Partnerships as a strategy for capacity enhancement.

If the ultimate objective of a strategy of decentralization is achieving developmental impact (or effectiveness in the delivery of services) what matters is not just whether the local government will have the required capacity but the degree to which local actors (public and private) have or can develop it. This brings up the role of partnerships between the state and the private sector (business, NGOs, community groups) as a tool to enhance local capacity, the subject of an ongoing research program in Latin America I’m involved in (Fiszbein and Lowden, [in preparation]).

When we talk about partnerships, we are in fact recognizing that as a result of the trends towards decentralization, democratization and market reforms in most countries in Latin America there is a de facto re-definition of the boundaries and relationships between the state and society, particularly at the local level (Fiszbein and Crawford [1996]). Some people in Latin America are now insisting that one should differentiate very clearly between the “state” and the “public sector”, where the latter involves a combination of state, civic and commercial interests that manifest themselves in public ways.

What we have learned over the course of an action-research program in six countries^[4] is that state-business-civic partnerships have the potential to dramatically expand local capacity by (i) making more human and technical resources available for development initiatives; (ii) increasing the productivity of those resources; and (iii) creating new social assets that facilitate further partnerships at lower costs.

I’ll present two examples that I hope will illustrate how these partnerships can radically alter local capacity. The first case refers to the municipio of Palpalá (population 40,000) in the northern tip of Argentina, where as a result of the privatization of the largest local enterprise approximately 25% of the labor force became unemployed. Several other small communities in the country have experienced similar shocks. In most cases, local governments did not have the capacity to deal with the challenge by themselves and waited in a passive manner for provincial or federal assistance. Palpalá, in contrast, faced this challenge starting from the recognition that what was required was to leverage the limited capacity in the hands of the municipal government with that of other non-state actors (Arroyo and Estebanez [1997]). A recently created municipio (as a result of a decentralization reform in the province) the municipal authorities belonged to a dissenting political group within the majority party in the region and could not thus count on provincial support. Their goal was the re-creation of a local economic base through micro-enterprises seeking a strong integration among them and between them, the municipal administration and the local schools in order to achieve high levels of competitiveness. The municipal government mobilized its limited financial, technical and professional capacity to promote this approach helping establish a network of partnerships and avoiding the dramatic social costs experienced by other municipios in similar circumstances.

Two of the Colombian municipios studied in World Bank [1995] appeared --by coincidence-- in a new research project dealing with partnerships allowing us to see how capacity had continued expending over a period of two years. In one of the municipios --Versalles-- our original study showed that, due to the traditional clientelistic style of the local administration, the municipal government had an extremely weak capacity compared to community organizations. Two years after the initial study, it was brought to our attention the existence of a local development corporation that is undertaking a number of income generating and social initiatives. This corporation involves a partnership between the local government, a private sector foundation operating from a city in the same region and a community organization. Over the previous two years, the community organizations continued expanding their capacity in a way that when there was a change in the local political leadership, the process of constituting the corporation was relatively easy.

These examples, and others similar in nature, suggest a link between decentralization, partnerships and enhanced local capacity. Our analysis is leading us to emphasize the enabling role played by empowered local governments in the conformation of these partnerships (with the consequent impact on capacity). It is not, I believe, simply a question of attitudes. Local governments in Latin America face a set of incentives that position them better than national governments for partnerships (particularly those implicit in local development approaches such as those I referred to above). Namely, they face lower costs and higher benefits from adopting a partnership approach than their respective national governments.

Even a motivated government willing to involve organizations of civil society (NGOs, CBOs, private sector groups) in projects leading to improvements in the living conditions of communities requires information on who are the relevant groups that should participate. That kind of information is easier to be obtained at the local level. Similarly, the benefits of such partnerships - that is, of a process of local development - are felt mostly locally or regionally but very rarely nationally.

In most circumstances, achieving the level of inter-sectoral cooperation implicit in a model of partnerships involves a drastic change in the way services are delivered or decisions are being made. In that sense, some interest groups are likely to be affected. Local governments, by virtue of starting from an “outsiders” position tend to be more inclined to challenge those interests than national governments that have developed allegiances and dependencies over many years of running national programs.

But whether such partnerships develop seems to be closely associated with political factors, as the cases of Palpalá and Versalles suggest.