Corporate Policy Papers
Taking Risks
3 - New Directions:
Using local development programmes to reduce poverty and improve local governance
New funding instruments The next generation of local development funds Guiding principles for future programmes Increasing accountability Promoting participation Applying the subsidiarity principle Developing a financing strategy Incorporating gender concerns Building capacity Upgrading monitoring and evaluation Building closer collaboration with UNDP
All future UNCDF programming (except microfinance) will occur within a single institutional framework—local development programmes—that will embody a consistent institutional strategy based on the following principles:
- • All local
project activities—particularly financing—will be anchored
in local institutions and procedures.
- • Institutional partnerships will be encouraged, with functions assigned on the basis of comparative advantage and subsidiarity.
- • Financing will be set at sustainable levels and allocated through block grants (with their built-in budget ceiling) tied to performance.
- • All project activities will be devised with a view to monitoring and developing their policy lessons, in partnership with national authorities and other stakeholders.
The broad activities of local development funds and eco-development projects will be maintained: planning, financing and delivery of basic social and economic investments and services and (where appropriate) support for natural resource management and sustainable agriculture. But these activities will no longer occur under separate institutional arrangements. (return)
Local development programmes may include one or more new funding instruments to provide maximum flexibility for local authorities to address their most urgent development needs. Local development funds have proven adept at handling small-scale investments in basic infrastructure (schools, roads, clinics). But a number of other strategic investments that may be more effective in reducing poverty cannot be processed through a local development fund because of their scale or complexity or because they are in sectors that rarely emerge from bottom-up planning (such as road network, environmental or economic investments).
Yet in the long term these investments are often as important—or more important—to local economic growth as the basic infrastructure funded through local development funds. And while the eco-development financing model was not sustainable in institutional terms and its investments in natural resource management and agricultural productivity cannot be handled easily by a local development fund, these are important areas for assistance that should be retained and supported by different instruments. Local development programmes will encompass a mix of financing instruments and options, including both conditional and development grants, as sumarized below. (return)
The next generation of local development funds
The next generation of local development funds will support decentralized planning, financing and delivery of basic investments and services by providing funding and capacity support to elected local authorities. While the basic structure and conceptual core of the original local development fund model remains, future local development funds will take into account the lessons highlighted earlier. Additional options, summarized below, may be identified and designed as components of the core local development fund or as separate projects.
Support for natural resource management. In areas where poverty is linked to significant local environmental problems related to management of the natural resource base, or to agricultural sustainability, the core local development fund approach may be supplemented by one or both of the following:
• A funding mechanism so that local authorities can invest directly in natural resource maintenance and productivity. (This would include many investments previously funded by eco-development projects, including catchment protection, reforestation, nurseries and small irrigation.)
• Assistance and capacity building to local government and community institutions to improve local resource management and resolve conflicts between users (such as between pastoralists and agriculturalists).
The primary criterion for these investments is that they have collective benefits and generate broader social or environmental externalities. The principles governing these investments are the same as those for local development funds—local government must play a primary role, emphasizing local partnerships, subsidiarity and sustainability. Outputs are not predefined but based on participatory local planning, which will also receive technical support. Management responsibilities will vary but most likely will involve a combination of local government, user groups and deconcentrated line ministries.
Support for other economic activities. In some cases there may be scope for supplementing a local development fund with support for nonagricultural production, through a component or a separate project that provides:
• A funding mechanism that allows local authorities to allocate resources to encourage local private investment (improving the local power supply, providing startup grants and so on).
• Assistance and capacity building to local government and other local economic interest groups (small business councils, chambers of commerce) to promote local economic development.
This is a new area that UNCDF considers critical but is just beginning to explore. It will proceed on a limited basis in a few countries.
Support for strategic infrastructure development. Finally, there may be a need to support the development of specific parts of the local infrastructure base (particularly the local road network) through:
• A funding mechanism that gives local authorities access to resources for annual infrastructure investments—that is, a sector investment fund.
• Assistance and capacity building to local government to better plan and maintain this infrastructure and to train local contractors (for example, in labour-based techniques).
