Transparency to the People USING STAKEHOLDER PARTICIPATION to SUPPORT PUBLIC SECTOR REFORM in NAURU and the REPUBLIC of the MARSHALL ISLANDS Pacifi C Studies Series

Pacifi c Studies Series

Transparency to the People USING STAKEHOLDER PARTICIPATION TO SUPPORT PUBLIC SECTOR REFORM IN NAURU AND THE REPUBLIC OF THE MARSHALL ISLANDS Pacifi c Studies Series

Transparency to the People USING STAKEHOLDER PARTICIPATION TO SUPPORT PUBLIC SECTOR REFORM IN NAURU AND THE REPUBLIC OF THE MARSHALL ISLANDS

ISBN 978-92-9092-094-6 Publication Stock No. RPT102238

Cataloging-In-Publication Data.

Asian Development Bank. Transparency to the people: using stakeholder participation to support public sector reform in Nauru and the Republic of the Marshall Islands. Mandaluyong City, Philippines: Asian Development Bank, 2010.

1. Governance. 2. Public sector reform. 3. Participation. 4. Nauru. 5. Republic of the Marshall Islands. I. Asian Development Bank.

Th e views expressed in this document are those of the author and do not necessarily reﬂ ect the views and policies of the Asian Development Bank (ADB), its Board of Governors, or the governments they represent.

By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

ADB encourages printing or copying information exclusively for personal and noncom- mercial use with proper acknowledgment of ADB. Users are restricted from reselling, redis- tributing, or creating derivative works for commercial purposes without the express, written consent of ADB.

All photos, with the exception of the lower left photo on page 26 taken by Dirk Spennemann, have been provided by Dr. Tim O’Meara.

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For orders, contact Department of External Relations Fax +63 2 636 2648 [email protected] ii Contents

Foreword iv Abbreviations v

THE QUESTION OF GOVERNANCE 1 Encouraging Reform of Governance 1 Th e Challenge of Good Governance in the Paciﬁ c 2 Th e Lever of Transparency and the Fulcrum of Personal Interest 3 Transparency as a ”Process Conditionality” 4

NAURU: PILOT PROJECT FOR THE NATIONAL ECONOMIC FORUM CONSULTATION PROGRAM 5 Conditions on Nauru at the Time of the Project 5 Evolution of the Pilot Project 7 Implementation of the Pilot Project 9 Public Awareness and Consultation Meetings 9 Straw Polls and Household Opinion Survey 12 Th e National Economic Forum 12 Post-Project Developments 14

MARSHALL ISLANDS: PILOT PROJECTS FOR IMPROVED EDUCATION AND SOLID WASTE MANAGEMENT 15 Pilot Project for Increasing Ownership of and Eﬀ ective Demand for Improved Education 15 Th e State of Education in 2005 15 Th e Pilot Project in Education 19 Project Outcome and Subsequent Developments 24 Pilot Project for Increasing Ownership of and Eﬀ ective Demand for Improved Solid Waste Management 25 Solid Waste Management on Majuro in 2006 25 Th e Pilot Project in Solid Waste Management 29 Post-Project Developments and Assessment 36

THE TRANSPARENCY APPROACH ASSESSED 38

References 39

iii Foreword

Th e societies of the Republic of the Marshall Islands (RMI) and Nauru have long struggled to accelerate the slow pace of their economic and social development. Making wise development decisions is not easy in countries characterized by a scarcity of resources, isolation, and other geographic constraints, and the resulting dearth of development opportunities. Th e slow pace of creating eff ective, modern systems of government in these countries has also made decision making more diffi cult. Modern systems of public sector management that engage citizens and respond to their needs are not yet well established, allowing traditional systems of government to endure and opening the door to the pursuit of private, vested interests at public expense. Despite comparatively large amounts of development assistance in the RMI and, in the case of Nauru, income from phosphate mining, the economies and societies of these countries have tended to drift—if not decline—without reform and appropriate, supportive development decisions. Markets have not developed, jobs have not been created, and standards of education, health, and other welfare have fallen. Crime has risen and inequality has emerged. Th e challenge is to overcome deeper constraints on governance, market creation, and service delivery. In many instances, assistance to the governments of the RMI and Nauru has reiterated advice already provided, or supported refi nancing and rebuilding. Aware of these disappointing outcomes, the Asian Development Bank (ADB) is determined to provide assistance to these countries that is more participatory and transparent, to achieve lasting solutions. Recent ADB assistance to the RMI and Nauru is described in this report. Th e report aims to foster appreciation and understanding of the diffi culties facing agencies such as ADB as they try to help Pacifi c island countries develop. Th e consultative and participatory approach described here appears to have benefi ted these small, close-knit, traditional societies. Th is experience may provide guidance to development eff orts not only in the RMI and Nauru, but in other Pacifi c island countries. Th e work described here was managed by Steve Pollard, principal economist of ADB’s Pacifi c Department, assisted by Dr. Tim O’Meara acting as consultant to ADB and the Australian Agency for International Development.

Robert Wihtol Director General Paciﬁ c Department

iv Abbreviations

ADB – Asian Development Bank AusAID – Australian Agency for International Development CMI – College of the Marshall Islands EIA – environmental impact assessment EPPSO – Economic Policy, Planning, and Statistics Oﬃ ce (Republic of the Marshall Islands) GDP – gross domestic product MALGov – Majuro Atoll local government MAWC – Majuro Atoll Waste Corporation MOE – Ministry of Education (Republic of the Marshall Islands) MOH – Ministry of Health (Republic of the Marshall Islands) MPW – Ministry of Public Works (Republic of the Marshall Islands) NEFCP – National Economic Forum Consultation Program NGO – nongovernment organization NPC – Nauru Phosphate Corporation PSC – Public Service Commission (Republic of the Marshall Islands) RMI – Republic of the Marshall Islands TA – technical assistance US – United States

v o 0 o o 20 00'S 20 00'N Marquesas Islands

uamotu Archipelago T FRENCH POLYNESIA Rapa N Kilometers Islands Society Flint Tahiti 0 500 1000 Millenium Malden Vostok Tubual Islands Tubual Kiritimati National Capital Reef/Atoll International Boundary Mitiaro Mauke Starbuck Tabuaeran Manuae Atiu Teraina Manihiki Mangaia Takutea Penhryn Aitutaki Suwarrow Avarua Boundaries are not necessarily authoritative. Rarotonga Nassau HAWAII, USA HAWAII, COOK ISLANDS Rakahanga Pukapuka Rawaki K I R I B A T I A K I R B Palmerston Rose Manua NIUE Fakaofo SAMOA Ederbury o o Tutuila Manra Swains AMERICAN Nukunono Kanton 170 00'W 170 00'W TOKELAU Orona Tafahi Birnie Upolu Savai'i Apia Atafu Winslow 'Eua Lifuka Niuatoputapu TONGA SAMOA Vava'u Mckean Niuafo'ou Tongatapu Carondelet Nikumaroro Wallis 'Ata Uvea Lau Nuku'alofa Alofi Fogafale Niulakita Funafuti Taveuni International Dateline Vaitupu FUTUNA Niutao Suva Futuna WALLIS AND Arorae Nui Nukulaelae Vanua Levu Vanua Nukufetau Nikunau Wellington TUVALU OF THE Beru Kadavu REPUBLIC Nanumea Rotuma Nanumaga Yasawa FIJI ISLANDS Viti Levu Viti Abemama Tamana

International Dateline Marakei Onotoa Butaritari South Tarawa Knox Ceva-i-Ra Arno Mili Tabiteuea Nonouti Kuria Maloelap Tarawa Fataka Wotje Abaiang Ailuk Utirik Aneytioum Jaluit Futuna Taongi Kili Majuro Aniwa Ebon Port Vila Maewo Erikol Pentecost Vetaounde Ambryn Anuta Vandua Lava Vandua NEW ZEALAND Likiep Norfolk Island Tikopia Rongerik Rongelap Efate Santa Cruz Islands Namu Ailinglaplap Malekoula Kwajalein NAURU Makwa Wotho Torres Bikini Ujae Kosrae MARSHALL ISLANDS MARSHALL Ailinginae Espiritu Santo SOLOMON ISLANDS NEW San Cristobal Pingelap VANUATU Malaita Ujelang CALEDONIA Rennell Mokil Enewetak Santa Isabel Nukumanu Ontong Java S O U T H PS O U T N A C I F O E A Senyavin Guadalcanal Honiara Choiseul Pohnpei Palikir Ngatik New Georgia Kapingamarangi Buka Minto Reef Oruluk Nukuoro Losap N O R T H PN O R T N A C I F O E A Woodlark New Ireland Hall Bougainville Mortlock Fayu o o Chuuk Trobiand New Hanover Pulap 150 00'E 150 00'E C o r a l S e New Britain Canberra Satawal Namonuito Elato Pikelot FEDERATED STATES OF MICRONESIA STATES FEDERATED Lamotrek Manus Ifalik Gaferut Port Moresby PAPUA Faraulep Woleai NEW GUINEA Fais Sorol Eauripik Ngulu Ulithi Yap PALAU REPUBLIC OF Melekeok Merir Sonsoral Islands Helen Reef Ngemelis A U S T R A L I A I L A U S T R A Pulo Anna Tobi Sea Philippine THE PACIFIC ISLANDS THE PACIFIC Dili TIMOR-LESTE I N D O E S A

vi o o o 20 00'S 20 00'N 0 Map Showing Pacific Island Countries Th e Question of Governance

Encouraging Reform of Governance Th e Asian Development Bank (ADB) and most other aid agencies hold that good governance is one of the pillars of development, a primary mechanism of social development and pro- poor, sustainable economic growth. Th ese agencies cannot, of course, act directly in the political arena in recipient countries to improve governance. Th ey can provide only assistance that host governments request and approve. Change and reform of governance is diffi cult for any country, encountering legitimate opposition as well as unscrupulous government offi cials who have stronger personal and political interest in maintaining rather than reforming governance practices. To encourage host governments to adopt policy and institutional reforms aimed at improving governance, aid agencies often provide technical assistance (TA) and loan projects with host-country receipt of some project benefi ts conditional upon adoption of specifi c policy and institutional reforms—so-called “conditionalities.” Although policy and institutional conditionalities have been a common feature of aid programs for some time, they are not always eff ective. Policy and institutional conditionalities aimed at reform of governance may be ineff ective for a number of reasons. Within funding agencies, political, institutional, and career incentives often engender more enthusiasm for incentives and rewards than for penalties for not fulfi lling project conditionalities. Instead of fostering reform, aid incentives may ease domestic pressure for reform by shoring up failing public services, making development of local capacity less necessary, or by providing discretionary goods and services that can be dispensed by unscrupulous politicians as patronage. Because project conditionalities are external to the social and political processes of the host country, local opponents can generate resistance or even backlash by labeling reforms as “foreign” and imposed from outside. Reforms associated with conditionalities may be approved and passed into law by host governments, but the laws may not be enforced and the reforms reversed once aid incentives run out. Governments may eventually opt out of a reform program after implementing it for a time simply because conditionalities applied from the outside led to its approval and implementation. Incentives within aid agencies and host governments alike lead to reiteration of critical reform recommendations in project reports if they are not fully implemented or are approved then revoked. An analysis by the Economic Policy, Planning, and Statistics Offi ce (EPPSO) of the Republic of the Marshall Islands’ (RMI) 113 ADB TA project reports prepared for the RMI between 1993 and 2005 (“the 12-year period”) found this to be true for a large number of recommended policy and institutional reforms. Nineteen core recommendations concern- ing fi scal responsibility and public service reform appeared in more than 10 project reports, each without signifi cant or lasting uptake. A core recommendation to enforce critical Public Service Commission (PSC) laws and regulations appeared in 17 project reports over more than a decade but was not implemented (EPPSO 2006).

