51653 NOVEMBER 2009 ABOUT THE AUTHOR SHAELA RAHMAN is a strategic communications dsasChanging the Minds of Skeptics: How Strategic Communications Can Build expert with the Strategy and Analysis unit of the Investment Momentum for Tax Reform Climate Department. She leads the project's communications How do you make tax reform palatable to a private sector that is component, with support from colleagues based in Sanaa and very untrusting of the government? That's one of the challenges the Cairo. Shaela co-authored the Yemen Tax Simplification project took on in working to streamline toolkit Strategic Communica- tions for Business Environment and modernize the country's cumbersome tax system. In an unusual Reforms: A Guide to Stakeholder Engagement and move for an Advisory Services project, we made communications-- Reform Promotion. including monitoring and evaluation (M&E) and analysis of stakeholder perceptions--a key component in this effort. Even APPROVING MANAGER Richard Stern, Program without a large budget, the communications component of Phase I Manager, Business Taxation, Investment Climate Advisory went a long way toward assessing perceptions of the existing tax Services of the WBG; and Cecile system, engaging stakeholders, and neutralizing opposition early Fruman, Manager, Strategy and Analysis, Investment enough to begin building consensus and identifying local champions Climate Advisory Services of for more sustainable reform. The lessons enumerated below share the WBG. the communications and stakeholder outreach that worked well to lay a foundation for Phase II. They also discuss how we might do some things differently next time. Background Specific goals: The project, a joint initiative of the Invest- · Streamlining and automating the entire ment Climate Department and IFC Advisory tax system Services in the Middle East and North Africa, · Making it more accessible--making the was launched in response to the Yemeni payment of taxes less cumbersome government's request for assistance with tax · Basingtaxesonself-assessment,toreduce reform, a central part of its broad reform avenues for corruption and build trust plan. The 18-month Phase I, which ended in between the Tax Authority and June 2009, focused on the groundwork--in- taxpayers cluding process mapping, drafting of the In- · Introducing a small and medium come Tax Law, a compliance cost survey, and enterprise (SME) tax system so on, as well as preparation of a communi- · Introducing a goods and services tax cations strategy--to support the work of (GST)--as opposed to a sales tax, which Phase II, which just began in FY10. has a cascading effect and leads to double-counting Project Overview · Aligning the legal framework with best practice Purpose: To improve Yemen's business- enabling environment by introducing a Points of resistance from the modern, efficient, and effective tax system private sector: that reduces the time and financial cost of complying with tax requirements. The · Objection to the tax rate as being too ultimate objective is to broaden the tax base, high encourage economic growth and investment, · Past performance of the government in and combat corruption and tax evasion. taxreform--promises,butlittlechange · Contentment with the status quo-- IFC SMARTLESSONS -- NOVEMBER 2009 1 blamingthegovernmentforcorruption,whilecontinuing reform. We worked with the client to outline a clear and to bribe officials and evade taxes comprehensive stakeholder-outreach plan in the first few months, which we felt was critical, given the tenuous and Lessons Learned potentially explosive relationship between the private sector and the government. (See Box 1.) 1) Engage opposing stakeholders in open dialogue. In Yemen, tensions ran high between the two main Box 1: Importance of a Communications Strategy stakeholders: The Tax Authority welcomed the project, but the private sector was divided, with the overwhelming Most World Bank Group investment climate advisory projects en- majority not supportive of the initiative. So our first move gage and communicate with stakeholders, but often not in a me- was to reach out to the private sector via the main thodical way. Communications are often viewed as an add-on businessmen's organizations--the Sanaa and Aden rather than as an integrated mechanism for proactively engaging Chambers of Commerce and the Federation of Chambers. stakeholders and applying communications best practices. In March 2008, we held a series of stakeholder workshops Lack of structure, strategy, and analytical rigor of stakeholder en- jointly with the Tax Authority and the Chambers of gagement and communications can expose the reform efforts to Commerce in the key cities of Sanaa and Aden. These a high degree of risk: Well-designed and well-intentioned reforms workshops introduced the project to a range of players, can be derailed by a lack of political will, unforeseen opposition, including the private sector, members of Parliament, tax or unexpected adversaries, or by overlooking core constituencies auditors, and donors. (To encourage candid dialogue, we critical to effecting enduring reform. did not invite the press.) Events opened with keynote addresses from the leadership of both the Tax Authority This is especially true where, as in the case of Yemen, you have and the Chambers of Commerce, setting a collaborative tensions between the Tax Authority and the private sector on tone. taxation rates, lack of information and transparency, corruption in the current system, and lack of dialogue or participation