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PROGRAMME FOR THE STRENGTHENING OF THE INSTITUTIONAL CAPACITY FOR REGULATORY MANAGEMENT –PRO-REG
CIVIL HOUSE OF THE PRESIDENCY OF REPUBLIC

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
In the mid 90s, Brazil promoted important changes in the regulatory framework of public services and some strategic sectors of economic activity. Following the international trend, the State sought to strengthen its regulatory role, creating specialized agencies for this purpose. These agencies are present both in areas infrastructure and public services as well as in the area of social regulation. Some years after the adoption of this new model, started a great debate related to the "regulatory autonomy" of the agencies. This debate has been driven by the conflict between the autonomy of regulatory agencies and the mechanisms of ministerial oversight and adjustment of the performance of the agencies to the policies and government guidelines. This conflict has contributed to the increased level of uncertainty in the exercise of regulatory activity, in a context in which the agencies should be more efficient and transparent, and should be more open to social control and participation. Citizen and customers groups, enterprises and business organizations are deeply concerned and affected by the levels or regulatory quality, transparency and accountability. In this context, are imperative institutional strengthening of regulatory agencies and the creation of mechanisms for ensuring improvement in the quality of regulation and management of the regulatory system. This process should include the search for greater efficiency, transparency and legitimacy. Agencies should contribute decisively to the Government fulfilled its commitment to promoting the economic development of the country, strengthening free enterprise and enhancing democracy. These strategic objectives require that the State has increased manageability and transparency

B. Strategic Approach

 2. What was the solution?
The Program for Strengthening Institutional Capacity for Regulatory Management - PRO-REG, was a joint proposal of the Civil House of the Presidency and the Inter-American Development Bank – IDB. The program was established under the responsibility of the Office for Analysis and Monitoring of Government Policies of the Civil House of the Presidency, the executing agency, in accordance with Decree No. 6,062, of March 16, 2007. In its initial phase, it featured resources from internal sources (the Federal Budget) and external (Inter-American Development Bank – IDB, as the Loan Agreement No. 1811/OC-BR). The overall objective of the program was to improve the quality of market regulation carried out under the Brazilian Federal Government through the strengthening of the regulatory system. Thus, it was expected to facilitate the full exercise of the functions of all actors and to improve coordination among the participating institutions, mechanisms for accountability and participation and monitoring by civil society. The program was structured in four components that match their specific objectives, which are: 1) strengthening the capacity of the formulation and analysis of public policies, 2) improve coordination and strategic alignment between sectoral policies and the regulatory process; 3) strengthening of autonomy, transparency and performance of regulatory agencies, and 4) development of mechanisms for the exercise of social control. The objectives of each component are detailed below: 1: strengthening capacity for formulation and policy analysis. Strengthen the capacity of ministries to formulate public policies that affect the sectors in which regulatory agencies operate. Additionally, monitor and evaluate the implementation and outcomes of these policies, taking into account the variables that affect the functioning of markets, the impact on competition and competitiveness, business environment, the capacity to attract investments and the potential effects on consumers and users. 2. improving coordination and strategic alignment between sector policies and regulatory process. Promote coordination and alignment between public policies and regulatory processes. This would be done by supporting the creation of institutional mechanisms to coordinate actions under the Federal Direct Administration, strengthening interagency cooperation between ministries and agencies, exchange of information and feedback of decisions that affect regulatory quality. Moreover, it supported the development of instruments for achieving and formalization of agreements and consensus around the results of sectoral policies, the performance of the agency and its administrative autonomy. 3. strengthening of autonomy, transparency and performance of regulatory agencies. Strengthen the autonomy of federal regulatory agencies, contribute to the improvement of their performance and foster the development of tools that support improving the quality of regulation. 4. Supporting mechanisms for social control practice. Supporting mechanisms of social accountability in regulatory activities, both to facilitate access and participation of civil society, consumers and users in the regulatory process, and to improve monitoring and analysis capacities of these actors about the process.