Sector investment funds would cover investments that do not emerge from local participatory planning or that—for reasons of scale and complexity—cannot be managed by local authorities (though local authorities would often help negotiate the content and delivery of these programmes). These funds are described in greater detail in UNCDF’s new infrastructure policy paper. (return)
Guiding principles for future programmes
Translating UNCDF’s evolving policies into operations will require flexible, even "modular" programming and project design. Strategies will vary between countries—and even between different parts of the same country—and over time. Still, a number of basic principles should guide the development of all future programmes and projects.
Where to work? When are country conditions appropriate for local development fund programming? At the moment this question has been partly pre-empted by UNCDF’s selection of concentration countries, (1) a selection that was based on national policies and on the scope for impact and synergy. But situations change (in both concentration and non-concentration countries), and UNCDF will periodically reassess whether to continue or expand local development programmes in a given country or to consider new countries for programming. It will focus on two main strategic goals of a local development programme:
• To directly support decentralized service delivery and better local governance within a project area.
• To establish a test model for further decentralization of resources by government and other donors.
The first goal is more easily achieved when policies and institutions are already favourable to democratic decentralization. But few countries have an "ideal" devolutionary policy and local government, and UNCDF is certainly not adopting a purist approach.
Furthermore, there would be little point in aiming for the second goal if UNCDF focused only on countries whose policies and institutions are already highly favourable—the job would already have been done. What matters is identifying opportunities for supporting change.
The most obvious indicator of opportunity lies in identifying positive policy trends and commitments to devolution. These might be laws creating or empowering local government, or plans to devolve greater resources to local government. It is also important to identify key proponents of these changes within government and to assess their chances of success.
The most important "green light" indicator is an officially sanctioned local representative assembly (mainly, if not fully, elected) to which government has entrusted consultative functions and to which there is some commitment to devolve significant service provision responsibilities and resources. Without such bodies—or a commitment to institute them—there can be no hope of democratic decentralization.
UNCDF must also gauge the scope for adding value to the national debate on decentralization policy. UNDP’s comparative advantage and role in policy dialogue are key, and UNCDF will not work in a country without UNDP as a partner. Impact is also enhanced when UNDP and UNCDF can partner with other multilateral and bilateral development agencies to assist government. Such partnerships will be an important feature of new programmes.
Selecting regions within countries. The 1995 policy paper outlined a strategy of selecting programme areas based on need and potential. (2) Programming experience since then has pointed to some conflict between equity and efficiency criteria and other UNCDF objectives, notably those of:
• Establishing a significant and credible piloting role.
• Entrusting programming decisions to national authorities.
• Complementing UNDP programme activities.
More simply, if governments are piloting ways to decentralize planning and financing for rural investment, they need to do so in a variety of districts with different characteristics to gain full value from the testing stage. They also need to ensure that highly visible pilots do not favour certain regions or populations. These considerations, along with the factors above, tend to lead to area selection based primarily on geographic spread and representativeness of a variety of contexts. UNCDF accepts these considerations, with the sole proviso that programme areas selected are poor and not overly funded by other donors.
How to work? Because UNCDF pilot programmes are intended as policy experiments in decentralizing development planning and financing, UNCDF will start programming only where there is clear commitment by government to a national pilot and where there is commitment to joint programming by UNDP.
During formulation UNCDF and UNDP will reach clear understandings with national governments on the relationship between the pilot project and decentralization policies and procedures, particularly regarding:
• Fiscal transfers from central to local governments for development services.
• Local government participatory planning procedures.
• Alternate approaches to the delivery and sustainability of infrastructure and services.
• Overall arrangements for monitoring and for learning lessons.
It is important to emphasize that UNCDF is not attempting to drive national policy along any single path. But for a small agency like UNCDF to have a pilot impact, all parties (UNCDF, UNDP and national governments) must agree on the aims of pilot projects, on how progress will be assessed and on regular monitoring. These agreements will be negotiated during project formulation and will help determine responsibilities for execution, implementation, and monitoring and evaluation. UNCDF will pursue a strategy for advocacy with other development partners in accordance with the agreements with national governments and consistent with the aims of the pilot projects.
What to do? The scope of programme outputs and activities and the institutional strategy chosen in each country will be guided by thorough analysis of the national and local context. What to do in a given country, how and with whom hinges on two sets of issues.
The first is determining the root causes of poverty in a programme area. In almost all rural areas poverty is at least partly caused by a lack of access to basic public services—health, education, water, sanitation and transport. These are the main focus of UNCDF efforts and will probably account for a sizable portion of future programming.
