4.2.

1 Why Decentralisation

Much of the decentralisation which has taken place in the past decade also has been motivated by
political concerns. For instance, in Latin America, decentralisation has been an essential part of the
democratisation process as discredited autocratic central regimes are replaced by elected governments
operating under new constitutions. In Africa, the spread of multi-party political systems is creating
demand for more local voice in decision-making. a. In some countries, such as Ethiopia, decentralisation
has been a response to pressures from regional or ethnic groups for more autonomy to control or
participation in the political process. In the extreme, decentralisation represents a desperate attempt to
keep the country together in the face of these pressures by granting more autonomy to all localities or
by forging “asymmetrical federations.” b. A variation of the above theme has been decentralisation as
an outcome of long civil wars, such as in Mozambique and Uganda, where opening political
opportunities at the local levels has allowed for greater participation by all former warring factions in
the governance of the country as a way of healing political and social wounds caused by the
disintegration of society because of bad governance. c. The transition economies of the former warring
factions in the governance of the governance of the country as a way of healing political and social
wounds caused by the disintegration of society because of bad governance. d. The transition economies
of the former socialist states have also massively decentralised as the old central apparatus crumbled. In
many countries, decentralisation simply has happened in the absence of any meaningful alternative
governance structure to provide local government services. In some cases particularly in East Asia,
decentralisation appears to be motivated by the need to improve service delivery to large populations
and the recognition of the limitations of central administration.

Although the main reason for decentralisation around the world is that it is simply happening, there are
a multitude of design issues that affect the impact of different types of decentralisation of efficiency,
equity and macro stability. In the regard, there is a growing body of literature examining the economic
rationale for decentralisation. The specific services to be decentralised and the type of decentralisation
will depend on economies of scale affecting technical efficiency and the degree of spillover effects
beyond jurisdictional boundaries. These are issues that need to be taken into account in the design of a
decentralised system. In practice, all services do not need to be decentralised in the same degree.

In an important economic sense, the market is the ultimate form of decentralisation in that the
consumer can acquire a tailored product from choice suppliers. The nature of most local public services
limits this option and establishes a government role in ensuring the provision of these services, but it
does not automatically require the public sector be responsible for delivery of all services. Where it is
possible to structure competition either in the delivery of a service, or for the right to deliver the service,
the evidence indicates that the service will be delivered more efficiently. Although uncommon in
practice, local governments have successfully competed for the right to provide certain local services. In
an array of local public services in any particular country, a mix of solutions from deconcentrating to
managed competition/privatization is likely to be co-exist.

Much as politics in the driving force behind decentralization in most countries, fortunately,
decentralization may be one of those instances where good politics and good economics may serve the
same end. The political objectives to increase political responsiveness and participation at the local level
can coincide with the economic objectives of better decisions about the use of public resources and
increased willingness to pay for local services.
At least five conditions are important for successful decentralization:

a. The decentralization framework must link, local financing and fiscal government so that local
politicians can bear the costs of their decisions and deliver on their promises;

b. The local community must be informed about the costs of services and service delivery options
involved and the resource envelope and its sources so that the decisions they make are meaningful.
Participatory budgeting such is one way to create this condition;

c. There must be a mechanism by which the community can express its preferences in a way that is
binding on the politicians so that there is a credible incentive for people participate; d. There must be a
system of accountability that relies on public and transparent information which enables the community
to effectively monitor the performance of the local government and react appropriately to that
performance so that politicians and local officials have an incentive to be responsive; and the
instruments of decentralisation, the legal and institutional framework, the structure of service delivery
responsibilities and the intergovernmental fiscal system are designed to support the political objectives.
Fulfilling these goals or at least having local governments improve upon the central government‟s
record is a tall order, but achievable; e. Successful decentralisation is closely related to observing the
design principles of finance following clear assignment of functions; informed decision making;
adherence to local priorities and accountability. However, applying these principles in practice has not
proven to be simple. Country policy and institutional instruments that establish decentralisation have to
be shaped to the specific conditions of individual countries.

4.2.2 THE CONSTITUTIONAL AND LEGAL FRAMEWORK FOR DECENTRALISATION

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Structurally, the desirable architecture of the rules and regulations that govern decentralised systems is
straightforward. A constitution should be used to enshrine the broad principles on which
decentralisation is to operate, including the rights and responsibilities of all levels of government, the
description and role key institutions at central and local levels and the basis on which detailed rules may
be established or changed. One or more laws should define specific parameters of the
intergovernmental fiscal system and the institutional details of the local government structure, including
key structures, procedures including elections, accountabilities and remedies.

A series of regulations associated with each law should interpret and detail the practices and measures
by which the related law will operate. Laws that deal with tasks that are shared between national and
sub-national governments should include sections on intergovernmental relations. Substantially greater
detail and specificity accompany the move down this three-platform architecture from constitution to
regulations, whereas greater difficulty and a higher degree of authority minister, parliament and
constitutional assembly are required to move up from regulations to the constitution. The levels of
difficulty and the locus of authority in effecting changes are important factors in determining where in
the architecture particular aspects of the decentralisation system are defined, as well as the relative
specificity of the definitions. The rigidities and flexibility established in this structure have important
implications for the management of decentralised system.
The placement of an item within this architecture may be the result of consensus, but it is often the
outcome of sometimes difficult negotiations between competing interests. Those concerned with
macroeconomic stability, for example, may want intergovernmental fiscal rules to be a matter for
regulation under the minister of Finance, to give that ministry maximum flexibility in public expenditure
management. Local government advocates, by contrast, may argue as they did successfully in Brazil for
these fiscal distributional rules to be enshrined in the constitution. In Uganda, the purposes and
mechanism for transfers are specified in the constitution along with a formula for determining the
minimum size of the pool from which block grants are to be disturbed; details of the distributional
formulas are the subject of regulations.

