Also available in Bangla Bangladesh has made striking progress on a range of social indicators over the last 15 years – an achievement which is credited to the country’s pluralist service provision regime, including the large network of NGOs. A recently released report by the World Bank titled ‘Economics and Governance of NGOs in Bangladesh’ recognizes these contributions and addresses the current debates surrounding NGOs. The main NGO services are by and large successfully targeted to poor households. For instance as the following chart shows almost half the students in NGO primary schools are from the poorest 20% of the population far higher than in other schools. The impact of these services is also clearly positive, and highlyvalued by the communities that they serve. For instance micro-credit programs that now reach around 70 percent  of poor households, have led to significant improvements in female empowerment and led to greater stability of incomes for the poor. Educational and health outcomes have improved for NGO beneficiaries due to social sector programs. NGO advocacy campaigns have also led to greater awareness, and some progress, on pro-poor issues. Hence the rapid growth of NGO activity over the past decade is a positive development. Moving forward, NGO services will need to be scaled up even further as NGOs can have a critical impact on Bangladesh’s PRSP targets. The share of aid to NGOs as a portion of total aid to Bangladesh has risen from 14% from 1990-95 to 24% between 1995-2004. At the same time micro-finance interest income and profits from commercial ventures have become increasingly important for NGOs. The scaling up of NGO activity will require different sources of funding depending on the type of service provided. The micro-finance sector has matured to the point where the sector ought to move towards commercial sources of funding. In the social sectors, there is a strong case for financing of NGO programs through the  Government Budget, using donor funds or domestic revenue. However in order for this to be effective in practice, contracting procedures need to improve significantly as part of an overall strengthening of Government procurement. For advocacy type work, financing sources ought to be independent of Government, raised from private donations or external grants. Several NGOs have established commercial enterprises whose profit stream is earmarked to support their development programs. This ‘endowment model’ is an innovative solution characteristic of charities elsewhere. However NGOs should incorporate such businesses as independent entities to create a level playing field with the private sector. In order to further capitalize on the potential of the NGO sector, the report argues for a ‘strategic compact’ between Government, NGOs, donors and clients. The implicit compact would be where each actor strengthens various areas that are within their own mandate. The combined impact of these improvements will go a long way in achieving the common goal of improving services to the poor in Bangladesh and help achieve the Millennium Development Goals. As part of this compact, the main role for Government is to facilitate the provision of quality NGO services under a modernized regulatory framework, developed in close consultation with NGOs. The regulatory focus should change from government micro-management of NGOs’ foreign funds to support for better corporate governance, strengthened accountability, and transparency by NGOs. Moreover regulatory reforms for NGOs need to be linked closely to the new micro-credit law under consideration. The framework should recognize that NGO advocacy fulfils an essential function in a democracy such as Bangladesh, and must be given space, except for activities that promote one political party, or election candidate, over another. Regulatory capacity must be strengthened significantly – one option is that Government set up an independent NGO Commission to perform many of the current regulatory bodies’ functions. Government ought to strengthen contracting procedures to improve the effectiveness of aid that is channeled to NGOs through the Budget. As part of this lessons from PKSF’s successful NGO contracting procedures could be mainstreamed within Government. The Government-NGO Coordination Council (GNCC) ought to be revived to provide a forum for regular Government-NGO discussions. Donors should continue to support NGO activities in Bangladesh, both to improve pro-poor service delivery and to promote a broad-based civil society, while ensuring that they do not undermine the accountability of NGOs to Bangladeshi stakeholders. Moreover donors need to be accountable for the occasions when poor project design or inadequate supervision contributes to unsatisfactory implementation of projects involving NGOs and institute mechanisms to prevent these from reoccurring. While financing social sector activities donors also need to develop a clear strategy for sustainability, as has occurred in micro-finance. This strategy ought to be developed in tandem with Government and NGOs where in the medium run the Budget progressively absorbs the costs of financing of various social sector programs. In areas such as advocacy, where the conflicts of interest with Government financing are significant, donors could work with NGOs to tap the market for greater private charitable contributions. Donors should also reduce the transaction costs of their financing by harmonizing reporting requirements, upgrading financial management skills of their own staff, and retaining “institutional memory” within their organizations.
NGOs also clearly have an important agenda in front of them if they are to continue to be effective partners in development. Priorities include the need to (i) strengthen financial management and corporate governance; (ii) scale up efforts to provide public disclosure with respect to financial and programme information along with a public information strategy to address misconceptions about NGOs (iii) make greater efforts to coordinate with local and national Government officials and act as facilitators of Government, private sector and community service provision (iv) revisit strategic directions periodically based on national development needs and internal capacity constraints (v) develop a middle management layer to oversee more complex development programs. Clients may also support the strategic compact using mechanisms that improve their capacity to demand and monitor services, for example, through vouchers enabling choice between public, NGO and private providers. May 2006 ___________________________________________________________________________________
Contacts Rezwan Alam/Rehnuma Amin (8802) 815-9015, Ext 4242,
E-mail: salam3@worldbank.org, ramin1@worldbank.org To obtain a hard copy of the report please contact Ms. Rehnuma Amin or
Ms. Razia Rouf at the World Bank To download a soft copy of the report please visit:
www.worldbank.org.bd/bds For more information on the World Bank in Bangladesh, please visit :
www.worldbank.org.bd & www.worldbank.org |
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