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The Local Economic Govern-ance Program: Notes for Practitioners By Verité Research

Public-Private Dialogues And A Sub-National Level Business Barometer

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Table of Contents 1. Introduction ....................................................................................................................................................................... 3

2. Conceptualization and Design ................................................................................................................................. 4

3. Implementation Process ............................................................................................................................................. 7

4. Case Studies ...................................................................................................................................................................... 12

5. International Context.................................................................................................................................................. 15

6. Lessons Learnt ................................................................................................................................................................ 16

REFERENCES .............................................................................................................................................................................. 19

Annexure 1: Unstructured Case Study Questionnaire for Key Informant Interviews ................. 20

Annexure 2: MSME Business Barometer Structure and Analysis............................................................ 22

Annexure 3: MSME Business Barometer Training Manual ......................................................................... 23

List of Figures, Tables and Boxes

Figure 1 The Asia Foundation's Integrated PPD Approach ............................................................................... 5

Figure 2 PPDs: Core Thematic (need the Word version of the document to edit the diagram).... 6

Figure 3 PPDs: Implementation Framework ............................................................................................................. 8

Table 1 PPD Activities: Sri Lanka Local Economic Governance ...................................................................... 9

Table 2 PPDs: International Snapshot ........................................................................................................................ 15

Box 1 Key Steps in Implementing PPDs …................................................................................................... 9

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Introduction

The Public-Private Dialogue (PPD) approach, combined with the business barometer de-signed to measure key variables impacting micro, small and medium enterprises (MSMEs) at the sub-national level, are core components of the Asia Foundation’s (TAF) drive to en-hance voice and inclusion by facilitating the active participation of the private sector in Sri Lanka’s public policy discourse. Set out under the framework of TAF’s Local Economic Gov-ernance (LEG) Project, the PPD1 methodology aims to create a dynamic communication mechanism that would bridge information and trust deficits, which undermine a meaning-ful partnership between the public and private sectors, particularly at the local government (LG) level.2

The underlying rationale is also that this approach - premised on the principles of coopera-tion, collaboration and mutual understanding – has the potential to bring about a win-win outcome for both the public and the private sectors. For instance, while a PPD benefits the private sector by creating a forum within which it can discuss issues critical to the business environment, the manner in which the public sector engages, responds and comes up with timely and relevant solutions can be an effective means to demonstrate credibility, ac-countability and transparency on the part of the government.

The MSME business barometer is a specific instrument or method conceptualized under the broader PPD “umbrella” methodology. Specifically, this instrument is designed to cap-ture critical factors that affect MSMEs in the formal and informal sectors at the sub-national level and to provide a gauge of the local enabling environment for private enterprises. However, the analysis contained in this note on the actual implementation experience and lessons learnt is limited by the fact that this tool is still at the design stage as at the time of writing.

The discussion set out in this practice note is based largely on content analysis of key doc-uments provided by TAF3 as well on insights gained during the design stage of the MSME business barometer. The unstructured questionnaire developed for key informant inter-views (KIIs) for the case study on “Navigating Politics in LEG Programming” being drafted by Verite Research also serves as a background piece to provide context for this analysis on PPDs (see Annexure 1). This note attempts to document, where possible, continuity in terms of TAF’s LEG Project trajectory with respect to the PPD initiative.4

1 The terms PPD and LPPD (Local Public Private Dialogue) are used interchangeably by TAF in its documentation. 2 See The Asia Foundation. Local PPD (LPPD) Manual. Promoting Public-Private Dialogues at the Sub-National Level: The Asia Foundation Approach. (mimeo). (undated). 3 For instance, The Asia Foundation. Progress Report: Sri Lanka Local Economic Governance Project. (various years). The Asia Foundation. Completion Report: Local Economic Governance Project. (December 2008); The Asia Founda-tion, op.cit. (undated). 4 However, the need to maintain client confidentiality in terms of specific PPD examples precludes elaboration with rich details in some instances. As such, much of this discussion centers on drawing out broad thematic stories un-derpinning the PPD narrative in Sri Lanka. A fuller exploration of the political economy nuances underpinning the LEG Project, with illustrations drawn from specific approaches and tools including PPDs, is set out in the case study “Navigating Politics in LEG Programming” drafted by Verite Research for TAF.

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The rest of this practice note is structured as follows: the next section sets out the concep-tualization and design of the PPD approach and MSME business barometer instrument, fol-lowed by a description of the implementation process with case study examples in Sections 3 and 4. Section 5 provides a brief overview of relevant international experience with PPDs to provide additional examples to aid in the unpacking of the opportunities and challenges pertaining to this approach in the Sri Lankan policy space, in Section 6.

