1. Session 1.5. The EU vision with regards to decentralization and local governance Jorge Rodríguez Bilbao DEVCO UNIT B2 “Civil Society and Local Authorities" EUROPEAN COMMISSION - DG DEVCO REGIONAL SEMINAR on Decentralisation & Local Governance In Anglophone and Lusophone Africa (Nairobi, Kenya, 11-14 November 2013)

2. Session 1.5. Part 1 New International Commitments with regard to LAs Jorge Rodríguez Bilbao DEVCO UNIT B2 "Civil Society and Local Authorities” EUROPEAN COMMISSION - DG DEVCO REGIONAL SEMINAR on Decentralisation & Local Governance In Anglophone and Lusophone Africa (Nairobi, Kenya, 11-14 November 2013)

3. The Paris Declaration on aid effectiveness (2005) 1.Implied a move towards sector approaches as well as an increased use of country systems to channel ODA. 2.Led to a focus on “Performance Based Partnerships” linked to budget support operations. 3.Does not even mention the terms decentralisation or sub-national governments 4.Policy dialogue becomes the main tool to ensure ‘mutual accountability’. The Accra Agenda for Action (2007) 1.Expanded the notion of ownership from ‘government’ to ‘country’ ownership. 2.From mutual accountability to domestic accountability (need for governments to account first and foremost to their own citizens). 3.policy dialogue (between state and society) became the centre of gravity (rather than the government-donor dialogue). Busan Outcome Document (2011) 1.Busan goes one step further: from ‘country’ ownership to “democratic ownership “of development policies and processes”. 2.confirms the centrality of an inclusive policy dialogue involving all relevant domestic actors

4. Agenda for Change(2011) A political GPS for the External Action of the EU 1.Defines two interlinked priorities for its external action: (i) Support to “fundamental values” (Democracy, human rights, rule of law) as well as (ii) Good governance and inclusive growth 1.Explicit recognition of LA (and NSAs) as full-fledged development actors alongside central governments (multi-actor approach)

5. Agenda for Change(2011) The practical implications of EU choice for a more ‘political’ cooperation and a multi-actor dialogue needs to be further considered by the EU, both at strategic level (“what role can EU play in promoting domestic reforms?”) and in operational terms (“what changes are needed in the modus operandi of policy dialogue) Are we ready for this Qualitative jump? Domestic dialogue processes Donor- country dialogue Intra- donor dialogue Domestic policy dialogue became the centre of gravity

6. Session 1.5. Part 2 The key findings from the Thematic evaluation of EC support to decentralisation Jorge Rodríguez Bilbao DEVCO UNIT B2 “Civil Society and Local Authorities" EUROPEAN COMMISSION - DG DEVCO REGIONAL SEMINAR on Decentralisation & Local Governance In Anglophone and Lusophone Africa (Nairobi, Kenya, 11-14 November 2013)

7. 4% ENPI SUR 10% Latin America 74% Africa 4% Asia Evolution of contracted amounts during the period 2002-2011 ① Geographical breakdown: 74% (586 M€) to Africa; 10% (78 M€) to LA; 7% (56 M €) to ENPI SUD and 4% (33M€) to Asia ② Most of the resources were spent in a limited set of countries:, Madagascar (60 M€), Mali (72 m€), Tanzania (22,7M€).. ③ The EU contribution represented an average of only 2,5% of overall EU financial contributions;

8. EU support has been most effective in selected aspects of the decentralization reform…. ….. A support that target only selected areas of reform, but with limited attention to the political dimension of the reform ① Formulation of decentralization policies; ② Financial support to LG feeding into/contributing to the development of national Intergovernmental Fiscal Transfers (IFT) ③ Capacity building of LG staff in areas of planning and public financial management ④ Improving access to basic services at local levels; EU support has been most successful when undertaken as a comprehensive public sector reform IMPACT OF EU SUPPORT TO DLG ① Achieving deeper legal reforms (in particular the harmonisation of sector legislation); ② Decentralization of Human Resources Management; ③ Building Central capacities to steer the reform; ④ Increasing the degree of LG autonomy; ⑤ Quality of service delivery; ⑥ Accountabilty towards CS ans citizens

