4.1.1 Basic Assumptions

Commitment to Devolution. The basic assumption of Local Development Funds is that decentralization is a desirable thing and that there is a government commitment to some form of decentralization, ideally a thoroughgoing devolution, which will result in increased local participation in decision-making and especially in those decisions affecting people's livelihoods. An important issue with respect to this assumption is that there is often a gap between ideological commitment to democratisation and the actual creation of decentralised institutional forms. In this respect, Uganda and Malawi constitute interesting contrasts. In Uganda, the mission found that the gap between commitment and practice is relatively small, at least in theory, whereas in Malawi the gap is substantial.

Uganda has moved relatively quickly to establish and rationalize different tiers of local authority and to assign them rights and responsibilities, including corporate legal status and a constitutionally-mandated portion of national budgetary resources. Malawi, by contrast, is still moving fairly slowly towards the re-vitalization of elected local authorities, whose elections have now been postponed to 1999.

Given the gap between commitment in theory and commitment in practice, a better assumption is that decentralization, like democracy in general, is a contested terrain. There are forces for it and against it, and they comprise both political actors and organisations, as in Malawi, where the ruling party is wary of decentralization to what would reportedly be a majority of opposition local councils, and the entrenched bureaucratic machinery of the state -- especially the institutions of financial allocation and accounting -- which have serious reservations about devolution in both Malawi and Uganda.

UNCDF should be more alert to probable nodes of resistance to decentralization in order to anticipate their reactions. This has implications for programme and project design. In particular it invites a fair measure of design flexibility in order to accommodate the "doubting Thomases" at specific times in the cycle. A good example is the current almost imperceptible struggles between Ministries of Finance and Local Government in both Uganda and Malawi, with the former not moving fast enough on devolution and the latter urging faster movement. Is there room in the design for resolving the conflict? At the very least, it suggests building a good communications link with the relevant central financial and planning mechanisms to be able to anticipate possible obstacles before they emerge full-blown.

Commitment to Experimentation and Systematic Learning of Lessons. A second major assumption is embodied in the very purpose of the local development fund policy experiments, which are aimed at demonstrating that the three elements of decentralised governance outlined above and encouraged through project design elements, do indeed have a demonstrable effect on sustainable local development and poverty alleviation. Several cautionary comments are perhaps n order here. One, whether the policy experiments yield the intended policy lessons depends on many other factors, perhaps the most important of which is the capacity and willingness of the host governments to capture the policy lessons in a systematic manner. (see 4.8) Two, the programme and project designs must themselves provide adequate room for learning lessons and re-cycling them into the project cycle. This is in part a function of monitoring and evaluation. (see 4.6)

Sustainability. Three, the issue of sustainable local development correctly looms large in all development literature. The problem, though, is that in practical terms sustainability is a complex phenomenon demanding a fairly holistic approach. Program sustainability must be a key objective, given the pilot nature of the Local Development Funds and their explicit intention to work through existing government systems in order to build adequate capacity in those systems.

Not a great deal of systematic attention seems to have been given to this issue at this stage in these two projects, perhaps understandably in the case of Uganda, which has yet to even begin implementation. But even in the narrower sense of project sustainability -- ie. the sustainability of the capital infrastructure being provided through project funding -- one often finds, as this mission did, that not enough attention is given to the problem. This issue is addressed in some detail below, both in the discussion of design issues and the consideration of implementation problems.

Role of the LDF in Poverty Alleviation. Four, poverty alleviation is a problematic concept even though no one has so far disagreed that it is one of the most important development objectives. The problem has to do with the following, all of which the mission ran into the field:

The implication for evaluation of seeking direct links between projects and poverty alleviation is that there are usually a great many factors, most of them external to projects, that impinge either positively or negatively on poverty alleviation. These factors are usually several steps removed from the project -- that is, they are the notorious intervening variables which most political scientists, unlike economists, find impossible to hold constant -- and therefore difficult to capture. UNCDF needs to re-think the implications of its focus on poverty eradication, not from the point of view of any lessened concern with it as an ultimate objective, but from the perspective of the realistic implications for program and project evaluation of the implicit direct link that many of the program documents make.

4.1.2 Ownership Approaches and Perceptions.

The concept of capital development funds is closely but not exclusively associated with UNCDF. There are other donors engaged in similar activities. In Uganda the World Bank is planning to mimic and coordinate closely with UNCDF by providing capacity funds to facilitate district planning under the Peri-Urban Infrastructure Project, which will fund infrastructure in municipal areas and which is being closely coordinated with the UNCDF projects. This is also the medium term intention of the World Bank in Malawi.

UNICEF in Uganda is spending roughly 55% of its budget at the community level and reports that it is watching closely the UNCDF model of decentralised capital development. UNICEF is also, in Jinja, Kabale and Mukono districts, supporting infrastructure projects, as is DANIDA in Rakai district. DANIDA is supporting the Decentralization Secretariat in the Ministry of Local Government in Uganda and has played a pioneering role in the decentralization system design through its long-term support in Rakai District. From experience, DANIDA supports the idea of UNCDF initially limiting itself to a few districts. In Malawi, the World Bank, through the Malawi Social Action Fund is supporting infrastructural projects similar to UNCDF's. The European Union's micro-project program in Malawi is also community based.

Despite the similarities, there are several differences between other donors' activities and UNCDF's Local Development Fund. One, UNCDF is the only donor which is deliberately committed to the experimental nature of its activities and truly pursues them on a pilot basis. Other donors have largely a developmental focus. Two, though the other donors also claim to recognize the need for a participatory approach, UNCDF seems to have taken this approach the furthest in its project designs.

Three, UNCDF also seems to be more aware than other donors of the need for donor funds to be catalytic in pursuit of broader objectives. The mission did not, for example get the feeling that the World Bank and the European Union in Malawi were consciously aware of the need for donor funds to be catalytic, particularly with respect to the inducement of institutional infrastructure.

Four, and perhaps most important, the World Bank's approach to local developing funding in Malawi is the one everybody contrasts with the UNCDF/UNDP approach. The Bank funds directly to communities as opposed to going through the District Development Committees; their focus is on empowering communities without reference to developing intermediate institutional infrastructure and long-term sustainability.

The mission encountered no fundamental perceptual differences between UNCDF staff in headquarters and country offices. However the mission did encounter highly nuanced perceptual differences elsewhere. One, the NGO fraternity in Malawi for example was somewhat sceptical about UNDCF's ability to generate the right type of project. Action Aid, for example, generates a totally different menu in that country. This menu includes projects such as provision of seeds, agricultural credit and water -- income generating activities, which many NGOs feel are critical to sustainability.

Two, few country partners, including central government ministries and especially various levels of local development committees, seemed fully aware of the experimental nature of UNCDF projects. The mission got the feeling that these country partners did appreciate the notion of "pilot" but did not fully link it with the notion of policy experiments. The lower in in the institutional hierarchy, the less the appreciation of the policy experiment, and the higher the tendency to treat the funds as another capital inflow to solve a local development problem.

Though the concept of Local Development Funds is clear in the literature, it is one of many "funds" encountered in the field. Therefore, UNCDF needs to continue emphasising the unique aspects of the fund, particularly the policy experiment aspect and the relationship to development of local governance institutions, if it is not to be confused with the numerous other funds.

The team was asked to review the validity of the concept and goals of local development funds.

Validity of the Concept and Goals:
Institution-building objectives and the experimental purpose of pilot funds.

Two of the most important aspects of the LDF which distinguishes it from other donors' objectives and efforts are the institution-building goal (i.e., use the availability of some capital funding to induce effective local institutions at district and sub-district level) and the experimental, pilot nature of the projects at national level.

Institution building generally does not occur in the absence of resources whose allocation can induce the work involved in designing and internalizing procedures that ultimately produce functioning institutions. In this respect, one issue the team bruited about was the size of the CDF funding, which seemed quite small given the ambitious objectives it is designed to facilitate. Malawian experience indicated that the amounts might be reasonable in the present political context, given the scanty local capacity for construction and financial management. Ugandan experience in this area may be different, and it might be opportune to test some alternatives in terms of the effect of size of funding on capacity development and effectivness in the evolving local governance institutions. Pilot projects are notoriously difficult to sustain against the well-known enemies of experimentation -- bureaucracies bent on standardization, political regimes bent on "upscaling" for political advantage, and a rational citizenry bent on acquiring whatever "good things" it perceives in the neighbors' compounds.

