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Governance as Multilateral Development Bank policy: The Case of the African Development Bank and the Asian Development Bank 

Morten Bøås

International Studies Association

March 18-21, 1998

Introduction :
Governance and the African Development Bank and the Asian Development Bank

In the African Development Bank (AfDB) and the Asian Development Bank (ADB), governance has recently emerged as an important issue-area: on 3 October 1995, the ADB became the first MDB to establish a Board-approved policy on governance, whereas in it's African counterpart - the AfDB - governance as an issue-area emerged in the discussions on reorganisation of the Bank in 1996. Governance is the most recent issue-area to emerge on these institutions' agenda, but it has created a lot of controversy and debate in the short time it has been around. The main reason is that recipient member states fear that Bank policies on governance may infringe on their national sovereignty and politicise decisions on their loans even more than today. However, these countries are not the only ones who have problems with governance. For precisely the same reason it is a difficult concept for the MDBs as well because these institutions does not want to be seen as political. Rather, since their establishment they have advocated the doctrine of political neutrality. They have embraced the functionalist logic that technical and economic questions can be separated from politics. For instance, in the Agreement Establishing the African Development Bank  and the Agreement Establishing the Asian Development Bank  the following principle of political neutrality is stated.

'The Bank shall not accept loans or assistance that could in any way prejudice, limit, deflect or otherwise alter its purpose or functions. The Bank, its President, vice-presidents, officers and staff shall not interfere in the political affairs of any members; nor shall they be influenced in their decisions by the political character of the member concerned. Only economic considerations shall be relevant to their decisions. Such considerations shall be weighed impartially in order to achieve and carry out the functions of the Bank. The President, vice-presidents, officers and staff of the Bank, in discharge of their offices, owe their duty entirely to the Bank and to no other authority. Each member of the Bank shall respect the international character of this duty and shall refrain from all attempts to influence any of them in discharge of their duties' [AfDB 1964:Art. 38; ADB 1982:Art. 36].

The problem for the AfDB and the ADB is that cross-cutting issues like governance (or environment, indigenous people, and involuntary resettlement for that matter) easily boil down to political questions. The accommodation of conflicting and diverse issues as these into co-operative action is a political question, and if these Banks are to get involved in such kind of governance they will have to interfere in the political affairs of their member countries, basing their decisions to some extent on the political character of their member countries.

The argument put forward here is that if a governance policy is to be more than just cosmetic lip-service, the Banks must walk the thorny path between consensus on one hand, and controversy on the other. The first step in this endeavour is therefore to offer some thoughts on the interaction between the issue-area of governance and the state-civil society relationship. Subsequently, the next step is to address the governance debate in the two Banks before we take this train of thought to its final destination and discuss the implications for state-civil society relations in recipient member countries in Africa and Asia.

Before we proceed with our journey, a few remarks on the two cases are necessary. In this paper we are concerned with two MDBs, the AfDB and the ADB, but no attempts are made to embed the analysis into a formal comparative framework. The ambition is just to offer some interpretations on why governance is on the agenda of these institutions, how they have approached this issue-area, and what kind of implications their approaches have for state-civil society relations in their borrowing member countries. From these interpretations some preliminary conclusions on governance are drawn in an attempt to suggest a way ahead.

(Good) Governance and the state-civil society nexus

According to the Commission on Global Governance, governance is the sum of the ways in which individuals and institutions, in public and private spheres, manage their common affairs in order to accommodate diverse and conflictual views. However, prior to governance's prime time attention on the international agenda it was present in more narrow political (academic) discourses as a generic concept, referring to the task of running a government, or any other public or private organisation [Hyden 1992]. More or less simultaneous to the launch of the Stockholm Initiative, 1 the World Bank started to play around with the concept, identifying the African crisis as one of a crisis of governance. More precisely, the World Bank operationalised governance as personalisation of power, lack of human rights, endemic corruption and unelected and unaccountable governments [The World Bank 1989, 1991 & 1992]. If such situations can be defined as a crisis of governance, i.e. bad governance, then good governance must be the natural opposite. The call for good governance from bilateral and multilateral donors today is therefore, at least implicitly, if not explicitly, a call for political and economic liberalisation, democratisation, accountability and respect for basic individual human rights. Accordingly, the issue of (good) governance is interwoven with and embedded in state-civil society relationships.

