CHAPTER ONE

BACKGROUND OF THE STUDY

            Introduction

Over the past three decades, a number of new public management (NPM) approaches and values, typically associated with the market and the private sector, have been introduced to improve administration and management practices in government, in the developed, developing and transitional economies (Larbi, 1998; Ofosu-Adarkwa, 2000; Kickert, 2001; Caulfield, 2006). These reform strategies and approaches have been drivened and influenced by several factors  and circumstances including changing economic, social, political conditions and technological development (Larbi, 1999; Yamamoto, 2006; Caulfield, 2006).

The executive agency concept is a key element of the NPM and arguably, one of its most adopted policy options and proposals (Laking, 2002; Moynihan, 2006; Massey, 2006). Moynihan (2006) further points to the apparent worldwide acceptance in the use of the agency approach for enhancing administrative and management capacity of the state and improvement in the public sector delivery of services. Consequently, the 1980s and 1990s witnessed a rise in the  emergence of autonomous organizations and executive agencies in virtually all the countries in the global arena (Verhoest et al. 2010; Sulle, 2010). The concept of an executive agency according to Mutahaba and Kiragu (2002: 63) “was in search for alternative options for improved public service delivery of services’’ and for the promotion of efficiency and effectiveness in government (Dodoo 1997). Scholars of executive agencies have argued that autonomous public organizations are more efficient and effective than civil bureaucracy in view of the autonomy powers, control and accountability mechanisms embedded in the agencies

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(Joshi and Ayee, 2009; Sulle, 2010; Atta-Mills, 2002; Manasan, 2003; Kim and Cho, 2016). Due to this NPM reform, managerial, operational, and administrative autonomy have been strengthened through the reduction of control often applied to inputs in the execution of public policies and the provision of services (Ohemeng and Adusah-Karikari, 2017; Kim and Cho, 2016; Verhoest, 2018; Moynihan, 2006).

The resultant effect of this phenomenon is the introduction of accountability mechanisms and tools such as the performance contracting, financial incentives and stronger competition. According to Kim and Cho (2016), though the structural designs of agencies may differ, two main control mechanisms such as result-oriented performance contracts and performance- enhancing reward systems are used to regulate the conduct and behaviour of executive agencies. Some of the key assumptions of the NPM doctrine which favour the creation of autonomous public organizations are result control and financial incentives which the organizations enjoy, empower them to improve on their performance and quality standards in service provision through the use of their autonomy and self-governing powers to deal swiftly with financial and human resource issues (Pollitt et al, 2001; Joshi and Ayee, 2009; Kim and Cho, 2016; Ohemeng and Adusah-Karikari 2017). According to Van Thiel and Pollitt (2007), the ideas of autonomy and result control have their root and origin from the principal-agent theory. Kim and Cho (2016) have further argued that civil bureaucrats and public managers usually pursue agenda that are not consistent with the concerns and aspirations of the national government. The setting up of executive authorities is therefore, an effort towards organizing the focus and interests of the principal and the agents by restructuring the incentive system.

This pattern in public service management and organizational reform across the globe is aimed at enhancing decentralization of management, involving more managerial, operational, financial and administrative autonomy and devolution of budgets and financial control for semi-

autonomous public entities on the British `executive agency’ lines (Ofosu-Adarkwa, 2000; Larbi, 1998) and debureaucratize public services (Ingraham, 1996). The executive agency concept has resulted in the focus on the creation of independent bodies as single purpose organizations mandated and empowered for the provision of specific tasks and/or services leading to a movement from unitary public administration, and separation in policy design, implementation and evaluation (Ohemeng and Adusah-Karikari, 2017). The hiving off of agencies from the civil service was also aimed at building the capacity of the sector by instituting an increasingly flexible and performance-oriented sector (Laegreid and Verhoest, 2010; Overman and Thiel, 2016).

According to Verhoest (2018), agencies as organizational reform strategy is not a new idea but the NPM period change the rationale behind agency creation and the governance mechanisms of agencies. The traditional executive agency was aimed at creating checks and balances to counter the royal power in the case of Sweden, partnering with other societal interests’ groups in corporatist environments such as Belgium and minimizing political risks and maintaining stability in the execution of national goals, objectives and programmes in the ever changing public space. However, the NPM styled agency model was developed in 1980s in Europe by the United Kingdom government and other Anglo-American states and intergovernmental organizations (IGOs) such as the International Monetary Fund (IMF), the World Bank and the Organization for Economic Cooperation and Development (OECD) (Verhoest, 2018). Pollitt et al (2001) also posit that policy prescriptions and loan conditionalities of IGOs caused astronomical rise in the creation of agencies across the globe.