The concept and these two goals of the funds were quite well understood, both by headquarters and project staff. The two case studies' project staffs were equally aware of the need to use the leverage of the funds to build local level institutions, and institutional capacity, with long-run import for a functioning system of local governance. Both were also committed to the use of the program as a pilot that could serve the purpose of experimental testing of alternatives for use in the long term design of national systems of local governance, i.e. upscaling.

In the case of Uganda, the government agency housing the project -- the Decentralization Secretariat of the Ministry of Local Government -- had agreed fully with the idea of testing specific procedures in the four (soon five) project districts. In Malawi a politically-inspired decision to scale up had been taken on the basis of the outcome of UNDP-supported initiatives in its governance program, to which the UNCDF local development fund had contributed (see the case study). Nonetheless, the local project management unit sees the need to retain the experimental nature and design of the program, and thus to continue to use the six project districts to pilot new procedures and test alternatives. These aspects of project design seem to have been satisfactory.

4.2.2 Modalities of Formulation.

The two case studies presented different styles of formulation. The Malawi formulation was done in close collaboration with UNDP's 5th country program and particularly its governance sub-components. It involved provision of technical assistance for the finalization of planning system documents to support the district level institution building taken as UNDP's major objective, under the rubric of District Focus.

The major approach was systematic reference to the field in terms of capacity assessment during design of a planning system; occasional stakeholder workshops (and more systematic meetings with individual central ministries/agencies) to attempt a technician-driven decentralization in the absence of forward movement on political devolution; the development of a District Development Office as the focal point of decentralized planning activity; and reference to sub-district levels to test out participatory methods, project identification and prioritization efforts, and various assumptions and approaches for the revitalization of the sub-district institutional infrastructure.

In Uganda, an effort to formulate the project in an iterative manner produced an institutional mechanism that incorporates district and sub-district level inputs into the evolving project framework. This is a District Advisory Group with members from each of the participating districts. The group makes the decisions about how the project proceeds, giving the district councils some degree of "ownership" of the project and reducing the degree to which decisions are communicated in top-down fashion.

The team passed up the chance to watch the initial formulation steps for a fifth "add-on" district in the field, in Kotido district, deciding to focus more closely on the districts already further along towards beginning implementation. An NGO (World Neighbors) was hired to develop the "communication framework" for the project, basically the strategy and terminology for conceptualising the project in locally relevant ways and proceeding iteratively, as well as for providing capacity building assistance.

Queries in the field suggested that the overall process for the initiation of the project were well understood and the district and sub-county councils were eager to begin. Some potential implementation issues, including mechanisms for ensuring sustainability and the monitoring efforts that are needed, were discussed with council staff from two of the four districts. The responses indicated less clarity about whether or why these were of concern or how they would be addressed. In other words, the details have yet to be worked out in practical terms, and it will be of interest to see how the District Advisory Group perceives, considers and resolves these.

We elicited one uniform response in these two very disparate projects which does shed some light on project formulation. In both countries the closer we got to the grassroots -- admittedly, only the district level in Uganda (although one team member has interviewed previously on similar subjects at sub-county and parish level) -- and at village level in Malawi, the clearer the message that local government and project identification, implementation and maintenance are not new processes. They are processes that the communities have undertaken for a long time, through good times and bad (and western system designers cannot truly understand the full implications for local sensitivities of the bad times in a place like Uganda). These societies have grassroots institutions and procedures.

Donor projects then introduce a whole new set of concepts; in most cases these are actually conditions, and they increase and change with great rapidity. There is a clear sense of offense taken at the requirements to adopt a whole new set of procedures, community relationships, and terminologies. There are well-concealed feelings of being insulted by the rudimentary assumptions or lack of information about local practice that come out of the questions of visiting external project staff, including host country nationals from the central bureaucracy.

The lesson here might be that although institution building is a critical objective, going further and mandating the characteristics of desired institutions and their output -- participatory, gender-neutral or compensatory, poverty-focused, non-hierarchical, apolitical, financially sustainable, environmentally sustainable, accountable, etc. etc. -- is counterproductive. It's insulting. It obliquely criticizes everything about the grassroots procedures and traditions of the communities in question, either by implying that the "new" way of doing things (participatory) is better and the communities' ways unsuitable, or by simple ignorance of the intricacies of local process.

This is not to argue that traditional institutions and procedures are satisfactory. These "new concepts" are important to the construction of local governance institutions that are transparent and effective, over the long run. To make them a part of the initial conversation with the communities, however, and build them into the conditions and processes for project identification and funding, is perceived as patronizing -- as imposing a blueprint from above, quite the opposite of the projects' stated goals and just like the old-style "blueprint" approaches that failed.

The logical conclusion, on the part of local communities, is that the donor is playing a game, that the community needs to learn the rules of the game and play it as well as or better than the donor, and that those who play it best attract the largest portion of the funding. The outcome is the ultimate failure of the project's institution building components, although we can't ignore all that totally deteriorated, donor-funded infrastructure either, whose sustainability was "ensured" by some sort of donor procedural gimmick.

While the team met with reasonable evidence that project concepts and terminologies had been internalized at district level, it is not convinced that the traditional grassroots methods of doing things have (in Malawi) or are about to (in Uganda) undergo significant change -- or that this should even be the objective, if institution building is (as the team concludes) the central objective. The team's conclusion is that less attention to novel methodologies in the formulation stage, and more attention to them in the implementation stage, would be beneficial to the chances for successful institution-building.

4.2.3 Design of Institutional Mechanisms

The two case studies confront radically different environments with respect to the design of institutional mechanisms. For Malawi, the problem has been political paralysis over the design of institutional mechanisms for local governance. The initial commitment to a piecemeal deconcentration, vesting increased sectoral responsibilities with the ministries' district level staff, has proceeded at a glacial pace. The explanation is given that capacity for fleshing out the precise division of such responsibilities -- and more importantly, the ensuing resources -- is not available, central ministries being stretched too thinly.

District Development Committees were constituted in the UNDP pilot districts, but with a rather odd, truncated political membership -- Members of Parliament, the Chairman of the Local Council, the chairmen of the local political party branches, the Chiefs of the Traditional Authority areas, (a hereditary, not elective, office), and two representatives of NGOs. Only the MPs are truly elective and they have the national parliament for a forum; local elected councilors are not members. Lack of forward movement has been underscored by the continued deterioration of the local councils, whose elective terms ran out two years ago with the Government deciding not to hold civic elections until the time of the general elections in 1999. A complete restructuring with much greater devolution to a District Assembly has been proposed and received favorable hearings, but it is not clear that it will be enacted into legislation, or if so, when.

Consequently, the project's ability to move forward with institution building on the national level for district focus is stalled. Paradoxically, there is therefore considerable scope for local level institution building and experimentation. Project Implementation Teams comprising district executive committee members (the technical staff) have been constituted and assigned to liaise with the sub-district institutions -- area development committees -- to elicit project proposals, profer advice and assistance, disburse funds and materials, and to supervise and monitor implementation. District Executive Committees have been asked to propose and undertake varying methods for proceeding, including for example disbursement of funds directly to the communities implementing projects, rather than through district treasury cashiers and sectoral ministry channels. (This is and experiment with the Bank's social adjustment fund's approach, about which many district staff profess considerable skepticism.)

Given the lack of a blueprint for the way forward, much potential for testing alternatives is possible. A challenge for the Malawi project is the identification of further implementation-relevant alternatives to test in the pilot districts. These might include different methods of getting technical assistance to Area and Village Development Committees (including subcontracting NGOs or the private sector); increasing the percentage of overhead that District Executive Committees are allocated for supervision (presently 5%; possibly not enough to sustain their interest); experimenting with community income generating investments in one or two districts with well worked-out proposals.

Lessons learned infrastructure. The main area in which the team found a curious gap in the institutional mechanisms in both cases was the area of capturing lessons learned. For Uganda, presumably the Project Management Unit and the District Advisory Group between them will be responsible for drawing these out. The team did not discern a clear assignment of responsibility, although this may have been our own shortcoming. Given the commitment of the Permanent Secretary to the experimental potential of this pilot it seems to the team that the project needs to give more substantive attention to designing a "lessons learned" infrastructure.

There are several aspects of such an infrastructure. UNCDF needs to be able to derive institutional learning from the Uganda project at one level of specificity and focus, primarily relating to the management of stakeholder commitment to a common approach to the local governance system and supportive inputs, as well as to the retention of Government's commitment to pilot program objectives. The Ministry of Local Government/Decentralization Secretariat need to be able to draw lessons at a different level of specificity and focus, relating to procedures for funds allocation and the supervision by districts of sub-district project implementation, in the varied situations and differing capacities of Uganda's local councils. There are no doubt other foci for drawing lessons, both institutional and implementation procedures.

