How capital projects are allocated in Papua New Guinean villages : the influence of local collective action, local-level institutions, and electoral politics

 70080 How Capital Projects are Allocated in Papua New Guinean Villages: The Influence of Local Collective Action, Local-level Institutions, and Electoral Politics August 2011 Zahid Hasnain (EASPR), Philip Keefer (DECRG) and Nicholas Menzies (LEGJR) The World Bank  ii Acknowledgements The authors wish to thank Paul Barker, Marjorie Andrew, Laura Bailey, Nicole Haley, Mathew Allen, Yasuhiko Matsuda, Stuti Khemani, and colleagues from the World Bank’s Justice for the Poor program for contributing to the research and this report. We are especially grateful for significant assistance from Quynh Nguyen in the construction of the database. A special word of thanks is also due to AusAID, the Governance Partnership Facility and the Japanese Social Development Fund for their financial support of this work. Errors of fact and interpretation are ours alone, as are the views expressed in this paper, which should not be attributed to the World Bank, its executive directors, or the countries they represent. Acronyms AusAID Australian Agency for International Development DSG District Support Grant DSIP District Services Improvement Program JDPBPC Joint District Planning and Budget Priorities Committee LLG Local Level Government LPV Limited Preferential Voting MP Member of Parliament OLPGLLG Organic Law on Provincial Governments and Local-level Governments WDC Ward Development Committee  iii Abstract Papua New Guinea (PNG) has implemented numerous institutional changes over the past fifteen years with the avowed aim of bringing government closer to the people, improving accountability and, by extension, local infrastructure development and service delivery. To date however, there has been little empirical evidence to establish whether these changes have impacted the provision of local infrastructure. Similarly, there is little empirical evidence revealing the main political economy factors that influence the way that resources are actually planned, spent, and impact communities at the sub-national level. This report investigates the determinants of local infrastructure projects at the ward level, the lowest level of government in PNG, to assess the impact of these institutional changes and to identify the importance of other factors, in particular local collective action. It does this through a survey covering more than 1000 households across 49 wards in nine PNG districts. It also presents descriptive statistics on the basic characteristics of the households that were surveyed, their knowledge of local level institutions, their participation in groups, and their voting behavior. The main findings from the survey suggest that the extent to which communities are organized for collective action, as measured by reported membership of groups, particularly non-church groups, is the strongest and most consistent predictor of whether a ward receives a project. The effect of group membership on the presence of new local public works projects is far stronger outside of Highlands’ districts. However, it is no different across districts that exhibit the most electoral violence, nor across mining versus non-mining districts. Participation in local associations and groups differs significantly within and across the nine districts. Emerging scholarship on civil society in PNG suggests that civil society organizations may be bridging customary social groupings; the survey appears to confirm this for the organizations which households report belonging to. However, wards in which such multi-clan groups are reported to be more predominant seem to be less successful in securing outside financing for local public works projects. The report explores especially the determinants of variation within districts in terms of the presence of new projects. Common wisdom in PNG suggests that the home wards of Members of Parliament (MPs) should be especially favored with projects. In six districts, the data includes this ward; these six home wards are no different from other wards in their district with respect to the presence of new projects.1 The survey asked questions about electoral behavior, the provision of cash and other gifts in exchange for votes and electoral violence. The survey found significant inter-district variation, with vote-buying dramatically higher in the three Highlands districts, where 42% of respondents report receiving cash, compared to 9% in the other districts. Within districts, vote-buying and the provision of local public works projects are inversely related. Vote-buying is also far more common in the three districts that exhibit the most electoral violence. 1 Supporting qualitative research suggests that in Koroba Lake-Kopiago District the MP’s home ward is an important factor in the presence of projects.  iv A summary of the findings are presented in the schematic below: The study has several implications for the Government of PNG and development partners:  First, although Government and donors have placed considerable emphasis on changing the institutions and procedures for making and implementing public policies at the local level (such as changes in electoral laws or the introduction of district level planning bodies), these seem not to have affected which wards receive projects. For example, wards in which households have better knowledge of the local government system are no more likely to have projects; the effect of group membership on projects is also unaffected by average knowledge of local governments. The results are consistent with the continuing dominance of the MP and traditional modes of interaction between MPs and their constituencies, which transcend and are largely unaffected by such innovations as the Joint District Planning and Budget Priorities Committee (JDPBPC).  Second, in a political environment in which MP influence is strong yet groups have an impact on development, there could be merit in developing accountability and feedback measures to link MPs and the district development committees they chair more closely with citizens. These could include relatively straightforward measures to increase transparency, such as policies to publicize JDPBPC allocations, budgets and meeting minutes in the newspaper, on radio and by posting them on church notice boards and at other community points. More involved measures such as performance monitoring and citizen/community scorecards, participatory budgeting and expenditure tracking have been implemented in many countries but remain largely absent from the service delivery landscape in PNG. (The box on page 36 provides an example of social audits of Kenyan constituency development funds). These measures also warrant consideration to see whether they can capitalize on a citizenry which, along some measures, is relatively active, informed and engaged. Implementation would need to focus on building a compact between service  v providers and citizens and not unduly raise demand-side expectations given significant supply-side constraints which are unlikely to be swiftly ameliorated.  