metadata: authors: 0: author: Larizza,Marco
1: author: Srivastava,Vivek
count: Sierra Leone
docna: 0: docna: Working with the grain for reforming the
            public service : a live example from Sierra Leone
docty: Policy Research Working Paper
subtopic: Health Care Services Industry,Labor Markets,Administrative & Civil Service Reform,Public Sector Administrative & Civil
            Service Reform,Inequality,Democratic Government,Public Sector Administrative and Civil
            Service Reform,De Facto Governments
teratopic: Public Sector Development,Governance,Finance and Financial Sector Development
abstracts: cdata!: Development practitioners still lack a
            critical mass of empirical evidence which can help identify
            the set of interventions that are more likely to work, and
            inform the design and implementation of feasible reforms.
            This paper contributes to fill this gap by looking at the
            case of the 'Sierra Leone Pay and Performance
            Project', a World Bank-supported initiative to reform
            the civil service. It analyzes the functional problems
            characterizing the civil service and discusses what factors
            account for the observed dysfunctions. The central argument
            is that the current dysfunctions might be difficult to
            reverse as they define a sub-optimal equilibrium which
            serves political purposes (dysfunctions by design). However,
            politics is not all that matters. This equilibrium is
            further reinforced by systemic dysfunctions that may not be
            the consequence of any strategic design or the outcome of
            elite preferences (dysfunctions by default). This is where
            there is scope for change, even in the short run. The
            authors conclude that the chances of successful civil
            service reforms are likely to be maximized if reform
            initiatives support modest and incremental changes that
            work with the grain of existing incentives and are
            consistent with government preferences.  The Sierra Leone
            Pay and Performance Project aims to do so by adopting a
            limited and targeted focus on pay reform, performance
            management and recruitment and staffing. In addition, the
            use of the results-based lending instrument is expected to
            help mitigate the current dysfunctions by aligning the
            incentives of the various players and, in this way, create
            the conditions for greater coordination across government
            agencies. Although the suggested approach is not without
            risks, recent dynamics suggest that the chances of success
            are greater today than in the past.
geo_reg_key: 1927320,517191
repnme: repnme: Working with the grain for reforming the
            public service : a live example from Sierra Leone
display_title: Working with the grain for reforming
            the public service : a live example from Sierra Leone
listing_relative_url: /research/2012/07/16560145/working-grain-reforming-public-service-live-example-sierra-leone
topicv3: Education, Skills Development and Labor
            Market m1326135 1484,Poverty m1326687 695,Human Resources for Public Sector m1327490 724,Jobs m1503931 2670,Health m1504661 3480
publishtoextweb_dt: 2012-07-01T00:00:00Z
historic_topic: Public Sector Development,Governance,Finance and Financial Sector Development
no_of_pages: 30
author_keys: 0: author_key: 1075275
1: author_key: 576949
model_extractions: WPS6152 Policy Research Working Paper 6152 Working with the Grain for Reforming the Public Service A Live Example from Sierra Leone _Vivek Srivastava Marco Larizza_ The World Bank Poverty Reduction and Economic Management Network Public Sector Governance Group & Africa Region Public Sector Reform and Capacity Building Unit July 2012
Policy Research Working Paper 6152

# **Abstract**

Development practitioners still lack a critical mass of empirical evidence which can help identify the set of interventions that are more likely to work, and inform the design and implementation of feasible reforms. This paper contributes to fill this gap by looking at the case of the ‘Sierra Leone Pay and Performance Project’, a World Bank-supported initiative to reform the civil service. It analyzes the functional problems characterizing the civil service and discusses what factors account for the observed dysfunctions. The central argument is that the current dysfunctions might be difficult to reverse as they define a sub-optimal equilibrium which serves political purposes (dysfunctions by design). However, politics is not all that matters. This equilibrium is further reinforced by systemic dysfunctions that may not be the consequence of any strategic design or the outcome of elite preferences (dysfunctions by default).

This is where there is scope for change, even in the short run. The authors conclude that the chances of successful civil service reforms are likely to be maximized if reform initiatives support modest and incremental changes that ‘work with the grain’ of existing incentives and are consistent with government preferences. The Sierra Leone Pay and Performance Project aims to do so by adopting a limited and targeted focus on pay reform, performance management and recruitment and staffing. In addition, the use of the results-based lending instrument is expected to help mitigate the current dysfunctions by aligning the incentives of the various players and, in this way, create the conditions for greater coordination across government agencies. Although the suggested approach is not without risks, recent dynamics suggest that the chances of success are greater today than in the past.

This paper is a product of the Public Sector Governance Group, Poverty Reduction and Economic Management Network; and the Public Sector Reform and Capacity Building Unit, Africa Region. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at vsrivastava@worldbank.org and mlarizza@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
**“Working with the Grain for Reforming the Public Service: A Live Example from Sierra Leone”**

# Vivek Srivastava and Marco Larizza<sup>1</sup>

_<u>Keywords: public service reform; political economy; Sierra Leone; fragile states.</u>_ JEL: D72, D73, H1, H5 Sector Board: PSG

> 1 Vivek Srivastava (vsrivastava@worldbank.org) is Senior Public Sector Specialist at the Public Sector Governance Group (PRMPS), the World Bank. Marco Larizza (mlarizza@worldbank.org) is Public Sector Specialist at the Poverty Reduction and Economic Management, Africa region (AFTP5), the World Bank. The authors gratefully acknowledge financial support from PRMPS and AFRCE office, respectively. The authors are also indebted to Vijay Pillai, Nick Manning, Kevin Brown and Harry Garnett for their valuable feedback and suggestions. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent.
# **Introduction**

After more than 30 years of donor-funded Public Sector Management (PSM) reforms, the quality of public service institutions in most Sub-Saharan African countries remains poor, seriously undermining governments‘ capacity to provide public goods and services to the majority of the poor. A growing consensus has emerged among researchers and development practitioners that past reform efforts have largely failed because they did not take into account the political economy environment and other context-specific constraints that are often binding. Most conventional explanations of failed reform efforts suggest that PSM interventions fail due to lack of ̳ownership‘ and ̳political commitment‘, over-ambition in the presence of ̳low local implementation capacity‘ and ̳inadequate technology‘, embedded ̳patrimonial practices‘ and other context-specific constraints (Crook 2011; Evans 2008; Wescott, 1999; Langseth et al. 1995). Drawing upon this literature and the World Bank‘s experience with public service reforms, the 2008 IEG report (IEG 2008) identified a set of guiding principles for better results in civil service and public sector reform, suggesting _inter alia_ that projects should be designed ̳recognizing the complex political and institutional context, as well as the sequencing issues that it takes to achieve results‘. These conclusions are largely consistent with the findings of a recent literature review on public sector governance reforms (Scott 2011), which emphasizes the importance of understanding the incentives that drive politicians and civil servants when identifying feasible reform options. In addition, the World Bank‘s new approach to Public Sector Management and others recent contributions (World Bank 2012a, Andrews 2010, Grindle 2007, 2004) have noted that reliance on ―isomorphic‖ or ―best practice‖ approaches - often based on the historical experience of OECD countries – has often produced rigid, externally imposed models unsuitable for replication in the context of most developing countries.

