Capacity Enhancement

S H A R I N G B E S T P R A C T I C E S A N D
briefs L E S S O N S L E A R N E D

CAPACITY ENHANCEMENT AT THE INSTITUTIONAL LEVEL

Three Case Studies in Telecommunications
Vera Wilhelm, Senior Economist, PRMVP and Susanne D. Mueller, PREM

How can the Bank or other development agencies more effectively support capacity enhancement (CE)
in client countries? Is there a more systematic way to design and track capacity enhancement activities?
Experience in telecom reform in Mali, Mauritania, and Morocco provides insights into the different
opportunities and constraints that different countries face in implementing very similar reforms. It forms
the basis for proposing a three-way framework for analyzing needs and planning capacity enhancement
assistance.

Capacity enhancement has been defined in multiple Figure 1: Ingredients of Capacity Enhancement
ways; its ultimate purpose is to leave behind better
skilled and oriented individuals, more responsive and
Institutional
effective institutions, and a better policy environment Environment
1
for pursuing development goals. For the purposes of • Political Leadership
• Administrative
this brief, capacity enhancement denotes the develop- • Economic
• Social
ment of formal and informal institutions and organi- • Stakeholders
Resources and
zations—that is, changes in the rules of the game and Motivations
Capabilities
and
organizational behavior that lead to improvements in •
•
Human
Technology
Incentives/Pressures
service delivery to the public and in the country’s • Infrastructure Capacity • Financial
• Finance Enhancement • Merit
investment climate. Capacity enhancement at the • Intersection of • Competition
linkages • Reputation
institutional or policy level has three main ingredients • Public voice

(see figure 1):

• The country’s resources and capabilities
• An enabling institutional environment Improved Improved
• Motivations and incentives/pressures that promote Delivery of Service Investment
Climate
to the Public
and help to sustain behavioral change.
To isolate factors that affect success and failure in
ited information available on the country studies,
capacity enhancement, this three-way framework was
however, this note focuses primarily on the elements
used to analyze experience in telecommunications
influencing capacity enhancement at the institutional
reform in three countries—Mali, Mauritania, and
level. Telecoms was chosen as a sector in which
Morocco (see box 1). It is important to note that the
understanding on how to sequence reforms aimed at
framework was designed to capture the three main
deregulation and privatization and how to maximize
levels at which capacity enhancement occurs: individ-
the impact of reforms seems to be well advanced. The
ual, organizational, and institutional. Due to the lim-
following three lessons for capacity building emerged:

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Figure 2: World Bank Role in Capacity support used a participatory process to identify
Enhancement* existing capacity, develop options for filling
gaps, and understand possible implications for
• International best
stakeholders. Bank teams and management need
practice: • Define CE objectives to allow enough flexibility and time for such an
• Telecom • Assess risks and constraints
handbook/toolkit • Map client commitment
assessment.
• OED/OEG sector • Identify key actors and constituencies • Assess client commitment and ownership. The
evaluation • Develop risk mitigation strategy
Adapt global
information needed to make this assessment is
knowledge locally: often hard to acquire, especially when vested
• Quick response • Identify client
briefings Institutional incentive, interests are at work. Even when the client takes
the initiative, actions should be monitored to be
Environment
• Technical assistance supporters and
Resources
• Communities of Motivations opponents
practice
&
Capabilities Capacity
& Incentives/
Pressures • Build trust sure that deeds match words.
• Study tours Enhancement • Broaden reform • Support key actors. Bank teams and management,
• Participatory tools • Use the media
• Web sites • Be prepared to exit based on their country knowledge and sectoral
Improved Delivery of Improved Investment expertise, should encourage clients to innovate
Services to the Public Climate
and take responsibility for their own actions.

