Questions/Answers

A new governance model/mechanism to reform design and delivery of citizen- and business-centric public services was introduced upon the initiative of the President of Azerbaijan in 2016. Broader aim of this initiative was to create more favorable economic and social opportunities for citizens through establishing a new model that continuously improves quality of public services. To this end, the Government established an institutional framework, comprising 3 components: (1) an inter-ministerial group of minister level officials ensure policy-level ownership and sponsorship, (2) a collaboration system that (2.a) convenes government, civil society and private sector, (2.b) ensures that all stakeholders effected by the reforms are heard and (2.c) creates an inclusive and collaborative environment to design and push the reforms; and (3) a coordination system that (3.a) enables ownership of all key processes, (3.b) enhances stakeholder capabilities and (3.c) drives the establishment and improvement of the infrastructure and tools required to run the new model. The initiative addresses two challenges: (1) Do things faster. Existing mechanisms that governed design and delivery of public services involved multiple iterations across several government agencies and layers. Bringing reforms into life through this mechanism took a lot of time, despite heavy efforts of all stakeholders. (2) Do things better. Although the Government was eager to listen to the voice of citizens, there was limited room for engaging civil society/citizens actively in design of public services in a structured way. In due course, the specific objectives were to create a sustainable institutional framework that learns and improves over time and serves as (1) a collaboration platform that eliminates coordination failures across government agencies and layers and (2) an inclusive mechanism facilitating citizen-centric public service design and delivery, especially for – women, people with disabilities and elderly– who may have additional difficulties in accessing public services.

The model is an integrated mechanism fostering sustainable development through a 3-component institutional framework: 1) Policy-level ownership rests with the inter-ministerial group of minister level officials to ensure policy harmonization with support of the Center for Analysis of Economic Reforms and Communication; 2) Topic-dedicated working groups, critical elements of the collaboration system, assess the needs, collect inputs and drive improvement. Groups involve several organizations but are led by one institution to achieve balance between collaboration and accountability; 3)Secretariat, the key enabler of the coordination system, owns the process ensuring coherence among working groups’ efforts and preventing duplication of efforts.

1) SDG 5: Gender equality. Local women were experiencing extra difficulties (e.g. due to household priorities) in accessing public services. The initiative facilitated provision of public services digitally, unblocking women’s access to those services (SDG 5A and SDG 5B). Consequently, annual number of legal entities established by women increased by 110% between 2016-2019. 2) SDG 8: Decent work and economic growth. The initiative helped remove barriers for SMEs to emerge and grow. For instance, processes related to starting a business, paying taxes, etc. have become leaner, cheaper, more accessible. Consequently, number of SMEs increased by ~30% between 2016-2019 (SDG 8.3). 3) SDG 9: Industry, innovation, and infrastructure. One example is, the initiative facilitated the creation of a credit bureau and integration of its database with multiple data sources, helping banks better assess loan risks and enhancing financial inclusiveness. Consequently, Doing Business Report (2020) ranked Azerbaijan #1 globally in ‘getting credit’ dimension (SDG 9.3). 4) SDG 17: Partnership for the goals. Inter-ministerial group ensures policy-level harmonization across topic-dedicated working groups (SDG 17.14). Inclusion of civil society and private sector in topicdedicated working groups as well as simplification of citizen engagement aims to increase effectiveness of reforms (SDG 17.17).

Sustainability is ensured in 3 ways: Organizationally, permanent nature of working groups enables building collaborative relations and expertise, while the groups’ inclusive nature ensures effectiveness of reforms via continuous feedback from stakeholders. Financially, the model is cost-effective as it leverages existing resources of institutions. Policy-wise, the model is regulated through legislative acts and does not depend on any institution or official. These factors enable sustainable impact delivery in several terms. Socially, the model helps provide equal services to everyone. Economically, it helps to improve the business environment. Environmentally, it helps reduce paper utilization through digitalization of public services.

Earlier reform approaches to improve public services faced several challenges: 1) Reforms required multiple iterations among institutions and substantial time; 2) Government agencies assigned people to working groups on reform basis rather than on continuous basis; 3) No tool existed to facilitate citizen participation in the process. Consequently, experience from earlier reforms could not be leveraged as people involved could be different for each reform, collaboration among working group members could not be taken to the next level and effectiveness of reforms could not be improved due to limited proactive feedback from public. With close support of the Center for Analysis of Economic Reforms and Communication, the current initiative introduced permanent topic-dedicated working groups which helped to reduce the time required for alignment among institutions as group members pushed reforms in their respective institutions. The permanent nature of topic-dedicated working groups also allowed its members to build experience and collaborative relations with other group members. The initiative also provided the citizens with online means to guide the reform processes. Digital engagement platform, introduced in 2019, provides citizens with access to view the meetings of all working groups and enables convenient feedback and idea submission to any meeting.

