1. AusAID support to LGU incentive program

2. Delivery Strategy on Subnational Governance
“Improved local governance capacity to deliver basic services”
Three major activities that will account for 40% of aid program over the five years
PRMF (till August 2014)
LGU Incentives Program ( )
PRMF successor program ( )

3. PRMF Status recently mobilised in 3 new provinces
expected transition to use local government systems for 7 provinces

4. PRMF Successor Program
retaining core principles of PRMF:
road sector as the entry point
governance reform program (capacity building)
performance-based/incentives for good performance
working at the provincial level or supporting provinces
rethinking of program delivery
funding mechanism  performance-based/output-based
significant role and responsibilities transferred to DILG
scaled-up program and management arrangements
partnership arrangements
considerations for infrastructure component
PRMF mid-term review recommendations
DILG-DPWH program on national secondary roads (WB)
design activities
DILG assessment (not separate from LGU incentive design process)
Analytical studies
political economy analysis of the local road sector
options for enhancing performance-based/output-based aid for road infrastructure
Research on quality of service standards for local roads
Design mission

5. LGU Incentive Program
Proposed support to LGU incentive program: PCF-SGH
FUND AUGMENTATION TO PCF
SUPPORT TO POLICY DIALOGUE PROCESS (strategic direction and policy)
TECHNICAL ASSISTANCE TO DILG (operational and management needs)

6. Concept Peer Review Process
Key Points and Recommendations
Keep it simple
Use of partner government systems
Focus on achievement of targets/performance
PCF should remain small but SGH should allow access to bigger ‘incentives’
Sustainability of changed practice/outcomes not the funding mechanism (limited lifespan)
Strategic and closer engagement with DILG to enhance PCF-SGH and strengthen policy
Fiduciary risk assessment

7. Design timeline Important Milestones
AusAID Design document – October 2012
NEDA ICC approval – November 2012
Memorandum of Subsidiary Arrangement – December 2012
Mobilisation – January 2013

8. Program design activities
PCF financial assessment/fiduciary risk assessment
(PFMP)
PCF (DILG) organisational capacity assessment
(PAHRODF)
Consultation workshops with key stakeholders
DILG PCF Management Team
Local Chief Executives (Mayors and Governors)
DILG Regional Directors
Engagement and coordination with WB-AAA activity and PDF working group
Analytical Support