1 A recent ADB assessment concluded that ADB loan projects that employ policy and institutional conditionalities generally succeed “in countries with policy and institutional environments that are amenable to reform.” In countries with policy and institutional environments not amenable to reform, however, the host governments’ commitment to reform was “outside ADB’s in- ﬂ uence” (ADB 2007, iii). But is the commitment of local citizens’ to reform also outside ADB’s inﬂ uence? Citizens of a country can initiate reform in at least two ways: they can motivate their leaders to make desired changes, or they can change their leaders. Citizens themselves must press for reforms. What ADB and other funding agencies can do is make it easier for them to do so.

Th e Challenge of Good Governance in the Pacifi c We know that Pacifi c islanders want aid and other public resources to be used for public benefi t rather than for private patronage. People say so when asked. Usually hidden from public view, patronage is socially ineffi cient and diverts resources away from large public benefi ts toward smaller private benefi ts. Th e checks and balances, and transparency and accountability associated with good governance diminish patronage and boost public benefi ts. People always prefer more benefi ts overall to less, and Pacifi c island voters can change their representatives and their governments if they want. So why does patronage and weak governance remain a common problem in the Pacifi c? While levels of education and literacy have risen steadily in Pacifi c countries, additional improvement is needed and will have broad benefi ts. A crucial benefi t will be increasing the often inadequate understanding at present of national laws, political processes, and the rights and responsibilities of citizens. Such increased understanding can be expected to contribute to more cooperation among citizens for the greater good and for national interests, which are at present commonly outweighed by family and other local interests. Greater understanding in this regard also can be expected to bolster democratic values at the expense of authoritarian values and traditions derived from custom and from colonialism, which remain entrenched in some countries. Authoritarian values and traditions sometimes reinforce hierarchical social systems where citizens avoid openly questioning their leaders, and political expectations that view elected politicians as victors with a right to power and the spoils of victory. Th ese unfortu- nate values and views are underpinned in some countries by political systems that provide little separation of legislative and executive powers, few checks and balances on executive authority, and a feeble voice for grassroots and national interests. Th e large amount of foreign aid and resource rents in some Pacifi c countries can undermine governance when unscrupulous politicians use it to build client networks and otherwise provide patronage to sway voters. Th ese conditions weaken to varying degrees internal incentives in many Pacifi c island governments to carry out reforms that would benefi t the public good. Th e clearest example in the Pacifi c of the eff ect of these conditions is Nauru, which continued to hold free and fair elections as successive governments ran the country into bankruptcy, taking Nauru in the space of 20 years from being one of the richest countries in the world to one of the poorest. Th ough nowhere so striking as in Nauru, a number of governments across the Pacifi c control distribution of windfall revenue in foreign aid and other economic rents that can be used by the unscrupulous for personal gain and to muster political support, co-opt potential opponents, and silence calls for reform. Aid received by Pacifi c island countries averages 12% of gross national income, compared with 1.1% for all developing countries (Sampson 2005, 7). Most Pacifi c countries also have substantial resource rents in the form of royalties and license fees from fi shing, logging, mining, off shore banking, passport sales, fl ag registries of ships, internet domains, telecommunication spectrums, and satellite space. Perversely, the problem of misuse of windfall revenues tends to be worse in countries that have competitive elections, where it can weaken governance and ultimately reduce the public benefi ts from government. 2 Fortunately, these problems can be overcome. If governance improves, so will use of aid and other forms of economic rent, social and economic conditions, and the capacity to achieve and sustain social and economic growth. But how might ADB and other funding agencies help improve governance in countries with policy and institutional environments not amenable to reform and a public little inclined to press for reform? Th ree recent ADB pilot projects off er an encouraging answer.

Th e Lever of Transparency and the Fulcrum of Personal Interest When poor governance is the expected and tolerated norm, funding agencies might seem to have neither a lever nor a fulcrum on which to apply one. Information is a powerful lever, however, and the strongest fulcrum of all may be the same one that causes corruption—personal interest. People are not likely to expose or criticize their own corrupt practices or those of their relatives or patrons. But when given information and the opportunity to use it, they are likely to criticize or expose others whose actions or inactions hurt them. Funding agencies are well placed to provide people with the information and the opportunity. In the three pilot projects described in this report, transparency was taken directly and publicly to those who were most likely to benefi t from better governance. For public services as fundamental as tax collection, education, or waste management, potential benefi ciaries included most of the general public. Surprisingly to some observers, most government employees charged with delivering the services were also included. Like most other people, they would rather do a good job and keep their self-respect and earn the respect of their neighbors and fellow citizens—if only other public servants could be counted on to do the same. Th e basic strategy for the three pilot projects was to give people detailed information about the operations of a particular public service together with the opportunity and visibility an ADB project aff ords to air issues of governance in a public or semipublic arena. Th e fi rst step was to collect and publicly present information that showed people how and at what cost a particular level of service is provided by government and how their own lives were being aff ected by poor service. Th en people were supplied with a public venue and a constructive mechanism for discussing the issues raised. Th e interests, concerns, ideas, and priorities that people expressed as they helped identify and develop options, and then chose which options they preferred, were documented. Finally, the projects helped arrange for people to present their reform priorities to their government directly or indirectly in a public setting. Virtually all Pacifi c governments now publicly support transparency and accountability. Once specifi c reforms are publicly endorsed by a majority of voters, it becomes diffi cult for governments to not embrace them. At the same time, by endorsing reform, the public supports and encourages reform-minded politicians or would-be politicians in their midst. When the RMI’s EPPSO proposed in 2007 to ask people in a household survey if they favored constitutional change for direct election of the president, some politicians wanted the question removed or the survey stopped. Th e survey went ahead, however, and when the published results showed 82% supported such constitutional change, most politicians quickly came out publicly in support of the measure. Part of the transparency approach in the three pilot projects was thus to document government endorsements of transparency and accountability, and even facilitate more such public endorsements by government and expressions of support for reform by the public. A government must make public assurances to its citizens, and citizens often convey publicly their priorities to their government. Private or little publicized assurances, endorsements, and conditionalities between host governments and overseas funding agencies may carry limited weight. Local citizens are in a much better position than funding agencies to hold governments accountable. 3 Transparency as a “Process Conditionality” Funding agencies can publicly tie their aid to a “process conditionality”—in this case, the process of transparency. A transparency conditionality diff ers in one critical way from the policy and institutional reform conditionalities that are now the stock in trade of the aid industry. A transparency conditionality only requires recipient governments to meet their commitments and obey their own transparency laws; it does not require them to implement new reforms recommended by an aid agency. Aid agencies help provide citizens information and opportunities mandated by their country’s transparency laws that they can use to put pressure on their government if they desire. In the three pilot projects described below, the transparency process took the form of broad stakeholder awareness, consultation, and participation programs designed to develop and assess local commitment to reform before any sectors were assisted directly. Th is transparency process was a precondition of future aid to the sectors. No specifi c reforms were required. Th e intent was merely to help build and mobilize reform incentives internal to the social and political systems in the host countries. Local stakeholders were assisted in identifying key issues, and then in developing options for dealing with those issues and choosing the best options. All of this was done in the public arena. Local stakeholders themselves proposed and chose the reforms they wanted their government to implement, as well as the means to ensure government accountability. Th e three ADB pilot projects described below were designed to apply the lever of transparency to the fulcrum of personal interest, which, together with the natural goodness and altruism of so many Pacifi c islanders, can help move more people to hold their governments accountable and induce more governments to more often serve the greater good. Th e project fi rst discussed was in Nauru, where formerly vast resource rents from phosphate mining ac- counted for virtually all government revenue and nearly all of gross domestic product (GDP). Th e remaining two projects took place in the RMI, where aid and other resource rents ac- counted for some 74% of public spending and 84% of GDP in 2003. Clearly, development in these countries was not a problem of too little money—at least not until the recent, total collapse of the Nauru economy. Instead, both countries were suff ering from poor governance, which itself resulted partly from an abundance of windfall resources.

4 Nauru: Pilot Project for the National Economic Forum Consultation Program

Conditions on Nauru at the Time of the Project Phosphate mining on Nauru began in 1906. By the early 1980s, it had made the country one of the wealthiest in the world in terms of per capita GDP. Th is wealth funded a welfare state devoid of taxes with high private consumption and large government ventures, as well as ex- tensive real estate investments held by fi ve public trust funds. Government expenditure often bore no relationship to the budget and surpassed revenue by a wide margin. To fund the defi cits, the government took out unsecured loans from the Bank of Nauru and other government-owned corporations, sold yen-denominated bonds overseas, and borrowed heavily against the real estate assets held by the fi ve public trust funds—a move repeatedly approved by Parliament although prohibited by the Constitution. Th e government as well as most government corporations and instrumentalities seldom prepared fi nancial statements or reported to Parliament as required by law. Th e few reports that had been presented to the Public Accounts Committee of Parliament were not up to accepted accounting standards.

The island of Nauru, showing the mined-out interior and phosphate loading docks

Phosphate mining at Topside on Nauru 5 As the phosphate deposits played out, the Nauru Phosphate Corporation (NPC) began suff ering operating losses and built up large debts. In 1996, Parliament invoked Article 62 of the Constitution, which states that “recovery of the phosphate deposits in Nauru has…ceased to provide adequately for the economic needs of the citizens of Nauru” (Government of Nauru 1968). Austerity measures should have followed but did not. As phosphate shipments dwin- dled, advance sales at steep discounts were arranged to generate immediate cash. Passports were sold abroad—both offi cially and unoffi cially—and off shore banking mechanisms were set up by the government that were inadequately regulated and unsuccessful in halting signifi - cant money laundering. By 2003, the government was bankrupt and the net value of the public trust funds had been reduced from 1,240 million Australian dollars (A$) to A$135 million, far less than the government’s unsettled debts and debt guarantees. Government had exhausted its ability to borrow and its assets were inadequate to balance existing debts. Government expenditure had crashed from over A$90 million per year to just a few million dollars per year. Revenues were not enough to fund public services, government payrolls, and other expenses. Basic power, water, fuel, education, health, and some administrative services were being supported fi nancially or provided directly by Australia and (to a much lesser extent) the People’s Republic of China. Rolling power outages were occurring daily, when electric pumps needed to lift water from ground-level rainwater catchments into distribution systems on the island shut down. Th e desalination plant had long since ceased operation. Th e island was often without petrol for weeks at a time. At the time the pilot project started, the government payroll for its 1,300 employees, the NPC payroll for its 1,600 employees, and the payrolls for the 350 local employees of the 14 other government corporations and instrumentalities were signifi cantly in arrears. Government land leases, phosphate royalties, and other contractual and statutory obligations to the public had not been paid for 1 to 4 years. Hun- dreds of NPC expatriate workers, mostly from Kiribati and Tuvalu, were stranded on Nauru awaiting back pay, pension payouts, and repatriation allowances so they could return home. Kiribati and Tuvalu had already repatriated hundreds, who left without receiving money owed them.