Among objectives of the initiative were citizen-centric improvements in public services especially for women who faced considerable challenges in accessing public services. Therefore, the initiative involved women into key working groups, where ~30% were women, to keep women’s problems in focus. Similarly, Center for Analysis of Economic Reforms that coordinated the initiative, achieved 46% women ratio in its personnel, thereby creating equal opportunities for women to shape reforms. Furthermore, the initiative facilitated the introduction of online services enabling women to establish and run their businesses from home. Consequently, annual number of businesses established by women increased by 110% between 2016-2019.

The beneficiaries include the following: - Women, people with disabilities and elderly: digitalizing public services facilitated convenient utilization of public services without a need to visit institutions physically; - SME owners: improvements in public services were targeted at simplification of the processes related to business environment, removal of barriers and creation of opportunities for everyone to build their own businesses. For instance, new e-tender reform provided SMEs with opportunity to get access to public procurement tenders. Similarly, simplification of procedures for starting business facilitated the growth of new businesses; - Citizens: providing everyone with equal access to public services was a crucial component of the initiative. Example of this could be the reform on enhancing financial inclusiveness through establishment of a credit bureau; - Public sector: the initiative helped institutions in two ways: 1) reduced organizational burden on provision of public services through digitalization; 2) built capabilities of reform team members through on-the-job reform experience, formal trainings and knowledge sharing; - Civil society (Non-government organizations, academia): the initiative helped civil society to be directly involved in the reform process via participating in working groups. Around 25% of all working group members were representatives of civil society.

The initiative passed through three phases including establishment (2016-2017), progression (2017-2018) and innovation (2018-2019) phases. During the establishment phase, the core of the new Reform Model was designed and the implementation of some initiatives started. Inter-ministerial group, its secretariat and 19 groups on different topics of business environment were formed in this phase.During the progression phase, commission passed legislations regarding the governance of the secretariat as well as of working groups, and designed a high-level action plan for 19 focus areas which were later detailed by working groups. 5 international assessment reports on business environment (Doing Business Report, Global Competitiveness Report, Economic Freedom Index, Global Opportunity Index, and Global Innovations Index) were used to prepare the high-level action plans as a measure to evaluate the effectiveness of working groups. In the innovation phase, several tools were launched to improve the coordination process. First, a web-based platform for the model was launched. Second, analytics tool enabling a fast and convenient analysis of the business environment was introduced. Next, digital communication platform was established in order to increase the efficiency in the coordination of the process within focused/dedicated working groups and between commission and working groups. Its key benefit was significant reduction in paper use which otherwise would be unavoidable with many parties involved. The most recent innovation is the introduction of engagement platform that intends to increase public participation in the process. Monitoring of the reform implementation is realized by the respective working groups once the reform is confirmed and assigned to an institution for implementation. Global reports mentioned earlier (5 key reports) are used as an evaluation tool to constantly assess the progress of the country on 19 different areas. In addition, a separate evaluation of the initiative was conducted by McKinsey & Company, a global consultancy firm.

- Limited reform experience was an obstacle at the beginning as people did not know where to start the reforms process: Organized trainings, enabled knowledge sharing and introduced digital benchmarking tool to guide them;- People raised concerns regarding the applicability and effectiveness of the new model: Constantly educated people, monitored their activity and replaced inactive members;- No tools existed to facilitate feedback from public: Designed a digital engagement tool enabling convenient feedback via web-platform;- No infrastructure existed to facilitate communication process as number of people involved in the model increased: Launched a digital communication platform

1)Digital civic engagement tool allowed convenient feedback & idea submission from public; 2) Introduced Predictive Impact Analytics of all legislative acts based on a new mechanism that combined the elements of RIA (Regulatory Impact Assessment); 3)Digital communication platform developed in Azerbaijan was the first such solution;4) Digital benchmarking tool, introduced for convenient analysis of business environment and data visualization, can be leveraged globally; 5) The institutional framework established a bridge among institutions, thus driving capability building and collaboration and faster alignment among institutions; 6)Introduced agile working principles in the reform process which strengthened and accelerated reforms.

