Good governance needed for sustainable development

October, 2005, Bangladesh completed preparing her awaited Poverty Reduction Strategy Paper (PRSP) and started to implement .It is widely known that lack of good governance is one of the key causes of the failure of 'Structural Adjustment Policy', 'Enhanced Structural Adjustment Policy' and other major reform policies guided by donor agencies ( e.g. World Bank, IMF etc.).Good governance was originally articulated in a World Bank publication in 1989.Good governance is now increasingly used as a base for aid and loans by major donors and international financial institutions. There are many countries in the world that have the same resource base, but the degree of good governance makes the difference in case of growth and poverty reduction. Realizing the importance of good governance, Bangladesh has given the second most priority to good governance as a strategy to accelerate poverty reduction.

Governance is the process of decision-making and the process of implementing that decision through different institutions in the management of the resource endowment of the state. Governance can be used in several contexts, such as corporate governance, international governance, national governance and local governance. Government is one of the actors in governance and other actors involve in governance vary depending on the level of government. Local level actors in governance are cooperatives, NGOs/CBOs, religious leaders, political leaders, financial institutions and above all local elected bodies. National actors in governance are media, international donors etc.

Good governance, a normative principle, is an efficient management of nation's resources and affairs such that it is participatory, equitable, accountable, transparent, and responsive to people's need. Good governance ensures the formulation of appropriate policies and priorities to support the activities of the people to enable them to earn a decent livelihood, their access to state resources and opportunities and help them lead a long and productive life. Good governance encompasses the mechanisms, processes, and institutions through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations and resolve their differences. Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframe. Good governance is an imperative for development. (UNECA, 2001).The definition of good governance is given in our PRSP in the following way "A maximal definition of good governance would include the following: checks and balances among various organs of government, legitimacy and authority of state institutions, rules and norms that determine who holds power and the exercise of this power, relationships of accountability among state functionaries and between these functionaries and citizens, the capacity of government to formulate policies, manage administrative and fiscal affairs of the state, and deliver goods and services.

When good governance in a society will be ensured, then corruption should be at minimum level and the views of minorities and the most vulnerable section of the society should be reflected in decision making. For achieving these goals, following instruments play the main role which is indicators of good governance.

The voices of all men and women as well as constructive participation should be considered in decisionmaking. The people's voices can be considered through representative intermediate institutions. It is important to point out that representative democracy does not necessarily mean that the concerns of the most vulnerable in society would be taken into consideration in decision making. A strong, pluralistic and organized civil society, where there is independence of expression and association, is necessary condition for good governance.

Good governance requires the establishment of rule of law where laws should be enforced impartially. There should be full protection of human rights, especially those of minorities, women, and ultra poor. To establish good governance, independent judiciary and impartial and incorruptible law enforcing agencies are necessary conditions.

Transparency is the free flow of information that how a decision is taken and how the decision is enforced. The information about the processes and institutions are directly accessible to those who will be affected by such decisions and their enforcement and the information should be enough and in easily understandable forms to understand and monitor them.

Good governance necessitates institutions and processes and try to serve all stakeholders within a reasonable timeframe.

There is a need for mediation of different interests in society to reach a broad consensus in society on what is in the best interest of the whole community and how this can be achieved. It also requires a long-term perspective for sustainable human development and how to achieve the goals of such development.

All men, women, minorities, ultra poor have opportunities to improve or maintain their well-being. All members in the society, especially most vulnerable portion of the people feel that they have a stake and do not feel excluded from the mainstream.

Good governance means that processes and institutions produce results that meet the needs of society while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment.

In general, organizations and institutions are accountable to those who will be affected by decisions or actions. Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders.

Leaders and the public have a broad and long-term perspective on good governance and human development, along with a sense of what is needed for such development.There is also an understanding of historical, cultural and social complexities in which that perspective is grounded.

Promotion of broad based economic growth, a dynamic private sector and social policies that will lead to poverty reduction is necessary for economic growth. Economic growth is best achieved in an efficient, open, market based economy.

Investment in people is a high priority, through policies and institutions that improve access to quality education, health and other services that underpin a country's human resource base.

Effective institutions and good corporate governance are needed to support the development of a competitive private sector. In particular, for markets to function, social norms are needed that respect contract and property rights.

Many recent cross-country studies have come up with arguable evidence that the economic growth and poverty reduction are positively related to the institutional quality in a given country. The better institutional quality implies effective judiciary or legislative mechanisms, the rule of law, political transparency/stability, civil liberties and rights, freedom of media, etc. If the countries strengthen their institutional arrangements, then their economic efficiency improves.

There are many studies, which present the governance and development interlinkage. We would briefly illustrate only few frequently cited works in the literature. The World Bank (1992) in its report on 'Governance and Development' provided a detailed analysis to indicate how important it is now to look comprehensively at the institutional environment in order to pursue a constant effort for overall development. Then, in the Interim Committee meeting (1996) of IMF, the Fund identified 'promoting good governance in all its aspects, including ensuring the rule of law, improving the efficiency and accountability of public sector, and tackling corruption as the key for economic efficiency and growth' in countries.

Governance of an economy embraces all macroeconomic, microeconomic and fiscal policies, public economic agencies, regulatory bodies, company laws and legal institutions connected with economic matters. The weak institutions and policies, outdated colonial laws and inefficiency of the administration resulted in creating conditions for inadequate governance in Bangladesh. There exists a weak Civil Society in Bangladesh, and that includes professional bodies, NGOs, labor unions, media people and other organizations.

Poor governance stifles and impedes development. In countries like bangladesh where there is corruption, poor control of public funds, lack of accountability, abuses of human rights and excessive military influence, development inevitably suffers. A landmark study by the World Bank, Assessing Aid - What Works, What Doesn't and Why (1998), demonstrated the crucial role that good governance plays in enhancing the effectiveness of aid. The study found that where there is sound country management, an additional one per cent of GDP in aid translates into a one per cent decline in poverty and a similar decline in infant mortality - whereas in a weak policy and management environment aid has much less impact. Findings like this clearly indicate that the 'returns' from development assistance are generally greater in developing countries characterized by good governance. One element of good governance that is needed for sustained development is an economy that operates in an ethical, accountable and appropriately regulated environment, which facilitates competition in the marketplace. Without this, there will be no driver for economic growth and sustainable development will not be possible. A dynamic private sector, operating in a properly functioning competitive market system, creates jobs and income, generates wealth and helps ensure that resources are used efficiently.

Governance is the main issue involving all major routes of anti-poverty such as acceleration of pro-poor economic growth, broad-based human development, women's advancement and closure of gender gaps, social protection against shocks, and participation of poor.

Poor governance is reflected in the inefficient management of the economy which eventually leads to the occurrences of very high level of corruption for which the country is identified as number one corrupt country of the world by Transparency International for five successive years (2001-2005). A nexus among corrupt politicians, bureaucrats, rent-seekers and police forces aggravated the situation further. According to Professor Mahmud, the seeds of corruption are sown at the very beginning of the democratic process when money and muscle power can influence elections."

(To be continued)