Enhancing Local Government Capacities: The Role of Social Investment Funds
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1 Enhancing Local Government Capacities: The Role of Social Investment Funds Carmen Schickinger, Sr. Project Manager, KfW-Head Quarters René Rodriguez, Sector Specialist, KfW-Central America
2 Working Thesis Decentralized approaches of SIF are giving an important contribution to enhance Local Governments capacities in the field of local investment management and State Modernisation, when transfer of funds is accompanied by technical assistance.
3 How do decentralized SIF work? Core Elements Resource Allocation Project Prioritization Project Execution In the past (centralized) Ex-ante via poverty map SIF SIF Today (decentralized) Poverty map and/or incentives to LG Municipal Democratic Investment Planning Local Governments and Communities
4 How do decentralized SIF work? Core Elements Operation & Maintenance Participation Local government strengthening In the past (centralized) Ministries Only training for maintenance None Today (decentralized) Ministries, LGs, and Communities. (Maintenance Funds) Systematically during proj.cycle: LGs & Communities $ Transfers and Technical Assistance for project cycle
5 Range of capacities at Local Government level Public Management: Investment Management Municipal services & quality control Economic development (income generation, etc.) What SIF can contribute Municipal development (zonification, taxis, cadastre, etc.)
6 What SIF can contribute to capacity building: Investment Management Municipal Participatory Investment Planning Project Cycle & Accounting Operation & Maintenance Democratization, Empowerment, Transparency, Accountability
7 SIF instruments for capacity building of LGs: Municipal Development Plans Manual of Project cycle Financial Transfers & Incentives Municipal Information System Technical Specifications Database with Prequalified Companies Municipal Maintenance Funds Modules for Training of Communities
8 SIF-approaches for capacity building: 1. Radical approach : El Salvador Total decentralization towards LGs. Learning by doing of LG with Municipal Advisor : oriented at project cycle management. Local Development Advisor : oriented at more general aspects. Package of additional TA (demand-driven): beyond project cycle LGs are forced by law to create a technical unit. Project cofinancing (matching funds). Incentives for good performers.
9 SIF-approaches for capacity building: 2. Gradual approach: Honduras, Nicaragua and Dominican Republic Pilot programs starting with best qualified LGs. Graduation: from small projects to all kind of projects. Precondition: to create a technical unit for project cycle management. Regressive financing of technical dept. of LGs. Continuous training activities for LGs. SIF-Inspectors.
10 Introduction of CDD in LG: Direct execution of projects by the communities Nicaragua, Honduras, Guatemala Shared execution of projects El Salvador, Honduras, Nicaragua, Dom.Rep. The organized community: receives the funds purchases materials contracts specialized workers and consultants it needs renders accounts to LG and SIF LG and Community jointly: contract contractors community supervises and authorizes payments both render accounts to plenary Always with the binomial "Municipalidad" Municipalidad/Comunidad"!!
11 Two basic principles: The intervention of the FIS in the communities should always be through the municipality This is not so in Guatemala and Dominican Republic Substantial investment in capacity building and strengthening of communities is necessary Otherwise projects are build for their own sake
12 Summary: 3 LD-approaches of SIF Solo LG approach: LG executes project Community Training for maintenance and limited participation LG-CDD option 1: (El Salvador) LG-CDD option 2: (Honduras) LG executes project Community approves LG approves Community executes Empowerment of communities & accountabil.
13 Limitations and mistakes LGs Want money, not Technical Assistance. Might turn into mini dictators. Are not interested in accountability & CDD. Are politicized along political parties. Insufficient accountability. SIFs Insufficient focus on accountability. Impose unneces. procedures. Do not focus enough on TA. Consider mayors as contractors and not as partners. Are politicized along political parties.
14 Challenges concerning capacity building (a): Delineation of responsibilities between Central and Local Goverments as well as between LD Institutions (clear mandates). Symmetry between fiscal decentralization, and responsibilities. Incentives for fiscal income generation. Sustainable technical and financial competence of LGs. Legal framework.
15 Challenges concerning capacity building (b): Quality assurance of technical assistance Short election periods of LG - sustainability of created capacities: no civil servants law. Keep perspective in mind: combination of transfers, grants and loans for LGs. Better consideration of accountability in local development approach (concrete instruments).
16 Conclusions: 1. CDD is used to strengthen the technical and democratic capacity of the binomial of Municipality/Community. 2. CDD integrated in the LG is a deeper form of decentralisation 3. Quality Control of TA is necessary for sustainability.
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