Because decentralisation is a complex social experiment, a good may be made for allowing more
flexibility to change the specificity of implementation instruments, while enshrining the political and
philosophical principles in the constitution and the operating structures in the laws.

INTERACTIONS BETWEEN LEGAL AND REGULATORY FRAMEWORK AND DECENTRALISATION In addition

to substantive law, a county‟s procedural laws can have profound effects on the success of
decentralisation efforts. For example, when local expenditures must be pre-audited by a central
authority, rigidities are introduced that make the benefits to decentralisation more difficult to achieve.
When reviewing the legal framework for decentralisation, it is not sufficient to examine laws specifically
dealing with decentralisation. Other laws that mandate aspects of service delivery, civil service,
budgeting and so on must also be considered to ensure a consistent approach.

Treatment of keys issues in the legal and regulatory framework will be shaped by the government‟s
structure as a unitary or federal system. In some federal systems (for example, Canada and India)

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local governments are completely under the authority of state to provincial governments. The federal
government is thereby limited in the relationships it may establish with the local level and must seek to
affect local behaviour and outcomes through the states or provinces.

Some unitary systems may exercise extremely centralised control over local governments. In Indonesia,
the Ministry of Home Affairs has had authority to appoint and remove mayors and even village heads.
The structural impediments in designing a decentralised system in this context are few, but that does
not mean that the process of instituting such a system is without critical hurdles. Indonesia has had
decentralisation legislation on its books since 1974, the process there remains far from completion.

As with others key aspects of decentralisation, the legal and regulatory framework will be tailored to
country circumstances. Nevertheless, there are issues this framework may be expected to address.
Those issues of potential interest to the work World Bank include the following:

a. Classification of local governments within the tiers established under the constitution; b. Broad
organisational structures and their roles and responsibilities; c. Terms of office, operating powers ,
procedures and limitations of the political leadership, as distinct from the civil service; d. The taxing and
fiscal administration authority of local governments; e. The distribution of budgeting, expenditure
management, accounting, auditing and reporting requirements; f. Service provision and delivery
authority; g. The mechanism for citizen participation and voice.

The legal and regulatory framework should be designed to recognise differences in management
capacity. The assignment of functional responsibilities, for example, provincial capital or designated
growth centre often implicitly recognises the varying capabilities of municipalities, but a more dynamic
framework that recognises capacity based on performance overtime would be more desirable in the
long run. Matching degree of autonomy and privileges to a revenue self-sufficiency, budget
management performance (absence of deficits) and service delivery performance (client surveys), would
allow the legal and appropriate time period for reassessments and indicators would need to be linked to
country circumstances as well as the specific details of decentralisation framework.

4.2.3 DECENTRALISATION AND CIVIL SERVICE REFORM

Civil service reform is usually a supporting strategy for more general decentralisation in government
operations or service delivery. Governments do not decentralise the civil service as an end in itself but
they do so in order to provide services better, manage resources more efficiently, or support other
general outcome goals. The civil service as a whole can be seen as one of the main instruments with
which the government fulfils its obligations. In the context of decentralisation, this tool must often be
reshaped in order to perform a new set of duties efficiently, equitably and effectively. Reform of the civil
service, therefore, is the process of modifying rules and incentives to

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obtain a more efficient, dedicated and performing government labour-force in newly decentralised
environment.

How does Decentralisation affect the civil service? Civil services at all levels of government need a
capable, motivated and efficient staff in order to deliver quality services to its citizens. When civil service
functions and structures are decentralised, existing bureaucratic patterns must be reorganised as roles
and accountability are shifted. Decentralisation thus intensifies the need for capable staff and increases
the importance of capacity building programmes.

4.2.4 THE PROCESS OF DECETRALISATION

a. Disperse power, both geographically and institutionally: Decentralisation inevitably changes the
location of power and jobs. Movement geographically or across tiers of government is often impeded by
issues related to statue, prestige and poor labour mobility. In the Eastern Europe transition economies,
for example, de-legitimation of the central state and the emergence of representative government at
local and intermediate levels of government have complicated human resource allocation. Incentive
programmes and mechanisms for inter-post mobility, which compound the costs of decentralisation,
may be required in order to introduce flexibility.

b. Creates new responsibilities for inexperience actors: Decentralisation creates more opportunities for
local autonomy and responsiveness to more specialised constituencies, but it also gives sub-national
governments more room to fail if specific steps are not taken to build local technical managerial
capacity.
c. Can disperse scale economies/expertise groups: The need for specialised personnel is related in part
to the size of the territory covered by the entity. Below a certain size, it might be counterproductive or
cost inefficient to have specialists or technical personnel. There are methods which can be used to
address this issue, one of which is to allow in the context of the decentralisation schemes the possibility
of empowering local self-governments units to form associations and pool their resources in order to
cover activities requiring specialised personnel.

