Last mile financing for local development: Scaling a mini-pilot into a national programme
  • October 15, 2015

The platform for local governance in rural Bangladesh comprises of 4,500 Union Parishads, with populations of around 50,000, supporting small clusters or unions of villages. Much of government expenditure at the Union Parishads level used to be channeled via central grants over which Union Parishads have had limited discretion.

UNCDF, together with UNDP, pioneered the first fiscal decentralization pilot initiative in Bangladesh, implemented in one district. This US$8 million project, which operated from 2000 to 2006, established a transparent and predictable formula-based grant making mechanism through which funds were directly transferred to Union Parishads that allowed for community involvement in planning, implementation, supervision and monitoring. 

Based on its successes, the Government of Bangladesh used a World Bank loan to launch  the Local Governance Support Project in 2007 to scale up the project’s practices over a 5 year period with an investment of US$ 190 million across the country. This included a technical component, which was implemented jointly by UNCDF and UNDP in six districts - covering 388 Union Parishads - with a budget of $2.4 million, to develop second generation innovations in decentralization. These successes led to a major scale up of the good practices in local development nationwide with an investment of US$532 million with support of the World Bank. 

During the current project phase, fiscal transfers from the national budget to local government grew at a limited pace (4%), while own-revenue generation reported by Union Parishads supported by the project increased by 25%.  This third generation project with   564 Union Parishads, incubates innovations primarily in the areas of pro-poor planning and local resource mobilization.

One beneficiary of this process is the Burungarchar community clinic. It is the nearest health facility for a big community of 4,500 households with 27,000 inhabitants. However, it could do little to directly address the high rate of maternal mortality since this modest health facility had no labour room for supporting medically aided delivery. It was in this situation that the ward meeting proposed the use of the performance-based block grant to build a labour room for the clinic.. Nine deliveries were completed within two months of establishing this facility and the labor room has been replicated as a model by another 10 community clinics. It helps to reduce child mortality and improve maternal health as well.