Table of Contents

• 1.0 Objectives of the Decentralization and Local Governance Conference
• 2.0 Substantive background to the Symposium
• 3.0 Organisation of the Symposium
• 4.0 Thematic Papers
• 4.1 Fiscal Decentralisation
• 4.2 Sectoral Decentralisation
• 4.3 Environmental/Natural Resource Management
• 4.4 Local Political/Institutional Structures And Processes
• 4.5 Local Economic Development And Poverty Reduction
• 5.0 Lessons Learned
• 6.0 Way forward

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1.0 Objectives of the Decentralization and Local Governance Conference

At the end of 1999, UNCDF decided to host an Africa Regional Conference to enable policy practitioners, representatives of both local and national governments, researchers and the donor support groups to meet and share lessons on the design and implementation of decentralization policies. It was agreed that an African institution would also be the focal point for the regional conference and the follow up.

UNCDF consulted the key players within the UNDP/UN group, and they were all fully supportive of the initiative. This included - the Regional Bureau for Africa (RBA), the Bureau for Development Policy (BDP), and the Department of Economic and Social Development (DESA). Outside the UN, the Government of Japan and the Ford Foundation provided direct financial support for the conference and the consolidated budget was managed by UNCDF.

Several other partners identified and sponsored participants from their projects and programmes to attend the meeting. They also provided substantive and logistical support. This included the German Technical Cooperation who sponsored participants from South Africa, Namibia and Lesotho. There was also significant support from the Municipal Development Programme, Africa Union of local Authorities, National Associations of Local Government and a variety of research and Academic institutions in Africa. In all 25 countries were represented by high-level delegations at the Cape Town meeting.

The overall objectives of the Africa Regional Conference were therefore shaped in a consultative and interactive way with all the different partners and stakeholders. These were:

1. First, sharing of practical lessons on the design and implementation of decentralization policies.
2. Second, bringing together researchers, policy makers, donors and other interested partners to the learning forum.
3. Third, advancing knowledge in some of the key thematic issues on decentralization and identifying some of the key questions from the countries.
4. Fourth, consolidating existing networks on local governance and providing support and space for regular interactions.

At the end of the Cape Town meeting all the delegations expressed satisfaction with the organisation and the substantive discussions of the meeting. The overall objectives were achieved and the areas of follow up were identified as further research on the thematic areas, strengthening networking and information exchange.

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2.0 Substantive background to the Symposium

By the end of the 1990s, many governments in Africa and the developing world had accepted decentralisation as a key feature of the public sector reform agenda closely associated with democratisation, good governance and poverty reduction. Many of the governments are currently putting together policies and proposing elaborate institutional mechanisms for decentralised planning and management. Multilateral and bilateral donors are supporting some of these initiatives and helping to fund the reform processes.

There are three common arguments that have been put forward to support decentralization:

1. That it improves efficiency of resource allocation. This promotes allocative efficiency by allowing greater differentiation of resource allocations across jurisdictions according to the demand in each locality. It is argued that sub-national governments are closer to the people than the central government and have better information about local preferences. There is also the element of promoting competition among local governments, which is likely to encourage them to perform better.
2. That it improves productive efficiency by fostering accountability, reducing corruption, and increasing cost effectiveness in the government. Since sub-national governments are closer to the people, citizens tend to be more aware of their actions than those of central governments. This is likely to increase legitimacy and consensus concerning the choice of public services.
3. That decentralization increases added value in terms of increasing households' willingness to pay for the services. Households are more willing to pay the services that match their demand. This in turn strengthens the incentives by sub-national governments and their constituents to monitor revenue collection, planning, expenditure and service delivery.

The arguments against decentralization fall into two main categories, those focusing on national effects and those concerned with local effects. In the first category there could be a conflict with the macro economic objectives, whereby local authorities take a much narrower view and perspective on key strategic issues. The second argument against has been the argument put forward about elite capture, which might restrict the benefits for the weaker and vulnerable groups which has negative consequences on issues like poverty reduction.

On the whole the balance sheet tends to be on the positive side of decentralization and many governments are striving to link decentralization with the improvement of good local governance. The latter becomes the vehicle for poverty reduction.