d. Introduce more levels into the state: Decentralisation, especially political decentralisation creates a
class of government workers which, based on the specific information which they receive feedback from
their constituencies may have different preferences than workers at the next higher level. This
divergence in views and convictions can create conflict within the civil service that will require
mechanisms to manage effectively.

e. Creates a tension between local autonomy and national standards: Decentralisation relaxes national
control and creates the potential for more regional variation in civil service conditions. Some room for
variation allows regions to hire a civil service, that matches a community‟s needs and budget
constraints. National salary eligibility and performance standards can ensure consistent quality, but they
can also lead to personnel expenditures especially for locally administered education and health sectors
beyond some local

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capacities; grant transfer system will need to take different financing capacities into account in these
and other types of mandated expenditures. The Philippines, Indonesia and Pakistan are examples of
decentralisation states with essentially uniform terms and conditions of service for government
employees in different regions.

f. Can increase administrative costs: Creating additional layers of government is an expensive

proposition and while the central government in the best of cases-might reduce its role and shed
personnel in the context of decentralisation, empirical evidence suggests that these works are often
reabsorbed by local governments. There is thus no net change in public sector employment. In the worst
case, central government employment remains unchanged, while local government employment grows.

g. Civil service Reform to support Decentralisation The main issue is assessing the civil service reform
priorities parallel those in more general decentralisation policies is the question “under what conditions
does one deconcentrate or devolve human resource management or organisational responsibilities to
lower tiers of government?” What requisite capacity does one need at various levels to make a system
work?”

The twin tasks of building local capacity and adjusting to the changes in intergovernmental coordination
needs can be daunting even when budgets allow comprehensive training and all stakeholders support
the reforms. The more frequent realities of budget constraints and mixed support, however, practically
ensure that large-scale civil service reform will be a long drawn-out, expensive process that does not
keep up with the pace of service or sector decentralisation.
h. Building Local Capacity Local or sub-national capacity is one of the most important factors creating a
wellfunctioning decentralisation civil service. In countries where local institutions already exist, the
challenge will be to reinforce them institutionally and legally as well as to strengthen their personnel
management capacities. In place where local government institution are embryonic or exist only at an
informal level, the institutional and legal framework will have to be created before any type of reform of
the administration is undertaken.

The degree of local capacity determines the kind of human-resource management strategies that will be
feasible and desirable. Decentralisation of human resources management is more likely to succeed in
cases where lower-level authorities have the financial and managerial ability to set competitive
compensation packages and salary levels that will attract local talent. In these cases, the flexibility
advantages of allowing local levels that will attract local talent. In these cases, the flexibility advantages
of allowing local level, a unitary hiring system might be preferred to ensure that the necessary skills are
present locally in all regions. In these cases where the centre retains more control over human
resources, caution should be paid to ensure that the management options of local stakeholders are not
curtailed.

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4.2.5 ADJUSTING TO DECENTRALISTION: GENERAL GUIDELINES FOR COUNTRY SPECIFIC STRATEGIES

The legal framework should clearly define responsibilities and standards. The creation of a strong legal
framework to address issues related to financing and reporting, to determine the type of control
mechanisms (especially financial) that are necessary and who is accountable for them, to evaluate hiring
practices and compensation schemes as well as addressing issues related to the procurement of public
work-must be a priority in any reform effort to ensure sound utilisation of public resources and minimise
corruption.

Consistence and transparency gain support. On matters of staffing, compensation or oversight of local
administration and most importantly in the delivery of services, it is very important to ensure that there
is transparency and that changes in the administration (and therefore the civil service) are not seen as
an instrument to disenfranchise some groups or favour another.

Reporting mechanism need to be clear and precise. Clear reporting procedures will need to be put in
place vis-à-vis other government agencies at the same level. In the medium and longer-term, audit
courts can be useful regulatory mechanism. Transitions from the existing system to new systems have to
be carefully planned to avoid conflict between new reporting arrangements and enduring mechanisms.

Channels for citizens-civil servant communication need to be created. By including more citizens in the
process of monitoring civil service performance, decentralisation creates more opportunities for friction
between civil servants and citizens. Harassment by private interest groups can prevent honest and
dedicated civil servants from performing their duties, while civil servants can use their positions to
threaten citizens. These tensions can be avoid by relatively quick and inexpensive methods and
structures for redressing grievances, whether these come from civil servants or from the citizens.
Training should contribute to the formation of new working relationships. In addition to building local
capacity, training can be a tool for creating personal networks among various levels of government,
regions or types of government workers. One recommendation, for example, might be to train career
civil servants and local politicians together to ensure that they better understand what is expected of
them and what they can expect from each other.

All levels of government should be encouraged to define and plan for the types of workers they will
need in order to carry out new responsibilities. In the short term, these sorts of rough plans substitute
for the computerised establishment management capacity and human resource management staff that
so many countries lack can help eliminate duplicate workers, unnecessary hired and other expensive
mistakes. At the very least, they can be an exercise in the longer-term planning and role definition.

Decentralisation can be a way of improving access to services, tailoring government action to private
needs and increasing the opportunities for state-society interactions. Sub-national

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governments, however, will only be effective when they have access to the necessary human and
financial resources to undertake the service they need the have been conferred.