Conceptualization and Design

An important element of the LEG Project is the emphasis on strengthening the social com-pact, by helping local authorities (LAs) to be more responsive to the needs of stakeholder groups such as businesses and citizens using people-centered approaches and tools such as PPDs, e-Citizen Report Cards (e-CRC) and Participatory Budgeting. 5 As such, both the PPD and the MSME business barometer initiatives are conceptualized as a means to institution-alize sustainable social accountability mechanisms at the LG level. Although there has been some degree of fluctuation or variation in the formulation of the PPD approach as it evolved in Sri Lanka –for instance, the change in emphasis in language from private-public dialogues to public-private dialogues6 – the underlying conviction that a meaningful dis-course between the business and government sectors would result in mutually beneficial outcomes remained at the core of this exercise. As will be discussed in detail in Section 5 moreover, the conceptualization and design of TAF’s PPD approach as well as of the MSME business barometer in Sri Lanka drew from similar initiatives in other countries.

The PPD methodology adopted by TAF is situated within a broader conceptual framework, which has three inter-related strands of activities: research, information gathering and dis-semination; specific PPDs; and, tools for improved business environments. The underlying assumption is that these three program clusters will work in an integrated and holistic fashion to stimulate a meaningful and sustainable dialogue between the public and the pri-vate sectors; a dialogue that would foster a greater degree of stakeholder ownership over the decision-making process. Examples of particular instruments under the different cate-gories include, the Economic Governance Index (EGI) as a method for research, information gathering and dissemination; and the MSME business barometer and regulatory impact as-sessment (RIA) as tools for improved business environments. This holistic approach to PPDs drawing from TAF’s experience in Bangladesh is illustrated in Figure 1 below. 7

5 Details on the e-CRC and on the Participatory Budgeting tools are set out in separate Practice Notes drafted by Verite Research. 6 See for instance: The Asia Foundation, op.cit. (2008); The Asia Foundation. Progress Report -Year 4 (December 1, 2013 to June 30, 2014): Sri Lanka Local Economic Governance Project. (2014b); The Asia Foundation, op.cit. (undat-ed). 7 The Asia Foundation, op.cit. (undated).

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Figure 1 The Asia Foundation's Integrated PPD Approach

(need the Word version of the document to edit the diagram)

Source: TAF (undated). Local PPD (LPPD) Manual. Promoting Public-Private Dialogues at the Sub-National Level: The Asia Foundation Approach. (mimeo).

TAF’s PPD program is also designed to fill a gap in the policy space pertaining to particular issues faced by MSMEs; to create a vehicle for collaboration between businesses and state officials at the LG level. At the same time, this approach facilitates a forum by which the voice of stakeholders at the LG level can be carried to policy makers at the national level. The conceptual framework within which this core component of the PPD program is for-mulated is depicted in Figure 2 below.

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Figure 2 PPDs: Core Thematic (need the Word version of the document to edit the diagram)

Source: TAF (undated). Local PPD (LPPD) Manual. Promoting Public-Private Dialogues at the Sub-National Level: The Asia Foundation Approach. (mimeo).

Examples of some of the key challenges faced by stakeholders at the sub-national level, which these PPDs are designed to address include: information deficits (for instance, access to accurate and timely information on policies, legislation and regulations that impact MSMEs at the LG level); weak channels of communication between stakeholders at the na-tional and LG levels (for instance, implementation gaps with respect to policies formulated at the national level and transmitted to the LG level as well as ineffective communication mechanisms between the public and the private sectors, which result in policies that are not conducive to the growth of MSMEs); and, trust deficits (for instance, the prevalence of

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information deficits combined with lapses in transparency, which give rise to widespread negative perceptions amongst the private sector that government sector service providers are uncooperative, inefficient or prone to bribery and the acceptance of “informal fees”).

Implementation Process

The key steps involved in the implementation of PPDs at the sub-national level as well as the activities associated with the design of the MSME business barometer are outlined in this section. As mentioned previously, some of the specific and rich details pertaining to the operationalization of PPDs in Sri Lanka cannot be set out in this practice note due to con-cerns of client confidentiality. Therefore, this discussion of the PPD approach and its con-ceptualization, design and implementation within the framework of the LEG Project, will center on issues of continuity and consistency as it evolved over the years. The description of the implementation process in this section also draws from an important internal docu-ment developed by TAF8, incorporating its cross-country experiences from around Asia9 and compiled with the objective of providing a practical user’s manual to implementers. As envisaged by TAF, this manual will be updated regularly as hands-on experience from the field is fed back into the system through innovative mechanisms such as an issue tracker – which in the case of Sri Lanka is deployed in collaboration with the National Enterprise De-velopment Authority (NEDA).10 11

