Case study: Improving the business environment through (mobile) technology-enabled governmental service centres
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- Daniella Nicholson
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1 Case study: Improving the business environment through (mobile) technology-enabled governmental service centres There was no water piping and our staff had to carry water to the shops. We received a letter from the local authorities asking us to pay for piping, but when we paid, there was still no water. Together with my neighbours who are also small business owners, we sent an SMS to the Complaint Centre in Yogyakarta (UPIK) asking for assistance to solve the problem. explains Sukri Farida, a shop owner in Yogyakarta. It is very convenient to just send a SMS; I can do this quickly between serving clients. I do not have to leave my business to queue in the government offices not knowing when to be assisted. Within a week, Sukri and the other small business owners received an answer from the department for water and sanitation, indicating that new pipes will be installed by the end of the month. The same information was also published in the local newspapers to inform the broader public. Three weeks after sending the SMS and letters, water supply was provided. Also on the side of the local authorities, the Complaint Centre is appreciated: The initiative has made significant contributions in changing the way we work as local government. Primarily it has changed the performance of government offices. It has opened the government s eyes to empathy for problems faced by small businesses. says Idham Ibty, the local government official responsible for small business registrations. At the beginning, we felt uncomfortable with the new system, because it entailed new technology. We had to be trained on computers and on the software that informed us about the complaints received. Furthermore, we feared to be overwhelmed with complaints. However, in practice the Complaint Centre helped the local government officials to understand where the problems are in the city and to react to them promptly. It made our lives easier since we could monitor the problems and the progress in solving them from our offices. This helped us to organise our interventions more efficiently. Furthermore, communication with the people in our city is now so much easier, as we can reach out to the population through many channels such as media or mailing lists or SMS, thus ensuring that the right people get the needed information within reasonable timeframes. 1 Summary Improving the environment for business is a priority for governments and development agencies across the globe. A hostile business environment weighs particularly heavily on small and informal businesses, which comprise the bulk of the business population and backbone of economic development in most developing countries. It is therefore an essential dimension of private sector development (PSD) and pro poor growth. Based on its 50 years of experience in PSD and development projects in 25 countries, Swisscontact has identified a number of constraints to making business environment reform work for small and informal businesses. These can be categorised as: the absence of mechanisms for dialogue; weak public and private sector capacity; and a lack of supporting functions such as research, information and communication. The following case from Swisscontact Indonesia demonstrates the role mobile services can play in overcoming these constraints: A dynamic business environment requires a continuous process of interaction and information exchange between small businesses and local authorities to create enabling conditions for the private sector. The Mayor of Yogyakarta initiated the Information and Complaint Centre (UPIK) as a management instrument for decision makers and asked Swisscontact for Technical Assistance. Through the centre, all citizens including small businesses can ask for information or file complaints by SMS, letter or phone, e.g. complaints on infrastructure, attitude of government officials, corruption, etc. The Complaint and Information Centre as well as other instruments are widely accepted by local authorities as well as the private sector and fully institutionalised within specific government structures and are integrated in the regular budget. Information requests or complaints through SMS are by far the most popular media (more than 90% through SMS). UPIK receives up to 30 SMS per day. In 2007, UPIK has processed 744 general information requests, 578 specific questions, 484 complaints and 365 proposals. The city of Yogyakarta has been awarded the prize for Good Governance of which the Information and Complaint Centre has been an important part. Due to the dramatic growth rates of cell phone penetration, mobile services are becoming increasingly important for business decisions and communication of small businesses. In particular, they drastically improve the interaction with local authorities: They reduce the costs for an individual small business since they are quick, easy, cheap and independent from opening hours, queues or physical distance. Swisscontact thereby works together with local government authorities and software solution providers for socio-economic win-win-situations. 1
2 2 Relevance of action 2.1 Background & objectives Past efforts to reform the business environment in developing countries have tended to address selected shortcomings only (e.g. registration procedures) without providing demand oriented services actually making life easier for local entrepreneurs to establish and grow their business. However, due to the importance of the small business sector for a country s economic development, reforms need to be specifically catered for small businesses and their particular needs. For example, in the important case of informal businesses, business regulations may be less of a concern than regulations governing the provision of basic local services such as sanitation, electricity or infrastructure facilities. Besides this lack of customized services, there are no organised entry points into government to specifically tackle business environment issues related to small businesses. There is often no possibility for a small business to request information from local authorities or to make a transaction (e.g. filling in a form or paying a tax) at one single point, in a cost effective and easy way. Access to adequate information is even worse, as the local government employees do not have information about the status and needs of small businesses and therefore cannot respond to them adequately. In the presented project from Swisscontact Indonesia, the overall objective was to institutionalize a continuous improvement process for business-related reform processes: The business environment can only be genuinely improved if change is pursued from within the system, i.e. through the existing institutions and stakeholders (private sector, civil society, public sector). Moreover reform of the enabling environment is not an isolated event: Stakeholders should be able to repeat change processes in the context of a dynamic business world. For this, players need appropriate capacity and channels to engage in reform. Within this context, the Information and Complaint Centre plays an important role as a platform for ongoing monitoring and feedback that allows small businesses to communicate and interact with local governments via mobile services such as SMS. It focuses on the implementation of regulations and provides an instrument to citizens and small businesses to follow up on governments delivery on reforms: Figure 1: Cycle for ongoing review of regulations in Indonesia This starting point is different from many enabling environment efforts which tend to be narrower in their definition. Swisscontact s approach did not focus on the reform of regulations only, but on the process and the stakeholders involved in the process that lead to reforms: Based on a policy dialogue, reforms of regulations are drafted and implemented. For the implementation of reforms, a monitoring mechanism needs to be in place that allows for feedback by the stakeholders such as the small businesses. 