Third, it seems that District Support Improvement Program (DSIP) and District Support Grants (DSG) do not get transformed into development projects as effectively in wards that are under-endowed with groups. To address this, it may be worth considering programs that target grants directly to wards, such as block grants to Ward Development Committees (WDCs).2 Ward Councilors are already well known by both men and women and significantly the most popular site of complaint by residents for poor (and non-existent) service delivery. Such grants could be married with matching grants to Local Level Governments (LLGs) and districts to encourage collaboration across wards and better integration between levels of government. A process of direct grants would have to consider means of mitigating potential costs, such as a weakening of linkages (and associated oversight and implementation support) between Provincial and District officials and the wards. Conducting research of this type invariably presents challenges, many of which were amplified in this case. As a result, any conclusions based on the survey results alone need to be carefully drawn and ideally supported by other empirical work. Significant questions remain for further research and understanding. For example, why do some wards exhibit more group activity? And what are the precise dynamics through which group activity (in disparate pursuits that include sports) leads to more projects? Other questions require a larger sample of wards to answer. For example, are the types of projects systematically different in "more group" wards? And are the maintenance and utilization of projects higher in "more group" wards? These remain important issues for further research. 2 Reportedly tied grants direct to LLGs were historically part of the inter-governmental financing system in PNG.  vi Contents Abstract ........................................................................................................................................ii Acknowledgements ......................................................................................................................v Acronyms......................................................................................................................................ii I. Introduction ............................................................................................................................. 1 II. The Planning and Budgeting Process for Local Projects ...................................................... 3 Limited Preferential Voting ......................................................................................................... 5 III. Descriptive Statistics: Who was Surveyed and What are Their Characteristics? ................ 5 Basic Respondent Information .................................................................................................... 6 Media Access and Knowledge of New Institutions ..................................................................... 7 Group Participation ..................................................................................................................... 9 Local Infrastructure Provision ................................................................................................... 11 Voting Behavior ......................................................................................................................... 12 IV. The Determinants of Infrastructure Allocation ................................................................. 15 Methodological concerns .......................................................................................................... 16 Determinants of New Projects .................................................................................................. 18 MP Incentives, Vote-buying and New Projects ......................................................................... 22 The Effect of Clans ..................................................................................................................... 25 Differences Across Districts ....................................................................................................... 27 Infrastructure Stock and New Projects ..................................................................................... 29 V. Conclusion and Further Work................................................................................................ 31 Annex 1: Research Districts ...................................................................................................... 34  1 I. Introduction 1. Despite rising mineral prices that have triggered an economic recovery after years of decline, development remains a significant challenge in Papua New Guinea. Human development indicators are below those of other countries in the region and urban-rural disparities remain significant. The World Bank estimates that the percentage of the population below the national poverty line increased from 37% in 1996 to 53% in 2006; life expectancy at 56 years is significantly below the East Asian average of 71 years; the literacy rate for individuals 15-24 years old declined from 67% in 2000 to 64% in 2007; less than half of primary school age children are enrolled in primary schools and, of these, only 60% complete six years of education. Civil society organizations, business leaders, donors and many government officials agree that this deprivation is primarily a failure of the state and that the challenge of development is in large part a challenge of improving governance. The Bank’s Country Assistance Strategy underlines the centrality of improvements in governance to the twin strategic pillars of promoting and maintaining sound economic and natural resource management and improving livelihoods and service delivery, especially for the rural poor. 2. Recognizing that improved accountability is key to better governance, the Government of Papua New Guinea (PNG) has instituted numerous institutional changes over the past fifteen years that aim to bring government closer to the people and, by extension, to improve local infrastructure development and service delivery. These changes include an elaborate three-tier local government structure, with considerable decentralization of authority for planning and allocating funds for local infrastructure projects to these new institutions, in particular to the Joint District Planning and Budget Priorities Committee (JDPBPC) at the district level, the apex of the three-tier system. The funds flowing to sub-national tiers of government have also increased considerably over the past five years. 