The "lessons learned" function is not simply a matter of identifying the opportune person(s) to task with the responsibility of extracting such lessons in post-hoc fashion and writing them up. In fact, the ability to draw systematic lessons from the pilot experiments being undertaken has upstream implications: it should rest on pre-implementation specification of at least some hypotheses or experiments, and it should be built into the monitoring and evaluation system.

Further, a "lessons learned" capacity needs to consider the critical downstream issues of audience, packaging and wider dissemination to the practitioner universe. While the standard output of a project when it reaches the terminal stages and the realization dawns that documentation should be forthcoming is to write up a case study and publish a glossy, popular version of the same with nice photographs, this is not very effective in getting the substantive lessons into the practitioner community. By this time in the project's life cycle, it is in the "golden years", so to speak, and the emphasis is on the positive outcomes rather than the true learning of lessons that may have occurred, many, or even most, of which relate to the unanticipated, the

ill-considered, or the positively alarming aspects of implementation.

UNCDF needs to have a more strategic approach to the production and marketing of lessons learned. Pre-implementation hypotheses or alternative strategies being tested should be identified; a rudimentary indication given as to how they will be judged as better or worse during implementation (this can never be wholly determinate); a monitoring and evaluation method indicated; responsibility for both the monitoring and the turning of it into comprehensible lessons learned allocated; and the target audience identified.

This is not to suggest that UNCDF's local development funds do not produce useful institutional learning, or that Uganda will not do so, or that Malawi has not. The issue is systematization of such learning as an organizational key objective which tends to take second place to project formulation and the inevitable stresses and crises of implementation. In the final analysis, a pilot project is only as good as the lessons that come out of it, and these are only as valuable as the impact they have on the intended audience. Lessons learned infrastructure needs greater development in the agency as a whole.

4.2.4 Spread and Phasing.

The spread of project activities is in many cases a political football. The choices of district in Uganda, while they may have been politically inspired, do allow for a good variety of settings in which to pilot procedures and determine whether institutional capacity is sufficient, or in what ways it is lacking. In Malawi, the choice of districts was based on poverty indicators more than politics. However, politics has forced a premature upscaling which the project is side-stepping by continuing to rely on the six project districts for further piloting. The mission found the geographical spread and phasing satisfactory, and more realistic than in other donor projects with which we are familiar. Our main concern was with the number of different types of activities the projects are attempting to undertake, and whether they are realistic in view of resource constraints, most particularly staff shortages in the relevant government units.

4.2.5 Allocation of Funds

Allocation of funds in the two cases is quite different but both have followed the preferences of the host countries. In Malawi the funds were initially allocated equally to the six districts. This meant very unequal per capita allocations since the six Local Impact Area districts in which UNDP and UNCDF are jointly pursuing the district focus strategy are vastly different in populations. Mangochi, for example, has nearly a million people, while Nsanje, in the extreme south, has about a quarter that many. In subsequent allocations the project has indexed the allocations to population.

Uganda, on the other hand, is allocating funds for the first phase of the project on the basis of the Government's allocational formula, which involves an index composed of population, infant mortality, population density and one other item (school enrolments?). From the district level, the allocation then proceeds according to the legislatively mandated algorithm -- 35% of funds are retained at the district council level, 65% passed on to subcounties. It is not clear what this will mean in practice since there are widely differing numbers of subcounties across districts, and the project imposes conditions project for them to meet to qualify for funding, which may well not all be met at the same time. In that case, it is not clear how the amounts "due" to specific levels will be determined at any particular point in time. Subcounties are also required to pass on 30% of their share to the parish level.

Uganda's project document makes reference to performance criteria and the need to satisfy these to qualify for second tranches of funding, but it is not clear if performance criteria will be used to determine the actual size of the allotments. The team recommends that thought be given to incorporating performance criteria into the determination of the size of allocations. This worked well in Kenya in inducing institutional capacity in the district treasuries, and it permits sliding scales that adjust the reward to the base from which the council is starting. The "flat rate" method of allocating funds is preferred by most local governments until they have actually seen the advantages of performance-based allocations, but the flat rate generally introduces numerous types of inequity and disincentive.

A final point on allocations concerns the tendency toward fragmentation and equity that characterizes rural Africa. The potential for capital development is quite lost when allocations are divvied up among dozens of subordinate units to appease the powerful drive for equity. This is likely to be more of a problem in Uganda than in Malawi, but it should be monitored carefully.

4.2.6 Scope of Technical Assistance.

The scope of technical assistance seems fairly narrow and not as well-focused or creative as might be hoped, consisting primarily of external consultants engaged to design planning systems/ manuals (Malawi) of somewhat equivocal relevance or utility; and a combination of external and internal resources to design and implement the "participatory" elements of project formulation, both centrally and in terms of local level institution building and project identification, in both projects. At least three other areas in which technical assistance might be useful suggest themselves:

The team fully supports the notion of "participation" in the abstract in establishing ownership over facilities and institutions, but agrees with recent reflections of the East African regional adviser that the idea of "participation" has not been carefully enough considered. The team agrees with his view (while hoping that we are not misinterpreting him) that there is need to consider the opportunity costs of participation in concrete terms.

More thought should be given to where, in the processes of institution building and project identification and implementation, participatory tools might be most strategic; and where, on the other hand, the zeal for grassroots participation may be counterproductive. For example, the team found evidence of inadequate budgeting and training for the participatory process of project identification in Malawi, which was part of the capacity building efforts undertaken. Staff claimed they had had better introductions to participatory methods through other projects.

It found evidence as well of the rote assignment of self-help contributions to the community as the persisting view and modality of "participation" at the village level in Malawi, and predicts this will be the case in Uganda unless a great deal more training is done. The need for substantially more training raises the question of cost-effectiveness. To assume that a few three day workshops on participatory methods and field training on "participatory tools" will overturn age-old patterns of labor allocation and deference seems naive. While textbook ideals of participatory appraisal may be attained in a handful of pilot districts (but not without substantially more resources than the LDFs are presently devoting to the effort), they will not be replicated at national level in the short or medium term, given the costs involved. A more strategic focus on participation seems advisable for reasons of sustainability.

Our recommendations are for a sharper, more strategic focus on participation which stresses:

-- national identification of key stakeholders in the LDFs' main areas of objective and their incorporation into project formulation and design. Participation at national level is critical to purchasing the commitment, however unenthusiastic, of the key stakeholders with real power to facilitate or obstruct UNCDF's program and objectives -- host country central government agencies, NGOs with substantial local investments, and key bilateral donors.

-- attention to the practical district/commune level issues with respect to participatory fora: who? how many at any one time? with what expectations for output? with what recognition of or strategy regarding cultural aspects of "participation", especially in public?

-- attention to village level ideas about what constitutes participation, with a view to whether it is in fact counter-productive or extractive and likely to remain so in the face of inadequate institutional counters at that level, where project and even district staff may appear only rarely

4.2.8 Procurement of Goods and Services

The team did not address this issue with respect to procurement by national project staff of goods and services under project agreements. There would be limited experience in Uganda thus far, and in Malawi there is a slight complication because of the delay of disbursement of UNCDF funds on grounds that conditions for project implementation were not achieved.

In terms of procurement of goods and services by beneficiaries from the local development fund once disbursed, some standard issues arose. In Uganda, where district level accountability has been a very troubled issue since the rapid devolution of recurrent funding to the districts over the period 1993/4-1995/6, the institutional infrastructure is in place for full control over local funds, from receipt through disbursement, accounting, and auditing.

Capacity, however, is said to be weak, especially at sub-district level where bookkeeping skills are sometimes scarce, let alone the broader skills involved in financial management. In addition the major players on the donor side have found a lack of systematization of accounting systems and procedures, a fact which the Ministry of Local Government disputes, claiming that the procedures are clear, documented and standard, but that capacity -- i.e., training -- is the main lack. The Bank is providing assistance to test and standardize procedures, arguing the problem is at least as much a lack of these as a lack of skills.

However, in one of the project districts the team visited, we were assured that the real issue was not the accounting skills -- in their view, the accounting procedures were present and clear (though not completely consistent with what the Bank considers a "national accounting system") and the personnel in place in that particular district (Mukono) were capable, even at the sub-county level. In their experience, the issue was the lack of "perfor-mance" audits -- physical checks, value for money audits, and the other procedures for determining whether quality of construction or service provision was up to the tendered/designed standard; whether the materials paid for matched the materials actually supplied; and whether these were consistent with what was used in the facility.

The team pursued this topic in discussions at the sub-district level in Malawi and found that there was some capacity for community monitoring, but that it was insufficient. Project designs might need to take account of this slightly more nuanced view of the needs for both capacity building and supervisory overheads in terms of "accountability" in the procurement of goods and services in LDF funded projects.