But in some areas poverty is also the result of other factors, such as natural resource degradation. Thus a major challenge in programme design will be in assessing how far these environmental and natural resource problems can be addressed in a governance strategy centred on local government. This is an area of considerable uncertainty—but also potential innovation.
The second issue is assessing the local institutional context and capacities, important because it determines the range of services that can feasibly be delivered to reduce local poverty and the scope of required capacity-building and institutional support.
Thus, as part of project formulation, UNCDF will do an institutional analysis of the scope for supporting decentralized planning and financing for rural services and investment, of potential local and central partner institutions, and of policy and institutional constraints on local governance on delivering services, increasing local participation and improving governance. This institutional analysis will:
• Assess the key causes of poverty in an area.
• Evaluate decentralization policy and the legitimacy, representativeness and local accountability of political bodies at the subnational level.
• Assess the mandate, responsibilities and fiscal capacities of local administrative authorities (both local governments and deconcentrated central ministries) on typical local development fund investments (primary roads, health, education, water and sanitation, natural resource management).
• Explore opportunities and constraints for local participation in public affairs and the existing and potential capacity, accountability and legitimacy of civil society structures in articulating and prioritizing local preferences, delivering services and holding local governments accountable (see annex).
Whom to work with? UNCDF will continue to focus on elected local government as its primary entry point or local partner but will also move towards more pluralist institutional approaches. This approach includes support to elected local authorities (rather than ad hoc project units, line ministries or NGOs) as the primary—though not exclusive—focus for providing basic infrastructure and services and as the hub of the local network of institutional relationships to be developed. UNCDF support will focus on building local authorities’ service provision capacities and on enhancing the accountability, viability, legitimacy and representativeness of these authorities.
Local institutions possess different comparative advantages, however, and local communities, NGOs or governments rarely are or should be the sole and autonomous providers of basic development services and infrastructure. Thus UNCDF programmes will encourage joint provision between local governments and other community, local and regional institutions to enhance local capacity to provide the full range of services needed for local development. Several approaches are possible.
• One is to link local governments with community institutions or user groups. To date the main such linkage is through community participation in planning and implementing service delivery activities. But local governments may be able to play a bigger role in empowering local forest user associations, herding societies, parent-teacher committees, village health committees and the like by, for example, delegating authority, enacting local by-laws and sanctioning arrangements for the payment of fees. Further, local governments may have a key role in mediating conflicts between competing groups, such as farmers and herders or upstream and downstream water users.
• A second approach is to link local governments with state technical agencies and NGOs at the local or regional level. This is important because service provision responsibilities are often shared between local governments and technical agencies—for example, local governments may be charged with building or maintaining schools, while the deconcentrated education department is charged with equipping and staffing them. Moreover, local governments often possess limited capacity to carry out their mandated responsibilities and rely on the staff and resources of technical agencies. Closer relationships may improve the accountability and performance of technical agencies even when they are not formally under the control of local government.
• Marginalized groups and many poor people (particularly women) are often unorganized or unrecognized and not part of the institutions and arrangements listed above. In these cases NGOs or community-based organizations may be needed to help them, not only by providing services but also by making their interests heard in political processes. UNCDF will support these important linkages as well (see participation and capacity building section).
Which level of local government? Having selected local government as the primary partner, the next step for UNCDF is deciding which local government institution to work with. This choice will be determined by the institutional and policy assessments described above. In many countries the answer is obvious, but in multitier systems with numerous districts and subdistricts there may be some question. In places that do not have locally elected authorities, the presumption will be to the tier where the institutions correspond closely to local government, where development financing takes place and where there is commitment to or some likelihood of local government being constituted in the future.
In Cambodia, for example, a hierarchy of elected committees has been established from district, to commune, to village. UNCDF decided to focus on the commune because the government had declared its intention to create corporate local government bodies at this level and because the democratic legitimacy of the district committees was in question.
In Bangladesh there was discussion about the merits of institutions at two levels: union councils and thana development and coordination committees. Focus will be on the union councils, which, though weak, are corporate bodies with a long history and recognized governance role. Though the thana committees have more direct access to technical staff capacity, they are administrative bodies and are not directly elected.
In Malawi, awaiting the outcome of the government’s decentralization policy, UNCDF joined UNDP in the debate to restore elected district councils to replace the appointed district development committees (established under the one-party regime).