The key challenge that most of the governments face is how to make decentralisation work. There is a clear recognition by all stakeholders that simply creating decentralised structures for decision making and announcing new procedures for participation will not guarantee their effectiveness or indeed generate more economic growth. There is need to go beyond, and provide the necessary resources to match the responsibilities given to local governments. Whilst there is no guarantee that greater decentralisation will result in greater democracy and more economic development, there are great hopes that the process of decentralised planning and management will be more inclusive, and take into account the needs of the poor and other disadvantaged and marginalized groups.

The passions and expectations around decentralisation have also been linked to efforts to reduce poverty and to promote sustainable development. State institutions have often been accused of being too remote from the daily realities of people's lives and therefore one of the key recommendations is to make institutions pro-poor through decentralisation. Decentralisation has a strong potential for increasing, and sometimes formalising, popular participation in civic processes. It can draw on the advantages of local information, local accountability, and local monitoring and has the potential to improve development outcomes and to induce broader institutional changes, which benefit and empower the poor.

Recently there has been a strong interest among donors and a variety of non-governmental organisations to provide funding and expertise to national and local governments to support decentralisation. UNCDF has been one of the key partners of the least developed countries, and has provided capital grants to allow the local governments unconditional funding for local level planning and decision-making.

One of the key challenges is that there are still many gaps in terms of knowledge about what works and what does not work. There is limited sharing and understanding of practical experiences at both the national and international levels, and the tendency for many meetings is to proclaim the benefits of decentralization without showing the real benefits for the local populations. Experience also clearly shows that decentralisation is much more complex and long term than just having local governments in place. It involves addressing tough questions about reform and restructuring of central and local governments, such as: determining the nature and structure of centre-local relationships; intergovernmental fiscal transfers; local economic development and local accountability and transparency. These are the challenges that the Cape Town meeting tried to address.

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3.0 Organisation of the Symposium

UNCDF took the lead to manage this regional initiative. This was based on UNCDF's comparative advantage and niche in the area of local governance and decentralization, and its active presence in supporting decentralization programmes in 15 concentration countries in the Africa region. It also reflects an important corporate objective of engaging in strategic partnerships whose key objectives are mobilization of resources, exchange of ideas and impact on policy.

The conference was designed around five interrelated themes that are closely linked to the design and implementation of decentralisation. Terms of reference were prepared and five leading scholars were identified to prepare thematic papers on the following:

1. Fiscal decentralization
2. Sectoral decentralization
3. Environmental/Natural Resource Management
4. Local political/institutional structures and processes
5. Local Economic development and poverty reduction

The choice of these themes was based on consultations with experts and practitioners involved in implementing decentralisation policies and programmes. While the main assumption was that decentralisation is about devolving political power and promoting the effective functioning of local governments and other lower level structures, experience of many countries reflects that there are different stages of accomplishment, and that some countries have made more progress than the others. The implications of the themes to each of the countries therefore depended on then stage of policy development in terms of decentralization.

In the early stages of decentralization, the main preoccupation of many countries is to set up institutional structures and have a legal framework and policy on decentralization. Once that has been accomplished, countries begin to grapple with the fundamental issue of fiscal decentralization, in particular addressing the transfer and utilization of resources to the different levels of government. The primary objective is to match responsibility and resources. The process requires significant dialogue between the centre and the local levels, and significant political commitment on the centre to provide adequate resources to local governments. It calls on decisions about what sector responsibilities need to be devolved and building the necessary capacities to enable local government function.

Ultimately however, the fundamental objective is to address poverty and the basic needs of communities that fall under the jurisdiction of locally managed institutional entities. The question to be asked is: Does decentralization bring any more benefits to local population, in particular the poor and the marginalized groups, than the existing centralized and sector arrangements? It is also clear that in many cases that decentralization focussing on limited geographical areas has limited capacity to deal with spillovers and inequality across regions.

The conference working groups examined some of these issues at length and made observations and recommendations on future actions. It is also clear that not all the thematic issues were addressed and therefore there is a need to continue to dialogue on the other key aspects including:

1. Provision of services
2. Rural -urban linkages
3. Role of traditional authorities
4. Community development

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4.0 Thematic Papers

This report presents a summary of the papers presented, the outcomes of the group discussions and some of the proposed ways forward. These summaries do not take into account the full revised papers prepared by the thematic facilitators and they are in no way comprehensive. They only give a flavour of the rich discussions and the highlights of the meeting.

