Fiscal Futures: Overcoming Hurdles to Citizen Activism for Fiscal Governance

Fiscal Futures: Overcoming Hurdles to Citizen Activism for Fiscal Governance

This post is part of the Fiscal Futures blog series exploring some of the biggest issues that fiscal accountability enthusiasts are likely to encounter over the next 10 to 15 years. Learn more about the Fiscal Futures project and download resources here.

Policy and programs seeking to advance transparency and accountability in public budgets have tended to focus on the state apparatus. Whether it be new laws that require greater openness or punish malfeasance or entirely new commissions and regulatory agencies to strengthen checks and balances, many initiatives focus internally on the state – the civil service, the courts, the legislature, or the executive.

These efforts are critical for enhancing accountable fiscal governance, but they are insufficient for producing lasting change or surmounting some of the tallest reform hurdles. Oftentimes they are simply subverted or coopted by persons in power. As a result, they have limited ability to reduce corruption, which in turn means they cannot stem the continued loss of government funds necessary for public investments nor the political destabilization and potentially violent conflict-inducing effects of an increasingly aggrieved and frustrated citizenry.

Reform, however, is not always the result of technocratic tinkering and innovation but can be driven by popular, broad-based citizen action. Whether it be labor or environmental policies or various human and civil rights issues, social movements deploying various nonviolent tactics have consistently demonstrated the ability to achieve genuine – sometimes transformative – shifts in policy and government performance. The underlying dynamic involves grassroots organizing to amplify citizen voices and wield power.

Credit: Social Justice Coalition

Can such bottom-up citizen initiatives be fostered to advance fiscal governance? Based on a series of interviews and focus group engagements with transparency and accountability reform advocates in Kenya, Nigeria, and Ukraine conducted as part of a United States Institute of Peace (USIP) project funded by the U.S. Agency for International Development, activists recounted two major challenges in mobilizing grassroots citizens for fiscal governance, and some lessons from our own initial research approach revealed a third challenge.

Challenge 1: Fiscal governance issues are technical and not immediately accessible for average citizens

The topic itself is arcane and technical, and therefore not immediately accessible for average citizens. As one activist in Kenya noted, there already is quite a bit of information on budgeting and spending available in Kenya, but “the question is how do you channel these things in an understandable ways that then create the [popular] action that is required” to pressure for more reform. In Ukraine, an anti-corruption advocate lamented that a new technological initiative to increase access to budgetary details of one oblast administration “gave citizens a tool to control budget funds but the other problem is that people don’t really understand it.” Another Ukrainian activist echoed the same sentiment, saying that the “end user [i.e., citizen] doesn’t really understand new anti-corruption terms and we have to explain in detail.”

Surveys of individuals’ experiences with bribery and corruption in Europe and Central Asia reinforce this notion of a substantial learning curve to actively mobilizing citizens in efforts to improve transparency or accountability. In most countries, difficulty in reporting incidents due to a lack of knowledge of how, where, or the associated costs to do so were consistently cited as the top reasons individuals did not report bribery or corruption, more so than fear of retaliation or a sense that there would be no consequences for the perpetrator.

Challenge 2: Maintaining mobilization after bursts of activism

Activists in Nigeria, Kenya, and Ukraine also cited sustainability as a challenge. Fiscal transparency and accountability are ongoing struggles, and maintaining mobilization after bursts of activism is difficult. A scandal might briefly grab headlines and galvanize popular support around the investigation of a specific individual, but it is hard to prolong citizen participation in the budgetary process or to monitor outputs and projects. Likewise, disillusionment can set in after grand victories that do not immediately result in perceptible accountability gains, such as the 2010 constitutional referendum in Kenya or recent electoral transitions in Nigeria. In Ukraine, many citizens were encouraged by the slew of dramatic, positive reforms that emerged following the Revolution of Dignity in 2013-2014, but, one activist noted, by 2018 “people began to lose confidence in reforms and that these reforms are being implemented effectively…there are doubts regarding how it is all going and whether it’s the right way or not.”

Challenge 3: Transparency and accountability activists rely heavily on support from external actors

Many of the activists and organizations we encountered were heavily reliant on financial assistance from external actors. Our research sought to understand the effects of this support on the impact and effectiveness of transparency and accountability campaigners. To do so we endeavored to interview and engage domestically funded organizations and activists and compare their experiences and approach to foreign funded groups. It proved difficult. Attempts at snowballing from foreign funded groups as well as outreach to in-country representatives of external actors produced few candidates. We did try reaching out to labor organizers and activists within religious organizations, given that these often have reliable domestic resources, but they typically did not work directly on transparency and accountability issues. Some independent or newer activists were referred to us, but they also did not always work on these issues, and some actually did obtain grants or foreign support over the course of our research.

