Simultaneously with Session C, a parallel session organized by EDI (WB) and TCA (FAO) on Training for Decentralized Institutional Development will be held.

Meetings will be chaired by a chairperson assisted by one or two Resource Persons (RP). The RPs will engage the discussion by making short presentations (15mn) addressing core issues of the selected themes. The Chairperson will facilitate the discussion and ensure that a series of working questions are addressed. The Rapporteur will write on posters for future display.

The Chairperson, the RPs, and the Rapporteur will meet subsequently to summarize the conclusions of the working group and present them during the Reporting Session. They will assist the discussion, answer questions or direct questions to participants of the working group. Last, they will present the organizing team with a summary on the issues and discussions of the working group.

Theme 10 (Sequencing, timing and design of decentralization strategies) will be discussed by all groups on the last day of the TCD. They will draw on conclusions from previous sessions and prepare a decentralization strategy for 4 countries. This session is best described as an application to case studies. A resource person will present a brief on a selected country where decentralization has barely began. The group will work on developing a decentralization strategy adapted to the country circumstances.

Content of the working group sessions

Working Group 1. Political dimension of decentralization

Agenda:

Decentralization has quietly become a fashion of our time. It is being considered or attempted in an astonishing diversity of developing, developed and transitional countries, by solvent and insolvent regimes, by democracies and autocracies, by regimes with varied colonial inheritances and with none. Decentralization holds a number of widely different promises and is subjected to a number of interpretations. This session, in particular, will look at democratic decentralization and its potential for improving the transparency, accountability and responsiveness of government. Themes include:

• Definitions and characteristics of democratic decentralization;
• Conditions of emergence;
• The workings of political accountability;
• The role of civil society in improving responsiveness and transparency of government;
• The implementation of democratic decentralization in clientelistic/hierarchical societies;
• Representativeness of local governments;
• The promises of democratic decentralization for poverty alleviation;
• The performance of decentralization in non-democratic (or partially) democratic contexts.
• What are the implications for the sequencing and design of decentralization strategies?

Working Group 2. Decentralization: programme formulation/implementation, monitoring/ evaluation, and participation

Agenda:

Non-government institutions and community-based organizations are the building blocks of development. Theses institutions, traditional and modern, at the community, local, regional and national levels, are the vehicles through which social change and social action occur. In the last two decades, non-government institutions and community-based organizations have become increasingly involved in providing development goods and services and are playing a major role in promoting accountability in government. Many recent programmes have supported and encouraged collective action at the local level in order to foster, food security, rural development and improve local level resource management. Decentralization, by bringing resources and responsibilities closer to the users, sets up local-level institutions as major actors in the development process.

In general, the context for collective action and the nature of institutions and mechanisms that can facilitate the development process, are poorly understood, and the incidence and effectiveness of local-level institutions in various sectors is seldom known. The session will review and discuss the incidence and effectiveness of local institution participation in rural development, and the conditions of that participation. It will also discuss the dynamics of local institution participation and state decentralization. Last, the session will specifically review the mechanics of participation in context of programme and project implementation.

• What is participation? What is it supposed to achieve?
• How to insure that a participatory and decentralized process is used in projects and programmes preparation and implementation? What are the mechanisms?
• How to determine appropriate roles for local governments, community organizations/NGOs, and higher levels of government in project selection, design, implementation and evaluation?
• How to assess and measure participation and its contribution to project sustainability and productivity?
• What are the conditions of effectiveness of local-level institutions?
• How to assess and strengthen local capacity? A supply or demand-driven process?
• How can decentralization enhance the potential of local-level institutions? How can local-level institutions enhance the decentralization process?
• Are NGOs and community organizations more representative than local governments? What are the implications?
• What are the cultural dimensions of decentralization (including indigenous knowledge)? How best to integrate them?
• What are the implications for the sequencing and design of decentralization strategies?