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4.1 Fiscal Decentralisation

Rémy Prud'homme's paper examined fiscal decentralisation and intergovernmental fiscal relations. The paper defined decentralisation instruments that decision-makers have at their disposal in policy design and implementation. The paper highlighted a number of the key instruments that include:

1. First, is the allocation of responsibilities for the provision of public goods and services. There is a need to clearly define the level of responsibility and to provide the necessary resources that level where the mandate is given.
2. The second issue is the allocation of taxes to different levels of government. This is particularly difficult in rural areas where often the tax bases are very low, and household incomes and taxes on consumption are often erratic and very low. Prud'homme suggests that taxes on agricultural goods, on land and property as possible solutions. These local taxes on land and property are already well established in the main urban centres in the majority of the countries. However, as responsibilities for service provision are far more than the local taxes, there is a need for an intergovernmental transfer system, which ensures that resources move to the different layers of government. The intergovernmental transfer issue immediately raises the need for controls in the areas of expenditures, borrowing, taxation, budgeting, accounting, reporting and audit.
3. Finally, decentralisation is not possible without relatively independent and politically responsive local governments. The rules governing the formation and functioning of local governments, such as election, administration and sub-national structures form an integral part of decentralisation.
4. The decisions made by central and local governments on the above mentioned instruments have a profound impact in terms of the socio-economic objectives according to which a decentralised system can be measured.

The paper highlights some of the criteria used to justify and measure decentralization. The first criteria is the economic efficiency, which comprises of allocative efficiency and productive efficiency. The allocative efficiency analysis holds that local governments will likely be able to better match public goods to local preferences. The productive efficiency argument states that local governments can produce the same goods at lower costs than central governments.Such criteria need to be examined empirically and this is a major challenge to both researchers and policy makers.

The second criterion highlighted is political efficiency. Increased decentralisation facilitates and increases local participation in political decision-making and stronger sub-national governments are a useful counter-power to the central government. There are many issues here that relate to the nature of government, the commitment to democracy and the strength and durability of institutions in the different countries.

In many of the African examples the justification of decentralization has been on political and administrative grounds with limited reference to the economic criteria. This has been problematic because it is the economic that helps to show the real "deliverables" or goods that decentralization can offer.

However the impact of the instruments to the policy areas is very much country-dependent and dependent on the combination of instruments used. The table below is an example of how the measures could be applied to a specific country, giving an indication of measures against specific criteria.

Table 1: Analytical Framework for Impact Mechanisms

	Economic Efficiency	Macro-Economic Stability	Redistribution	Political Efficiency
Allocation of Responsibilities	+	-	-	++
Allocation of taxes	-	--	--	++
Transfers system	+	+	++	-
Central govt. controls	+	+	0	0
Election rules	+	--	-	++
All	+	-	-	++

# ++ : very positive
# -- : very negative

There are, a few caveats which have to be recognised:

1. Firstly, Prud'homme argues that all other things being equal, a more decentralised system will tend to increase disparities because poorer jurisdictions which have lower tax bases. This tendency could be accepted as a price to be paid in the initial phases, and that can be corrected using a transfer system in the form of equalisation grants, and other government grants.
2. Secondly, there are fixed costs associated with the creation and operation of a multilevel government system. In poor countries these fixed costs of running a local government may consume most of the resources available, leaving very little for the provision and production of the basic public services. Ultimately however the cost is outweighed by the proximity of government to the people, which increases sensitivity to local needs of the majority of the citizens.
3. Thirdly, election rules have an impact on the functioning of a decentralised system. The possibility of re-election can be an incentive to economic efficiency on the part of mayors, and reduced terms may serve better political efficiency.

The discussion in the working group sessions centred around allocation of powers between the state and local authorities, allocation of taxes, intergovernmental transfers, development banks of local authorities, local authorities access to lending, and perspectives for the future. Experiences from the participating countries suggest that local authorities have the final and essential responsibility of the provision of basic public services. However they do not have the necessary resources and are unable to generate local revenues due to inelastic local taxes, poor collection methods and corruption.

