Strengthening sub-national governance for poverty reduction: innovations and impact

Paul Spray (Head of the Latin America and Caribbean Department for DFID):

• DFID’s approach in Latin America has emphasized strong contact with civil society organisations (CSOs).
• DFID has also been working with the Inter-American Development Bank (IADB) and the World Bank to add value to their lending programmes to sub-national governments.
• DFID is keen to observe how potential lessons from Latin American experiences could be applied elsewhere.
• As a result, DFID is supporting 12 UK non-governmental organisations in Latin America to implement projects/ policies in tune with local CSOs agendas and in recognition of their role at the frontline of tackling social exclusion and inequality.
• DFID is drawing up a framework and policy dialogue with CSOs in order to capture lessons learnt.

*Cecilia Martinez, Regional Director ROLAC, UN-Habitat was unfortunately unable to attend.
Adam Behrendt, PhD, DFID Regional Governance Coordinator for Latin America

• Often the discussion centers on local governments’ limited capacity to carry out development programmes
• Scales of sub-national governance have a significant spatial dimension. Different units can represent municipal governments, counties or even whole districts. It is very important to acknowledge these distinctions if lessons from Latin America can be made relevant for other regions.
• An up-date of the civil unrest in Bolivia was also provided given that country's relevance as a notable case of far reaching decentralisation reforms. The polarisation of support between central government in the highlands and lowland areas is closely related to decentralisation and local governance structures. Tensions over fiscal transfers are fanning the conflict. Incidentally, one of the speakers was unable to attend this event due to the road to the airport being obstructed. Both sides are strongly entrenched and unlikely to back down in the near future. There is limited space for mediation and negotiations.

Discussion:

• A strong voice for local government is very important at national level. Gender and governance are also highly relevant. In Bolivia 33% of local authorities are women. Decentralisation is one step to building a culture of institutional strengthening but professionalisation of the civil service is also crucial.
• The International Monetary Fund and the World Bank favour tight fiscal management such as budgetary balancing. This was argued as counter-productive as governments need to invest in social programmes in order to tackle poverty.
• Citing an example in India on decentralisation and local participation, the discussant emphasized the importance of including civil society in decision making processes. Governance structures need to exploit the social capital of local groups.

Session One
An Overview of DFID Support to Pro-Poor Sub-National Governance in Latin America.

Adam Behrendt, PhD, DFID Regional Governance Coordinator for Latin America

• A brief introduction of DFID’s approach in Latin America was provided. From 2004-2005 DFID changed from a bilateral donor to a regional donor. Partnerships through trust-funds were also created with the IADB and the World Bank in order to enhance the impact of those institutions and add value to their activities.
• DFID focused on sub-national governance in Middle Income Countries (MICs) of Latin America because of the rising quantity of investment at sub-national levels in all regions and sub-national governments provide more opportunity for engagement by citizens and civil society.
• The decentralisation of expenditure is very high in Latin America. Resource rich areas, especially in hydrocarbons and mining, are pushing up national revenues.
• Approximately 75% of population live in cities. Urban poverty is distinct from rural poverty and in some cases can be worst given the increased risks of violent crime.
• DFID’s engagement strategy can add value working either ‘through’, ‘with’ and ‘around’ organisations like the World Bank. Some regional highlights were mentioned including: Politics of the budget and analysis at sub-national level in Brazil with World Bank; supporting accountability and civil society at sub-national level and PAR - Regional Learning Program for Good Governance in Latin America.

Marcelo Renjel, Director Regional Learning and Exchange Programme for Sub-National Governments and Poverty Reduction—PAR

• The PAR - Regional Learning Program for Good Governance in Latin America – was started in September 2006 as a joint initiative between the Impact Alliance and DFID. The programme operates in Bolivia, Peru, Ecuador, Colombia, Nicaragua and Brazil.
• The Program’s direct implementing partners include Pact, the National Working Group for Participation (GNTP-Bolivia), the Brazilian Institute for Municipal Administration (IBAM) and CARE. PAR's also works in collaboration with Latin-American Federation of Cities, Municipalities and Associations (FLACMA) and Quito Honesto, amongst others.   
• Some of PAR’s accomplishments include the development of approach for improving local and regional governance in regional governance in bi-national cross border regions of the Amazon between Bolivia and Brazil. These processes help adjacent local governments to better address common challenges such as tackling urban poverty and improving policy responses.
• Some the challenges addressed by PAR include the need to develop the capacities of sub-national governments and improving the coordination of information and knowledge flows. PAR responds by attempting to ‘connect’, ‘develop’ and ‘scale up’ its activities to meet these challenges.
• PAR has learnt that strategic engagement with the international financial institutions, testing approaches and instruments such as governance and inter-municipal cooperation and recuperating regional experiences for policy dialogue are vital.