 3. How did the initiative solve the problem and improve people’s lives?
The State, playing its role as regulator, shall contribute effectively to the protection of consumer rights and promote market stability. According to this approach, regulatory reform in Brazil simultaneously sought to meet the challenges linked to reviewing what was produced during the last sixteen years, and to face the future challenges of promoting institutions that are sound, transparent and efficient. The most relevant aspects of this ongoing process of transformation are linked to coordination between regulatory activity and the formulation of public policies, the consolidation of agencies' autonomy, the strengthening of social participation in regulation, resulting in significant improvement in the process of decision making in the regulatory environment. One of the main initiatives of the PRO-REG was the introduction of the Regulatory Impact Assessment – RIA, in order to improve the decision making process, from the prior assessment of the potential impacts of each standard. This leads agencies to maintain ongoing interaction with all regulated actors and users. There is therefore increased social participation and greater legitimacy of the regulatory process. The Program also increased social capital between regulatory agencies and civil society organizations, and created room for a more cooperative environment about regulatory reform in Brazil.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The implementation strategy of the program was based on the development of a set of activities under each component, as follows: 1: strengthening capacity for formulation and policy analysis. 2: improving coordination and strategic alignment between sector policies and regulatory process. 3: strengthening of autonomy, transparency and performance of regulatory agencies. 4. Support for the social control mechanisms. A more detailed description about the implentação activities related to each component strategy activities are in the attached file.
 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The program was designed by the Civil House of the Presidency, together with the Public Management Secretariat of the Ministry of Planning, Budget and Management. The Brazilian government received technical and financial support from the Inter-American Development Bank (IDB), the Office of Information and Regulatory Affairs (OIRA), linked to the White House, the European Commission, the OECD and the British Embassy. It has focused on supporting the ten federal regulatory agencies: National Water Agency (ANA); National Civil Aviation Agency (ANAC); National Telecommunications Agency (Anatel); Brazilian Electricity Regulatory Agency (Aneel); National Cinema Agency (Ancine); National Petroleum Agency (ANP); National Regulatory Agency for Private Healty Insurance and Plans (ANS); National Agency for Waterway Transportation (ANTAQ); National Agency for Surface Land Transportation (ANTT); and, Brazilian Health Surveillance Agency (Anvisa). Additionally, members of the National System bodies of Consumer Protection and non-governmental non-profit organizations that provide support to consumer associations were involved.
 6. How was the strategy implemented and what resources were mobilized?
The program featured IDB financing in the amount of US$ 3.85 million. The Brazilian government has invested US$ 2,85 million. In addition, PRO-REG has received important financial support from British Embassy, OIRA and OEDC, providing courses and hiring experts to give technical support to Brazilian Regulatory Agencies in the deployment of the Regulatory Impact Assessment pilot projects. The funding allowed the hiring of a great number of national experts, as Wladimir Antonio Ribeiro (University of São Paulo), Humberto Falcão Martins (Publix Institute), Alketa Peci, Caio Marini, Enrique Saravia, Ilvo Debus and Patricia Sampaio Regina Pinheiro (Fundação Getúlio Vargas - Rio de Janeiro), Maria Theresa Alves and James Giacomoni (University of Brasília) and international experts, as Joseph S. Paoli (Argentina), Sebastian Azumendi (World Bank), Delia Rodrigo (Interamerican Development Bank and OECD), Martin Lodge (London School of Economics and Political Science), Kay Wegrich (Hertie Berlin School of Governance), Vindelyn Smith-Hillman (Competition Appeal Tribunal - United Kingdom), Massimo Motta (Pompeo Fabra University and Director of the Barcelona School of Economics). Thus, it was possible to develop a set of training initiatives, including sending Brazilian technicians for training programs abroad, such as the courses offered by George Washington University, in partnership with the Office of Information and Regulatory Affairs - OIRA, USA. Internally, there was a stronger partnership with the National School of Public Administration - ENAP, which provided vital logistical support for the provision of training courses. These courses are taught by renowned national and international experts listed above. Furthermore, several studies were developed through contracting technical consultancy, supporting the regulatory agencies to structure their pilot projects on Regulatory Impact Assessment - RIA. The process also included the mobilization of ministries with regulatory responsibilities, associations of consumer protection and various non-governmental organizations. Increasing social participation was an important instrument of pressure on regulatory agencies to adhere to this new philosophy. It is a process still under construction, but it has allowed the training of over three thousand technicians, many of whom become “peer educators” in their workplaces.
