file Kigali Strengthening Local

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Strengthening Local Governance: Bridging the Supply and Demand-Side Presented by: Sanjay Pradhan Director, PREM Public Sector Governance The World Bank The World Bank Presented to: Senior Policy Workshop on Local Governance & Pro-Poor Outcomes in Africa Kigali, Rwanda 31 October – 2 November, 2006

Decentralization is Global and African Phenomenon: 

Significant Wave of Democratization in Past Decades Political Decentralization and Local Elections now found in vast majority of African Countries If well designed, local governance can enhance responsiveness and efficiency Decentralization is Global and African Phenomenon But Fiscal and Administrative Devolution in Africa has Lagged Local governments typically control only very limited resources in terms of own taxes, transfer, or staff Roles and responsibilities unclear Functions duplicated by central/deconcentrated entities, often meaning that no one effectively delivers Highly political process, and nascent accountability mechanisms

Some Realties of Local Governance: 

Some Realties of Local Governance want to support front-line investments, but unsure how to best channel money given concerns about national systems and local governments Local Governance concerned that local governments don’t have the capacity to spend the money well…or politically unpopular overlap in responsibilities, but don’t perform in a responsive manner concerned that they don’t have the resources and authorities to meet expectations are often popular direct recipients of resources, but in themselves are not enough for sustainable and scaled-up service delivery Local Governments Central Governments Deconcentrated Central Line Agencies Communities Donors

Multiple Actors and Unclear Accountabilities Impede Local Governance : 

Multiple Actors and Unclear Accountabilities Impede Local Governance Line Agencies Local Governments Communities Source: Adopted from Helling, Serrano, Warren (2006) Frontline Local Actors Central Cross-Cutting Agencies Local Oversight Institutions CSOs/Private Sector Citizens Donors

Conditions for effective local governance: 

Citizen and business engagement open and accountable local political process, CSO-media oversight, public-private partnership Central government enabling conditions allow fiscal and administrative autonomy, adequate & predictable transfers, accountable line agencies Community collective action Conditions for effective local governance Local government capacity & oversight fiscal & administrative capacity legislature & judiciary

Central Government Enabling Conditions: 

Central Government Enabling Conditions Clear definition of roles and responsibilities of local governments and deconcentrated line agencies E.g., basic health, education, infrastructure Adequate financing and capacity Own tax base plus transfers (including donor support) Administrative capacity, without duplicative responsibilities Top down accountabilities oriented to performance Incentives to encourage local governments and line agencies to deliver Grants linked to minimum standards (e.g., public finance management) and performance Municipal contract: policy & institutional reform in exchange for budget support Balance local government autonomy & resources with local accountability (bottom-up/horizontal)

Sierra Leone: Rapid Results through Devolution: 

Sierra Leone: Rapid Results through Devolution New Local Councils were challenged to implement one Rapid Result Initiative (RRI) Urgent and compelling Visible – people will notice the difference Can be translated into real impact in 100 days SL’s Decentralization Secretariat provided coaches MoF disbursed Local Government Development Grants four months after elections LCs did not disappoint! Tackled diverse development issues: water, sanitation, feeder roads, bridges, traffic, rice production, post-harvest loss. Total volume of Garbage in two lorry parks and two markets in Kenema Township reduced by 90% within 95 days. Often cheaper and faster than traditional government means

Local Government Capacity & Oversight: 

Local Government Capacity & Oversight Key Emphasis: Robust & monitorable Public Finance Management (PFM) systems Public Expenditure and Financial Accountability Type (PEFA) benchmarks Sequenced approach to building PFM capacity (e.g., Cambodia) Strengthening demand for public finance accountability Adequate tax base & administrative capacity Transparency and participation in policy making and service delivery

Trends in Public Financial Management Can be Monitored: 

Trends in Public Financial Management Can be Monitored 2 6 1 6 7 0 1 2 3 4 5 6 7 8 Decline in 3 categories Decline in 1-2 categories No change Improvement in 1-2 categories Improvement in 3 or more categories Net Change in HIPC Tracking Indicators, 2001-2004

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PEFA’s Performance Measurement Framework