Working Group 3. Reform of institutions and the new role of the state

Agenda:

With the new policy orientations based on the market-oriented economy, democratization and increased participation of civil society, the restructuring of public institutions and the progressive disengagement of the State from many of its "traditional" activities have become necessary. In the past, these institutions have benefited from important investments in personnel and equipment in order to improve their capacity. More recently, their poor performance and a general shortage of resources have led to a redefinition of their role.

Public institutions' restructuring includes cross-sectoral efforts towards comprehensively decentralizing financial responsibilities, in line with the subsidiarity principle, thus, enhancing at the local level the conditions for food security and rural development. Their reform, motivated by a search for increased efficiency, bears many risks with respect to programme coherence, social equity and good governance, but, opens new doors for various actors (private sector, civil society, and subnational levels of government).

• What are the perceived shortcomings of the central state capacity to deliver services?
• What tools and procedures have been used for reforming the role of the state?
• To what degree has the reform of the state been achieved? What are the results? Are there regional patterns?
• What has been the impact on service delivery efficiency and sustainability?
• What are the theoretical paradigms (subsidiarity, public choice theory, comparative advantage, etc.) that can guide the definition of roles and responsibilities for each actor (subnational levels of government, civil society, the private sector)? In practice, what are their potential and limitations?
• What are the implications for the design and sequencing of decentralization strategies?

Working Group 4. Fiscal Decentralization, regional equity, macroeconomic management and rural growth

Agenda:

Consensus is emerging among economists about what factors provide the basis for successful market oriented economic reform; at the top of this list, fiscal rectitude is indeed a critical factor in defining successful development policy, then it is imperative that the linkage between fiscal rectitude and fiscal decentralization be carefully explored. The primary focus of this session is to explore the domain of this linkage. Among other issues, some that may be specifically addressed include:

• What role does decentralization play in increasing or decreasing the effectiveness of fiscal resource management tools? Some argue that the devolution of substantial fiscal resources and powers to sub-national governments may make the central management of fiscal policy and deficit reduction very difficult. Others claim that failure to devote sufficient resources, and accountability for those resources to local governments will condemn the decentralization process and thus impede growth?
• How does decentralization affect the allocative efficiency of resource markets? Does reliance on a decentralized fiscal structure reduce the efficiency with which government tax, spend, and transfer resources?
• How does decentralization alter the relationship between developing countries financial and donor agencies, who have historically required centrally managed fiscal institutions? What institutions must arise to ensure accountability at the central level, and foster strong democratic linkages at the local level? How does one address the natural tension that arises between local preferences and central oversight?
• Is there a mechanism in which equity issues can be addressed? Are people prepared to move/migrate to equate marginal welfare (utility?) in the provision of local public goods across admin.-units? What unique structural rigidities impact the relationship between decentralized fiscal processes and inter-regional equity in developing countries?
• To what extent can cross-subsidization of poorer areas be secured through expanding local government areas without jeopardizing the effectiveness of decentralization policies?
• What is the evidence for and against these propositions?
• What are the implications for the sequencing, timing and design of decentralization strategies?

Working Group 5. Institutional Capacity

Agenda:

Countries that have embarked on decentralization are naturally concerned with the capacity of institutions at all levels and, in particular, the capacity of local governments and community organizations to handle new reponsibilities and new resources, and the appropriate means to strengthen it. The conventional view indicates that a successful process of decentralization requires a massive technical assistance effort, led by the national level, to help local governments develop their capabilities. It is often argued that a prerequisite to effective decentralization is the presence of able, skilled human resources at all levels. However, the experience with technical assistance programmes have been frustrating because they did not seem to achieve sustainable results. Purely supply-driven assistance programmes appear quite ineffective and the task at hand is to define the characteristics of a new strategy for local capacity development.