The Nauru Phosphate Corporation plant 6 Th e Bank of Nauru had been insolvent for some years, but remained open in a monopoly position on the island, still accepting public deposits. Savings, however, could not be retrieved because the bank had only a small amount of cash on hand, completely inadequate to cover hundreds of millions of dollars of deposits and other obligations. Th e windfall revenue from phosphate mining had been so enormous that some of it could be shared with most of the 10,000 or so Nauruans, discouraging scrutiny of those with access to the revenue. Even in late 2003, when Nauru was long since bankrupt, over 3,250 of its residents were employed by the government or one of its corporations or instrumentalities. Th e government thus still provided the take-home pay of nearly every adult on the island. Th e government also controlled access to overseas scholarships and training, conferences and the attendant travel per diems, free fl ights on Air Nauru, free lodging at Nauru’s overseas hotels, unsecured loans, overseas medical and other referrals for patients and their families, offi cial and unoffi cial travel with fi ve-star hotel stays in exotic destinations, free housing, family allowances, pensions, land lease payments, phosphate royalties, seats on some two dozen boards, and special investment and business prospects. Despite the extended and deepening crisis, attempts to introduce budgetary and related policy reforms had repeatedly failed and had been politically costly to the politicians and governments who backed the reforms. In this diffi cult environment, a new reform-minded government sought assistance from ADB in mid-2003 to help develop a strategy for dealing with the country’s economic and fi nancial diffi culties. ADB agreed to provide funds from a previously approved TA project for Nauru1 in partnership with the Australian Agency for International Development (AusAID) to implement the pilot project described here, which came to be called the National Economic Forum Consultation Program (NEFCP).

Evolution of the Pilot Project After a short settling-in period, the new government was ready to implement its reform agenda, which included introduction of an austerity budget. As originally planned, the project was to assist the government with preparation of the draft budget. It was also to support a household opinion survey and a broad public consultation program, and a National Economic Forum hosted by the government, at which the draft budget would be presented for public discussion. Th e draft budget would then be revised to reﬂ ect comments and advice received at the forum.

Ship loading phosphate

1 ADB. 1999. Social Awareness and Transitional Requirements for the Reform Program. Manila. Approved 1 February 1999. 7 A primary objective of these activities was to increase public understanding of the economic crisis, and thereby gain support for the new government’s reform agenda. Previous attempts to hold public consultations on reform issues had been scrapped when angry behavior erupted. Conditions were tense on Nauru when the project team began assembling in August 2003. Th e government had already changed hands three times since the start of the year, and the new reform-minded government held power by only a slim margin. Th e collapse of the previous government had set off a spate of vandalism and arson that destroyed the president’s mansion and equipment at the Nauru Phosphate Corporation (NPC). Th e president’s offi ce in the Government Building had been set afi re, and other government buildings and vehicles had been burned or destroyed. Upon arrival in Nauru, the fi rst project consultant met the minister of fi nance, who of- fered the government’s full support for the project. But at the fi rst sitting of Parliament the next morning, the reform government was toppled by a vote of no confi dence engineered by a coalition of the old guard. Th e president who had been deposed twice already that year was back in power. Th e new government offi cially put the project and all other ADB TA on hold until it had time to consider matters fully. ADB deferred other planned TA to Nauru and called for successful implementation of the NEFCP as a condition for further ADB assistance to Nauru. As a partner in the project, Australia also made further AusAID assistance to Nauru contingent on the NEFCP, although ongoing AusAID assistance was not deferred pending implementation of the NEFCP. Rather than defer ADB and AusAID fi nancial support, the work of the project consultants was not halted. During a subsequent district consultation meeting, a project consultant read aloud from the only recent annual report of a government corporation, noting A$250,000 in travel allowances paid out during the year by a small, government-owned insurance company. Such transparency was not universally appreciated, prompting a complaint to the president. Th is minor episode highlighted the lack of transparency about government operations which, coupled with a robust mill of rumor and misinformation, had left people ill informed about the nature, extent, and causes of present conditions. Consequently, the project’s consultation program took on a public awareness component as well as data collection to support it. Ad- ditionally, consultations were broadened to include offi cers and staff of government departments, corporations, and instrumentalities, in addition to the general public. Original project plans for the timing and the way stakeholders would work together to prepare a new “reform budget” were also adjusted. Th ese changes were necessitated by the real- ity that the new government was unlikely to prepare a reform budget. Also, people might not respond constructively to an abrupt presentation of a major austerity package because most did not yet understand or accept the fi nancial condition of the country. Neither did most know about or understand the options that might be considered for a realistic budget. Under such conditions, a single consultation with the public at the National Economic Forum, as originally planned, asking people to express their needs and priorities, might only raise expectations at a time when expectations needed lowering. Such an approach might not be very enlightening either, as private discussions had already indicated that the public mind was focused squarely on a single issue: getting the money the government owed them, that is, their back pay, phosphate royalties, trust fund income, savings deposited in the Bank of Nauru, family allowances, pensions, and land lease payments. Th e best way to keep expectations in check and foster constructive debate was to combine the consultation meetings with a public awareness program to explain current fi nancial conditions. Once people understood the current situation and how it came to be, they would be in a better position to furnish constructive advice. Although such transparency did not meet with 8 favor from the present government and its supporters, the president approved the amended activities of the project.

Implementation of the Pilot Project

Public Awareness and Consultation Meetings With the addition of two capable national consultants to work with the international consultants (two of whom worked on Nauru for 3 months, and two others for 3 weeks), the team began conducting public awareness and consultation meetings. One of the international consultants, who was a Nauruan national and spoke Nauruan, helped conduct many of the public meetings. Th e government provided no counterparts. Th e president, however, did provide a representative to attend every meeting and take notes on the proceedings. In a sign of what was to follow, however, the president’s representative quickly became a supporter of the consultation program, introducing the project at the start of meetings and often reminding the consultants about important points to be discussed. Th e project team held 38 formal group meetings (including 21 district meetings) in addition to many private meetings and informal discussions. While awaiting authorization to conduct the district meetings, which had the highest political proﬁ le, the team held smaller, less formal meetings with women’s groups, youth groups, sports groups, and nongovernment organizations (NGOs). About 550 people attended the group meetings, and two or more district meetings took place in every electoral district except the president’s district, where he would not authorize a meeting. For the district meetings, members of Parliament (MPs) were invited to arrange a meeting in their district with a cross section of 10–15 respected leaders. MPs were invited to attend, but those who did rarely spoke, and none used a meeting as a political platform. Care was taken that no single political faction dominated attendance or meeting discussions. Meetings were held at politically neutral sites—almost always a local school or church building. As concerns about the security of meetings diminished, meetings were held in open courtyards or in open rooms or buildings, where interested neighbors or passersby could listen in or join the meeting. Interest became especially keen just before the National Economic Forum, when the project became the subject of a televised debate in Parliament. Some later meetings were attended by 25–30 people.

Yaren district consultation meeting held in a Parliament building conference room 9 One of the district consultation meetings held in Anabar and Anabare

A consultation meeting at the Buada Community Center

Almost all district meetings were held after work, starting about 6:00 p.m. and lasting 4 to 5 hours. When the power went off , meetings continued using lantern light. A small white- board was the only presentation medium available until release of the consultation fl yer was authorized just days before the National Economic Forum. In addition to meeting with the public, the team met with members of some government departments. Private, informal meetings were also held with present and former staff of some of the smaller government corporations, but not with any staff of the major government corporations or instrumentalities. To keep the meetings constructive and free of political bias, ground rules were established disallowing discussion of the particulars of any specifi c government, cabinet, parliament, MP, 10 or government offi cial past or present. Instead, common practices of the governments and people of Nauru since independence were discussed. Meetings usually opened with a short statement in Nauruan by the representative of the president. Th e representative or one of the Nauruan-speaking consultants then presented in Nauruan a summary of the origin, purpose, and structure of the public awareness and consultation program, and previewed the upcoming National Economic Forum. Th e international consultant conducted the public awareness presentation and facilitated discussion of issues and options. Th e national consultants were not allowed by the government to make substan- tive presentations at the meetings. Th e public awareness presentation began with an explanation of why foreigners had been invited to help clarify current conditions in Nauru and facilitate discussions in an attempt to insure that the public awareness and consultation program leading up to the Forum and the Forum itself were unbiased as possible. All sides realized that the issues were sensitive and politically charged, often muddled by inaccurate and irresponsible rumors and deliberate misinformation. After introductory remarks, meeting discussions were divided into four parts. Review of the fi nancial condition of government. Th e fi nancial condition of the government, its instrumentalities and corporations, and the public trust funds was summarized, and how that condition had come about was explained. By the time the questions and comments on the fi nancial situation ended, the meeting had usually run an hour or more and the mood had turned from serious to somber. Participants were no longer concerned only about getting their money from the government, they were ready to talk about solutions. Government transparency and accountability. Th e central issue that emerged during discussion of fi nancial conditions was always the issue of governance. Participants would not move on to discussion of issues and options for budgetary reform until the underlying issue of governance had been thoroughly addressed. Participants were commonly unwilling to endorse budgetary reforms until something had been done to improve governance. Transparency and accountability were thus addressed; these terms and concepts were not well known or understood in Nauru before the project. Most discussion of transparency and accountability issues followed the principles and options listed in the consultation information fl yer, which were derived from comments and suggestions made by Nauruans at earlier consultation meetings. An overwhelming consensus was reached in favor of greater transparency and accountability in government, with strong support for the principles of increasing transparency and accountability together with the options for implementing principles listed in the consultation fl yer. Raising government revenue. Once it was understood and accepted that there was a very large gap between current government revenue and the level of funds needed to support even the most basic public services, virtually all meeting participants agreed that the government should raise more revenue. Th ere was also a consensus on the principles to be followed in selecting revenue-raising options. A principle strongly supported was that no revenue option should be implemented that would come directly from the public pocketbook. Measures that would initiate taxes or tariff s directly or indirectly on the public were thus out of the question. Once options for raising government revenue had been discussed, however, it became clear that there would not be enough revenue to pay for everything everyone wanted. By then people were ready for the fi nal step. Priorities for government spending. Principles to be followed in setting priorities for government spending were agreed upon, with a strong consensus supporting implementation of all but one of the options for reducing government spending. Th e consensus overwhelm- ingly favored halting subsidies to government instrumentalities and corporations; rationalizing government departments, instrumentalities, and corporations; closing or downsizing one or 11 more overseas diplomatic offi ces; reducing offi cial travel expenses; shifting overseas students and medical referrals from Melbourne to Suva or Brisbane; eliminating unfair employment practices; and reviewing and possibly cutting statutory payments to the public. But consensus was moderately against reducing the government payroll by lowering pay rates, cutting working hours, or laying off staff . Such reluctance, in the face of the already near-complete halt in wage payments, indicated that most people had not yet fully come to terms with the grave condition of government fi nances. Th e awareness and consultation meetings demonstrated that the public as well as most offi cers and staff of government departments, corporations, and instrumentalities wanted their government to change the way it dealt with the public and with its departments, corporations, and instrumentalities. Since independence, the government (the president and the Cabinet) had kept the public at arm’s length while maintaining hands-on control over the day-to-day operations of government departments, corporations, and instrumentalities. Th e people of Nauru wanted those two approaches reversed. Th ey wanted the government to be hands-on with the public, and the president and the Cabinet to stay at arm’s length from the day-to-day operations of government departments, corporations, and instrumentalities.