Despite this general understanding that context and politics matter, there are significant challenges in translating these lessons into operational practice. As Goetz (2007) noted, past reform experiences are so context-sensitive that it remains extremely difficult to identify solutions and reform paths based on these. In addition, as Scott (2011) forcefully put it, the PSM literature has mainly focused on ̳presenting failure‘ rather than ̳explaining success‘. This is especially the case for most cases of PE analysis of PSM reform, which provide _ex-post_ explanations of why reforms failed but fall short of 2
offering _ex-ante_ credible predictions about what operational solutions are likely to work and what specific form donor interventions should take to succeed in achieving the stated reform objectives (World Bank 2012a). Likewise, the literature on ̳good enough‘ PSM reforms offers limited practical guidance beyond the general recommendations that ̳isomorphic‘ solutions are not likely to be appropriate, hence the need to overcome them with ̳adjustments in reform approach‘ (Andrews 2010)<sup>2</sup> . Practical and contextspecific examples of ̳working with the grain‘ of African development (Kelsall 2008; Booth 2009) are largely undocumented, and development practitioners still lack a critical mass of empirical evidence to show how political economy analysis can successfully inform the design and implementation of context-appropriate PSM reforms, helping to identify the specific set of interventions that are more likely to work. The paper contributes to fill this gap by looking at one ̳live example‘ of PSM reform in the context of post-conflict and fragile states<sup>3</sup> , Sierra Leone‘s Pay Reform and Performance Project (P&PP)<sup>4</sup> , which supports civil service reform with a limited and targeted focus on pay reform, performance management and recruitment and staffing. The focus of this paper is to distill the practical and operational lessons which can be learned from the ̳prospective‘ political economy analysis, which was used in this case (i) to better understand what defines the current equilibrium in the civil service in Sierra Leone; and (ii) to identify what reform strategies are most likely to ̳work with the grain‘ of prevailing political incentives, thereby reducing the risk of failure and increasing the chances of achieving the desired results.

The analysis is organized as follows: section 1 describes the functional problem of the public service in post-conflict Sierra Leone. Section 2 aims to identify the most likely reasons that account for the current dysfunctions. Though there is no simple means of distinguishing them, these ̳binding constraints‘ are both most likely the consequence of (i) strategic political choices (―dysfunctions by design‖); and/or (ii) determined by factors which are not necessarily at odds with politicians‘ preferences

> 2 See, for example, the call for reform approaches based on  ̳a better understanding of what contextappropriate reforms look like (Andrews 2010); or the suggestion to adopt  ̳a more nuanced understanding of the evolution of institutions and government capabilities, (...) grounding action in the contextual realities of each country‖ (Grindle 2007: 525).

> 3 The centrality of politics is considered especially relevant in the context of post-conflict and fragile states, whose special characteristics often magnify political obstacles to PSR and require  ̳good enough‘ approaches that deviate significantly from  ̳best practices‘ and isomorphic solutions (World Bank 2011a). 4 Project preparation has been completed and approved by the Board on May 31, 2012. Implementation is expected to start in August/September 2012.

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(―dysfunctions by default‖). The latter probably persist as a result of inertia, distrust, indifference and neglect or are, in some cases, the unintended consequences of previous reform efforts. Section 3 translates the findings from the ̳prospective‘ PE analysis into operational practice and discusses how the design of the P&PP is expected to address some of the current dysfunctions and thereby provide ̳best-fit‘ solutions for civil service reform in Sierra Leone. Section 4 evaluates the risks associated with the suggested approach and discusses why there are greater chances of success today than in the past. Section 5 concludes by suggesting potential implications of this ̳live experiment‘ for ongoing efforts to develop a ̳theory of change‘ in Public Sector Management and adopt ̳best-fit‘ reforms solutions in fragile and institutionally challenging environments.

# **1. The Civil Service in Sierra Leone: Defining the functional problem**

Despite strong economic growth of 4.57 % between 2008 and 2010, Sierra Leone still faces serious development challenges: over 62 percent of the population lives below the poverty line of $1.25 a day, and almost two-thirds of the population is illiterate. Life expectancy is 49 years, well below the regional average of 54 years. Available evidence suggests that the Sierra Leone‘s performance on the delivery of services and the provision of basic infrastructure – such as road and power - is below par with respect to other similarly placed countries in the region (table 1), and not commensurate with the resources being expended (World Bank 2010).

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# **Table 1: Sierra Leone in Comparative Perspective**

|**Country**<br>**Name**|**Literacy**<br>**rate,**<br>**adult**<br>**total (%**<br>**of**<br>**people**<br>**ages 15**<br>**and**<br>**above)**|**Ratio of**<br>**young**<br>**literate**<br>**females**<br>**to males**<br>**(% ages**<br>**15-24)**|**Mortalit**<br>**y rate,**<br>**infant**<br>**(per**<br>**1,000**<br>**live**<br>**births)**|**Mortality**<br>**rate,**<br>**under-5**<br>**(per**<br>**1,000)**|**Improved**<br>**sanitation**<br>**facilities**<br>**(% of**<br>**populatio**<br>**n with**<br>**access)**|**Improved**<br>**water**<br>**source (%**<br>**of**<br>**population**<br>**with**<br>**access)**|**GNI**<br>**per**<br>**capit**<br>**a**<br>**(PPP)**<br>**const**<br>**ant**<br>**2005**<br>**(HD)**|
|---|---|---|---|---|---|---|---|
|Sierra Leone|40.9|71.1|113.7|174|13|49|737|
|Burundi|66.6|99.2|87.8|141.9|46|72|368|
|DRC|67.0|84.7|111.7|169.9|23|46|280|
|Mozambique|55.1|81.6|92.2|135|17|47|898|
|Rwanda|70.7|100.5|59.1|91.1|54|65|1133|
|Liberia|59.1|114.9|73.6|102.6|17|68|265|
|Guinea|39.5|61.7|81.2|129.9|53|19|863|
|**SL rank**|**6**|**6**|**7**|**7**|**7**|**4**|**4**|