2.2 Target group & beneficiaries Swisscontact s activities in the area of the Information and Complaint Centres aim at changing the way local governments work and interact with their constituency. By working with decision makers in local governments, their awareness of the needs of small businesses and their capacity to respond to these needs are increased. Swisscontact focused in its work on the channels via which the public sector communicates with the private sector in order to reduce the barriers for interaction. Swisscontact introduced innovative channels such as mobiles services that allowed it to reach out to far more small businesses than traditional channels such as government offices: 2
3 Figure 2: Mobiles services and their outreach for governmental services Gov. office Local Complaint letters, etc. Governm l mobile services (Rural) accessibility/ outreach & ubiquity The final beneficiaries of the collaboration with local governments are the small businesses and citizens who have new choices: they can choose from a variety of channels to reach the Complaint Centre, independent of where they are and what communication infrastructure they have. This way, they gain trust in the local authorities since they can interact with those authorities who deal with the issues brought up and simplify processes. This reduces the transaction costs of small businesses and thereby frees resources such as time and working capital to concentrate on business development. 2.3 Relevance for target group, third countries and partner objectives Evidence shows that decisions by local bureaucracies often are taken with little consideration of or input from affected stakeholders. Even when public-private dialogue takes place, bureaucracies rarely utilise any inputs: dialogue does not influence decision-making. Unless policy dialogue and feedback are institutionalised within the government administration, it remains coincidental and limited in impact. Swisscontact support therefore focuses on the institutionalisation of mechanisms for stakeholder communication and feedback: overcoming the obstacles to initiation of dialogue; improving the practices of interaction between the parties; increasing the efficiency of dialogue; and design and piloting new forms of cooperation between the authorities and the business community. Swisscontact Indonesia introduced the Information and Complaint Centre as a mechanism institutionalized within local government to provide a feedback and monitoring mechanism for stakeholders. Swisscontact s approach was to introduce innovative the channels via which the local government interacts and communicates with its citizen including small businesses. Traditionally, government requires citizen to come to government offices if they want to interact with government. This is not only costly in terms of distance, time and outreach, but also illustrates the attitude towards the civil society and private sector. An Information and Complaint Centre allows the government to collect information such as complaints and enquiries from small businesses without requiring physical presence. It customizes the channels by offering a set of channels: from conventional letters and phone calls to s and mobile services such as SMS. The individual citizen or small business can choose its preferred channel that it feels most comfortable with: Figure 3: Modern channels for interaction between local government and small businesses 3
4 3 Description of the action, its feasibility and effectiveness 3.1 Methodology, description of proposed activities The Information and Complaint Centre was initiated as a management instrument for decision makers like Mayors and as a feedback mechanism for bringing the city administration closer to the private sector and civil society. Through the centre, all citizens can ask for information or file complaints by letter, phone or SMS, e.g. complaints on infrastructure, attitude of government officials, corruption, etc. Mobile services such as SMS thereby facilitated this real time interaction between the private and the public sector: They reduce the costs for an individual small business to interact with local authorities since they are independent from opening hours, queues or physical distance. The centre is part of the information department of the city and managed by its staff. The centre collects and registers the information and complaints and forwards the requests for follow-up to the government department (or other related institutions) as well as to the Mayor for information and monitoring. The departments in charge are obliged to react and to report follow-up. Figure 4: Monitoring of implementation of reforms via an Information and Complaint Centre The Information and Complaint Centre is complemented by a strong media component. Newspapers and local radios were linked to the Centres to encourage routine interaction, for example to air incoming complaints. The Centre s statistics were published regularly and specific issues were discussed in the media. 3.2 General results/ outputs/ impact It was Swisscontact s intention to demonstrate good examples of more effective advocacy, regulatory practices and public-private dialogue with pilot activities that then can be copied and replicated rather than developing comprehensive enabling environment programmes. The Information and Complaint Centres as an important element of the cycle of ongoing review of reform led to the following results: The Complaint and Information Centre as well as other instruments are widely accepted by local authorities as well as the private sector and fully institutionalised within specific government structures and are integrated in the regular budget. Information requests or complaints through SMS are by far the most popular media (more than 90% through SMS). UPIK receives up to 30 SMS per day. In 2007, UPIK has processed 744 general information requests, 578 specific questions, 484 complaints and 365 proposals. UPIK provides the top management in Government an instrument to measure the performance of the various public services: complaints are listed by government departments and the