Straw Polls and Household Opinion Survey To complement the general consensus reached at the public consultation meetings, the project conducted straw polls at the last three district meetings and followed those with an opinion survey of Nauruan households. A draft questionnaire was fi rst informally tested by the two national consultants. Th e revised questionnaire was then used in a straw poll at the last three district consultation meetings, with participants raising their hands in response to queries read from the questionnaire, and some participants explaining their responses. A stratifi ed random sample of 20% of the 212 Nauruan households on the island was surveyed. Th irteen enumerators completed the survey in a single day. Th e household survey had two purposes. Th e fi rst was to broaden the consultation by recording the opinions of people who did not attend a consultation meeting. Th e second purpose was to test whether the recommendations that emerged from the consultation meetings and the National Economic Forum that followed represented the views of the broader Nauruan population. Th e result of the household survey was quite similar to results in the straw polls and the National Economic Forum. Th e household survey demonstrated almost universal public support for major reforms—96% supported making government more transparent and accountable, 95% thought the government should reduce spending, and 98% agreed that the government needed to raise more revenue. Respondents strongly supported all of the specifi c options listed on the consultation information fl yer for improving transparency and accountability. In contrast, there was little support for austerity measures such as cutting working hours and salary rates, even though most of those surveyed agreed that the government needed to stream- line its departments, and that would require cutting jobs. A sizable majority of respondents also supported measures that would introduce import tariff s; enforce a user-pays principle for water, electricity, and trash collection; and initiate a tax on business profi ts.

Th e National Economic Forum Th e National Economic Forum was held in the morning and evening of 7 and 8 October 2003 at a large, open church hall on the main road in the center of the urban area of Nauru. Attendance was hampered by the complete lack of petrol on the island and by concern about government disapproval. However, the Forum was broadcast live on government television and was reportedly watched by nearly everyone.

12 Th e core of the Forum was a series of eight working sessions, each devoted to a topic derived from the issues and options raised by stakeholders during the awareness and consultation meetings and compiled in the consultation information fl yer. Governance issues were the subject of the fi rst day’s session, while government fi nance issues were discussed on the second day. For each session, the facilitator, an international consultant of Nauruan descent, presented the issues to be discussed and described the format of discussions. Options that had been raised and considered in the preceding consultation meetings were summarized by another consultant. Th e same consultant also briefl y summarized responses to the straw polls and the ranking of the options in the household survey. Despite the concern of some about government disapproval of participation and opinions, three or four volunteer panelists then presented, in 10 minutes or less, their views on the issues and options under discussion. Dis- cussion and questions from the fl oor followed panel presentations for an hour or more. Finally, the facilitator wrapped up each session by summarizing the discussion, the key issues raised, and any consensus reached on options. No one representing the current or the former government joined any of the panels or spoke from the fl oor. Th e results of the National Economic Forum closely mirrored the results of the consultation meetings, the straw polls, and the household opinion survey, thereby confi rming the cred- ibility of Forum recommendations. Recommended were major improvements in governance as required to provide a solid foundation for other reforms. More specifi cally, consensus was reached on a series of concrete actions to improve government transparency and accountability by increasing public knowledge of government decision making and public participation in the process. Th e key recommendation was to increase public participation in government through consultations and public meetings like the National Economic Forum, as well as through public advisory bodies created to work with the government on budgeting and other specifi c issues. For the public to participate constructively on budgeting and other issues, more transparency from government was required. Recommendations for public participation were thus paired with recommendations for government transparency, with improvements in transparency to be carried out fi rst in each pair or recommendations. In addition, the Forum generated 35 specifi c recommendations for government action. Th ree concerned immediate action on the Nauru Phosphate Royalties Trust and the General Electric capital loan; 12 had to do with medium-term action on government departments, corporations, and instrumentalities other than the Nauru Phosphate Royalties Trust; and six other recommendations concerned long-term action on the Constitution and laws pertaining to government departments, corporations, and instrumentalities. Each set of recommendations had subsets of recommendations for transparency and for public participation relating to that particular issue.

Citizen panel discussing issues at the National Economic Forum 13 Post-Project Developments Th e government did not embrace the recommendations of the National Economic Forum. Five of the 35 above-mentioned recommendations called for government preparation and publishing of missing audited accounts and annual reports of the government and its vari- ous departments, corporations, and instrumentalities as required under the Constitution and laws of Nauru. Th e people of Nauru wanted those missing accounts and reports to provide critical information that would allow them to decide how—and how far—they needed to go in solving governance problems. Th e government of Nauru had neither the resources nor the will to prepare the overdue accounts, however, with opposition from many oﬃ cials and their supporters expected. A recommendation of the pilot project was for ADB to support governance reform in Nauru by invoking a transparency conditionality similar to the one on which the pilot project rested. According to this recommendation, ADB would provide the resources needed to prepare and publish the missing audited accounts and annual reports, and would have made subsequent support to Nauru contingent on such preparation and publication. Th e recommendation was not taken up by ADB, in part because making ADB assistance contingent on compliance by a host government with requirements of its own Constitution and laws might be seen as ADB interference in domestic politics. Nauru’s voters ultimately showed that they did embrace the recommendations of the National Economic Forum. A new government of reform candidates was elected a year later in a landslide victory. Th e new government began the slow and diﬃ cult process of reform as generally outlined by the National Economic Forum. ADB facilitated the new reform process with a project following the same general strategy as the pilot project (Balm 2007).

14 Marshall Islands: Pilot Projects for Improved Education and Solid Waste Management

In the course of preparing an update of the ADB country strategy and program for the RMI in early 2004, ADB worked with the Economic Policy, Planning, and Statistics Offi ce (EPPSO) to consult with a broad cross section of government and public stakeholders. Th ose consultations culminated in a meeting of the National Coordinating Committee,2 to which the chief secretary invited representatives of the private sector and NGOs, and other members of civil society. Th e clear consensus of the meeting, endorsed by both government and civil society representatives, was that the top priorities were civil service reform for ADB TA and solid waste management for ADB loan assistance. Both issues had been tackled previously with little success, however, and ADB was unwilling to invest more resources unless there was strong local support for the necessary reforms. RMI and ADB thus agreed to carry out two pilot projects using the transparency process through stakeholder consultation and participation to develop and assess local ownership of and eff ective demand for reform. Th e fi rst pilot project dealt with civil service reform in education.

Pilot Project for Increasing Ownership of and Eff ective Demand for Improved Education

Th e State of Education in 2005 Education, according to all national consultations in the RMI at the time, was the country’s top priority. Education took by far the largest share of all public spending each year—about $38 million in total and about $3,200 per public school student in kindergarten through 12th grade. Th at level of spending was perhaps the highest in the Pacifi c, yet all evidence showed education outcomes in the RMI were among the poorest in the Pacifi c. EPPSO, in its annual Performance Monitoring Report of 2005, concluded that “the RMI has an education disaster taking place” (EPPSO 2005). Public service delivery in education was clearly ineffi cient. Th e problems were widely suspected to be the result of poor performance by civil service staff at all levels. Th e education sector was not alone in this predicament. Despite receiving more aid per capita than almost any other country, the RMI government was ranked low in ratings of eff ectiveness (Figure 1).

2 Comprised of secretaries and directors of the ministries and agencies of the national government. 15 Figure 1: Government Effectiveness Ratings for Selected Countries in 2005

Source: Kaufmann, D., A. Kraay, and M. Mastruzzi. 2006. Governance Matters V: Governance Indicators for 1996–2005. Washington, DC: World Bank.

Th e state of education in the RMI in 2005 was not a problem that had developed recently, but one that had been growing over 20 years. A 1992 letter from the South Pacifi c Board for Educational Assessment to the RMI minister of education noted that RMI student results on the Pacifi c Islands Literacy Levels test of mathematics as well as English and Marshallese literacy were very poor, the lowest of the 10 countries sampled. Supported by overseas funding, the Ministry of Education (MOE) operated public primary schools in virtually every community in the RMI. Student–teacher ratios averaged about 14, but were higher in most urban schools on Majuro and Ebeye and lower in most schools on the outer islands. Eleven out of 76 public primary schools had 25 or fewer students; the smallest had only six on Majuro and Ebeye. In contrast, 20 public primary schools had at least 100 students, with the largest having over 900 on the outer islands. MOE licensing and monitoring of the 23 private schools in the country was required by law, but was not being carried out eff ectively. An analysis of 1999 census data and school enrollment data showed that many school-age children were not enrolled in primary school even though virtually all had access to a neigh- borhood school. Th e data, although not precise, appeared to show that net student enrollment was about 80% for primary schools and 30% for secondary schools. Dropout rates were high. Just over half of all children completed eighth grade (public and private), and about one quarter of all children completed high school (public and private). Admission to a public high school is limited by entrance exams because of space constraints, but space was increasing in 2005 with the addition of two new high schools. Five church- based private high schools were also available. No research had been carried out to determine the reasons for low school enrollment and the high dropout rates, but the poor quality of the school environment and the education provided were strongly suspected. Available data showed that students’ academic performance was poor. Th e results of the 16 public high school entrance examination were representative. Eighth graders in both public and private schools were tested by MOE using a locally developed exam with both English and Marshallese language sections. Th e test was largely multiple choice and based on local content and standards. Only 60 points out of 100 were required to pass the test, yet no school, public or private, achieved an average student score of “pass” from 2002 through 2004 (Figure 2).

Figure 2: Average Scores on the Public High School Entrance Test in All Republic of the Marshall Islands Primary Schools, 2002–2004

Note: Scores below 60 rate a “fail.” Source: Ministry of Education.

All students in dozens of public and private schools regularly failed the test. In Ebeye Primary School, an urban school with over 900 students on the island with the highest per capita income in the RMI, 87 out of 88 students failed the high school entrance test in 2005. Forty-two of 76 public primary schools in the country had average student scores of less than 30 out of 100. Th e great majority of students admitted to both public and private high schools had failed the entrance test, most by a wide margin. Students who managed to graduate from high school generally did poorly at work or could not fi nd employment, primarily because of lack of basic literacy, math skills, and work skills (Marshall Islands Journal 2005). High school graduates also performed poorly on placement tests at the College of the Marshall Islands (CMI) on Majuro. Only about 5% of applicants qualifi ed to take credit courses in English and about 1% qualifi ed for credit courses in math (Figure 3). A large majority of applicants did not even qualify for “developmental” classes, but only for “enrichment” classes, roughly equivalent to fourth grade level in the United States (US) according to a senior CMI staff member.