The experience of many countries and organizations were investigated and some were reapplied. For instance, leveraging the concept of a global benchmarking tool used by OECD and IOTA, the initiative introduced a digital benchmarking tool, to compare countries based on the state of their business environment. Similarly, leveraging the experience of countries using Regulatory Impact Assessment (RIA), the model introduced a new approach utilizing the RIA criteria. Moreover, benchmarking Azerbaijan to other countries on different dimensions of business environment, defining the best practice countries on those dimensions and analyzing their experience are central elements of the initiative.

Initial discussions are in progress with several countries including Uganda and Kenya, for the reapplication of the model. In this context, materials were shared and further knowledge transfer is in progress. Several institutions have already started adapting and replicating certain elements of the model (e.g. AzerSu OJSC, AzeriGas PU, Financial Markets Supervisory Authority). There are many examples of the working group members who, inspired by the model’s success, initiated reforms in their institutions and applied the model’s approach. For example, following successful reform on online access to electricity networks, group members initiated similar reforms for other utility services (online access to water and gas supply) in their institutions leveraging approach and the ways of working of the model. Similarly, following successful simplification of starting a new legal entity, working group members initiated a similar reform on institution level for simplification of the process of sole proprietorship establishment. Important achievement is the capability transfer from the initiative to institutions and wider reapplication of the working ways. In addition, with the initial results, civil society and private sector showed more interest to the initiative. While only 110 people were involved in working groups in 2016, this number reached > 300 in 2018.

The initiative is based on a few principles ensuring its transferability. IFC vice-president Hans Peter Lankes, during his visit to Azerbaijan in September of 2019, recognized the success of the model and informed his intention to promote it for reapplication in other countries. The core principles ensuring transferability of the model can be grouped under organization, processes and tools components; - Organization: 1) Establishment of a central body independent from other institutions to coordinate the overall process and harmonize policies across different areas; 2) Establishment of topic-dedicated working groups that engage representatives of relevant government agencies in a continuous collaborative process, to ensure faster alignment among institutions;- Processes: Establishment of continuous communication process that aims to address challenges presented by any legislative scheme of reform design and implementation. Objective in these processes is to solve the complexities in the existing regulatory schemes through new collaborative approaches; - Tools: Constant analysis of the model, identification of challenges and design and introduction of tools in order to address the challenges. Examples could be the communication platform, analytics tool and engagement platform introduced in the case of Azerbaijan. However, other tools could be required in different cases.

The low-cost / high-impact nature of the initiative has proved its efficiency through effective utilization of existing institutional resources. The new reform governance model involves not only ministries, but also private sector organizations, public unions, civil society organizations in its organizational structure. While the initiative uses existing resources, it aims to make processes more efficient through collaboration and effective coordination. Since the launch, the initiative involved 19 topic-dedicated working groups and 300 people who spent 789K man-hours and attended 627 working group meetings to design 136 initiatives and pass 55 legislative documents.

The initiative ensures sustainability on 3 levels: 1) Permanent nature of working groups that enables development of expertise and collaborative relations, clear ownership/leadership in process coordination and in each working group, and continuous capability building ensure sustainability on institutional level. 2) The model functions with little incremental costs since members of working groups are appointed from existing institutions. The limited budget required for different purposes is provided via the Center for Analysis of Economic Reforms and Communication. 3) The functioning of the model is regulated by separate legislative acts (decrees, decisions, laws) making it independent from other institutions.

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The initiative was evaluated by World Intellectual Property Organization (WIPO) and McKinsey & Company. WIPO’s evaluation was based on interviews, information requests and surveys aiming to analyze whether the initiative was successful in building public respect for IP. WIPO rewarded the Center for Analysis of Economic Reforms and Communication with IP Enterprise Trophy for designing and implementing the model successfully. McKinsey & Co’s evaluation utilized a systematic diagnostics approach that is based on a 4-step feedback loop analysis: 1) Context analysis (Why/Rationale); 2) Overview of model (What/How); 3) Performance check (The impact); 4) Health check (The sustainability).

