Posted February 1998
|Food and Agriculture Organization of the United Nations||United Nations Capital Development Fund||International Fund for Agricultural Development||German Agency for Technical Cooperation||Swiss Agency for Development and Cooperation||World Bank|
16-18 December 1997
Technical Consultation on Decentralization
Over the last 5 years UNCDF has designed programmes which provide capital budgets and technical support to local governments and de-concentrated state authorities in over 15 LDC countries. These programmes are now in various stages of implementation, providing a continuous field information which we have used to modify our approach, model and assumptions. While the design of these specific UNCDF projects may be different from other donors-and there are critical differences in many cases- we do think most of the issues emerging will be common to many donors and governments engaged in supporting decentralization policy and programmes.
These projects, called Local Development Fund (LDFs) are of a pilot nature, averaging from $3m-$9m over 3-5 years. They can be characterized as practical experiments in decentralized financing and planning of rural development. They provide technical assistance and direct capital resources in the form of budgetary planning ceilings to rural authorities at district Council or Commune level, and transfer typically 1-5 US$/capita. These programs often precede implementation of national decentralization programmes or investments by larger donors such as the World Bank. Critical to our ability to fund such pilot programs is UNCDF\s mandate to provide capital assistance in the form of small grants, which also facilitates the direct channeling of resources to local levels.
The intent is to promote decentralised planning and financing of rural development AND institution building at the local level.. UNCDF's particular focus has been to enhance the capacity of local government to finance and manage capital budgets with a strong emphasis on inclusive participatory planning at the local level. Many agencies are doing similar things. A key feature of these programmes is that we work within and not parallel to the national/local planning system for public investments.
It is important to underscore the fact that given UNCDF's central mandate is poverty reduction, there is a basic assumption underlying the focus on governance; that decentralisation improves governance and improved governance has an impact on poverty reduction. We agree with the concerns that the jury is still out on the strength of this link.
But there is a tension also between local planning and participation. When participatory mechanisms are incorporated to planning procedure, the result is often a surge in demand for social infrastructure and welfare subsidies, a spreading of scarce resources in numerous small projects, the inability of local politicians to "control" the demand they have unleashed (often reluctantly, precisely because they knew how damaging to their status would be any successive attempt to control).
In encouraging local participation we face real difficulties in devising mechanisms which are sustainable and replicable, institutionally and financially. NGOs can afford to mount intensive PRA exercises in limited areas, but these can rarely be imitated on any scale. In general we find that techniques for community-level participatory projects/actions identification , have not been adequately related to the local public sector planning process.
While a lot of attention has been given to grassroots projects identification, not nearly the same has been given to increasing the capacity of local planning authorities for projects selection, appraisal and preparation. Equally deficient has been the effort to combine the process of grassroots proposals identification and selection with that of submitting local planners ideas to grassroots screening and feedback.
Less attention seems to have been given to building the institutions for participation in public affairs than to participation in project cycles. Yet the sustainability of the improved planning procedures, is highly dependent on the set up and functioning of a local planning authority which combines the legal responsibility of local authorities with the control functions of civil society organizations. The strategies to achieve this combination, again vary by context, particularly on the representativeness of the local authorities (elected versus nominated) and the relations between them and the technical agencies.
By institutional we mean that the main responsibility for building local capacity, must be assumed by higher levels of governments and mandated by a specific national policy. Two issues emerge in this connection. National/regional/provincial staff may not have the capacity to build capacity and this may call for a wider range of actors to be involved in this effort. NGOs and national associations of local authorities have a potentially important role to play in this respect. Also government staff leading the capacity building effort may lack the appropriate incentives if the cost and financing of the extension which may initially be covered by external financing is not taken over by national governments in the long run.
By focused we mean that, despite the systemic nature of the local capacity to be built, a realistic strategy should identify specific entry points and limit itself , initially, to building the local capacity required in connection with these entry points. In our programs we focus on capacity for local capital programming and therefore develop the local planning, project and financial management capacities.
By long term we mean that the current 3-5 years frame of the programs we support, is clearly inadequate. Capacities for local planning and project implementation are dependent on changes in attitudes and social interaction and negotiation abilities, as much as on acquired skills. This makes it impossible to substitute intensive training for actual on-the-job experience.