With respect to civil society, experience suggests a wide range of alternatives which are partly overlapping, but not necessarily mutually exclusive possibilities. These range from popular participation, and bargaining among the elite to interaction between citizens and the government. Nevertheless, the main assumption in the literature is civil society's assumed ability to establish pathways between society and government. Civil society can therefore be seen as:

'1) buffer against government and society, 2) broker between government and society, 3) symbol of actual political norm setter, 4) agent of change, 5) regulator of the process of participation in societal norm setting, 6) integrator of groups articulating political interests into a viable process for doing so, 7) representative of particular interests, and 8) midwife of regime change' [Harbeson 1994:22].

Different as these various interpretations of civil society may be, the element that united them is the understanding that the relationship between state and civil society is one of reciprocity. In other words, if we were to ask the question of what constitutes civil society it cannot be answered without an understanding of the nature of the state in question and vice versa . If the state and civil society is constituted through iterated interaction, the issue of governance (bad or good) is also an outcome of the same process. However, governance should not be seen as just another equivalent to the state-civil society problematique, but as an aspect of the public realm that encompasses both. The demarcation line is thus between private and public. The governance nexus has to do with whether there exists a civic public realm, how it is maintained by political actors both in state and society, and whether access to participation in the public realm is built on respected and legitimate rules.

As such, governance is concerned with the regime that constitutes the set of fundamental rules for the organisation of the public realm, and not with government. Both governance and government refer to goal-oriented activities and systems of rule, but whereas government suggests constituted policies backed by formal authority governance refers to activities backed by shared goals that may or may not derive from legal and formal authority [Rosenau 1992]. Governance clearly embraces governmental institutions, but it also subsumes informal, nongovernmental institutions operating within the public realm. As a system of rule, governance is therefore as dependent on intersubjective meanings as on formally sanctioned constitutions and charters: it will only work if it is accepted by the majority (or at least by the most powerful actors within the system). Subsequently, this bottle of governance is equivalent to the management of regime structures for the purpose of enhancing the legitimacy of the public realm. Good governance create legitimacy together with the social capital that keeps people motivated and results in their contribution to public causes. Thus, governance and actual policy-making are both separated and interwoven entities. Good governance, not only ensures the legitimacy of the regime that governs the public realm, it also confers legitimacy on the actual decision-makers.

To sum up, governance, either in the broad sense (the sum of the ways, individuals and institutions, public and private, manage their common affairs) and in the more narrow understanding as the maintenance of the regime structure that supervises the public realm, is embedded in and interwoven with state - civil society interaction in any given nation. The recent MDB emphasis on the governance issue therefore highlights their role as political actors and increases the concern of member states to infringements on their national sovereignty.

Governance & the African Development Bank

Some believe that because the AfDB is a MDB controlled by African countries themselves, it is compared to the World Bank and other multilateral and bilateral donors, in a privileged position to address the so-called governance crisis on the African continent [Peprah 1994:129-130]. The argument is that the AfDB should be able to discuss the issue of governance with African countries in a less suspicious atmosphere than what extraregional organisations have been able to do. However, the counter argument can be made that because the Bank is controlled by the African countries themselves, it is too close to the governance problem in Africa to be willing and/or able to get involved in it.

The main problem for the institution, however, is that the charter of the AfDB like that of most other MDBs 2 , discourages the Bank from emphasising political considerations in its lending decisions. Moreover, because the AfDB is formally controlled by the African member countries, it is more responsive to the will of its borrowing member countries than other MDBs. With both the presidency and vice-presidencies determined by the institution's borrowing member countries, the Bank's top management is quite naturally reluctant to push too hard on the governance issue. The space available for entrepreneurial manoeuvring and expressions of firm leadership by the AfDB within this issue area is therefore quite small. Nevertheless, the extra-regional donor countries, which the Bank depends upon for capital increase and replenishment, now demand action by the Bank on this issue, and subsequently, the AfDB has to walk the thin line between governance/donors and accusations of political interference/borrowers.