In both Anglophone and Francophone Africa local taxation is based on four tax forms: tax on built property, non-built property, residence tax and licences. Generally central governments have kept the most profitable forms of taxation - income tax, sales tax and other specific levies. Local authorities also lack information on taxable infrastructure e.g valuation of property is usually outdated and far behind the new developments

The second source of local authorities' funds are the intergovernmental transfers which support a variety of services that local authorities have to provide such as health, education and public works. The transfers come in the form of conditional and unconditional grants. In the newly decentralizing countries there is a tendency to rely on conditional grants, which result in local governments having limited powers of decision-making. In most cases such transfers are inadequate and are only able to cover a proportion of the cost of services. Some innovative transfer mechanisms are in place for example in Nigeria, where the Federal and State governments have since 1976, transferred funds to the local authorities based on the petroleum income. In Uganda and Senegal the central governments have transferred to local authorities the exact sums that are estimated for the provision of the services now delegated to local authorities. The main problem is that the transfers tend to be conditional and therefore leave local governments with limited room to manoeuvre in the decision making process

Some countries, such as Mali, have set up development banks for local authorities, which operate according to certain subvention repartition criteria. In a few countries the local authorities also have a right to source directly from the financial markets. This usually applies to the larger urban local governments.

For future action, the participants of the symposium wished for more exchange of information, support to action research and possibilities of exchanges in terms of visiting countries in the region to learn more about fiscal decentralisation in Africa. They also emphasised the need for donors to invest more in the new fields of research on fiscal decentralisation.

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4.2 Sectoral Decentralisation

Larry Schroeder and Matt Andrews define sectoral decentralisation as reassignment of decision-making authority in a specific public service sector of central government to sub-national bodies, particularly local self-governing organisations. In most African countries sectoral decentralisation applies to rural local governments, which are mainly concerned with the provision of local roads, health services, primary education and rural water supply. The larger urban governments are much more integrated and define their own sectoral operations.

Allocative efficiency is the underlying rationale for the decentralised provision of any public service.The arguments supporting sectoral decentralisation focus on the issue of better matching of the needs of beneficiaries and more accountability on the part of the decision - makers. On the other hand, there are also limitations to decentralisation, such as reaching maximum economies of scale in the provision of a public service, jurisdictional spillover costs or benefits associated with the provision of service, significant income redistribution effects and insufficient capacities. Therefore, the nature of services to be provided within a sector needs to be examined carefully, and there is a need to weigh the importance of some of the limitations against the likely benefits from decentralisation.

The delivery of a public service requires two types of activities - provision and production. Provision involves decisions associated with "governing", and the key questions asked are: what services to provide and to whom, the quantity and quality of services to be provided, how the services are financed and how to ensure that they are produced. Production is the process of converting inputs into outputs. It can be undertaken through different combinations and through a variety of arrangements. Further, devolution of a public service means that the local government is the provision unit. In deconcentration the agents of the central government (placed either in the locality, region or at the centre) are responsible for provision decisions.

There are a number of issues that arise with respect to the devolution of services:

1. First, is the likelihood that local government can and is likely to make better provision decisions than the central authorities;
2. Secondly, is whether local governments will ensure services are made available to the poorest segments of the locality;
3. Thirdly, to what extent technical, scientific and localised information exist required to make appropriate decisions at the local and central level;
4. Fourthly, it is becoming critical to address the role of non-governmental organisations and other organisations of civil society in both the provision and production of services at the different levels of government.

Each of the general public services such as rural roads or health is derived from a number of sub-activities that in their totality constitute a sector. The types of inputs necessary vary as well as the degree of necessary coordination between sub-activities. The paper analysed the theory and experience in sectoral decentralization focussing on rural roads, water provision, primary education and primary health care. The paper highlights what appears not to work, what appears to work and what remains to be learned. Some of the key issues highlighted are:

1. Creating shared resource arrangements in which central agents provide resources (to account for inter jurisdictional spillovers and capacity inadequacies at the local level).
2. Decentralizing resource dependencies gradually, along with creating local capacity development programs.
3. Engaging citizen commitment through contracts, matched with capacity and institutional development.
4. Decentralization through privatisation where local economies are vibrant, maximising the use of local labour and resource production
5. In the case of schools decentralizing to local parents and community boards

Even in devolved systems, central governments often maintain considerable influence over certain aspects of provision and production decisions. Where specific services are guaranteed to all citizens under the constitution, it is important to ensure the balance between insuring that the services are delivered, while permitting local officials autonomy in making provision decisions. There may also be a need to direct other financing mechanisms (not necessarily targeted towards local government) towards specific strategic sectors ,to address inter jurisdictional spillovers and to cater for those services which require economies of scale.