_Source_ : World Bank (2012b) While the link is not easily established, it is generally accepted that in addition to its capability for policy making/coordination and regulation, the quality of ―upstream‖ public sector institutions has an impact on the ―downstream‖ performance of government on the provision of services and infrastructure (World Bank 2012a). Consequently, the poor status of the civil service – reflected in Sierra Leone‘s poor ranking on WGI‘s ̳Government Effectiveness‘ indicator - remains an issue of serious concern for development partners and has been often identified by national governments as an area requiring urgent reforms (World Bank 2012b). Over the years during and after the civil war, the public service in Sierra Leone experienced a progressive depletion of professional and technical staff at the middle and senior levels. This is starkly evident when comparing the composition of Sierra Leone‘s (core) civil service to other African countries. In Sierra Leone today, over 87 percent of the personnel are in the lowest (―blue collar‖) grades 1-5. While this is an improvement on the 92% three years ago, it is still very low. Top management grades represent only slightly over 1 percent of civil service employment. Professional and technical staff 5
constitutes only about 11 percent of the total civil service workforce<sup>5</sup> [Table 2]. Comparable numbers for professional and technical staff in Gambia (in 2007) were 26 percent and even in Sudan (in 2004) 14.3 percent.<sup>67</sup> This is commonly referred to as the problem of the ̳missing middle‘.

**Table 2: The composition of civil service in Sierra Leone (2008-2011)**

|||**20**|**08**|**2**|**011**|
|---|---|---|---|---|---|
|**Category**|**Grades**|**Numbers**|**Percent**<br>**of total**|**Numbers**|**Percent of**<br>**total**|
|Low|1-5|13,255|92.2%|11,881|87.3%|
|Middle|6-10|995|6.9%|1,559|11.4%<sup>8</sup>|
|High|11+|134|0.9%|177|1.3%|
|**_Total_**||**_14,384_**|**_100%_**|**_13,617_**|**_100%_**|

<mark>Notes: (i) The figures for 2008 are from World Bank (2010): Sierra Leone Public Expenditure Review, Report Number 52817-SL, October 28, 2010; (ii) Figures for 2011 were provided to Bank staff by the MoFED in September-November 2011; (iii) Figures for both 2008 and 2011 include core civil service and health workers; (iv) grades 1-5 are the lower grades/―blue collar‖ workers; grades 6-10 are professional and technical staff with grade 7 as the graduate entry level; and grades 11 and up are the senior management cadre.</mark> _Source_ : World Bank (2012b) Several features characterize the current state of the civil service in Sierra Leone, including (i) extremely low levels of remuneration that are inadequate for attracting and retaining staff; (ii) patronage based appointments, promotions and remuneration levels; and (iii) the virtual absence of intrinsic or extrinsic incentives for performance. In addition, internal inequities which engender frustration and dissatisfaction are not conducive to establishing an _esprit de corps_ . While it is difficult to disentangle the impact of each of these, it is more than likely that together they act as ̳binding constraints‘, the lifting of which would be a necessary (if not sufficient) condition to improve overall civil service performance. We now review them in turn.

> 5 The comparable figure was 7% in 2008 (World Bank 2010). The ―civil service‖ in Sierra Leone includes health workers but not teachers who are included in the ―public service‖ count but not in the ―civil service‖.

> 6 Figures for Gambia are from the payroll for 2007; figures for Sudan are from Public Administration/Civil Service, Government of Sudan, Background Paper, Sudan: Joint Assessment Mission, World Bank, unpublished mimeo, 2004.

> 7 The Public Expenditure Review (World Bank 2010) suggests 45% as the desirable percentage.

> 8 The real problem of the low numbers in the middle/technical and senior grades is in the ―bureaucracy‖ and not with the front line staff associated with service delivery. For example, close to 60 percent of teachers hold positions between grades 6-10, i.e. are at the middle levels.

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# **1.1 Low remuneration**

Low remuneration appears to be one of the major reasons why Sierra Leone‘s civil service has not been able to attract and retain suitably qualified in technical and professional personnel. Current levels of remuneration are extremely low for many professional and managerial jobs. One indication that low remuneration is a key constraint to attracting qualified staff is that entry level personnel recently recruited for certain technical positions (budget officers, procurement specialists, internal auditors) had to be offered an average of US$1000 above the regular civil service wage (approximately $ 200) to accept these positions. Other indications that low levels of pay are a key constraint to filling technical and managerial positions include a plethora of ―coping‖ arrangements that circumvent the low public pay scale. These include (i) the relatively well paid local technical assistants (LTAs)<sup>9</sup> in line positions, often funded by donors; (ii) the prevalence of project implementation/management units (PI/MUs); (iii) donor funded line agencies such as the Decentralization Secretariat and, till recently, the Local Government Finance Department; and (iv) other ad-hoc salary topups.<sup>10</sup>

# **1.2 Patronage based appointment and promotion**

The quality of staff in the middle and upper grades poses an additional problem as appointments to these positions have not been made on the basis of merit and competency. Even if these practices were to change the pool from which promotions to leadership positions can be made is weak. During the civil war, it was generally the most qualified and competent people with marketable skills who left. With some exceptions, the civil servants remaining are those who lack the skills and competencies to find jobs overseas or in the private sector. As noted above, LTAs often fill critical

> 9 ―Local Technical Assistants‖ or ―LTAs‖ refers to personnel recruited outside the government‘s regular recruitment processes, including officers initially recruited as project staff but currently performing Civil Service functions following the closure of these projects. LTAs are typically paid at rates considerably higher than those for regular civil servants.

> 10 (i) – (iii) are also referred to as the ―shadow civil service‖. The Ministry of Finance and Economic Development (MoFED), has the largest number of such arrangements.  A study conducted in 2008 found that 64% of the professional positions in the MoFED were staffed by LTAs. While 39% of the total staff in the MoFED were LTAs they accounted for 85% of the wage bill (GHK Consultants 2008).

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gaps. While, in recent years, the integrity of the lateral entry recruitment process has improved, these new appointees will take a while to make their way through the system even if they were to stay. This has happened for two reasons. Competency based promotions are a challenge because the appraisal system had fallen into disuse; Permanent Secretary (PS) level appointments are made by the President; and the Public Service Commission has, in spite of good intentions, lacked the capacity to undertake the necessary selection exercises. Promotion decisions have therefore been effectively made by the senior management of ministries with the ―recommendations‖ simplify ratified by the HRMO and the PSC. Compounding the selection problem, no training is provided to enable those who have been promoted to perform their new responsibilities because there is no public service management training capacity or tradition for training for senior management. The assumption that is that personnel promoted to these positions would know how to perform their functions by virtue of their seniority. As a result, many civil service managers today lack the basic skills and competencies for their jobs.