3. To date however, there has been little robust empirical investigation into whether these changes have affected the provision of local infrastructure nor whether they have changed the political economy factors that influence accountability: the way resources are actually planned, spent, and affect communities at the sub-national level in PNG. This report presents results from the analysis of a survey, covering more than 1000 households across 49 wards in 9 districts in PNG that was undertaken with the explicit aim of answering some of these questions. To our knowledge this is the first such detailed empirical analysis of its kind in PNG, and one of the first anywhere that compare localities’ access to outside public works financing depending on the group organizations of the localities, the electoral behavior of candidates in the locality, and households’ own knowledge of the formal institutional arrangements through which projects are distributed. 4. The main issue that this report investigates is the determinants of projects at the ward level, with the ward being the lowest administrative tier in PNG and consisting of at most a few villages. Local infrastructure projects are an important ingredient of any effort to improve service delivery, and are well suited to this form of empirical examination precisely because local institutions have considerable de jure decision-making authority over them. The survey also allows us to examine numerous other, related questions that are also of importance, including household knowledge of and participation in the new local  2 government institutions; household participation in local group activities; the nature of these groups, in particular their clan representation; voting behavior; the interactions of the MPs with communities; and the impact of the Limited Preferential Voting (LPV) system, introduced for general elections in 20073, on voting behavior and MP incentives. 5. To summarize, the main findings of this report are as follows:  Villagers display a high degree of participation in groups, both church and non- church, including school boards, producer cooperatives, and women’s groups, as measured by group membership and frequency of meetings. Households that belong to non-church groups are not systematically different, in terms of income, assets, gender, occupation, or education, from those that do not.  The extent to which communities are organized for collective action, as measured by membership of villagers in groups, particularly non-church groups, is the strongest and most consistent predictor of whether or not a ward receives a project.  By contrast, neither the economic characteristics of wards nor average ward knowledge of the formal institutional arrangements of the local level government system (specifically, the JDPBPCs), nor the presence of an active Ward Development Committee, appear to influence project allocation.  The clan composition of local groups is important. While the apparent proliferation of multi-clan groups is a positive sign for the prospects of bottom-up pressure for broadly beneficial local public goods, group participation in wards has a smaller effect in wards with more multi-clan groups than in those with fewer.  Vote buying — i.e., the exchange of cash or other gifts for votes — is prevalent in most districts (but with significant variation between districts) and appears to have been unaffected by the introduction of LPV. Moreover, while local collective action improves the provision of local infrastructure, it is also linked to greater, not less vote buying. 6. These findings are of particular relevance to the policy community. The Government of PNG, civil society and other stakeholders, as well as PNG’s development partners have tended to focus heavily on institutional changes to improve service delivery, ranging from new electoral rules (i.e. the LPV system) to the new, decentralized institutions for delivering projects to Districts, LLGs and wards. The strategies of electoral mobilization that politicians use depend on more than formal institutions, however, and these institutions may be less likely to have the desired effects in electoral environments like PNG's, where clientelist and clan-based appeals may matter more than service delivery. 7. Though the changes were intended to drive allocation decisions down to more local levels and to involve village officials more directly, we see little evidence that the formal attributes of these local institutions matter. In particular, wards that know more about the JDPBPC or that have a Ward Development Committee are not more likely to have projects. 3 The LPV system was introduced following the 2002 general election and piloted in 10 by-elections in the lead-up to its first use in a general election in 2007.  3 Instead, differences among communities in their capacity to engage in collective action appear to have the strongest effect on service delivery and the receipt of infrastructure. The main findings from the survey suggest that there is indeed considerable participation in local associations and groups across the nine districts and this participation has a large and significant association with whether communities receive projects. 8. The study has several implications for the government of PNG and for donor assistance to the country. First, although government and donors have placed considerable emphasis on de jure changes to laws and procedures regarding public policies at the local level (such as changes in electoral laws or the introduction local level planning bodies), these seem not to have affected which wards receive projects. For example, wards in which households have better knowledge of the new local government scheme are no more likely to have projects; the effect of group membership on projects is also unaffected by average knowledge of local governments. The results are consistent with the continuing dominance of the MP and traditional modes of interaction between MPs and their constituencies, which transcend and are largely unaffected by such innovations as the Joint District Planning and Budget Priorities Committee. 9. Second, in a political environment in which MP influence is strong, yet groups have an impact on development, the focus should be on strengthening mechanisms that better link the MPs to citizens and to strengthen these groups ability to hold MPs accountable. Third, it is likely that wards that are under-endowed with groups will be best-served by programs that target grants directly to wards, rather than funding sources that work through intermediate entities. 10. This report is organized as follows. The next section briefly describes the formal local level government institutional arrangements. Section 3 describes the survey instrument, and presents some descriptive statistics on the basic characteristics of the households that participated, their knowledge of local level institutions, their participation in groups, and their voting behavior. Section 4, the analytical core of the paper, presents the results from the regression analysis on the determinants of infrastructure projects in PNG wards. II. The Planning and Budgeting Process for Local Projects 11. PNG is divided into 20 provincial-level divisions, each one of which contains one or more districts, for a total of 89 nationwide. Each administrative district is also an electoral district, with a single seat in the National Parliament (called an “Open