9. 5 Recommendations Overall process of state Modernisation Including public sector reform National development strategies and processes Local development strategies and processes Democratisation and wider governance reforms (elected) Local Governments Municipal development Local Democracy and Governance Citizen participation Support to Decentralisation Process: Different entry doors ① Clarify the EU's role in supporting decentralization by anchoring that support within partner countries "wider reform agenda"; ② Conduct a comprehensive country analysis with specific focus on the "politics of reforms"; ③ Deepen country dialogue beyond the relevant lead ministry; ④ Strengthen capacities of local actors to analyse and influence the reform process; ⑤ Prioritise EU support to LG fiscal reforms ; …and one FINAL CONCLUSSION "The EC has a unique but largely unrealised potential for global support to decentralization in partner countries" In order to tap into that potential, the main recommendation invites the EU to develop "an explicit response strategy that clearly embeds future support for decentralization reforms within a wider public sector reform agenda"

10. More than 25 participants from EU Delegations in Latin America, Asia, Africa and ENPI countries, as well as HQ staff, discussed the issue of DLG for 4 days (July 2012) Follow up at EC level Existential question: what does EU do in decentralization in post- Busan/Agenda for Change period? (paradigm shift) Understand what works, what does not work and why in EU support to DLG Feed into EC policy ( EU communication) Identify needs for operational guidance

11. What is decentralisation…? No shortage of confusion… but at least we agree what decentralization should NOT be

12. Decentralisation is not good or bad, it is about how a state is designed and organised 1.Decentralization is, fundamentally, a political process 2.Decentralization is about state building/reform 3.Decentralization is a multi-level process of institutional (re- )construction 4.Decentralization can help to build new societal compromises (social contracts) based on endogenous funding

13. The believers Decentralization as and end The pragmatic Decentralization as a tool for better public policies Decentralization can never be a religion ! Need to recognise the instrumentality of decentralization with respect to development ! Move the discussion from a “good governance agenda” and examine how decentralization may contribute to achieve governance and development outcomes’!!

14. Shifting the debate: decentralization as a development issue  In many development agencies, decentralization has been treated as a stand-alone governance topic;  Decentralization is a means to achieving certain development objectives, not an end in itself;  Decentralization Reforms are playing out everywhere in Africa, Latin America and Asia;  Decentralization creates space for interaction between the State and the citizens;  The key question is not whether EU should support decentralization everywhere, but how the local public sector can be best organized and financed to achieve a country’s development objectives

15. Key principles for smart support

16. 16. Start from decentralization realities on the ground We tend to see the world through specific lenses…

17. The outcome of this bargain does not always lead to more autonomous LA In real world, decentralization is driven by politics, not by development policy!! Adopt a “Political economy” perspective Decentralization entails political bargaining over the content and implementation among different categories of actors To have a practical impact, PEA of decentralization reforms must assess whether, and to which extent, reforms driven by politics, may nevertheless result in changes that open space for advancing governance and developmental goals

18. 18. Free your mind from the aid modality!!! The KEY QUESTION IS : What does the EC want to achieve and what is the most appropriate modality (or mix of aid modalities) to achieve it? Avoid adressing support primary from the aid modality perspective

19. Focus on specific features of DLG reform that strengthen the autonomous action of LA for better developement and governance outcomes! Give a greater attention to the demand side of the reform process! Decentralization reforms does not necessarily lead to more autonomous LA!! Focus on development outcomes (not just local governance) and an appreciation of the role of local autonomy to promote it

20. Accountability Autonomy FD: Two primary components Discretion of LAs to make decissionsAccountability Use Fiscal decentralization as strategic entry point to progressively build the accountability culture from below