Civil service reform is both capacity building and adjusting to decentralisation and it addresses the first
of these requirements. There is fairly widespread agreement that capacity-building at all government
levels is an essential component of decentralisation. The sequencing and priority level of training is
whether to train local or central government human resources first. This depends on the country itself,
although the sub-national governments have generally been the first to be trained to accept their new
responsibilities. There is less agreement over how to deliver the appropriate human resources packages
to the appropriate levels of government and how to coordinate human resources management across
and between levels of government. The decision to decentralise or retain central control over human
resource management i.e. recruiting, hiring, salary-setting, etc depends heavily on the existing degree of
sub-national capacity. The suggestions above outline some general coordination mechanisms, but the
specific institutional arrangements for ensuring a consistent efficient civil service must react to the kinds
of institutional changes that decentralisation has brought.

4.2.6 DECENTRALISATION, INFORMATION AND MONITORING Accountability is a prerequisite for

improved public sector performance and information is the key to accountability. The systematic
collection, analysis and reporting of information are critical elements, of decentralisation programmes
because that information can be used to verify compliance with policy goals, to analyse alternative
outcomes and to guide future decisions. Information on financial flows i.e. budgeting and expenditure
reporting as well as on other inputs, outputs and where possible, outcomes. Such information is
essential to inform local constituents and to encourage public participation in the political process and
at the central level to monitor and supervise local activities funded at least partially by central sources.

Unless the local public is aware of what public goods and services are provided, how well they are
provided, who the beneficiaries are, how much the goods and services cost and who paid for them, local
constituencies will not encourage effective government. Central monitoring and evaluation of local
performance, has much the same effect, except that national interests replace particular local interests.
Without some central monitoring, there can be no assurance that functions of national importance are
adequately performed once they have been discentralised, that the macroeconomic implications of
decentralisation are understood, or that the effects of proposed changes in intergovernmental fiscal or
administrative relations are adequately analysed.

Many decentralising countries have weak or inadequate mechanisms for citizens and higher levels of
government to monitor, evaluate and support decentralisation. However, this does not prevent
decentralisation from achieving some of its goals, but it does limit its ability to create large efficiency
gains. The task of monitoring and assessing sub-national finances can be strengthened considerably
through improvements in financial accounting and reporting and the establishment of analytical
capacities for monitoring and evaluation. But the need for careful monitoring goes beyond finance.
Depending on the service delivery objective, the need for monitoring will differ. For example, different
aspects of decentralisation may have different effects on the construction and

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maintenance of various types of infrastructure, or health care programmes, or education. If the

objective if for safety nets to reach the poor, information is required regarding who the poor are and
where they are located and how much of the benefits from the programme are reaching this target
group. In the vast majority of cases, countries spend significant resources on safety nets but fail to
collect date and monitor who receives the benefits and how they were affected. A notable exception to
this is the valuable evaluation of the poverty targeting of Argentina safety network programme
(Revallion 1998).

To improve financial accounting and reporting, detailed fiscal data should be regularly collected and
reported. Ideally, this data would be derived from uniform financial and reporting systems. At a
minimum, this should be collected and processed on a regular and timely basis. The data should exhibit
the following characteristics:

a. Breadth of coverage: information should be broadly representative, both across units of sub-national
government and across financial classifications (e.g. revenues, expenditures, debt). b. Consistence:
minimal reporting and classification errors. c. Comparability: the same types of activities should be
reflected across units of government d. Clarity: actual activities should be reported rather than
budgeted activities, and ideally, data should be audited.

The development and implementation of financial reporting and information systems often requires
substantial technical assistance, training, time and resources. Implementation of these systems may
also require that central institutions be established to develop and maintain the reporting systems, to
trains and support local officials and monitor and analyse developments in sub-national finance.

Establishing a census of governments similar in coverage to the censuses of population, industry and
employment existing in many countries and publishing sub-national financial data would establish the
foundation for a monitoring system and also provide important inputs for revenue estimating, economic
research and the assessment of creditworthiness.
It is very difficult to monitor decentralisation consistently across countries. For example fiscal
information, such as that reported in the IMFs Government Finance Statistics, is often used to track
international trends in decentralisation among various countries. The problem with this data however,
is that, analysts often use the percentage of total public expenditures undertaken at the local level as an
indicator of decentralisation. In reality, in some countries, local governments decide on the allocation of
these resources, while in others, much of these expenditures are mandated at the central level and only
undertaken at the local level. The former is consistent with the decentralisation, while the latter is not.
Nevertheless, for now these are often the best data available for cross-country comparisons. The
Decentralisation Thematic Group at the World Bank is in the process of coordinating several data
collection efforts across the Bank to form one comprehensive, detailed database of fiscal and
institutional variables across countries.

4.2.7 DECENTRALISATION AND LOCAL TECHNICAL AND MANAGERIAL CAPACITY

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The recent international trend toward decentralisation has provoked a lively debate about the capacity
of local governments and communities to plan, finance and manage their new responsibilities.
Assessing, improving and accommodating varying degrees of local capacity has become more and more
important as decentralisation policies transfer larger responsibilities as well as budgets from national
governments to local governments and communities.

