KfW Development Bank. through economic infrastructure investments. Domestic resource mobilization at the local level

Transcription

1 KfW Development Bank Domestic resource mobilization at the local level through economic infrastructure investments Isolde Bielek Bonn, September 14th, 2016

2 Outline 1 Rationale for DRM via infrastructure investment at the local level 2 FC support to local level investment 3 National transfer mechanism for DRM in Benin: FADEC 4 Local development fund for DRM in Burkina Faso: FICOD 2

3 Rationale for DRM via infrastructure investment at the local level Subnational governments depending on own revenues may be more accountable, less corrupt and provide more public goods Subnational governments may be more prudent with own revenues than with transfers from federal government Revenues are generated at the subnational level where people pay for, but also benefit from, service delivery Subnational governments depending on local revenues have a stronger incentive to create an enabling environment for economic activity at the local level => Local level investment may contribute to DRM via employment, taxes and fees 3

4 FC support to local level investment: Twin goals physical infrastructure for improvement of public service delivery Improvement of public service delivery structural improvement of (local) governance Market places, Bus stations Health stations, schools Economic, social and Strengthening capacities in financial management, accountability and Town halls, community halls administrative participation of the population infrastructure A smart mix of economic and social/ administrative infrastructure can help to increase service delivery in line with financial capacity 4

5 National transfer mechanism and Local development fund Strengthen fiscal transfer mechanisms Improve public service delivery and strengthen local economies Support investments in infrastructure according to local priorities Financial cooperation National transfer mechanism Local development fund Local authorities Strengthen local ownership and capacities: - financial management - planning, procurement - building supervision - participation - accountability Population Focus on income-generating infrastructure 5

6 National Transfer Mechanism - Example Benin: FADEC Challenge More than 70 % of the people live on and from the land, predominantly poor Insufficient infrastructure and income opportunities Insufficient money transfer to the local level Lack of suitably qualified personnel to provide municipal services efficiently and at a high standard Approach Establishment and support of the budget transfer mechanism FADEC Including all the relevant players on local level Accompanying measures for monitoring the application of funds Objectives National transfer mechanism and monitoring the application of funds are fortified All Communities make use of FADEC in order to offer sustainable infrastructure Key message The municipalities are supported in the transparent and efficient use of the investment funds provided. Incentives for individual efforts can be set as the amount provided contains a variable tranche, depending on the performance of the local government. Volume of financing: 29,5 Mio EUR Planned Term: 4 years 6

7 Possibilities for DRM in Burkina Faso: local development Fund FICOD Challenge Predominant poor population, insufficient infrastructure and income opportunities Insufficient financial support from the national transfer system for the municipalities Insufficient capacities of the municipalities Approach Participation of target group Funding of social and income generating infrastructure Investment-related accompanying measures Key message Locally investing in both economic and social/ administrative infrastructure can contribute to increase service delivery in line with financial capacity. Objectives Infrastructure operates well and is widely used (80%) Planning and budgeting capacities are fortified Contribution to improvement of the living conditions Volume of financing: 16.5 Mio EUR Planned Term: 4 years 7

8 Appendix: What FC finances Investments Qualified consulting services HR support measures Programme-based approaches Infrastructure Social development/ governance Financial system development Rural development/ conservation of natural resources Peace and security Renewable energies/ energy efficiency Water/sewage/waste Transport Urban development Education Health Decentralisation Good governance Microfinance Promoting SMEs Agriculture Preserving biodiversity Reforestation Anti-erosion measures Preventing crises and conflict Reconstruction Emergency relief and transitional aid Reintegration KfW Development Bank / Financial Cooperation with developing and emerging countries 8

9 Appendix: National transfer mechanisme key elements Who gets the money? Formula based allocation Access Criteria: Nationwide selected regions Type of settlement: urban rural Poverty Minimum Conditions: performance of local government quality of specific project yearly allocations transparent formula allocation is not linked to funding needs or specific projects 9

10 Appendix: Allocation of funds for investment example Benin Fadec Variable tranche Population 34% Basic amount Poverty 34% Individual Allocation Teritorry 15% Performance 17% 10