Editor's Note: Towards Responsive & Inclusive Financial Management Institutions

by Hisham Waly
Practice Manager
Governance Global Practice / MENA

The tree trunks in the picture, are, well, just that — tree trunks. But to many, the meaningless angles take on a familiar appearance, that of two human faces in profile kissing. This is an example of a phenomenon known as Pareidolia. The term comes from the Greek words "para", meaning beyond, and "eidolon", meaning image. The World English Online Dictionary defines Pareidolia as “the imagined perception of a pattern or meaning where it does not actually exist.”

Some of us have experienced this phenomenon whether by seeing religious symbols in oddly-shaped vegetables or even rabbit-shaped clouds in the sky. Essentially, people draw what they believe to be significant information from obviously insignificant stimuli. Scientists provide numerous explanations for this phenomenon ranging from our evolutionary heritage, the brain’s information processing system, or simply being a product of people’s expectations, as reported by the BBC.

A byproduct of working for the World Bank is attending meetings —a lot of meetings— whether internal (with specialists from various sectors and backgrounds) or external (with government officials, civil society, media, the private sector, citizens, and donors). In some of these meetings, I have observed that some of us sometimes see a pattern in random data because of our yearning to find meaning in the complex world of development reform.  For example, the passing of an access to information law (an excellent step) is usually interpreted as a commitment by the government for more transparency and better governance.  However, in some cases, the law is never implemented or, when implemented, does not lead to increased participation or accountability (for example, due to the weak capacity of CSOs and legislators, or even the government itself putting up obstacles to prevent its implementation). Another example is the issuance of a law stipulating the adoption of International Financial Reporting Standards (IFRS) by a country— only to realize later that, as the capacity of stakeholders and enforcement arrangements were not considered, the adoption of such standards remains theoretical.

The intent of governments in pursuing public financial management or corporate financial reporting reforms varies. In many cases, governments are genuinely pursuing reforms with commitment and ownership, while in some cases they are reacting to external pressure by sending what Matt Andrews describes in his book The Limits of Institutional Reform in Development as “signals” to garner external legitimacy. However, oftentimes these cannot be implemented and seldom provide real and sustainable solutions. In other cases, governments are trying to rehabilitate their image— for example, after a well-publicized corruption scandal— by responding to pressure from the media and public opinion or in an attempt to deal with fiscal and economic crises tighten controls over public spending and put into place arrangements for fiscal discipline and independent scrutiny (Archon and De Renzio, 2013).                                             

As a development institution and donor, we need to be clear sighted about the level of government commitment and ownership in order to better collaborate with internal and external partners.  In the past, this was not always easy, given the way the World Bank was organizationally structured whereby professionals representing financial management, procurement, public sector, anticorruption, regulatory policy, social accountability, taxation, and information management were spread between many sectors and regions that did not always coordinate and exchange information—  and, in some cases, even competed over budget and tasks.

As of July 1, 2014, the World Bank Group’s new structural organization into 14 global practices, with one Global Practice (GP) dedicated to Governance, aims to solve this  fragmentation by bringing together all  such professionals under one roof. The aim will be to better work together, exchange information faster, build local and global knowledge that is adaptable to our clients’ circumstances, develop integrated and innovative solutions to real problems, timely report on results to our stakeholders and better connect the dots to design realistic— not pareidolia-like— interventions.

The Governance GP consists of more than 800 professionals with a presence in more than 120 countries across the globe. This, we hope, will help unlock our knowledge and expertise to help achieve the World Bank Group’s two ambitious goals: reducing the number of people living on less than $1.25 a day to 3 percent by 2030 and promoting shared prosperity by fostering the income growth of the bottom 40 percent.

A new chapter begins.