Piloting Innovations

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Piloting Innovations for Decentralization
Reforms Local Governments in Local
Development and Poverty Reduction New
York, 21 June 2004
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Presentation

• UNCDF
• UNCDFs pilot approach to local development
• Major areas of innovation
• Policy impact
• Case studies
• UNCDF project in BANGLADESH
• UNCDF project in MALAWI
• UNCDF projects in MALI

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Presentation prepared by

• Angelo BONFIGLIOLI, Sr. technical adviser
  UNCDF,New York
• Azizur Rahman SIDDIQUE, Local Governance
  Development Fund Project, Sirajganj, Bangladesh
• Willie SAMUTE, Principal Secretary, Ministry of
  Local Government Rural Development, Malawi
• Mohamed AG ERLAF, Director, National Authority
  for Local Government Investment

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II. UNCDF
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UNCDF

• The United Nations Capital Fund, created in 1966
  by the General Assembly of the UN, is a
  multi-lateral organization.
• It has its own legal status and funds (from a
  group of donors), within the UNDP group.
• UNCDF funds and implements small-scale
  investments (in the forms of grants) in LDCs in
  local development and micro-finance.

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II. UNCDFs pilot approach to local development

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An innovative model

• UNCDF has developed an innovative strategic tool,
  the Local development Programme (LDP), designed
  to support local development, within the context
  of poverty reduction. LDPs stress
• the role of democratic governance in
  poverty-reduction (i.e., the establishment of
  horizontal networks involving local
  governments, community organizations, the civil
  society and the private sector),
• the role of democratically elected local
  authorities in local development

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Specific challenges faced by LDPs
a) Developing local institutions
b) Building local capacities
c) Fostering pro-poor delivery of
infrastructure and services
d) Financing local development
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Major risks faced by LDPs
Lower quality of public services
Inequity growing regional disparities
Capture of benefits by local elite
Still mixed and incomplete empirical evidence of
the comparative advantage of decentralized
governance in poverty reduction
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Existing LDP portfolio

• Since 1998, UNCDF has initiated projects
  supporting local governments in more than 20
  countries (mainly in Africa and Asia)
• These projects involve a total cost of about 160
  million, of which 96 million from UNCDFcore
  funds and 64 million from contributions and/or
  trust funds from UNDP and other donors The
  Netherlands, Norway, DFID/UK, BSF/Belgium,
  Danida/Danemark, and Luxembourg
• About 64 million constitute a general fund to
  support LGs investments (poverty reduction,
  infrastructure, service delivery, etc.), through
  different configurations (block grants, earmarked
  funds, green windows, etc.)

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III. Major areas of
LDPSs innovation
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Major innovations
Financing
Planning Budgeting
Capacity building
LDP
Accountab. transparency
Implement. production
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Planning budgeting

• Inclusive and cost effective planning
  partici-pation of all local stakeholders
• Technical support innovative ways of providing
  LGs with technical skills for participatory
  planning
• Linking planning budgeting planning as a more
  meaningful process with tangible results

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Financing

• Fund allocation use of pre-determined,
  formula-based allocations to LGs, for capital
  expenditure
• Block grants hard budget ceilings, in order to
  undertake meaningful investment planning
• Support to local budget on the basis of
  comprehensive LDP, away from a project-by-project
  modality, with predictable annual allocations
• Performance-based funding ex-post controls (in
  the light of essential parameters)
• Matching contributions in kind and nature,
  according to differential approach
• Local resources support for improving local
  revenue collection

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Capacity building

• Training for a number of different stakeholders
  (use of planning tools, procedures. Mentoring of
  lower levels of LGs by higher levels)
• Learning by doing fostering capacity-building
  by on-the-job familiarization ( the crucial
  innovation)

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Implementation / production

• Procurement /production procedures and modalities
  suitable flexible arrangements managed by LGs
  (private sector bidding, force account, community
  implementation, etc.)
• Oversight supervision monitoring (with
  support to project management committees or task
  forces under the supervision of LGs)
• Private sector upgrading contractors, training
  contractors in contract management for bidding
  for tenders, unleashing entrepreneurship
• Operation maintenance arrangements included in
  the planning

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Accountability and transparency

• Communication a strategy for downward
  accountability
• Monitoring and evaluation through a number of
  self-assessments and auto-evaluations
• Participation participatory planning and
  accountability

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IV. Impact on policies
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Policy impact
Broad policy directions local governance for
poverty reduction
Legislation statutory framework
LDP
Regulatory framework norms, procedures,
practices
Institutional architecture
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V. First case study UNCDF Project in Bangladesh
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Sirajganj Local Governance Development Fund
Project
Duration 5 Years
Started in July 2000
Coverage
Implementing Agency Local Government
Division Ministry of LGRD Cooperatives
Funded by UNCDF UNDP
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BANGLADESH Country Profile

• Population 130 million (75 rural)
• Density 876/sq km
• Poverty 58 poor people live in rural areas 40
  rural pop. are poor (against 14 urban pop.)