Although our research has not yet concluded, a few factors seem to be at play. In some countries, there may just be limited activism around transparency and accountability that isn’t reliant to some extent on foreign funding, or such activism may be of such a different nature that it would be difficult to compare to externally financed organizations and groups even if we were able to identify and research it. Alternatively, initial groups and key informants we contacted may be so detached from domestically resourced movement actors that snowballing was not a viable technique for reaching them. For instance, there have been notable citizen- led and -funded efforts in other countries, such as the Mazdoor Kisan Shakti Sangathan’s experience in India, discussed by Nikhil Dey in a previous Fiscal Futures post.

How can activists overcome these challenges and mobilize citizens?

First, take cues from the grassroots. As was the case with the Indian Right to Information movement profiled in the aforementioned blog post, the entry point is not rallying the public around abstract fiscal transparency issues and technocratic measures, but linking these directly to immediate problems. “We would like to have proper toilets, fit to be used by humans, disabled people and children,” declared Bukela Gincana, a social audit volunteer in South Africa. Insufficient, substandard sanitation afflicts marginalized communities and can lead to gender-based and communal violence. Up to 50 people share one toilet, many with no locks, and women have been raped at night, reported residents in informal settlements in Cape Town. From 2015-2016, the Social Audit Network (SAN), Social Justice Coalition (SJC), the International Budget Partnership South Africa, and citizens engaged in two social audits focusing on sanitation service outsourcing. SJC, a “membership-based social movement” also launched a campaign to include the poor in budget decisions. Nonviolent tactics ranged from research, community organizing, education/training, engagement with locals/sanitation workers/officials, and advocacy, to physical inspections, protests, stunts, and citizen-state public forums. Finally, residents flooded the municipality with 3,000 formal submissions concerning the draft Cape Town budget, a creative mass action combining institutional and extra-institutional pressure. In 2017, SAN, IBP South Africa, and Planact conducted sanitation social audits in Wattville, near Johannesburg. Working with residents, elected officials, administrators, and civil society organizations, these efforts led to faulty portable toilets being replaced, improved relationships between government and residents, and a commitment to a collaborative approach to social accountability.

A more recent example comes from Ciudad del Este, Paraguay. ReAcción, a youth-led hybrid civil society organization, has been mobilizing students for several years to map and monitor disbursements for public school infrastructure from FONACIDE (National Public Investment and Development Fund) in order to impact corruption and channel funds to marginalized schools prioritized by the Ministry of Education. After David Riveros García, reAcción’s founder, encountered difficulties building anti-corruption awareness amongst high school students, in 2013 he and friends latched on to public discontent over FONACIDE’s weak transparency and monitoring mechanisms and ensuing scandals.

Second, it may not be love at first sight. Even when their grievances and problems are central to the civic initiative, citizens won’t be clamoring to jump on the fiscal transparency bandwagon. Apathy, low self-confidence, and sometimes fear can be common obstacles. Nonviolent action initiatives cultivating collective responsibility, collective ownership, and collective identity help to overcome these challenges. ReAcción underscored to fellow students that they should be FONACIDE’s beneficiaries; corruption affected them and their schools; and they could make an impact. High-schoolers had a role in planning and decision-making, and through peers learned useful skills not only for monitoring but also for their own development, including dialoguing with elites, data visualization, and computer programming.

Third, spice it up. To get citizens involved in fiscal transparency, civic initiatives have added contextually-relevant culture, humor, fellowship, and social recognition into communications, skills,  leadership-building, engagement, and nonviolent tactics. In Wattville, community volunteers canvassed fellow residents. They wore easily recognizable in T-shirts with slogans such as, “Sanitation is dignity” and “Sifuna Ukwazi Iqiniso (We Want to Know the Truth).

Fourth, invest in education. IBP not only helped to gain documents from Cape Town’s municipality, it carried out local trainings in public finance, budget analysis, and procurement. The fiscal governance field can also support capacity building in effective grassroots engagement. At present, there seems to be an over-emphasis on “sustaining mobilization” and an under-investment in community-organizing, movement building, and leadership.

Fifth, develop incremental goals with tangible outcomes. According to scholar-practitioner Marshall Ganz, “without clear outcomes, neither leaders nor participants have any way to evaluate success or failure, to learn, or to experience the feedback essential to motivation.” How does this play out for fiscal transparency? Over two years, the Wattville social audits yielded new toilets, improved employment conditions for janitors, citizen input into the subsequent tender document, and more generally, improved citizen-state communication. Moreover, in 2018, SAN, IBP, Planact, and the Wattville and Thembelihle communities joined forces to expand social audits to ten informal settlements. The objectives are not only to improve fiscal governance and direct sanitation service, but to change government systems. In Paraguay – through annual mapping and visualizations of the administrative process, cross-data research and visualizations, and monitoring of selected schools – reAcción’s volunteers contributed to increasing FONACIDE’s transparency from the Ministry of Education down to Ciudad del Este. Recently, reports Riveros García, the General Auditor’s report sent to President Abdo Benítez included the youth group’s 2018 Annual Report on the management of FONCIDE funds.

Fiscal governance poses unique challenges for activists. Annual budgets, government accounting, and procurement regulations are unlikely to turn average people to the streets. But dedicated efforts to punch through these more abstruse procedures and link them to citizen’s immediate well-being can help mobilize popular support for fiscal responsibility.

