Governance: Abu Dhabi authorities streamlining the state

06 June 2008
The Abu Dhabi authorities are implementing ambitious plans to overhaul the public sector and open up the economy, using private companies to drive economic growth.

The Abu Dhabi government has managed to maintain a brisk pace as it overhauls its public administration. In August 2007, it revealed plans to outsource non-core government activities to the private sector as part of a major departmental overhaul set out in a new policy agenda for the emirate.

These broad goals are to be realised in the outsourcing of key state functions stretching from taxi provision, firefighting and police forces training to general administrative activities such as payroll, data collection and recruitment.

The new focus ties in with a renewed emphasis on strategic planning, evident across the UAE. Dubai brought out its own strategic plan in February 2007, setting out a series of target-driven aims to make doing business easier and to raise the quality of life. The plans are also designed to address the lack of co-ordination between different government bodies and streamline working processes - a key feature of Abu Dhabi’s restructuring scheme.

Setting targets

The organisation in charge of the shake-up of the government is the Abu Dhabi Government Restructuring Committee (ADGRC), which was formed in 2005. It has set out targets and timelines for streamlining the state. Each department is charged with finding ways to provide better services at lower cost, deploying ‘more technology and less bureaucracy’. For example, restructuring of the municipal services is expected to deliver a 35-40 per cent reduction in the cost of service provisions.

In 2006, the committee outlined its vision for a new government-wide organisational structure and governance model. This resulted in the creation of the Executive Affairs Authority, a corporate entity with full financial independence that will oversee and implement the emirate’s policies and strategies.

Three new sector-based Executive Council committees - the Economic Development Committee, the Social Committee and the Infrastructure & Environment Committee - have been set up to improve co-ordination and deliver more holistic approaches to planning and regulation. These specialised committees have been given decision-making powers at the discretion of the Executive Council, and will facilitate co-ordination between government departments and entities within their respective fields of responsibility. The committees will enable greater co-ordination of government planning to prevent duplication and overlapping of services.

Despite the creation of these new layers of government, the restructuring programme has reduced the number of entities reporting to the Executive Council from more than 40 to 26 - an overall reduction of 63 per cent.

The mantra of the new governance model is target-driven success. Each government department has to develop and present to the Executive Council five-year strategies, which will facilitate the government’s shift towards becoming first and foremost a regulator of services provided by a professional private sector. These strategies will empower departments to develop their own annual business plans, which will be monitored by the new Performance Management Unit of the General Secretariat. It will also lead to improvements in transparency. This year, the emirate will for the first time publish its annual consolidated expenditure budget.

This governance model is intended to create a sustainable, constructive public-private partnership (PPP). A report from the Department of Planning & Economy released in April envisages that new initiatives will open up “new, huge and diverse opportunities” for the private sector to enter into a strategic partnership with the government.

Abu Dhabi Council for Economic Development, for example, will enable greater opportunities for private sector entities to have a say in economic policy formulation through dialogue with their government counterparts and joint co-operation in identifying potential solutions to issues found to be constraining growth.

New bodies are acting as regulators in other areas of the economy - for example, a new regulatory body will oversee Abu Dhabi’s real estate sector - and the new Abu Dhabi Education Council (Adec) has taken over functions that were previously the remit of the Education Ministry and the Higher Education & Scientific Research Ministry.

School reforms

Adec is to introduce private sector participation in the management of schools, launching a PPP for public school management as part of its government school reform programme. Some 61 schools in Abu Dhabi, Al-Ain and Al-Gharbia are designated as PPP schools and 57 will be added in the next academic year.

Two new corporations - Abu Dhabi Ports Company and Abu Dhabi Airports Company - have been created to take operational responsibility for Abu Dhabi’s seaports and airports respectively. This will allow the government to focus more on sector planning and regulation in these areas.

The new institutional apparatus is also helping to sharpen up the image of the public sector and make it more accessible to the public, creating a more user-friendly public administration. In March, the government announced plans to establish evening courts to ease the burden on the system and speed up the legal process.

The municipalities have been at the forefront of the outsourcing effort over the past few years, farming out the provision of water treatment, waste disposal and the management of public parks to the private sector. The collection of solid waste was privatised in 2006, with the award of a $136m, 10-year operation and maintenance contract to a joint venture of Emirates Utilities Company Holding and Italy’s IMA.

