Unit 3

GOVERNANCE
What is Governance ? (Concepts)
Understand the Significance of governance
Dimensions of Governance
Explore the evolution of the concepts of
Governance
Major pillars of good governance
Assess existing governance structure of
Ethiopia.

Decision making Institutions

Governance
and both
means
implementation informal
Processes and
Informal
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 How did we implement Development activities and policies?
 Public organizations were established to lead the effort
 The following components were included to ensure the successful governance:
» Processes
» People

(People + administrators) are

established as governance
Processes
body

 Governance is concerned with how societies, governments and

organizations are managed and led.
 This includes how they structure and otherwise order their affairs,
make decisions and exercise powers, and manage their
relationships and accountabilities
 What are Institutions?

 They consist of rules and agencies

 Institutional structures are sometimes seen as ‘fixed’ – a
‘given’, not a variable. We work around them, not with
them.
 Concerns:
– Accountability
– Responsiveness
– Voice / choice
 Joined-up action is needed
 1. Meaning and Significance of Governance
 Governance
 is not a new concept.
 is as old as human civilization.
 Means the process
 of decision -making and by which decisions are implemented (or not implemented).
It can be used in several contexts:
 corporate governance,
 international governance,
 national governance and
 local governance.
 Governance covers ‘the management of the course of events in a
social system’, whether such systems are conceived in
organizational, sectoral or broader terms (Horrigan 2010; quoting
Burris et al 2005).
 Here, the governance of systems embraces their structures, internal
and external interactions, and modes of decision-making and other
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behavior.
 Definition of Governance Cont’d …
Generally, Governance
 Is the processes and institutions, both formal and informal, that guide and restrain the
collective activities of a group.
 Is ‘the manner in which power is exercised in the management of a country’s economic
& social resources’ (WB, 1989).
 Is ’the exercise of economic, political and administrative authority to manage a
country’s affairs at all levels.’(UNDP)

 Governance need not necessarily be conducted exclusively by governments

and the informal organizations to which they delegate authority.
 Private firms, associations of firms, nongovernmental organizations (NGOs),
and associations of NGOs all engage in it, often in association with
governmental bodies, to create governance; sometimes without governmental
authority. 5
 Defining Governance…Cont’d
Governance is not government as it recognizes power
exists inside and outside the formal authority &
governmental institutions
Government is the subset that acts with authority and
creates formal obligations.
Governance involves the private sector, government
and civil society at various levels
Governance also focuses on processes and institutions
Recognizes that decisions are made based on complex
relationships between many actors with different
priorities.
 2. Difference between governance and government

Governance Government
 is a broader notion than  is one of the actors in
government. governance (other actors
 is a cumulative practice private sector, civil society).
of behavior & attitude of  comprises constitution, laws,
government as seen in the institutions, structures,
manner they create & use management mechanism &
the said instruments. administrative process.
 The form, style, system,
method, procedure…
reflect the pattern of
governance.

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 Dimensions of Governance

1. Political dimension: processes by which those in authority are

selected, elected, monitored and replaced. It includes setting policies,
decisions about allocation & distribution of resources with popular
participation for implementation of policy.

2. Economic dimension : process by which public resources are effectively

managed and sound internal (i.e. monetary and fiscal) and external economic
(i.e. import, export, foreign exchange) policies implemented. It determines
country’s economic activities and its relationship with other economies

3. Administrative dimension: process by which a system of

administration and policy implementation which is carried out through an
efficient, independent, accountable, and transparent system of public
service delivery which has significant implications on bureaucratic competence
to help design and implement appropriate policies and manage public sector.

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 Dimensions of Governance Cont’d
4. Social dimension:
 consists of social norms, values, standards, role of culture,
religions that significantly determine and shape societal
interactions.
 deals with informal rules that govern the interactions of the
society.
5. Green dimension:
 includes environmental democracy and sustainable development
which considers environmental sustainability and promoting green
world.
6. The institutional dimension: processes by which citizens
and the state itself respect the society's/public institutions