In line with the core objective of the PPD approach, which is to promote a meaningful dis-course between the public and the private sectors at the LG level and to enhance stake-holder ownership over the decision-making process, TAF only plays the role of facilitator in these initiatives. The selection of particular issues to be discussed at the PPDs are left to the participants from the two sectors and are location-specific, reiterating the Foundation’s conviction that blueprints and “one size fits all” models are not conducive to inclusive and sustainable development. The operationalization of the PPD process under the LEG Project and within the contours of the integrated conceptual framework depicted in Figure 1 above, is illustrated in Figure 3. Important steps in the implementation of these PPDs are set out in Box 1. A crucial feature of this approach, as illustrated in Figures 1 and 3, is that PPDs are both an event and a process in a cycle of activities. The facilitated meetings be-tween the business and government sectors and the Working Group (WG) sessions for in-stance are events, whilst the implementation of stakeholder recommendations and the feed-back of issues into the policy space are examples of process. 8 The Asia Foundation, op.cit. (undated). 9 Information in The Asia Foundation, op.cit. (undated) is based on feedback from TAF’s economic units in Bangla-desh, Cambodia, Indonesia, Nepal, Philippines and Sri Lanka. 10 See NEDA (2015). Sri Lanka Enterprises Issue Tracker. [Online]. Available from: http://www.ppdissuetracker.org/ [Accessed on 29 September 2015]. 11 As documented in The Asia Foundation, op.cit. (2014b), TAF has been discussing the modalities of a PPD Issue Tracker Website with the National Enterprise Development Authority (NEDA) since December 2013, and has also entered into a Memorandum of Understanding (MOU) with NEDA to embed this into the Authority’s official web-site. The objective of this Issue Tracker is to highlight the priorities that emerge at the LG level in the national poli-cy space. This mechanism is also a reflection of a recalibration of the PPD process from a general to a more target-ed approach.

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Figure 3 PPDs: Implementation Framework

(need the Word version of the document to edit the diagram)

Source: TAF (2008). Completion Report: Local Economic Governance Project. Colombo, TAF, December 2008.

Box 1. Key Steps in Implementing PPDs

1. Assess feasibility/identify participants (includes the selection of location/level of intervention; issues for discussion; and, political/social sensitivities)

2. Design and implement sub-national level PPDs (includes the setting up of WGs, exploring insti-tutional partnerships; identifying champions to move the dialogue forward; introducing tools such as a Logical Framework Analysis (LFA) for efficient project management; and, facilitating media coverage/visibility and developing outreach, communication and advocacy plans)

3. Implement additional tools to support the process (includes research outputs such as an EGI, RIA and Policy Matrices and capacity building of PPD participants)

4. Institutionalize monitoring and evaluation systems (includes measuring progress of the PPD structure and issues raised and communication of results)

5. Consolidate outcomes and learnings (includes strategies for entry and exit as well as for insti-tutional sustainability and replicability)

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Source: TAF (undated). Local PPD (LPPD) Manual. Promoting Public-Private Dialogues at the Sub-National Level: The Asia Foundation Approach. (mimeo).

An integral component of the PPD process highlighted above, is the establishment of Work-ing Groups (WGs) comprised of private and government sector stakeholders at the LG level. These WGs meet on a monthly basis to identify critical issues impacting local businesses and to find workable solutions to these problems. Examples of some of the activities car-ried out by TAF to facilitate and assist these WGs include: technical assistance in particular areas based on the demands of the participants (for instance, city planning, traffic man-agement, tourism); training sessions on effective policy advocacy skills; capacity building on research and proposal writing; and, fostering links with national level policy makers 12.

A significant shortcoming in the institutionalization of the PPD methodology, which also precludes a comprehensive and thorough appraisal of the implementation process over the years, is the patchy and rather unsystematic documentation of specific activities pertaining to this approach. Details of PPD activities conducted under TAF’s LEG Project, based on the published documents available as at the time of writing, are set out in Table 1.

Table 1 PPD Activities: Sri Lanka Local Economic Governance

Year/s Administrative Level (No. of Localities)

General/Issue-Based

Main Results

200613 Provincial Gov-ernment (4) LG (15)

Not specified in the published TAF docu-mentation

Established information desks/help desks Facilitated the construction/relocation of market places/bus stands in cities Reduced tax arrears Reviewed/reformed By Laws Introduced public private partnerships to erect street lights and install street signs Introduced mechanisms to reduce traffic congestion

200814 LG (19) Not specified in the published TAF docu-mentation

Setting up of WGs Establishment of help desks (Chilaw, Nuwara Eliya, Nawalapitiya) Introduced innovative/cost-saving ap-proach to urban waste management (Ambalangoda) Relocation of unauthorized street hawk-ers (Trincomalee) Installation of new street lamp posts in keeping with heritage/architectural setting (Kan-dy)

12 The MOU between TAF and NEDA sets out that this Authority will channel business-related issues that emerge from PPDs to policy makers at the national level. NEDA also provides the regional business Chambers with access to this site, to post as well as to get updates on these issues. 13 The Asia Foundation, op.cit. (undated). 14 The Asia Foundation, op.cit. (2008).

