sent by Nicholas Mireri

Re:World Bank backs decentralised government

Published on October 25, 2007, 12:00 am

By Alex Ndegwa

The World Bank has supported a decentralised system of Government, saying if implemented properly it could broaden participation in political, economic, and social activities in developing countries.

But in a report first published in 1999 called "Decentralisation Briefing Notes", it cautions that failure to observe the delicate balancing act in resource allocation between wealthier and poorer regions could spell doom, further widening the gap between the rich and the poor.

"Although politics is the driving force behind decentralisation in most countries, decentralisation may be one of those happy instances in which good politics and good economics serve the same end," concludes the report.

The notes, reprinted in 2000, were prepared originally for a World Bank internal website to help Bank staff understand the multi-dimensional aspects of decentralisation.

It defines decentralisation as the transfer of authority and responsibility for public functions from the central government to subordinate or quasi-independent government organisations or the private sector. The Bank highlights the impact of decentralisation on efficiency, equity, and macro stability. Forms of decentralisation outlined by the Bank include political, administrative, fiscal and economic.

According to the report, the success of decentralisation is built on four key pillars: adequate funding to properly outlined projects, informed decision-making, adherence to local priorities, and accountability.

These revelations come in the wake of the raging debate in Kenya on proposals to introduce a majimbo system of government, which analysts say is the one issue most likely to determine the outcome of the December General Election.

President Kibaki has vowed that the system would never be introduced in Kenya, saying those proposing majimbo were living in the past.

But ODM presidential candidate Mr Raila Odinga has accused the Government of trying to scare the public about his party’s proposal on majimbo.

Those opposed claim it is intended to divide the country into tribal blocs and could lead to mass evictions of people who find themselves in the wrong jimbo.

But the proponents argue the system had been demonised, saying they are talking about federalism or devolution of power from a centre that has become too powerful and had discriminated against some regions. They say it is also about equitable sharing of natural resources.

Both parties have sharply differed on the interpretation of majimbo and the World Bank, even though it does not make a direct reference on majimbo in the report, explains the four forms of decentralisation.

Political decentralisation is aimed at giving citizens and their elected representatives more power in public decision making while administrative refers to distributing authority to different levels of Government and encompasses devolution typified by the Kenyan local authorities.

Marginalised regions

Fiscal refers to discretion given to, for instance, local governments or administrative units to raise revenue through levying taxes while the most common form of Economic decentralisation is privatisation.

To ensure equity, the report cautions that deliberate measures to give concessions to marginalised regions that could be disadvantaged by the system must be implemented otherwise poverty would escalate.

"Significant decentralisation of expenditures and revenues can lead to greater efficiency and accountability in the wealthier parts of the country, but can lead to declines in equity in the poorer parts unless intergovernmental transfers are used to compensate the poorer areas," it observes.

On equal measure, the Bank discourages the weakening of the central government to the point where it’s unable to discharge its national roles. "If the centre decentralises more revenues than expenditures, it can be starved of resources necessary to meet its national obligations."

It adds that the division of power and responsibility between levels of government also raises issues of institutional capacity, as well as corruption and governance.

Making a strong case for the system, economists justify decentralisation on the grounds of "allocative efficiency".

The rationale is that public expenditure decisions made by a devolved government are likely to resonate well with a local constituency than those made by a remote central government.

The report noted that participation had been proven to be crucial in spurring growth.

Research on regional government in Italy, says the report, found that governments that were more open to constituent pressure were more successful at managing resources and creating innovative programmes to distribute services effectively.

Warning that with decentralisation, as with many complicated policy issues, "the devil is in the details," the report, however, advises Governments to trend carefully on the issue and implement systems tailor-made to suit their unique environments.

"The outcome will depend on myriad individual political, fiscal, and administrative policies and institutions as well as their interaction within a given country," it concludes.

It observes that in many countries, decentralisation had simply happened in the absence of any meaningful alternative governance structure to provide local government services.

Yet in some cases, particularly in East Asia, decentralisation appeared to be motivated by the need to improve service delivery to large populations and the recognition of the limitation of central administration.