Shaazka Beyerle is a Senior Research Advisor at the U.S. Institute of Peace. Davin O’Regan is Senior Program Officer for Nonviolent Action at the U.S. Institute of Peace. They oversee several research initiatives that examine the impact of foreign donor support for activists and social movement organizations in Nigeria, Kenya, Ukraine, Guatemala, Zimbabwe, and Burma.

Further Reading

Fiscal Futures: When the People Demand Transparency for Accountability

Fiscal Futures: When the People Demand Transparency for Accountability

This post is part of the Fiscal Futures blog series exploring some of the biggest issues that fiscal accountability enthusiasts are likely to encounter over the next 10 to 15 years. Learn more about the Fiscal Futures project and download resources here.

There has been growing skepticism about the impact of transparency initiatives on fiscal accountability issues. India provides an outstanding example of how social movements have creatively and effectively used the People’s Right to Information (RTI) to enforce a form of fiscal accountability that demonstrably connects allocations, expenditure, and policy with people and their priorities. How did this transformative process get initiated, and what lessons does it have for the future, and for its use in other parts of the globe?

In 1996, after a series of public hearings exposed systemic corruption across Rajasthan, the MKSS announced a strike in the city of Beawar and began a historic 40 day protest to demand the Right to Information. Image via Twitter / @mkssindia

Thirty years ago, a peasant and workers organization in Rajasthan, India — the Mazdoor Kisan Shakti Sangathan (MKSS) (Association for the Empowerment of Labourers and Farmers) — began their grassroots struggles with some very mainstream demands that are commonly made by the poor across the world: land and minimum wages. These were both issues of access to, and distribution of, resources. It was in the course of their struggles that the people realized that it was impossible to show the where, the how, and by whom they were being denied their most basic rights without access to records – more specifically, accounts of expenditure incurred in their name. Thus rang out the first, and soon to become, defining slogan of India’s energetic and robust right to information movement: “hamara paisa, hamara hisaab” (our money, our accounts). In many ways this concept defines fiscal accountability succinctly, powerfully, and from the point of view of a social movement in an entirely relevant way.

Another popular slogan from the movement, “the right to know, the right to live!,”  points to the strong connections between transparency and the battles for survival of marginalized communities. What began as a demand for details of local expenditure soon grew into a widespread demand for a share of state and national resources. Campaigns emerged that not only demanded details of expenditure on public works, but put forth a cogently argued demand for the right to work and employment. In a situation of competing fiscal priorities, social movements realized that they had to be armed with information that could establish their entitlement, and also ensure delivery. Information was empowering individuals and communities to demand justice and their share of resources, and social movements, who had once seen these issues as elite and esoteric debates, now began to see them as essential weapons in their battles for justice. It was not transparency for itself, but transparency for accountability. It was not only to look at, and publicly audit expenditure, but also to demand an equitable share of resources for education, health, food, employment, social security, and even to redefine ‘development’.

The demands for transparency and accountability from grassroots movements led by the MKSS and others in India resulted in the passage of landmark legislation in 2005: the Right to Information Act. This law has changed the governance landscape in India, where millions of people use the law to request information from government on a variety of issues that impact their lives. Many of the same progressive forces that championed the enactment of an information law also successfully advocated for the passage of the National Rural Employment Guarantee Act in 2005 that entitles every rural family in India to 100 days of employment from the government. This multi-billion dollar program currently supports tens of millions of low-income Indians each year. The program is also designed in a way that allows beneficiaries to audit the use of the monies allocated to it. These rights-based laws have now spread to other sectors such as education, food security, and pensions for the elderly –  and provide a model for how a rights-based framework can be adopted across sectors in a country.

Transparency when demanded and extracted by people is not easy to take back, even when the people face an autocratic political regime hostile to the idea of “development and democratic rights.” Once transparency becomes an integral part of the democratic lexicon, the demand for fiscal transparency and accountability presents an opportunity to strengthen other democratic battles – of speech and expression, equal access and inclusion, and participatory decision making.

Are there similar stories of the spread of such processes from other parts of the world, or can such success even be repeated?

While every story is unique, and Indian socio-political conditions have certainly been a contributing factor, it is the universality of the appeal for transparency and accountability that makes clear the potential for these issues to exist everywhere. The nature of their use and applicability might be modified in different places and countries, but following certain basic principles would result in empowering people to be able to make use of the democratic paradigms of transparency and accountability – even under hostile conditions.

For instance, social audits in Kenya, Mexico, Indonesia, Bhutan, Afghanistan, and South Africa have produced the same degree of excitement and involvement as has been seen in the Indian states where social audits were born and took root. This is because communities are allowed to frame their own questions. They are involved in the effort to access, analyze, and present the documents. And  they are a part of the exercise as users and potential beneficiaries of the programs and their funds. Social audits have also had an affect far beyond their immediate and specific context.

Social audits are only a manifestation of principles that can be applied in very different ways. If people are allowed to frame their questions, and platforms can be created where they can demand answers, they will fight to support such a process from end to end, including the demand for access to information, as well as the demand for fiscal accountability that will likely arise from such access.