# **1.3 Lack of incentives for performance**

Finally, the virtual absence of any intrinsic or extrinsic incentives for performance has led to a lack of accountability and demoralized and demotivated civil servants. Intrinsic motivation and a ―public service ethic‖ are also largely absent. This _ethos_ is no longer evident in Sierra Leone, where real pay levels (including salaries and benefits) have deteriorated so far that the lack of extrinsic rewards overwhelms any intrinsic factors derived from the work itself. Unfair pay (internal inequity) is also an important demotivating factor. This is especially true in a situation where some civil servants/LTAs are very highly remunerated in a non-transparent way, creating tensions and resentment among staff<sup>11</sup> . Moreover, individuals and jobs are wrongly graded at levels that are higher/lower than they should be.<sup>12</sup> Unfortunately, for many years, government has failed to introduce a pay structure in which relativities are based on the

> 11 These tensions have been constantly reported  in recent focus groups discussions carried out in the Ministry of Finance (Vinuela and Barrie 2011) and in the Ministry to Local Government and Rural Development (Larizza and Glynn 2011).

> 12 For example, nurses are currently placed in grade 4 whereas they should in all likelihood be in grade 6.

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relative worth of the job. Instead, ad-hoc pay adjustments for a select few<sup>13</sup> have created significant anomalies and distortions which are resented by the majority of civil servants. Donors have contributed to this problem by directly adopting short-term solutions to the capacity gaps that aimed to ̳create temporary capacity‘ (McKechnie 2004) by promoting special contract arrangements<sup>14</sup> (e.g. LTAs). Over time, these ̳coping arrangements‘ have produced severe negative side-effects for staff motivation, engendering tensions between the regular civil servants and LTAs and undermining team spirit and cohesion within the civil service. Overall, this has had an adverse effect on professional cooperation both within and between functions and departments<sup>15</sup> . In this environment, neither government nor civil service managers have demanded much in the way of performance from civil servants. And the lack of a functioning performance appraisal system has created a culture in which poor performance is tolerated and good performance is not encouraged.

# **2.  What accounts for the current dysfunctions? Defining the political equilibrium**

This section attempts to explain why the current dysfunctions might be difficult to reverse, and why the current sub-optimal equilibrium is stable and makes it difficult to implement reforms. It is argued that two major determinants have shaped politicians incentives: (i) the resilience of neo-patrimonial practices as a key strategy to access and maintain power; and (ii) the imperfections in the ̳political market‘, manifested in this case by ethnically-driven political identities and systemic ̳vertical‘ information asymmetries between citizens and rulers. Taken together, these determinants undermine the incentives to improve public sector performance and could explain the political elites‘ interests to protect the status quo and resist reforms aimed at improving the quality of civil service <u>(dysfunctions by design). However, politics is not all that</u>

> 13 Measures such as higher salaries and additional staff and resources for the health sector to implement the Free Health Care Initiative (FHCI) are illustrative of a larger trend.

> 14 The Ministry of Finance and Economic Development has been the main recipient of donor-funded positions, with the consequence that LTAs now represent over 60 % of the technical staff within the ministry (GHK 2008).

> 15 According to Wilson (1991) in a low information environment a more hierarchical structure with low turnover and an esprit de corps makes for more efficient and well-functioning bureaucracy. As discussed in this section, both requirements are missing in Sierra Leone.

9
matters. This equilibrium is further reinforced by systemic dysfunctions that may not be the consequence of any strategic design or the outcome of elite preferences <u>(dysfunctions by default). Examples of such dysfunctions include (i) lack of trust and</u> poor coordination among (and within) agencies, often magnified by information asymmetries; (ii) marginalization of critical players; and (iii) short-term (and often adhoc) solutions which circumvent the problem of a poorly performing civil service. We now examine each set of dysfunctions in turn.

# **2.1 Dysfunctions by design**

Since the end of the civil war in 2002, much has changed in Sierra Leone‘s political landscape: democracy—at least in its electoral form—is now in place. Two rounds of national elections (in 2002 and 2007, respectively) culminated in the first peaceful transfer of power in the country‘s history, while political, fiscal and administrative power has been granted to sub-national governments (Local Councils), re-established in 2004 after 32 years of hyper-centralized and authoritarian rule. These are, indeed, notable achievements in a post-conflict and fragile environment. However, more striking than the changes are, in fact, the continuities with the pre-conflict environment. Despite the formal transition to multiparty politics and ̳electoral‘ democracy (Diamond 1999), informal ̳neo-patrimonial‘<sup><u>16</u></sup> practices remain a resilient strategy to exercise political power and manage relationships between the state and society. Evidence suggests that politicians continue to have incentives to divert resources to private rents and/or toward targeted provision of private goods (such as jobs, contracts, and political appointments), that are likely to benefit narrow interest groups rather than the broader public interest (Robinson 2009). In Sierra Leone, patterns of electoral behavior tend to re-enforce these practices, as people vote on the basis of ethnic or regional affiliations

> 16 For the purposes of this paper  ̳ _neo-patrimonialism’_ is understood as a style of governance in which politicians maintain power through a system of personal relationships in which they, as patrons, provide favors to clients in exchange for political support. Derived from Max Weber‘s (1968) original formulation of  ̳patrimonialism as a form of traditional domination,  ̳neo-patrimonialism‘ has become a dominant paradigm to conceptualize political power in Africa. A quick review of scholarly publications confirms the relevance of this concept in African Studies [see, among others: Bratton & van de Walle 1997; Englebert 2000; Van de Walle 2001. For a critical review of this literature, see Erdmann and Engel (2006)].