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 3. Quality of Governance
Quality wise, governance could be either good or bad.
According to WB the major symptoms of bad governance includes:
1.Failure to make clear separation between what is public and what is private, hence a
tendency to ‘rent seeking behavior’.
2.Failure to establish a predictable framework of law and government behavior conducive to
development or arbitrariness in the application of rules and laws
3.Executive rules, regulations, licensing requirements which impede functioning of
markets and encourage rent seeking.
4.Priorities, inconsistent with development, resulting in a misallocation of resources.
5.Excessively narrowly based or nontransparent decision making.
6.Excessive costs, poor service to the public and failure to achieve the aims of a policy.
indicators of Good Governance
processes & institutions produce results that meet the needs of society while making the
best use of resources at their disposal.
When governance is able to attain the intended theoretical objective it is said to be ‘good
governance.’ 10
 Emergence of Good Governance
The concept of good governance has emerged due to various reasons.
1. Implementation of Structural Adjustment Program (SAP),
2. The collapse of communism

3. The quest for democracy by developing nations

4. The emergence or proliferation of NGOs
5. The rise of human intervention
6. The impact of globalization (influence of the 1989 report) of the World
Bank.

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 Emergence of Good Governance Cont’d …
A. The experience of Structural Adjustment Program (SAP)
 is a package of economic &institutional measures which the IMF, WB
and other Western aid donor agencies for policy oriented loans.
 Its aim is to destroy the dominant state led development paradigm
by promoting open and free competitive market economies,
supervised by minimal state.
SAP involved two main stages including:
1. Immediate devaluation of currency and macro-economic
stabilization through market oriented and liberal monetary
and fiscal policy approach.
 For instance 2.75 birr was needed to buy for one US dollar before SAP.
After the implementation of SAP however Ethiopian Birr was
devaluated to nearly 11 Birr to buy for one dollar and subsequently
remained increasing; and
2. Sought to transform economic structures and institutions through
deregulation, privatization, dismantling or diminishing oversized
public bureaucracy, reducing subsidy (E.g. fertilizer subsidy) &
encouraging realistic price to increase productivity.
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 Emergence of Good Governance Cont’d

SAP cont’d
SAP certainly resulted change in the use, production, and
distribution of resources which has inevitably given rise to both
winners and losers.
 Losers were bureaucrats and public sector workers as the
result of losing their job; farmers due to land privatization
and absence of subsidy
 Losers located in or state apparatus; hence they could use
their influence to restrain the programs, and often did.
 Farmers & the poor from different corners of the world
revealed their objection trough strike and demonstration
on the street and hence

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 Emergence of Good Governance Cont’d
SAP in almost all developing countries failed to achieve
the objective
• SAP fails due to:
 the ability to plan and implement adjustment was largely a
consequence of political commitment, capacity, and skill, as well as
bureaucratic competency.
 IMF and WB rather confronted with Incompetent and often
Corrupt government in many developing countries.
 poor governance as major sources of the African crises and
problems of development and hence making the governance of
developing countries “good” as opposed to “bad” governance is
started to be seen as a remedial action.

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 Emergence of Good governance Cont’d

2. The collapse of communism

 refers to the end of cold war between the Western camp (USA) and the Eastern
European led by USSR.
 was simply an ideological fight between capitalism and communism where
there was no use of any physical weapon. Both camps were using various
mechanisms such financial and non-financial supports and create economic
and political relationship with developing countries so as to attract them in to
their respective ideological camps.
 was an important strategic factor which helped to shape the emergence of
Western interest in promoting good governance.
 Western declare that corruption, economic mismanagement, inefficiency,
stagnation, unpleasant bureaucracy, and lack of popular democratic
participation are the features of communism –autocratic regimes.
 Therefore, for any LDC to get aid &technical support from the Western (i.e.
developed nations) reforming their systems in line with the requirements of
capitalism ideology including promoting democracy and good governance have
been taken as an essential precondition.

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 Emergence of Good Governance Cont’d
3. The impact of pro-democracy movement
 The pro-democratic movement in Latin America, the Philippines and
laterally Eastern Europe in the 1980s stimulated similar movements of
quest for democracy elsewhere.
 In Africa, between 1989 and 1992, internal and external pressures
prompted steps in the directions of democratization in a host of
countries, from Nigeria to Zaire and from Guinea to Angola.
 In similar pattern in Asia there was a pro democratic
movement in the Philippines, Taiwan, Bangladesh, and
Nepal.
 The West drew legitimacy for its pro-democracy policies from
these movements and said now is a time to support popular
demand for good governance and democracy in developing
country and started injecting the principles of liberal democracy
as if it works universally.
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 Emergence of Good governance Cont’d
4. The proliferation of NGOs
 actors changed the political landscape in most countries.
 The UN system and the Washington – based financial institutions,
(international NGOs, as Human Rights Watch and global media
penetrated what had formally been something of a governmental).
 They excreted a growing influence on what once had been almost
exclusively matters of state policy
 CSOs such as human rights advocates, gender activists, develop
mentalists, group of indigenous people have invaded the territory of
states ; and
 Non-state actors play a vital role in making government more
accountable and on the other hand they create a network of
cooperation with governments to promote development.
 The above situations have happened to be the reasons for the
emergence of the concept of good governance