Responsibility for maintaining public buildings has also been outsourced. The Department of Social Services & Commercial Buildings is to hand over its portfolio of buildings to Abu Dhabi Commercial Properties, the property division of Abu Dhabi Commercial Bank (ADCB), in 2008. It will manage 50,000 flats and offices in 3,400 mixed-use buildings - although because ADCB is majority owned by the government, the state will still maintain an interest in the property sector.

The Abu Dhabi government does not expect to see the full results of the restructuring until 2009, but more than half of the planned changes are already complete. “Abu Dhabi is the capital and we are trying to start here as the major player,” says Rashed Mubarak al-Hajeri, chairman of the Abu Dhabi Department of Civil Service and a member of the Executive Council (see box opposite). “This strategy is already leading others and driving them to reach the same standards.”

A report released by the Department of Planning & Economy in April 2008 notes that the private sector boosted participation in economic activity to 18.2 per cent share of gross domestic product (GDP) in 2007, from about 15 per cent the previous year. The outsourcing of services to the private sector has clearly had some impact here.

Abu Dhabi can also claim real success in reducing civil service staff. Employee numbers have declined dramatically, down from 64,000 to just over 11,000 in 2007, and with plans to reduce that further to 8,000 in 2008. The reduction in numbers is also evident at the municipal level. More than 40,000 municipal jobs have been cut since 2005, according to the Department of Municipal Affairs, bringing the number of municipal employees down from more than 45,000 to less than 4,300.

These represent real gains for Abu Dhabi, which has set its ambitions high in wanting to radically reshape its economy for the 21st century. Streamlined and more efficient, the government has made room for the private sector to become the real engine of growth in the economy.

Interview: Rashed Mubarak al-Hajeri

As an executive council member and chairman of the Abu Dhabi Department of Civil Service, Rashed Mubarak al-Hajeri plays a crucial role in the emirate’s reform programme. So far, he says, progress is ahead of schedule, but improving communications and recruiting the right people remain key challenges.

“Our reorganisation has made significant strides since it began two years ago,” says Al-Hajeri. “Our masterplan concentrates on improving our core business and outsourcing other activities. To this end, we reduced the number of staff in the government by 38 per cent in 2007 [to 11,226], yet at the same time increased Emiratisation by 15 per cent [to 4,703].”

Staff numbers are continuing to fall, with a further 11 per cent decline in the first quarter of 2008. At the same time, the involvement of women in government is being actively encouraged, with a 13 per cent increase in female staff in 2007 to 1,159.

Activities that have so far been outsourced include IT provision and municipality services such as landscaping, public transport and waste collection.

“We are empowering the private sector to deliver these activities and working in strategic partnerships with international firms,” says Al-Hajeri. “Our role is to regulate, and create an attractive environment and good facilities. That should attract a lot of investors.”

The idea seems to be working. The Department for Planning & Economy announced in May that the number of companies receiving operating licences increased by 43 per cent to 10,200 in 2007.

Concerns have been raised over the emirate’s ability to act as an effective regulator, but Al-Hajeri is confident the government is up to the challenge, having worked with countries that have already embarked on this type of restructure such as the UK and Singapore.

As with any major restructuring, there have been difficulties, notably improving communication between government departments.

“Communications was a major issue and we hosted a lot of workshops with various departments to find out more about their expectations,” says Al-Hajeri. “We still need to make more effort here, but this is normal. It is not possible to move straight from one extreme to the other. We have done a lot with other departments and it is going very well.”

The other issue, which is a challenge for both public and private sector organisations in the region, is staff. A government-wide human resources masterplan is under development and departments are restructuring their pay schemes. “We are honestly trying to lead the change, in partnership with the private sector,” says Al-Hajeri. “We have got to pay market rates, align our benchmarks with job description and competencies, and attract the best talent.”

Progress is being measured by a series of key performance indicators that are the basis for a system of regular reports. ”We have a performance department that manages this,” says Al-Hajeri. “It is done on a quarterly basis so no entity lags behind.”

For a Q&A with Al-Hajeri, click on the attached document in 'Resources' on the right.

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