Community Based Rural Development Advisor DECENTRALIZATION AND RURAL SERVICES: MESSAGES FROM RECENT RESEARCH AND PRACTICE Graham B. Kerr Community Based Rural Development Advisor The World Bank Regional Seminar on “Decentralization and Participation for Sustainable Rural Development in Southern Africa” October 26-30, 1998

The Challenges for US 1.3 billion still living in poverty -- 800 million in rural areas Significant growth in number of mouths to be fed

Why is rural development not happening? Rural poor have little political power Urban bias in the policy environment Agriculture seen as a declining sector Falling food prices Aid fatigue in the agriculture sector Integrated rural development programs have failed Geographically dispersed and lacking communications and transportation infrastructure, rural people have difficulty organizing ... the rural poor and women in particular have little political voice. For 20 years real cereal prices have declined reducing returns to irrigation and other investments. Much of decline due to better technologies and practices -- the result of investment in agricultural research. The upward trend in food supplies and decline in real grain prices induce a false perception that global food supplies are assured -- perception persists despite grain stocks in 1996 being lowest since 1940s.

Why Decentralize? improve access to and quality of services give local communities control of resources to invest in projects they care about -- often education, health, infrastructure and other growth enhancing services create conditions for bargaining, increase information flows, increase efficiency empower under-represented groups, such as local entrepreneurs to be politically active

What is decentralization ? The transfer of authority and responsibility for some government functions from central government to intermediate and local governments, and often to communities and the private sector Messages:gkerr 2

Decentralization: A Dynamic Institution Deconcentration -- central staff to localities Delegation -- to parastatals Devolution -- to lower levels of government Privatization -- to private firms

Decentralization is here to stay globalization -- changing role of the state growth of local democracy -- power sharing professionalization of local capacity it is now a country strategy rather than a donor strategy Messages:gkerr 4

BUT there are pitfalls Decentralization has often failed -- often not even really started -- de jure vs. de facto it matters how it is done Soufflé theory -- three dimensions of decentralization Messages:gkerr 6

Three dimensions of decentralization Administrative decentralization transfers substantial authority and responsibility for managing services to local government, local communities and the private sector Political decentralization transfers policy and legislative powers from central government to elected sub-national and local councils. Fiscal Decentralization transfers authority and responsibility for raising and spending revenues from central to local governments and communities. Messages:gkerr 7

Our Soufflé Theory Rural Impacts -- the long-term results Service Delivery System Results -- reformed institutions Service Delivery System Outcomes -- medium term changes in the system Decentralization choices -- three dimensions Institutional endowments -- the environment

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Decentralization: Multiple Levels National Decentralization Framework and concerns Local Service Institutions and concerns Institurional reform on several levels -- Macro issues -- national democratic instiutions urban bias -- We need to balance the reform strategy -- focus on local organizations and institutions. -- we come back to this several times during the week.

Our Characterization Study Describes decentralization choices made in 19 countries in early 1990s Data collected by local consultants and interviews with Bank staff Measures of three dimensions on 10 point scales -- 10 points to those which are devolved

Only 15 countries because we do not have data sets in 15 countries -- four of the states in federal countries included. This is the early nineties -- remember that when looking at Colombia and Poland -- recent changes show up in the score. Several AFR countries had not started in the early 90s. Interesting contrast between Punjab and Karnataka. Now lets look at the three dimensions

You have often heard it said that decentralization is essentially a political process -- Suzanne has noted in her recent paper -- decentralization without democratization will fail. In the nineties the political aspects of decentralization is making substantial progress the other dimensions less so -- but no Soufflé fiscal authority seems to slowest. Now lets look at one dimension over time

Generally speaking the level of decentralization is low and not very encouraging -- even for these most basic of services Rural services are still controlled by higher levels of government The least decentralized are still primarily in Africa -- with the exception of Bangladesh Who dropped from the national rank Senegal 7-4,and Bangladesh 10-5, Karnataka 14-11 Up -- Zambia, Punjab, Hidalgo, and Bahia Top end similar

Political dimension less pronounced her than the national level -- certainly does not seem to be taking the lead -- in spite of laws being place in several countries -- Egypt since the late 70s. Lower half -- little decentralization -- Top half administrative dimension most advanced -- still not soufflé -- but all are rising Now lets look briefly across the sectors

Conclusions of Characterization Study Rural services still largely in the hands of higher levels of government Decentralized systems still in their infancy The real benefits and problems of decentralization may only be fully appreciated when the systems have matured and additional powers devolved to local governments and communities Messages:gkerr 12

How can we improve the impact of decentralization? Ensure a balanced approach -- address all three dimensions Focus on key system outcomes and results accountability transparency representation local resource mobilization local institutional capacity local voice sustainability Messages:gkerr 13

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Political Representation? Develop policies to encourage local competitive political system ensure that local politicians represent local groups enable local NGOs for disadvantaged groups Political Decentralization??? Decentralization is first and foremost a political process Devolution is an essential ingredient Local participation -- voice -- is an essential ingredient Messages:gkerr 15

Political Accountability? Design programs so that service providers are accountable to local elected councils and their local clients local elected councils are accountable to their constituents Messages:gkerr 16

Fiscal Devolution? Policy dialogue to ensure central government devolves appropriate fiscal authority fiscal policies and procedures in place for each level of government local governments assume authority and enact appropriate, responsible policies fiscal discipline -- checks and balances are built into the system Fiscal Decentralization???? Positively related to sound economic management and good governance Effect on mobilizing local resources mixed Decentralized allocation decisions can be more efficient -- project unit costs drop. Often lags other dimensions -- distorting implementation of decentralization and its impacts inter-governmental transfers continue to be important Messages:gkerr 19

Fiscal Capacity and Accountability? Design programs so that fiscal transfer schemes are transparent, predictable, and local units have appropriate level of autonomy local units build their capacity to implement their fiscal responsibilities systems to mobilize local resources are enhanced Messages:gkerr 20

Administrative Decentralization? Deconcentration is only the first stage of administrative decentralization and may hinder further progress Delegation of administration to civil society is important Messages:gkerr 21

Administrative Capacity? Design programs so that: local managerial and technical expertise is recognized and used local knowledge is incorporated into program -- voice

Administrative Accountability and Transparency? Design programs so that planning, budgeting and spending are public and open contract laws and procedures are adequate information systems are built into the program local press is included in the project process Messages:gkerr 17

Final Messages Decentralization has potential Decentralization is not happening with rural services Focus on increasing accountability to local clients, increasing responsiveness, building political, fiscal and administrative capacity

Thank you