Colombia Citizen Visible Audit program in Colombia

Branch of Government:
Executive

Open Budget Survey / Public Participation in the Budget Process Score (Out of 100): 2015: 46 – 2017: 15

Stage in Fiscal Policy Cycle

Implementation

Summary

Colombian constitution and laws require that mining royalties be transferred to sub-national governments and allocated to public works in areas such as education, health, nutrition, and water. In order to prevent corrupt practices in the use of royalties, the Colombian Anti-Corruption Presidential Commission launched in 2008 the Citizen Visible Audits (CVA) program to promote transparency of royalty funds and citizen participation in the management of public investments. Since 2012, the CVA program is a central piece of the Colombian Government’s Open Government Partnership.

This practices illustrates the principles of openness, depth, sustainability, inclusiveness and respect for self-expression.

Basic Facts

The government of Colombia defines a citizen visible audit as a strategy to encourage citizen participation in the monitoring and social control of the execution of public funds through a series of community forums, referred to as auditorias visibles in Spanish. These forums, where detailed information about the planning, budgeting, and the progress of public works is provided, bring together authorities, local communities, and representatives from the implementing firm with the aim of generating an open and consultative space where they all can meet, discuss, and agree on the correct completion of the projects.

CVA is led by the National Planning Department (Departamento Nacional de Planeación or DNP), which is an administrative department belonging to the executive branch of government and reports directly to the presidency of the republic. This takes place at the local level and takes place at the implementation stage of the budget cycle.

The Political Constitution (1991) organizes the country as a unitary but decentralized republic, with administrative autonomy to the territorial units comprising 32 departments (regions) and 1,103 municipalities. Although Colombia is a unitary state, a large proportion of public spending (around 25 percent) is carried out by the regional and local administrations. There is a separate royalties budget, Sistema General de Regalias (SGR), covering the receipt and allocation of natural resource revenues, which is approved by Congress every two years;

History of CVA

Colombia has substantial oil reserves and is a major source of gold, silver, emeralds, platinum and coal. Royalties collected by the Government of Colombia increased over the 15 years to 2015 due to higher production and prices of natural resources. In 2008, royalties amounted to more than 6 billion Colombian Pesos per year from an average of 1 billion Colombian Pesos during the 1990s. Oil revenues from all sources flowing to the government averaged 2.5% of GDP per annum between 2011 and 2014, before declining sharply with the large fall in oil prices.[1] An important share of these royalties is distributed among sub-national governments (SNGs) to finance finance public investment projects through the royalties budget. However, the transfer of royalties to 219 SNGs for 1 billion Colombian Pesos (12.5 percent of the total) was suspended due to mismanagement of these funds, including lack of information and adequate reporting, use of funds in activities not allowed by the legal framework, failures in the procurement processes and problems in the execution of contracts.

The Colombian Anti-corruption Presidential Commission inquired into the management of funds and found large-scale corruption. An assessment found that there could be two ways to end the misuse of funds: i) A technical team made up of accounting and engineering professionals who could monitor funds; and ii) a demand-driven approach through CVAs where people on the ground could make the system more transparent. Accordingly, the government disbanded the original Royalties Agency, and brought DNP into a key role.  Subsequently, the presidency mandated the DNP to collaborate with the Presidential Program to Fight against Corruption (PPLCC) to monitor royalty-funded’ projects. The DNP was a highly respected institution with the needed capabilities and local presence in the departments, which made it a good partner for the PPLC. The DNP took an active role and made a strong commitment to improving social control[2] as a tool to improve the local delivery of royalty-funded projects. In 2006, the new Royalties Directorate Director Amparo Garcia Montaña was hired, bringing new leadership and vision. In 2008, the DNP was mandated to control the royalties directly and in the same year, the first citizen, with then-President Álvaro Uribe in attendance.

Why

Despite the increase in royalties from extractive industries, many subnational governments (SNGs) responsible for the execution of investment projects in the territories did not have sufficient capacity to manage large projects. The issue of lack of capacity was particularly acute in smaller municipalities.6 In addition, the central government’s monitoring and control mechanisms could not handle the increase in the number and size of projects, and in the amount of money being transferred to SNGs. The lack of local capacity, along with a loose supervision policy from the central government, created a breeding ground for inefficient management of the royalty funds and projects. Money was reaching local governments, but the impacts of those funds were not reaching the most needed. All these issues contributed to the failure and mishandling of the implementation of royalty-funded projects, which fueled citizen frustration and distrust. So, the basic idea behind CVA  was to improve project implementation by providing information to citizens and local entities about funding, progress, and contracts, and try to focus their attention on the problems as the driver for corrective actions. It also provides the stakeholders with an exchange platform to track the physical execution of public works and improve the delivery of projects. The associated forums help to develop and strengthen the links and communication flows between citizens and local government representatives. As per DNP, the main objectives for the CVAs are[3]:

  • Generate an opportunity and space to share information transparently so as to allow citizens to properly monitor the projects
  • Allow citizens to participate in the management of resources
  • Ensure that projects are as agreed in the contract and within the stipulated time frame
  • Identify and report to local authorities on critical points in the implementation of project

Authorizing Environment

Legal backing for CVA is provided by the Law on Citizens’ Participation which was preliminarily approved by the Colombian Congress on December 6, 2011, and on May 8, 2012, the government promoted new guidelines for the implementation of CVAs.