Kathrin Plangemann, Senior Public Sector Management Specialist, World Bank

• World Bank has been moving from fiscal decentralization to sub-national public management.
• Decentralisation and sub-national management support in LAC consists of, amongst others: development policy lending on decentralisation; development policy lending to sub-national levels; and analytic and advisory activities.
• An evaluation of effectiveness of the Bank’s support to decentralisation in 20 countries between 1990 and 2007 revealed some strengths and weaknesses of this approach. The design of an intergovernmental legal framework and transfer system was regarded as particularly effective. The Bank was less effective on clarifying the roles and responsibilities of the different levels of governments.
• Recommendations to improve the Bank’s performance included, amongst others, seeking more realistic and pragmatic loan design and encouraging a more results-based approach to decentralisation with greater monitoring and evaluation.
• Some of the emerging issues examined where addressing the different needs of increasingly confident and innovative sub-national governments and a greater focus on spatial issues to improve understanding of territorial development issues.
• A summary of DFID’s Markets and Governance for Poverty Reduction Trust Fund and its activities in Peru and Brazil was provided. This partnership between DFID and the World Bank had a number of achievements including fostering innovation, piloting new approaches and scaling up interventions, including in areas that are traditionally not supported by the Bank

Discussion

• As individuals continue to migrate to LA cities, a thorough investigation into the linkages between urbanization and poverty is required.
• Clarifying the scale of analysis is necessary to avoid simplifying data on the amount of funds going to regional and sub-national governments. For those smaller units, private sector lending is considered one viable option. Yet diversifying policy-making is not the same as demand-driven policy-making.
• Discussants debated whether DFID’s new activities with the World Bank were worthwhile. Some argued that DFID adds value to the World Bank, while others felt it is a real shame DFID is scaling down its operations in LA.
• A major weakness of the presentations was that they failed to mention how to get people out of poverty both through the informal and formal economies.

Session Two
Innovations and Case Studies in Sub-national Governance.
Presentation of selected sub-national governance strengthening initiatives: impacts and lessons learned from Latin America, Africa, and Asia.

Siyabonga Memela, Director Local Governance Unit, Institute for Democracy in South Africa—IDASA

• The state of local governance in South Africa was presented by highlighting lessons from the local governance barometer. This tool is being developed as part of their membership of a network to measure governance.
• Assessing local governance is a complex multi-dimensional process which needs to take into account economic, political and socio-cultural issues.
• The countries involved in the survey were Botswana, Lesotho, South Africa, Malawi and Tanzania.
• Lessons from the barometer suggest that municipalities are struggling to juggle demands and supply pressures, and party political interests over-ride the interests of communities.

Gil Soares, Senior Governance Advisor, Brazilian Institute for Municipal Administration—IBAM (Brazil)

• The presentation outlined the Inter-Municipal collaboration in Brazil-Bolivia BorderAreas project. The objective is to foster and establish bi-national social capital.
• Usually sidelined, border areas require more attention as they can often be havens for criminal activity.
• Some of the results of the project include the sources of potable water being cleaned up; the monitoring of the children and adolescents walking by the border and the strengthening of prevention programmes (e.g. HIV/AIDS) on the border.
• Lessons learnt include the fact that the challenges exposed in this project are long term, financial support must be flexible and communication is of strategic importance.

Manoj Rai, Director, Society for Participatory Research in Asia—PRIA (India)

• The dependency on government is still very high and bureaucracy remains heavily entrenched.
• There are new opportunities through local governance, although older challenges remain. Out of the three million elected representatives, over one million are women. They are new to political mainstream but are having to deliver in difficult and unfavorable socio-bureaucratic environment.
• Civil society organizations are striving in different areas but synergies between them are rarely present.
• Lessons learnt suggest that isolated innovations need to be scaled up and institutionalized. Champions within government need to be supported to reform the system from the inside.

Discussion:

• Before 2007 the private sector in India did not really look at governance and poverty.
• In Latin America there are few funds and resources available for low level participation.
• African CSOs struggle to engage with policy-makers and funders as seen as confrontational.
• Scaling up is a very serious issue and one which is yet to be given adequate attention.
• Discrimination continues against ethnic minorities not only by government but by society at large. As a result, minority groups are being left behind in the Millennium Development Goals.

Synthesis - David Booth, Research Fellow, ODI

• Focus of our attention ought to be on sub-national governance rather than sub-national government.
• A question mark remains as to what extent Latin American experiences are relevant for other developing areas.
• Sub-national governance is very important yet immensely complicated as demonstrated by its numerous variations.
• DFID’s work is very opportunistic in LA. It is a great shame that DFID is terminating its work on sub-national governance in 2008/9. Its approach is too short to evaluate lessons for other areas – more time is required.
• They have also recruited very good staff. Donors should consider hiring more local staff to cultivate these linkages and personal relationships.