More importantly, there needs to be an understanding of the political nature of this set of demands. This is not something that can be donor-driven or controlled. Even worse is when a donor or set of donors waits to apply a “results framework” of some kind before providing support, or pulling the plug. It would be better to not support the effort at all than be the one to decide that the results are not commensurate with the support.

Speaking from our own experience in India, we only achieved what we did because there was no donor to ask us how much we achieved at each step along the way. It was the people who shaped and defined the questions, and who put in time, money, and courage to struggle against the resistance to transparency and fiscal accountability that exists everywhere. In fact, if there isn’t resistance, it means the vested interests are still secure and unconcerned.

These are also not campaigns that can be shaped by technocrats. There is a great need for technical support – but primarily to assist in demystifying and making comprehensible the financial transactions that have been deliberately placed in a technocratic framework of elite debate. This needs to be done with humility and solidarity from the “experts,” so that they see themselves as supporters in a cause defined by those most affected. This will allow the ordinary citizen to decide the nature and extent of the steps to be taken.

In some countries and situations citizens will use the platform of local self government, and in other places it might be part of a nationwide anti-corruption or anti-inflation movement. Questions related to fiscal accountability must, and do, permeate all such debates, but it is only when they are defined and shaped by the poor and marginalized that they will truly live up to their potential of  becoming a part of the struggle for justice, development, and democracy.

Nikhil Dey is a social and political activist and a founding member of the Mazdoor Kisan Shakti Sangathan.

Further Reading

Fiscal Futures: Fighting Climate Change with Fiscal Policy

Fiscal Futures: Fighting Climate Change with Fiscal Policy

This post is part of the Fiscal Futures blog series exploring some of the biggest issues that fiscal accountability enthusiasts are likely to encounter over the next 10 to 15 years. Learn more about the Fiscal Futures project and download resources here.

2018 went out of its way to show what our climate change future is likely to look like. Throughout the year, extreme weather events around the world destroyed lives and livelihoods costing billions in economic losses and public resources.

Climate change threatens the natural systems that our lives and economies depend on, so it is simultaneously an environmental, economic, and developmental issue. But it is also an equity issue. If you’re poor, female, or otherwise marginalized, the risk of losing your already limited assets, livelihood, and potentially your life is heightened by climate change. Failure to address this extra vulnerability as we tackle climate change will deepen existing poverty and inequality.

An aerial view of a neighborhood affected by Cyclone Idai on March 24, 2019 in Beira, Mozambique.
An aerial view of a neighborhood affected by Cyclone Idai on March 24, 2019 in Beira, Mozambique. Credit: Andrew Renneisen—Getty Images.

The global community must reduce the emissions that cause global warming (mitigation) and protect vulnerable people, communities, and sectors from extreme weather events; help them recover; and build resilience to unavoidable climatic changes (adaptation). An adequate response will require massive investments of public and private money, with estimates topping hundreds of billions of dollars per year.

It’s clear that climate change will be one of the greatest public finance challenges for the foreseeable future. Governments will play a substantial role in both mitigation and adaptation. Some of this will be through regulations and other policies, but most actions will be through public finance systems, either through revenue policies that indirectly influence investor and individual behavior or direct spending on infrastructure, programs, and services.

Governments don’t make these decisions in a vacuum, and those opposing effective climate change action, particularly on mitigation, are politically very powerful. The coal and oil industries employ lots of people, provide relatively cheap energy, and pump massive amounts of money into political campaigns, all ensuring their influence. Effective civil society engagement in climate-related budgeting is critical to countering this influence and avoiding the fiscal impacts of climate disasters and misguided investments. Civil society organizations (CSOs) and others outside government have an essential role through effectively advocating for and monitoring budget policies that both address climate change impacts and build the resilience of those who are poor and marginalized — and stopping those that don’t.

Given the massive amount of financial resources that will be mobilized to respond, climate change may turn out to be our greatest opportunity to develop sustainable, equitable, and resilient societies. The road leading to this vision, however, will not be a straight one.

Climate finance accountability: the practical and the political

Most efforts to respond to climate change will have winners and losers. Who will win or lose will be determined largely by how actions are designed, financed, and implemented.

A tale of two “carbon taxes”

Last fall hundreds of gilets jaunes (or yellow vests) protesters hit the streets of Paris and other French cities in massive demonstrations against a “carbon tax.” This fuel tax increase was a government effort to use fiscal policy to encourage people and businesses to cut their consumption, reducing France’s emissions. However, the government had failed to recognize and address the negative impact the energy tax hike would have on those already struggling. As the opposition grew, the government was forced to drop the increase.

Carbon taxes have proven effective in reducing emissions, but they are regressive, often forcing poor and low-income people to choose between energy and other essentials. This isn’t a “developed world” phenomenon, fuel tax increases have led to recent widespread protests in such countries as Kenya, Nigeria, and India. Though these increases were not related to climate, the resulting protests provide an important lesson for those planning to use fiscal policy to address climate change.