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Establishment of a new Chamber of Commerce with office bearers representing three ethnic communities (Sinhalese, Tamils, Muslims) as a sign of solidarity (Gampola) Coordinated collaboration between the Urban Council (UC) and the business community (Kinniya)

April 2012 -March 2013 15

LG (5) 14 issue-based PPDs General PPDs on emerging issues in all 5 locations

Provision of low-interest loans to small entrepreneurs by the Regional Development Bank (linked to TAF’s work on the MSME – or what was then called the Business Environment Barometer)

June 2013-November

201316

Southern Prov-ince

2 rounds of issue-based PPDs on the subject of busi-ness name registra-tion (in association with the Ministry of Trade, Southern Prov-ince)

Piloting of the issue tracker (with the Badulla and Kandy Chambers of Commerce); and exploring options for collaboration with NEDA (see footnotes 11 and 12 above)

December 2013-June

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Central Province Access to credit

Supporting the Chamber of Commerce and Industry of the Central Province (CCIP) to develop a policy brief on access to credit, based on the outcomes of the PPDs, and to submit these findings as recommendations for the National Budget, 2014 Reviewing a draft design for an e-Business Environment Barometer (eBEB)

June 2014-November 201418

LG localities in 5 Provinces: North, East, South, Sabaragamuwa, Central

Issues per-taining to proposals to be submitted by local businesses for the National Budget, 201519

Launching of the issue tracker by the Minister of Industries and Commerce20 Supporting the Ceylon Chamber of Com-merce (CCC) to organize the first ever National Forum on SME empowerment on issues ranging from regulation, access to finance, supply and value chains, productivity and quality standards to policy advocacy Completing the design of the eBEB and pre-testing of the tool in Kandy, Galle and

15 The Asia Foundation. Progress Report and Annual Plan Year 4 (April 2012 – March 2013): Sri Lanka Local Eco-nomic Governance Project. (2013). 16 The Asia Foundation. Progress Report 4. (June 2013-November 30, 2013): Sri Lanka Local Economic Governance Project. (2013). 17 The Asia Foundation, op.cit. (2014b). 18 The Asia Foundation. Progress Report – Year 5 (June 1 to November 30, 2014): Sri Lanka Local Economic Govern-ance Project. (2014a). 19 The CCIP representing the Regional Chambers Advocacy Forum (RCAF) conducted pre-budget consultative dis-cussions and submitted proposals under 17 categories: agriculture, poultry, construction, dairy, finance, vocational training, gem and jewelry, rubber, tourism, regional investment, labor, price control, handicraft, machinery for small and medium enterprises (SMEs), land, women in business and sustainability for regional chambers. 20 See Daily FT Online (2014). South Asia’s first SME issue and biz mood trackers unveiled in Colombo. Daily FT Online, 29 August, 2014. Available from: http://www.ft.lk/article/344134/South-Asia-s-first-SME-issue-and-biz-mood-trackers-unveiled-in-Colombo. [Accessed on 1 October 2015].

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Kurunegala

Notwithstanding the relatively sparse documentation of the PPD process, the evidence available suggests that there has been some level of consistency in the manner in which this approach has evolved over the years. Continuity in terms of the PPD project trajectory is evidenced for instance, in the evolution of the concept of the business barometer in Sri Lanka – although the actual implementation of this instrument has been significantly de-layed. As highlighted in Table 1, language pertaining to this tool has been set out in various TAF documents over the years. In addition, the Foundation has commissioned various re-search pieces on issues relating to this subject within the framework of the LEG Project. 21

A critical addition to the PPD interventions is the creation of an ‘Online Issue Tracker’ nest-ed in the National Enterprise Development Authority (NEDA). The Issue Tracker is a tool to track issues which impact on an enabling environment for regional / sub-national business. This instrument is designed to systematically track issues, which emerge from various es-tablished business consultations like the Regional Economic Forums (REF), District Eco-nomic Forums (DEF) and WGs and has the potential to help the public and private sectors work together for more rapid and effective reform. The Issue Tracker is operating as a web-based interface and will facilitate all regional business chambers to collect and input data on issues impacting on micro, small and medium enterprises and track them on the status of redress. It is further envisaged that the database will also serve as a repository from which to collect and share experiences and insights, and, more broadly, to draw infer-ences on patterns and trends. NEDA is in the process of rolling out a nation-wide training program for all Chambers of Commerce to build awareness on the Issue Tracker and pro-vide training and mentoring support to help consistent upload of data and track progress of redress.