of the Result: The workshops helped neutralize some private private sector in policymaking. sector opposition, and laid the foundation for open dialogue. They also helped us begin to understand the range of attitudes toward reform. The outreach plan went beyond simply putting together a communications campaign. It looked at the existing capacity, 2) Partner with the press. processes, and systems of the customer-services operation of the Tax Authority, and recommended several changes to Since we didn't invite the press to the stakeholder ensure that this function would be carried out more workshops, we organized a separate informal lunch for effectively. Also key was keeping the client (both mid-level select representatives, mainly from media sources considered officials and the leadership) involved at every step of to be unbiased. (Yemen has a lot of government-run media developing the strategy--and making it clear that the outlets, as well as others run by prominent private sector responsibility for implementing the strategy was with them, groups.) We introduced the project, explained its objectives, while assuring our support. We also provided training in and then asked for advice on how to engage our target media relations and communications to senior and mid-level audiences effectively, given the political economy of Yemen. tax officials in order to better equip them to work with the The media have excellent knowledge of the stakeholder local media and to implement the recommendations of the landscape, including the conflicting agendas and strategy. motivations of the private sector and the government. Result: We got buy-in from within the Tax Authority, gained Result: The media participants appreciated our efforts to some strong champions and allies in customer services, and engage them and to seek their input at an early stage, and were able to place a stronger emphasis on sustainability they were eager to share insights. For example, they gave beyond World Bank Group (WBG) involvement. The client us a sense of the type of advertising previously done by the contributed staff time, was satisfied with the content, and is Tax Authority--primarily using state-run papers, which currentlyworkingtoimplementsomeofourrecommendations, made it clear that taxpayers were not being widely reached. particularly regarding the types of media to be used for They also gave us an idea of the ownership of the different outreach (private versus state-owned outlets). media outlets (state versus private) and which ones were popularly patronized by different groups (such as businesses, 4) Take the pulse of local participants. students, government agencies, and so on). We wanted to know how the main stakeholder groups 3) Involve the client in developing a communications feel about the current system of taxation in Yemen? Are strategy that can continue beyond the life of the they supportive of the proposed reforms? What are the project. main issues and concerns? The stakeholder workshops provided a few answers to these questions, but we wanted Strategic communications was a smart investment for our more structured feedback. In particular, we wanted project, because it provided a framework for engaging perceptions information that could feed into the design stakeholders early to address the risks and barriers to tax of a pilot communications campaign. In other words, we 2 IFC SMARTLESSONS -- NOVEMBER 2009 wanted a sounding board for the materials and ads we Result: The campaign pleased the leadership of the Tax were developing. Authority, who also appreciated our flexibility on the timing. Our responsiveness on the timing also gives us In December 2008, we arranged for a series of detailed more leverage to negotiate with the client to fund a interviews with small focus groups of stakeholders: with greater proportion of the next, more comprehensive seven businessmen representing medium and large firms, campaign that will run in Phase II. with five small-scale entrepreneurs, and with nine employees of the Tax Authority and intermediaries (tax consultants). We showed them the slogan--"Paying taxes helps build and develop the country"--and drafts of ads using such key terms as mutualtrust,simplifiedprocedures, and fairness. We asked what they liked or disliked, and invited suggestions for improvements. Result: They gave us some good feedback on the design of the campaign ads. For example, they thought the ads should be in classic Arabic and avoid the use of dialects. They asked that we emphasize the development link to taxes. And they liked the slogan. Caveat: Focus groups provide soft, anecdotal information that can yield helpful insights for the design of a campaign. But they are not scientific, and their results do not feed into a system for M&E of a project's effectiveness. (See Lesson 6, below.) 