• How to assess local capacity (local governments and community organizations)? What constitutes institutional capacity for decentralization?
• Is the presence of able, skilled human resources, at all levels, an absolute prerequisite to effective decentralization? Should a good deconcentration always precedes devolution?
• Is the argument of "lack of local capacity" a political argument used by central states in order not to relinquish power?
• What do we mean by liberating "latent capacity" at the local level? What are the existing capabilities on which to build?
• Is it efficient to address the lack of local capacity by reinforcing control mechanisms (ex-ante and ex-post controls, tutelle)? What other alternative means have been tried? With what results?
• What is the experience of conventional technical assistance programmes? What has worked? What has not worked? Why? Are there regional differences? How to make programmes region-specific?
• To what extend can local level institutions identify their own weaknesses and training needs? What would be the characteristics of a demand-driven assistance programme (access to technical assistance, contractual relationships)? What role for central government and other sub-national levels? What role for the private sector? Donors? Are there regional differences? How to make programmes region-specific?
• What are the implications for the design and sequencing of decentralization strategies? What would an appropriate monitoring and evaluation system look like? What are the key impact indicators?

Working Group 6. Decentralization and access to rural services (agricultural and social)

Agenda:

There are many sector characteristics that make sustainable provision of agricultural and social services difficult. Typically, these include issues of financing, control and accountability, the respective roles of government levels, the private sector, community-organizations and NGOs, and linkages with research and farmers. How can decentralization improve the level and efficiency of publicly provided agricultural and social services. What are the key elements in the design of rural primary health and primary education systems, and the appropriate roles of each local stake holder? What are the implications for the sequencing and design of decentralization strategies?

• How can decentralization improve coverage, quality and efficiency of publicly provided agricultural services?
• What decentralized and participatory processes can make systems more accountable and responsive to farmers?
• What are the key elements in designing of a financially sustainable delivery system that contributes to enhance rural development and food security?
• What are the appropriate relative roles of each stake-holder in the sector?
• What are the implications for the sequencing and design of decentralization strategies?
• What would an appropriate monitoring and evaluation system look like? What are the key impact indicators?

Working Group 7. Decentralization and natural resource management (NRM) (productive and conservation projects)

Agenda: Sustainable Natural Resource Management (NRM) presents a number of difficult challenges. In particular, delayed and diffuse returns on investments (for example soil conservation for agricultural productivity and biodiversity conservation) may induce governments and poor local communities to give NRM a low priority. The situation is compounded where decisions on the use of NR are made centrally without incentives for the users to comply with regulations and without adequate law enforcement capacity. This session will analyze the short-comings of centralized approaches to NRM and review innovations incorporating participatory and decentralized processes.

• What are the specificities of this sector?
• What are the optimal roles of government levels, community organizations, and NGOs in the design of NRM strategies and the formulation of policies?
• How to determine and implement them?
• How to determine the types and degrees of participation?
• How to analyze pre-conditions, determinants and trade-offs for scaling up productive NRM and conservation efforts to sustain food security and rural development at the local level?
• What are the implications for the design and sequencing of decentralization strategies?
• What would an appropriate monitoring and evaluation system look like? What are the key impact indicators?

Working Group 8. Decentralization and the provision of rural infrastructures

Agenda:

There are many characteristics that make rural infrastructure provision more difficult than urban provision. In particular, the dispersed nature of rural population, their lower incomes and their lack of political voice led to under-investment in rural infrastructure.

• How can decentralization help scale-up the provision of rural infrastructure? Is local capacity a real obstacle?
• The sector faces major difficulties of financial sustainability especially for operation and maintenance and other recurrent costs. Does decentralization offer any solutions?
• What are the key elements in the design of rural infrastructure systems? What are the appropriate roles of each level of government, the private sector, community organizations and NGOs?
• What are the implications for the sequencing and design of decentralization strategies?
• What would an appropriate monitoring and evaluation system look like? What are the key impact indicators?

Working Group 9. Design of intergovernmental fiscal relations and international finance institutions' allocations for rural development

Agenda:

Decentralization of service delivery responsibilities to subnational governments must be fiscally sustainable, yet transparent and accountable. How can the system of intergovernmental fiscal transfers, be designed in a way that reflects the resource and needs of each level of government, yet allows for checks and balances among levels? How to optimize mobilization of local resources? How can donors best support this effort?