The working group discussions emphasised several points:

1. First, the needs of the poorest sectors of the population should be the starting point for deciding what to decentralise and how. An integrated programme of increasing the role of local institutions enables better co-ordination between sectors, than decentralisation on a sector by sector basis. It is also desirable to enshrine the functions decentralised to local institutions in legislation.
2. Secondly, economies of scale could be reached through collaboration with the other appropriate institutions. Ministries of Local Government have an important coordinating role to play in ensuring that the sector ministries at the centre have a clear understanding of the objectives of the decentralisation policy. Sectoral decentralisation entails a major restructuring of public sector institutions and this is a long and complex process that cannot and should not be rushed.
3. Thirdly, when decentralising several sectors, it is advisable to begin by sector-specific grants, and as experience and local capacity increase, move towards block grants. The grants should be channelled straight to local institutions, not via line ministries. All in all, inadequate funding is prevalent and a major obstacle to the implementation of decentralisation policies. Phasing is necessary, especially given the capacity deficiencies in financial resources, human resources, calibre of local politicians and the extent of civil society participation.
4. Fourthly, donors should also 'play by the rules' of the decentralisation game and support the implementation of sector wide approaches within the context of decentralisation policy. They should not, however, dictate or impose policies or establish parallel structures. External agencies have an especially valuable role to play in the capacity building.

The working group raised the following issues for further research:

How to overcome the financial and human resource gaps existing at the local levels?

1. How to deal with the problem of excess/redundant staff at local level, in cases where central and local government institutions are amalgamated?
2. The appropriate levels and forms of remuneration for local politicians/administrators
3. The feasibility and implications of phasing sectoral decentralization by local institutions
4. The implications of a situation where opposition parties control some local authorities. -How to get external support agencies to support local institutions directly?

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4.3 Environmental/Natural Resource Management

Jesse C. Ribot's paper identifies that development agencies and NGOs around the world are promoting greater participation by local population in the use, maintenance and restoration of forests, pasture lands, wildlife and fisheries in order to improve local development and environmental management. The core of the decentralization argument is the transfer of environmental management responsibilities and powers from central government to a variety of local institutions that is aimed to increase popular participation, in order to promote more equitable and efficient forms of local environmental management. The key to effective decentralisation is increased democratic participation in local public decision-making through the establishment of downwardly accountable, representative authorities with meaningful powers. This is the foundation from which to expect the local efficiency, equity and development benefits for the poor that decentralisation promises.

Several African countries have experienced some degrees of decentralisation of natural resource management. There are of course significant variations in terms of the history of natural resource management , between the more arid pastoral areas, and the more arable farming areas. There are also different approaches that governments, with the support of different donor agencies, have pursued to deal with natural resource management. Experience in most of the African countries suggests that democratic, downwardly accountable local governments are the key ingredients in terms of localising natural resource management. The paper highlights several examples of the management of the forestry sector, which in most countries is dominated by central government environmental ministries. In most cases planning processes where central ministries specify in great detail what plans must look like, undermine the notion of local autonomy and become new tools of central control.

In most countries decentralization of environmental powers is in its early stages and the key is consolidating the functioning of locally elected governments. This has to be followed by a transfer of fiscal resources to local governments and ensuring that there are institutional structures in place to deal with the planning and implementation of development. The transfer has to be gradual to allow the local institutions adequate time to build their capacities and to allay fears of abuse of resources by central authorities. The first powers that could be transferred to local authorities are those that are revenue-neutral, such as allocation of lands, and of rights to use other natural resources in the local arena. Revenue-generating powers, such as powers to tax land, income, and natural resource exploitation may also be less threatening to the centre than direct transfer of funds from central government. Local authorities should be given real powers (in statute) in order to gain experience needed to build capacity, and to demonstrate that capacity has been gained.

The presented five key questions for the group discussions:

1. Moving toward participation through local representation
2. Increasing accountability of environmental power holders
3. Building the principles for environmental subsidiarity
4. Sequencing capacity
5. Creating environmental rights rather than privileges

The working group started by considering the range of actors in natural resource management i.e identifying who is dealing with natural resources at the local level. This list includes traditional authorities, parastatal bodies, non - governmental organizations and the local government bodies. In several cases central government calls on village communities to manage natural resources, but in reality the villages have limited gains from such participation. It is therefore important to define the roles clearly, highlighting the legal status and providing the necessary financial and human resources.