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 Emergence of Good Governance Cont’d

5. The Rise of Human Intervention

 Humanitarian interventions have encouraged the insertion of
responsibility as a necessary additional component of national
sovereignty.
 International communities can intervene in sovereignty of a given country
on one condition:
 When a state fails
 To discharge its responsibility.
 Incapable of maintaining peace and order, and
 Where violation of human right is intensive.

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 Emergence of Good Governance Cont’d
6. Globalization
 Political, social, and economic pressure resulted in
internationalization and this brings the world in to one
biggest village and created the new world order.
 The growing sense of interconnectedness between all parts
of the world through increasing volume and variety of cross-
border transactions in goods and services,
 Free international capital flows, and more rapid and
widespread diffusion of technology.
 The opportunities within this social, political and
technological and economic interconnectedness could be
best exploited through meaning full exercise of good
governance.

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 Emergence of Good Governance Cont’d
7. The 1989 World Bank Report on Africa
 argued that the underlying factor of Africa’s development
problems is a crises of governance/bad governance (WB 1989).
 The WB operationalzed bad governance as personalization of power,
lack of human rights, endemic corruption, and unelected and
unaccountable governments and the natural opposite of this is
simply “good’ governance.
 This report called for the importance of governance reform (which
could also mean political reform) in order to address the crises of
governance or bad governance in developing nations in order to help
them promote their development.
 The promotion of good governance, democracy and development was
intern supported by many intergovernmental and regional organizations
such as OECD (1989), Nordic Ministry of Development (1990), the US,
British and French governments, the Commission of European
Communities, WB and the UNDP (1991) …etc.
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 Defining Good Governance
 “The generally accepted definition of good governance is ensuring
respect for human rights and the rule of law, strengthening
democratization, and promoting transparency and capability in
public administration” -The Esfahan Declaration of September 2004.
 This definition focuses on political and administrative governance
but it is important that to realize that the concept can be viewed
from different perspectives, e.g. economic, legal, institutional, etc.
 Good governance must enable women and men to access the
benefits of citizenship. It based on the principle of citizenship, affirms
that no man, woman or child can be denied the access to the
necessities of modern life…
UN-Habitat
 It also encompasses the mechanisms, processes and institutions by
which citizens & groups articulate their interests, exercise their legal
rights, meet their obligations & mediate their differences
8 characteristics ( Principles) of good governance

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 3.5 Pillars of Good Governance
Good governance has 8 major characteristics. These are:
 Participation
 Rule of law
 Transparency
 Responsiveness
 Consensus oriented
 Equity and inclusiveness
 Effectiveness and efficiency
 Accountability

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 Practice Questions
1. What is good governance within the context of any effort to
enhance social development and reduce poverty?
2. What are the benefits of good governance in the management of
development and poverty alleviation?
3. In what ways can one measure good governance in the
strengthening democratic governance of efforts of any government
authority?
4. In what ways are the principles of good governance applicable
policy making and implementation with respect to link democracy
and constitutionalism.
 Group Activity
• In small groups of
participants choose
one principle of good
governance and
explain how it can be
applied to any one
aspect of a
hypothetical poverty
alleviation project In
ETHIOPIA
 Interactive Class Discussion

• Participants present
mini-reports of the
group activity as the
basis of class discussion
of possible scenarios
for the application of
good governance
principles in the
management of diverse
Development efforts
Conclusion:
Benefits of Good Governance in Development Efforts
 Improved service delivery Universally agreed that good governance
brings socio-economic & political benefits to society
 Attraction of investment
 Reduction of corruption
 Increased civic participation
 More equitable distribution of resources
 More sustainable & efficient use of resources
 Increased sense of fairness and security for citizens
 More efficient utilization of resources
 Increased sense of ownership of development
programmes/projects/processes/outcomes
 Enhanced legitimacy of programmes/projects/processes
 Improved information flows amongst stakeholders
 Enhanced responsiveness to grassroots issues
 Creation of synergistic resource structures and
– organizational managerial effectiveness
The End