Governance is also about recognizing the important role played by the institutional arrangements within which all organisations operate – the formal and informal rules of the game. Understanding the political processes that affect the lives of poor people is critical for identifying real opportunities for change. A professional, well planned and 'technical' approach to institutional development and service delivery is indeed necessary, but unless it sits within a wider assessment of the political context for reform and change, it will not be sustainable.

Good Governance attempts to lay the foundations for factors like accountability, transparency, effective service delivery and efficiency of processes and outcomes. However to guarantee these features, social accountability becomes an overhauling factor, be it in the context of civil society or political society. Social accountability is the ability of all citizens, civil society and the private sector to scrutinize leaders, governments and public institutions and hold them to account. This includes, ultimately, the opportunity to change leaders by democratic means. In the larger context, democratic governance is a necessary factor. The underlying assumption is that the features of democratic governance enable social accountability. These features are parliamentary democracy, representation, constitutionalism and participation respectively. These features in a cumulative manner ensure social accountability through:

• Fundamental rights
• Franchise power
• Local governance
• Information flow
• Public sphere
• Legislations
• Private sector participation
• Civil society engagement and
• Formation of state regulatory bodies

However a precondition for an enabling environment is removal of what Dr. Amartya Sen calls ‘unfreedoms’. This is primarily because Sen identifies entitlements as the approach to development. Capability is the freedom to achieve valuable beings and doings. Therefore in order to enable agents to affect the processes at work and general rules in the working of society, it is vital to develop the capacities.