In the mid 2000s, Indonesia’s Directorate General of Taxes (DGT) was still struggling to recover from the shock of the Asian financial crisis of the previous decade. Tax revenue had plummeted during the crisis, and the collection rate remained well below accepted standards, as well as below the standards of many peers in the region. In 2006, the directorate’s new leaders launched a nationwide overhaul, drawing lessons from a successful pilot program that had reorganized the DGT’s biggest offices and enabled large taxpayers to settle all of their tax-related affairs with a single visit to one office rather than having to go through multiple steps. Expanding that pilot to more than 300 locations across a 3,000-mile archipelago presented no small challenge. The implementers built a digital database that linked all offices to a central server in the capital of Jakarta, developed competency testing and training that bolstered the quality of staff, and created new positions to improve relationships with taxpayers. Other measures aimed to reduce corruption and tax fraud. When political and practical crosswinds frustrated the DGT’s efforts to build the workforce its leaders thought it needed, the agency turned to big-data analytics to improve compliance and broaden the tax base. By 2018, domestic revenue mobilization had plateaued, but the changes introduced had produced important improvements. The question was then what to do to broaden the base further without decreasing incentives for investment or raising administrative costs to unsustainable levels.

Leon Schreiber drafted this case study based on interviews conducted in Jakarta in January and February 2018. Case published April 2018.

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By the mid-2000s, Indonesia had recovered from a devastating economic crisis and made significant progress in transitioning from a dictatorship to a democracy. However, the country's vast state bureaucracy continued to resist pressure to improve operations. In 2006, President Susilo Bambang Yudhoyono tapped economist Sri Mulyani Indrawati to transform Indonesia's massive Ministry of Finance, which was responsible not only for economic policy making but also for taxes and customs. During four years as minister, Mulyani introduced new standard operating procedures, raised civil servant salaries, created a new performance management system, and cracked down on malfeasance. Her reforms turned what had once been a dysfunctional institution into a high performer. But ongoing resistance illustrated the difficulties and perils of ambitious bureaucratic reform in Indonesia.

This case study was drafted by Gordon LaForge based on research by Rachel Jackson, Drew McDonald, Matt Devlin, and Andrew Schalkwyk and on interviews conducted by ISS staff members from 2009 to 2015. Case published May 2016. Other ISS case studies provide additional detail about certain aspects of the reforms discussed in this case or about related initiatives. For example, see Instilling Order and Accountability: Standard Operating Procedures at Indonesia's Ministry of Finance, 2006-2007.

In 2002, Lithuania was struggling to defeat corruption, which had flourished during the Soviet occupation. Once viewed as the key to survival in an administered economy, offering gifts for services had become an accepted social norm. More than a decade after Lithuania regained independence, polling showed that although 77% of Lithuanians considered this form of corruption a problem, few were willing to change behaviors they saw as practical. The country’s recently created anti-corruption agency, the Special Investigation Service, faced the challenge of changing those social expectations. It decided to focus on a new generation of Lithuanians. The Modern Didactics Center, an educational nongovernmental organization, and a dedicated group of teachers stepped in to help the agency work toward the ambitious goal of changing the attitudes of students across the country. The group experimented with a variety of educational approaches both in and outside the classroom, including a curriculum that integrated anti-corruption elements into standard subjects and projects that encouraged students to become local activists. Despite resistance from educators that limited the program’s scale, the effort developed new approaches that illuminated the ethical and practical downsides of corruption for students across the country.

Maya Gainer drafted this case based on interviews conducted in Vilnius, Mažeikiai, and Anykščiai, Lithuania, during February 2015. Case published June 2015.

Lagos State began the twenty-first century as a boomtown crippled by crime, traffic, blight, and corruption. A regional economic hub and burgeoning state of 13.4 million people, the megalopolis had a global reputation for government dysfunction. Two successively elected governors, Bola Tinubu and Babatunde Fashola, worked in tandem to set the state on a new course. Beginning in 1999, their administrations overhauled city governance, raised new revenues, improved security and sanitation, reduced traffic, expanded infrastructure and transit, and attracted global investment. By following through on their promises to constituents and forging a new civic contract between Lagos and its taxpayers, Tinubu and Fashola laid the foundations of a functional, livable, and sustainable metropolis.
 
Gabriel Kuris drafted this case study based on interviews conducted by Graeme Blair in Lagos, Nigeria, in August 2009 and by Kuris in Lagos, in October 2011 and in Providence, Rhode Island, in November 2012. Case published July 2014.

Associated Interview(s):  Babatunde Fashola, Bola Tinubu

When Mohamed Abdel Salam El-Mahgoub became governor of Alexandria in 1997, he took charge of a storied Egyptian city on the verge of collapse. Garbage and trash lined streets that were clogged with traffic. Roads, highways, water and sanitation systems required urgent repair. Corrupt municipal employees exacted costly bribes for business licenses and building permits. The city’s economy had slowed, as investors, put off by the city’s fading infrastructure and poor services, took their money elsewhere. Alexandria’s fortunes began to turn at the beginning of a nine-year period that came to be called “the Mahgoub era.” Determined to restore the city’s greatness, Mahgoub encouraged citizen participation, formed alliances with key groups, and won public support via high-visibility projects.  He made government more business-friendly by tackling corruption that inflated the price of required documents, and he lured back investors with tax incentives and improved infrastructure. During his nine years in office, Mahgoub saw Alexandria’s economy bloom, fueled by construction projects and an improved business climate. Although some reforms lost momentum when Mahgoub was promoted to a cabinet position in 2006, his accomplishments as governor underscored the value of citizen participation in Egypt’s centralized government.

Violence in neighborhoods on the outskirts of Cape Town, South Africa, escalated in the late 1990s. In areas like Manenberg and Hanover Park, gangs dominated community life, interrupted the delivery of public services, and in some instances threatened civil servants working in housing offices, medical clinics, and libraries. Following the African National Congress’s victory in the first democratic local government elections in 1996, city officials sought new ways to reduce the impact of the gang presence on the delivery of community services. Ahmedi Vawda, executive director of the Directorate of Community Development (called ComDev), and his team thought that the only ways to succeed were to build confidence among residents—thereby increasing their resolve in standing up to the gangs—and to lower the attraction this way of life had for young people. By giving a greater voice to residents, including greater discretion over service delivery, the team hoped to build social capital and gradually enlarge the space under public control. The ComDev team mapped the economic and social challenges facing the most-vulnerable communities and created Area Coordinating Teams (ACTs) that enabled local organizations to play major roles in governance. These forums increased community understanding of local government responsibilities—along with the community’s role in development—by identifying areas where municipal funding could support community initiatives. Although the ACTs did not take direct action against the gangs, in the neighborhood of Manenberg they provided a space for local participation in development projects and laid the foundation for progress by soliciting local feedback for city services, by asserting the presence of government in previously insecure areas, and by restoring a degree of community confidence.