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Improving PFM – A Platform Approach Platform 1 A credible budget delivering a reliable and predictable resource to budget managers Platform 2 Improved internal control and public access to key fiscal information to hold managers accountable Platform 3 Improved linkage of priorities and service targets to budget planning and implementation Platform 4 Integration of accountability and review processes for both finance and performance management Integration of budget (recurrent & capital budgets) Strengthen macro and revenue Forecasting Streamline spending processes Broad Activities Re-design Budgeting Classification system Initial design of FMIS for core business processes Strengthen external audit and define internal audit function Re-design budget cycle (e.g. MTEF) Pilot program based budgeting & budget analysis Further fiscal Decentralization Full design of FMIS Develop IT Management Strategy Initial design of asset register Enables a basis for accountability Enables focus on what is done with money Enables more accountability for performance management Cambodia – Sequence of Platforms Broad Activities Broad Activities Broad Activities Source: See “Study of measures used to address weaknesses in Public Financial Management systems in the context of policy-based support,” by Peter Brooke, at www.pefa.org

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Strengthening Demand for Public Financial Accountability Participatory Budgeting, Puerto Alegra (Brazil) Civil Society Oversight; transparent, competitive procurement (Slovakia) Strengthening Supreme Audit Institutions (Hungary) Public Expenditure Tracking & Information Campaigns (Ghana, Madagascar, Mozambique, Peru, Senegal, Tanzania, Zambia) Procurement oversight by CSOs (Philippines) Strengthening Public Accounts Committees of Parliament (India) Transparent, competitive e-procurement (LAC) Strengthening Public Accounts Committees of Parliament (Kenya, Ghana, Zambia -- AFR) Accountability, Transparency & Integrity Project (Tanzania)

Citizen & Business Engagement: 

Citizen & Business Engagement Ensure Local Citizens have capacity to hold local governments and providers to account Local Budget Transparency Participatory Budgeting (e.g., Porto Alegre, Brazil) Public information on resource transfers for expenditure tracking (e.g., Uganda) Citizen Score Cards (e.g., Bangalore PAC) Counter situations of local capture Mandated Representation Transparent public-private participation Positive Peer Pressure Local Government Associations Yardstick Competition

Empowering citizens with information can reduce leakages: 

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 1990 1991 1993 1994 1995 Equiv. US$ per student Intended grant Actual grant received by primary school (means) 1999 Source: Uganda Public Expenditure Tracking Surveys Tracking Education Dollars in Uganda Empowering citizens with information can reduce leakages Public info campaign

Civil society monitoring of government services can help improve the delivery of services …: 

Civil society monitoring of government services can help improve the delivery of services … Source: Public Affairs Center, India 5 6 4 9 25 1 14 41 47 42 67 34 34 16 32 32 73 94 73 92 73 78 85 96 77 n/a n/a 0 10 20 30 40 50 60 70 80 90 100 City council Electricity Water supply Telephones Public hospitals Police Land authority Public buses Transport authority Agencies Percent Satisfied 1994 1999 2003 Service Provision: Bangalore

Role of Donors: 

Role of Donors Provide harmonized support for an effective system of local governance Support central government enabling conditions: Intergovernmental transfer system that promotes mutual accountability Adequate, predictable transfers for minimum standards & performance Strengthen PFM systems with monitorable indicators Strengthen, not bypass, local accountability systems Help LGs deliver their mandates to citizens Support LGs implement their development plans & budgets, prepared and executed with active participation of citizens Support collection & dissemination of information on promises & achievements Promote transparency as cross-cutting imperative Jointly monitor progress using harmonized indicators, learn and adjust

Good Practice: 

Good Practice Donor Harmonization and SWAPs Uganda & Tanzania donor harmonization around local government support (“basket”) funds Streamlining of conditional grants with greater emphasis on performance Common Benchmarking Benchmarking of Local Government Public Financial Management Capacity in Uganda with PEFA Pilots, On-going in Tanzania Promoting Synergies Across Sectors World Bank’s Indonesia Country Assistance Strategy Built Around National, Local, and Community Driven Development Platform Multi-Donor Decentralization Support Facility Support problem-driven analysis Build common knowledge Serve as clearing house for innovative experiences

Maintaining Momentum within World Bank: 

Maintaining Momentum within World Bank Local Governance is key part of Bank’s Broader Governance and Anti-Corruption Strategy Africa region Local Governance Thematic Group formed Sharing experience among country teams on how to provide harmonized support to strengthen local governance Internal reorganization will help break down institutional boundaries: merging urban, infrastructure, rural, water & sanitation, environmental and social teams into one Sustainable Development group Proactive engagement with development partners and the proposed Secretariat on Local Governance housed in KfW Strengthening Actionable Indicators for Decentralization with Partners Including local government PFM performance indicators World Bank Actions in Advance of 2007 Ministers Conference

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Questions and Answers The World Bank 1818 H Street, NW Washington, D.C. 20433 USA “Working for a World Free of Poverty” For additional information, see: http://www.worldbank.org