There’s another approach. At the same time as demonstrations in France, the Canadian government enacted a carbon tax with little opposition. The Citizens Climate Lobby had proposed a “revenue neutral” carbon tax that returns nearly all of the proceeds back to individuals, offsetting the potential negative impact of the tax. Their proposal was reflected in the design of the enacted tax.

The message for government is clear: failing to understand the equity component of climate change —and to engage citizens and civil society in decisions on climate actions — can lead to not only poor choices but also political upheaval.

The nuts-and-bolts of climate finance accountability

Climate-related public finance policy making, execution, and audit takes place within national and subnational climate change and development bodies; line, planning, and finance ministries; legislative sector and public accounts committees; the supreme audit institution; and state, provincial, and/or local government units. All these are potential spaces through which CSOs, directly or through strategic relationships, can influence policy choices, monitor whether public money for climate action is spent according to plans and has the intended impact, and hold the government to account when it falls short.

We’re already starting to see a growing number of promising cases of how civil society, government, and others are engaging in policy processes to strengthen climate finance accountability.

Following the bright lights: combining the practical and political

These examples demonstrate the potential for and value of effective co-governance in climate finance, bringing in a range of civil society and international actors, including those with technical skills, legitimacy with communities and the government, and the relationships that can facilitate engagement.

Still, this is a new field, and most of the examples are nascent, experimental, and localized. How might this field evolve in ways that support co-governance at scale across countries and at all levels of government?

One recent example demonstrates the kind of decisive, significant breakthroughs that can emerge from a co-governance model. In January 2019 Germany’s Exit Coal Commission approved a proposal to end coal-fired energy production by 2038. As in most countries, coal is politically powerful, provides lots of jobs, and generates relatively cheap energy. Shutting it down will not be easy or painless. Thus the proposal includes €40 billion to compensate affected workers, companies, regions, and consumers. While the civil society environmental groups on the commission would have liked a more aggressive timeline for the phase out, all but one approved the package. This was very strategic. The proposal’s compensation package is seen as essential to counteracting the growing popularity in coal-producing states of a populist party planning to run in upcoming regional elections on a platform opposing climate change action. When political realities trump (no pun intended) ideal climate action, it may be more expedient for CSOs to take the incremental step in the right direction rather than drawing a line in the stand and risking a more hostile political environment for continued progress.

The next task for civil society will be to monitor the disbursement of approved compensation to ensure that it reaches those most impacted.

The bigger fiscal picture

While addressing climate change will require significant public funds, it would be a mistake to assume that these would be “new” funds on top of current budgets for public goods and services. The harsh reality is that climate-driven increases in costs, e.g., a jump in cases of malaria, will likely be addressed through spending cuts for other needs. Governments could increase revenues, but they face political and economic limits to doing so. Also, some revenue policies that a government might employ in its climate response, like carbon taxes, can reduce the revenue base over time, putting even greater pressure on budgets and the need for difficult trade-offs. We can address climate change without increasing poverty and inequality, but we will need to work on multiple fronts concurrently (as flagged in this blog series.) We need to consider how to raise greater domestic resources in developing countries without increasing the burden on poor communities, how to change the prevailing public finance frame to place more emphasis on equity and inclusion and how to promote and support deeper and broader civil society engagement in decision making and oversight to counter the powerful corporate voices for the status quo. Climate finance is clearly a game changer, but can we change the nature of our game in response? Can we leverage climate finance to make serious inroads into poverty and inequality?

Further Reading

Fiscal Futures: Is There a Space for Better Fiscal Accountability in South Africa’s Metropolitan Municipalities?

Fiscal Futures: Is There a Space for Better Fiscal Accountability in South Africa’s Metropolitan Municipalities?

This post is part of the Fiscal Futures blog series exploring some of the biggest issues that fiscal accountability enthusiasts are likely to encounter over the next 10 to 15 years. Learn more about the Fiscal Futures project and download resources here.

South Africa is considered a ‘young urban nation.’ Over 15 million people live in the country’s five metropolitan areas and account for roughly 64% of the population. The majority of these residents are considered ‘young,’ ranging in age from 15 – 34. The hyper-urbanized nature of the South African population is not unique to the rest of the world: over 50% of the world’s population lives in cities. But the pressures of urbanization have become increasingly acute with a sluggish economy, creeping unemployment, and burgeoning informality.

Urbanization and legacies of the past

Urbanization with associated informality and unemployment (the official unemployment rate in South Africa stands at 27%, although unofficial figures put it closer to 45% in historically disadvantaged ‘townships’) has had three main consequences: 1.) it has significantly burdened the nation’s welfare and social grants system, which currently supports close to 16 million citizens across the country; 2.) it has exacerbated violent crime and deepened structural inequality; and 3.) it has amplified historical race divisions into intersectional class and gender divisions.

