Navigating the Perfect Storm: A Crisis of Trust at the Subnational level


The Shipwreck exhibited 1805 Joseph Mallord William Turner 1775-1851 Accepted by the nation as part of the Turner Bequest 1856
The Shipwreck exhibited 1805 Joseph Mallord William Turner 1775-1851 Accepted by the nation as part of the Turner Bequest 1856

*To read this post in Spanish, click here.

In our previous post “How to Restore Trust? Falling Prices of Raw Materials and Political Crisis,” we talked about the difficult situation that governments are put under pressure by the arrival of fewer resources in the primary sector and citizens that increasingly tolerate less abuse of power and demand better services.

Now we would like to draw attention to a key issue: the need to strengthen support for institutions and improve the quality of public governance at subnational levels of government.

Local governments in our region face a delicate balance. They have received more resources and responsibilities as a result of transfers from royalties and of the decentralization process. But many of these governments have not developed the institutional capacity to manage these resources and responsibilities efficiently and effectively, particularly with regard to public investment.

Government, business and civil society interface most directly at the subnational level. If local governments cannot meet service delivery effectively, this creates pressures for companies to intervene and occupy these gaps, including creating strategies for obtaining the “social license” to operate. In many cases, this causes a situation in which civil society creates false expectations about the proper role of the private sector and the governments in providing services.

Holistically, it is an urgent task to support the strengthening of institutions at the subnational level of government. In the book Transparent Governance in an Age of Abundance, published by the Inter-American Development Bank, we show that in Brazil, for example, a greater flow of resource royalties may be associated with less transparency and fewer controls.

Analyzing the key aspects of successful initiatives to strengthen governance in this sector in recent years shows the central role that technological innovation can play. It is crucial to continue supporting the development of infrastructure open data platforms and geo-referencing to publish data from the mining and energy sector, such as MapaRegalias in Colombia, as this represents an entry point for broader policy reform.

There are promising examples of municipalities and provinces in the region that are using digital platforms to process high-quality information. See, for example, open data initiatives in Mexico, in the city of Xalapa, in Argentina, in the city of Bahia Blanca, in big cities like Quito, or in the state of Minas Gerais in Brazil with Data Viva.

These platforms are not only making the existing information accessible and understandable to citizens, they also help governments to design better policies and implement them. These initiatives demonstrate that transparency in the sub-national governments is possible. In the case of Peru, for example, one of the most interesting aspects of the implementation of the Initiative for Transparency in Extractive Industries (EITI) is that this international standard for voluntary application has been taken to the subnational level in the regions of Piura and Moquegua.

The initiatives mentioned make information and communication technologies a key driver of transparency and efficiency in the public sector, and have created a standard that goes beyond the cities or municipalities where they were implemented. In fact, citizens and journalists in the region benefit from the use of these platforms and in many cases encourage those responsible for decision making in the extractive sector to join the wave of transparency.

Technological innovation is also key to promoting dialogue and reflection, processes aimed at achieving more effective community work and for helping to identify information needs for sectoral development strategies with a long-term vision that are compatible with the needs of society. For example, the Consejo Minero in Chile has made efforts to be more transparent and help understand water use in the mining sector in that country.

Finally, public investment systems can be an effective entry point to boost reforms for good governance in the sector. This goes beyond the reconciliation of data between company payments and the revenues of sub-national governments. It focuses directly on the timely and effective use of these revenues. In this sense, these platforms are powerful because they make relevant information about the extractive sector available to the public and could be the visible face of reform and improved institutions. This has been the operating principle in the preparation and implementation of the Program for Institutional Strengthening of the Mining and Energy Sector in Colombia supported by the IDB.

In many countries in the region, widespread corruption and poor implementation capacity have generated a remarkable disconnect between public investment projects and plans for national and regional development. This is prompting several countries in the region to make significant efforts to modernize national public investment systems.

The latter includes improving systems of information management for public investment, which is key to planning, implementing, and monitoring public investments. Strengthening information systems related to public investment generates profits that go beyond transparency to improve efficiency and effectiveness.

Information systems help connect the budget cycle with the implementation of programs of public and private investment. They also ensure traceability of public investment resources for citizens to have timely and quality information throughout the investment cycle, which are key inputs to improve decision making, whether it’s at the level of design or policy implementation.

In this challenging context, why not work together for these initiatives to be implemented across the region? As the author Javier Cercas said, “we didn’t invent corruption, (…); it has been here since the world began: human beings are like that. The problem, therefore, is not those who are corrupt: the problem is the system that prevents or encourages corruption; you have to change people, but first we must change the system. The difficult thing is not to replace magnates with decent people, but to prevent decent people from becoming crooks.”


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