4.2.9 Scope of projects funded.

There seems to be a wide variation in the view of the appropriate scope of projects funded. The team can only comment on Malawi, since the project has yet to begin implementation in Uganda. In Malawi, the team found the scope of projects funded very narrow, and a fairly substantial amount of criticism of this from the district level institutions. In Malawi, because of the existence of at least four main local infrastructure provision programs, all with slightly different foci and substantially divergent management structures, but all stressing community contributions in the projects at around the 25% level, the phenomenon has rapidly become one of "brick-driven development" and is overwhel-mingly focused on provision of school infrastructure. Boreholes are a second modal choice.

Few other projects are identified, and generally those few are also "brick driven". That is, the communities have now internalized the "fact" (which is actually not correct with respect to the LDF program in Malawi, but which is nonetheless taken as gospel by community leaders) that they have to have a cache of bricks on hand to show the project appraisal team when it arrives, before they will be considered for funding. Schools are the pre-eminent local facility for which bricks are a standard input that the community can supply; schools are the greatest number of projects identified, at around 75% for all of the relevant programs, according to anecdotal evidence. There is a tremendous lack of school infrastructure, so the educational sector can productively ingest this narrowly-focused scope of projects for the foreseeable future.

Some communities have now learned that bricks are not mandatory for the UNCDF projects to go ahead and have taken to reallocating the bricks to another project identified for the locality for which they are applying to another donor. It can only be a matter of time before some enterprising soul accumulates a collection of bricks that can be hired out for the occasion of project appraisal team visits. However, brick-driven development is the antithesis of the planning-system led development which the CDF program in Malawi feels is central to significant institution building. The team agrees. It is also extremely unclear how "participatory" or equitable (as opposed to extractive) the allocation of responsibilities for producing the bricks is, since allocating these responsibilities is done by the (unelected) village headmen in at least some cases, and making the bricks is frequently done by busy rural women.

Both district committees visited were of the view that CDF funds should be available to finance income generating activities with capital investment needs, not just social and economic infrastructure. They felt that the long-term sustainability of social and economic infrastructure depended on building a local capacity to generate revenue, and income generating activities were more likely to be able and available to them in this way than the standard social infrastructre. Thus, educational fees (which have now been abolished in Malawi) and health cost sharing are items over which central governments inevitably maintain tight control, whereas the proceeds from local improved markets, fish landing depots and processing facilities, milk coolers, maize mills, and the like can be more easily allocated to local government institutions.

These are precisely the type of local economic infrastructure that is most conspicuous by its glaring absence in Malawi: the market infrastructure is virtually non-existent. Further, the history of exploitive private sector (or parastatal) domination of these kinds of economic infrastructure do not bode well for the early development of responsible and competitive private sector supply. A program of local government provision of these kinds of economic facilities, with a view to early privatization as responsible private sector capacity emerges, could be the most strategic approach to the revitalization of district councils, which are currently being run administratively in Malawi.

Uganda might provide useful lessons in terms of the privatization process. Ugandan local governments began privatizing some years ago, and a few have had outstanding success in stabilizing their revenue and increasing it ten-fold in this manner. Not all are so successful, but lessons are being learned -- or should be learned. The mission felt the avoidance of community income generating activities was a mistake, as long as there were clear commitment to private, competitive management arrangements.

The issues here are really whether income generating activities on an individual basis should be entertained (the team thinks not; there are plenty of micro-enterprise efforts with a comparative advantage here), and where a project shades off from being community economic infrastructure to being potentially viable individual income generating activity. The answer cannot be general: Malawi's dearth of economic infrastructure and pervasive poverty are quite different even from Uganda's, let alone a wealthier country like Kenya, and the economic and social infrastructure relevant to the answer to this question must differ even more strikingly for Asia.

4.2.10 Sustainability and Self-Reliance.

The team was particularly concerned about sustainability and raised the issue at several levels. It is an important concern both in terms of the sustainability of the system being designed -- by inference, the institutional infrastructure being induced or strengthened -- and in terms of the sustainability of the capital infrastructure provided under project funding.

Sustainability of the institutional infrastructure. Our main concern in this regard are the hidden costs that frequently attend the system being designed, especially those related to participatory project identification and appraisal and to effective monitoring of project implementation. Project implementation in Malawi is supposed to be carefully monitored by the Project Implementation Teams from the District Executive Committee, to ensure that the infrastructure provided is actually underway, that quality is acceptable, that materials are being kept secure, that accounting records are being kept, etc. A 5% overhead is the standard "fee" out of the total project allocation which the District Executive Committee can use for all of the supervisory, monitoring and evaluation efforts required.

The impression was given by the DEC in Nsanje that this amount was insufficient, and that it was unreasonable to expect satisfactory monitoring without substantial sums for fuel. In Uganda, the same item may be even more costly, given the need for district level committee staff to travel to the numerous sub-counties to assure themselves that the minimum conditions the project has set for inception at sub-county level are met, before disbursing funding -- and then the shouldering of similar supervision and monitoring responsibilities.

Of course, the projects can reallocate funding to take these needs into account. Overhead can be increased. However, it is not so clear that the post-project situation, wherein the local governments will have to shoulder these costs, will find them so willing or able. This is an area in which experimentation by both projects could be useful -- assessing the real, "zero-based" costs of supervision and monitoring, to the extent these are an integral part of the system that is being built. Other projects' documents and "lessons learned" compendiums should be reviewed for the same type of information. Local governments need to know something precise about the costs of doing business in the fashion that a project is piloting, as compared with other ways. If the costs are too high, the institutional infrastructure may continue on paper, but it will not function effectively or to the purposes for which it is designed.

Sustainability of the physical infrastructure. Long-term sustainability of the capital infrastructure provided under UNCDF funding is also a critical issue. The countryside in many developing countries is dotted with underutilized infrastructure, half finished, poorly staffed or unstaffed, with major missing ingredients -- water supplies, access, sanitation. While it is impossible to plan capital infrastructure on a full-cost basis in most countries, given the realities of scarce resources and the degree to which most of them are currently operating on a "cash budget" basis under IMF conditions, there is for that reason a need to consider long-term operational funding implications, the potential for phasing, maintenance needs, and life cycle and replacement needs.

Some minimum level of assurance of adequate operational and maintenance resources should be a central concern of UNCDF capital investment funding. Bilateral donors have traditionally assured themselves by having signed agreements with the relevant central ministry officials committing it to taking over operational and maintenance expenditure. Central ministry commitments are in some sense counterproductive for UNCDF in its focus on building self-sustaining and authoritative local governments, although they are inevitable in such cases as Malawi in the short term, and better than nothing. Some other ways of looking at this need to be explored (and perhaps have been in other CDF projects).

The team asked repeatedly about this issue at district level in both projects. The responses were not completely encouraging. In Uganda the district staff in one of the two districts dismissed this as an issue at all, claiming that the districts already are concerned with operations and maintenance funding considerations and that the CDF funded infrastructure would be fully integrated into the district's budgetary processes, which have been heavily focused on operations and maintenance expenditure. They did not go so far as to suggest that subcounties would be prevented from planning and implementing infrastructure projects that the District Council felt would put an unsupportable strain on the recurrent budget, but the general conclusion was that District Councils do have the right to profer more than just advice if the recurrent implications of subcounty investment would place any call on district level resources. (Which include all salaries).

Given the existing tight resource constraints on Uganda's district councils (mostly tied funds, no "equalization" grants, very poor recent local tax collections, and a further decrease in the percentage of local tax sent to the district from the subcounty), this level of assurance may be overly optimistic. On the other hand, this is probably the wealthiest district in the country, with the most experience at local resource mobilization, and it may in fact be able to handle the CDF long-term operations expenditure claims.

The other district visited indicated more frankly that there could indeed be problems about sustainability of project-provided infrastructure over the long term if the level of planning capacity at subcounty level was not greatly improved, or if the subcounties took the political approach of pushing project recurrent implications up to the district level.

In Malawi, the same discussions were pursued relentlessly. The general response from the first district visited, from both the district and area action committee, was that once the capital infrastructure was up, the issue of staff salaries was one for the central government. The communities themselves are supposed to assume the responsibility for maintenance, and to establish a fund for this purpose. Maintenance, it turns out, is just that -- keeping the place clean, orderly, painted, and repairing broken windows and damaged roofs. This the communities can and are pledged to do.