Who does what? When determining the roles and responsibilities of institutional actors, the following should be considered:
• Unbundling service provision. The supply of basic public services involves various functions (commonly divided between provision and production) that are usually most effectively and efficiently performed by different local institutions.
• Institutional comparative advantage. These different local institutions—elected authorities, line agencies, NGOs, community and civil society groups, private entrepreneurs—possess quite different comparative advantages in performing these functions. While local elected authorities generally possess a clear advantage as principal "clients" in planning and financing basic services, they rarely perform these tasks alone and they generally are not suited to producing and managing these services.
• Subsidiarity. Functions and resources should be devolved to the lowest feasible institutional level (see below).
At the local level the key partners will be the elected authorities in the programme area, and these will be the main focus of capacity-building efforts. But other partners will also be identified. Sublocal government bodies (such as ward or village councils) and other community institutions will be involved in core service provision activities and receive capacity support. Where the focus is on natural resource management, resource user groups will be identified and supported. Where service or infrastructure provision involves other deconcentrated central departments, these will be identified and their collaboration with local authorities will be supported. Finally, the support of credible local NGOs will be sought, whether in social mobilization, capacity building or service delivery (in the last case, through contract to the local authority or other designated government service provision body).
It is also important to identify a national-level partner with which UNCDF can develop the programme strategy and that will take the lead role in monitoring and disseminating policy lessons. This partner will almost always be a body charged with promoting decentralization and supporting local authorities—most likely a ministry of local government, interior or planning; a technical unit or secretariat attached to such a ministry; or an interministerial committee or task force. These links with national bodies are also key given their crucial role in monitoring and mentoring local government.
If pilot projects are to be effective, UNCDF—working with UNDP—should also identify other donors interested in decentralization. Such partnerships could allow for joint interventions in helping governments develop policy and ensure a consolidated donor approach, especially in the financing of decentralization. The potential for leveraging pilot experiences is enormous when UNCDF and UNDP work with other important donors. (3) This has and should continue to be a key area for UNDP leadership with its upstream policy role and its donor and country coordination function. (return)
A parallel aim in promoting joint provision and institutional collaboration is to foster mutual accountability and trust between local institutions and actors. All too often in developing countries there is more competition than collaboration between local authorities and NGOs and other nonstate organizations, and considerable mistrust between local authorities and central government staff.
Further, even in countries with strong decentralization policies and well-enshrined principles of subsidiarity, there is often a great deal of mistrust between various levels of government—particularly regarding control of funds. And in most countries there is even greater mistrust felt by citizens toward local governments. It is naïve to believe that injecting scarce capital resources into this environment will not have an impact on levels of trust and accountability between different local bodies.
Accountability is thus an important part of UNCDF’s programme strategy, and future programmes will address different types of accountability (fiscal, political, managerial) in a wider range of relationships (between central and local governments, technical and political authorities, local governments and populations and so on). More attention will be given to understanding the constraints, sanctions and incentives that encourage good performance and accountability.
UNCDF will ensure that programmes are designed to stimulate accountability by:
• Rewarding and sanctioning local government performance and linking it to the allocation of resources and block development grants.
• Stressing the accountability of local administrative officers and line departments, primarily to elected representatives but also to local citizens.
• Supporting regulatory and technical oversight by central ministries to enable them to better monitor and mentor local authorities.
• Developing communication campaigns that increase the flow of public information about local government decisions and performance, with terms of local public investment projects and conditions of citizen access.
• Creating mechanisms for communities to hold elected officials accountable for the allocation and management of resources.
• Devising more participatory service planning and provision mechanisms and the capacities to manage these.
• Supporting local financial management and accounting to minimize both real malfeasance and suspicions of the same.
• Developing transparent and participatory monitoring and evaluation systems.
• Routinely disseminating information on local government affairs.
• Making administrative departments and civil servants more accountable to local elected bodies and to the public.
• Clarifying the roles and service delivery expectations of local authorities, consistent with policy and legal mandates.
Strategies will vary. Where technical staff are under the formal control of local authorities, efforts will entail providing support to local government management and committee systems, training councillors and staff and so on. Where deconcentrated bodies are separate from local authority control, efforts will involve devising task- or service-specific contracts or compacts between these bodies, on the one hand, and local authorities or even community groups, on the other, and creating consultative forums for periodic exchange. (return)
UNCDF is committed to supporting broad public participation in local decision-making and resource allocation within its programmes. There are two main elements to this strategy.