*Applied to Telecommunications
3. Use Incentives and Pressures
The assessment of the institutional environment
should provide the basis for developing a strategy to
1. Strengthen Resources and Capabilities build ownership and reduce the risks to successful
The Bank has a menu of resources available to help implementation of reforms. Such a strategy can center
support capacity enhancement in a country (see fig- on support for the key champions of reform—as in
ure 2). A good deal of knowledge on international Morocco and Mauritania—and on the careful use of
best practices is readily obtainable, and knowledge incentives (development assistance, debt relief, and
transfer can greatly impact behavior, but only if it is international reputation) and pressures (suspension
applied to the local institutional environment and of project, loss of heavily indebted poor country
combined with a country-specific strategy for building (HIPC) debt relief, and public opinion) to motivate the
stakeholder commitment and ownership and address- supporters and opponents of reform.
ing risks. A New Approach?
In Mali, Mauritania, and Morocco, making the best
The arrows in figure 2 show the role the Bank plays
use of international knowledge required a process of
and the methods it uses for each of the three areas of
joint and continuous learning, in which the Bank
capacity enhancement. In most of these areas, diag-
played the role of a facilitator making best practices
nostic and process tools have been developed in dif-
available, while the clients adapted these practices for 2
ferent parts of the Bank (see box 2). These tools and
a good fit to local circumstances.
the thinking that has gone into their design could be
2. Understand the Institutional Environment used more deliberately to define CE objectives better,
Before knowledge and best practices can be usefully capture existing capacity and gaps, shape preparation
shared, it is important to: of CE activities, and help mitigate risks. Sector- and
• Gather information to understand the political, task-specific selection, adaptation, and integration of
country, and sector risks that are likely to affect these tools, especially if used jointly with the client,
the outcome of reforms. could help to generate and track information that
• Understand and use incentives and conditionality would make it easier to learn from success and fail-
to influence the behavior of key actors and orga- ures. This learning process could not only shape
nizations. Bank strategy, but also help to broaden client owner-
• Assess risks and define the problem. Understand ship and commitment. In addition, clearer guidelines
the main constraints that affect the implementa- for staff on the preconditions for engagement (i.e.,
tion of a policy and identify the supporters and client readiness for reform) and triggers on which to
opponents of reform and the underlying risks. build an exit strategy could support risk management
• Understand the institutional context. In Mauri- and policy dialogue.
tania and Mali, successful capacity enhancement

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Box 1: Telecom Reforms in the Three Countries
Mauritania
In 1998 Mauritania had only five telephone lines per 1,000
inhabitants—one of the lowest ratios in the world. At first,
the key decisionmakers were loath to liberalize the telecom
sector, because of its potential to threaten the country’s
tightly managed security. But in discussions of Mauritania’s
economic prospects as the basis for a new World Bank coun-
try assistance strategy, they came to see telecom reform as a
magnet for foreign investment and a means for economic
development.
Mauritania had no institutions with experience in liberaliz-
ing, privatizing, or introducing competition in this or other
sectors. Even so, it introduced genuine competition in tele-
coms and established a transparent regulatory framework in
little more than two years—widely regarded as a record. The
investments generated by the new operators amounted to 10
percent of Mauritania’s GDP in the first two years and dou-
bled existing telecom services in the first four months of the
reform program.
The Bank’s main contribution was to codify global knowl-
edge into actionable steps that helped to close institutional
gaps, while building up stakeholders’ commitment and own-
ership and supporting an autonomous process of local learn-
ing. The support of the country’s President and other key
decisionmakers was critical in Mauritania’s highly central-
ized system. Unlike in Mali and Morocco, incentives were
mainly positive, such as the lure of resources from the HIPC
Initiative and prospects for the country to attract foreign
investment and create jobs. Other success factors included
the commitment of key decisionmakers, which kept vested
interests at bay, and the very favorable international context
for telecom reform at the time.
Mali
The Bank went into Mali in 1998 with higher expectations
than it had in Mauritania. Mali—with its more developed
economy, larger market, more participatory political process,
and well-developed media—appeared more attractive to
investors. It had good export revenues from cotton and gold
and enjoyed good relations with the donor community. But
despite the government’s expressions of enthusiasm for tele-
com reform and a good deal of technical work, the words did
not translate into action and the reforms stalled. Two factors
eventually turned things around: the government’s need to
maintain good relations with the donor community, espe-
cially in view of HIPC, and an outcry from civil society and
labor unions. By August 2002 Mali had garnered $44 million
for the license of a second national telecom operator, along-
side the yet-to-be privatized state operator.
Mali’s case illustrates how reforms that have been derailed
can be brought back on track through the use of incentives
and pressures by civil society and donors. It also illustrates the
importance of disseminating information through the media,
team and consensus building through dialogue and cross-
country consultation, and high-level political commitment.
Morocco
Morocco’s telecom liberalization in 1999 brought a huge
expansion in service; more than 90 percent of the population
is now covered by mobile communications services. In
August 1999 a consortium of investors paid $1.1 billion for a
fifteen-year license to provide mobile telephone services
alongside the newly privatized state operating company. This
was one of the highest prices ever paid per inhabitant, in a
region not known for attracting great investor interest. The
mobile market grew from 150,000 to 6,500,000 customers
within a few years. Morocco’s initial success stemmed from
having set up a transparent regulatory framework and bid-
ding process, as well as its willingness to offer a license with
attractive terms. Although the reforms on the mobile market
were highly successful, they resulted in a debacle in the
Internet market, where the incumbent operator grew its
market share to about 70 percent due to unfair competition
practices.
The initial keys to success were a long and sustained set of
continuous actions by King Hassan II and his advisors,
demonstrating clear objectives and commitment to reform;
the Bank’s support in the form of analytical work and knowl-
edge to the champions of reform, using windows of opportu-
nity; and the King’s identification of the vested interests
opposed to reform and the design of a strategy to derail
them.
By mid-2002, however, Morocco’s reforms were backslid-
ing. The two directors of the regulatory agency Agence
Nationale de Réglementation des Télécommunications
(ANRT) previously ranked as the most independent in
Africa, resigned due to excessive government interference.
In the end, ANRT was not able to protect fair competition in
the Internet market. The experience illustrates the fragility
of institutional capacity building and the vulnerability of
new rules of the game when faced with vested political
interests and a weak institutional environment. The Bank’s
strategy of supporting a few key actors and champions of
reform and involving civil society in the process showed lim-
ited results overall. The institutional constraints proved too
strong to allow the independent regulator to consolidate its
role or civil society and consumer groups to exert effective
pressures. The lack of transparent institutions and processes
ultimately jeopardized the broader success of Bank-sup-
ported reforms.
Common Lessons
The overall experience in the three countries highlights the
importance of the following:
• Clear objectives, in particular those relating to capacity
enhancement, which are often embedded in broader
goals
• Good understanding of the institutional environment and
realistic assessment of the implicit risks related to
implementation
• Increasing leverage by engaging civil society and the donor
community
• Role of successful communication and knowledge sharing
to engage and empower the client.
 Box 2: Capacity Enhancement Tools and Handbooks