Some natural resources need special protection and are not transferable to local authorities. However there should still be a way to ensure they benefit local development and poverty reduction somehow. Several examples were cited of local governments benefiting from revenues derived from natural resource management - in western United States stumpage fees from timber; in Cameroon fees from timber harvesting; in Zimbabwe, Campfire revenues to local governments; and in Uganda, a portion of the revenues from forestry and wildlife to local governments.

Contrary to common central government claims, natural resource management by local authorities is often more effective than by central authorities. The key is to empower local communities and to build their capacities for management of local resources. In most cases the state still keeps the bulk ownership rights of the natural resources and the most lucrative rights of exploitation, leaving local populations marginal benefits and some simple rights of usage. Also international conventions also argue for greater responsibility for local authorities in natural resource management.

Traditional leaders are an important force to be reckoned with in dealing with natural resource management. The working group stated that even though the devolution of powers should be done unambiguously in favour of the elected local authorities, the traditional authorities should be implicated in the decision-making process as major political actors and also as citizens.

The working group identified several themes for future action. Information should be made available and exchanged , in particular about local regulations ( in local languages) , prevention and management of local conflicts stemming from the use of natural resources, and benefits that could accrue from good management of natural resources. The group suggested the development of an inventory about existing networks, action research and networking on specific topics likely to gain political influence, and setting up national focal points on the basis of present participants (at the Cape Town conference) leading to an establishment of a network.

Finally, as regards research, themes of interest identified were:

1. Decentralisation and protection of the rights of local populations to common resources,
2. Perceptions of rural populations on decentralisation,
3. Effectiveness of communal management of natural resources,
4. Role of traditional leaders in decentralisation, planning, and
5. Relationship of decentralised natural resource management and the fight against poverty.

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4.4 Local Political/Institutional Structures And Processes

Dele Olowu argued that African countries are at once regarded as centralised and excessively decentralized. The formal state structure is usually centralised but the functioning of society is decentralised - people live in scattered rural communities and conduct their business and daily lives in a relatively autonomous and decentralized way. The decentralisation efforts in Africa during the last few decades have essentially been aimed at empowering people as part of the effort at democratising state institutions and creating local self-governing structures. There is also a growing appreciation that what needs to be developed is not only local government, but local governance. This implies not only the transfer of responsibilities and resources vertically from central to local governments, but also the development of horizontal networks between local governments and local non-state actors. The importance of horizontal networks is that they help to mobilize additional resources for local level development, and enhance the accountability of local level political and management officials.

Africa has relatively weak formal local government structures, judged by size of expenditures and employees. There have been various attempts to decentralisation since the period of attaining independence that have basically reflected two tendencies: one towards greater centralization and the other towards decentralization. Since the 1980's many African governments have implemented policies on democratic decentralization with greater emphasis on devolution. There are many factors that have motivated democratic decentralization and the most prominent include:

1. The failure of centralised public sector management as evidenced by economic, fiscal and political crises;

2. Pressure for political reforms by external donors and domestic actors outside the state;

3. Growing urbanisation and metropolitanisation;

4. The conscious use of decentralisation as a political mechanism by ruling groups to neutralise, contain and seek compromises with regional or local elites;

5. Globalisation pressures, which have compelled national governments to focus on strategic issues of national economic and political management.

However, decentralisation faces some major dilemmas in Africa. On the political level there is often the unwillingness of political and administrative leaders to share the power, which perpetuates the monopoly inherited from colonial times. Secondly, in some cases even more difficult political dilemma is that, in many instances it is local elites rather than the most vulnerable groups that capture decentralised power, and then use it to repress the local minorities. This problem requires a review of the institutional frameworks for participation, accountability, and more effective information flows between local governments and the public. From an economic perspective, it should be ensured that decentralisation does not endanger economic stabilisation and redistribution efforts. Decentralisation also requires a wider institutional, political and economic reform to go with it. In addition, it is important to realise that there is quite a significant real cost of new institutions, staffing, procedures and training and the problem is often compounded by the absence of reliable data on governmental performance and also by weak capacity at central and local levels.

The discussion on this topic was divided between two working groups: the first concentrating on local political processes, and the second on institutional structures.