While one of the common rationales for decentralisation proposes that local governments‟ proximity to
their constituents will force them to be better than central governments at managing resources and
matching their constituents preferences, it is not clear that local governments an communities have the
capacity to translate this information advantage into efficiency advantage. Inexperienced, small local
governments may not have the technical capacity to implement and maintain projects and they may not
have the training to effectively manage larger budgets.

This note discusses the two main branches of „‟local capacity‟‟ debate: first, the question of what local
capacity is; and second, the issue of what to do about varying degrees of local capacity once it has been
identified. „‟ Local government‟‟ is taken to mean the level of government where some degree of
everyday face-to-face interaction between citizens/beneficiaries and government is possible.

Assessing Local Capacity

Decentralisation planners have used the general guideline that central agencies should focus on creating
and sustaining the enabling environment and overall strategic issues, while local organisations should
concentrate on tailoring specific mechanisms of service delivery and public expenditure packages to fit
local needs and circumstances. In reality, however, varying degrees of local capacity both local
government and civil society/the private sector obviously affect decisions about which levels of
government can best perform which tasks. In most cases, decentralisation of basic services does not
mean the wholesale transfer to local agencies of all tasks associated with those services. An assessment
of local capacity is an integral part of designing decentralisation.

What is Capacity?
Measuring local capacity can be difficult and the debate over quantifying it has often been motivated by
political concerns as well as technical considerations (Widner, 1994). Central governments have used
„‟lack of capacity‟‟ excuse for refusing to transfer their authority, financial resources and the
accompanying privileges to local units. For example, Fiszbeing (1997) found out in Colombia what was
being characterised by national agencies‟‟ The municiplos (municipals) were actually demonstrating
considerable local capacity by turning down conditional matching grants from central agencies and
borrowing funds locally at market rates in order to implement their own priorities.

For this reason, it is useful to set out some of the relevant issues in objectively measuring local capacity.
The fact that a community and its government exist indicates the presence of some skills.

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The challenge for development agencies and their partners is to identify the latent capacity in the local
government, civil society, and private sector and bring it into the development programmes.

The first task is to identify the specific tasks that local governments and citizens will need to carry out.
The following are just a few of the components of planning, implementing and sustaining basic services:

a. Analysing and solving local problems b. Determining community needs c. Organizing local and national
political support programmes d. Mobilising national resources for programmes e. Raising tax revenues
or collecting user fees f. Writing specifications for the technical elements of programmes g. Maintaining
and sustaining the service h. Evaluating the impact of the programme on the local environment i.
Providing for those affected adversely by the programme j. Contracting for services and buying
equipment

4.2.8 DECENTRALISE OR BUILD CAPACITY? WHICH ONE COMES FIRST?

The traditional approach to decentralisation has been to build capacity before transferring
responsibilities or revenues. This cautious method was fuelled by worries about irresponsible spending,
local corruption, regional inequities and service collapse as well as many central governments‟
reluctance to devolve authority. Some authors such as Bahl and Linn even argued that the lack of local
capacity, among other factors, made decentralisation ineffective and even undesirable in developing
countries.

This traditional approach is changing, however as increasing evidence shows that the capacities of all
levels increase as decentralised service system mature. There is a growing appreciation that
“management is a performance art” better learned by doing than listening. Rondinelli, et al (1984)
reports that Indonesia, Morocco, Thailand and Pakistan‟s local government capacity increased slightly
but perceptibly in the years following decentralisation. Devolution in Papau New Guinea has increased
popular participation in government and improved the planning, management and coordination
capacity of provincial administrators. Faguet‟s ongoing research on Bolivia shows that local
government‟s education investments are more rational and more in line with local needs than the
national government‟s expenditure. In general, much of evidence indicates that decentralisation has
increased local participation and hence local government leverage in gaining access to national
resources and encouraged the development of public and private planning and management skills.
Decentralisation in and of itself can be the best way to build capacity. Central support can be important
to maintain equity in spending across jurisdictions and ensure proper attention to training. Tendler
(1997), for example, points out that effective delivery of local services rests upon partnerships crossing
levels of government and the public, private and civil sectors. Nevertheless, capacity-building should not
be a supply-driven endeavour that provides the same support package

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to widely varying local jurisdictions. It is also not always clear that national capacity is greater than local
capacity. Putnam‟s research, for example, shows that Italians rate local government effectiveness higher
than national government capacity.

Demand-driven capacity-building programmes. One way of enhancing local capacity is through training
and practice is to allow local institutions to use a portion of programme funds, or their own funds, to
contract for the technical expertise that they feel is appropriate to their specific requirements. This
technical help can often be found locally, and acquired quicker and cheaper than from central or
regional resources. Similarly communities can be given block grants for their own capacity-building
training programmes. They can purchase the training they need to fill the gaps which they have
identified in their own management and technical capacity. They can decide whether to buy the training
from local, regional or central institutions. When local sources are used, a local network of technical
expertise develops. This local network can be tapped more efficiently for maintenance of existing or new
programmes in future.

Local participation can be a strong motivator for change: Recent evidence from Columbia and Bolivia
shows that citizens/constituent oversight can be an important impetus for local governments to actively
improve their capacity. Regular, fair elections and citizens councils can increase the pressure on local
leaders to turn popular demands into outputs.