 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
Over the first six years of the PRO-REG important advances were made. Importantly, there was a significant improvement in Regulatory Quality Index, which rose from 0.57 to 0.68. The index takes into account a set of indicators with different weights, evaluating three important dimensions of operation of the agencies: Institutional Coordination and Monitoring; Autonomy and Transparency, and Mechanism of Consultation and Accountability. The PRO-REG also sought to interfere with two components of the index of global competitiveness (GCI): Pillar Institutional (PI) and the Infrastructure Pillar (PIE). In the first six years of the program the country should evolve institutional pillar in 10% and 8% in the infrastructure pillar, taking into account the employed in 2005/2006 position. Between 2005/2006 and 2012/2013 Institutional Pilar evolved from 3.38 to 3.8 (12.4%) and Infrastructure Pillar evolved from 3.2 to 4 (25%). This indicates that the goals were met. As a result, between 2008/08 and 2012/13 the country has advanced five positions in the "basic requirements subindex" in the Latin American ranking of the Global Competitiveness Index, reaching the eighth. It should be highlighted that the country occupies the fifth position in the institutional pillar and sixth position in the infrastructure pillar. This improve in regulatory quality has been directly related to the investment in training. Since the beginning of the program until December 2012 3.538 people were trained: 2,386 from federal regulatory agencies, 534 from supervisors ministries, 210 from state and municipal regulatory agencies, 265 from consumer protection authorities and 143 from other institutions.
 8. What were the most successful outputs and why was the initiative effective?
The main instrument adopted was the Regulatory Quality Index. This index is calculated based on each agency's performance in three dimensions: Institutional and Monitoring Coordination; Autonomy and Transparency, and Mechanism for Consultation and Accountability. The "Institutional Coordination and Monitoring" dimension is evaluated based on the following criteria: the existence of the unit responsible for monitoring the quality regulatory process; existence of indicators for assessing regulatory quality; periodic measurement of indicators of regulatory quality; periodic publication of indicators regulatory quality. The "Autonomy and Transparency" dimension comprises a set of twenty criteria, notably: regulatory framework established by law; duties and responsibilities of the agency clearly defined; officers named must have the approval of Congress; agenda for executive board meetings previously published; disclosure of decisions of the meetings of the executive board; full management of resources by the agency; the agency makes analysis of efficiency and effectiveness, distributional impact analysis and environmental impact analysis; agency does impact analysis on the regulated sector and the investment environment; the agency does impact analysis on users and consumers. The "Mechanism for Consultation and Accountability" dimension is evaluated based on the following criteria: prior consultations/audiences; use of mechanisms of consultation and audience before adopting regulations; consultations and audiences have improved the regulatory activity; existence legal requirement for stakeholders to participate in the audiences; guidelines for public consultation and audience are known by users and consumers; law requires the publication of the draft regulations and the results of public consultations and audiences; the agency conducts at least one public consultation per year; the agency has published the drafts of regulations and public consultations regularly. Each set of criteria allowed the calculation of an indicator and setting targets for its evolution. Regarding the "improved capacity for policymaking two goals were defined: train at least 550 public servants and have a satisfactory evaluation of training courses for at least 80% of the participants. Between 2008 and 2012 were trained over 3,500 servers and the courses have been evaluated positively by more than 96% of participants. In addition, the Federal Government had set a target that at least six regulatory agencies should implement institutional coordination and management tools by the end of 2009. At the end of the period, seven regulatory agencies had implemented at least one new management tool. It is important to highlight the National Telecommunications Agency, which deployed six new instruments.
 9. What were the main obstacles encountered and how were they overcome?
The main obstacle faced by all regulatory agencies, was the difficulty of changing organizational culture. This problem has been overcome with the development of pilot projects aimed at institutionalizing the practice of regulatory impact assessment. The pilot projects are being conducted in all ten federal regulatory agencies and the Regulatory Agency of Delegated Public Services of the State of Ceará - ARCE. Some agencies, such as the Brazilian Health Surveillance Agency - Anvisa, already conduct some type of regulatory impact analysis for any normative act that may be issued. However, this practice cannot yet be considered widespread. Moreover, the technical teams are still learning to handle the process: clearly define the problem, identify the risks and alternatives, and, of course, choose the most suitable analysis methodology.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The experience of the institutional strengthening of regulatory agencies has brought many benefits for the government, for regulated agents and society. The government benefits by the increased efficiency of regulatory activity and by the greater coordination between the ministries, responsible for the formulation of government policies, and the regulatory agencies, responsible for regulating and supervising the delivery of public services by regulated entities. The regulated agents benefit from greater predictability of normative acts and, above all, the previous analysis of the impact of these acts. The previous analysis prevents these agents be required to incur costs and take unnecessary procedures. Moreover, the dialogue with the regulated entities, through public hearings and consultations, allows proper planning of activities and its timely compliance with the new standards. Consumers and users are benefited by the increased effectiveness of normative acts and inspection activity. Where regulation is not adequate, besides does not achieve its purpose, encourages regulated entities to contesting them in Court, leaving consumers and users unprotected. Furthermore, the mechanisms of public consultations and hearings allow consumers and users reveal their real needs. Thus, the rules tend to adjust to these realities, becoming more efficient and effective.