But the real recurrent responsibility for operations is the central government's. It is legally required to assume the staffing and operations requirements. The idea that it might eventually face a situation where it could not meet these, in the short term, whether the law said so or not -- or might refuse to, in the time-honored way of interminable delay in staffing or providing the necessary equipment or supplies -- was simply refused by all respondents. The Government could not do that.

Yet the team's experience from Kenya, with its aggressive harambee efforts of the 70s and 80s that provided significant amounts of social infrastructure, is that Government can indeed do that, and does it all the time.

In the other district visited, the discussion was carried on at a DEC meeting with the director of the Decentralization Unit in attendance. This meeting clarified the fact that in Malawi, most of the projects being identified and prioritized under the present CDF facility are school infrastructure, and most of that is "gap-filling" infrastructure for existing schools with teachers already in place. The team's fear of insupportable recurrent burdens in this case are unwarranted.

On the other hand, the Ministry's Decentralization head indicated that for one or two other sectors this problem had already been encountered -- clinics built had found no staff, since the production of qualified health professionals is much more expensive and time consuming than teachers. So some thought needs to be given to the mechanisms for ensuring satisfactory capacity utilization of the CDF-provided facilities, i.e. acceptable operation and maintenance funding (ultimately including the planning of deliberate replacement and renewal), and not just the expression of commitment by the communities to manage and take care of minor maintenance and repair.

Long-term Finance Mobilization and Management. This leads the team to suggest that some technical assistance ought to be applied to the development of capacity in long-term financial planning -- looking at alternative scenarios for local resource mobilization (taxes, cesses, privatization of council managed or owned facilities, development funds, etc.), developing locally-relavant indexes for the ratio of capital to recurrent expenditure over time, and the like. UNCDF might consider tackling this as a high priority issue in the course of program implementation and targeting it at discussions with the responsible financial sector stakeholders -- the Ministry of Finance, the commercial banks, Chambers of Commerce, the Bank, and bilateral donors who are invested in local infrastructure development.

No two countries are the same, and the sustainability issues vary enormously from one to the next. But it is not feasible over the long run for local capital infrastructure -- no matter who provides it -- to be sustainable without attention to the macro-environment with respect to local government finance. The tendency for provision of technical assistance in this area is for it to come from the Bank or other IFIs and to focus almost exclusively on municipalities or medium size towns, with taxable property bases. The needs and the potential resource base of rural local governments are fundamentally different.

4.2.11 Scaling Up Strategies.

Scaling up strategies seem to the team not to be within the control of UNCDF projects. Scaling up decisions are made by central governments with at least some political motivations. At best, the CDF projects can provide sound advice on the costs of the implementation system they have built in the project areas so that governments are not totally unprepared for these. They include especially the costs of supervision (fuel and subsistence) and of adequate training in project formulation, monitoring and accounting at several levels of government. These costs can be overwhelming when the numbers of local government units below the district level are totalled.

Uganda. Scaling up in Uganda in some senses took place before the project was conceived, let alone formulated. The devolution of major responsibilities and funding to the districts had taken place just before project formulation. Unlike many other efforts this devolution involved the recurrent service provision portfolio, not the development budget. The project is thus in a strategic position to pilot the procedures for devolution of development funding, but with the political institutional infrastructure for autonomous local governments already in place. Further, the national execution agency is committed to the pilot project approach in order to learn lessons to use in scaling up development funding and in developing procedures for the district councils for effective financial management. A project portfolio of four districts was chosen, regionally balanced and incorporating other useful differences for experimental purposes.

One further district has been added to the bag. The team is not aware whether this was on the basis of political pressure, but assumes that it might have played at least some role, and that such pressures will continue or increase -- to add districts when the successes of the five emerge. The team would urge that CDF not fall under the spell of these sometimes extremely cogent pressures and arguments, holding to the initial four (now five) districts and the pilot project approach. Scaling up in Uganda should involve tranferring the procedures developed to both the Government of Uganda and the interested bilateral donor community, rather than undertaking investments in new districts.

Malawi. Scaling up in Malawi is also now underway, despite the fact that the CDF portion of the project is just in mid-stream. (It had earlier UNDP funding and some of the important elements that the Government of Malawi has chosen to replicate come from this earlier phase). The Government has a clear political objective in forcing the pace of the scaling up effort, since it needs to work hard toward getting re-elected in 1999. So the legal framework for empowering local governments remains stalled while the administrative lessons being learned from the UNDP effort, to which CDF has contributed, are being used to scale up a technical development planning and implementation capacity.

The UNDP/UNCDF staff have determined to continue piloting procedures relevant to this administrative capacity and to continue with the six pilot districts, undertaking experiments based on the differing approaches of other donors in the small scale infrastructure development domain. Here, the Government is drawing heavily on the institutional developments that have been developed in the six UNDP districts, so the project(s) can be said to have contributed centrally to scaling up.

Yet, is there adequate information from the project about the operational costs and capacity requirements Government is likely to face? These, in the team's view, are the major input the CDF funding projects can have toward scaling up and toward making clear the financial and manpower implications. In Malawi, the already drastically overstretched government capacity is unlikely to replicate the six districts' procedures satisfactorily. This point has been made to the Government by the Decentralization Unit, and agreement reached at least in principle to phase the scaling up administratively according to what is feasible in financial and personnel terms.

4.2.12 Design of Monitoring and Evaluation.

The team's conclusions about monitoring and evaluation systems, and their design implications, are treated in section 4.5, below.

The project designs seemed to the team to be quite flexible, especially given the mutually agreed pilot mode of both field cases and the commitment of the executing agencies to use them to test alternatives. In Malawi, the head of the Decentralization Unit's effort explicitly requested the district executive committees to make an attempt at testing alternative ways to proceed. He suggested some experiments to them and indicated others that were being undertaken by project districts. In Uganda, the Permanent Secretary, Local Government expressed the explicit desire to use the project in a testing mode.

Whether this can completely guarantee flexibility remains to be seen. It appeared that in a few areas the projects were less able to change the design -- e.g., in terms of the type of infra-structure funded (ruling out income generating infrastructure, for example), although even here it sounded as though one district was going to be allowed to experiment with this after making forceful representations of the validity of their approach. If anything, the team fears the long-term problem may be an overly flexible design which "bends" to accommodate experiments without thinking through the rigors of having appropriate "control" variables in place, such that the outcome of the design alterations can actually be evaluated.

4.2.14 Project Design Recommendations

The Mission proposes the following five design recommendations from this overly-lengthy discussion.

1. Political economy of local government. Projects should be appraised initially on the basis of a realistic political economy assessment of the likelihood of constructing sustainable local governance institutions in the particular case, with reasonable devolution of responsibilities and resources.

2. Infrastructure for learning lessons. Projects should be designed with attention to institutional mechanisms for capturing lessons relevant for scaling up, including a set of initial hypotheses about the experimental strategies being attempted. It will of course be the case that many more will be identified during the course of implementation, and the experiments may be entirely recast as experience is gained. Without articulating the procedures being tested and the possible outcomes, it is very difficult ever to actually capture concrete lessons.

3. Monitoring and evaluation. Monitoring and evaluation systems should be part of project design. These also will change greatly during implementation, and they shouldn't be overly designed, but there needs to be a clear notion of what monitoring will be done to determine whether the procedures being designed are actually cost-effective and sustainable. The Uganda project did devote considerable attention to monitoring and evaluation. If UNCDF intends to stress the impact of projects on poverty alleviation, it is also necessary for poverty indexes to be identified and built into project appraisal and the monitoring of project benefits.

4. Sustainability. Attention to sustainability of both the project's procedures and of the capital infrastructure being provided should play a much more important role in project design. It is not as straightforward as these two cases suggest, or rather as their host country managers seem to assume.

5. Financial resource mobilization and management. In the long run the mission felt UNCDF will have to explore ways of providing assistance on financial resource mobilization and management, perhaps to relevant central government units supporting devolution. Local government cannot operate sustainably without resources, and central transfers do not provide the motivation for commitment, ownership and effective financial management that is required to sustain capital social investments.

Our review examined only briefly the issue of complexity and its implications for management, one of the implementation issues discussed below. Both field projects did manifest certain types of complexity that might make it difficult to convey their objectives in a clear, prioritized fashion to field staff. In Uganda, the project document seemed to the team to present the project in an overly complicated language. Certain terminologies were employed that no doubt are well understood by central project staff -- "communications framework", for example -- but which might not be easily conveyed to subcounty councils. The Uganda project has already experimented with employing an NGO to assist in developing that communications framework in a "field friendly" manner. Further efforts along these lines might be necessary. A graphic representation of the flow of project funds, for example, was both useful to the team and somewhat challenging to interpret. Simplification should be attempted.