17 Figure 3: Math and English Placement of High School Graduates at the College of the Marshall Islands, 2002–2004

Credt = credit, Devel = developmental, L = level. Source: College of the Marshall Islands.

Th e results were not better for students once they enrolled at CMI. Just over 10% of CMI students graduated, according to EPPSO. Nearly half of MOE staff who had graduated from CMI with an associate degree failed a test for English literacy—developed locally based on local content and standards—administered by MOE (Figure 4). MOE considered English literacy crucial for teachers and administrators because the teaching curriculum is in English (except for classes in Marshallese language and culture), and because staff education and training as well as textbooks and other resources are in English. About two-thirds of all education staff (public and private) was tested by MOE for English literacy. Th ree-quarters of those did not attain passing scores. Th e proportion of those scoring low was higher for education staff (public and private) that held only a local high school diploma (roughly half of all MOE staff ). Marshallese staff at MOE holding a bachelor’s degree and a master’s degree scored better, but a large proportion did not attain passing scores.

Figure 4: Results of English Literacy Test for Marshallese Staff of the Ministry of Education Holding an Associate Degree

18 Source: Ministry of Education. MOE was carrying out important initiatives in the public education sector aimed at rebuilding or refurbishing virtually all infrastructure, installing performance-based budgeting, upgrading the qualifi cations and English literacy of staff , revising and standardizing the curriculum, adding more preschool and kindergarten classes, expanding student testing, buying textbooks, improving record keeping, providing remedial classes for entering high school students who had failed the high school entrance test, creating or strengthening parent–teacher associations, and increasing staff pay. Th ese initiatives were being implemented with guidance, funding, and technical assistance from outside agencies, including the help of nearly 100 volunteer teachers and contract administrative staff from the US. However, existing MOE staff operating under existing personnel arrangements was implementing the initiatives, since little or no civil service reform was under way. Th e secretary of education was the local prime mover of the above initiatives. She also had lobbied the government unsuccessfully to reform the Public Service Commission (PSC) and its relationship with MOE, discipline staff guilty of gross negligence, and reduce the number of very small, remote schools providing poor education. Other pressure for reform appeared to be coming mainly from outside funding agencies, with little evidence of public pressure for education reform.

Th e Pilot Project in Education Th e pilot project, Increasing Ownership and Eff ective Demand for Improved Education,3 was approved by ADB in December 2004. Its purpose was to help assess and develop eff ective stakeholder demand for civil service reform in the education sector by providing information and a mechanism for public discussion. In the process, the project would have an immediate practical outcome by helping to develop a national consensus on specifi c reform measures to improve education. Th e project team comprised two consultants (one national and one international). After introductory meetings with MOE, the team began collecting and analyz- ing information that would help provide stakeholders with more transparency on the state of education in the RMI, and of civil service practices in the sector. All project activities had the approval and often the support of the secretary of education. Th e secretary had off ered to host the pilot project and the government reaffi rmed its approval during the formal inception meeting for the project. Once the project team began examining student performance and staff personnel records, however, opposition within MOE and higher levels of government emerged. MOE did not provide the required project counterparts or much in the way of offi cial support. Th e team worked to keep the transparency project as constructive as possible, entertaining no public discussion of matters pertaining directly to any member of the government or any other individual, and publishing no incriminating information that was obtained.

Discussion of education issues between project consultant and youth on Ebeye 19 3 ADB. 2004. Increasing Ownership and Eff ective Demand for Improved Education. Manila. Implementation of the pilot project. Th e team carried out two rounds of stakeholder consultations. Primary purposes of fi rst round consultations was to brief participants on the state of education in the RMI, and obtain their views on what issues needed to be addressed in the education sector and what options should be considered to tackle each issue. First round consultations took place in March and April 2005. Initially, consultations concentrated on Majuro Atoll and three groups of teachers from Jaluit, Likiep, and Wotje atolls. Th ey were expanded to cover Ebeye and three outer islands (Arno, Lib, and Mili) after permission and funds were obtained. Both government and public stakeholders were consulted individually and in group meetings, except on Ebeye and the outer islands where consultations were limited to group meetings by budget limitations and terms of reference. A total of 716 people participated in fi rst round consultations in 53 group meetings, including 38 meetings of government and public stakeholder groups on Majuro Atoll. Information and issues relevant to public sector governance in the education sector were the focus of discussions, including many subjects seldom discussed or acknowledged publicly. At the end of that fi rst round, the project team presented to MOE, the Cabinet, other government stakeholders, and members of the public a briefi ng paper, Issues and Options for Improving Education in the RMI. Th e paper contained most of the information slides that had been used to facilitate discussion during consultation meetings. It summarized fi ndings on the state of education, as well as the most important issues and options for their resolution identifi ed by stakeholders. Th e second round of consultations took place from July through October 2005. A total of 53 group consultation meetings were conducted as well as many private discussions and in- terviews. Th e great majority of the group meetings were conducted by the national consultant in the Marshallese language. A central objective was to identify options for tackling education sector issues by the government for which there was broad support. Another important objective was to assess and further develop local commitment to reform in the sector. Th ese consultations covered a representative sample of urban stakeholders, especially those on Ebeye and Majuro, where 70% of the population resides, and stakeholders on selected outer islands. Unfortunately, consultations could not be carried out on most outer islands where the majority of electoral districts lie and where education delivery, government transparency, and resident voice in government decision making was thought to be weakest.

Marshallese consultant talking with parents about their outer island school 20 Outcome of public awareness and consultation meetings. Th e two rounds of stakeholder consultations as well as supporting record research by the project showed that the issues identifi ed by stakeholders were primarily caused—either directly or indirectly—by small scale but widespread and long standing abuse of the civil service personnel system. Some public servants in education were indeed dedicated, but many others took or avoided actions, in violation of PSC regulations, that resulted in the sacrifi ce of the much larger and longer-term benefi ts of public education for their own short-term gain. PSC regulations identifi ed as commonly violated in the education sector are listed in Table 1. Th e failure of PSC to comply with its regulation that required it to “avoid infl uence of political, religious, social, and family ties” was highlighted. Stakeholders maintained that political, religious, social, and family infl uences undermined all aspects of the civil service personnel system. Th is conclusion was not controversial even within PSC. PSC management, in its second consultation meeting with the project team, affi rmed the accuracy of information presented in Table 1. Public health workers went on strike in 1999 over the same issues and gained some measure of reform, but the reforms did not extend to education or other sectors.

Table 1: Public Service Commission Regulations Commonly Not Being Complied with by the Commission

1. Avoid influence of political, religious, social, and family ties. 2. Apply modern organization and management systems in the Public Service. 3. Avoid extravagance and waste. 4. Adhere to hiring and promotion standards. 5. Assign staff levels, steps, and pay within legislated bounds. 6. Require appropriate professional qualifications for appointments. 7. Require Public Service employees to be present at their place of work. 8. Ensure that employees receive equal pay for equal work and qualifications. 9. Publish annually list of Public Service employees. 10. Publish promptly all new Public Service hires and promotions. 11. Enforce employee obedience to lawful orders by controlling officer. 12. Require progress reports and bond for employees on study leave. 13. Provide properly constituted and functioning Appeals Committee with one sitting member elected by Public Service employees.

Source: Asian Development Bank Pilot Project in Education for Marshall Islands.

Another common violation listed in Table 1 and verifi ed in MOE and Ministry of Finance records was in salaries awarded classroom teachers. Hundreds of MOE teachers were not being paid according to the PSC pay scale. Th e majority were actually paid more than legally allowed, some double the legal maximum; others received about half the legal minimum. A comparison of the average pay and benefi ts of teachers employed by MOE with the average pay and benefi ts of teachers employed at the two “elite” private schools on Majuro— Coop and Assumption—showed that teachers employed by MOE enjoyed pay and benefi ts 59% higher, on average, than those of teachers at the two top private schools, for staff with similar qualifi cations and responsibilities. Th is despite the fact all staff at Coop and Assump- tion passed MOE’s English literacy test, while the majority of public school staff failed the test. Additionally, average student performance at the two private schools was far superior to average student performance at the public schools. 21 Th e infl uence of political and private interests on public service decisions appeared to be at the root of problems. Transparency and accountability were at a low level. Although modest progress was being made or attempted on several fronts, abuse of the civil service personnel system had entrenched a public education work force that was ineff ective and expensive. Th e intended public benefi t of education spending was not materializing. Funds were instead subsidizing private gains. Without public oversight, similar interests also undermined much of the private education system. Th ese problems also were blunting pursuit of solutions with potential to resolve long-standing technical problems. Stakeholders at project consultation meetings made it clear they desired immediate civil service reform to improve education and other public services. Private sector participants in particular, as well as parents of school-age children and most MOE staff , wanted a halt in the abuse of the public service personnel system. Parents called on the government to fi re immediately staff not performing up to standards rather than wait until 2008 or 2010 to fi re them as MOE had proposed. Increasing accountability in the public service would improve education results immediately, not in 10 or 20 years as proposed by MOE, and would provide a fi rm foundation for subsequent solutions to technical problems. Altogether, stakeholders raised nine major issues in the course of consultation meetings, and off ered, assessed, and prioritized 66 diff erent options for dealing with those issues (Table 2). Th e consensus was that the best option for reforming the civil service was to amend the Constitution and PSC regulations to transfer direct authority for personnel matters to MOE and other ministries, at the same time setting up a public service appeals committee independent of the government. MOE employees were especially fi rm about the need for an independent appeals committee.

22 Table 2: Summarization of Stakeholder-Supported Options for Solving the Resource Management Problems of the Ministry of Education

Issue: MOE Resource Options Proposed by Level of Management Stakeholders Support Comments MOE has difficulty 1. No action. Stakeholders want action. carrying out performance- based budgeting and 2. Reform PSC to give MOE more See detailed options listed above otherwise managing its control over its personnel. under PSC Issues. personnel and other resources efficiently and 3. Restructure funding from grants, MOE no longer thinks this is a effectively. compact, and General Fund to significant issue. simplify MOE management and accounting task.

4. Reform and restructure MOE.

5. ADB (or other donors) provides MOE supports this option. See also technical assistance to help the next item, below. government and MOE carry out civil service audit, strategic planning, ADB has advised that it could and restructuring of MOE as part of support an audit, but ADB would broader civil service reform project. delay other technical assistance or loans until the civil service personnel 6. Consolidate some 7th and 8th issues are solved. grades in small outer island schools by providing one or more local middle schools on atoll.

7. Local school boards or PTAs Cautious support on case-by-case. formally monitor and assess local Middle schools might include preschool staff and also participate in 7th grade and must be high quality. school budgeting.

8. Consolidate some very small Strong support from parents. outer island schools.

MOE does this in rare cases. Some cautious support case-by-case if the resulting consolidated school would be of high quality. More support in cases where very small schools could not reasonably achieve acceptable standards. Note: Number of indicates higher (more) or lower (fewer) level of support. ADB = Asian Development Bank, MOE = Ministry of Education, PSC = Public Service Commission, PTA = parent–teacher association. Source: People Speak Out on Civil Service Reform in Education (Asian Development Bank Pilot Project in Education for Marshall Islands).