In its various policy papers and approaches, the Bank has taken some small steps in order to try to carve out a niche for itself. The Bank's poverty alleviation strategy has promised changes in the approach in order to incorporate governance issues. The attention is now on participatory approaches to development, a greater role for women and improved co-operation with NGOs [AfDB 1992]. However, vague statements like these do not impress anybody these days, and most observers seems to agree that the Bank's actual track record of implementation of these vague statements have not been very impressive either [Bøås 1996; Mule & English 1996].

In an attempt to rock the governance issue out of the blind alley it seemed to be stuck in, the Bank's African Advisory Council submitted a report to the Bank in 1994 on the theme democratisation processes and governance . 3 The advisory council's main argument was that

'The success of the development enterprise itself is dependent on the consolidation of democracy, as well as on the existence of good governance. The Bank, although primarily a financial institution, has, of necessity, to be involved in a these two sets of issues' [AfDB 1994A:1].

In the report, a wide range of recommendations for Bank involvement in the promotion of democracy was put forward, like, for instance, employment generation, poverty alleviation, education, the private sector, political and economic integration, the establishment of an endogenous science and technology base and research. Moreover, in order to facilitate good governance, the report argued for the need of more comprehensive policy advise to regional members, and projects and programs that address these issues in a more integrated and direct manner than the traditional adjustment programs of the Bank. According to the Council, the AfDB's adjustment, research and training policies should be brought into consistence with African norms and values. The Bank should develop an African approach to governance. However, when it comes to identifying precisely what an African approach to governance really is, the report is more unclear. Apart from the rejection of the idea of negative conditionalities as a way of promoting policy objectives, and opting instead for the provision of additional resources to the well-doers, the report does not really come up with any real suggestions that can be operationalised in a concrete manner. 4

The question was what the Bank really was supposed to do, squeezed as it was between donors (with badly needed fresh cash) and borrowers (with voting power). The answer came with the report from a Task Force on Project Quality (the Knox report) which was submitted to the Bank's Board and its Governors. 5 The Knox report described the Bank as a chaotic top-heavy bureaucracy, weakened by the impoverishment of the continent it was meant to help, and full of political intrigue and suspicion. The report argued that if the Bank was not significantly reformed, the institution might end up destroying itself. Moreover, the Task Force found that the Bank was being pulled in all directions - staff and management mistrusted the Board and vice versa  - and the presidency, although formally vested with authority, had little power compared to (some of) the 18-member Board of Directors. The Bank's personnel had been unable to keep up with the pace of growth in project lending. Little attention was paid to the quality of loans as opposed to volume. Armed with this kind of ammunition, leading nonregional member countries demanded fundamental changes before they would consider replenishment of the soft window of the AfDB, the African Development Fund.

Just after the conclusions of the Knox report had hit Abidjan in April 1994, the discussions on what to do with the Bank's former focal point for cross-cutting issues, the Social and Environment Policy Division started. Several suggestions were put forward. The division itself argued strongly that it should be turned into a department directly under one of the vice-presidents, whereas others argued for streamlining the Bank's expertise on cross-cutting issues into the country programming departments. The internal discussions on this issue went back and forth in a blind ally for a substantial amount of time. In fact, no progress was made neither on governance nor on the other cross-cutting issues place within the organisational framework of the Bank before a internal task force/working group was established in March 1996.

'I would propose that a working group or a special task force be set up immediately with staff experts in these areas and responsible people at different levels, which should be asked to review in more detail this unit's functional objectives and responsibilities and try to define its longer term resource needs based on the general policy directions we should expect to follow. It should also address all those cross-cutting themes that are relevant, including governance, population issues etc.' [AfDB 1996A:1]. 6

This was in fact the first time governance was explicitly raised in the debate on a new focal point for cross-cutting issues in the AfDB. The next time, however, these questions were raised at a Board meeting on 19 February 1996 governance was substituted with NGO co-operation and institutional development. At this meeting it was decided that the most effective way of creating a focal point for cross-cutting themes as poverty, women-in-development, environment, NGOs and institutional development in the Bank was to create a support function within the Operations vice-presidency. 7 The main objective of this Unit was supposedly to enhance the Bank's strategic direction and to ensure in an independent manner, the formulation and monitoring of Bank-wide policies and guidelines for environment and the classification of projects, environmental impact assessment and the social dimension of projects. The terms of reference for the unit and its staff requirements was left to the internal task force to figure out. Among other issues, the task force should therefore:

  1. Define the functional responsibilities of the unit, making a distinction between its operational and policy focus.

  2. Assess the staff needs in the various disciplines based on the Bank's operational priorities and external recruitment in the areas of environment, women-in-development, social sector, private sector and governance.

