Governance Reform in Cambodia: Decentralization and Deconcentration and Local Governance Lecture 8 1 Public Administration Reform and Decentralized Governance

Why Local Governance? Local Governance:  can improve resource allocation and service provision by bringing decision makers and service providers {duty bearers} closer to service users {rights holders};  allows developing unique solutions to unique problems;  allows for a greater involvement of citizens in decision making regarding public services; and  is one of the predominant approaches to strengthening democracy.

PAR and Local Governance Public Administration Reform (PAR) can achieve the following objectives:  Strengthen local governance capacity through training and other capacity building tools;  Establish new accountability frameworks promoting local governance;  Enhance local accountability by establishing mechanisms for direct interaction between local residents and local public administrations;  Clarify financial aspects of center-local government responsibilities (e.g., revenue collection, transfers, budgeting); and  Strengthen local NGOs and other stakeholders in their ability to be proactively involved into local level decision making.

Defining Decentralization  Political decentralization transfers political power and authority to sub- national levels such as elected village councils and state level bodies. Where such transfer is made to a local level of public authority that is autonomous and fully independent from the devolving authority, devolution takes place.  Under fiscal decentralization, some level of resource reallocation is made to allow local government to function properly, with arrangements for resource allocation usually negotiated between local and central authorities.  Administrative decentralization involves the transfer of decision making authority, resources and responsibilities for the delivery of selected public services from the central government to other lower levels of government, agencies, and field offices of central government line agencies. There are two basic types. Deconcentration is the transfer of authority and responsibility from one level of the central government to another with the local unit accountable to the central government ministry or agency which has been decentralized. Delegation, on the other hand, is the redistribution of authority and responsibility to local units of government or agencies that are not always necessarily, branches or local offices of the delegating authority, with the bulk of accountability still vertical and to the delegating central unit.

Challenges of Decentralization  Decentralization does not automatically lead to improved developmental outcomes for the poor and other disadvantaged groups.  In the absence of effective local accountability frameworks, some local officials may divert the funds for personal gain.  Performance of the public service may suffer because decentralization entails new lines of accountability and reporting.  Limited capacity of local governments may hamper local decision making and service delivery (e.g., revenue collection, budgeting, determining expenditure priorities).

Fiscal Decentralization As a Condition for Successful Decentralization  Fiscal decentralization defines how and in what way expenditures and revenues are organized between and across different levels of government in the national polity (Source: UNDP, Fiscal Decentralization and Poverty Reduction, 2005)  To be really independent in their decisions and accountable to local residents, local governments should be able to:  Mobilize resources from the local community and reduce its financial dependency on the central government;  Determine its own expenditure priorities;  Have sufficient revenue to meet their obligations; and  Be accountable to local residents for their fiscal management.

How PAR Can Help in Fiscal Decentralization  Support local governments in developing their capacity to set their own expenditure priorities through consultations with local residents and stakeholders.  Ensure through functional and policy reviews that central ministries do not consume scarce national resources for functions that have been decentralized.  Support development of local taxing and budgeting capacities.  Embed results- and performance focused approaches into fiscally decentralized systems so that fiscal decentralization benefits the poor and other disadvantaged groups.

How PAR Can Help in Fiscal Decentralization (Cont’d)  Ensure that revenue sharing between the central and local governments is a transparent process so that citizens would understand how much is being shared and for what purposes.  Take into consideration human rights implications of fiscal decentralization reforms in terms of analyzing whether public services are improved and rights better protected.  Enhance local accountability and monitoring frameworks to support public participation in financial decision-making.

UNDP: Democratic Governance Focus Area Key Result Area or Cluster I: Fostering Inclusive Participation Key Result Area or Cluster II: Strengthening Responsive Governing Institutions Key Result Area/Cluster III: Grounding Democratic Governance in International Principles