Who and How

The main actors involved in this participatory process are: (i) a team of experts from the Royalties Directorate, specialized in citizen’s participation, public investments and procurement regulations who chair the hearings; (ii) Beneficiaries Committee, composed by members of the community and serving as the main counterpart between the community, the local government and the contractors; (iii) the local government; and (iv) the community.

Once a specific project is selected in a given municipality, the CVA program consists of the following activities:

(a) Disseminating information through radio, newspapers, invitations and local TV about the CVA program in the neighborhoods where the project takes place.

(b) During the public forum[4] the infrastructure project is introduced to the community. Citizens are told about their rights and entitlements, including the activities they can do to monitor the project and the responsibilities of the executing firm. A group of beneficiaries composed of interested citizens is constituted and trained to carry out community monitoring activities. The training stresses the importance of the role citizens play in the improvement of their quality of life and how CVAs can diminish the possibilities of corruption and improve the effectiveness in the execution of projects financed with resources from royalties.

In addition, the Beneficiaries Committee is provided with training and printed material on the characteristics of the particular public investment including the type of work, its characteristics, costs and expected impact and benefits for the community. As a result, the community is provided with a methodology for monitoring investment works. Progressively, the Beneficiaries Committees take the lead in the hearings from DPN?, and capacities are created among the community for promoting the replication of the methodology in other public works financed with royalty funds.

(c) Periodical public forums are held, bringing together local authorities, members of local communities, and representatives from the firm that carry out the specific project. Typically, each project entails three public hearings at the different stages of the project – launching, supervision and completion. In these public forums, the state of the project is explained in detail to the community, which in turn might voice its suggestions and recommendations. Commitments are made by the firm, the local government, and project supervisor to solve the problems that may arise during the construction of the project. These commitments are monitored by the community, the facilitators from the central government (DNP) and the project supervisor. If a commitment is not honored, facilitators and supervisors intervene to let the local government know about this. If the problem persists, administrative complaints are submitted to the Supreme Audit Body in the central administration.

(d) In between public forums, the beneficiary group monitors the project and collects information on whether commitments are being honored and any other new problem that may arise.

(e) Before making the final payment to the executing firm, the finalized project is presented to the community. The audit results are shared with all interested and concerned stake-holders.

The DNP has signed agreements with the Office of the Inspector General to work together and share information. Despite the fact that it cannot sign agreements with the Office of the Auditor General

and the Office of the Attorney General because of legal constraints, they share information with these offices about every project to ensure proper coordination and effective work. It was common to share both information and monitoring visits. An important step forward was to allow the Office of the Auditor General to use GESPROY (GEStion de PROYectos, or Project Management), the project management information system that includes all the information about the royalty-funded projects and the Royalties Directorate. There were also joint visits and joint private oversight agreements for specific projects among all or some of the institutions. Taking into consideration the difficulties often inherent to coordination among public agencies, the work undertaken by all the organizations was regarded by DNP staff as impressive, and has set a precedent for other collaborative efforts in the government.

Results and Impact

In 2013, The World Bank had published an impact evaluation report on CVA[5] in Colombia. The study found that the CVA program had a positive impact on the community with more than 60 percent of the population ranking the project with the CVA program above other infrastructure projects in the community. The CVA program has a positive and significant impact on the efficient use of public funds, even though citizens’ participation in the program is low. Furthermore, the evaluations of the role of local government officials that helped manage the project were also found to be positive.

  • The program also had a major impact on the percentage of citizens who reported that they themselves or their families received a benefit from the project, proving that implementation and completion of the project have been directly reported by citizens. On the whole, the CVA program succeeded in increasing project performance.
  • The study found that the CVA program had an impact on political accountability and institutional quality. Participants reported that after the program 64 percent would contact their local representatives in case of a service delivery problem. Of these participants, 85 percent believe that participation in the CVA would help solve this potential problem faster.