In Malawi, the problem was less one of an overwritten project document and more one of too many activities with too few staff to manage, assist, supervise, monitor and evaluate them. There is enough to do to design a functioning district-subdistrict council system, information flow, project monitoring and evaluation criteria and system, in support of capital infrastructure investments. To try to add a planning system to that seems overly ambitious.

The team reviewed the plan documents and found them quite complex and demanding in terms of paperwork. Further, the planning process is not fundamentally tied to a realistic budgeting process, which could have negative repercussions if ambitious plans are laid and little is accomplished. In addition, a national data bank is being worked on, in support of the planning functions. The team was not convinced that all these activities could be satisfactorily pursued by the existing project staff.

The key issue in a project that undertakes many different activities, such as both of these, is to ensure that the activities are complementary but independent. That is, it is acceptable that planning, training, and system design activities are all pursued in tandem. But if these are tightly integrated with each other such that the outputs of one are essential inputs into the other(s), or they are all closely interwoven, then the delays and difficulties ramify throughout the project. We all theoretically learned this lesson in the era of integrated rural development projects.

In sum, the projects need to guard against the tendency to attempt to solve problems in areas of central concern by identifying new activities that could be undertaken, unless it is clear that these activities are within the mandate of the relevant host country organization and that the latter is both able and willing to devote adequate resources to them.

The team was asked to focus particularly on implementation issues arising or likely to arise. Many of the issues discussed above under the general project design category have implications for implementation. These have been discussed in those sections and are not repeated here.

4.4.1 Management

4.4.1.1 Ownership, Coordination and Synergy. Two differing degrees of ownership at national level characterized the two field projects. In Uganda, national ownership is strong, albeit primarily held by the Ministry of Local Government, which is in a fairly weak position vis-a-vis the Ministry of Finance. Whether the project had developed any strong rapport in Finance -- which is essential, given the reported critical attitude toward decentralization taken in Finance -- the team did not explore.

The impression was given that there was not a strong coordination within the UN family, such that UNCDF's effort was not seen as an integral part of the UNDP and UNICEF programs, although neither did they appear to be in conflict. It is too premature to assess the degree of synergy that will obtain in Uganda among the UN's efforts; linkages are currently being explored.

In Malawi, the project seemed to be "owned" by only the relevant unit in the Ministry of Local Government and seen as a UNDP effort. On the other hand, it had an informal network of ties into the Ministry of Finance (via the local Malawi staff at UNDP), which may prove ultimately as useful as the technical commitment at the upper reaches of Local Government in Uganda. Further, UNDP in Malawi seems clearly the focal point of much of the bilateral and multilateral donor effort, and thus able to give critical moral and material support to the Local Development Fund effort (indicated most forcefully in its provision of start-up funding when UNCDF delayed project effectiveness), and to pull the donor community into information-sharing efforts on issues of central importance to the District Development Fund and its institution-building goals.

However, institutional clout is not sufficient by itself to ensure optimal coordination and synergy, and this is an area in which UNCDF might productively spend some time and resources devising a strategic approach that does not rely quite so heavily on the informal networks and efforts of UNDP staff.

Both projects had about the same level of recognition at the district level: they were clearly viewed as one of a number of sources of project finance, both by district officials and by the beneficiary communities. To say that they were seen as any more special resource would be stretching things, although the creation of the District Advisory Group in Uganda may have increased the ownership vis-a-vis a select portion of district staff.

It is at the sub-district level that the projects, in terms of the capital investments made, have to be "owned" if our present assumptions about sustainability are correct. The team felt that the projects we heard about and visited were strongly supported by the local institutional infrastructure, i.e. the Project Committee we visited in Nsanje and the Area Development Committee in Dedza. We did not have the time to delve into whether the communities as whole, rather than a few individuals, really felt committed to the projects, which of course is the critical issue with respect to the likelihood of sustainability.

4.4.1.2. Manageability. Manageability is a complex function of the number of activities undertaken, the clarity of the outputs expected from them, the staff inputs and capacity available, other resource adequacy and the timeliness of its availability, and the ability to monitor, evaluate, and reprogram on the basis of interim evaluation. The project in Malawi is far enough along the road for some assessment of these and an overall critique of manageability.

Project activities in Malawi include the design and implementa-tion of a planning system, including both the identification, appraisal, prioritization, and implementation of a number of projects and the attempt to place them in the context of an overall district planning process. This planning process is itself quite complex and "heavy" on the side of the production of a plan document but fairly light on the side of relating this document to a resource mobilization strategy.

Other activities include the revitalization of a sub-district institutional infrastructure, including a strategy for meetings, decision-making, reporting and supervision; the training of officials at district and sub-district level on participatory methods and basic planning skills (and presumably financial management skills); the design and implementation of a national data base to "service" the district planning needs; the mounting of experiments on institutional and funding procedures and the drawing out of lessons from these experiments.

This seemed to the team a heroic effort and one which the resources were not clearly adequate to sustain. Suggestions for areas of priority and a narrower focus are given here, although the team is aware that our limited understanding of the situation on the ground may mean we are making suggestions which are infeasible or suboptimal. The Uganda project cannot be assessed in terms of actual performance yet. However, its goals seem equally ambitious, in a setting in which existing institutional capacity at sub-district level is weak to non-existent, and the additional factor of the Government of Uganda's keen interest in using the project may put additional, unanticipated stresses on capacity.

Manageability thus comes down to an ability to figure out a strategic focus and phasing for this overwhelming set of activities, to prioritize among them, and to set up separate mechanisms for dealing with them rather than burdening the same set of people with responsibility for many or all of them. The team proposes the following method for increasing manageability:

The team posed a set of questions about implementation issues to other projects via a faxed questionnaire. The responses (from Palestine and Mozambique) focused on these same issues, most notably the need to be concerned with financial resource mobilization for local sustainability of capital projects, and for attention to project costs of appraisal, supervision, and the like.

4.4.2 Coordination

The basic impressions the team received about coordination were indicated above. In Malawi, UNDP's central role in donor coordination is potentially very useful and has in practice led to the slow but steady march toward consistent donor pressure and advice on devolution. We do not have enough information on which to base any real assessment of synergy or the lack thereof in donor efforts; the most important of them, the various similar local development funds, are being treated as one large, extra-project experiment by UNCDF and other donors are looking keenly to the two models to see what comes out on the issue of financial transfer mechanisms. This may be the most important issue at hand, and its resolution is likely to produce useful outcomes eventually, although the host country field staff profess frustration.

In Uganda, donor coordination is pursued through a variety of fora but the one that has become institutionalized is the donor group on the social services, which has taken up decentralization as one of its areas of concern. Further, all the donors seemed to know who the key players were in various districts and vaguely how their approaches differed, or which ones were worth talking to. Donor coordination at the level of sharing information and general commitment to decentralization seems fairly solid.

It is at the level of practical issues that there is still some difficulty. The Ministry of Local Government has a newly-created Donor Coordination Unit (DANIDA-funded) which has however not yet got off the ground or defined clearly its strategy. DANIDA is exploring some ways to galvanize the unit into action. What the unit needs, in DANIDA's view, is a perspective on donor funding that emphasizes pointing donors in the direction of creative investment and experiment, with adequate feedback to the Ministry, so that the outcomes do contribute to upscaling, rather than the geographic reduplication of funds with divergent project designs in the disadvantaged districts which is the direction the unit is presently tending toward.

In spite of the time limitation, the mission was able to review important aspects of monitoring and evaluation. The team held discussions with project managers and staff in relevant institutions, including central government, local authorities, and project implementation committees. The mission was, however, unable to scrutinise closely all the necessary files and minutes

of various meetings. With these caveats we make the following observations, beginning with Uganda.

The Uganda project document, unlike the other project documents, has an extremely elaborate Monitoring and Evaluation Framework. The Framework identifies stakeholders, nature of responsibility for each stakeholder, the purpose of each activity, the frequency of each activity and necessary data and its sources. The framework also identifies performance measures/indicators.

The Monitoring and Evaluation Framework is technically sound and includes all the elements that one would expect in a document of its nature. However, the Framework, in our view does not fully come to grips with the capacity problem of the stakeholders identified. Clearly each of the tasks will have to be performed by a particular person within a particular organisation. In most cases the assumption seems to be that the existing capacity with some upgrading of skills will be able to perform the assigned tasks.