Essentially, the NPM agency model sought to make governments lean by making public sector organizations function like private entities and incorporate market values into them. The NPM executive agency, therefore, seeks to promote specialization, efficiency, service innovation and

responsiveness to customer groups in diverse market situations and organizational environments. The executive agency concept is based on the principles of structural and functional disaggregation, competition and performance contracting and independence in management matters such as personnel, finance and budget (Dunleavy et al, 2006; Sulle, 2010; Ohemeng and Adusah-Karikari, 2017; Moynihan, 2006; Overman and Van Thiel, 2016; Verhoest 2018).

Likewise, Ghana in the 1980s and 1990s followed the executive agency approach towards reforming its public sector through the changes in its tax revenue administration (Atta-Mills, 2002; Joshi and Ayee, 2009), water and health sectors (Larbi, 1998; Ohemeng and Adusah- Karikari, 2017). In the view of Ohemeng and Owusu (2015), Ghana is the first developing economy that established the executive revenue agency in the mid-1980s, with a ministerial level secretariat which became fully integrated in 2010. Similarly, the executive agency model is manifested in the creation of the Local Government Service Act 656, 2003, with a secretariat mandated for the management, development and provision of local government services and functions to the Ghanaian citizenry in the various sub-national and local government areas. Again, the establishment of the Community Water and Sanitation Agency (CWSA) in 1997, charged with the responsibility for providing all year-round access to efficient, quality and sustainable and clean water and sanitation services and facilities to the underserved and rural districts in Ghana is also indicative of the setting up of an executive agency.

According to Aryeetey and Ahene (2005), the post-Cold War period witnessed a minimal role for central government in economic activities including the delivery of public services in developing countries. Consequently, private sector ownership and involvement in critical areas of the public service delivery implied the setting up of independent supervisory agencies to provide regulatory and oversight roles, and ensure compliance, efficiency, competition, affordable pricing and quality of services (Aryeetey and Ahene, 2005). In the light of this, two

major regulatory executive agencies such as the Public Utilities Regulatory Commission (PURC) and the National Communications Authority (NCA) were set up to oversee the activities of corporate entities and players involved in utility service provision, namely, water, electricity and telecommunication in Ghana.

According to the OECD (2005), the implementation of decentralized health policy is the most pronounced development idea in several developing countries. Similarly, Bossert and Beauvais (2002) argued that health sector management reform policies in developing societies are issues  of keen interests to many international organizations such as the World Bank, Pan American Health Organization (PAHO), World Health Organization (WHO) etc. The concept of autonomous hospitals according to Govindaraj et al (1996), refers to hospitals that decide on their own governance framework and policies relating to finance, administration and management. Govindaraj et al (1996) views hospital autonomy in two perspectives of ‘type’ and ‘degree’. According to them, the first approach involves ownership and authority whilst the second approach relates to the hospital management functions – general administration, human resource management, governance and financial management. The organizational, operational and management changes in Ghana’s health service delivery began with the promulgation of the Hospitals Administration Law 1988, (PNDCL 209) which became effective in 1990. The Law granted limited managerial powers to the Korle Bu Teaching Hospital board (KBTH) and for the first time created a board of governors’ model with substantive management functions (Frimpong-Boateng, 2015).

The health service reforms were further boosted and strengthened in the mid-1990s with the enactment of the Ghana Health Service and Teaching Hospitals Act 525, 1996. The Act 525 reinforced the autonomy powers of the KBTH and granted the board extensive policy making and management functions in the areas of governance, financial management, general service

administration and human resource management (Govindaraj et al, 1996). Specifically, Act 525 mandates the KBTH to undertake three main primary goals: (i) the provision of advanced clinical healthcare to support the ones provided by the Ghana Health Service; (ii) serve as the training ground for the teaching and training of both undergraduate and postgraduate health personnel and (iii) undertake research into health issues to improve public health standards and quality in Ghana (Republic of Ghana 1996).

            Problem Statement

Even though Ghana implemented one of the most comprehensive political decentralization policies in Africa in 1988 with the creation of 110 District Assemblies (Ayee, 1994), not much attention was paid to management decentralization within the public service. In the health and other major public services, decision-making on operational and implementation matters as well as allocation and control of human and financial resources continued to be centralized (Larbi, 1998; Gbagbo, 2015 and Adane, 2015). According to Ayee (2001), the Mills-Odoi Commission on the Structure and Remuneration of the Public Service and the Okoh Commission on the Structure and Procedures of the Civil Service highlighted the weak and disorganized public organizations involved in service delivery and policy implementation, and recommended a separation between ministerial bodies in charge of policy making, strategic planning, monitoring and evaluation and the decentralized agencies responsible for implementing policies and decisions.