LOCAL GOVERNMENT ADMINISTRATION
Division (06)
District (Zila, 64) Average popul. 2 million
Deconcentrated level
Sub-District (Upazila, 469) Average popul.
255,000
Union (Union Parishad, 4488) Average popul.
30,000 9 wards(Gram Sarkar)
Elected authorities
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Policy Constraints

• LGs (established in 1870) still lack a coherent
  and stable policy
• Limited authority of UP (strong central control)
• Unclear womens representation
• Weak tax revenue power
• General mistrust, perceptions of low capacity,
  elite bias, corruption and lack of accountability
• Some policy statements (eg PRSP), while pointing
  to potential role of LGs, still remain starved of
  resources and sidelined

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Overview of major innovations

• Participatory Decision Making Monitoring
• Decentralized performance-based funding
• Open Budget Sessions
• Women Empowerment
• Local Resources Mobilization
• Participatory Performance Assessment of UPs
• Transparency and accountability
• Dissemination of lessons learned for policy
  change

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Participatory Decision Making Monitoring

• Participation of local community in Planning,
  Implementation, Monitoring, Maintenance
• Community wards meeting before annual budget
  session (at UP level)
• Men and women identify local problems and
  prioritize them for immediate solution
• UP plan and budget incorporated in community plan
  
• UP approved projects are implemented, monitored
  maintained by community committees

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Decentralized performance-based fund

• Annual Development Block Grant directly allocated
  to the UPs instead of sub-district
• Use of formula-based predictable grant
• Performance-based financing
• Timely disbursements to the UPs
• Fund owned by UPs
• Dissemination of information to Communities
• 30 of funds earmarked for women

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Open Budget Session

• UP Budget prepared through consultation with
  community opinion of local stakeholders on
  allocations to different activities
• Budget meetings usually attended by 100-500
  persons
• Communitys concerns are reflected in the budget
• Community participation in local resource
  mobilization
• Information on different sources of revenue and
  expenditures provided to communities

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Women Empowerment

• UP Women members are organized / trained through
  Women Development Forum at district Upazila
  level.
• At least 30 of local committees are chaired by
  female members
• 30 local development fund are earmarked for
  women
• Women participation in decision making process
• Advocacy information on women rights in the
  local governments process

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Local Resource Mobilization

• Enhancement of local revenue mobilization is one
  of the key criteria for accessibility to funds
• Training/Counselling to UPs and Communities
• Local resource mobilized for OM
• Incentive for performing UPs (e.g. in revenue
  collection)
• Community are informed about the use of revenue
  collected by UPs.
• Contribute to the government effort to revise
  model tax schedule strategy

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Participatory Performance Assessment

• Assessment of the UP Activities by the community
• The assessment done once a year in a particular
  day in presence of local people
• The assessment facilitated by UP members or any
  persons from community and community
  representatives provided score
• Participation of 100-300 persons (including
  20-30 women) in the assessment workshop
• Use of public score card to assess the
  performance of Ups
• Links between the results of the performance
  assessment and funding capacity building
  activities of UPs

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Transparency Accountability

• Organization of UDC, WDC, SSCs UFT in a
  transparent manner to ensure participation of
  community
• Use of scheme information boards, UP notice
  boards for information dissemination
• - Monitoring
  activities managed
• by community
• - Access of
  communities to UP
• financial
  transactions
• - Community
  gathering at the
• start and
  handover of schemes.

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Dissemination of lessons learned

• Performance assessment score card (eventually
  introduced nationally by LG Ministry)
• Incentive for the LGIs linked with Performance
  outcome
• Organization of local and national workshops
  
• Wide communication of results and findings of
  
  evaluation studies to constituencies and to
  policy makers

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Major innovations of the SLGDFP
Appropriate financing procedures
Improved Planning Budgeting
Capacity building for all stakeholders
SLGDFP
Accountab. transparency with trust and
credibility
Efficient implement. production
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V. 2nd Case study Local Governance and
Development Management Programme, MALAWI
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MALAWI Country Profile

• Population about 12 million
• Poverty is widespread, deep and severe
• 65 of population is poor 28 living in dire
  poverty
• Life expectancy rate 39 years
• Literacy rate 58 (female rate 44)
• Up to 1994 30 years of autocratic rule,
  over-centralization and weak local Government
• 1993 multi-party democracy
• 1994 first multiparty democratic government and
  Government intension to decentralize