23 Stakeholders also reached a consensus that to raise education standards, public and private schools should pursue accreditation by Western Association of Schools and Colleges, an accreditation body independent of the government. Th e option of having an accreditation body that could be controlled by the government was not supported. Stakeholders supported the principle of parents and other local community members helping monitor, oversee, and assess staff performance in local schools to improve service delivery in education and change the relationship between government and civil society. A group representing stakeholders could provide independent checks and balances over both service personnel and their managers through formal monitoring and assessment. Th e local school board could be given this role, following the successful example of Likiep public primary school. Th e consensus among stakeholders was that MOE and PSC had demonstrated they could not monitor education staff adequately, especially in remote locations, and that they were unable or unwilling to hold staff accountable even when monitoring was within their grasp. More generally but importantly, reform measures that would increase transparency to the public and involve public stakeholders in relevant decision making generated a strong consensus of support among stakeholders. Also strongly supported was the creation of more checks and balances exerted by one stakeholder group over another to increase accountability system wide.

Project Outcome and Subsequent Developments Th e results of the two rounds of consultations were presented by the project team in a series of wrap-up meetings—fi rst with MOE, then with representatives of public stakeholder groups, and fi nally with the Cabinet. A similar presentation to Parliament—which would have been broadcast on national radio, reaching outer island residents—was ultimately blocked by opponents of the project, who also rejected its results and any action based on issues raised and options endorsed by stakeholders. Publication of the project results, however, was authorized by the president, and appeared as an insert in the Marshall Islands Journal (15 October 2005), thus making available to the public the same information presented to the Cabinet. Th e insert covered 12 pages and fea- tured a summary essay in English and in Marshallese together with graphics of data summarizing the state of education in RMI, the issues and options raised by stakeholders, and the consensus reached among stakeholders on the options that should be implemented to address each issue. Midway through the project’s consultation program, the chief secretary and then the minister of fi nance publicly acknowledged that the project had revealed serious problems in the civil service personnel system and announced plans to conduct civil service personnel and performance audits in MOE and other ministries. Th ese plans were not implemented, however. Instead, the government requested, and ADB agreed to provide, funding and TA for a pilot audit of MOE staff performance. Inappropriate project design, however, resulted in a lengthy delay in the project until an ADB consultant working with MOE carried out a small but reportedly successful pilot audit of teacher performance. Th e Ministry of Health (MOH) requested a similar TA. Other than minor shifts in a handful of individual staff positions, however, MOE has reported no changes in personnel or in personnel management, no redress of payroll incon- sistencies, no changes in PSC operations or the civil service personnel system generally, and

24 no disciplinary actions. MOE has initiated several changes in accord with options endorsed by stakeholders. A school lunch program resumed in some schools, reducing truancy. Student testing gradually expanded to meet the requirements of the Education Act. A few new staﬀ have been recruited to help carry out the critical budgeting function. MOE has also adopted the personnel records reconciled by the project team to replace MOE’s own incomplete and inconsistent records. Majuro High School started the process of applying to the Western As- sociation of Schools and Colleges for accreditation.

Pilot Project for Increasing Ownership of and Eff ective Demand for Improved Solid Waste Management Th e second pilot project in the RMI using the transparency process was launched 7 months after the education project. Th e new project4 had a logic, purpose, and implementation program similar to those of the education project, and was implemented by the same two consultants (one national and one international), together with a short-term consultant engineer. Th is project, however, centered on civil service reform in solid waste management and was limited in scope to the most populous island, Majuro. Another diﬀ erence was that the stakeholder consultation and participation process for the solid waste project was originally intended to determine the design parameters, and otherwise pave the way for a proposed ADB loan project that would have provided new infrastructure and other support for solid waste management on Majuro. Th e latter objective was dropped before the project began because the Government of the RMI and ADB had agreed there would be no new loans in the foreseeable future.

Solid Waste Management on Majuro in 2006 Th e standard of service and the prospects for improvement were thought by many to be worse in solid waste management than in education. One reason for pessimism was that responsibility for solid waste management was largely the responsibility of the Majuro Atoll local government (MALGov). MALGov was described as “dysfunctional” and “insolvent” by the Marshall Islands Social Security Administration in a recent petition (ultimately granted) to the high court aimed at forcing the local government into receivership (Marshall Islands Journal 2007). In practice, MALGov was only part of the problem. It only collected garbage, using levies from a local sales tax to support its public garbage collection system (among other things). Its system, however, was crumbling and in late 2006 served only half the island using decrepit equipment that an overseas funding agency had provided some 6–7 years earlier. Th ree other national government institutions—MOH, the Environmental Protection Agency (EPA), and the Marshall Islands Visitors Authority—also collected solid waste, each with its own staﬀ , equipment, and funds earmarked for the task. Th e Ministry of Public Works (MPW) was also involved, being responsible for managing the dump site on Majuro. MOH collected and either disposed of or stored its own medical and other solid waste, while the Marshall Islands Visitors Authority collected trash from a few public areas. EPA was participating in a regional aid program to collect lead-acid batteries and ship them overseas for recycling, but had actually collected few batteries and shipped none. EPA also was meant to enforce solid waste regulations and had cited some violators, but the attorney general refused to press the citations and the Cabinet would not allow EPA to hire an outside lawyer to press the citations on its own.

4 ADB. 2005. Increasing Ownership of and Eﬀ ective Demand for Improved Urban Waste Management. Manila. Approved 22 September 2005. 25 Medical waste bags in open container Lead-acid batteries piled up near the port behind the hospital

In addition to the operations of national and local governments, some 100 or more businesses, government oﬃ ces, and private households collected their own waste or (in the case of two small businesses) other people’s waste. Two private businesses bought aluminum cans and other valuable metals from scavengers to sell overseas for recycling, and an NGO had been set up that had begun tapping overseas development funds to launch ambitious composting and recycling schemes on Majuro. Solid waste collected by MALGov, the Marshall Islands Visitors Authority, and the 100 or more businesses, government oﬃ ces, and private households was deposited at an ill-constructed and poorly managed dump site that spread along the shoreline and windward reef a few miles from the town center. Th e dump site was the responsibility of MPW. However, only about one-half of the solid waste generated on the island found its way to the dump site or a recycling yard. Th e rest ended up on beaches or in many informal and technically illegal dump sites around the island. Even much of the waste deposited at the dump site ended up in the ocean as a succession of poorly designed and built seawalls failed in high surf, allowing trash to wash into the sea and onto neighboring land.

Trash washing across the main road in Jenrok Scores of informal household dumps dot during a period of high waves in 1979 residential areas

26 Th e problems in solid waste management were not due to a shortage of money. MALGov and the national government together budgeted about $1.2 million yearly for solid waste management, each government responsible for about half the total. Even that large amount did not include the costs of most capital equipment, which came as grants from foreign funding agencies. From the poor state of equipment and service and the few people seen working, it appeared that not all of budgeted funds was actually being spent on solid waste management. Neither MALGov nor the national government kept separate accounts for solid waste management. RMI audits were not detailed or thorough enough to determine actual expenditures on solid waste management, and MALGov was last audited in 2001. On top of the $1.2 million, a project survey revealed that the 100 or more government offi ces, private businesses, and households spent perhaps $300,000 per year hauling their waste to the dump. Th e total direct cost for the poor solid waste management system on Majuro was thus about $1.5 million per year, or about $800 per household served and about $250 per ton collected, not counting most capital costs. Th ose amounts were roughly fi ve times higher than the cost of a state-of-the-art collection and disposal system in the US, where per capita incomes were 10–15 times higher than on Majuro. Th e indirect costs of poor solid waste management on Majuro were also substantial. Among those costs were damage to public health and to the local and global environment, including relatively large greenhouse gas emissions from the dumps that contributed to global warming and rising sea levels. Also part of indirect costs was damage to tourism development and to fi shing, added business and household costs, and costs that an environmental impact assessment might term “loss of amenity,” referring to the unpleasantness of living in a waste- fi lled environment. Well aware of these problems, the government had approached a funding agency for a grant to build a new and much larger garbage dump on Majuro’s ocean-side reef fl at at Jenrok, immediately to windward of the island’s most densely populated area. Jenrok and the sur- rounding area are home to several thousand of the poorest people in the RMI, 80% of whom are migrants from the outer islands with no hereditary rights to occupy the land they lived on, and thus no voice in the location of the garbage dump.

Low tide at the government’s preferred site for a new dump on the windward reef flat at Jenrok 27 Even though planning for the new dump site had been minimal, dumping there was set to begin soon under a pilot operation to be constructed and operated by MPW. Th e plan had not yet been announced, and no resolution had been reached on a long-standing dispute over whether the government or the traditional owners of the adjacent land owned the beachfront and reef fl at on which the dump was to be constructed. Another critical question on this crowded atoll was who would own the new land that would be reclaimed from the sea with the construction of the seawall and the fi lling of the reef fl at? Regulations for obtaining the necessary permits for the new dump were being skirted. A contract had been awarded for preparation of an environmental impact assessment (EIA) for the new dump. However, the initial contract proposal stated that the EIA would fi nd in favor of the government’s selection of the Jenrok site—prior to completion of the EIA, the construction design and operating plan by MPW, and other prerequisites for the EIA, and before the land-use permit or zoning certifi cate had been issued. MPW nonetheless let it be known that dumping would begin as soon as the EIA was completed. Th ese precipitous steps were being taken despite the failure over the previous 5 years of at least 25 aid-sponsored initiatives to improve solid waste management or to have any signifi - cant impact (Table 3). Similar attempts had been made as far back as 1969.

Table 3: Recent Failed Attempts to Improve Solid Waste Management on Majuro

Year Recent Failed Initiatives Status Status 2001 RMI EPA establishes solid waste committee No effect 2002 OMIP solid waste grant of $200,000 Need decisions JICA solid waste pilot scoping visit #1 No results San Diego waste management planning and training visit #1 No effect RMI EPA and San Diego team review USAKA solid waste operations No effect Draft bill to create national Solid Waste Authority Not adopted 2003 JICA solid waste project scoping visit #2 No results San Diego waste management planning and training visit #2 (OMIP) No effect US Army recommendations to improve Majuro dump operations No effect RMI EPA and OEPPC hold community meetings No effect BECA recommendations for solid waste management No action JICA solid waste pilot project No effect USAKA solid waste visit to Majuro makes recommendations No effect Cabinet paper and MOU to centralize waste management in MALGov No action RMI stakeholders identify solid waste as #1 priority No action 2004 IWP Jenrok solid waste scoping report No action IWP Jenrok solid waste stream analysis No effect BECA solid waste management plan No action Cabinet establishes solid waste task force to advise Cabinet No action 2005 ADB environmental report highlights solid waste problems No action RMI EPA weekly radio program begins educating listeners on waste No effect RMI Visitors Authority begins newspaper ads against littering No effect JICA solid waste project scoping visit #3. No results Budget $250,000 from US Compact funds for solid waste Not spent BECA tables revised solid waste management plan No action ADB = Asian Development Bank; BECA = Beca International Consultants; EPA = Environmental Protection Agency; IWP = International Waters Programme (United Nations Development Programme); JICA = Japan International Cooperation Agency; MALGov = Majuro Atoll Local Government; MOU = memorandum of understanding; OEPPC = Office of Environmental Policy, Planning, and Coordination; OMIP = Operation and Maintenance Improvement Program; RMI = Republic of the Marshall Islands; US = United States; USAKA = US Army Kwajalein Atoll. Source: Asian Development Bank pilot project for improved solid waste management in the Marshall Islands.