More recently, over the last year, TAF has made considerable progress in terms of finalizing the design of the business barometer (see Annexures 2 and 3 for details of the MSME Busi-ness Barometer Structure and Analysis and Training Manual, respectively). As mentioned earlier on in this note, the objective of this business barometer is to measure critical factors that impact MSMEs in the formal and informal sectors at the sub-national level. Developing these indicators included activities such as formulating working definitions for the micro, small, medium, formal and informal sectors; refining indicators and triangulating findings based on inputs from stakeholders such as local businesses, regional Chambers of Com-merce, NEDA, and LG officials; drafting a sampling plan; pre-testing the instrument in Kan-dy, Galle and Kurunegala; designing analytical templates and reporting formats to present data; and, drafting a training manual. As at the time of writing, the MSME business barome-ter has been developed to a pre-pilot stage, with three pilots and an island-wide survey to be implemented before the instrument can be finalized.

21 See for instance, Jin-Kyung Jung (2014). The Design of a Business Barometer at Sub-National Levels in Sri Lanka. TAF (February 2014); as well as research on access to credit and other challenges to SME development in the post-conflict years, contained in internal TAF documents.

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Case Studies

The case studies set out below, unpacking the implementation of PPDs in Sri Lanka and the results of this process, are based on the documents provided by TAF 22 as well as on obser-vations made by the author whilst participating in specific PPDs.23 Given the patchy nature of published documentation, as noted above, these narratives only offer a snapshot of the process and of possible factors that may have contributed to the apparent success of the approach or alternatively, of it falling short of expected outcomes.

Evidence based on TAF’s documentation suggests that the Foundation has consistently used the PPD approach to engage in “trust building and inclusive actions to create positive synergies among the state, private sector and citizens”. 24 As discussed earlier in this note, these thematic activities are integral to TAF’s commitment to enhancing voice and inclu-sion as well as strengthening social accountability mechanisms at the LG level. The two case studies portrayed in this section highlight some key socio-political and economic fac-tors underpinning the process and outcomes of specific PPDs within the contours of the program objectives embraced by TAF.

22 See References for a complete list of these sources. 23 A more detailed account of these PPDs cannot be included in this practice note because of issues relating to cli-ent confidentiality. 24 The Asia Foundation, op.cit. (2014a).

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Case Study 1: Matara

The relative success of the PPD approach in Matara was directly linked to the identification of a political champion - the Matara Mayor - in the early stages of the process and to the particular mental model associated with this personality. Some of the key challenges to change and reform in this Municipal Council (MC), identified by stakeholders at the PPDs, included economic factors such as outward migration to other cities due to the lack of business and employment opportunities and socio-cultural factors such as an innate suspi-cion and distrust of other players in the policy space.

The Mayor’s strategic interventions to find workable solutions to these problems hinged on a bottom-up approach. Discussions were held on a continued basis with target groups and end-users in an effort to get longer term buy-in and insulate the reform process from the vagaries of political interference. Whilst this example illustrates the positive features asso-ciated with TAF’s emphasis on political champions, as opposed to bureaucrats, in the LEG Project, the fact that the favorable outcomes associated with the Matara PPD were centered on a single personality raises concerns with respect to the locking-in of these practices on a sustainable basis as well as its replicability in other locations.

Case Study 2: Trincomalee

The PPD process in Trincomalee presents a concrete example of how the LEG Project has been able to achieve its key inter-related objectives: facilitating ethnic and religious har-mony/reconciliation; improving livelihoods and sustainable development; and, building partnerships between the public and private sectors. Prior to TAF’s interventions under the PPD approach, the Trincomalee Urban Council (UC) had very little interaction with the District Chamber of Commerce. Moreover, traders’ associations were organized along eth-nic lines, with the Trincomalee market complexes being designated as Sinhalese, Tamil or Muslim.

The PPD initiatives resulted in the establishment of a multi-ethnic market complex and the resolution of sensitive issues such as the equitable allocation of stalls amongst traders from the different ethnic communities. Two key enabling factors in this process were TAF’s ex-perience with mediation and conflict sensitive approaches and the active involvement of the WGs. Given that both these elements are linked to the design of the LEG Project, the po-tential for replicability and sustainability is higher- in contrast to the personality-driven outcome embedded in the Matara narrative.