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instead of a given party‘s performance.<sup>17</sup> Indeed, when people vote on the basis of fixed characteristics (such as ethnicity), this significantly reduces the extent of political competition—support is guaranteed, regardless of performance—and increases the ability of politicians to gain support in exchange for rewarding targeted groups with jobs and other private goods (Horowitz 1985; Acemoglu and Robinson 2008).Evidence that identity politics still plays an important role in Sierra Leone can be found in the reported ―winner-takes-all‖ strategy followed by the ruling party (APC) after its victory in the 2007 elections. According to several sources, there has been a deliberate attempt by the current administration to exacerbate regional political rivalries by dismissing numerous southeasterners functionaries appointed by the previous administration and replacing them with APC-supporting and Temne-dominated northerners<sup>18</sup> , often with little regard for their competence, experience or qualification (Gberie 2010; ICGR 2008; Africa Confidential 2009: 5). These practices have important implication for the management and performance of civil service. More specifically, this situation creates a classic ̳politician‘s dilemma‘ (Geddes 1994) between the goal of improving performance of the bureaucracy and ensuring political survival. When the logic of political survival prevails, the competence and efficiency of the public bureaucracy is undermined. From a politician‘ perspective, the bureaucracy could represent a potential source of political opposition to patrons, with the consequence that bureaucrats are continually ―shuffled‖ so that they cannot conspire against the rulers, while appointments, promotions and remunerations are based on patronage rather than merit and professional qualifications for the job. The case of Sierra Leone is illustrative of such dilemma, and shows how this creates strong resistance to any reform efforts that aim to change the management of civil service and insulate the bureaucracy from the discretionary power of patrons and politicians.

―Political market imperfections‖ (Keefer and Khemani 2004) also influence the extent to which societal groups can collectively mobilize and create political pressures for changes. Post-conflict Sierra Leone mirrors the experience of many other

> 17 Evidence from the 2007 national elections suggests, however, that there is a ―swing vote‖ in the urban areas (in particular, Freetown and the Western Peninsula) that is increasingly responsive to government performance  (Kandeh 2008).

> 18 It is worth noting possible counterarguments; for example, that this move was prompted by the new government‘s need to ―balance‖ a civil service dominated by the (Mende-Krio) SLPP.

11
developing countries where the information base of the poor might be skewed<sup>19</sup> in a way that detracts from their ability to hold elected officials accountable for the quality of public services. In the absence of any information on public service standards, targets and performance, it is difficult for the citizens to hold the public service accountable for their lack of performance. This is especially true in the case of PSM reforms because intermediate improvements in the quality of public management systems are difficult to measure and ̳downstream‘ improvements in services and development outcomes take several years, and may not be easily attributed to the reform of ̳upstream‘ institutions (World Bank 2012a). Overall, this makes it difficult to overcome collective action problems and mobilize potential beneficiaries for PSM reforms. As Heredia and Schneider (2003) argue, beneficiaries of administrative reforms are usually dispersed while opponents are concentrated, to the point that there are a few grounds to hope that reform proposals will emerge from electoral campaigns or elected legislatures.

In the Sierra Leone context, efforts to overcome information asymmetries and collective action problems are further compromised by the resilience of ethnic cleavages and their ̳politicization‘ for electoral purposes. This situation undermines the potential effect that electoral competition usually plays in mobilizing pressure for reforms. More importantly, if popular support can be safely ensured by ethnic-based distribution of patronage and public resources, establishing a functioning bureaucracy becomes less relevant and money can be diverted elsewhere, for personal or political ends. In fact, a weak and politicized bureaucracy would make easier to achieve these goals. Keefer and Vlaicu (2008) provide a rigorous empirical test of this argument and demonstrate that sharply different policy choices across democracies can be explained as a consequence of differences in the ability of political competitors to make credible pre-electoral commitments to voters. According to the authors, in democracies where political competitors can make credible promises to only small segments of the electorate (such as, for instance, their co-ethnics), governments prefer to pursue clientelistic policies, high targeted spending, high rent seeking, and low public good provision. Existing analysis of national electoral politics in Sierra Leone (Kandeh 2003,

> 19 Today, about 20 newspapers are regularly printed in Freetown, though most are of poor quality and often carry sensational or unsubstantiated stories. Moreover, the total circulation remains very small, with estimated 20,000–40,000 copies distributed in Freetown on a daily basis. In addition, all newspapers are published in English, while only 30 percent of the population is fluent in the language, and close to 70 percent is illiterate.

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2008) is consistent with this argument, and might help to explain why the demands for a better performing public sector have been traditionally low.

# **2.2 Dysfunctions by default**

While several PSR initiatives have been tried in the past 20 years, they have largely failed to address the functional problems described above. Successive administrations in Sierra Leone have since the end of the conflict, at least in their public announcements, have identified the resuscitation of the public service as a priority vital for stability, poverty reduction, service delivery and the creation of a capable state. This was clearly reflected in the first Poverty Reduction Strategy Paper (PRSP I, 2005) and reemphasized in PRSP II (Agenda for change, 2009<sup>20</sup> ). Public sector reform has also been an integral part of the reforms that donors have been trying to achieve through sector investments and the provision of Budget Support. However, despite this rhetoric, until recently the public service reforms have not been a revealed priority in the GoSL‘s development agenda, with the result that previous reform attempts have been largely donor-driven<sup>21</sup> . Partially as a consequence of this, government initiatives have tended to focus around ̳ad-hoc‘ measures in response to immediate problems and issues, usually in response to pressures from different interests groups<sup>22</sup> , without adequate consideration of the long-term consequences of their actions. For example, the GoSL and its DPs have usually dealt with the ̳capacity gap‘ in the civil service by either bypassing government agencies and outsourcing their functions (working with NGOs and other non-state actors) or by ̳creating temporary capacity‘ through the use of

> 20  ―It _is our conviction that no economic transformation is possible without a transparent, accountable and effective public sector dedicated to providing supportive policies and actions. In this respect it is our intention to reform the public sector, support the private sector, modernize the financial sector, and take robust action on corruption"._ President Ernest Koroma, Opening Statement, Agenda for Change. 21 Among international donors, DFID has been actively engaged to support civil service reforms, until pulling out in 2010. An internal DFID report noted  ̳lack of ownership‘ of the reform agenda by government authorities as one of the reasons for the disappointing progress on PSR agenda.

> 22 A recent example is the ad hoc pay increases in 2010 and 2011 without any of the complementary reform elements identified in the government‘s strategy paper on pay reforms. The use of LTAs, donor funded lines agencies, PIUs, etc. has continued over the years without any long term strategy for finding sustainable alternatives. There are a large number of ―informal‖ arrangements such as the recruitment of staff by MDAs from retained resources outside of the formal recruitment systems.  Others include the recent Free HealthCare Initiative.

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donor-funded staff in line positions or even government funded LTAs.<sup>23</sup> The case of the donor-funded Decentralization Secretariat – an implementing agency established virtually outside the Ministry of Local Government and Rural Development to establish and promote decentralization reforms – provides an example of this approach. More recently, the government decided to grant higher salaries and additional staff and resources for the health sector to implement the Free Health Care Initiative (FHCI). While these short-term solutions or ̳coping arrangements‘ seem to have contributed to improved performance within the targeted agencies (Viñuela and Barrie 2011; Larizza and Glynn 2011), over time they have also created serious – albeit unintended – systemic complications, including: (i) marginalization of agencies such as the HRMO<sup>24</sup> which should be playing a critical role in designing and implementing reforms; (ii) demotivation for the majority of civil servants who do not have access to contractual benefits, combined with resistance to reform from the minority of who benefits from such arrangements; and (iii) fragmented responsibility for public service management and reform, which in turn accounts for information asymmetries and lack of coordination among critical agencies.