Clarity in responsibility assignment is essential. India‟s technicality and managerial ambitious Small
Farmers‟ Development Agency and Sri Lanka‟s lack of guidance for the appropriate uses of budgets, for
example, led to low levels of success. The more successful decentralisation efforts in Indonesia and
Thailand however, had clearer procedures for local budget allocation and responsibilities.

The prevailing wisdom today can be summed up by the following statement from Working Group 5
(Institutional Capacity) at the Technical Consultation on Decentralisation and Rural Development, FAO,
Rome, December 1997: ” rather than plan and make large up-front investment in local capacity building
as a prerequisite and make large up-front investment in local capacity building as a prerequisite for
devolution of responsibility, there was a broad consensus that it would be quicker and more cost-
effective to begin the process of devolution, to permit learning by doing and to build up capacity
through practise.” The evidence decentralisation, particularly when appropriate programmes to increase
interaction with the sector are included in decentralisation design.

4.2.9 ACCOUNTABILITY, TRANSPARENCY AND CORRUPTION IN DECENTRALISED GOVERNANCE

ACCOUNTABILITY
In its democratic political aspect, decentralisation as currently conceived and increasingly practiced in
the international development community has two principal components: participation and
accountability. Participation is chiefly concerned with increasing the roles of citizens in choosing

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their local leaders and in telling those leaders what to do – in other words, providing inputs into local
governance. Accountability constitutes the other side of the process; it is the degree to which local
government has to explain or justify what they have done or failed to do.

Improved information about local needs and preferences is one of the theoretical advantages of
decentralisation, but there is no guarantee that leaders will actually act on these preferences unless
they feel some sort of accountability, but other mechanisms such as citizen councils can have limited
influence. Accountability can be seen as the validation of participation, in that the test of whether
attempts to increase participation to hold a local government responsible for its actions.

TYPES OF ACCOUNTABILITY Accountability comes in two dimensions i.e. that of government workers to
elect officials; and that of the elected officials to the citizens who elect them.

Government Workers to Local Officials

The first type can prove difficult to achieve, for civil servants, particularly professionals in such fields as
health, education and agriculture the very sectors that are most often decentralised and have
considerable incentive to evade control by locally elected officials. Such people generally have university
training and sophisticated life-style practises that are hard to maintain in small towns and villages,
career ambitions that transcend the local level and goals for their children‟s education that local schools
cannot meet.

They may well also fear that quality standards for service delivery will suffer if provision is localised.
Finally, they often find opportunities for corruption greater if they supervised by distant manager
through long chains of command than if they must report to superiors close at hand. For all these
reasons, they tend to have strong urges to maintain ties with their parent ministries in the central
government and to resist decentralisation initiatives. And understandably, their colleagues at the centre
have parallel interest in maintaining these ties, for they are much concerned about preserving interest in
maintaining these ties, for they are much concerned about preserving national standards on service
delivery and often about opportunities for venality as well.

Given all these reasons both good and bad for opposition, it is scarcely surprising that decentralisation
initiatives so often run into heavy bureaucratic resistance and designers find themselves pressured to
keep significant linkages between the field and the central ministries, especially concerning such issues
as postings, promotions and salaries. Needless to say, such ties tend to undercut the capacity of elect
officials to supervise government servants supposedly working for them. Some decentralised
governance systems e.g. Karnataka State in India appear to have worked through these problems to
establish popular control over the bureaucracy, but it has taken many years to do so.

Elected leaders to the Citizenry The second type of accountability is that of elected officials to the
citizenry. Elections provided they are free and fair provide the most obvious accountability, but this
rather blunt tool, exercised only at widespread intervals and offering only the broadest citizen control
over government. Voters can

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retain or reject their political leaders, a decision that can certainly have salutary or positive effects on
governance, but these acts are summary judgments, generally not reactions to particular acts or
omissions. And when the local elections do revolve around a given issue, such as schools, they
necessarily leave everything else out of the picture. Citizens need more discriminating/incisive
instruments to enforce accountability. Fortunately, a number of these are available.

Political parties can be a powerful tool for accountability when they are established and vigorous at the
local level, as in many Latin American countries. They have a built-in incentive to uncover and publicise
wrongdoing by the party in power and to present continuously an alternative set of public policies to the
voters.

Civil society and its precursor social capital enable citizens to articulate their reaction to local
government and to lobby officials to be responsive. These representations generally come through
NGOs, which like political parties, often have parent organisations at the provincial or national level.

If citizens are to hold their government accountable, they must be able to find out what it is doing. At
the immediate neighbourhood level, a word of mouth is perhaps sufficient to transmit such information,
but at any higher level some form a media becomes essential. In some countries, print media can
perform this function, but generally their coverage is minimal outside larger population centres. A
feasible substitute in many settings is a low-wattage AM radio, which is highly vocal, cheap to operate
and can offer news and talk shows addressing local issues.

Public meetings can be an effective mechanism for encouraging citizens to express their views and
obliging public officials to answer them. The cabildos abiertos (meetings) held in many Latin American
countries are good examples. In some settings, such meetings may be little more than briefing sessions,
but in others can be effective in getting public officials to defend their actions.