A second comment on the framework is that it seems to be a bit too elaborate, and this could conceivably deter those who are expected to work with it. Our observations in Malawi indicate that the complicated and elaborate components of the district planning system are simply by-passed by the district level field staff, who find them off the point (this is discussed further below); the best approach with monitoring and evaluation design, therefore, at least initially, might be to simplify the framework by reducing it to a few key questions for each tier of government and other organisations. Elaborations that are added later by the field staff themselves are more likely to command their attention and efforts. Thirdly the framework does not attempt to cost monitoring and evaluation, an issue that turned out to be critical in Malawi.

In line with the above, there is an urgent need to operationalise the framework within each stakeholder organisation. The first line of stakeholders are government ministries, in particular the Ministry of Local Government's Project Management Unit. The unit is expected to develop a National Monitoring and Evaluation Framework of its own in order to start capturing the policy lessons of decentralisation. The framework is not yet in place. In addition, the unit though fully aware of the data requirements has "little capacity for data processing and little traditional for using figures". Each of the other ministries is in the process of developing a Quality Assurance Unit. Of great future importance is the Local Government Finance Commission which will monitor district performance and is currently consulting closely with donors. In short, at the national level, there is evident awareness of the need to monitor and evaluate decentralisation though technical difficulties were evident even at this level.

It was the team's conclusion that the success or failure of monitoring and evaluation will very much depend on the capacity of the districts in the first instance. The National Monitoring Strategy is "to work with existing institutions", meaning that districts will bear the major responsibility. Thus, districts are "expected to flag policy lessons" to central government; to follow closely projects under implementation to ensure that they are not modified, shifted, or distorted; to receive and collate reports from lower tiers; and to generate the necessary planning data through district planning units. From our discussions with district teams we formed the opinion that the districts are putting emphasis on "using the existing system" as one way of demonstrating their readiness to start. In other words they are either deliberately underestimating their capacity for monitoring and evaluation, or they are not fully aware of their obligations as stakeholders. In our view it was a bit of both.

The level below the district -- i.e., the sub-county in Uganda and the Area Development Committee in Malawi -- is where monitoring and evaluation is likely to encounter serious difficulties, partly due to poor record keeping and the tendency of most rural people to carry a great deal of information in their heads rather than write it down and partly because the idea of keeping systematic information and updating it is not common or well-understood. In our view, the three most important sources of monitoring at this level are likely to be site visits, attendance at meetings and oral interviews of project committees. These sources of data should therefore be strengthened, the pencil and paper approach introduced fairly gradually, and the monitoring and evaluation efforts also made a part of the experimental design.

In summary, the Monitoring and Evaluation Framework as outlined in the Uganda Project Document should be tried but with a great deal of flexibility and with an eye to modifying it as implementation commences. Likely future problems are:

All key documents in Malawi do recognise the need for monitoring and evaluation though not as elaborately as the Uganda project document. These documents include the Malawi District Development Planning Manual prepared by the Ministry of Local Government and Sports, District Development Plans and District Socio-Economic Profiles. In addition, the government has embarked on a somewhat ambitious project of generating a District Databank through a very comprehensive questionnaire. This is a project of the Ministry of Local Government and Sports. The need for monitoring and evaluation has therefore been recognised at the national level.

For monitoring and evaluation the three most important institutions are the Ministry of Local Government and Sports, the District Development Committee and the District Executive Committee. Monitoring and Evaluation is actually built into the process of project selection, for which the District Planning Manual has provided 16 criteria (see Annex) against which proposed projects are to be evaluated for prioritization. In order to understand how monitoring and evaluation is expected to work one also needs to understand the project phases.

Figure I. SIX PHASES OF PROJECT

(1) PROJECT PROPOSAL FROM COMMUNITIES TO DDC

(2) PROPOSAL EVALUATION BY DISTRICT EXECUTIVE COMMITTEEE

(3) PROPOSAL PRESENTATION

(4) PROPOSAL FUNDING BY DDC

(5) MONITORING BY DDC AND DEC AND MINISTRY OF LOCAL GOVERNMENT

(6) FEEDBACK TO PROJECT

The most important project phases are 2 and 5. In step 2, the District Executive Committee is expected to visit the proposed project site in order to verify the details of the project proposal. Following the site visit the committee is expected to evaluate the proposal, on the basis of the 16 criteria listed, for presentation to the DDC. The mission found that this ranking process is rarely followed (see discussion elsewhere in this report). The Execution Committee uses its own "common sense" criteria and so does the District Development Committee in selecting those projects to be funded. The most important "common sense" criteria seemed to be "distributional fairness" on the part of the DDC, and "community contribution" and capacity of the local community to maintain the project on the part of the District Executive Committee.

The initial evaluation can therefore be termed as Socio-Political rather than technical.

Following the funding of projects by the District Development Committee, monitoring is expected to commence with the commencement of project implementation. The mission reached the following conclusions on this phase of the project:

What lessons can be learned from Malawi?

First the cost of monitoring and evaluation must be carefully thought out and built into the project design and costing. One of the biggest constraints to monitoring in Malawi is non-availability of transport. That is why the District Executive Committee, the body primarily responsive for monitoring, has tended to rely on the District Building Foreman for assessing the progress of the projects.

Second, monitoring and evaluation should not be conceived in rigid administrative terms. The Malawi situation shows that in spite of an absence of a comprehensive monitoring and evaluation framework, project implementation is proceeding reasonably well, though one can argue that not all lessons are being learned.

Three, as discussed in 4.8 capacity is a major problem affecting the seriousness with which monitoring and evaluation is being conducted. Some training has been provided to members of the District Executive Committees. This training is however inadequate either for human resources mobilisation or for technical evaluation of projects.

Four, monitoring and evaluation seems to be largely understood in the old sense of supervision missions which were not usually welcome by those being "supervised", and if they were welcome it was because they would bring additional resources. Along these lines the mission was of the view that the local project implementation committees were not fully aware that they were taking part in a pilot programme intended to yield policy lessons. The awareness will be a function of more interaction between the communities and other stakeholders such as government officials. A communication strategy is recommended as a means of bridging the gap between the middle institutions and the grassroots institutions through systematic feedback to local communities.

Five, it is the view of the mission that it will be a while, in both Uganda and Malawi, before reliable quantitative data is available. Consequently great care should be taken in designing, monitoring and evaluation frameworks at all levels of government, to strike a balance between quantitative and qualitative data. Qualitative data is especially important in assessing some of the "softer issues" such as the local communities' propensity to participate or to withdraw. The Ugandan framework makes an effort to try and capture this type of data. Others should do the same.

The team did not have enough time to address the sensitive issue of project staff capacity. Our focus was instead on the capacity of the implementors at district and subdistrict level of the projects funded by UNCDF, both infrastructural and institutional. Our conclusions on the latter are set out below. We feel that any serious assessment of staff capacity needs to look at the ability of staff at all the levels indicated to undertake experimental initiatives -- proposing them, indicating the methodology for determining how to measure "success" and "failure", how to draw lessons learned, and how to systematically present them in relevant stakeholder fora. UNCDF might want to engage a consultant with experience in staff capacity assessment for this purpose.

More than any other issue, except that of criteria for project selection, the issue of capacity featured prominently in discussions during our field visits. In Uganda it is a "Looming Question". In Malawi it is already a practical issue. The mission was not able to assess systematically the extent of capacity requirements but was able to assess where the capacity might be needed and in some cases the type of capacity required.

In both Uganda and Malawi, the ministries of Local Government are absolutely critical to the outcome of decentralised efforts currently under way. More specifically the Project Management Unit, Ministry of Local Government in Uganda and the Decentralisation Secretariat, Ministry of Local Government and Sports in Malawi are the two pivotal units in decentralisation policy, Evaluation and Monitoring.

Uganda

In Uganda the unit is in dire deed of technical assistance but is still discussing prior questions such as type of technical assistance needed, where the assistance will come from, who will decide on the necessary technical assistance etc. But even before these questions are settled it was clear that the unit needs additional capacity in data collection and analysis, monitoring and evaluation techniques, technical planning skills and policy analysis. The unit will also require the necessary equipment such as computers and the skills to utilise the equipment. This would be a good investment, given that the unit is well situated to advocate decentralisation as it has the ear of Permanent Secretary in the Ministry as ardent supporter of decentralisation in Uganda.

With decentralisation well under way, the general problem of low capacity will now start manifesting itself at the district and sub-country levels of government. One level where this is already evident is in District Planning. Several donors as indicated earlier in this report are providing support but one expects district planning resources to continue being stretched until more training is done. A complicating factor in Uganda is that, the training vote is still with central government ministries which still mostly handle training. This means that, the staff which mostly benefits from training are those in the ministries. And yet with decentralisation the Districts have inherited more responsibilities. The mission found that districts need capacity building in the following areas:

I. Financial Management: District officials have not in the past been fully exposed to financial management, including financial planning. They have usually been exposed to simple tasks such as handling vouchers. In addition to district officials, politicians need short courses in financial management since they will now be approving district budgets and receiving financial reports.