Bank documents: ———. A User’s Guide to Poverty and Social Assessment

Krueger, Richard A., Mary Anne Casey, Jonathan Donner,
Stuart Kirsch, and Jonathan N. Maack. 2001. “Social
Analysis: Selected Tools and Techniques.” Social
Development Papers. No. 36. http://lnweb18.worldbank.org/
ESSD/essdext.nsf/61DocByUnid/228B6562B7E162BC85256
C0D005A312C/$FILE/SDP-36.pdf. Washington, D.C.: World
Bank.
Public Expenditure and Financial Accountability (PEFA)
Secretariat. 2003. Assessing Public Expenditure,
Procurement, and Financial Accountability: A Review of
Diagnostic Instruments (PEFA). http://www.pefa.org/
mappingpaper.pdf. Washington, D.C.
World Bank. 1996. The World Bank Participation
Sourcebook. Environmentally Sustainable Development.
http://www.worldbank.org/wbi/sourcebook/sbpdf.htm.
Washington, D.C.
———. 2002. Monitoring & Evaluation: Some Tools,
Methods, and Approaches. Operations Evaluation
Department. http://lnweb18.worldbank.org/oed/
oeddoclib.nsf/24cc3bb1f94ae11c85256808006a0046/
a5efbb5d776b67d285256b1e0079c9a3/$FILE/MandE_tools_
methods_approaches.pdf. Washington, D.C.
Analysis. Poverty Reduction Group and Social Development
Department. http://poverty.worldbank.org/files/12685_psia_
users_guide.pdf. Washington, D.C.
External Handbooks:
Department for International Development. 2002. Tools for
Development: Handbook for Those Engaged in Development
Activity. Performance and Effectiveness Department.
http://www.dfid.gov.uk/foi/tools/tools_pdf/DFID_
ToolsforDevelopment.pdf. London, U.K.
Hopkins, Dr. Thomas J. 1994. Handbook on Capacity
Assessment Methodologies: An Analytical Review. United
Nations Development Programme. http://magnet.undp.org/
cdrb/CAPMET%7E1.htm. New York, NY.
Inter-American Development Bank. Resource Book on
Participation. http://www.iadb.org/exr/english/policies/
participate/. Washington, D.C.
United Nations Development Programme, 2003. Capacity
Development Resource Book. http://magnet.undp.org/cdrb/
Default.htm. New York, NY.

Peer reviewers: Carlo Maria Rossotto, Regulatory
Economist, Global Information & Communications
Technologies, and Poul Engberg-Pederson, Senior
Public Sector Specialist, PRMPS
1. This CE Brief summarizes the 2003 publication, The
Ingredients of Capacity Enhancement: Three Case Studies in
Telecommunications, World Bank Institute, Washington, D.C.
2. WBI is creating an inventory of tools for task managers,
classified by purpose. See <http://www-wbweb.worldbank.org/
prem/pas/test/capacity/toolsoverview.htm>.

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