28 Th e failure of so many previous attempts to reform solid waste management discouraged even some local supporters of the pilot project in the education sector. Some were reluctant to endorse or participate in a similar project in solid waste management. However, the diﬀ erence between the many previous failed attempts to reform solid waste management on Majuro and the pilot project was that the previous attempts had been planned and carried out largely as a private matter between the government, funding agencies, and the associated consultants. Th e new pilot project, on the other hand, was to be carried out in full view of the public and with its broad participation.

Th e Pilot Project in Solid Waste Management Th e project (footnote 4) was essentially a governance project in the solid waste management sector. Th e strategy adopted was to embed public discussion of governance issues in a practical program to design and assess improved institutional and technical solutions for solid waste management. Improved solutions were urgently needed, and a combined governance and technical approach was deemed most constructive. Questionable institutional and technical solutions were already being pursued by the government, and the public was understandably exhausted with mere talk about solid waste management. MALGov agreed to act as the executing agency for the project. However, the minister of public works kindly acted as de facto government contact for the project because MALGov avoided direct involvement in project implementation, other than being consulted alongside other stakeholders. Th e involvement of the minister of public works also was modest. Neither MALGov nor MPW provided the required counterpart staff or offi ce space. Instead, the project team operated out of a private offi ce. At the outset, the visible lack of government participation undermined public confi dence in the practical utility of participation in the project and led to the mistaken view of some public and government stakeholders that the project itself was or should be responsible for making policy decisions and even implementing reforms. Both local and national governments expected the project team to carry out all project activities on its own and then inform them of action required of them. Th e consultants were even expected to prepare new requests for aid to fund the new infrastructure requirements the project was expected to identify. Such a passive role for the host government was not consistent with contemporary aid projects. With such thin evidence of support by government, ADB might have postponed the project until the agreed project arrangements were met, or canceled the project. However, postponement or cancellation would have done nothing to remedy poor governance, which was the problem at hand and the principal reason for the project. A foundation of most projects supported by external funding agencies is the assumption of accord between the host government’s interests and the public’s interests. Th ere may be some divergence of interests, however, in projects intended to increase eff ective demand for reform. Government commitment to such projects may very well be weak because of weak commitment to reform. Implementation and full attainment of the objectives of such projects are likely to be diffi cult because of weak cooperation by government. Project strategy was thus to move solid waste management issues into the public spotlight, furnishing stakeholders with information about the issues, providing them a forum to discuss the issues and options for their resolution by government, and giving them a means to send a public message to government about their wishes for reform.

29 Implementation of the Pilot Project Initial document research and informal consultations by the project team identiﬁ ed 11 main issues that the project might address (Table 4). Th e ﬁ rst listed issue—governance—was fundamental because the success of technical options for addressing the other 10 issues all depended on improved governance.

Table 4: Primary Issues for Consultation for Improved Solid Waste Management on Majuro

1. Governance 2. Collection method 3. User pays 4. Enforcement 5. Waste reduction and recycling 6. Public awareness and values 7. Disposal methods 8. Disposal sites 9. Industrial waste 10. Hazardous waste 11. Scrap metal cleanup

Source: Asian Development Bank pilot project for improved solid waste management in the Marshall Islands.

It was apparent that the fragmented institutional arrangements for solid waste management were apparently a major cause of the poor service, ineffi cient use of resources, and the weak accountability endemic in the current system, as well as the lack of ownership of system problems. A Cabinet paper, a Majuro Chamber of Commerce initiative, and all initial project reports had reached the same conclusion. At the project inception meeting in late May 2006, the project team advised the government’s Solid Waste Task Force that the institutional issue would be tackled in the fi rst round of stakeholder consultations. Since there was little doubt that the consensus of these consultations would mirror conclusions already reached by government—centralization of all solid waste operations in a single institution—the team recommended that the government immediately implement that option. Th is would allow the project to focus on the other issues, and the team could work with the newly formed institution on issues and solutions identifi ed by stakeholders. Otherwise, long-standing governance issues would be publicly aired in the opening stakeholder consultations. Centralization of solid waste management on Majuro in a single institution operated as a public utility was quickly agreed to in principle by all parties. Th e form and source of funding of the utility then had to be decided. Four options were canvassed, with a consensus clearly favoring creation of a new chartered corporation to be owned and funded by MALGov or the national government, or both (Table 5).

30 Table 5: Governance Issue and Main Options for Discussion for Improved Solid Waste Management on Majuro

Governance Issue Responsibility and funding for solid waste management is divided among two governments and five institutions, each of which has other competing and sometimes conflicting priorities and responsibilities, which undermines institutional focus, coordination, transparency, and accountability

Options 1. No change. 2. Leave institutions unchanged, but get better people. 3. Leave organization unchanged, but reform MALGov and MPW. 4. Centralize collection and disposal in one institution: • MALGov • MPW • Solid Waste Authority • Division of MEC or MWSC • Stand-alone government corporation that: i. manages contracts let to private sector. ii. carries out its own operations.

MALGov = Majuro Atoll Local Government, MEC = Marshalls Energy Company, MPW = Ministry of Public Works, MWSC = Majuro Water and Sewer Company. Source: Asian Development Bank pilot project for improved solid waste management in the Marshall Islands.

Action to create the new chartered corporation was slow, however, because of the same political and fi nancial issues within and between MALGov and the national government that had scuttled all previous attempts. Th e project team did what it could to facilitate action. Creating a new, government-owned corporation was not technically diffi cult. Similar corporations had been created before in the RMI, and such action was fully within the capabilities of the responsible government offi cers and agencies. Despite this, the government requested the project team to complete all necessary preparations. Th is was accomplished by the team, which then took a break to await government action. When the team reconvened in August 2006, government action on the new corporation was still awaited. In the meantime, the team began preparing for the fi rst round of stakeholder consultations, which was to focus on the fi rst three items on the list of issues raised by stakeholders—governance, the collection system, and who would pay for waste collection and how (Table 4). Current collection and disposal operations were documented, the fi nancial costs and the nonfi nancial pros and cons of diff erent collection options were evaluated, and a public awareness strategy was developed. Th e fi rst round of consultations with both government and public stakeholders was launched in mid-September 2006 with government action on the new corporation still awaited. A series of 15 group consultation meetings as well as separate meetings with 59 individual stakeholders across Majuro were carried out. Th e meetings began with a 68-slide presentation, which documented in photographic form the current state of solid waste management on Majuro as well as the 11 main issues for consultation (Table 4). Photographs were used because a tendency of some during the education pilot project to reject documentary evidence even if it came from offi cial government records. Th e accuracy of the photographic documentation was not contested.

31 Stakeholders then discussed options for resolution of the main issues. Since the new solid waste corporation had not yet been created, governance was the ﬁ rst issue discussed at each consultation. Th e range of options discussed was the same as discussed with the Solid Waste Task Force 4 months earlier (Table 5), and were evaluated carefully by stakeholders as shown in Table 6. Th e project team facilitated group discussions and provided relevant information, but left each person and group to reach their own conclusions. Part of the information provided each group was a report on the current status of the proposed creation of a new corporation for solid waste management on Majuro, which had been with the Cabinet since June. As one after another of both government and nongovernment stakeholder groups endorsed that proposal, the Cabinet authorized in principle the creation of a new Majuro Atoll Waste Corporation (MAWC). However, no decision was at that time reached within or between the national and local governments on the transfer or other disposition to the new corporation of their existing assets, staﬀ , and funding for solid waste management. Th e new corporation was not created for another 4 months.

Table 6: Stakeholder Preferences on Institutional Options to Improve Governance, and Option Strengths and Limitations

Reform Reform Centralize Centralize Centralize No Better and and Statutory MEC or Stand-alone Item Change Staff Centralize Centralize Authority MWSC Corporation MALGov MWP Transparency of ? solid waste unit Accountability of ? institutions Efficiency and ? effectiveness Focus on solid ? waste Attract paying ? customers Coordinate solid ? waste activities No overlap of ? responsibility Political ? ? ? ? independence Track record ?

Level of local ? responsibility Speed and ease of reform Note: Number of indicates higher (more ) or lower (fewer) level of support. MALGov = Majuro Atoll Local Government, MEC = Marshalls Energy Company, MWP = Ministry of Public Works, MWSC = Majuro Water and Sewer Company. Source: Asian Development Bank pilot project for improved solid waste management in the Marshall Islands.

In addition to governance, stakeholders discussed during the ﬁ rst round the issue of solid waste collection, focusing on the following concerns:

• What is the best collection method (among four equipment options of diff erent sizes and types)? • What is the proper service area (urban only or the entire island of Majuro)? 32 • What is the proper customer base (households or businesses, or both, and government offi ces)? • Who should pay for the collection service (households or businesses, or both and government offi ces) and how (indirectly or through taxes)?

To facilitate these discussions, the team developed 11 diff erent concept design options for diff erent combinations of alternatives for solid waste collection, along with a fi nancial analysis for each design option. Th e pros and cons of each option were discussed, and stakeholders in all but one group meeting came to a clear consensus on the preferred option for addressing each of the four issues listed above, and all but one of the group meetings developed a clear consensus on all four issues. One group made a series of ad hoc proposals for other options that seemed to involve the group’s private interests. Th e consensus of stakeholder views is summarized in Table 7. At the same time waste collection options were being discussed, the team carried out a public awareness campaign in the form of a series of articles and photos published in the Marshall Islands Journal.

Table 7: Stakeholder Preferences on Different Methods for Solid Waste Collection and Method Strengths and Limitations

Item Bags Stands Wheelies 3m3 Bins 15m3 Bins Cost User pays Commercial revenue Public health Separate types of trash Social ownership Appearance and smell Operating health and safety Distance to bin Placement in crowded areas Percent waste captured Dealing with breakdowns Dealing with household sizes

Note: Number of indicates higher (more) or lower (fewer) level of support. m3 = cubic meters. Source: Asian Development Bank pilot project for improved solid waste management in the Marshall Islands.