Formal redress procedures have been included as an accountability mechanism in some decentralisation
initiatives. Bolivia probably has the most elaborate instrument along these lines with its Municipal
Vigilance Committees that are based on traditional local social structures and are charged with
monitoring elected councils, encouraged to file actionable complaints with higher levels if needed.

In other systems, formal recall procedures are available to citizens dissatisfied with their officials.
Opinion surveys have generally considered too complex and sophisticated to use at the local level, but
usable and affordable technologies are being developed in the Philippines enabling local NGOs to
employ such polls to assess public opinion about service provisions.

A recent USAID assessment of democratic local governance in six countries found that each country
employed a different mix of these mechanisms, while no country had employed them all. No one
instrument proved effective in all six settings, but various combinations offered considerable promise.
Some may be able to substitute at least in part for others when weak or absent. Civil society and the
media, for example, might together be able to make up for a feeble party system at the local level.
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TRANSPARENCY AND CORRUPTION

In theory these two phenomena should be inversely related, such that more transparency in local
governance should mean less scope for corruption, in that dishonest behavior would become more
easily detectable, punished and discouraged in future. The history of the industrialized countries
indicates that this tend to be true in the longer term, but recent experience shows that this relationship
is not necessarily true at all in the short run.

In the former Soviet Union countries, for example local governance institutions, had become much more
open to public scrutiny in the 1990s, but at the same time there could be little more doubt that
corruption at all levels had greatly increased. It is to be hoped that the local mechanisms of
accountability discussed above will in tandem with greater probity/integrity at the national level
improve the degree of honesty at all levels, but at best this will take time. The message for the
international development community is to press forward with as many of these accountability
mechanisms as feasible.

A second linkage between transparency and corruption has been noted by Manor when he notes that
India, while greater transparency in local governance was not accompanied by increased corruption, it
did lead to popular perceptions of greater public malfeasance (Wrongful conduct by a public official),
simply because citizens became more aware of what was going on. Overtime, to the extent that
accountability mechanisms begin to become effective and corruption begins to decline, the citizenry
should appreciate the improvement.

The democratic local governance initiatives currently under way in many countries hold much promise
for developing effective systems of public accountability that will ensure that government servants are
responsible to elected officials and that the latter are in turn responsible to the public that should
increase the pressure for more transparent local governance, in which corruption will be easier to bring
to light and thus to curtail. But just it took many decades for such efforts to make much headway in the
industrial countries, so too quick results cannot be expected elsewhere.

4.2.10 DECENTRALISATION AND SOCIAL SERVICE DELIVERY

EDUCATION AND DECENTRALISATION

There is currently a global trend of decentralising education systems. Most countries are experimenting
with or contemplating some form of education. The process transfers decisionsmaking powers from
Central Ministry of Education to intermediate governments, local governments, communities and
schools. The extent of the transfer varies, however, from administrative deconcentration to much
broader transfer of financial control to the regional or local level. While there are solid theoretical
justifications for decentralising education systems, the process requires strong political commitment and
leadership in order to succeed. The path, depths and ultimately, the outcome of decentralisation
reforms depend on motivations for reforms, the
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initial country and sector conditions and the interaction of various important coalitions within the
sector.

WHY DECENTRALISE EDUCATION

In a world where most governments have experienced the pitfalls of centralised education service
provisions, mainly opaque decision-making, administrative and fiscal inefficiency and poor quality and
access to services, the theoretical advantages of decentralisation have become extremely appealing. In
general, the process of decentralisation can substantially improve efficiency, transparency,
accountability and responsiveness of service provision compared with centralised systems.

Decentralised education provisions promises to be more efficient, better reflect local priorities,
encourage participation and eventually improves coverage and quality. In particular, governments with
severe fiscal constraints are enticed by the potential of decentralisation to increase efficiency.
Beneficiary cost recovery schemes such as community financing have emerged as means for central
governments to offload some of the fiscal burden of education service provision.

DECIDING WHO CONTROLS WHAT

There is ongoing debate about the appropriate locus of decision-making within the education sector.
The debate remains unresolved because the process requires that policymakers rationalise and
harmonise a complex set of complementary functions, mainly: curriculum design, teaching methods,
student evaluation, textbook production and distribution, teacher recruitment and pay, school
constructions and rehabilitation, education financing and parent-teacher linkages. The choices of who
does what are further complicated because each of these functions has to be evaluated for primary,
secondary and tertiary education and often for preschools and adult literacy as well. The evidence about
the impact of decentralisation on education services is mixed and limited. In Brazil, it has increased
overall access (enrolments) but has done little to reverse persistent regional inequities in access to
schooling, per capita expenditures and quality. Chile‟s experience also suggests that decentralisation
does not by itself remove between localities of varying incomes and quality in poorer communities
continues to lag. These results are supported by experiences in Zimbabwe and New Zealand.

However, the design of these decentralised systems has been criticised. One shortcoming is that central
governments have off-loaded responsibilities to local governments and communities and school actors
may not be sufficient and that increased autonomy for communities and school actors may be necessary
to improve schools and learning. By increasing the participation of parents, community-managed
schools in El Salvador show significantly lower rates of student and teacher absenteeism. While this type
of management does appear to have improved student performance in tests according to a recent
evaluation, it may be just a matter of time before better student attendance translates into higher
student achievement. In Nicaragua, controlling for similar household background and school inputs,
students in schools that make decisions about school functions perform better in tests. These results are
derived from ongoing impact evaluations. Since

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the impact of management reforms such as these may take time to unfold, further empirical analysis
needed.