Another beneficial aspect of the CVA approach is its potential role in taming, or better managing, social conflict particularly stemming from the exploitation of natural resources. As currently can be seen in many Latin American countries, the exploitation of natural resources can involve large infrastructure investments and considerable impact on the natural environment. In turn, such projects may encounter strong local opposition, which may result in social conflicts pitting local inhabitants (often ethnic minorities) against governments and large corporations. Colombia’s CVA program provides a venue for these types of conflicts to be aired and managed before gridlock appears.

Lessons Learned

Reason Behind CVA’s success:  Based on a study conducted by the World Bank[6], when 956 people belonging to a random samples of the 29 projects were asked about the reasons for CVA’s success, the responses provided were: community was given a voice to express its ideas (96 percent); the motivation of the community for the program to work (95 percent); and the visibility that the program brought to the project (94 percent). Among the reasons cited for the program’s failure, the most mentioned were lack of capacity of the population to carry out the audit (91 percent); lack of coordination among actors at the different levels (87 percent); and low community participation (86 percent). Participants stated their own reason for deciding to participate in a CVA program by attending a meeting was in large part to: obtain a benefit for the community (98 percent), acquire information on the project (98 percent), reduce corruption (92 percent), and increase efficiency (91 percent).

Building Partnerships: Coordinating a multi-dimensional response and building robust partnerships with stakeholders were crucial factors in building local capacity. CVAs, with presentations of information and public discussions, raised citizens’ awareness of their own vital role in monitoring the use of public resources, holding government accountable, and ultimately “improving their quality of life”.

Principles of Public Participation in Fiscal Policy

The principles best illustrated by the mechanism are:

Openness: The process is open, information is provided about the purpose and scope of the public engagement. The process is transparent since the citizens are provided with sufficient information in order to undertake the audit. There is also transparency in the sense that the audit is implemented by DNP is an administrative department and reports directly to the presidency of the republic.

Sustainability: This is a long-term and ongoing process, it has taken on an institutionalized format. Additionally, The DNP is trying to move away from a resource intensive process to a more sustainable control system.

Inclusiveness: The social process aims to be inclusive of all groups through inviting villagers as to act as social auditors. The project is also inclusive since each and every local government is audited.

Respect for self-expression: This mechanism allows communities to express their interests freely within the framework of public hearing.

Country Context

a. Type of government: Colombia is a republic with a strong executive branch that has dominance over the government. The government also contain a legislative branch and a judicial branch. The legislature in Colombia contains a congress, and a supreme court predominates the judicial branch. The executive branch contains ministries and administrative departments, and the president retains a vice president as counsel. Governors are elected by the public; mayors are subordinate to the governors. An inspector general is responsible for managing the affairs of the government. The inspector general collaborates with the controller general to oversee fiscal aspects of governing. The Ombudsman’s Office of Colombia protects the civil and human rights of Colombians.

b. Civic space: Colombia has a vibrant civil society that has played an important part to promote democracy and bring peace. According to the British Broadcasting Corp, Colombia is one of the most dangerous places in the world for journalists. They face intimidation by drug traffickers, guerrillas and paramilitaries. Reporters Without Borders has denounced armed groups, corrupt politicians and drug barons as “enemies of press freedom.” However, the private media—both print and television—are free to express diverse opinions, reports Freedom House. In addition, more than 97 percent of the population is subscribed to mobile phone services. To prevent corruption, the 1991 Constitution prohibits all branches of government from granting money or aid to private entities, including Civil Society Organizations. The National Endowment for Democracy states in a report that the “government entities at the national, departmental, district and municipal level may, out of their own respective budgets, sign contracts with private nonprofits . CSOs in Colombia are able to enjoy a variety of tax breaks, including a lower rate than that of commercial companies or, in some cases, are even exempt from paying income taxes.” Besides journalists and CSO activists, community members are also organized under Juntas de Acción Comunal (Community Action Councils) so they can participate in the planning and implementation of development programs that affect their community.

c. Open Budget Survey Scores[7] – Colombia’s score in the 2015 OBS of 57 out of 100 was substantially higher than the global average score of 45, although it was below countries in the region with similar levels of income, such as Brazil and Peru. Since 2012, the Government of Colombia has increased the availability of budget information by  publishing the Citizens Budget. However, the Government of Colombia has decreased the availability of budget information by: Reducing the comprehensiveness of the Year-End Report. With respect to public participation, Colombia’s score of 46 out of 100 indicates that the public is provided with limited opportunities to engage in budget processes, although this is higher than the global average score of 25 and it is above most other countries in the region (except for Brazil). The legislature provides adequate oversight during the planning stage of the budget cycle and adequate oversight during the implementation stage of the budget cycle. However, regular consultations on budget matters between the executive and the legislature do not take place. The supreme audit institution provides adequate budget oversight. Under the law, it has full discretion to undertake audits as it sees fit.