21. Where is the Local dimension when supporting decentralization/sector policies using BS?

22. Session 1.5. Part 3 The EU Communication "Empowering Local Authorities (LAs) in partner countries for enchanced governance and more effective development outcomes" (May 2013) Jorge Rodríguez Bilbao DEVCO UNIT B2 “Civil Society and Local Authorities" EUROPEAN COMMISSION - DG DEVCO REGIONAL SEMINAR on Decentralisation & Local Governance In Anglophone and Lusophone Africa (Nairobi, Kenya, 11-14 November 2013)

23. Une petite révolution copernicienne —> This is not out of the blue! ① Thematic evaluation of the EC support to decentralization process (covering the period 2000-2009) was completed in 2012 Lessons of 10 years of EC support to decentralization and Local Governance process around the world; ② Results of the stakeholder consultation on the basis if the Issue Paper local authorities for development ③ New International Commitments with regard to local authorities (Accra, Busan, AfC)

24. New EU commitments with regard to LAs Reflect a paradigm shift ① It gives EU practitioners a clear political vision on Why to engage strategically with LAs and seek their empowerment. ② Recognizes the potential of LAs to bring about better governance and deliver development to citizens. ③ It sends out a clear message that this will not happen if these LAs are not empowered, i.e. endowed with sufficient levels of autonomy, resources and capacities to fulfil their mandate. ④ It also affirms “EU should consider fiscal decentralisation as a strategic entry point to progressively build an accountability culture, as it defines the generation and distribution of resources that are used to fulfil citizens' demands”. ⑤ Furthermore, it invites the EU to (i) explore the use of innovative funding modalities facilitating access to resources at local level; (ii) involve sub-national governments in the design and implementation of budget support and (iii) factor decentralisation in budget support operations. FIVE key messages of the EU COMM

25. Recognition of the importance of the local dimension of development ① The local level is where development outcomes (democracy, governance, inclusive growth) materialize ② Sound national policies are a necessary but not sufficient condition to trigger development

26. The Local Public Sector. The local public sector is the part of the public sector that interacts with residents, civil society and the private sector. It is where residents and businesses receive services from the public sector and where citizens interact with government officials.

27. Unlocking the development potential of LAs 1)Conductive environment at local level through legal and regulatory instruments allowing LAs to benefit from a sufficient level of autonomy in exercising their mandate 2)Leadership of LAs to play a catalyst role 3)Citizens and community groups that engage in the local political process and demand transparent and accountable management of local public resources 1)Conductive environment at local level through legal and regulatory instruments allowing LAs to benefit from a sufficient level of autonomy in exercising their mandate 2)Leadership of LAs to play a catalyst role 3)Citizens and community groups that engage in the local political process and demand transparent and accountable management of local public resources 1.Mandate enabling multi-sector planning 2.Legitimacy to play a facilitative role and achieve consensus among different institutional actors and interest groups 3.Unique regulatory powers, allowing them to enforce local action. 4.Unique ability to be sensitive to local conditions; 5.Greater institutional stability 1.Mandate enabling multi-sector planning 2.Legitimacy to play a facilitative role and achieve consensus among different institutional actors and interest groups 3.Unique regulatory powers, allowing them to enforce local action. 4.Unique ability to be sensitive to local conditions; 5.Greater institutional stability Comparative advantages of LAs with respect to other public, non- governmental and private agents Whether or not these comparative advantages are actually realized or not depends on:

28. LAs: A Catalyst for better governance and development outcomes LAs Operate in a dual mode ① Represent and ensure welfare of a local political community (agents of a political constituency ==policy makers) ② Represent and facilitate the action of the State in their jurisdiction (agents of the Central State== managers) Citizens and community groups that engage in the local political process and to demand transparent and accountable management of local public resources Citizens LOCAL DEMOCRACY Experimentation with new forms of interactions between LAs and Civil Society and strategic alliances with local community and private sector organizations Accountability LOCAL DEVELOPMENT the word “local” does not refer to the “where”, but to the “who and the how” of development promotion. Local Development is the contribution to national development and poverty reduction efforts that autonomous LAs may generate through the mobilization of locality specific resources and their combination with national / global resources. Framework for the promotion of TERRITORIAL APPROACH