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District focus for Development Concept

• 1993 Government adopts the District Focus for
  Development Concept, whose elements are
• Development planning and management procedures
  and institutional arrangements,
• Decentralized Development Financing,
• Capacity building for decentralized development
  management,
• National Decentralization Policy formulation
• The policy is implemented by the project in 6
  Local Impact Areas (Districts) 1993 1997
• Rolled out to the rest of the country 29
  Districts in 1998 (UNCDF/UNDP) under the Local
  Governance and Development Management Programme
  (LGDMP)

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Local Governance Development Management
Programme (LGDMP)

• Objectives
• Contribute towards the alleviation of poverty in
  Malawi by improving governance through improved
  broader citizen participation in decision making
  and enhanced performance of central and local
  government.
• Develop sub national development planning system
• Develop decentralised financing mechanism to meet
  the challenges of community development
• Formulation of decentralization policy

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Major innovations of the programme
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Sub National Planning System

• Giving to the District Development Committees
  responsibility for local development ( i.e final
  decision on district specific development through
  District Development Plans)
• Strengthening development institutions (VDCs,
  ADCs, DDC)
• Setting planning procedures at all levels (VAP,
  SEPS, DDPs)

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Sub National Planning System ()

• Capacity Building establishing procedures,
  institutions and capacities for communities
  participation in local development
• Establishing coordination mechanism through the
  setting up of a District Development Office,
  District Executive and Area Executive committees
• Establishing institutions for capacity building
  at district, area and village level.

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The District Development Fund

• A decentralised development financing mechanism
  established and managed at the district level
• The DDF is designed to respond to issues and
  projects that are raised through the District
  Development Planning system
• Allocation of funds based on a clear formula

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Distribution formula

• National Level
• 5 of National Revenue Net statutory expenditure
• 20 distributed equally to all district
• 80 based on population, illiteracy rate, infant
  mortality rate and access to safe drinking water
• District level
• 70 of the funds are allocated to community based
  projects
• 30 for projects initiated at district level

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National Decentralisation Policy

• 1996 Commissioning of comprehensive studies of
  Decentralization Policy
• Institutional set-up for policy formulation
  (Cabinet Committee on Decentralization, Technical
  Committee and Decentralization Secretariat)
• 1998 Decentralisation Policy approved Local
  Government Act passed based on the policy

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Characteristics of the policy

• Devolving political, administrative and
  development authority to the districts
• Integrating governmental agencies at the district
  and local level into one local government
  administrative unit
• Diverting the centre of implementation
  responsibilities
• Promoting popular participation, in the
  governance and development management

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Other achievements

• Merger of local and district administration to
  form one local government secretariat
• Local Government Elections
• Establishment of key Local Government
  Institutions including the National Local
  Government Finance Committee
• Approval by Parliament of intergovernmental
  fiscal transfer formula
• Funding to District Assemblies based on approved
  formula including Social Funds
• Integration of MASAF III into Decentralized
  Planning and Financing Mechanisms

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Other achievements

• Allocation of funds to assemblies using the
  formula
• Establishment of key Local Governance
  Institutions including the National Local
  Government Finance Committee
• Sustained central government grant transfers to
  all local authorities

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Major innovations
Financing
Planning Budgeting
Capacity building
LGDMP
Accountab. transparency
Implement. production
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Challenges (problems still to be solved)

• Slow pace of devolution
• Inadequate capacity at assembly level
• Transferring less funds than indicated in the
  policy
• Variation between local priorities and funding
  decisions
• Multiplicity of participatory institutions at the
  community level

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V. 3nd Case study Support to Local Government
Projects (in Mopti and Timbuktu) MALI
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MALI
  UNCDF SUPPORTING LOCAL GOVERNMENTS (MOPTI
AND TIMBUKTU REGIONS)
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MALI COUNTRY PROFILE

• POPULATION 13 million

• AREA 1.204.000 km2

• LIFE EXPECTANCY 48 ans (men) 49 (women)

• GDP 230 / capita

• 1999 FIRST LOCAL ELECTIONS (participation rate
  22)
• 2004 SECOND LOCAL ELECTIONS (participation
  rate 45)

• MINISTERE DE LADMINISTRATION TERRITORIALE ET DES
  COLLECTIVITES LOCALES (Ministry of Territorial
  administration Local Governments)
• Direction Nationale des Collectivités Locales
• Agence Nationale dInvestissement des
  Collectivités Locales (9 élus locaux faisant
  partie dun Conseil dadministration de 12
  membres)

