Making services work for poor people: What’s decentralization got to do with it? World Development Report 2004 Shanta Devarajan and Shekhar Shah Decentralization & Intergovernmental Fiscal Reform course Washington, DC, March 25, 2003

WDR 2004 Messages Services are failing poor people. But they can work. How? By empowering poor people to –Monitor and discipline service providers –Raise their voice in policymaking By strengthening incentives for service providers to serve the poor

How are services failing poor people? Public spending usually benefits the rich, not the poor

Expenditure incidence HealthEducation Percent to richest quintile Percent to poorest quintile Source: Compiled from various sources

Access to primary school and health clinics in rural areas

Use of an improved drinking water source Richest quintile Poorest quintile Average Source: Analysis of Demographic and Health Survey data

How are services failing poor people? Public spending usually benefits the rich, not the poor Money fails to reach frontline service providers –In Uganda, only 13% of non-wage recurrent spending on primary education reached primary schools

How are services failing poor people? Public spending usually benefits the rich, not the poor Money fails to reach frontline service providers Service quality is low for poor people

Examples of low service quality Bangladesh: Absenteeism rates for doctors in primary health care centers: 79%. Zimbabwe: 13% of respondents gave as a reason for not delivering babies in public facilities that “nurses hit mothers during delivery”. Guinea: 70% of government drugs disappeared. Costa Rica: absenteeism rate is 30% in public health facilities.

A framework

Citizen-Politician/Policymaker Political economy of public services Political competition and incentives for service delivery –Informed voting –Social polarization – “Curley” effect –Credibility of politicians’ promises

What matters more for enrollment? Expenditures or elections? % point change in gross primary school enrollment Source: Keefer 2003.

Citizen-Politician/Policymaker Political economy of public services The nature of political competition and incentives for service delivery –Informed voting –Social polarization –Credibility of politicians’ promises Clientelism

Mexico’s PRONASOL, Large social assistance program (1.2% of GDP) Water, sanitation, electricity and education construction to poor communities Limited poverty impact –Reduced poverty by 3% –If better targeted, could have reduced it by 64%

A framework

Policymaker-Provider Incentives Monitoring

Policymaker-Provider: Contracting NGOs in Cambodia Contracting out (CO): NGO can hire and fire, transfer staff, set wages, procure drugs, etc. Contracting in (CI): NGO manages district, cannot hire and fire (but can transfer staff), $0.25 per capita budget supplement Control/Comparison (CC): Services run by government 12 districts randomly assigned to CC, CI or CO

Utilization of Facilities by Poor People Sick in last month, %

A framework

Client-Provider Reveal demand and strengthen accountability by: Choice

FSSAP Bangladesh Criteria: –Attendance in school –Passing grade –Unmarried Girls to receive scholarship deposited to account set up in her name School to receive support based on # of girls

Client-Provider Strengthen accountability by: Choice Participation: clients as monitors

Client-Provider: EDUCO Program in El Salvador Parents’ associations (ACEs) –Hire and fire teachers –Visit schools on regular basis –Contract with Ministry of Education to deliver primary education

EDUCO promoted parental involvement……which boosted student performance EDUCO’s achievements % increase in test scores per visit (in both types of schools) Parental visits to traditional and EDUCO schools in past month

Deconcentration

Delegation

Devolution

What we can do Expand information –Specific information – Uganda PETs, Report Cards –Strong political interest in fixing the problem –Issue electorally important –Role of mass media

What we can do Expand information Tailor service delivery arrangements to service characteristics and country circumstances

Eight sizes fit all? Difficult to monitor Easy to monitor

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Homogeneous clients

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Pro-rich politics Pro-poor politics Homogeneous clients Pro-rich politics Pro-poor politics

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Pro-rich politicsDemand-side subsidies, co- payments by households Pro-poor politics Homogeneous clients Pro-rich politics Pro-poor politicsCentral- government provision Government provision or contracting

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Pro-rich politicsDemand-side subsidies, co- payments by households Pro-poor politicsUse local knowledge and monitoring (decentralize) Use local knowledge (deconcentrate) Homogeneous clients Pro-rich politics Pro-poor politicsCentral- government provision Government provision or contracting

Eight sizes fit all? Difficult to monitorEasy to monitor Center: Pro- rich politics Local: Pro-rich politicsDemand-side subsidies, co-payments by households Local: Pro-poor politicsUse local knowledge, monitoring and resources (decentralize) Center: Pro- poor politics Pro-rich politicsCentral funding with contracts, local knowledge (deconcentration) Pro-poor politicsCentral funding, local provision