The last implication is especially critical from a reform perspective and is worth further elaboration. While the responsibility for public service reform (by its very nature) is fragmented in many countries, in Sierra Leone this fragmentation is greater and further exacerbates the coordination challenges in a government where coordination and information sharing capacity and traditions are weak. Figure 2 [Appendix] presents a graphic characterization of the current institutional arrangements in the public service. According to the Constitution, the Secretary to the President is ―the principal adviser to the President on Public Service matters‖ (art. 67 (2) a). The Cabinet Secretary is also the Head of the Civil Service and is responsible for ―coordinating and supervising the work of all administrative heads of ministries and departments in the Public Service‖ (art.68 (3) c). The PSC has ―the power to appoint persons to hold or act in offices in the

> 23 More recently, with the closure of donor projects, some LTAs are now on the GoSL payroll by default rather than by design.

> 24 The MoFED has historically been heavily supported (―pampered‖ in the views of some) by the development partners (DPs) whereas the HRMO has hardly received any donor attention, as shown by the fact that no LTAs position have been established there. This further explains why the GoSL‘s management of its human resources so much worse than of its financial resources (as measured, for example, by its performance on PEFA), as well as persistent resentments between HRMO & MoFED (Vinuela and Barrie 2011).

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public service (including power to make appointments on promotion and to confirm appointments) and to dismiss and to exercise disciplinary control over persons holding or acting in such offices shall vest in the Public Service Commission‖ (art. 512 (1)). However, for Permanent Secretaries this power vests with the President ―acting in consultation with the Public Service Commission‖ (art. 154 (1)). The HRMO has responsibility for HR functions and for leading human resource management reforms. The Strategy and Policy Unit (SPU) in the office of the President has responsibility for performance contracts between the president and the ministers and reports to the Chief of Staff. In addition, a new Directorate for Performance Management has been established in the HRMO to assess the performance of individual civil servants. A Public Sector Reform Unit (PSRU) - located in the Presidency - is responsible for coordinating public sector reforms but has no executive authority and implementation responsibilities.

In addition to the high level of fragmentation, long-lasting and persisting mutual distrust between the MoFED and other MDAs further complicates the coordination problem among key implementing agencies. Taking advantage of its dominant position, the Ministry of Finance and Economic Development (MoFED) often acts well beyond its mandate and intervenes in areas that are beyond its remit. Such interventions are often justified with the argument that MDAs are non-strategic and providing ―laundry lists‖ rather than sensible budget proposals supported by strategic plans. The MDAs, on the other hand, often view the MoFED as insensitive to their needs and arbitrary in its resource allocation decisions.

It is very difficult to get any accountability for service delivery and results in a system which is characterized by such deep-rooted levels of mistrust. This further exacerbates information asymmetries between ̳principals‘ and ̳agents‘ both across as well as within government agencies. Under those conditions, leadership for change is unlikely to emerge readily. Frustrated by this fragmentation of the reform agenda, both donor and interested government agencies refer to the President as a ̳last-resort solution‘ to circumvent the problem and advance the reform agenda. While this approach might produce short-term gains – in a hyper-presidential system like that of Sierra Leone, decisions made at the level of Presidency do get quickly implemented – over the long-run this further complicates the problem, with the Presidency pushing for ̳ad-hoc‘ solutions that often respond to the narrow interests and further ̳atomize‘ the 15
nature of civil service reforms.

Taken together, many of these dysfunctions are, most likely, not the consequence of a larger political design. While resistant vested interests may have got established for the status quo, it is likely that these dysfunctions persist largely as a result of inertia, neglect and indifference and are, therefore, more amenable to change<sup>25</sup> .

# **3.  Working with the grain: Key features in the P&PP design**

As discussed earlier, the PSM literature suggests that the chances of successful civil service reform in Sierra Leone are likely to be maximized if reforms initiatives support modest and incremental changes that can ̳work with the grain‘ (Booth 2009, Kelsall 2008) of existing constraints and incentives and are consistent with elite preferences. The P&PP aims to do this by keeping a relatively limited and targeted focus which supports three reform areas (pay reform, recruitment and staffing and performance management) targeted in the GoSL‘s flagship public sector reform program (GoSL 2011). The project‘s development objective is to improve competitiveness in pay, performance management and accountability and increase recruitment of middle and senior staff in the civil service in Sierra Leone (World Bank 2012b). To achieve these goals and support project implementation, a results-based lending instrument is used. Under this approach disbursements are based on the achievement of pre-specified results identified by ―Disbursement Linked Indicators (DLIs)‖ along the agreed reform paths. The use of the results-based financing modality puts into operational practice the emerging lessons from the PE analysis and is expected to increase the chances of success because it (i) ̳works with the grain‘ by better aligning the incentives of the various players and, in this way, helps to mitigate the co-ordination problems; and (ii) it provides the space to government to develop its own reform paths and in this way engenders greater government ownership of the reform agenda and reduces the risks associated with externally driven isomorphic ̳best-practice‘ solutions.

> 25 In practice, however, it is difficult to disentangle the effect of each set of dysfunctions on our outcome of interest. In other words, we don‘t know the extent to which poor coordination, inertia and agencies‘ fragmentation has led to the inability to implement public service reforms, vis-à-vis the constraints imposed by the political incentives of the elites and other powerful groups whose vested interests might be threatened by the reform agenda.

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The financing modality is expected to create incentives for greater coordination across agencies, in particular the MoFED and the other agencies associated with the reforms such as the HRMO and the PSC. This mutual dependence and the pressures for ̳joined-up working‘ that the approach engenders, empowers the latter and could potentially help in reversing some of the prevailing patterns of mistrust and marginalization. Agencies that seldom communicated in the past have the incentive to relatively more constructive conversations than they have had in the past. This is not a marginal issue: as shown by the experience of other countries, PS reform initiatives hosted in one agency could have considerable difficulty extending its reach to those aspects of management that are the concern of others, and can seriously undermine organizational commitment to reform (Polidano 2001). By providing clear responsibilities to each agency for specific sub-components of the project, this approach is also expected to mitigate the coordination problems that have traditionally affected and undermined previous reform efforts. Moreover, players previously marginalized in the decision-making process (such as the HRMO and the PSC) will be given a leading role in the reform agenda, enhancing a sense of ownership and giving all a stake in the process<sup>26</sup> [See Figure 3 in the Appendix for a visual map of the project‘s implementing agencies and their respective relationships].