The group on local political processes started from the position that decentralisation cannot be considered as a simple administrative organisation model, but as a framework for expanding local democracy, which in turn becomes the principal vehicle for reducing poverty. Several issues arose from these conversations. First, acquiring political power at the local level is of major interest to all the political parties. However, space should be provided and guaranteed by law for other non - political actors of civil society. The relationship between the central and local level tends to be defined by the ambiguity of the need of the central level to control the local level , and the local level's aspiration to achieve autonomy. Especially in Francophone countries this control, "tutelle" often appears as a constraint and sometimes leads to a paralysis of the local authorities' powers. As a solution the group recommended softer controls from the central level, accompanied by a greater accountability of the local authorities to the local populations and favouring the control of legality. Obligation to surrender the financial accounts to local population also reinforces their confidence and participation to local planning. Sometimes the downward accountability is not materialising simply due to lack of capacities. It is therefore necessary to reinforce the capacities of local leaders and support them with competent technicians at the local level. It was also emphasised that local populations have to be sensitised to their rights.

The working group on local institutional structure compared decentralization experiences from different countries. Most countries highlighted the crucial importance of enshrining the decentralisation principles in the constitution. The subsequent lack of commitment and major weaknesses in the legislative and policy frameworks usually emanate from the lack of constitutional commitment. Some of the problems highlighted include: the linkages between locally elected (local government) officials with other local (traditional authorities) and central structures; sources of local government revenue; and the general vertical and horizontal coordination. There are variations in the institutional set-up and coordination with the centre between countries. Many participants emphasised the important role played by Associations of Local Governments, especially in their involvement in policy dialogue, and in facilitating interaction between the centre and individual local governments. In all countries urban local governments seem to be much stronger and more established than rural local governments.

The working group identified two issues especially requiring further investigation:

1. The role of traditional leaders and
2. Mechanisms of improving downward accountability.

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4.5 Local Economic Development And Poverty Reduction

Helmsing, argues that most African countries have been facing major economic challenges resulting from globalisation, economic structural adjustment and market liberalisation. This has resulted in the significant reduction in the capacity and role of the state, which used to have a dominant role in economic development. It is argued that the dominance of central government in all spheres of economic life contributed to the underdevelopment of the local social and economic fabric. It certainly weakened the development of the private sector when nationalisation was considered the answer to all the economic issues, and undermined local governments when all powers were vested in the all powerful sector ministries and parastatal bodies.

Helmsing, identified two sets of forces for change: the first are structural adjustment and liberation policies which many African governments adopted (or where forced to adopt) as a way of addressing their economic crisis. The idea was to shift the locus from government to the market. The results have been disappointing in many cases because the assumptions that the private sector would take up the challenge have not been realised. The second was the ideological disenchantment with the one party socialist and statist policies that have dominated most countries since independence. This undermined the development and elaboration of alternative approaches to development. The main signal of the end was the fall of the Soviet Union, increasingly aid fatigue and the decline of ODA which triggered a search for new alternatives.

The idea of the market has not been easy to translate, as markets do not emerge spontaneously. In the poor economies investment opportunities do not reveal themselves so easily and information is very hard to come by. There is also a serious problem of lack of capital and systems to promote local investment. In such an environment it has been difficult to speak of local development and the capacities for poverty reduction are limited.

However in the absence of the central state, new forms of local economy have emerged. In particular the informal sector has grown rapidly in the urban economy and the rural economy has been freed of the stranglehold of centralised produce marketing boards. The urban situation is even more complex and the "geo-economy" is creating winners and losers by the potential ability of cities and regions to integrate.

Localities are increasingly thrown onto themselves to create place prosperity. Local government has emerged as a key player geared to provide the right mix of local public goods, and secondly, to facilitate or enable other actors, communities, private firms, workers and NGOs to make their most productive contribution. The principal characteristics of a new generation of local economic development promotion are that it is multi-actor, multi-sector and multi-level. Its success depends on its ability to mobilise public, private and non-profit actors, and to utilise the local government frameworks.

Helmsing defines local economic development as a process in which partnerships between local governments, community-based groups and the private sector are established to manage existing resources to create jobs and stimulate the economy of a well-defined territory. New generations of local economic development initiatives can be divided into community based economic development, business or enterprise development and locality development. It is up to each local authority, in partnership with other local actors and other stakeholders to find their new role and the right mix of initiatives.