  3. Classify the unit's co-ordinating role with regard to participatory development issues and liaison with NGOs.

Governance was, therefore, mentioned as a separate issue-area in the terms of reference for the internal task force, but in the final report from the task force the term governance was substituted with institutional development. According to the report from the task force which was approved by the Board in June 1996 a new Environment and Sustainable Development Unit (OESU) should be established.

'The Environment and Sustainable Development Unit (OESU) - which comprises the cross-cutting issues of environment, gender, poverty reduction, population, NGOs and institutional development - develops and updates policies, guidelines; monitors their implementation; provides advice for designing and implementing country strategies and operational programmes; and participates - when necessary - as members of the project team in preparing, appraising, supervising and evaluating (post-mortem) projects. Through linking the concerns on social dimensions with environmental assessment, the Unit ensures a harmonious and long-term balancing of basic human needs and critical natural resources in the borrowing member countries' [AfDB 1996B:Annex IV].

The OESU is therefore supposed to serve as the Bank's focal point for reviewing environmental and social concerns and for the promotion of environmental and social awareness within the Bank and the borrowing member countries. With respect to the Bank's governance substitute - institutional development - the OESU main policy functions are to:

  1. prepare the Bank's institutional development policy, and the procedures and guidelines necessary to assist staff to integrate this area into the project cycle

  2. disseminate current developments within the field of institutional development, collect comparative date on this area in the Bank's borrowing member countries and prepare policy studies in the area

  3. co-ordinate Bank participation in international and regional fora on institutional development, monitor Bank progress in integrating institutional development factors into Bank operations, and to design and assist in delivering training programmes on institutional development to staff and officials in borrowing member countries,
and the OESU main operational functions are to

  1. ensure that Country Strategy Papers and policy dialogue with member countries reflect institutional strengthening activities

  2. ensure provisions of direct support to institutional strengthening operations and participate, when found necessary, in different phases of the project cycle for all projects with institutional development components

  3. report on how effectively the Bank has provided, and borrowers have used assistance for institutional building/strengthening. Moreover, examine whether such projects/project components have been effective in developing the indigenous capacity of borrowing institutions to perform their functions on a sustainable basis.

In short, the new unit is supposed to be both the developer of new policies and the watchdog of the Bank's action on cross-cutting issues. Thus, the next question is what kind of implication such an approach to governance will have for state-civil society relations in the AfDB's borrowing member countries. We will turn to this question after we have paid a similar visit to the ADB.

Governance & the Asian Development Bank

On 10 February 1997, Shoji Nishimoto, Chief of the ADB's Strategy and Policy Office, cut the ribbon officially opening the Governance and Capacity Building Resource Room in the Bank's headquarters. The Governance and Capacity Building Resource Group (GCB-RG) is supposed to serve as the focal point for governance and capacity building within the institution. The task of GCB-RG include gathering, producing, and disseminating relevant information and approaches in the field of governance and public sector management in both the Asia and Pacific region, and throughout the globe. On request it is supposed to be able to provide support and advice to Bank programs and projects departments working on governance and capacity building issues. Such assistance could include consultation and referrals on country strategy assistance programs, loans, TA grants, 8 or providing hands-on support for selected projects, and training [ADB 1997]. Finally, the group shall recommend adjustments in ADB policies and procedures in order to make the Bank more effective in promoting governance and capacity building.

Currently, seven Bank staff and consultants are assigned to the GCB-RG, which is housed by the Bank's Strategy and Policy Office. According to the plan, this small unit shall serve as the core of a broader network of Bank staff working to make the provisions of the Bank's governance policy a reality. Whether this admirable objective will become reality is still to early to say because the "proof of the pudding lies in the eating." Nevertheless, encouraging, at least, for the group position vis-à-vis  other departments within the Bank, it has already managed to involve itself in issues ranging from municipal management in South Asian megacities to decentralisation of education services in Indonesia.