Cape Town South Africa Informal Settlement
An informal settlement near Cape Town, South Africa

This national phenomenon is significantly magnified in the urban management of South Africa’s metropolitan municipalities (metros), particularly Cape Town. The inequalities associated with urbanization are manifested both spatially and economically, with the majority of the poor living on the periphery. It is estimated that working class citizens spend up to 40% of their income commuting to better economic opportunities, but the public transport system has, over time, become unreliable and unsafe. In addition to the cost of transport, the housing and basic services crisis in Cape Town is prevalent, with an estimated 204 informal settlements and thousands of backyard shacks predominantly situated in poor black and colored neighborhoods located on the periphery of the city, reinforcing apartheid spatial planning and increasing fiscal pressures on local government.

There are also increasing fiscal pressures on the City of Cape Town’s local government that have severely impacted service delivery. This past financial year, residents in Cape Town owed the local government $6.8 million in property rates and taxes (most of the state subsidized housing stock on the periphery- both ownership and rental- do not pay any property rates), and severe drought in 2017/18 put unprecedented fiscal pressure on the city to deliver services whilst investing in climate-proof infrastructure.

In response these urban crises, South Africa’s national government introduced a number of municipal-level legislative and fiscal instruments. However stringent grant conditionality, the opaque nature of developmental process and rampant corruption has limited any form of innovation to the urban crisis. These issues are compounded by a weak public participation process that diminishes citizen voices and limits fiscal accountability. Thus, despite significant government policy frameworks, the apartheid spatial form and race/class/gender divisions continue to prevail.

Fiscal Accountability as a Constitutional Right

Public participation sits at the heart of the South African constitution, but despite progressive legislation and frameworks, the realization of active citizenry and true participation remains a pipe dream. This has resulted in recurring service delivery protests, and ultimately, poor urban governance which is significantly visible in the fiscal accountability sector. Public sector budgeting, particularly in metropolitan areas, is generally seen as the key lynchpin in urban development decision making. However, attempts to comment on budget planning and expenditure by civil society organizations has had limited impact for three primary reasons. First, the budget document is incomprehensible for the common citizen. It is presented as a 600 page hard copy document and doesn’t provide legible information on specific neighborhoods or wards. The information the budget document provides can only be unraveled through deep analysis and requires specialists who can decipher spreadsheets. Second, public participation in the budget process happens after decisions by the City Council have already been taken. Third, there isn’t a clear public framework that determines the criteria for decision making. The public sector does not share any models for prioritization of projects or service delivery interventions, and this lack of clarity makes the process susceptible to political interference and favoritism. Ultimately citizens are disempowered in key decision making processes that significantly impact their lives.

New forms of civic convergence: Cross-Class and Race Experimentation

In response to poor public participation and poor fiscal transparency, the Development Action Group (DAG) convened a number of civic organizations to discuss issues of urban governance in Cape Town with the intention of incubating an intersectional class and race coalition that could influence equitable development and investments. Participating organizations ranged from affluent civics in well-located neighborhoods to communities living in informal settlements and backyard accommodations. These engagements were known as the Cape Town Civics Conversations. The dialogues were electrified with affluent civics relating middle class issues like traffic, street lighting, etc. to poorer backyarder shack dwellers stating ‘that while affluent civics are concerned with speed bumps and high speed internet, I was born in a backyard shack and have been living there for over 50 years, with no sight of land or housing.’

Ultimately, the civics conversation is not about specific issues, but about a lack of transparency and accountability. Civics have limited influence over local government decision making, and most tactics to hold the local government accountable are failing. To this end, two civic coalitions emerged with the aim of redefining public participation and fiscal accountability: the Civic Action for Public Participation (CAPP) coalition was formed in partnership with six inner-city civic organizations, and an organic formation of roughly twenty civic organizations in Mitchells Plain, a historically segregated area on the periphery of the city, was formed under the umbrella of Mitchells Plain United Residents Association (MURA).

As a means to frame new forms of citizen participation and improve fiscal accountability, both coalitions hosted a series of workshops and dialogues in their respective jurisdictions. CAPP developed a manifesto of principles to improve public participation that focused on transparency, information sharing, inclusivity, and accountability. MURA developed resolutions for greater accountability on land transactions, affordable housing, and economic investments. DAG continues to play a role in developing the capacity of civic organizations while producing research-based knowledge products. For example, DAG developed a web-based platform to strengthen civic solidarity and widen coalitions. As a result, the civic coalitions continue to grow and explore deeper structural issues relating to inequality and justice.

Cross-class coalition building hasn’t been an easy task. While civics across class and race will agree that the issue of public participation is important, it is fairly obvious that neighborhoods on the periphery are dealing with very different issues than their inner-city counterparts. Peripheral neighborhoods are often characterized by high rates of violence and serious social ills while the inner-city is more focused on housing affordability, gentrification, and built heritage. This polarization often means that civics on the periphery may not feel as passionate about topics the inner-city civics may feel are pressing. Despite the contextual differences, cross-class coalitions continue to convene to discuss improved urban governance and social change. These urban governance issues are emergent but relate to proper public participation, fiscal transparency, and political and administrative accountability.