response time has become a performance indicator for the Government. Most complaints are related to poor infrastructure (water, sanitation, electric power etc.), followed by public order, transportation, performance of government employees education and business licenses. The average responding time varies between 2 days and 26 days, depending of the department. The feedback from UPIK has resulted in additional measures by the city Government to improve Good Governance: a one-stop-service for business licenses has been established and the parliament and the executive have introduced a program for regulatory review of 60 local regulations which have often become subject of complaints. The database from UPIK has provided the starting point for the selection of the regulations to be reviewed. Perceptions among stakeholders have changed due to frequent interaction: There is evidence of a more constructive attitude, based on solving problems commonly, rather pointing the finger of blame, as had been the norm in the past. The city of Yogyakarta has been awarded the prize for Good Governance of which the Information and Complaint Centre has been an important part. 4
5 Continuing interest and commitment of local actors: Governments in several other provinces and districts have requested assistance to initiate similar processes and centres. Some of the local governments which have received support now provide technical assistance to other governments. In focusing on where the poor are in the business environment and how it affects them, Swisscontact has found that its analysis has to go beyond the conventional business environment focus on formal macro policy, legal and regulatory constraints. UPIK shows that the majority of all complaints received in 2007 are related to basic services: water, waste collection, maintenance of public spaces, public market infrastructure and basic legal documents, like land or birth certificates. On a day-to-day basis these issues often matter more to micro and informal entrepreneurs than formal or sophisticated matters like licence- or finance-related ones. Focusing on such issues helps ensure that business environment reform is more pro-poor. 3.3 Implementing partners, roles & responsibilities Swisscontact worked in multi-stakeholder teams, involving a wide circle of experts; communication activities (e.g. round table discussions, conferences, forums) and efforts to stimulate local initiatives to improve dialogue. A tender process was conducted, to identify potential pilot projects for such institutional mechanisms. As a result of the tender process, Swisscontact selected proposals from the city of Yogyakarta and others for introduction of an Information and Complaint Centre within the government. The centre s operational costs are paid by the government and Swisscontact has provided technical assistance and some financial assistance for the development of the centre s software. Swisscontact s specific inputs were: Technical assistance and advisory services to the local government administration to define, develop and introduce the system for the Information and Complaint Centre Organization of tendering process and selection of software solution provider Co-funding of development costs of software (20% of total costs) Capacity building to government staff for establishing standard operating procedures Capacity building for establishing monitoring system (performance indicators, homepage etc.) By working through relevant local stakeholders as far as possible, local ownership is ensured. In this respect clear and tangible contributions are vital for all parties: Swisscontact has contributed its staff time and expertise; local stakeholders contribute their time, information, knowledge, networks and infrastructure; financial requirements typically modest have been matching wherever possible. 4 Sustainability of action The objective of institutionalisation of interventions that lead to an improved business environment has been fully reached: The Complaint and Information Centre as well as other instruments are fully institutionalised within specific government structures and are integrated in the regular budget. Swisscontact supported the development phase of UPIK since 2002 until 2004, since than the Government is maintaining the system without external support. Swisscontact s intervention with local partners both on the business as well as the government side were explicitly about enhancing their capacity to collect and distribute information or conduct analysis about the business environment. Therefore, the intervention to develop Complaint Centres has generated information about local environment constraints which have further fuelled Swisscontact s interventions as well as the actions of local actors. Furthermore, communication channels like mobile services are customized to the abilities and needs of small businesses that allow them to interact with government in a cost efficient and simple way. This approach to information contrasts with many enabling environment interventions, which tend to see the direct delivery of information and analysis as the role of the project. Swisscontact s experience suggests that a project s key role is to assist appropriate partners develop capacity to conduct such analysis themselves and stimulate other stakeholders to demand such information. 5 About Swisscontact, project references & how to get in touch Founded in 1959, Swisscontact is the organization of the Swiss private sector for development cooperation. Its aim is to effectively fight poverty promoting private economic and social development in selected countries in the South and East through advisory services, training and continuing education. Over four hundred staff members are active for Swisscontact in 25 project countries worldwide as well as in Switzerland and Germany. In addition the experts of our Senior Expert Corps offer their know-how as volunteers. Swisscontact s goal is to promote sustainable development (socially, ecologically and economically) in selected southern and eastern countries. Cooperation with local partners is a priority, as our leading principle is: "Helping Others to Help Themselves". 5
6 To further the development of our partner countries and also to reduce poverty, Swisscontact focuses on the following areas: Financial services: Improving the possibilities for SMEs to save and receive loans by offering micro-credit schemes and financing facilities Encouraging vocational training Promoting small and medium-sized enterprises (SMEs) and improving their basic conditions Environmental protection: Reducing the environmental burden in towns and cities In all areas, particular emphasis is placed on promoting the private-sector economy A financial commitment from the Swiss private sector, municipalities, cantons and individuals ensures the viability of Swisscontact's projects. Contributions by the Swiss government, multilateral organizations and private foundations represent other sources of funding. Your contact at Swisscontact: Peter Bissegger Swisscontact Indonesia, Country Resident Representative peter@swisscontact.or.id 6
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