The essential role of resilient and responsive institutions

SDG 16 aims to improve people’s lives by reducing violence, improving access to justice, and promoting effective, accountable, and inclusive institutions.

Strong, effective, transparent, and accountable institutions are essential for sustainable development and critical for governments to deliver services to their citizens. In 2020 governments worldwide have found themselves under strain while managing the fallout and consequences of the COVID-19 pandemic.

Government responses to COVID-19

In March 2020, as the rapid spread of COVID-19 became evident, many countries began to quickly implement containment and closure measures.

A devastating but unequal global economic crisis

The shutdowns had an immediate negative impact on the economy. Large‌ numbers‌ ‌of‌ ‌people‌ were ‌thrown‌ ‌into‌ ‌unemployment‌ and economic uncertainty.

The willingness of governments to respond with swift measures shows how governments and central banks can act decisively in‌‌ ‌a‌ ‌‌crisis.

Effective institutions

The Worldwide Governance Indicators (WGI) measure performance on government effectiveness, among other governance indicators, using enterprise, citizen and expert surveys around the world. The indicator on effectiveness attempts to capture the quality of public service, the quality of the bureaucracy, and the quality of policy formulation and implementation.

All countries are scored on a scale from 0 to 100, based on their relative performance compared to other countries. In Sub-Saharan Africa, 28 out of 48 countries are in the lower quartile of effectiveness, with a small number of countries in other regions also in this range.

The WGIs are based on how survey respondents in different countries perceive different aspects of the quality of their institutions. These perceptions do not necessarily imply that the local institutions are of corresponding quality or that they haven’t changed over time.

Surveys that look at satisfaction with institutional performance in specific areas are useful in that they provide policymakers with important insights into how people perceive the quality of government services. Satisfaction with public services is one such indicator for SDG target 16.6, which focuses on effective, accountable, and transparent institutions.

The most recent survey by the Afrobarometer asked people in 34 African countries how well their government handles improving basic health services. In Botswana and Kenya more than two-thirds of respondents said that their current government was doing fairly or very well, while in several other countries respondents had less favorable views of the health services they receive.

Budget management

To evaluate the institutional quality of governments, we can examine how they perform in practice. One way to do this is to assess whether governments adhere to their planned budgets. This is a key indicator used to measure effective, accountable, and transparent institutions for SDG target 16.6.

The Public Expenditure and Financial Accountability (PEFA) Program, hosted by the World Bank, assesses countries' financial management of public expenditures. As part of this process, PEFA collects data on a government's total expenditure as a proportion of its originally approved budget (SDG indicator 16.6.1).

Average budget deviations vary a lot across countries. Some countries, such as Colombia, Moldova, and Norway, spend close to their planned budgets, while others spend much more or much less.

But averages do not tell the whole story. Even when a country's spending is, on average, close to the planned budget, year-to-year variations can be large. For example, Moldova spent nearly 16 percent more than its planned budget in 2007 but almost 9 percent less than originally planned in 2015.

Such yearly fluctuations are why PEFA uses a period of three years when conducting their evaluations. Countries that deviate by more than 15 percent from their planned budget once within a period of three consecutive years are classified as a C, while countries that deviate more than 15 percent in two or more years over the three-year period receive a D grade.

Transparency and accountability

Good financial management encompasses more than budget reliability. The broader aim of SDG target 16.6 is for institutions to be both transparent and accountable.

One crucial aspect of financial management is the public’s access to fiscal information from the government. Another is the degree to which the supreme audit institution (SAI) operates independently from the executive branch. A supreme audit institution is a government institution that conducts audits of government activities, monitors the use of public funds and serves as a public spending watchdog. Both public access to information and independent auditing are essential to ensuring a transparent budget process and holding the government accountable for its spending.

A third aspect is the ability to prepare fiscal forecasts. Such forecasts make budget allocations more predictable and are needed to assess the fiscal impact of the government’s policies. To ensure transparency, forecasts and their underlying assumptions should also be submitted to the legislature.

Few countries perform well in all three aspects of public financial management. Of the 49 countries that have been assessed since 2016 only 9 received an A or B grade on all three indicators.

Institutions need to be transparent, accountable and effective to function properly and cope with crises such as the COVID-19 pandemic. For many governments the crisis may help identify weaknesses in current institutions and present an opportunity to make structural improvements.