Decentralisation of education systems demands harmonisation of a complex set of functions, each for
primary, secondary, tertiary and non-formal education. The issues of how far to devolve decision-making
in each of these sub-sectors and to whom, continue to be debated. There are a number of on-going
experiments worldwide, ranging from devolution of limited functions to intermediate governments and
local governments, to community-based management and financing of schools. The current consensus is
that tertiary education and specific functions such as curriculum design and standards setting are best
retained by the centre; secondary and primary education should be devolved as far as possible; local
participation in school management improves accountability and responsiveness, and fosters resource
mobilisation. Yet, the gist of the issue is in the details and there are many details that need to be sorted
out on a country by country basis.

Review Question

Read about Decentralization in your country. Describe the context, service delivery, successes and
challenges of the policy in your respective country.

4.2.11 DECENTRALISATION AND DEVELOPMENT

The following constitute the advantage of decentralization to development:

a. Decentralization can become an effective way of overcoming the serious limitation of centrally
controlled national planning. The most important factor in this regard would be to delegate some
control and authority in national development planning and government to officials who are directly
concerned with the field or local situation and are as such closest to the development problems.
Decentralization to regional and local levels will, therefore, permit these officials to design and plan
development which would be appropriate to the specific needs of the various regions and
heterogeneous groups.

b. Decentralization can eliminate and enormous amount of the bureaucratic red tape associated with
strictly centralized planning and management in developing countries as a direct result of the over
concentration of power, authority and resources in the central government. c. Decentralization of the
functions of central government and linking central to local and regional levels will necessarily give rise
to an increase in the knowledge and grasp of officials concerning local problems and needs.

d. Decentralization makes it possible to achieve better political and administrative penetrate in applying
the policy of the national government in remote rural areas.

e. Decentralization can give rise to greater representation of a diversity of political, religious, ethnic and
tribal groups in development decision-making which, in turn, can promote the principles of equality in
the allocation and utilization of government resources.

f. Decentralization can have a stimulating effect on the development of more effective resources among
local government and private institutions. This means that these institutions will be able to take over
functions which are often poorly performed by the
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central government. Moreover, this may give local officials opportunity to develop their own
managerial and technical skills. g. The efficiency of the central government may increase, since it will be
relieved of routine tasks which can be effectively performed by field staff and local officials. h.
Decentralisation can also provide valuable structures whereby the activities of a variety of central
government ministries can more effectively link up and reach an accommodation with one another, as
well as with the activities of local officials and NGSs in the various regions. i. A decentralised structure is
also needed to institutionalise mass participation. Such a structure will be capable of facilitating the
exchange of information and of channelling local needs and political demands from the local
communities to the national government. j. Decentralisation can, therefore, assist in neutralising the
influence on and exclusive control over development by the local elite – a form of control which is often
unsympathetic towards the objectives of a national development policy and the needs of the
povertystricken masses. k. Decentralisation can give to a more flexible, innovative and creative
administrative system. Local administrative units can accordingly have more freedom to test innovative
action and experimental phases fall, the failure would be limited to small areas and need not necessarily
be reflected at national level. l. It is generally accepted that decentralisation can also promote political
stability and national unit, in that groups in different areas of a single national state are afforded the
opportunity to participate more directly in development decision-making.

4.2.12 DISADVANTAGES OF DECENTRALISATION

a. More often than not, decentralization serves elitist (high placed people in society) interests at local
level as local governments are given little way to plan and also make decisions. Decisions are made at
the center and indirectly imposed on local governments for implementation even if they do not serve
the interests of the local people. b. In countries where corruption is the order of the day, instead of
bringing services nearer to the people, it is corruption that decentralized and service delivery is greatly
hampered. c. In most cases, decentralization is interpreted to mean localization and all the available
opportunities in the local governments go to the sons and daughters of the area. This negatively
impacts on service delivery and performance as it only enhances ineffectiveness and inefficiency as
nothing much can be done by the sons and daughter of the area. d. There is a problem of lack of
capacity to run services effectively and efficiently. A good number of local governments lack human
resources with the necessary capacity and capability to provide services effectively. e. Sometimes, the
political „‟heavy weights‟‟ paralyses service delivery as they fight to stamp their influence and authority
in the local area. They undermine each other and at the end of the day services are not delivered to the
masses. f. There is lack of authority by local government to approve laws that are necessary for
effective operations of local governments as laws are made and approved at the center. This practice
hampers service delivery and development.

g. Sometimes, there is misuse of power and authority by local leaders. Local leaders sometimes use
their power to deny areas where they do not have political support services just to prove as to who
wields the power in the locality. h. Where decentralization does not correspond with the interests of the
people in the area who have to apply it, it is not implemented effectively. For example, in Buganda
where decentralization is viewed as standing in the way of federalism it has not borne the desired fruits
and yet the potential to develop under it is immense.
I. In some countries, decentralization promotes „‟the tribalization‟‟ of citizens and this creates more
divisions rather than fostering national unity.

CHAPTER 5: PUBLIC BUDGETING

In this chapter of the module we introduce you to the fundamental issues of public