respected, the same cannot be said for the staggering number of people living in poverty.

The United Nations Secretary-General, Kofi Annan, recently summed up the intolerable dilemma in the current debate on development and globalization:

"Either we help the outsiders in a globalized world out of a sense of moral obligation and enlightened self-interest, or we will find ourselves compelled to do so tomorrow, when their problems become our problems in a world without walls."

An increasingly number of the world’s leaders have begun to understand this, and they have started on this extremely important task.

In the Millennium Declaration the world’s leaders stated that the development goals could only be achieved through good – or democratic – governance. They furthermore pledged to spare no effort to promote democracy and strengthen the rule of law. These goals constitute our joint vision for the next decade. We know most of the means we need to realize this vision, and we have a shared responsibility to do so.

I will be focusing primarily on governance issues today, with a special emphasis on some of the core problems involved in developing good governance.

I will try to describe what are the challenges in developing good governance and what the Norwegian Government is doing to promote good governance in our development cooperation.

"Good governance is perhaps the single most important factor in eradicating poverty and promoting development."

Those are the words of the UN Secretary-General Kofi Annan.

In saying this, Kofi Annan is not only underlining the importance of good governance, he is also identifying it as a factor, or a general precondition, that exceeds other factors, such as health care and education, in importance.

Mr. Mark Malloch Brown, the administrator of the UNDP, has stated that democratic governance in many countries is the missing link between the fight against poverty and successful poverty reduction.

Governance-related issues are again cited as necessary conditions for development in the New Partnership for Africa’s Development (or NEPAD). NEPAD is the most exciting and important initiative for development in decades, and the initiative has come from the African countries themselves. That is important!

Without good governance, it is hard to see how a country can in a sustainable way develop and lift its people out of poverty and hopelessness.

According to the Nobel laureate Dr. Amartya Sen:

"Civil and political rights ... give people the opportunity to draw attention forcefully to general needs and to demand appropriate public action."

Thus political rights are important not only for the fulfilment of needs; they are also crucial for the formulation of those needs.

This is what democratic governance is all about. There is a vital connection between open, democratic and accountable systems of governance and respect for human rights on the one hand, and the ability to achieve economic and social development on the other. They are mutually reinforcing.

We must recognize that the relationship between the state, the private sector and civil society are key determinants of whether a nation is able to create and sustain equitable opportunities for its entire population. Governance can no longer be considered a closed system.

The state’s task is to find a balance between taking advantage of globalization and providing a secure and stable social and economic domestic environment, particularly for the most vulnerable. Globalization is also placing governments under greater scrutiny, which may eventually lead to improved state conduct and more responsible economic policies.

If a government does not function effectively, scarce resources will be wasted.

If it does not have legitimacy in the eyes of the people, it will not be able to achieve its goals.

If it is unable to build national consensus around these objectives, no external assistance can bring them about.

If it is unable to create a strong social fabric, the country risks disintegration and chaos.

And equally important,

If people are not empowered to take responsibility for their own lives and their own development within an enabling framework provided by the government, development will not be sustainable.

Good governance is certainly a loose form. It’s inherently positive. It’s a bit like "motherhood. That does not make it less relevant. Think about negative terms – "oppression", "deprivation". They are loose and negative. But not without meaning!

So, then, you may ask, what is good governance?

There may be many different answers to that question. Governance is "good" when there are certain principles that are guaranteed and respected by a country’s leaders, and when this benefits all inhabitants of that country. And, at the same time, when the political leaders show the courage, leadership and the political will it takes to continue to develop good governance.

It is about allowing high ethical standards to have a place in the day to day work of government.

As I see it, these principle include transparency in all its forms, democratic representation, division of powers, civil and political rights, economic and social rights, free and fair elections, government effectiveness and accountability, combating corruption, free media and "watchdog functions", political participation, the rule of law, sound economic policy and public financial management – just to mention the most important ones.

I agree with Prof. Torbjørn Knutsen that good governance goes beyond democracy as such. It’s much broader.

What are the challenges in developing good governance?

First of all, good governance can only be achieved if there is a political will in a country to take the necessary, and sometimes tough, decisions that will make the development of good governance possible.

As I just mentioned, good governance is not one single thing or development in one single field. It involves many aspects. By saying this, I will agree with those who argue that there are different ways to reach the characteristics of "good governance" and thus a sustainable development.

However, one important thing is that you need to know what the current situation is and where you want to go, before you can begin to do anything.

Many countries and institutions have tried to measure governance by developing governance indicators. Examples of this are the study by the World Bank Institute entitled "Governance matters" and, the Transparency International corruption index. These efforts have not been easy; nor have they given an entirely correct picture of the situation.

Another example is this year’s Human Development Report (HDR), which , as reflected in its title: "Deepening democracy in a fragmented world", is devoted to democracy and governance issues. The report is probably the most thorough analysis to date of the governance situation in a large number of countries.

The HDR is a very important tool when working with governance issues, because it analyses the status of governance in the countries of the world and the progress they are making in reaching the Millennium Goals. The report draws up a map of the global governance situation and has been useful in our work. Thus I can recommend the report as important reading.

Politicians must work for development and poverty eradication by showing leadership and making sound decisions and assigning the right priorities. Promoting good governance is one such vital priority.

