1. Decentralization reforms and local development Brussels 13-17 April, 2015

2. Country Context  Pakistan is a federal state comprising four provinces (Punjab, Sindh, Khyber Pkahtunkhwa, Balochistan), each with its assembly and independent administrative structure and 3 autonomous regions (FATA, Kashemere, Gilgit Baltistan).  Alternation between Military and Civilian rule, with different preferences for decentralization  Widespread corruption, patronage and clientelism, insecurity and militancy, cleavages along multidimensional lines (family politics, ethnicities, military, security, civilian rule, judiciary, bureaucracy, extremism, highly skewed distribution of wealth),  Lack of progress on MDGs  Constitutional provisions for Provinces to devolve fiscal, admin and political powers (art 140A), since 2010  Slow implementation of Local Government Acts since last general elections in May 2013  Historic experience of top-down development planning  Upcoming elections in Khyber Pakhtunkhwa (KP) Province scheduled in May 2015  Local Government Act 2013 of KP foreseeing devolution of services to Districts including a direct allocation of 30% of the total Annual Development Budget  District Administrations’ capacities weak

3. Past and current EU response  tested approaches to local development through the use of thematic budget line NSA-LA.  Extension of the pilot through large grants with high quality local NGO, supporting a specific model of citizens' coalitions interacting with local authorities for improved service delivery.  Supported the development of a policy framework to create fiscal space at local level for community driven development with capacity building for local authorities.  Designed at the end of 2012 a budget support program (SRC), giving direct responsibility of service delivery to the State, supported by Technical Assistance and complemented by a grant for social mobilization through CSO.  Design of a Performance Assessment Framework and selection of indicators capturing policy objectives and key processes  Fixed and Variable tranches respectively 42% and 58 %

4. Key choices in the new programming cycle  The programme developed in Khyber Pakhtunkhwa provides a model to adapt in each province, according to the specific institutional development/maturity/readiness met on the ground.  No new BS intervention have been foreseen in the first half of MIPS 2014-2020  In Balochistan and Sindh a mix of the following applies:  Community mobilization and design of community local development plans  Strengthening interactions between local authorities/governments and communities in order to improve local development processes  Capacity building of local authorities and local representatives  Strong policy dialogue with Provincial Governments aiming at:  Provision of additional resources to fund community initiatives  Developing a policy framework for community driven local development  Parallel understanding and engagement of Provinces in e PFM Reform road map in coordination with key reference International Organizations.

5. Operational challenges  complex interventions requiring time and resource- consuming policy dialogue and contract management  need to understand political-economy of decentralisation (often fluctuating and evolving in a fragile and insecure environment)  Choice of BS modality based on HQ instruction not on a real understanding of local contexts  Then payment process questioned by HQ on local realities

6. How to further deepen engagement at local level and optimize the chances of impact?  Continue to fine tune pilot innovative approaches through NSA-LA thematic lines  Develop tools for territorial analysis and participative planning.  Assess and study, with HQ help, ongoing large scale interventions  Identify and strengthen EUD political contribution to OPS programming  Continue policy dialogue to secure local budget allocation for community driven local development