Finally, even assuming top-level political and technical commitment to reform exists at the level of the ̳principals‘ (ministers, PSs and the like), implementation can still be at risk given the poor level of information about reform, and the lack of regular information flows across as well as within departments and agencies. The mere lack of good information could lead to resistance. The project aims to address this problem directly, by supporting the government to develop a communication strategy, with the ultimate goal of enhancing both the quality and frequency of information flows and thereby reducing the risk arising from information asymmetries.

Cognizant of the political and capacity constraints and the other exacerbating factors such as administrative fragmentation and mistrust, the project takes a modest

> 26 The WBI‘s Leadership Program will also contribute to this goal by supporting reform teams to develop practical skills for managing the complex change process that typically underpin any reform program during the implementation stage

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and flexible approach which increases the probability of ―ownership‖ and alignment with the country context.<sup>27</sup> The project targets a fairly modest set of critical reforms that are recognized as critical to relieving the binding constraints to addressing the functional problems. It is not intended to be ̳transformative‘ and it does not adopt a normative approach that implicitly aims to model the Sierra Leone civil service against international ̳best practices‘. This incremental approach in turn is expected to create less resistance from vested interests (Robinson 2007) and allow for a series of sequenced steps that would cumulatively have an observable impact in the short-term. Moreover, the project approach pushes in areas where the solutions are relatively obvious and allows the solutions to come from the government where this is less clear. For instance, it is widely agreed that staffing middle and senior positions is a necessary condition and that pay reforms to address external competitiveness and internal inequity are needed. However, the precise reform paths, sequencing and phasing are left to the government. It is expected that the supporting dialogue will help to ensure that a government owned reform plan emerges that is consistent with some sensible set of technical parameters. By not offering pre-determined solutions to agreed objectives, the project allows for a significant degree of flexibility and for the emergence of ―home grown‖ ̳best fit‘ approaches.

The project recognizes the need to find reform solutions that are technically sound and, at the same time, consistent with government interests and preferences. The design of the project is therefore much better aligned with the government‘s own goals and reflects a balance that combines both principles: the reform paths are identified by government with technical parameters provided by experts.

Tactically, the project focuses on issues that the government has shown an interest in addressing and, thus, is likely to take on the ̳default dysfunctions‘ rather than the ̳dysfunctions by design‘ - these being more difficult to address. Moreover, while the preferences and interests of stakeholders are not fully known, the design has taken careful stock of the concerns of the prospective ̳losers‘ from reform (such as LTAs) as well as of the need to meet the aspirations of potential ̳winners‘ (such as junior and middle-level civil servants). Also, the flexibility of the approach provides greater space

> 27 The authors are greatly indebted to Nick Manning for his insights and comments on the project design. The emphasis on realism highlighted here is derived from his original formulation.

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for maneuver for tactical initiatives aiming to manage resistance to reform and address concerns of critical ̳veto-players‘. Finally, broad consultation processes and information campaigns (both within the government agencies as well as outside them, with non-state actors) will be gradually introduced during implementation, with channels for citizens‘ feedback. Evidence from research suggests that such outcomeoriented information campaign can be critical to support reform-oriented leadership as the population has to be sufficiently informed to give them credit for their efforts (Khemani 2007).

# **4.  Managing risks and incentives: Why are the chances of success greater today?**

Several challenges remain. While alignment with the GoSL Reform Program is expected to enhance ownership of civil service reform, working through and with the country‘s existing institutional arrangements rather than around them might create unexpected costs in terms of effectiveness and compromise the capacity to sustain reform efforts by delivering ̳quick results‘ (delays in achieving DLIs would delay/slow down disbursement). Also, critical funding needed to sustain the reform process might not be provided by the MoFED to the implementing entities in a timely manner, undermining implementing agencies‘ capacity to achieve reform objectives. Finally, a pragmatic compromise will have to be found between the need to achieve ̳performance‘ objectives and the need not to pose a direct threat to the elites‘ political survival strategy<sup>28</sup> .

Given these inherent risks, one might question _why the chances of successful civil service reform in Sierra Leone should be greater today when other reform efforts have failed to achieve intended objective in the past_ . To a large extent, the response to this legitimate question is that the project design is tailored to the country context and circumstances and the chances of success are further enhanced by the evidence that the current equilibrium might change in the future. With regard to the latter, recent dynamics provide additional confidence that more favorable conditions for PSM reform

> 28 The higher pressures against meritocratic-appointment are likely to emerge for the senior-level positions. However, the majority of new recruitments under the project will target the  ̳missing middle‘, and evidence suggests that new recruitment for these categories have been less subject to political capture and clientelism (see cases of recent appointments by PSC).

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might exist today than in the past. These dynamics refer to key determinants of politicians‘ incentives, and include the following:

**_Mounting Pressures by ‘swing voters’ residing in urban areas_** _:_ The current elites seem to have learned the lessons from the last (2007) national elections: under conditions of excessive nonperformance, vote buying and old-style patronage is not sufficient to win popular support, at least in large urban areas (especially Freetown) where people are willing to shift party loyalty subject to the performance of the incumbent, acting as  ̳swing voters‘ (Kandeh 2008). The pressures to build roads and the recent emphasis on  ̳better performing civil service‘ seem to be consistent with this analysis (EIU 2011).

**_The greater time-horizon of incumbent political elites_** : Currently, the incumbent government believes that its electoral changes are better than has been the case in the past, and thus it believes that it will reap the benefits of (particularly pay) reforms. The prospect of re-election might create incentives for long-term vision, to the point that powerful ruling elites might consider the prospects of a stronger and more efficient bureaucracy as an opportunity to maximize and  ̳centralize‘ the rents and move toward more  ̳developmental‘ forms of patrimonialism (Kelsall & Booth 2010)<sup>29</sup> .