 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The initiative is sustained, at the Federal level, by a Presidential Decree, the existence of two governance institutions (the Executive and Consultive Committees) and the linkage of the Program to a core unit of the Center of Government. It has also a specific budgetary provision and a supporting network of public and private partners. This experience is perfectly transferable to other national and international levels of government. The great challenge of the PRO-REG is to stimulate all regulatory agencies and bodies with regulatory functions, in the federal government, in the states and municipalities to adopt it. The Brazilian experience is already being shared in the Latin American and Caribbean Network for Better Regulation and Competitiveness and can be extended to other countries with relative ease.
 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Improving the quality of regulation involves technical issues beyond political and institutional aspects. Hence the concern of the program to reach consensus, through engagement, from initial planning of the actions of representatives of regulators, supervisors ministries, academia, entrepreneurs, consumers and national and international experts in regulation. It could be highlight the following aspects with respect to lessons learned, specially related to the formulation, implementation and replication: ( A) In formulating: ( i) the strategy of awareness and knowledge dissemination was successful; (ii) the character of dialogue with partners vis-à-vis accession a coercive approach attracted them; (iii) the need to provide governance on the results of the PRO-REG, with agreements and commitments with regulatory agencies and ministries to maximize results; (iv) the need to strengthen the partnership of the PRO-REG and the various government agencies and involve state and local agencies; (v) the need to provide means to improve coordination among those responsible for sectoral policies and regulatory processes; and, ( vi) the need to seek agreements to balance autonomy of the agencies with the control and evaluation of their results; ( B ) in implementing: (i) the progressive maturation of the debates on regulation; (ii) the conformation that, when properly structured, is a viable and convincing consensus around new ideas; (iii) the best use of governance by committees PRO-REG models; (iv) the importance of the involvement of representatives of organized civil society; (v) progress in implementing the network would have helped to perpetuate the work of improving regulatory; (vi) a greater debate about the administrative simplification of the regulatory acts would advance the reduction of costs; (vii) the design of communication for different audiences, with national publicity campaigns, would have involved more representatives of society; (viii) the effectiveness of providing specific consulting, as pilot projects; (ix) the need to provide specialized courses, master's and doctoral degrees in regulation; (x) the result of good training Executor by the Bank in the use of policies in IDB acquisitions; (xi) the accumulation of experience and capability improvement, fundamental to the continuity of the Programme in more advanced bases; and, (xi) the need to structure networks of multipliers, in order to meet the quantitative demand for training of different agencies; (C) Initiatives that can be reapplied: (i) the program as a whole, in the public interest and cooperation with other countries; (ii) the jump of regulatory quality and the outline of the regulatory governance obtained; (iii) the expansion the training activity of the program regionalized to meet demands across the country; (iv) capacity building and training of servers with practical and theoretical tools on the regulation, such as initiatives for fostering reflection; (v) training and events actors directly involved; (vi) technical cooperation and exchange of experience with other countries; (vii) the creation of a network of regulatory interactions to different bodies, such as between agencies and ministries; (viii) monitoring of indicators of regulatory quality, such as through increased enforcement on the agencies in implementing improvements; and, (ix) the result of greater visibility of the regulatory agencies in the executive branch, agencies control and civil society.

Contact Information

Institution Name:   CIVIL HOUSE OF THE PRESIDENCY OF REPUBLIC
Institution Type:   Government Department  
Contact Person:   LUIZ ALBERTO DOS SANTOS
Title:   Mr.  
Telephone/ Fax:   +55 61 3411-1453
Institution's / Project's Website:  
E-mail:   luizsan@presidencia.gov.br  
Address:   PALÁCIO DO PLANALTO, 4º ANDAR, SALA 414
Postal Code:   70150-900
City:   BRASILIA
State/Province:   DISTRITO FEDERAL
Country:  

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