The paper did not delve much into the question of poverty reduction although it highlighted the importance of community economic programmes.

The programmes include:

1. Creating local safety nets, which is a critical issue for many of the poor communities; Without such local mutual support networks at the neighbourhood levels local economic development was unlikely to happen
2. Housing improvement and settlement upgrading; in the poor urban communities upgrading involves a package of activities-basic water, sanitation, roads, community facilities for education and health.
3. Basic service delivery; a major issue has been the decentralization programmes which have given local governments a range of powers and authority over basic services and has also opened new space for contracting out.
4. Stimulating community economy - this is crucial for local economic development and the stimulation of micro enterprise programmes

The working group on local economic development and poverty alleviation agreed that the local government has an important role to play in the new environment, but it should be mainly an enabling one. Local governments can support local economic development through provision of infrastructure and services. Such strategies should have certain key elements in place, including participatory processes, the existence of a development fund and a bias towards local producers. There should be a clear line between enabling environment and undertaking income-generating activities, which used to be the trend of the past.

On poverty alleviation, the analysis of economic statistics should be accompanied by an analysis of the perceptions of the poor people themselves.

In addition to local governments, other players like NGOs, private sector, government and donors have an important role to play. Effective local economic development frameworks require all the actors to work in a planned process that has internalised participation as a key factor. Outsourcing of some traditional public sector activities and partnerships with the private sector could be effective but this depends on the local governments clearly understanding their roles and having the necessary negotiating capacities. The roles must, however, be clearly defined and partnerships do not mean the handing over to the private sector of state assets and the creation of private sector monopolies.

The questions that remain for further research include:

1. The right mix of outsourcing some public sector activities.
2. How to work effectively with the private sector and the nature and extent of consultation.
3. Measuring the impact of local economic development on national economic development.
4. Downward and horizontal accountability of local governments.
5. Planning and coordination of local economic development.
6. Effect of decentralisation on poverty alleviation.
7. Indicators of poverty and decentralisation and
8. Local economic development in poor subsistence economies.

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5.0 Lessons Learned

While each country has its own very specific context and history, there is a great deal of common ground in their experiences and in the challenges that they face. The participants indicated that one of the most valuable aspect of the Cape Town meeting were the substantive discussions of the five thematic areas and the clear inter-linkages that emerged. The importance of fiscal decentralization was a major concern running through all the thematic discussions. The meeting helped to advance the agenda from the tendency of many of the regional meetings to simply clamour for more decentralization.

The sharing of experiences and discussing the challenges during the meeting bridged the gaps that usually exist among senior policymakers, field experts and academic researchers in terms of policy dialogue. In most cases the different groups meet separately, and do not benefit from each others reflection thus reinforcing a sense of isolation often felt in the daily work.

There were new some new insights into promoting decentralisation in Africa, and into more effective ways of supporting and empowering the poor. Most participants acknowledged that there was a wealth of experience on decentralisation policy implementation in the Africa region that they were not aware of and the meeting had opened their horizons. In particular the sharing of concrete experiences between Francophone and Anglophone countries was considered very stimulating. The common conclusion was that there was a need to have more conferences and meetings, and to give greater recognition of African skills and more utilisation of these skills nationally and between countries.

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6.0 Way Forward

UNCDF believes the Cape Town symposium was a good start to a process of more in-depth network building, research and policy advocacy on decentralisation in Africa. Consequently UNCDF is currently working on a follow-up work programme, starting in June 2001, which takes into account the corporate priorities of the organisations on strategic partnerships to support local governance and poverty reduction.

In short, what we see as relevant for the next two years are the following points:

1. To build and consolidate a South-South and North-South network on decentralisation in Africa, to set up institutional linkages and research collaboration among researchers and institutions.
2. To undertake more in-depth research at country levels on the thematic areas discussed in the Cape Town meeting. This will increase knowledge on local governance and decentralization, and also create a mechanism for the regular review of the country experiences.
3. To continue the information dissemination and policy advocacy on decentralisation in Africa region through a variety of information sharing mechanisms- the internet, newsletters and publications.
4. To strengthen collaboration with regional organisations in the Africa region e.g. Africa Union of Local Authorities, Municipal Development Programme and the National Associations of Local Government

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