Th e second round of consultations focused mainly on solid waste disposal and closely related issues such as composting and recycling. From late November to mid-December 2006, the project team facilitated consultations with 19 diff erent groups of both government and nongovernment stakeholders, and consulted over 70 individuals outside formal group meetings. Finally, the national consultant canvassed door-to-door the poor households located along the Jenrok coastal site that had long been the government’s preferred option for a large “reef- fi ll” solid waste dump. It was diffi cult for these households to otherwise voice their opinions because they occupied the land they lived on only at the pleasure of hereditary land owners. Th e team developed 11 main disposal options and three recycling options along with a fi - nancial analysis of each, and prepared a preliminary assessment of each option’s pros and cons. 33 Th e disposal issues were technically the most diffi cult as well as the most expensive, while the disposal and recycling issues together were the most sensitive politically. Th e disposal options were closely tied to questions of funding and diplomacy and private interests due to their expense. Th e main disposal options were • a modern sanitary landfi ll at the far end of the island on Laura Islet; • a sanitary reef-fi ll constructed behind a large seawall adjoining the shore on top of the windward reef fl at at one of three possible locations in the urban area of Majuro; • a non-sanitary reef-fi ll at one of the same three possible locations on the reef fl at; • a controlled-air waste incinerator combined with a sanitary landfi ll for the toxic ash it would produce; or • a thermal gasifi er “waste-to-energy” system that would generate electricity, require no landfi ll or reef-fi ll, and probably generate a profi t.

Th e results of the second round of consultations mirrored those of the fi rst. All stakeholders, but one group, came to a clear consensus on which disposal option they preferred (the thermal gasifi er, waste-to-energy option), and the same disposal option emerged as the clear consensus across all but one of the group meetings (Table 8). One group appeared to have a confl ict of interest in favor of a diff erent option.

Table 8: Stakeholder Preferences on the Main Solid Waste Disposal Options, and Option Strengths and Limitations

Riwut Jenrok Combined Non- Jenrok Non- Laura Air Industrial Sanitary Sanitary sanitary Sanitary Incinerator BOS Scale No with with with With Thermal Item Compost Separation Separation Separation Separation Landfill Gasifier Total cost per year Operating cost + added capital per year Cost per ton

Years of operation Revenue opportunity Risk of ocean and lagoon pollution Risk of land and water lens pollution Riskl of air pollution Risk of methane gas explosion Risk of technology breakdown Risk of disease Appearance, smell, noise, and truck traffic Land issues Note: Number of indicates higher (more) or lower (fewer) level of support. BOS = batch oxidation system. Source: Asian Development Bank pilot project for improved solid waste management in the Marshall Islands. 34 Published in Marshall Islands Journal on Friday, 2 February 2007

Symposium sponsored by nongovernment organizations 35 Th e three recycling options diff ered mainly in whether they would be driven by the market, or by legislation and either taxes or funding-agency subsidies. Not enough time was available to canvas broad public opinion on recycling options, but the team did consult twice with importers, commercial recyclers, and several environmentalists. Th e importers and commercial recyclers expressed strong opposition to the tax and funding-agency subsidy schemes proposed by environmentalists because these options would hurt their businesses and, in the case of the commercial recyclers, were likely to put them out of business. Th e subsidy options nevertheless received strong support from the environmentalists, whose own personal and business interests lay with those options. Th e two rounds of consultations helped develop a clear consensus among both government and nongovernment stakeholder groups on preferred options for resolving the main institutional, collection, and disposal issues in the solid waste management on Majuro. How- ever, while the groups consulted were broadly representative of Majuro society, they did not speak for all of Majuro. Th e project team intended to provide information on the outcomes of the group and individual consultation meetings to the newly incorporated MAWC, then work with MAWC’s new general manager and board of directors to facilitate their selection of preferred options for resolution of institutional, waste collection, and waste disposal issues based on their own evaluations and information provided by the project. Ideally, the MAWC board would publish its proposed choices, solicit public review and comment on its proposals, and conduct public hearings. With the benefi t of public input at the hearings, the MAWC board could then make decisions and begin implementing the chosen options based on stakeholder consensus. MAWC had not yet been incorporated by the end of January 2007, however. Conse- quently, the project team presented two technical briefi ngs to the prospective board members of MAWC, providing each with hard copies as well as a compact disc (CD) of all project documents. Th e same documentation was provided to the minister of public works, the mayor of Majuro, and six NGOs. To get the results of the project and information about the consensus reached by stakeholders on options for resolving issues in the solid waste sector before the public, the project arranged for publication of “Ta Eo Am Lemnak? (What Do You Th ink?)—Consensus on Solid Waste Collection and Disposal Options for Majuro Atoll” as a 12-page insert in the Marshall Islands Journal and on the website www.Yokwe.net. Th e Cabinet gave its fi nal approval for MAWC the same day the newspaper insert went to press, and MAWC was legally incorporated and its directors appointed. Shortly thereafter, the six NGOs which had been provided copies of the project documents sponsored a symposium on the consensus reached by stakeholders in project consultation meetings on options for resolving institutional, collection, and disposal issues in the solid waste sector. Th e symposium, conducted as an informal public hearing, provided all participants an opportunity to ask questions about and comment on the consensus options, and to express their opinions about the options. Many of the participants who spoke at the symposium had neither attended earlier project consultation meetings nor read the newspaper insert.

Post-Project Developments and Assessment Creating a corporation for centralized management of solid waste on Majuro was an important step. MAWC was established with a general manager, a board of directors, and a small staff supported by a modest budget as well as by informal use of some MPW employees and equipment. However, management of solid waste on Majuro was not centralized with the creation of MAWC. MPW and MALGov continued most of their previous activities in solid waste 36 collection and retained most of their budgets for these activities. MALGov subsequently en- tered receivership, yet no agreement was reached between MALGov, the national government, and MAWC on the disposition of the assets of the two governments used for solid waste management, including staff , equipment, and budget funds. MAWC concentrated initially on managing the existing dump site, with commendable results. Construction of a proper seawall at the dump was proposed by MAWC, to be funded by the bulk of a budget request to the government. MAWC had not yet decided on whether to pursue the thermal gasifi er waste-to-energy system, the solid waste disposal option supported by a consensus of stakeholders in the project’s public consultations. In the meantime, green waste and recyclable materials were separated by hand at the dump site. MAWC had yet to implement the rest of its ambitious recycling plan aimed at reducing the amount of waste reaching the dump. Under this plan, plastics, paper, and cardboard would be separated by hand, compacted, and shipped overseas. Glass would be crushed on site. Existing and planned recycling activities have required and are expected to continue to require generous aid or tax subsidies to off set the high cost of shipping, capital equipment, and other expenses. MAWC was using its government and aid subsidies to compete with existing private sector recyclers. MAWC expanded its waste collection services when MALGov stopped its public waste collection service, then—under public pressure—resumed collection at only two or three bins per day for the whole of Majuro. MAWC began waste collection with a newly purchased truck at the other 10 or so large open collection bins that remained usable after repair by MAWC. MAWC also launched a commercial waste collection service for about 100 customers, funded in part by the ADB pilot project, and hoped to follow with a household collection service— fi rst in the urban area and then perhaps in the rest of Majuro—when funds were available. Th e new commercial collection service and planned household collection service follow closely the option supported by stakeholders in project consultations. No agreement with MALGov had been reached, however, on what would become of the MALGov public collection service and the disposition of MALGov employees and equipment if MAWC were to begin its own household collection service. In sum, the net results of the project were the creation of the new solid waste corporation, MAWC, and the improvements the corporation achieved in managing the dump, launching a commercial waste collection system, and helping with what remained of MALGov’s public waste collection system. Th e creation of MAWC increased ownership of solid waste problems by focusing some attention and responsibility on the new corporation. Th ese improvements were not the result of rationalizing existing resources, however, but the consequence of an increase in the number of people employed and public funds allocated for solid waste management. It is diffi cult to assess whether the pilot project resulted in a net increase in eff ective public demand for further reform in the solid waste sector. Developments in future monthly meetings of the Marshall Islands Chamber of Commerce and the Marshall Islands Tourism Association may provide a measure of demand for reform. Both organizations have been vocal proponents of reform in solid waste management and both have members sitting on the MAWC board. Similarly, it is too early to determine whether the pilot project resulted in an increase in broad, eff ective demand for improved governance in the provision of basic public services on Majuro. Th is might best be gauged by results in subsequent local and national elections. What is clear, however, is that little public discussion of solid waste management issues would have taken place and few, if any, practical improvements in service would have occurred without the project. Much remains to be done and the degree of commitment of the national government and MALGov is not yet clear. Nevertheless, a start was made, and that is promising in itself after so many failed attempts. 37 Th e Transparency Approach Assessed

Governance in the RMI and Nauru in each of the three sectors which were the focus of the three pilot projects was weak. Th e host governments indicated little inclination to reform. Pre- vious TA, loan, and grant assistance laced with conditionalities had gained funding agencies little traction in eff orts to help improve governance. Th e pilot projects confi rmed the strength and the need to tackle certain underlying conditions that commonly challenge good governance in Pacifi c island countries. Knowledge of the fundamentals of democratic values, political processes, national laws, and responsible citizen- ship need to be strengthened through continuing improvements in education. Such improvements should also contribute to more cooperation among citizens for the greater good and for national interests, reducing the preponderance at present of family and other local interests. Funding agencies could support the development of education courses teaching these fundamentals. Similar education initiatives are commonly included in funding for environmental programs in the Pacifi c, but are still usually lacking in the essential area of governance. Th e pilot projects, however, did not set out to modify any of the underlying conditions that contribute to weak governance. Instead, they attempted to tap into human nature by providing people with information and opportunities they might use to change certain underlying conditions as well as the ultimate outcomes. Th e transparency approach used by the projects—airing both governance and related technical issues in the public arena—proved generally constructive and fairly eff ective in increasing ownership of the issues and eff ective demand for reform. Th e approach also helped stakeholders reach public consensus on practical reform measures and demonstrate support for reform-minded or would-be politicians, while making it more diffi cult for the unreformed. Th e pilot projects thus helped achieve a measure of practical reform. Th e transparency approach produced important benefi ts in each of the pilot projects. Th e RMI project for solid waste management provided a public example of how to include the public together with government stakeholders in the design, assessment, and decision-making processes of a large infrastructure project. Th e RMI education project and the Nauru project for budgetary reform enlightened stakeholders about the rights and responsibilities of citizens and public servants. In all three cases, broad stakeholder participation helped to guide the ultimate decisions toward solutions that would serve the best interests of an informed public. ADB and other funding agencies can have little direct infl uence on a government’s commitment to reform. Th ey also can do little to challenge directly many of the underlying causes of poor governance. Th e three pilot projects described here, however, show that by taking transparency directly to the people, funding agencies can help create conditions under which citizens can more readily press for reform. Whether the modest gains achieved in the pilot projects will prevail remains to be seen, but in all three cases, the future looks more promising than the past.

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41 Transparency to the People

The publication tells the story of the use of stakeholder participation to support public sector reform in Nauru and the Republic of the Marshall Islands (RMI). The report provides important lessons for donor agencies, for Nauru and the RMI, and for other Pacific island nations that mainly live off aid and other rents. The lessons concern what has gone wrong with governance and why, and what can be done to improve governance under existing conditions. The three pilot projects described show that by taking transparency directly to the people, donors can help create more favorable conditions under which local citizens themselves can more readily press for reform. Whether the modest gains achieved in the pilot projects will prevail remains to be seen, but in all three cases, the future looks more promising than the past.

About the Asian Development Bank

ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries substantially reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to two thirds of the world’s poor: 1.8 billion people who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org ISBN 978-92-9092-094-6 Publication Stock No. RPT102238 Printed in the Philippines