Capacity building strategies are also obviously very dependent on specific contexts. One critical issue is the nature and stability of the local civil service. If municipal employees are hired and fired at any changes in local political representatives, (as in Nicaragua) the efforts to build local capacity are obviously greatly frustrated. Equally problematic is the situation where all local civil servants are centrally deployed, giving rise to higher turnover and lower degrees of local loyalty.
Also, somehow paradoxically, capacity building and introduction of innovative practices, in countries with long traditions of local government (e.g. Bangladesh) may face the extra challenge of fighting entrenched procedures and outmoded practices.
In many countries, despite apparently favorable central government policy on privatisation, at local government level there is often resistance: fear by local civil servants that the politicians use this for cronies, and fear by politicians at implications for laying off government staff In many rural areas (Ethiopia, N. Uganda) the only source of supply capacity (for engineering, technical, construction, management, etc. functions) lies in NGOs or in government departments (the private sector often finding higher returns in urban areas). This poses challenges:
Since the development budget in many countries where we work is funded 80-90% by donors, this raises major issues of donor coordination and commitment to supporting decentralization objectives, and of reconciling government and the various donor financial monitoring procedures and expectations. In this respect we believe "working models" should be developed to provide both local authorities and other donors interested in decentralized financing, with the tools for integration of different flows of funds, in support of a unified local planning process, whilst satisfying donor accountability requirements. It is worth noting in this connection that As a donor channeling funds to local authorities (and trying to pilot better IGFT systems) we are often caught between two objectives: (1) trying to work through official central-local fiscal transfer mechanisms but (2) aiming for expeditious local delivery.
For fiscal decentralization to promote rural growth requires that local fiscal allocations entail a bias to "efficient" rather than to "fair/equitable" allocation of resources, and so a shift from the natural tendency to allow equal shares for all in the local fiscal resource pie. Our experience is that the feasibility for such a shift again depends on a number of factors:
While , in general , the distribution of infrastructure provision responsibilities should be governed by the subsidiarity principle, the application of this principle often faces some constraints. Even the most local type of social infrastructure may require some form of joint provision in which higher levels of government typically assume responsibility for financing of operating costs. The rationale for this is often strengthened by central authorities concerns with the maintenance of minimum service standards, as happened in Vietnam where provincial authorities re-centralized the management of health and education, previously assigned to districts, to secure uniform levels of service.
First, basic local transport and market infrastructure, and improved extension and support services are critical. These of course are all preeminently activities undertaken by the state, and may often be the mandate of local authorities
Second, supporting community NRM institutions also requires (decentralised) state financing of community activities, such as community irrigation schemes, watershed protection measures, etc.. In preparing projects of this sort (Malawi, Ethiopia, ..) two key issues which emerge are (a) how to adapt local participatory planning procedures to ensure that such proposals are adequately fed into the process and (b) what are the appropriate terms of financing of such support, so as not to discourage local initiative, nor to undercut emerging micro-finance institutions.
Third , and more problematic, improved NRM often requires greater access to credit/micro-finance. Clearly local authorities have no comparative advantage in this area and should not be involved in direct management of micro-finance facilities. But, in many rural areas there are simply no micro-finance institutions and there is often great pressure to relax this principle. An intermediate solution adopted in some countries (Cambodia, Ethiopia ..) is for local authorities to provide grant injections of loan capital as revolving funds for community savings/credit groups (coupled with an extension service), to help develop embryonic village banks. More generally, a major challenge lies in devising arrangements by which local authorities can provide a more direct support to farm and non-farm enterprises.
Finally, because of the frequent association of natural resources degradation with difficulties of local communities in enforcing common property management rules, local governments can also play an important supporting role, through the enacting and enforcing of local regulations on forest and pasture uses, etc.
But we are also quite excited about the potential of these programmes. Already many possibilities have presented themselves. For example, there is still not very much being done in the area of performance based allocation systems-moving beyond simple grant financing to deliver services to looking at how transfers from the outside can improve mobilisation and use of local resources. Another area of interest is how and under what conditions local governments should be assisted to move beyond provision of social infrastructure only into other important areas such as natural resource development, promotion of local economic development. In these cases donors can provide a useful service through pilot programmes that can help underwrite the risk of partner governments.