Case Study 3: Southern Province Electronic Business Registration Reform

TAF in association with the Ministry of Trade, Southern Province conducted two rounds of PPDs on the issue of Business Name Registration in response to numerous complaints from businesses regarding the cumbersome and opaque procedures related to registering new businesses. Key recommendations that emerged from the PPDs included:

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a. Computerizing the process to make registration user friendly

b. Automating backend operations including databases for easy tracking of application sta-tus

c. Simplifying application forms and providing brochures to explain registration formalities and timelines In response to the recommendations above, the Foundation developed a software to regis-ter the names of any businesses through a uniform and consistent process in 47 Divisional Secretariat Divisions (DSDs) in the Southern Province (see a screenshot below). The system is fully operational now.

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International Context

The selection of cross-country examples outlined in this section draws from TAF’s distinc-tive approach to PPDs 25 as well as from other notable initiatives such as the online forum jointly facilitated by a group of leading international donor organizations (DFID, World Bank, IFC, OECD and GTZ).26 A flavor of some of the key themes and factors underpinning the PPD process in these different contextual settings is set out in Table 2. Whilst recogniz-ing that “cut and paste” solutions are not conducive to inclusive and sustainable develop-ment, the broader insights that emerge from these examples can be useful to get to a more comprehensive understanding of the opportunities and challenges pertaining to PPDs in Sri Lanka under the framework of the LEG Project.

An important and distinctive element of TAF’s PPD approach is the focus on sub-national level, issue-based discussions. The Foundation’s consistent focus on sub-national level in-terventions under the LEG Project in general and under the PPD approach in particular has also been reinforced by particular strategies, including the emphasis on political champions such as Mayors (as evidenced in the Matara Case Study above) over bureaucrats to get deeper stakeholder buy-in.

Although other initiatives such as the multi-donor online forum mentioned above are rela-tively better documented and have readily accessible and user-friendly PPD materials, case studies, tools and handbooks27, the entry point for these strategies is largely at the national policy level.28 Moreover, a significant shortcoming of this multi-donor initiative is the fail-ure to document and integrate the rich learnings from similar work done by TAF in several countries.2930 Given the pitfalls associated with reinventing the wheel, this evident gap in donor coordination and possible duplication of efforts raises wider policy concerns.

Table 2 PPDs: International Snapshot

Country Key Process Factors Cambodia WGs on sectoral clusters at the national level (since

2001) Macedonia E-government solution for public consultation in the

legislative process and the development of a national platform for sustainable PPDs on RIA principles of transparency, accountability and inclusion

Nepal Strategic approach to build trust between stakehold-ers in the policy space in fragile and conflict-affected states; and, to address issues of post-conflict eco-nomic development as well as peace and reconcilia-tion in an environment of significant political turmoil

Pakistan Inclusion and integration of political parties (and their economic mandates) in the PPDs (in 2014, a

25 As documented in The Asia Foundation, op.cit. (undated). 26 As detailed at: http://www.publicprivatedialogue.org/. 27 See “The PPD Handbook” at: http://www.publicprivatedialogue.org/tools/. 28 As detailed at: http://www.publicprivatedialogue.org/ 29 Ibid.; Bettcher, Herzberg and Nadgrodkiewicz (2015). Public-Private Dialogue: The Key to Good Governance and Development. CIPE (February 2015) 30 Three specific examples that stand out in this regard are Bangladesh, Cambodia and Nepal.

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local think tank, the Policy Research Institute of Mar-ket Economy, developed a scorecard to track pro-gress in 3 key policy areas: economic revival energy security, social protection)

Philippines Tripartite approach (business, LG, civil society) to transparent and accountable governance

Source: TAF (undated). Local PPD (LPPD) Manual. Promoting Public-Private Dialogues at the Sub-National Level: The Asia Foundation Approach. (mimeo); DFID, World Bank, OECD and GTZ (2015). Public-Private Dia-logue Database. [Online]. Available from: http://www.publicprivatedialogue.org/.

Lessons Learnt

As discussed in this practice note, a comprehensive analysis of the opportunities and chal-lenges pertaining to the PPD approach, based on detailed accounts of its implementation in Sri Lanka, is precluded by the sparse nature of documented evidence. This is indeed unfor-tunate given the intrinsic value of this methodology in terms of fostering a culture of dia-logue between public and private sector actors at the sub-national level and facilitating sus-tainable social accountability mechanisms – as evidenced in the case studies above drawing from both the Sri Lankan and international context.