• How important are key fiscal transfer instruments/mechanisms affect behavior and incentives of various government levels?
• How can fiscal sustainability be enhanced by the careful design of benefit taxation schemes and the structure of local taxes?
• What are appropriate rules and mechanisms to ensure financial control without undermining local autonomy? (issues of ex-ante vs ex-post control, procurements, audit, etc.)
• Can potential problems such as increased inequities among regions be solved by the careful design of intergovernmental transfers?
• What are the implications for the design of donors' financing flows in terms of their integration into the existing system of fiscal relations and in terms of their control and accountability requirements?
• What are the implications for the sequencing and design of decentralization strategies? What would an appropriate monitoring and evaluation system look like? What are the key impact indicators?

Working Group 10. Sequencing, timing and design of decentralization strategies: Application to case studies

Bolivia: Ivan Cossio

Bangladesh: Zarina Khan

Malawi: Willie Samute

Indonesia: Widodo Yusuf

Agenda:

The sequencing and design of national decentralization programmes is very complex because of the many dimensions of decentralization. There are political, administrative, and fiscal dimensions to decentralization, and, also, the important role of non-government institutions can no longer be ignored. These dimensions are cross-cutting, and have sector-specific implications.

As a result, many questions arise regarding proper sequencing and design of decentralization strategies and how best to integrate them to a wider national strategy. Issues include whether to attempt political decentralization first, then administrative, etc., pilot one or a couple of sectors first, or, whether a decentralization programme should be comprehensive and simultaneous. In addition, a proper strategy must assign specific functions and responsibilities to various levels of governments and develop criteria to do so.

The answers to many of these questions will invariable be country specific, although general principles can guide the process. The clinic will examine cases of countries wrestling with the process and participants will offer insights from international experience on how best to proceed.

One alternative would be to select developed countries which have been engaged for a long period of time in decentralization efforts and draw the lessons for rural development.

Wrap-up session

• Panel of donors presenting and discussing future collaboration and next steps to be taken. Discussion with the audience.

• Training for decentralized institutional development (EDI - TCA)

A variety of countries are undergoing or are starting processes of decentralization, intended as decentralization of governance, i.e. intergovernmental transfer of decision-making but also primarily as decentralization through market or quasi-market mechanisms. It is accepted that a deconcentrated administration is appropriate for rural development due to the spatially dispersed nature of agriculture with its widely varying and location-specific agro-ecological conditions and resource endowments. At the same time, a view has developed that governments should attempt to do less and not only delegate more authority and power to sub-national levels but also empower local communities groups or individuals to provide more services for themselves. Hence, reforms are underway in public institutions to delimit the role of government, to facilitate the fiscal sustainability of local governments and to increase the scope of civil society organisations in local governance. It is argued that able, skilled human resources at all levels are an essential component of any decentralization process.

In order to arrive at defining the elements of a training programme to enhance human resources for decentralization we need to establish:

• Who needs training? Central level government staff, local government officers, civil society organizations? How many and where?
• For each of these groups what are the capabilities that need to be created, i.e. which are the main topics of training?
• Should the output of this working group be the outline of a long term (7-10 years) training programme? Alternatively, should the group decide on an initial programme which would then define a larger and longer-term programme?
• How could the training programme start? At international, regional, sub-regional level? With which institutions? How will the participants be selected? Who will run the training programme? Which topics and groups (central level policy-makers, local government staff, civil society organizations) should be dealt with in priority? What would be the estimated costs of the initial training and how would it be funded?
• Which part of the training is a public good, hence should be provided by donors, which part could be provided by others? What is the comparative advantage of each of the actors (gathered in Rome) to provide this training? Who else is there? Are other actors better suited?

Presentation by TCD Secretariat of the requirements for setting up a network.

Plenaries

• Why do governments decentralize and implement reforms?
• What are the windows of opportunities for introducing reform?

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