Political participation through representation. At the heart of the UNCDF strategy for promoting local governance is the belief that elected local government—where it exists—is crucial for ensuring the responsiveness of the state to local people. Political participation, through the periodic election of local representatives, allows a small degree of popular influence over state resources (including local civil servants and budgets). Thus an important element of UNCDF policy is enhancing representation by:
• Charting the obstacles and opportunities for citizen participation in the local political process and for improving the performance and accountability of elected representatives. (4)
• Training councillors on duties, responsibilities and participatory practice.
• Supporting "marginal" representatives (women, youth).
• Improving communication and feedback between elected councils and the public.
But there are limits to the effectiveness of representative mechanisms as vehicles for popular participation. This goal is especially difficult to achieve in fragile democracies, in areas where party bureaucracies are not very democratic, and in large rural constituencies where face-to-face contact between constituents and councillors is rare, where significant groups or interests are underrepresented, and where information is scarce, communication poor and education levels low. In other words, elected local authorities may be a necessary base for widespread public participation in decision-making and resource allocation. But it is far from sufficient.
Public participation in service delivery. UNCDF therefore places great emphasis on opening the planning, decision-making and implementation procedures for local investment and service delivery to as wide a range of public involvement as possible. This entails, for example:
• Communicating information to local people on procedures, options and available funds in appropriate language and format.
• Training communities to articulate their problems and priorities and propose solutions.
• Ensuring that local planning decisions are explained and justified to the public.
• Devolving control over investment implementation and service management to community groups, with capacity building and training to support this.
• Supporting public monitoring of investment and service activities.
UNCDF will ensure that constraints and opportunities for participation in local planning and service delivery are reviewed during formulation and reflected in programme design. This includes review of existing practices, procedures and capacities (see the working paper "Policy and Institutional Analysis and Programming Strategies").
Building institutions. Beyond supporting representation in the service delivery cycle, UNCDF is also committed to testing procedures that support the expression of local voice and strengthen local accountability and oversight. Examples include:
• Committees—with broad representation of marginal groups, local NGOs and the like—to screen and appraise planning proposals before these are submitted to the local council and to monitor council activities.
• Ward constituency assemblies whereby elected councillors report back to constituents on their activities
• Service agreements between community groups and specific local sector (education, health) departments, whereby mutual responsibilities are defined and monitored.
Finally, UNCDF will further develop consultative processes such as stakeholder workshops during project design, while recognizing that these project-based activities offer a limited forum for citizen participation in local public affairs. (5) (return)
Applying the subsidiarity principle
Project design will be guided by the subsidiarity principle, particularly when it comes to assigning planning and provision responsibilities and allocating funds.
Provision responsibilities. One key element in developing bottom-up planning procedures is designating the appropriate "approval level" for different services and investments. Approval authority should be entrusted to an institution coinciding as closely as possible to the community concerned.
In two cases, however, this rule must be tempered: when the proposal would entail claims on budget, staffing or technical resources managed at a higher level, or when the proposal entails other externalities or spillovers. In those cases assignment can be determined only after a case-by-case examination of different types of investment and service.
Another important service provision area where the subsidiarity principle applies is managing common natural resources. Here the presumption is that local user groups can most efficiently and equitably undertake this responsibility, and UNCDF strategy will support this approach. Still, at times the support of a higher authority—such as local government—may be needed to back up the rule-enforcing authority of user groups or to ease collaboration between different user groups competing for the same resource.
Allocation of funds. While local authorities are the primary recipients of financing, they will be encouraged to further devolve part of their allocation to lower-level institutions in their areas. This approach will only be feasible for funding investments of very local or community interest with no wider repercussions (such as handpump or school repairs) and where viable and representative institutions (such as village or ward committees) at these levels can generate feasible planning proposals and assume accountability for funds received. (return)
Developing a financing strategy
Most UNCDF funding for investments within local development programmes will be channelled to local governments on an annual discretionary block grant basis—as under the financing model for local development funds. But several new elements of the future financing strategy have emerged from lessons to date.
Local discretion versus earmarking in the use of funds. In most cases the bulk of funds will be allocated as unconditional or development grants, giving local authorities discretion—within agreed limits—as to their use. As noted, however, in some cases these may be complemented by other, more conditional transfers for specific sectoral or thematic purposes.