5) For the campaign--the heart of the communications activity--incorporate stakeholder feedback, and get the timing right. Figure 1: Ad on the new tax system, published in Yemeni The taxpayer outreach campaign not only had to create newspapers. The ads were published in Arabic. This example has awareness of the reform, but it also needed to impart been translated into English. messages that would resonate with the local market and address the concerns of taxpayers. So we used the stakeholder feedback from the focus groups and workshops 6) Incorporate M&E into your communications plan. to develop three overarching messages: "building trust," "a simple and transparent new system," and "taxes as a Advisory projects are increasingly incorporating sound means of enhancing Yemen's long-term growth and M&E frameworks to gauge results, but often they do not development." We created themes and characters that the encompass communications activities. In fact, apart from average taxpayer could identify with (see Figure 1) and an output indicator that measures the number of media used short, powerful slogans and simple language. reports and appearances, the standardized Advisory Services M&E system includes no tools to assess The pilot campaign ran for one week in the cities of Sanaa communications results or changes in perceptions that can and Aden. Based on our research, we used the most cost- occur from communications efforts. Also, since effective and widely viewed media in Yemen, mainly in communications activities typically have very limited print form--full- and half-page ads in prominent national budgets, the addition of robust M&E (requiring collection and business newspapers, billboards (150 in Sanaa and 50 of data, surveys, and so on) can be a challenge. in Aden), and 2,500 fliers distributed to businesses and chambers of commerce--as well as some radio ads. The On the Yemen project, we had a budget for communications campaign was deliberately short, since it was a pilot for a activities (about $50,000), which included M&E. Due to larger campaign in Phase II, and since a lot of the technical budgetary constraints, the evaluation of the Phase I test work on the reforms is still under way and we did not want campaign--to provide an M&E baseline for the larger to overadvertise but rather inform taxpayers that changes campaign planned in Phase II--was carried out by the are coming. public relations (PR) firm that ran the campaign. Typically, a project would hire an independent firm for M&E, but in The timing and duration of the campaign also responded our case it made sense for the firm that will execute the to local circumstances. Although the designs and materials Phase II campaign to be involved in the analysis of what were ready to go by March 2009, the Tax Authority did or didn't work. suggested that launching a campaign on a topic as sensitive as tax reform so close to election time (April 2009) would The PR firm distributed 600 questionnaires in Sanaa and interfere with the re-election campaign and fuel opposition Aden to a defined random sample consisting of educated attacks. So we launched the pilot campaign in August people between the ages 15 and 65, of whom 85 percent 2009, after all election-related concerns had died down. were men and 75 percent were involved in tax matters IFC SMARTLESSONS -- NOVEMBER 2009 3 directly or indirectly (businessmen, campaign in Phase II, but it also provided accountants, auditors, university students, encouragement that we were on the right and academics). The sample was not track in communicating the benefits of the preselected for people who had seen the ads. new system. The September 2009 survey-- Of the 600 questionnaires, we received which indicated that 54 percent of responses from 509 people, not all of whom respondents thought the new tax system answered every question. would indeed help build trust--compared quite favorably with our earlier evidence that Given the newness of incorporating an M&E show very little confidence in the new element into the communications activities, system's ability to build trust. this was a learning experience for us. For example, our initial information gathering-- Conclusion from the workshops and focus groups-- yielded anecdotal insights rather than Our objective was to support the success and scientific data. This meant that, although the sustainability of the reform effort, which subsequent survey by the PR firm may provide meant our communications activities had to baseline data for comparison at the end of strike a balance between generating Phase II, we had no real apples-to-apples data awareness for reform, changing perception with which to evaluate the effectiveness of and thus behavior, and building the capacity the Phase I test campaign. If you have the of the client so that the reform is increasingly budget for it, a more scientific M&E approach driven by local demand. Our Phase I work in at the outset will provide valuable baseline Yemen--to understand and take targeted data from which to evaluate the early stages measures to neutralize private sector of your communications efforts--using the opposition and misconceptions on tax reform, same survey before and after the campaign. shift perceptions favorably toward the proposed new system, and ensure that the Result: Nonetheless, the survey following the client is fully involved and is making the Phase I test campaign not only helped set up decisions--gives us a solid foundation for the a baseline for a more comprehensive work of Phase II. DISCLAIMER IFC SmartLessons is an awards program to share lessons learned in development-oriented advisory services and investment operations. The findings, interpretations, and conclusions Figure 2: Stakeholder feedback before and after the campaign expressed in this paper are those of the author(s) and do not necessarily reflect the views of IFC or its partner organizations, the Executive Directors of The World Bank or the governments they represent. IFC does not assume any responsibility for the completeness or accuracy of the information contained in this document. Please see the terms and conditions at www.ifc.org/ smartlessons or contact the program at smartlessons@ifc.org. IFC SMARTLESSONS -- NOVEMBER 2009 4