Lessons from Cape Town

Three key lessons have already emerged from the dialogues which may be useful for civic activism elsewhere:

  • Bridging knowledge gaps on government legislation and policies: Several workshops and dialogues have highlighted civil society knowledge gaps on government legislation and policies. Equipping civics and coalitions with information on key legislation, government procurement processes, fiscal mechanisms etc. underpins any radical rethinking of urban development.
  • Dispelling assumptions that better legislation and policy is the answer: The prevalent assumption that new legislation and policies will improve public participation and fiscal accountability is not the only avenue for change. A greater emphasis on utilizing existing legislation and policy frameworks can deepen government accountability and transparency.
  • Collectivizing and building a common voice in engagement with government: The emergence and collectivizing of cross-class and cross-race coalitions is an essential ingredient to transmit power to the people. It forms a solid foundation for breaking down the current and historical barriers that divide society.

Development Action Group (DAG) is a non-profit organization working throughout South Africa to address underlying causes of poverty and inequality in urban areas. The group has over 30 years of experience in working with community based organizations to unlock opportunities to access basic services, land, tenure rights, and affordable housing.

Further Reading

Fiscal Futures: The End of Sovereignty and the Influence of Corporate Power are Twin Challenges to Fiscal Governance

Fiscal Futures: The End of Sovereignty and the Influence of Corporate Power are Twin Challenges to Fiscal Governance

This post is part of the Fiscal Futures blog series exploring some of the biggest issues that fiscal accountability enthusiasts are likely to encounter over the next 10 to 15 years. Learn more about the Fiscal Futures project and download resources here.

Imagine that your ancestors have lived on the shore of Lake Texcoco, in the valley known today as Mexico City, for thousands of years. They have experienced Aztec resettlements, climatic events, and the Spanish conquest of Tenochtitlan. Through it all your family and their identity have survived, inextricably linked to the land and water that sustains you. However, seventeen years ago the government of Mexico first proposed to build a new international airport less than a kilometer from your home, threatening your history, livelihood, community, and environment. Twice now you’ve successfully organized to defend your rights, but now it’s 2018 and the stakes are higher: contracts have been handed out, public debt has incurred, excavation and construction have begun, and the price tag is already over 10 billion USD.

The Texcoco construction site near Mexico City. Credit: Brett Gundlock / Bloomberg

This situation – all too real for the people and communities of Texcoco – has been playing out for months in Mexico. The government of Enrique Peña Nieto hatched its plan in private, appropriating land, issuing bonds, assigning construction and operation contracts, and financing the project largely with public revenue, all while evading freedom of information requests, audits, and scrutiny. Faced with ballooning costs, uncertain revenue, and economic, environmental, and social unviability, the new government of Andrés Manuel López Obrador chose to cancel Texcoco and relocate the new airport to a military base. While seemingly a victory for you and your community, the public burden of the project remains and the loss of confidence in infrastructure projects is indelible.

During the struggle you learned from an open contracting watchdog that five wealthy families are the beneficial owners of over half of the new airport’s contracts, many without having to bid. One of these families also directly finances the project, not to mention numerous revolving door cases between the airport regulator, construction companies, and creditors. Now the new government must take losses to exit these contracts. You also learned that international bondholders and securities investors are reticent to accept the government’s liquidation terms. Furthermore, credit-rating agencies have downgraded Mexican bonds and issued warnings about planned megaprojects.

The new international airport – one of countless examples in Mexico and around the world – highlights twin challenges for fiscal governance everywhere: the end of sovereignty and the influence of corporate power. The power of transnational corporations and global economic and monetary institutions to influence national budgetary and financial decisions, including bond issues, debt pricing, and access to credit, is overwhelming. Similarly, the risk in any given country of the corporate capture of State decision-making is real, whether over public contracting, infrastructure financing, or the regulators themselves.

Facing such obstacles, as a Texcoco resident what reasonable expectation do you have that fiscal governance – both the supply of information (transparency) and the demand for results (accountability) – operates in the public interest? The answer to your question has everything to do with an economic system larger than any one country.

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To tell from the recent World Economic Forum in Davos, fiscal governance is not the topic du jour, nor is the transparency and accountability advocacy practiced by NGOs, philanthropists, and academia. Instead, big business is most preoccupied with the state of global capitalism. Its concern is whether corporate leaders, investors, and the Bretton Woods network of multi-lateral institutions can hold open the floodgates of the world market. Its preference for global leadership favors market-based solutions, not State action (except for police actions in times of perceived crisis).

The main effect of the shift of global capital away from nations as champions is none other than the palpable end of national sovereignty, not only over all things economic, but over public goods and spaces writ large. Where modern liberal politics once existed to defend the commons, today our postmodern world privatizes the public square and exalts private property above all else. This is our new normal, with real implications for fiscal governance everywhere.

The example of Mexico is particularly illustrative, one of numerous cases around the globe. Since the 1980s almost every major industry has been privatized, from railroads to mines, banks to refineries. Also, highways, airports, seaports, and postal services, to name several, have seen varying degrees of privatization. Literally the public square – historic sites, sidewalks, streets, green spaces – has been branded, licensed, leased, or sold to private interests. With transnational corporations becoming the engine of economic change as they take over public functions, including collecting financial flows and other wealth and directing them northward (mostly to the U.S., though that’s changing particularly in the case of China), it would seem that capital has largely replaced the State.