II. Planning: An appreciation of planning techniques will now be necessary for both district and sub-county officials. A common element in district plans is that, they usually goal at providing a description of the situation on the ground and providing a shopping list. They are therefore not yet feeding into the central and planning process.

III. Legal Aspects of Decentralisation: Officials at the district and sub-county levels need a goal grasp of the new constitution and the Local Government Act, which all need to understand in order to avoid endless disputes on rights and responsibilities. They also need to understand the Proposed Project Support Implementation Agreements which must be in place at all levels before fund transfers can commence. This is especially critical at the district level given that districts will now be central in providing the central government ministries, particularly the Project Management Unit, with the necessary monitoring data. This capacity is needed at both district and sub-county levels.

IV. Participatory methods: Of great interest to UNCDF is the process of enhacing participatory methods particularly at the lowest levels of governance. In this case the parish. The process of generating the UNDCF funded projects has, in the mission's opinion, created a huge appetite for participation. This appetite should be tagged through further training in participatory methods especially at the project level.

A complicating factor with respect to sub-county capacity development is the current situation where sub-county staff are district employees. In theory therefore, the district can pull them out thus further weakening the capacity at the sub-county level. A second complicating factor is that, the problem of capacity building is still being debated at the county and sub-county levels with the dominant question being: who will do what and at what level??

Malawi

Malawi's capacity issues have had time to manifest themselves practically since the commencement of UNCDF project activities in 1995. At the central government level, decentralisation is being hampered by serious capacity problems at two critical ministries. These are the Ministries of Local Government and Sports and the Ministry of Finance.

The Ministry of Finance is currently working on formal procedures for fiscal decentralisation. The decision for this is being done by the World Bank but does not appear to be moving fast enough. More relevant to UNCDF, formal procedures for handling District Development Funds have not been completed. As a temporary measure, Treasury Cashiers are now designated by the Ministry of Finance to handle District Development Funds. These cashiers need training in financial management in order to handle adequately this new responsibility. The Ministry also needs additional capacity to re-write the District Development Fund:Financial Management Manual which is now deemed too narrow. Furthermore, the ministry needs re-orientation from centralised financial management to decentralised fiscal management. A series of short training courses for key ministry staff are therefore necessary.

The Ministry of Local Government as stated earlier is the key player in decentralisation in Malawi. This ministry is responsible among other things for generating a national district-based data base, nursing the process of district planning and monitoring activities in District Development Funds areas. The ministry needs additional capacity especially in three areas:

Monitoring and Evaluation: The Ministry of Local Government is in three key monitoring and evaluation institutions. These are the quarterly meetings between UNCDF, UNDP and the Ministry Programme Steering Committees chaired by the ministry and attended by UNCDF, UNDP, and the Ministry of Finance and Economic Planning. Annual Review meetings at district level are attended by all line ministries, UNCDF, UNDP, the District Development Committee and the District Executive Committee. In addition, the Ministry is the recipient of the project completion reports out of which it is expected to draw policy lessons. The mission's conclusion was that the ministry needs urgent additional capacity for drawing policy lessons from all it's monitoring and evaluation activities.

More specifically we recommend that UNCDF provide technical assistance for this purpose. A complicating factor in capacity acquisition at all levels of government is that, currently recruitment for all positions has been frozen except for District Development Officers, District Human Resources Officer and Accounting Staff. At the district level, the districts have set up training sub-committees. The training offered usually consists of very short courses, lasting from a few days to a few weeks.

The team's discussions with district officials led the mission to conclude that further capacity is needed as follows:

District Development Committees: The membership of these committees is currently the District Commissioner as Chairman, District Members of Parliament, Chiefs from the Area Development Committees, 2 NGO Representatives and District Council Chairman. The Committees therefore do not have technicians as members, and this makes their consideration of project appraisals and prioritization difficult and lacking in attention to the issues that the District Executive Committees are supposed to use in the planning system being developed by the UNCDF project. All district staff, and in particular the Finance Committees and Tender Committees (which are currently staffed by civil servants since the District Councils are not functioning) need additional training in Financial Management and Tendering Procedures in order to fully understand the monthly and quarterly reports.

The District Executive Committee: This committee is made of technical line ministry personnel in the districts. The District Development Committee is highly dependent on it for technical advice. This is also the committee which provides direct technical link between the district and the projects. During discussions with these committees the mission was informed that, these committees are especially ill-equipped in monitoring and evaluating the "soft" non-technical aspects of projects such as the degree of community animation. Members of these committees therefore, need additional training in participatory methods, especially in targeting poverty. Currently they are receiving very brief courses in Participatory Rural Appraisal.

Local Development Committees: Under the current District Focus n Malawi, three layers of local development committees are in existence. These are Area Development Committees in each of the 25 districts. Below the Area Development Committees are Village Development Committees. The latter normally elect members of project implementation committees when they attempt to get funding for a project. In the view of the mission, training has not yet found it's way to the local development committees and yet these committees are crucial to proper project implementation. Members of these committees need continuous training in the following simple but important tasks.

In recognition of training needs at this level, Area Executive Committees have been formed with the major responsibility being training and technical advice to the Area and Village Development Committees. UNCDF needs to work with these committees.

In both Uganda and Malawi, capacity constraints need serious attention. Problems exist at the national level, the district level and the sub-district level. Of critical importance in our view is the capacity to recognize and monitor policy lessons, as well as the capacity to handle projects at the local level. The Malawi case suggests two things. One, local communities can handle project quite competently but the lessons are not always fully learned. This is a capacity problem. Two, Uganda could be underestimating the capacity problem with the argument that UNCDF projects will utilise existing systems. This is also true in Malawi but this has not made the capacity problem any less. Three and overall, UNCDF is right in making capacity building an integral part of the approach. It is quite clear to the mission that capacity needs to be built simultaneously with other project activities. This requires deliberate effort. In both Uganda and Malawi the tendency has been to assign new responsibilities first and worry about capacity afterwards.

The team did not have adequate time to examine issues of delivery. We asked subdistrict level project committees about the speed with which project proposals were handled, funds disbursed, and implementation undertaken if funded. In both cases the field visits indicated satisfactory performance, although there were the inevitable complaints about proposals which were not quickly responded to (this applies only to Malawi as Uganda has not yet begun implementation).

In part this is a function of the fact that LDF funds are only one of several resources against which proposals are made, and the district level team is likely to attempt to redirect proposals which do not fit the criteria for one source very well toward other programs. This leads to a delay in response -- rather than say "no" the district staff leave the communities in suspense, and the result is sometimes for the tentative community contribution -- the bricks -- to be appropriated by part of the community for another project if there is a delay ( or to loan out the bricks for other project proposals!).

The other issue we encountered, again in Malawi, was the preference of the communities for the MASAF procedure of disbursing funds directly to the communities, i.e. the project committees, because this shortens the time of delivery considerably, as well as convincing the community that it is getting all the money allocated, rather than having some portions of it retained by district staff for "overheads".

The team felt that impact, to the extent that it could be gauged during our field visits, was positive and was more closely tied to the institution-building objectives of the Local Development Funds Program than to poverty alleviation per se. We noted above the impact in Malawi, which however is primarily one of the consolidation of an administrative infrastructure which can channel local needs and information and project resources. This comprises the District Development Offices, the revitalization of the Area and Village Action Committees (the latter are reportedly still quite uneven as to their reality in the six UNDP districts), the Project Implementation Teams. Other projects are finding it easier to get their own activities underway in the districts with these institutions, especially the District Development Offices -- a sure sign that they are useful. We found little in the way of a systematic impact assessment, perhaps because we did not think to ask.

The Malawi Social Action Fund, by contrast, has designed an impact evaluation methodology and prepared documents evaluating its efforts to date. These seemed candid, well thought-out, and worth considering for the UNCDF project. The key would be to see whether local consultants could be found to undertake such an assessment. Malawi Institute of Management appears to have been commissioned to assess MASAF's program. Something far more modest would no doubt be in order for UNCDF, since the project is channeling far less in the way of funding but has more complex institution-building goals than MASAF.

Impact assessment in terms of poverty indicators in project areas should be considered if UNCDF is committed to this goal. The mission does not think it is methodologically very fruitful or feasible, but feels that the LDF program as a whole is vulnerable to criticism on this point. Our recommendation, however, would be to design a simple system for assessing the impact of institution building, as well as some standard impact indicators of numbers of persons served by infrastructure being provided.