The rest of this section sets out some insights relating to critical issues such as replicability, adaptation, sustainability and institutionalization based on the documents provided by TAF 31 as well as on observations made by the author when participating in specific PPDs and evaluating the Foundation’s approach.

Documentation gaps undermine the potential for replication and institutionalization

A significant problem in TAF’s PPD approach is the patchy documentation process and cor-responding gaps in institutional memory pertaining to details on the actual implementation and evolution of this tool over the years. These lapses impede the extraction of possibly rich and useful lessons by other development practitioners as well as the adaptation and replication of workable methods in other locations. The online multi-donor PPD forum fa-cilitated by other donor organizations is, in contrast, an example of a well-documented and practitioner-friendly initiative.32 A key priority for the Foundation to undertake is to devel-op a simple PPD user’s manual, made available in all three languages, and based on the ground level experience gained over the years. A second important issue, also related to the potential of getting deeper and wider stakeholder buy-in, is the need for a more thorough and systematic process of impact assessment. Although select TAF documents – such as The Asia Foundation (2008) – do contain fairly detailed accounts of case studies and impact assessment, this information is by and large fragmented.

Administrative delays pose a challenge to buy-in and sustainability

31 See References for a complete list of these sources. 32 As detailed at: http://www.publicprivatedialogue.org/.

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A key general lesson that emerges from Sri Lanka’s PPD narrative is that it is essentially an unfinished agenda. As detailed in previous sections of this note, although there was conti-nuity and consistency in the conceptualization of the methodology, the PPD trajectory has been dotted with episodes of implementation gaps. The evolution and current status of the MSME barometer tool is a clear example of these administrative delays that have held up the implementation of important and useful initiatives. Given that stakeholder buy-in is time-sensitive and that demonstration effects are crucial for sustainability, it is critical that TAF rolls out this tool and does not miss out on this window of opportunity.

Locking in the benefits of political champions for sustainability and replicability

TAF, under the contours of the LEG Project, adopts a distinct strategy of embracing political champions, as opposed to bureaucrats, to drive the PPD process. Whilst this approach can be successful as illustrated in the Matara Mayor case study set out above, the replicability and sustainability of this model are circumscribed by various factors including the fact that policy outputs and outcomes are often associated with the mental model of a particular po-litical actor. As such, a more rigorous compilation and documentation of case study evi-dence unpacking the social, political, economic and cultural dynamics that underpin the PPD process will also be useful to evaluate and fine-tune TAF’s strategic interventions.

Balance of power between national and local government is critical for sustainability and institutionalization

The PPD approach is designed to create a forum by which policy issues identified by stake-holders at the LG level can be transmitted to decision makers at the national level. As such, these PPDs target specific issues pertaining to information and communication deficits for example that arise between actors in the sub-national and national level policy spaces. However, a common concern that has been voiced at the PPD sessions is that the relatively high degree of centralization that characterizes Sri Lanka’s political institutions under-mines the realization of voice and inclusion at the LG level. Whilst this is an external factor beyond TAF’s direct control, it is important to keep in mind when reassessing and rethink-ing the PPD methodology in the Sri Lankan context, so as to ensure that the process is sus-tainable.

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REFERENCES

Bettcher, Kim, Herzberg, Benjamin and Nadgrodkiewicz, Anna (2015). Public-Private Dia-logue: The Key to Good Governance and Development. CIPE, February 2015.

Daily FT Online (2014). South Asia’s first SME issue and biz mood trackers unveiled in Colom-bo. Daily FT Online, 29 August, 2014. Available from: http://www.ft.lk/article/344134/South-Asia-s-first-SME-issue-and-biz-mood-trackers-unveiled-in-Colombo. [Accessed on 1 October 2015]. DFID, World Bank, OECD and GTZ (2015). Public-Private Dialogue Database. [Online]. Availa-ble from: http://www.publicprivatedialogue.org/ [Accessed on 3 October 2015]. Jung, Stephanie Jin-Kyung (2014). The Design of a Business Barometer at Sub-National Levels in Sri Lanka. Colombo, TAF, February 2014.

NEDA (2015). Sri Lanka Enterprises Issue Tracker. [Online]. Available from: http://www.ppdissuetracker.org/ [Accessed on 29 September 2015].

The Asia Foundation (undated). Local PPD (LPPD) Manual. Promoting Public-Private Dialogues at the Sub-National Level: The Asia Foundation Approach. (mimeo).

The Asia Foundation (various years). Progress Report: Sri Lanka Local Economic Governance Project. Colombo, TAF.

The Asia Foundation (2014a). Progress Report – Year 5 (June 1 to November 30, 2014): Sri Lanka Local Economic Governance Project. Colombo, TAF.