However, more interesting from the perspective of this paper is the question of (1) what does the ADB actual mean with governance and capacity building, and (2) why has the Bank suddenly become so concerned about such a difficult issue-area for itself as governance?

The ADB acknowledges that governance is a multi-dimensional concept that means different things to different people [ADB 1995A]. Nevertheless, among the many definitions of governance that exists, the Bank choose the one from the 1979 edition of Webster's New Universal Unabridged Dictionary  where governance is defined as 'the manner in which power is exercised in the management of a country's social and economic resources for development.' Quite similarly, capacity building is defined as, 'strengthening the national framework within a developing member country that affects the direction, management and sustenance of the development process in a sector and the economy as a whole' [ADB 1997:1]. The question is what does this actually mean. Is governance and capacity building just two sides of the same coin, or are they analytically and conceptually different, but inter-related? Is the ADB version of governance in line with the broad version (the sum of the ways, individuals and institutions, private and public, manage their common affairs) or is the Bank's version more in touch with the narrow understanding of governance as the maintenance of the regime structure that supervise the public realm. This is not necessarily a difficult question in academic terms, but for a regional political institution which prefers to be a non-political actor it is a tricky one. At least, the ADB does not seem to be able to give a straightforward answer because in it's latest publication on governance it is stated that:

'Although useful in framing the discussion, both definitions are too broad to give concrete operational guidance. Furthermore, the practical or analytical rationale for differentiating between them is often unclear. Since most of the Bank's work on governance is devoted to building the capacity of public sector institutions, Bank staff are encouraged to use the shorthand term "Governance and Capacity Building" (or GCB) when referring to these issues' [ADB 1997:1].

Taken word for word this quote only increases our confusion around governance in the ADB, but if we read between the lines an interesting story about the Bank's preferred public image, of itself emerges. This story is related to the second question, why did the Bank suddenly became so concerned about such a difficult issue-area. Why did the Bank bother?

Governance, like most of the other cross-cutting issues (indigenous people, involuntary resettlement, gender, environment etc.) that have played such a prominent role in the international development debate lately, is a donor/NGO-driven issue. Quite often they have been forced down the throat of MDBs and developing member countries by donors who are acting under simultaneous pressure from general donor-fatigue and NGOs lobbying for what they perceive as a more sustainable development practice in MDBs.

'Good governance, democratic development and human rights are controversial issues in the Asian region with governments apprehensive of their implications for development assistance. They have opposed the introduction of conditionalities attached to lending that are political in nature' [Kappagoda 1995:148-149].

Borrowing member countries would like to see as little conditionalities attached to their loans as possible not only because they disagree with the policies behind the conditionalities, but also because conditionalities means less freedom to choose in their national developmental processes. The ADB's position is somewhat similar. A lot of people in the Bank, in particular, in the Program Departments, the Strategy Policy Office and in the Office of the Environment and Social Development are without doubt concerned about these issues, but for the Project Departments and the Bank as a whole these issues are difficult. The main reason lies in the Bank's charter, in article 36 which states that only economic issues should be taken into consideration. Thus, the main problem with the issue of governance for the ADB is that it rather easily leads the Bank on a crash-course with its charter and its preferred image of political neutrality. Governance is, therefore, the type of issue that the Bank would have been happy to keep at bay, if it had been possible. Such a strategy was, however, not a viable one. The publication of the World Bank reports that described the crisis on the African continent as one of governance (or rather as a lack of good governance) and the Report of the Commission on Global Governance led to increased concern about governance issues in the international development debate. In fact, the ADB admits that it was this debate that spilled over to the parallel discussions on the objectives, priorities and approaches of the operational programs of the Bank [ADB 1995B].

