EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf

Appointing a strong, independent and experienced senior management team and
Board is critical if increased accountability is to be achieved. Public sector reforms
have been supported by technical assistance programs to strengthen capacity. These
have also had mixed success.
For example, the ADB funded 15 Technical Assistance (TA) grants to help improve
operations and financial performance of the water and sanitation sectors in four Pacific
countries (Fiji, Kiribati, Marshall Islands and Papua New Guinea) between 1975 and
2002. In an evaluation of these TA’s, the ADB reported some improvements, but
noted that the projects had not completely delivered to expectations. This is in part due
to a lack of focus on core Board or management competence. The study noted the
following lessons:
A change in corporate structure did not translate immediately into
commercial focus, as these organizations lacked a culture of minimizing
costs and generating revenue
The success of efforts to establish or strengthen Boards of Directors is
dependent on the qualifications of the elected members and the capability
of these individuals to carry out their functions well
The TAs focused on introducing KPIs for performance based
management, but directors and managers did not always have the
competence to understand and act upon data.
Although this study was water sector specific, these lessons are applicable to other
attempts at infrastructure sector reform in the Pacific. They reflect the Pacificspecific
challenge of a limited pool of resources, technical capability and capacity.
However, the success of public sector reforms in infrastructure sectors in some
Pacific countries suggests that these challenges can be overcome.
Key features of successful public sector reforms include:
Government willingness to let the Board of a public corporation or
corporatized entity operate independently
Government willingness, in the case of a corporatized entity, to allow the
organization to operate on a commercial basis, with a profit objective to
provide for growth
Transparent decision making by the Board and the management team
Driven, independent and capable of senior management and Board
members
Board and government support for prices that cover full and reasonable
costs, or explicit subsidies to make up any shortfall
Ensuring there are appropriate oversight mechanisms in place
These characteristics represent a good model for successful public sector reform, and
should be achievable for most Pacific countries. However, some may find it more
difficult to appoint management or Board members with the required skills.
As discussed in section 6.2.2, some Pacific countries have a smaller pool of skills to
draw upon due to small populations, youthful populations and outward migration.
There are some ways to alleviate this problem. One solution is to look beyond the
borders of the country to the Diaspora 18 , or to try and attract skilled individuals from
other countries. Low salaries are an impediment to attracting skilled workers. In most
18 Although as we note elsewhere in section 6.2.2 the potential supply of skilled labor from the Diaspora may not
be large, and there are considerable difficulties in attracting back labor which is short supply in larger, higher
income countries in the region.
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