For advocates the question should be: isn’t it time we focus our transparency and accountability efforts on the economic system and the power of global capital?

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The void of national sovereignty, to a great degree caused by global capital and its institutions, has essentially been filled by corporate power. Today, State decision-making – once the manifestation of the public interest – to a varying degree has been captured by global capital and transnational corporations, whereby an oligarchy – through a revolving door of influence between government and business elites, often illegally – obtains and maintains among a privileged few decisive influence over everything from macro-economic policy to procurement.

The case of Mexico is especially flagrant. As of last count, 37 people own or maintain influence over 28% of the national economy through interlocking corporate directorships, the revolving door, and corruption, making it arguably the most unequal country on the planet. Since the 1960s one organization – the Mexican Council of Businesspeople – comprised of the owners of Mexican capital meets regularly with the president or his proxy to engage in a simple quid pro quo: the executive branch provides privileged information to the elite prior to announcing official decisions, for example about megaprojects such as the new airport or the recent oil and electricity privatization, in exchange for the business sector publicly expressing support for the president and his government so as to confer legitimacy. Essentially, in Mexico corporate capture has become institutionalized.

In its own right corporate power is formidable. But in the void of sovereignty and in the presence of capture, well, it’s overwhelming as both the engine of global capital and the determinate factor in public decision-making. With rapidly decreasing mechanisms to legislate and enforce regulations on corporations in any one country, the decisions about multi-billion dollar airports, fiscal flows, country credit worthiness, and the like are more often determined in the executive suite of a transnational asset manager in New York City than in the halls of government in Mexico City.

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The campaign to defend your community against the new international airport is an ostensible victory, but somehow feels hollow. This past time elite families benefited disproportionally by winning public contracts. The interests of transnational bondholders, investors, and credit-rating agencies seemed to come before yours, the people of Texcoco. And if not for a change in government the weak State captured by corporate interests would’ve imposed the megaproject over your best efforts. You have no assurances that this situation won’t repeat itself in the future. What role, if any, should fiscal governance play to assuage your fears?

As advocates, our work is at a crossroads. One path leads us to expand our transparency and accountability efforts to the network of companies, investors, and institutions that propagate global capital, incorporating analyses of power and corporate capture into our work, refining and enhancing our governance efforts at home and abroad. Another path – the one we’ve followed until now – leads us to more of the same: diminishing returns in our national strategies as declining sovereignty and increasing transnational corporate power render our efforts irrelevant. I choose the former.

If a fight to reclaim the public interest awaits us, we must boldly but intelligently confront the twin challenges that lie before us. Our efforts must address the human rights concerns of the people of Texcoco. We must learn from and build power with social movements that seek equality and justice, including communities, workers, indigenous peoples, feminists, and many more. We must change the social norm for expectations of fiscal governance, away from technocratic fixes and domestic government engagement to a wider embrace of research, organizing, and accountability efforts. We must make ours a cultural movement for change to re-territorialize the global landscape with postmodern alternatives to global capital. We must think and act globally, as global citizens.

As an example, PODER – one of several organizations contributing to the movement for corporate accountability – fosters local-global campaigning in Latin America by accompanying communities and other stakeholders to gain and wield business intelligence and access to decision-making so as to push back against corporate-sponsored human rights abuses. The objective is to support local “corporate accountability guarantors” at strategic nodes of the global economy to serve as informed, campaign-savvy horizontal accountability mechanisms, essentially checks on corporate power.

As advocates we must also engage critically though constructively with one another to ensure that our efforts do not unwittingly play into the hands of global capital, a system that has proven itself masterful at creating, adapting to, and benefiting from social division and tensions. If we’re smart, we will learn to use a variety of tools, including many contained within capitalism, as weapons in our fight. Shareholder and proxy strategies, expanding ESG (environmental, social, and governance) indicators to include fiscal governance, domestic financial reform legislation, beneficial ownership disclosures, whistle-blowing laws and protections, human rights impact assessments, and so many more means will help us achieve our end.

What will be our new commons, the public square, the public interest re-imagined? To my way of thinking we must “rage, rage against the dying of the light.” As New York City mayor Bill de Blasio said upon Amazon canceling its headquarters expansion in Queens, “We just witnessed another example of what the concentration of power in the hands of huge corporations leaves in its wake. Let’s change the rules before the next corporation tries to divide and conquer.” Fiscal governance will again be relevant – yes, even to the people of Texcoco – and will operate in the public interest when we expand and organize to make it so. Let us prove that democracy is anything but window dressing for capitalism.

Benjamin Cokelet is Founding Co-Executive Director of the Project on Organizing, Development, Education, and Research (PODER), a regional not-for-profit, non-governmental organization whose mission is to improve corporate transparency and accountability in Latin America from a human rights perspective and to strengthen civil society stakeholders of corporations as long-term accountability guarantors.

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