29. Specific topics adressed in the COMM ① Decentralisation processes ② Capacity development of LAs; ③ Sustainable urbanisation; ④ Association of LAs Shaping EU support for improved Governance and more effective development outcomes

30. Decentralization processes ① Decentralization is, fundamentally, a political process ② EU support should be based primarily on the understanding of the political economy of the reforms; ③ EU support to decentralization will focus on specific features that allow LAs to enjoy sufficient levels of autonomy, resources and capacities to fulfil their mandate ④ EU considers fiscal decentralisation as a strategic entry point to progressively build an accountability culture from below

31. Capacity development of LAs ① First, distinguish between the LAs ‘internal’ and ‘interactive’ capacities. ② Second, capacities of LAs are affected by factors that operate at three levels: Individual ( values, culture, training, attitude of local government personnel ) Institutional ( LAs structures, procedures and operating rules, which frame and govern the activities of the personnel ) Systemic ( Policy and legal framework within which the LAs operate + rules and practices that govern the relations of LAs with other actors) ③ Promote "on the job" and demand driven (tailored to the specific needs and requests of LAs) training, directed also to civil society ( to empower citizens to hold their local governments accountable ) and CG staff (to help them to modify the role they have played—often from oversight and control to facilitation and support—). Three main messages

32. Sustainable urbanisation ① By the year 2025, 2/3 of the world's population will live in urban areas, with 95% of the urban population growth taking place in partner countries Urban governance has become another important aspect of good local governance ② EU will encourage the definition of city policies for slum upgrading to extend citizenship and services to slum dwellers

33. Recognizing of the importance of Associations of Local Authorities The COMM: 1.Recognise The role of Associations of Local Authorities (ALAs) in 2. Suggest exploring the opportunities of establishing partnerships with ALAs in partner countries in order to facilitate the integration of LAs perspective in the programming of national and local priorities as well as in the implementation of related EU-funded programs Advocating for decentralisation policies leading to more autonomous and empowered Local Authorities. Developing the capacities of its members Growing role of international Associations of Local Authorities in international debates about development policies

34. A way forward: more efficient and flexible modalities of support

35. ① Exploring the use of innovative funding modalities (including performance-based grants); ② Involving both central and sub-national governments in the design and implementation of budget support; ③ Decentralizing budget support operations –particularly Sector Reform Contracts- aiming at improved service delivery in order to better reach the target population or institution; ④ Supporting systems to monitor the extent to which funding is effectively transferred to LAs,; ⑤ Assuring coordination, complementarity and coherence between sector policies (supported by budget support) on the one hand, and ongoing decentralization reforms. ⑥ Exploring the use of a mix of modalities in order to combine support to national policies (upstream support) with specific actions aiming at empowering local level (downstream support), which, in turns, helps to increase demand for services, can feed policy-making and provide evidence for PD ⑦ Supporting and coordinating decentralized and cross-border cooperation between LAs from Europe and partner countries ⑧ Recognising the role of European LAs as “political actors” as well as the key role to be played by The “Committee of Regions”, which provides European LAs with a political space for exchanging experiences as well as for establishing inter- regional relations 8 operational challenges

36. The Council of the European Union has "welcomed with satisfaction the Commission's Communication (…) which proposes a more strategic engagement with accountable, representative local authorities and associations of local authorities in partner countries". The Council has underlined that "local authorities and their associations are important actors for change in reducing poverty and in promoting human rights and democracy, good governance and sustainable development at local level in partner countries (…) alongside central governments and in partnership with civil society organisations". The Council has encouraged "the Commission to develop an action plan" around the key areas of the Communication, drawing upon "the wide experience of EU Member States in working with Local Authorities". In addition, "EU Delegations, in close cooperation with Member States, should engage on the ground with local authorities in structured and regular dialogue". Council Conclusions of 22nd July 2013

37. Thank you!!