The Asia Foundation (2014b). Progress Report – Year 4 (December 1, 2013 to June 30, 2014): Sri Lanka Local Economic Governance Project. Colombo, TAF, December 2014.

The Asia Foundation (2013). Progress Report 4. (June 2013-November 30, 2013): Sri Lanka Local Economic Governance Project. Colombo, TAF.

The Asia Foundation (2013). Progress Report and Annual Plan Year 4 (April 2012 – March 2013): Sri Lanka Local Economic Governance Project. Colombo, TAF.

The Asia Foundation (2008). Completion Report: Local Economic Governance Project. Colombo, TAF, December 2008.

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Annexure 1: Unstructured Case Study Questionnaire for Key Informant Interviews

A. Case Study Objectives: 1. Getting to a comprehensive understanding of how The Asia Foundation

(TAF) has “navigated the complexities and realities of power and politics in the Local Economic Governance (LEG) Program” (This includes all three strands/domains being addressed in the Practice Notes)

2. Unpacking the dynamic nature of the institutional and organizational struc-tures and processes (political/social/economic/legal/other) at the local gov-ernment level (LG) that have facilitated (or failed to facilitate) TAF’s key ob-jectives of replication, institutionalization and innovation embedded in the following Program Components: improved local economic governance; in-creased economic and social development opportunities; and, empowerment for social inclusion and peace

3. Exploring how political and economic incentives were built to provide citi-zen-centric services

4. Documenting/highlighting the value-addition that the LEG Program provides to the existing body of conceptual and empirical knowledge

B. Questions for Unstructured KPIs: 1. Has TAF’s LEG Program (and the three strands/domains embedded in this Pro-

gram) been successful in terms of its stated objectives (as set out in Case Study Objective 2 above and as reflected specifically in the sub-objectives underpin-ning the three strands addressed in the Practice Notes)? Has the Program failed to realize these objectives? a) Please identify the key supply and demand-side enabling factors that have

contributed to the success of the Program. These factors may include politi-cal/social/legal/economic/technical/other institutional/organizational structures and processes at the LG level and in the relevant public policy space (such as factors associated with national/provincial government, do-nor practices, other development partners such as the private sec-tor/Regional Chambers, citizen groups, etc.).

b) Please identify the key supply and demand-side factors that have under-mined the success of the Program.

c) Please identify key procedural elements that stand out as “innova-tive”/”novel” in the LEG Program.

2. How have the strategic political economy approaches and tools adopted by TAF in the LEG Program worked in practice?

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a) What are the “political” incentives that have worked to make the Program a success?

b) What are the “political” disincentives that have undermined the success of the Program?

c) To what extent has the strategy of “working closely with political actors” (in-cluding “political champions”) been useful in terms of realizing the objectives of the LEG Program? Explain for instance, how these “champions” have nego-tiated the challenge of getting broad buy-in/political ownership for the re-form process. Has political competition and comparison played a role in shaping the incentives and behavior of these political actors?

d) To what extent has the strategy of “working closely with political actors” (in-cluding “political champions”) led to new risks that have in turn undermined the success of the LEG Program?

e) How has the role of bureaucrats (as distinct from politicians) been balanced and contextualized in the Program?

f) Has the existing “political context” had an impact in terms of the suc-cess/failure of the Program? If so, how (explain the dynamics of the link be-tween the “political context” and the success/failure of the Program)? Ex-plain how the specifics of Sri Lanka’s local governance context have impacted on the LEG Program. Explain how the Program has addressed issues such as rent-seeking/corruption and political favoritism. Explain how the LEG Pro-gram has navigated institutional realities during and after the civil war (in-cluding the nature of the state, of the state-citizen nexus, of the role of other development partners- for instance, the private sector and the donor com-munity).

g) Explain how the LEG Program has addressed the issue of trust deficit in Sri Lanka’s civil society and facilitated and embedded citizen “voice” mecha-nisms (and the active participation of citizens in the broader socio-economic development and political governance process) – particularly in relation to the empowerment of vulnerable and marginalized communities.

h) How has the “politics” of governance been blended with the “imperative” of economic growth in the Program?

3. To what extent can the strategic political economy approaches and tools under-pinning the LEG Program be replicated – in other localities in Sri Lanka/by TAF in future programs/by other donors?

-What are the key “good practice” lessons as well as major shortcomings that may be useful for practitioners (Sri Lankan policy makers, the donor com-munity, other key actors in this particular public policy space, etc.) attempt-ing to replicate this “model”?

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Annexure 2: MSME Business Barometer Structure and Analysis

MSMB Structure and Analysis.pdf

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Annexure 3: MSME Business Barometer Training Manual

MSMB Training Manual.pdf