Prior to the ADB's Annual Meeting in 1994 several of the donor countries started to ask questions like what should a regional development bank do when its region has become, at least, partly developed. The general feeling among several major donor countries was that since many of the developing countries in Asia had growing resources themselves and access to private capital, a capital increase for the ADB could only be justified if a substantial shift in Bank policy from "economic growth and co-operation" to 'social progress' was made [Bøås 1996]. Subsequently, replenishment of the Asian Development Fund (the soft window of the ADB) and general capital increase was linked to more emphasis in the Bank on social sector issues like reducing poverty and improving the environment. Instead of just financing a road, the role of the ADB was to ensure that the road was of particular benefit to poor communities or, for instance, that the recipient government charged appropriate fees to traffic in order to limit environmental damage. Such a change of focus represented in itself an identity crisis for an institution geared towards industry and infrastructure, but most sensitive was the demand that loans should be linked to good governance. Mr. Zhou Zhengqing, the senior Chinese official attending the ADB's 1994 Annual Meeting in Nice, clearly expressed China's opposition when he stated that China did not agree with the linkage between policy and capital. According to the Chinese position these were totally different issues. Mr. Mar'ie Muhammad, Indonesia's finance minister, argued that it was impractical and unrealistic to try to lay down an all-embracing set of policies for all member countries. Thailand and India also expressed concern about the link between capital increase and lending policy, and Mr. Mohammed Saifur Rahman, finance minister of Bangladesh, said a majority of the Bank's developing country members were against including governance in the Bank's agenda. The U.S. officials, on the other hand, argued that they expected governance guidelines to be applied flexibly and pragmatically, and that the ADB should still have the scope to respond to the disparate needs of borrowing members. The ADB response was to argue that as a bank it felt that it could only use the term (good governance) in an economic context, not a political one. In short, governance was placed on the ADB agenda, but meaning what and for what purpose was not exactly clear.

From the ADB's point of view two things were clear: governance as an issue-area for the Bank could not be avoided, but governance as democratisation and human rights had to be avoided in order for the Bank to keep its activities within its charter's border. In order to try to find a way out of this mess of conflicting views and opinions the Bank, therefore, decided to undertake a study of East Asian development experiences, examining three specific aspects of governance:

  1. Bureaucratic capability for the implementation of policies, programs and projects.

  2. The government/business interface for effective policy outcomes.

  3. The principle of shared growth, from which the whole population stands to benefit.

In April 1995, a workshop on Governance and Development brought together development practitioners and scholars from six of the high-performing economies of the region - Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan. The dialogue at the workshop revealed, not surprisingly, considerable apprehension among borrowers that an ADB governance policy would reflect donor preferences and experiences. It was argued by the regional representatives that existing definitions of governance such as the one advocated by the OECD reflected the experience and interests of Western donors without taking into account important components of the Asian experience [Root 1996]. 9 In order to avoid such a Western bias, it was argued that the knowledge gained through the workshop dialogue should constitute an important part of the framework for an ADB policy paper on governance. 10

A Western bias was to be avoided, and subsequently it was agreed that governance should be defined in accordance with the Webster's New Universal unabridged Dictionary , as the manner in which power is exercised in the management of a country's economic and social resources for development. What made this definition so attractive for the Bank, and its Asian member countries was that it links governance directly to public and private management of the development process. According to the Bank:

'It encompasses the functioning and capability of the public sector, as well as the rules and institutions that create the framework for the conduct of both public and private business, including accountability for economic and financial performance, and regulatory frameworks relating to companies, corporations and partnerships. In broad terms, then, governance is about the institutional environment in which citizens interact among themselves and with government agencies/officials' [ADB 1995B:1-2]. 11

In the ADB understanding, governance focuses therefore almost exclusively on effective management. Governance is therefore not a question of choosing the 'right' policy, but a question of implementation. It concerns the norm and standards of behaviour that ensure that governments actually are able to deliver to their fellow country men what they have promised to deliver. What is emphasised is therefore not the outspoken political dimension of governance (democracy and human rights), but the so-called economic dimension of governance, the one that interprets good governance as sound developmental management. Governance is, more than anything else, a tool that can facilitate adequate returns and efficacy of the programmes and projects financed by the Bank.

If governance according to the ADB is sound development management, the obvious next question is what kind of implication such an approach will have for state-civil society relations in its borrowing member countries?

