Democracy and Governance Sector Guide

These partnerships focus on root causes, not symptoms, and seek to improve fundamental conditions that underlie all aspects of development. A successful Democracy and Governance alliance can help to transform the environment for all stakeholders. The private sector can be a compelling voice in reform efforts, encouraging public sector reform when it makes the case for change. Multi-stakeholder partnerships are common, increasing an alliance's impact with combined resources and talent. Joint efforts reduce the risk to any single actor and can have widespread impact on an industry sector or a country's entire business environment. Philanthropic organizations can also be important partners, having taken the lead on governance issues in ways that are a natural follow-on to their core programs. One model for Democracy and Governance alliances is supporting good governance. Effective governments deliver a wide range of critical services for citizens, including providing security, setting and enforcing rules and regulations, and furnishing public goods. The private sector's ability to flourish also depends on these governance issues. An alliance that supports good governance can put partner resources to use where governance is weak, and can reinforce local reform efforts. In turn, the private sector benefits from a more transparent and supportive business environment. The ChileCompra – Microsoft partnership is an example of an alliance that supports good governance. In 1999, Chile launched ChileCompra, an electronic procurement portal, to consolidate government contracting into a single, online site that would both increase procurement transparency and reduce government costs. However, small businesses that did not have computer access were being left out. Microsoft's Partnership for Technology Access, Chile's Ministry of Finance, and others developed a low-cost package for small businesses that included software, computers, internet access, and training. The Ministry provided competitive 36-month financing, and Microsoft contributed software and training. One year after the partnership was launched in 2006, more than 20,000 micro-, small, and medium-sized Chilean companies had purchased the package and were registering on the procurement portal. Another model for Democracy and Governance alliances is strengthening municipal governments. Municipal governments often control key resources in locations where the private sector has strong interests, yet in many countries, local-level government institutions lack the funding, resources, and expertise necessary for robust public service. Alliances that collaborate with municipal governments have shown good potential to improve conditions at the local level, building institutional capacity and supporting policies that meet the needs of all citizens as well as business. Private sector actors that are inflexible in terms of location may be motivated to participate in such alliances. The Municipal Development Alliance in Angola addresses both capacity-building and citizen participation at the municipal level. The partnership's unique Integrated Development Plans include the participation of ordinary citizens to help direct the distribution of resources to meet community needs, and to be involved in the design of policies that foster local sustainable development. Micro-projects build skills in entrepreneurs, while capacity-building for municipal administration staff includes participatory planning, computer skills, decentralization, and leadership. Alliance partner Lazare Kaplan, a diamond distributor, had mining operations in the area and joined the alliance to contribute funding and training. USAID provided technical assistance in designing the Integrated Development Plans and advised on their implementation. In Mexico, Evensen Dodge has joined USAID to help regional governments tap capital markets to finance local infrastructure. When decentralization measures push financing responsibility out to municipal or regional governments, capacity for raising capital is not always immediately in place. Evensen's technical assistance helped local governments in two Mexican states borrow $300 million from domestic capital markets for infrastructure improvements. State credit ratings were improved, resulting in lower transaction costs and interest rates, saving the states an estimated $4-6 million and positioning them to be more attractive to national and international investors. USAID provided legitimacy and oversight to the process, and Evensen provided technical work at a 50% discount. The International Budget Partnership, an NGO that partners with civil society organizations, focuses on budget transparency issues in over 40 countries around the world. The aim of the Partnership is to make budget systems more responsive to the needs of poor and low-income people.