McKinsey’s evaluation included a number of analyses through different measures on the effectiveness of the initiative: 1) Analysis of economic indicators (GDP progression, foreign trade, number of new SMEs and legal entities established yearly, etc.); 2) Analysis of key global reports and benchmarks assessing business environment of countries – Doing Business, Global competitiveness, Economic Freedom Index/Reports; 3)Analysis of targets and results of the commission’s working groups; 4) Interviews with working groups as well as private sector organizations to understand the work done for improvement in public services; 5)Opinions of international organizations and businesses about the impact of the initiative

McKinsey’s evaluation focused on understanding the impact of the initiative on several dimensions (i.e. areas of business environment, macroeconomic indicators, SME growth climate, economic opportunities for women). Key findings revealed the following aspects: a) Effective institutional framework helps drive collaboration and keep costs low; b) Introduction of innovative tools facilitates coordination; c) Approach for involving private sector, academia and civil society helps ensure the effectiveness of reforms via early feedback; d) Efficiency in utilizing existing resources and institutional base, continuous capability building and regulatory independence ensures sustainability of the model; e) More importantly, the model has been effective in improving the business climate in the country: 1) Process improvements were achieved across all areas of business environment; 2) Business climate positively affected establishment of new businesses and employment; 3) Reforms positively affected women entrepreneurship. The model’s focus, as a result of the evaluation, shifted towards three key directions: 1) Enable working groups for wider digitalization of public services; 2) Drive the effectiveness of working groups further via improving the existing digital tools and introducing new ones; 2) Promote the new approach to reform governance for its reapplication of the initiative both locally and globally, in order to extend the impact

Horizontally: Initiative assembles number of groups dedicated to specific topics of business environment. Each group typically consists of ~25 permanent members that represent all relevant government agencies, private sector organizations, public unions and business associations. Collaboration system allows continuous communication among group members. Members, leveraging digital communication platform, communicate offline on a daily basis. Regular physical meetings, on important milestones, are decision oriented. As reforms are designed, each group member drives the fast alignment within their respective institution. The group also gets feedback from civil society and private sector since they are part of each group. Vertically: Inter-ministerial group, chaired by Deputy Prime Minister, assembles six minister-level executives to drive its mission and govern the implementation . Senior level composition of the commission ensures adequate focus. Inter-ministerial group also comprises a secretariat to run its daily operations and to coordinate topic-dedicated working groups. Secretariat, with ongoing support of the Center for the Analysis of Economic Reforms and Communication, owns the overall process, ensures coherence among different working groups’ efforts and prevents duplication of efforts among working groups. Secretariat facilitates the ongoing work of the groups and works towards optimizing the processes and building capabilities.

Initiative was launched with close engagement of Center for Analysis of Reforms and Communication, Presidential Office and Institutions that 7 minister-level officials forming the current inter-ministerial group represent. Implementation of the model heavily relies on the close engagement of government agencies within each working group. Each group has dedicated members from all relevant working groups on voluntary basis. On top of government agencies, there are many part-time group members representing private sector, academia and civil society organizations. These members provide early inputs on the suggested reforms within each group. Overall, more than 300 participants were engaged from government, private sector, academia and civil society in the implementation of the initiative. During the evaluation of the initiative, McKinsey & Company engaged with all working groups via information requests and phone calls, and interviewed members of 5 key working groups. Interviews involved around 15 people and not only the members of working groups but also the institution representatives directly involved in implementation of the reforms. Besides, employees of the Center for Analysis of Economic Reforms and Communication as well as of Presidential Office also provided insights about the initiative throughout the evaluation process.

The initiative generates learnings and continuously improves itself as illustrated by the introduction of digital tools to address specific obstacles encountered during implementation of the initiative. Certain lessons learned through this journey are particularly important in terms of re-applicability of the model in other contexts: a) Changing the mindsets of people took time but was the most important enabler of success; b) Collaborative work of representatives of different institutions helped achieve things much faster; c) The novelty of the management style (involving diagnostics, implementation and impact analysis for each topical working group) caused concerns among people at the beginning, but with the first achievements of the initiative, the initial concern was replaced with enthusiasm and motivation. To improve the initiative following actions are on the way: a) Engage more citizens and civil society and more continuously; b) Conduct additional benchmarking with reform models in other countries for further improvement; c) Local reapplication at institution level (e.g. each institution can create permanent reform teams on the topics that are not covered in the initiative; d) Global reapplication by sharing the experience and benefits of the model with other countries; e) Integrate communication tool with the communication platforms of institutions.