**_The diminishing role of civil service as vehicle for rent-distribution vis-à-vis other emerging sectors_** : The potential for rent extraction and patronage from the civil service is decreasing relatively to other sectors (mining, infrastructure), which provide greater opportunities for the political survival of the elites. In other words, while the risk of rent-seeking behavior cannot be entirely discounted, in practice there are reasons to believe that crucial rent-seeking opportunities may not be affected by public service reforms. Also, while still present, rent extraction from the core civil service (largely through allocation of private benefits such as recruitments and promotions) is unlikely to represent a large share of the overall  ̳rent pie‘. Other sectors are likely to be more attractive for patrimonial practices - political appointments in major parastatal agencies provide evidence of this - given the relative ease with which resources can be redirected from these sectors either for personal gain or, most likely, political ends (Robinson 2008). Moreover, the prospects of increase in mineral revenues (figure 4) imply that the role of the civil service as a means of allocating rents and benefits will be

> 29 It must be observed, however, that at the moment it is still not clear what the GoSL‘s true motives are, and whether they lead to pursuing broad-based development or rather to undermining it.

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even smaller in the near future. Therefore, PSM reform is not expected to be perceived as a critical threat to rents that are central for the political survival of the current elites.

**Figure 4: Expected tax revenues from mineral royalties, 2011-2015**

<!-- Start of picture text -->
-<br>Production<br>US$ million ( mill. tons)<br>1,000 35.0<br>900<br>30.0<br>800<br>700 25.0<br>Production<br>600<br>20.0<br>500<br>15.0<br>400<br>Dividend Witholding<br>Corporate  Tax<br>300 income tax 10.0<br>200 Foreign Aid<br>Royalty (3%) Loans 5.0<br>100<br>Grants<br>0 0.0<br>2011 2012 2013 2014 2015 (2008 - 10 Avg.)<br><!-- End of picture text -->

_Source_ : Bank staff‘s estimates.

**_The pressures generated from within the civil service open-up new opportunities for leveraging donor resources_** . The government is currently under political pressure to increase public sector pay in the face of binding fiscal constraints. Recognizing that enhanced pay alone will not improve the effectiveness of the public service, the GoSL has also embarked upon a performance contracting process. This situation offers a strategic  ̳entry point‘ for the Bank and other development partners to leverage financial resources and technical knowledge to support the government in pushing through a pay and performance reform agenda. Moreover, while the electoral process might be potentially destabilizing, both the content and the sequencing of suggested reform paths is such that the risks associated with the electoral cycles can be successfully mitigated. On the one hand, evidence suggests that the Public Sector Reform agenda cuts across party lines. Both parties have publicly expressed the intention to improve the performance of public sector in the country as part of their programmatic agenda. Accordingly, a change in the administration and shift of party in power is not expected

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to produce significant changes in current commitment to reform. Finally, the timing of the interventions is such that critical reforms initiatives will have to be implemented soon after the elections. This is expected to provide greater room of maneuver for the government – regardless of the party in power - as the perceived legitimacy of political leadership is usually at the highest at the beginning of the post-election period.

Despite these recent dynamics, however, the risks associated with the P&PP remain high, as they are inherent in PSM reforms<sup>30</sup> . As observed in the World Bank new PSM Approach ―the prospects for success in PSM interventions can be maximized, but success cannot be guaranteed‖ The key challenge is therefore to enhance the Bank‘s ability to manage risks wisely ̳by reshaping the way in which the Bank engages with clients in selecting and implementing its PSM lending projects‘ (World Bank 2012a).

# **5. Concluding remarks**

So far, the academic and policy debate on PSM reform has largely focused _ex-post_ explanations of why donor-driven interventions failed, but fell short of offering _ex-ante_ credible predictions about what operational solutions are likely to work and what specific form donor interventions should take to succeed in achieving the stated reform objectives. Recent contributions have moved the debate one step further, arguing that existing reforms face limits that can only be overcome with ̳adjustments in reform approach that put less emphasis on reproducing the same reform models and more on better understanding what context-appropriate reforms look like‘ (Andrews 2010; see also Grindle 2007). Despite this understanding, however, development practitioners are still left with little more than general policy recommendations, and practical operational guidance remains largely under-developed. The World Bank‘s new Public Sector Management Approach offers an important contribution toward this goal. It aims to improve PSM operational practices ―by

> 30 From a corporate perspective, the high-risk environment might confirm - rather than undermine - the strategic value for the Bank and the donor community to get engaged in civil service reforms in Sierra Leone. While success cannot be guaranteed, the risk of taking no-action might be bigger for several reasons: _first_ , donors might not have the same leverage in the future and therefore experience higher difficulty in promoting dialogue on PSR reforms; _second_ , the absence of a policy dialogue might further incentivize discretionary and arbitrary decisions driven by the quest for political support (the case of recent increases in health sector salaries is illustrative of what might become a generalized trend); _third_ , failure to influence the public service reform agenda in the country might have broader implications as this may undermine the effectiveness of other sectoral interventions.  This is also consistent with the WDR 2011 observation that ―rates of success in assistance programs should be lower in fragile situations than in stable development situations, since the contextual risk is by definition higher (World Bank 2011b).

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reshaping the way in which the Bank engages with clients in selecting and implementing its PSM lending projects. In project design, the Approach seeks to strengthen the Bank‘s capability to assess risks and returns, with a "diagnostic" rather than "best practice" approach. In project implementation support, the Approach emphasizes flexible instruments in order to adjust to the nature of PSM reform trajectories – which are often incremental and require room for experimentation and constant adaptation‖ (World Bank 2012a: 8). The Approach also suggests more continuous and pro-active engagement with the client and other partners ̳to build trust and to seize political windows of opportunity, as and when they open‘ (Ibid).

By looking at the case of the Sierra Leone P&PP project, this paper has provided an important contribution to this agenda and piloted the new PSM approach by putting in practice its operational principles. By adopting the PSM ̳diagnostic protocol‘, the case of Sierra Leone shows how project design and selection can be improved by identifying the ̳ _functional problem’_ underlying the civil service and institutional " _binding constraints_ ", with a special focus on the political economy purpose that they serve. It also shows how the ̳prospective‘ PE analysis can inform Bank efforts to (i) identify the context-appropriate and politically salient reform solutions for addressing such binding constraints; (ii) design the critical path for achieving these reform objectives; and, most importantly, (iii) select the lending instrument which is more appropriate to broaden the reform space and achieve the desired results. The example of Sierra Leone suggests that results-based lending may well provide a promising opportunity for PSM reforms, as it ̳works with the grain‘ of the country‘s institutional and capacity constraints while also promoting joined-up working among critical players. In addition, the preparation experience from Sierra Leone offers some additional benefits, confirming that a more pro-active method for engaging with the client and stakeholders can indeed broaden the reform space in ways that more traditional approaches would not provide. It is hoped that these important lessons that can help building a body of comparative evidence on what works in PSM, and guide practitioners interested in replicating the approach followed in the Sierra Leone P&PP project for other fragile and institutionally challenging contexts.

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