Another important priority is recipient responsibility. When drawing up a new strategy for our development cooperation, we recognized that there would never be any sustainable development unless the recipients were sitting in the "driver’s seat", determining their own priorities and finding their own solutions to the challenges of development. Once we came to this conclusion, recipient responsibility became the guiding principle of all our efforts.

This principle entails transferring responsibility for planning, implementation, monitoring and evaluation from the donor to the recipient. This change of policy also means that if we are to reach the Millennium Development Goals, we must strive to establish an equal partnership based on a clear division of roles and responsibility. The new strategy laid the foundation for a more realistic dialogue. What should our contribution in the development process be, and what must our partners themselves take responsibility for?

In practical terms, this change of policy led to new ways of working. Whereas we previously implemented the projects ourselves, our role today is more that of a facilitator. We make financial and technical resources available, while the recipients, to a greater extent than previously, must take care of planning and implementation themselves.

Recipient responsibility must, as I have said, be strengthened, governance improved and corruption combated. The conditions for growth, and thus development, are far from good in many developing countries. In countries where corruption is endemic and governance is poor, national and international investors will stay away. That leaves the poor as the ultimate losers. Good governance is therefore a precondition for development.

What is the Norwegian Government doing to promote good governance in our development cooperation?

Norwegian development cooperation has undergone considerable changes in the past decade. As I mentioned earlier, we are dedicated to the principle of recipient responsibility. This principle plays a central role in our work and in the new Action Plan for Combating Poverty, which we launched earlier this year.

The Action Plan has a clear focus on governance and related issues such as the promotion and protection of human rights, and holds that good governance is crucial to eradicate poverty. Furthermore it states clearly that the dialogue with developing countries must emphasize the importance of good governance and that assistance in the form of capacity-building has high priority. We believe that countries, which make an effort to develop good governance, should receive the lion’s share of our aid.

The Action Plan is a broad-based guide to development policy, and it has a rights-based approach. It has been called a "living plan" because it will be reviewed, evaluated and updated regularly.

The Action Plan includes a focus on many issues, and its conclusions - or recommendations - can be summed up as follows:

Development assistance alone cannot lift a country out of poverty.

Developing countries must be given back control over their own development.

The war on poverty is about promoting human rights.

Education and health must be promoted. The HIV/Aids epidemic must be combated.

Development assistance must be increased substantially.

The importance of good governance is now well documented. We have tried to address the problem in our development cooperation with an anti-corruption strategy and a democracy initiative. What we are doing now is to take this a step further and introduce a more comprehensive governance approach. This governance initiative includes three important factors:

First, efforts to evaluate and improve the basic preconditions for good governance, such as education, institutional development, systematic efforts to eradicate petty corruption and greed corruption, and a democratic framework and observance of basic rights

Second, government reforms. This includes initiatives to improve financial administration by the ministries of finance, the central banks and other government bodies. It includes reforms to improve the competence of government officials and increase their salaries. And it includes reforms to secure a constitutional state in which the rights and liberties of the inhabitants, independence of the courts, etc., are guaranteed, and in which government institutions are answerable under the law for their actions.

It must also include allowing the vast majority of people from the developing world to gain formal title to their assets. Presently, some 80% of them are deprived of their right to property.

Third, the watchdog functions. This includes initiatives to improve supervision and control by government bodies such as the Auditor General and the national assembly, non-governmental institutions, governing parties and the opposition, and the media and civil society.

Much of this work is related directly or indirectly to democratization – supporting elections, helping to build legislatures and judiciaries, and promoting the independence of the press, anti-corruption efforts, a strong civil society, transparency and accountability in the public administration, and human rights, just to mention a few important examples.

The overall goal of this initiative is to find out what Norway can do to help to improve the governance situation in cooperation with each at our partner countries. In order to do this we need to know what the present situation actually is, what Norway has done previously and what other donors have done and are doing.

ICT also must have a place in all of this. We are already seeing how ICT can help boost transparency and accountability.

Cooperation with our partner countries and with other donors, whether they are countries or organizations, is of crucial importance in this work.

This is what the cooperation between the so-called Utstein countries is all about. In 1999 we formed an alliance, or coalition, with the UK, the Netherlands and Germany, and now also Sweden has been included. The Utstein group is committed to making aid more effective and poverty oriented.

Promoting good governance is on the top of our agenda. A joint (Utstein) anti-corruption resource centre has been established at the CMI in Bergen.

Before ending my introduction I would like to highlight five points:

First, good governance is widely accepted as a precondition for sustainable development. It is not the only precondition, but it is a necessary one if development is to be sustainable.

Second, there is no global formula for how to achieve "good governance". It takes political courage and leadership.

Third, donor countries must listen to the recipient countries and encourage recipient responsibility. We must work in a way that makes good governance possible. This calls for donor coordination.

Fourth, we in the rich countries must do our part and clear up our nags – for instance the phenomenon of fiscal / tax paradises, weak enforcement of international corruption, unfair trade regimes, and so on. Good governance is also a challenge to us.

Fifth. This is an exciting and important global agenda. There are few projects / challenges out there that beat the agenda of fighting poverty, in terms of complexity, risks and rewards. I welcome you all to join in this effort.

Thank you for your attention.