Educational financing and corruption

1. Educational financing and corruption Norad framework and experiences IWGE, Rome, 12-14 June 2006 Presentation by ed. adviser Arne Kr. Larsen

2. General framework • Norad new strategy: Focus on governance and anti-corruption. • All Norad staff are supposed to work in accordance with ethical rules and regulations in Public Administration Act/Civil Service Act. • A special Unit for Governance and Anti-corruption has been created. Internal anti-corruption network with participants from all units/departments. • Education unit cooperates closely with Anti-corruption unit.

3. General framework (cont.) • Supporting and actively cooperating with The U4 Anti-corruption unit. All Norad staff have been offered training on anti-corruption methodology. • Two training courses (one in Africa and one in Asia) were arranged last year for all education programme staff at embassies. (In cooperation with IIEP) • Norad supports international organizations working against corruption: TI (Transparency International);TIRI (International NGO focusing on post-conflict countries/reconstruction settings), INTOSAI (International Organization of Supreme Audit Institutions); U4 (joint initiative of DFID, Norad, SIDA…).

4. Educationalfinancing and corruption In general terms Norad is fighting corruption through: • Good governance in development cooperation assistance. • Anti-corruption measures, e.g. • anti-corruption clauses in development cooperation agreements. • support and participation in PER/PETS • financial reviews

5. Case: Tanzania/PEDP • A Norwegian researcher participated in the REPOA-team that carried out the public expenditure tracking study on the flow of funds allocated to the Primary Education Development Programme (PEDP) in 2004. • The study revealed substantial problems in the transfer system between the central, district and school level and a lack of knowledge among important stakeholders, including donors, about the financial situation in the program. • The findings raised a major debate among development partners in Tanzania and contributed to an increased awareness of anti-corruption issues in Norwegian financed development activities.

6. Case: Tanzania/PEDP(Cont.) The following conclusions were summed up at a meeting initiated by the Norwegian Embassy with representatives from the Tanzanian education authorities and donor agencies: • PETS is a solid, technically good piece of work. This kind of study makes an excellent tool for tracing changes over time. • The study however has its’ limitations as a method. PETS could have benefited from adding a broader social context perspective. • Documented leakage does not automatically prove corruption.

7. Case: Tanzania/PEDP(Cont.) • The capacity training was not yet in place at the time covered by the study (2002-03). All levels in the management system were lacking reliable information/manuals/training. These are reasons behind some of the leakage. • In the planning of PEDP under ESDP, the decentralised system formed a bases for implementation and management of funds. The link to the implementation of Local Government Reform is therefore crucial.

8. Case: Tanzania/PEDP(Cont.) • The importance of empowerment of schools in a decentralised system was raised. It would be relevant to include NGO’s in this debate, since they obviously play a role. • Conclusion: Great interest for repeating the study. Financial tracking can best be followed up in a larger context, not only as a study connected to a project (PEDP). • The development partners shall follow up on PETS in the various relevant fora in dialogue with GoT. An eventual decision of repeating PETS however, should rest with GoT.

9. Case: Bangladesh/FESP • The purpose of the programme has been to provide financial support directly to the individual girl in secondary school to enable her and her family to retain her in school. • The provision of cash funds from the bank system through different levels of the system for distribution according to a set of criteria, set the stage for a number of challenges also linked directly to corruption. • On the basis of audit reports the Embassy felt the need to track the funds from the headquarter level to the individual girl’s hand in order to check whether procedures had been followed. An accepted strategy for the exercise was agreed with the Ministry of Education.

10. Bangladesh/FESP (Cont.) • A three-month’ financial management monitoring exercise was undertaken by a private accounting company. • It was found that nearly no girls were eligible for stipends according to the set criteria. The agreements were violated by different actors, and no security was provided for carrying money from the banks. • The documentation made an honest, but difficult dialogue possible at high level between MOE and the Embassy. It was, however found most useful. A result of the exercise was that the Project Director was removed from office

11. Bangladesh/FESP (Cont.) • The Exercise was further developed into monitoring of disbursement arrangement at schools, interviews with beneficiaries etc. and a strategy called Continuous Audit (based on Performance Audit methodology) was developed. • Based on the experience with FESP, Norway initiated a similar exercise in another Norwegian funded project: PEDPQI. The findings revealed first and foremost severe lack of capacity and competence at different levels of implementation and therefore delays and gaps in delivery of educational services in the system.

12. Bangladesh/FESP (Cont.) • For the revised Agreement of the project an Action Plan was included as an immediate follow up of the findings of the exercise and for improved financial management as a condition for further financial support from Norway • When a new sector programme in education was prepared (PEDP II) a financial review was undertaken in order to make recommendations for a risk-reduction strategy on the financial management and governance in the programme. • (J. Wood, H. Abdul Hye and A Shrivastava on “Bangladesh: Developing a Risk-Reduction Strategy On Financial Management and Governance in PEDP2”)

13. Bangladesh/FESP (Cont) Major recommendations for a risk-reduction strategy according to the review: • A pro-active approach to increasing transparency and information to support public accountability, at all levels should be taken. • Increased use of mass media to generate awareness about the organisation and financing of the primary education system, the regulations concerning the stipend programme, the charging of school fees and the transparency of school finances. • Developing procedures and regulations to improve the objectivity of staff appointments, promotions and transfers, including open marking and an appeals procedure,

14. Bangladesh/FESP (Cont) • More radical approaches to textbook procurement that could undermine the stranglehold exerted by the printers’ cartel, and technical steps to allow better stock control of textbooks should be considered. • A review of stipend programme after one or two years to confirm its proper use of funds should be prioritised.