Implications for state-civil society relations in developing member countries

Democracy and democratisation has today the position as good government on a global scale. Subsequently, good governance is often seen as "hand in glove" with democracy and democratisation. The argument is that you cannot have one without the other. Good governance is impossible without democracy and vice versa . This is, as we have learnt not the AfDB/ADB approach to governance. For these institutions, governance is institutional development and sound development management respectively, and therefore not necessarily linked to the issue of democracy and democratisation in their borrowing member countries. The questions we are confronted with is therefore, first, what is the difference, if any, between governance as institutional development and governance as sound development management, and second, what kind of implication do these approaches to governance have for state-civil society relations in the Banks' developing member countries?

We have already established that the issue of governance is embedded in and interwoven with the state-civil society relationship. State and civil society is constituted through iterated interaction, and the governance produced (bad or good) is an outcome of the same process of iterated interaction. Governance is, as such an aspect of the public realm and concerned with the regime that constitute the set of fundamental rules for the organisation of the public realm. If the Banks' approaches and policies to governance are supposed to be more than just paying lip-service to the international donor community, they must have to have the ability to address and influence the relationship between state and civil society within the public realm. How can governance as institutional development, and governance as sound development management accomplish this task? Is it even possible that approaches to governance, which exclude democratisation, democracy and human rights from the equation, can affect state-civil society issues?

On the other hand, it is possible to turn this question up-side-down, and rather ask whether it is suitable for these institutions to establish policies that will put them on crash-course with their customers. There is without doubt significant elements of Western bias in the international development dialogue, and it is not unthinkable that a more pragmatic approach may be more suited to the circumstances than the one advocated by Western donors.

'So far, most proselytising about governance takes places among international organisations dominated by the experience of the donor, most of whom are Western nations. Japan was the only Asian nation to participate in the pronouncement of the Development Assistance Committee of the Organisation for Economic Co-operation and Development [see OECD 1995]. In this document, no reference was made to the recent experience of contemporary Asia, but many statements elevated the Western path to be the universal prototype of development' [Root 1996:146].

One obvious reason behind the AfDB and the ADB's reluctance to address governance as political liberalisation and democratisation is that their charters clearly state that these Banks should not make use of political considerations in their lending decisions. Nevertheless, we should not disregard the possibility that governance as institutional building and governance as sound development management can constituted the first steps towards an African and Asian approach to governance.

From the perspective of the work-load and manpower devoted to governance in the two institutions, there is little doubt that governance as an issue-area is more well established in the ADB than in the AfDB. As we have seen, the ADB has established a Board-approved policy on governance, and a governance group (GCB-RG) has been established within the Strategy and Policy Office. In the AfDB no policy paper on governance has yet been written, and none of the staff members in OESU have special responsibility for governance as such.

However, other differences can be observed as well. If we, for instance, look at how governance as an issue-area has been incorporated into the organisational structure of the institutions, an interesting difference emerges. In the ADB, governance is separated from the other cross-cutting issues which are dealt with by the Office of the Environment and Social Development and the Program Departments, whereas in the AfDB governance is under the same roof as the other cross-cutting issues in the OESU. What kind of implications do these differences have for state-civil society relations?

One point of departure is the working definition/operationalisation offered by the ADB, namely that

'governance is about the institutional environment in which citizens interact among themselves and with government agencies/officials' [ADB 1995B:2]

This definition is not unlike the interpretation where governance is concerned with the operation of the public realm. If governance is connected in one way or another to the institutional environment in which citizens and government/state and society interact then the governance nexus is also connected to whether or not there exists a public realm. How it is maintained by political actors both in state and society, and whether access to participation in the public realm is built on respected and legitimate rules. In other words, governance as sound development management can have a significant effect on state-civil society relations without an explicit focus on democracy and democratisation. If one of the main tasks of civil society is to establish pathways between society and government, a governance policy which emphasises interaction in the public realm has the potential of increasing the role of civil society both as a buffer, and as a broker between government and society; as a symbol of political norms, agent of change, regulator of participation and integrator of group interests; and as the representative of particular interests and a midwife of change [Harbeson 1994:22].

The potential is therefore present. It is not the presence of 'words of honour' like democratisation and democracy that decide whether the governance policy of the ADB is just donor-driven lips-service or not, but the actual focus of the policy. It is too early to come up with any kind of verdict regarding the ADB's governance policy, but if one should forward a word of warning, it would be on the separation of governance from the other cross-cutting issues in the institutional structure. If the Bank really wants to link its governance policy to interaction in the public realm in a manner that make sense for the other cross-cutting issues, the institution should pool these issues together at the start of the project cycle phase because it is cross-cutting issues like environment, indigenous people, involuntary resettlement and gender that really need support from a governance policy focused on citizens-government interaction in the public realm.