Scale of financing
The level of funding, through all grant windows, should be consistent with the volume of transfers that can be sustained in the long term or replicated in other areas. Thus funding should be calculated for the size and composition of the national development budget, including donor contributions. At the same time, investment funding must be sized in line with recurrent budget availability (a particular constraint for investments, such as district roads, that cannot be maintained by users).
Objects of financing
A flexible range of financing objects will be maintained, with provision for "software" development and capacity investment activities other than infrastructure. However, routine recurrent expenditures will still be excluded. Where financing is for investments related to natural resources or production, efforts will be made to ascertain that these generate collective benefits and positive externalities and that they cannot be funded through other credit schemes.
Channelling and management of funds
To ensure sustainability and transparency, all funding will be channelled through existing procedures for central-local transfers, as far as possible and as far as they exist. Similarly, at the local level funds will be held in local government accounts and managed and disbursed according to statutory procedures. Often, of course, there also must be provision for specific training and capacity building in local financial management, monitoring and audit.
Information on available funds
Procedures will be laid down so that all parties receiving funds (local authorities or lower-level bodies) are informed of the volume available (and of the rules for access and use) before they start planning and prioritizing. This ensures that local decisions are made within a defined budget constraint and that the opportunity costs of resources are properly weighed.
Local cofinancing
Funding arrangements will continue to aim at mobilizing local resources, whether by requiring communities to make contributions in cash or in kind (6) or by matching allocations by local authorities from own resources. All new programmes will also devote resources to building capacity for better local revenue mobilization and administration. This will entail training and support to improve local tax collections and devising cost recovery procedures (levies, user charges) for investments and services that allow this.
Access conditions
There will be more systematic application of access conditions, whereby local authorities will have to satisfy agreed criteria before receiving funds. These conditions will usually relate to both procedural compliance (for example, conformity with official financial management and accounting practice and standards, with agreed participatory procedures) and policy compliance (that investments reflect agreed priorities).
Public finance best practice
Programme financing should generally embody the basic lessons of best practice in local public finance. That is, allocations should be formula driven and transparent, with incentives for good performance. (return)
UNCDF is committed to designing and implementing programmes that promote gender equity and empowerment. This commitment takes several forms. First, all project preparation activities should include an explicit assessment of gender differences—whether in access to basic services, natural resources and property and tenure rights, or representative or decision-making institutions—and highlight the problems women face in these areas. Obtaining this information requires special efforts to consult with and gather feedback from women in the preparation process.
Second, project design should reflect this assessment, with planning and decision-making procedures that make special allowance for the interests and priorities of women. Thus, for example, local planning procedures should enable women’s groups to identify problems and offer solutions, or include screening and appraisal criteria that favour investments that benefit women—and that exclude or penalize proposals that might harm women.
Finally, UNCDF should take all opportunities to strengthen women’s role in local representative and decision-making institutions. This means paying special attention to the training of elected women’s representatives in local councils and to defining a clear role for them, and to ensuring that women are adequately represented in other nominated local committees or consultative bodies.
Implementing these commitments will require setting aside part of project budgets to obtain training and expertise on gender-related activities, to ensure that institutions, procedures and activities are developed to reflect these concerns. UNCDF projects will not normally establish quotas of funds for "women’s activities". But there is good reason to believe that most of the basic services—water, primary health and education, transport—typically promoted by UNCDF respond to women’s priorities. (return)
Capacity building is a key area of UNDP expertise and comparative advantage and an essential feature of UNCDF pilot projects. UNCDF, working with UNDP, will take a more holistic approach to capacity building, emphasizing the range of capacities needed for effective service delivery and good governance—including budgeting, accounting, communication, internal management, revenue mobilization, and monitoring and evaluation—and extending capacity-building efforts beyond local government officials to other local actors. These other local actors will include private service providers, NGOs and contractors as well as community organizations that need to develop certain capacities in order to engage in development activities and political processes.
Projects should pilot demand-driven mechanisms in which local bodies take a greater role in determining the source and type of technical assistance required. In addition, increased efforts will be made to identify national sources of expertise.