• HAUT CONSEIL DES COLLECTIVITES TERRITORIALES

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FINANCIAL SUPPORT
TECHNICAL SUPPORT
LOCAL GOVERNMENTS
DNCT Direction Nationale des Collectivités
Territoriales (Central Branch)
ANICT Agence Nationale dInvestissement des
Collectivités Territoriales (Status
Etablissement Public à caractère Administratif)
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DNCT MISSION

• DEFINE, CONTROL AND IMPLEMENT THE REGULATORY
  FRAMEWORK FOR LOCAL GOVERNMENTS

• CARRY OUT BASIC STUDIES TO IMPROVE AND BUILD UP
  THE DECENTRALISATION PROCESS

• MONITOR THE LEGAL CONTROL OF THE REPRESENTATIVES
  OF THE CENTRAL GOVERNEMENT ON SUB-NATIONAL
  GOVERNEMNTS

• DEFINE THE TYPE OF SUPPORT NEED BY LOCAL
  GOVERNMENTS IN ORDER TO PLAY A CRUCIAL ROLE IN
  LOCAL DEVELOPMENT AND ADMINISTRATION

• STRENGTHEN THE COOPERATION BETWEE LOCAL
  GOVERNEMENTS AS WELL AS THE PARTNERSHIP BETWEEN
  LOCAL GOVERNMENTS AND THEIR PARTNERS

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ANICT THE MISSION

• DISTRIBUTE GRANTS TO LOCAL GOVERNEMENTS IN
  ORDER TO FINANCE LOCAL DEVELOPMENT-RELATED
  INVESTMENT

• FAVOR GRANT PEREQUATION MECHANISMS, WHICH TAKE
  INTO ACCOUNT THE DEGREES OF DEVELOPMENT OF LOCAL
  GOVERNEMENTS, ACCORDING TO WELL-DEFINED CRITERIA

• ASSIST LOCAL GOVERNEMENTS TO DEVELOP BASIC
  PRO-POOR INFRASTRUCTURE AND SERVICES

• ASSIST SUB-NATIONA GOVERNEMENTS TO MOBILIZE
  INTERNAL FINANCIAL RESOURCES

• PROVIDE COLLATERAL FOR LOCAL GOVERNEMENTS
  LOANS AIMED AT FINANCING LOCAL DEVELOPMENT
  INITIATIVES

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UNCDFS TECHNICAL SUPPORT TO LOCAL GOVERNMENTS
NATIONAL COORDINATING UNIT
DNCT
PACR-TImbuKtu PACR-Mopti
LOCAL GOVERNMENTS
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UNCDFS FINANCIAL SUPPORT TO LOCAL GOVERNEMENTS
UNCDF
PUBLIC TREASURY
ANICT CENTRAL BANK ACCOUNTS
ANICTS ADMINISTR. COSTS 5
INVESTMENT 95
BLOCK GRANTS TO LOCAL GOV.
MATCHING GRANTS (FROM LOCAL GOVERNEMENTS)

LOCAL GOVERNMNTS
SERVICE PROVIDERS
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CONTEXTUAL CONSTRAINTS

• SLOW TRANSFER OF SECTORAL RESPONSIBILITIES TO LGs

• LOW MOBILISATION OF LOCAL FINANCIAL RESOURCES

• LOW IMPLEMENTATION RATE OF INCOME GENERATING
  INFRASTRUCTURE

• WEAK CONTROL OF LOCAL MANAGEMENT PROCEDURES BY
  LOCAL STAKEHOLDERS

• FREQUENT TURN-OUT OF STAFF AT LOCAL GOVERNMENT
  LEVEL

• INSUFFICIENT DECONCENTRATION OF LINE DEPARTMENTS

• LACK OF SYNERGIE BETWEEN COMMUNITY APPROACHES AND
  LOCAL GOVERNEMENT APPROACHES

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PACR-T PACR-M LESSONS LEARNED

• STRONG CENTRAL GOVERNEMENT INVOLVEMENT

• STRONG PARTNERSHIP WITH OTHER DONORS SUPPORTING
  DECENTRALISATION AND EFFORTS TO HARMONIZE
  PROCEDURES

• TECHNICAL AND FINANCIAL SUPPORT TO ABOUT 130
  LOCAL GOVERNEMENTS (OUT OF A TOTAL OF 761)

• PARTICIPATORY PLANNING AND BUDGETING

• USE OF NON-CONDITIONAL AND PREDICTABLE FUNDS

• ADOPTION OF A GENERAL APPROACH SPECIFICALLY AIMED
  AT EMPOWERING LOCAL STAKEHOLDERS

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Piloting Innovations for Decentralization
Reforms Local Governments in Local
Development and Poverty Reduction New
York, 21 June 2004