In the AfDB, governance is substituted with the term institutional development, and, as we have seen from the review of that Bank's work on governance, no actual policy and working definition has yet been produced. In this respect, the AfDB is clearly lagging behind its sister institution in Asia. However, if we look at the issue from another angle the view is more blurred because in contrast to the situation in ADB, governance/institutional development is treated as a cross-cutting issue and pooled together with environment, gender, poverty reduction, population and NGOs in the OESU. The advantage of this approach is that it may make it easier to link governance with cross-cutting issues as environment, gender and NGOs to popular debate within the public realm. Such linkages may increase the Bank's ability to pursue an effective policy dialogue that can improve civil society's role in Africa as a buffer and as a broker between government and society.

In short, democratisation and democracy are not prerequisites for an effective policy of governance. In both cases the institutions have the potential to make an impact on state-civil society relations. The question is whether they in the future have to ability and willingness to walk the tricky path between consensus on one hand and controversy on the other.

The way ahead

Work and burden-sharing are important themes for the international development debate and so should role-sharing be. Coined in the language of economics, the role of the AfDB and the ADB in the governance debate lies in their comparative advantage. As regional institutions, where borrowing member countries have substantial influence, they are in fact in a privileged situation to address the governance issue. However, in order to take on such a role the participants/actors in the Banks should keep in mind that due to the charters of the institutions and the high degree of political sensitivity in this issue-area, democracy and democratisation should perhaps not be the main dish of these Banks' governance policies. On the contrary, these institutions should in fact avoid these terms because they all too often, send dialogue into a blind alley and the participants back into to trenches where they happily throw oral grenades at one another. Building consensus is definitively important. Nevertheless, it should just be but one element of the AfDB and the ADB work on governance. The other element that is necessary for an effective regional bank policy on governance is controversy. If democracy, democratisation and human rights are not parts of the governance/sound development management/institutional building dish they must have a particular focus on the interaction within the public realm if they are going to have an edge in development in Africa and Asia.

References


Note 1: The Commission's report was the outcome of an initiative taken by Willy Brandt which led to a meeting in Sweden and the presentation of a document entitled Common Responsibility in the 1990s: The Stockholm Initiative on Global Security and Governance Back.

Note 2: The odd man out here is the European Bank of Reconstruction and Development (EBRD). Established in the wake of the fall of communism, the thinking behind EBRD was that the collapse of communism and the consequential shift in the structure of international politics offered liberalism an opportunity to link economic development with political liberalisation. Back.

Note 3: The Council is a permanent revolving body of eminent Africans whose function is to advise the Bank on critical aspects of development policy. Back.

Note 4: Unfortunately, due to declining concessional resources, any move to link country allocations to good governance is most likely to appear as one based on negative sanctions rather than positive sanctions. Back.

Note 5: The report was soon known as the Knox report after the chairman of the task force, David Knox, a former vice-president of the World Bank. Back.

Note 6: Letter from the Nordic-Indian-Swiss Executive Director Inga Björk-Klevby to the President of the AfDB Omar Kabbaj. Back.

Note 7: The names used on the various themes are the names used by the Bank. For some reason the Bank prefer in its official documents to talk about women-in-development instead of gender and gender issues. Back.

Note 8: TA is in aid language the abbreviation for technical assistance. Back.

Note 9: For instance, in the OECD approach to governance democratic elections are held to be the general standard of accountability. Back.

Note 10: Equally important was the decision to distil the knowledge from the workshop into a book. The book - Small Countries - Big Lessons: governance and the rise of East Asia  written by Hilton Root is a serious attempt to formulate an Asian approach to governance. In short, his argument is that the uniqueness of East Asia lies in its capacity to implement successfully economic and social policies. Subsequently, governance is defines as sound development management. Back.

Note 11: The first part of this section is strongly influenced by a World Bank document from 1991 entitled Managing Development: The Governance Dimension . This influence is acknowledged by the ADB in its policy paper on governance. Back.