In many cases what are considered "capacity problems" are actually a result of the incentives and sanctions under which local officials operate (or deficiencies in the technologies or practices they are expected to adopt). Commitments to institutional analysis, to context-driven design and to incentives that encourage good local government performance will result in more effective targeting of capacity-building efforts.
It is not possible—or desirable—to pre-define the scope or appropriate delivery mechanisms for capacity-building activities. Such activities must reflect the institutional analysis during formulation and decisions about the instruments (local development funds, conditional grants and so on) to be used to deliver UNCDF-UNDP support. Still, the following principles will apply:
• Based on the institutional and related analyses during formulation, UNCDF will broaden capacity-building support to include local government officials and administrative staff involved in service planning, financing and budgeting, and management; private service agents, NGOs and community organizations; and deconcentrated line ministry staff.
• During formulation, UNCDF and UNDP will support national and local authorities responsible for project formulation activities to determine the menu of capacity-building requirements, identify audiences (stakeholders) for support and determine priorities and modalities for delivering this support.
• UNCDF will increasingly devolve responsibilities for prioritizing capacity-building requirements (backstopping, technical support and so on) to local authorities and deconcentrated line ministries to ensure that these activities more closely respond to demand and are accountable to client requirements.
• UNCDF, working with UNDP, will ensure that the external technical assistance made available to national execution agencies and local implementing authorities is continually evaluated, consistent with policy commitments on local ownership. (return)
Upgrading monitoring and evaluation
More attention will be paid to building an adequate learning infrastructure for pilot projects. This means developing a clear strategy for a programme’s role as a national pilot for policy on decentralization and local governance. To that end, full-fledged monitoring and evaluation systems should be designed and funded to generate credible lessons for the policy dialogue. Emphasis should be placed on continuous feedback and communication about project performance between stakeholders throughout the project cycle. Projects should include a strategy (and funding) for communicating pilot lessons to policy-makers, development partners and other stakeholders through media channels, workshops and the like. In the course of design the main "policy hypotheses" and challenges should be agreed on with stakeholders and clear monitoring indicators and responsibilities determined. (return)
Building closer collaboration with UNDP
The success of UNCDF-supported local governance pilot programmes is closely linked to its ability to support national decentralization policy and procedures. UNCDF funds are increasingly being used to pilot institutional mechanisms for decentralized development. This approach clearly requires more emphasis on technical assistance activities outside the narrow confines of capital funding and more flexibility in the way these activities are defined and managed.
For these efforts UNCDF needs UNDP more than ever. UNDP has a comparative advantage in supporting national governance capacities, promoting dialogue on upstream policy development and coordinating donor efforts. UNCDF has made significant progress in country-level collaboration with UNDP in recent years, both in joint programming and in engaging other donors in support of decentralization. In addition, UNCDF’s lessons from the field are being incorporated in the policy work done at UNDP headquarters by the Management Development and Governance Division and the Evaluation Office. These gains need to be sustained and strengthened, and joint programming with memorandums of understanding between UNCDF and UNDP should remain prerequisites for all future UNCDF country programming. (return)
Notes
1. See "UNCDF Policy on Selecting Concentration Countries", l997. (back)
2. In the past UNCDF projects tended to be scattered both geographically and thematically throughout a given country. The formula for need and potential was developed in the mid-l990s to select geographic focus areas in countries and was based on a mix of efficiency and equity criteria. (See UNCDF Policy Paper, "Poverty Reduction, Paticipation and Local Governance: The Role for UNCDF", l995.) These criteria have been superceded by UNCDF’s shift towards pilot projects that require greater geographic spread for testing new ideas and approaches. (back)
3. Because of UNCDF’s collaboration with UNDP in Malawi, it has been possible to secure support for replication of the local development fund approach by the African Development Bank and by the Danish International Development Agency and the British Department for International Development in the near future. (back)
4. Good performance here refers to investment decisions that reflect local social preferences (including interests of marginalized populations), are transparent and are attentive to technical feasibility, financial viability, the integration of local and regional planning considerations, and revenue-raising performance. Official accountability refers to compliance with assigned responsibilities (within and among levels of government, as well as financial and other regulations). (back)
5. Despite limitations, in many cases stakeholder workshops organized by UNCDF were the first time that such a broadly diverse and representative group was assembled—with the blessing and participation of the government—to finalize a design of a donor-funded project. (back)
6. Care will be taken to ensure this does not constitute regressive taxation of poorest groups. (back)
