Local Government Accountability: Challenges and Strategies

1
Local Government Accountability Challenges and
Strategies

• World Bank Public Sector and Expenditure
  Management Thematic Group
• Michael Schaeffer
• March 2005

2
Strengthening LGU Accountability

• Good Governance, Accountability and Development
• Accountability A Diagnostic Framework
• Mechanisms For Improving Information Flows
• Policy Considerations

3
Four Pillars of Good Local Governance

• Accountability Capacity to Hold Public
  Officials Accountable for Their Actions
• Transparency Low Cost Accessibility to Relevant
  Information
• Predictability Results from Laws / Regulations
  that are Clear, Uniformly and Effectively
  Enforced
• Public Participation Citizens are Informed and
  Involved.

4
Effective Accountability

• Answerability Local Public Officials Should
  Respond to Questions
• How They Use Their Authority
• Where The Resources Went And,
• What Was Achieved
• Consequences There is a Need For Meaningful
  Consequences

5
Accountability Linkages

• Bottom-up By Local Government To Local Citizens
• Horizontal Accountability By the Local
  Government To Various Public Institutions of
  Accountability
• Vertical Accountability By the Local Government
  to the Central Government

6
Accountability Linkages
7
Characteristics of an Effective Budget1

1 See Meyers, Roy T., 1996. Is There a Key to
the Normative Budgeting Lock, The World Bank,
Washington, D.C.
8
Factors That Adversely Impact Budget Performance
Source Meyers, Roy T., 1996. Is There a Key to
the Normative Budgeting Lock, The World Bank,
Washington, D.C.
9
Weak Local Accountability

• Institutions of Local Accountability in
  Developing Countries Often Weak
• Capture of Public Resources By Local Elite
• Remedies Ensure Greater Information
  Dissemination About the Roles and
  Responsibilities of Government and the Outcomes
  of Public Resource Allocation

10
Accountability A Framework

• First Phase Diagnostic Questionnaire Tool
• Document Existing System Using the Diagnostic as
  the Background Tool
• Second Phase Assess Each Element of the System
  and Design Improvements According to Local
  Central Government Priorities

11
Diagnostic Questionnaire

• Comprehensive budget should include all
  revenue / expenditure
• Should Diagnosis Accuracy of LGU Reporting
• Authoritative Are Public Funds Spent as
  Authorized By Law?
• Transparent Does the LGU Publish Timely
  Information

12
Example Albania

• Insufficient Attention Paid to Strategic
  Allocation of Resources
• Sustained Improvements in Delivery of Public
  Services Require Balance Between Central / Local
  Governments

13
Albania Operation and Maintenance Allocations
for Pre-University Education and Primary Health
Care (Lek Million)
Source Republic of Albania, Ministry of Finance.
Medium Term Expenditure Framework 2003-2005.
Tirana Albania September 2002 Pg 29
14
Lessons Learned

• Overdependence on Central Government Transfers
  May Undermine Local Government Accountability
• May Create Perverse Incentives For Misallocation
  of Public Resources
• Technical Design of Transfers May Not Have
  Desired Impact on Local Central Government
  Accountability

15
Lessons Learned

• Policy Interventions That Address Local
  Information Asymmetries Are Likely to Be Critical
  To Empower Citizens to Hold Their Local
  Government Representatives Accountable

16
Expenditure Tracking Surveys

• Operational Approaches to Improve Local
  Government Expenditure Management and
  Accountability Rests Upon
• The Information Problem is Massive
• Specific Entry Points Need to be Identified
• Path Dependence is a Reality
• Many Developing Countries Have Limited Human
  Resource Capacity

17
Expenditure Tracking Survey - Uses

• Serve as Diagnostic Tool on Service Delivery
• Enabling Analysis of Public Expenditure
  Priorities
• Takes into Account Implementation Capacity of
  LGUs (Other Levels of Government)
• Provide Good Primary Data For Empirical Research

18
Expenditure Tracking Survey General Findings
Source World Bank. 2002. Assessing Frontline
Service Delivery by Ritva Reinikka and Jakob
Svensson. Washington, DC The World Bank. Page
249
19
Mechanisms For Improving Information Flows

• Increased Information
• Consultation (and, Oversight)
• Active Community Participation

20
Mechanisms For Advancing Public Sector
Accountability


1 Elements from Table 5 Formal Mechanisms for
Advancing Accountability were obtained from
Malcolm Russell-Einhorn (2004) Creating and
Implementing a Local Transparency Initiative
Local Government Brief Page 32.
1 Elements from Table 5 Formal Mechanisms for
Advancing Accountability were obtained from
Malcolm Russell-Einhorn (2004) Creating and
Implementing a Local Transparency Initiative
Local Government Brief Page 32.
21
Policy Considerations

• Local And Central Government Relationships
• Building Integrity Incentives into
  Decentralization Policy
• Operational Approach
• Consultation and Participation At Local Level
• Public Discussion
• Institutional Controls
• Transparency of Rules, Regulations, Laws and
  Processes
• The Audit Function
• Procurement

22
Local Central Government Relationship

• Insure that LGUs Provided With Services in Accord
  With The Assignment of Powers and Functions to
  Local Government
• Insure that LGU Resources Should be Utilized
  Efficiently and in the Manner Intended

23
Building Integrity Into Decentralization Policy
Source V. Vergara, Municipal Integrity
Workshop, World Bank.
24
Operational Approach

• Installing Meritocracy Programs
• Clarifying Government Priorities
• Ensure Full Budget Control and Coverage
• Enhance Policy Coordination And Budget
  Formulation Process Between Executive and Councils

25
Consultation and Participation

• Three Criteria For Evaluating Transparency and
  Accountability Mechanisms in Local Circumstances
• Degree of Visibility
• Simplicity of the Mechanism
• The Degree to Which the Mechanism can Have a
  Direct Rather than Indirect Impact on Government
  Policies and Programs

26
Policy Considerations

• Public Discussion
• Institutional Controls
• Honest and Effective Supervision
• Auditing Oversight and Control
• Standards of Ethical Behavior
• Transparency of Rules, Regulations and Processes
• The Audit Function
• Internal
• External
• National Audit Institution

27
Regulation of Procurement Processes

• Procurement One of the Areas Most Heavily
  Affected by Lack Of Transparency
• National Public Procurement Agency
• Implement LGU Oversight Measures

28
Concluding Remarks

• Local Government Accountability May Deteriorate
  in Effectiveness if Not Guided by Coherent and
  Universal Principles
• Strengthening Governance (Accountability,
  Transparency, Predictability, and Participation)
• Reinforce Foundation of Civil Society
• Engage in Improvements in LGU Expenditure
  Management Programs