Summary
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Video Reporters: David Barré, Tobias Sommer
Recommendations on SDC support to Sustainable Municipal Finances as presented during the Sarajevo dlgn f2f meeting:
- When providing financial support to local Governments, SDC should strive to work on-system. Since financial support to local Governments is a highly political issue, pre-conditions for engagement have to be assessed carefully. The 4-stage “maturity of decentralization” model developed by the iDPWG-DLG should be used for this assessment. SDC should advocate for formula based national intergovernmental transfer systems. If pre-conditions permit and risks appear to be manageable, SDC should contribute to formula based national intergovernmental transfer systems. The contribution modalities should be determined by the leverage that can be attained: this can be through participation in basked funding, through the provision of experience, or through reputation (Swiss neutrality, Swiss per equation system). SDC should strive for a consultancy role in the design and implementation of the national intergovernmental transfer system (policy dialogue), trying to influence the criteria used in the formula to have SDC values reflected (democracy, gender equality, social inclusion, poverty targeting, environmental protection).
- If conditions do not permit to work on-system, SDC should only engage in pilots for providing grants to local Governments if a clear link to the national steering platform on fiscal decentralization exists and experiences from the pilot can be fed into it. SDC should advocate for a multi-stakeholder steering platform, including central Government (alignment), development partners (harmonization), and other national actors (democratic process). SDC should put special emphasis on the inclusion in this platform of elected, legislative institutions.
- In a mature system of fiscal decentralization, borrowing opportunities by local Governments for capital investments are key for sustainability. This asks for legal preconditions, modalities to access credit institutions, and institutional capacities. Support for borrowing normally will be the last stage in the development of sustainable local Government finance. SDC should support local Governments in their capacity to prove their credit-worthiness, and engage on procedures for them to access credit institutions.
- SDC should put more focus on supporting municipalities’ own revenues because of its potential to improve local autonomy and downward accountability.
- SDC should support overall national transfer systems and their development (commitment to Aid Effectiveness).
- SDC needs to acknowledge that by supporting municipal finances it always interferes in or influences domestic politics and SDc should elaborate a strategy of political dialogue.
- SDC should work within the given national system of capacity building.
- SDC should engage in providing capacity building vouchers or grants to local governments based on municipal capacity building plans.
Summary of comments on recommendations:
On recommendation 1:
a.Support for building checks-and-balances should be added.
b.Risks should be formulated as challenges to be addressed, not as constraints; SDC should work towards pre-conditions to be met, non-engagement just because pre-conditions are not met would be wrong.
c.The distinction between formula based and performance based was there in the discussion, but is not reflected in the recommendations; criteria refer to the latter.
d.Does SDC really want to move to basket funding when supporting municipalities financially?
e.PED/power analysis should be added as instruments to assess pre-conditions.
On recommendation 2:
a.More emphasis should be put on including local governments in steering platform.
b.Civil society should be mentioned explicitly as member of steering platform.
c.Should recommendation 2 really be formulated as alternative to recommendation 1? Should SDC not rather always have own parallel projects for truth-grounding policy dialogue on the national system?
On recommendation 3:
a.The debt risk for municipalities inherent in borrowing should be spelled out.
b.SDC should also work towards pre-conditions to be met.
On recommendation 4:
a.Natural resource management as important source of own revenues should be added
b.(received outside plenary): development of revenue generating economic activities by municipalities should be added as source of revenue (Burkina experience)
Concerning all recommendations:
The equity issue is not reflected in the recommendations.
Next steps in the learning project:
- The recommendations of the learning project presented during the f2f (see below) will be revised. The comments received (see below) will be integrated and an extended rationale will we added. This second draft will be circulated in the network for consultation towards the end of March.
- The final version of the recommendations will be integrated into the synthesis report on the project. The results of the e-discussion will also be taken up in this report. The “Lernbuch”, containing the case studies, the synthesis report, videos, photos and learning tools will be finalized and put on-line roughly towards the end of May.
- The learning project will be formally closed towards mid 2011.
- For the time being, the recommendations elaborated in the learning project are to be considered as informal guidance for SDC operations. They reflect SDC’s good technical practice for supporting Sustainable Municipal Finances. The dlgn core group will discuss with SDC’s theme manager “decentralization and local governance”, Brigit Hagmann, the feasibility of having them integrated into a SDC category “B” reference document. This would transform their status into technical standards for SDC operations.
Adrian Gnägi
Methodology of the Learning Project
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Video Reporters: David Barré, Tobias Sommer
Preparatory e-discussion
From the 14th of February to the 4th of March, in preparation of the dlgn F2F in Sarajevo, the Learning Project on Sustainable Municipal Finances launched a three week long e-discussion on the main results of the Learning Project.
The five topics addressed in the three thematic discussion sessions were: Capacity Development (week 1); Donor grants and fiscal transfers (week 2); and Own revenues and borrowing (week 3). A total of 32 people from 16 countries participated on the e-discussion.
The e-discussion was moderated by Bertha Camacho from Skat Consulting, who was in charge of inviting participants to share their opinions and thoughts during the discussion. Thematic content was provided by Adrian Gnägi, one of the owners of the Learning Project.
Each session started with few provocative questions regarding the discussion topic and dlgn members were invited to share their opinions and thoughts regarding those questions. An analytical summary of each week’s discussion session was produced by Adrian Gnägi. These summaries serve as basis for the development of a consolidated response on each of the discussion topics. The consolidated response documents highlight the most important outcomes and lessons drawn from the discussion and include all responses and resources shared by participants.
English was the discussion language, but considering the diversity of the network, participants had the option of sharing their thoughts and inputs in other languages (French and Spanish). The insights received in other languages were translated into English and shared with the whole community.
PDF Download: Consolidated Reply – Capacity Development (Week 1)
PDF Download: Consolidated Reply – Donor Grants and Fiscal Transfers (Week 2)
PDF Download: Consolidated Reply – Own Revenues and Borrowing (Week 3)
Bertha Camacho
Participants’ Experiences and Learnings
Marc De Tollenaere on Municipalities Raising Their Own Revenue
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Video reporters: Gérard Laleye, Tobias Sommer
Personal Learnings from the Learning Project
Norbert Piljs, IC Kosovo:
The presentation of the Performance Based Grant Systems was one of the most inspiring moments so far. Nevertheless, as the presentation proceeded, I slowly realized that the beautiful simplicity of the incentive driven change can easily disappear in complex administrative control systems for measuring the performance and avoiding abuse.
Tommaso Tabet, COOF Bangladesh:
I had good discussions and sharing on local municipal finances. They helped me a great deal in putting a frame on what we are doing in Bangladesh. I was able to confirm the relevance and innovation of our approach in the local governance portfolio. I particularly appreciated exchanges with our colleagues of Eastern Europe. I feel that we are not left alone, dealing with municipal finance issues, in our corner in Bangladesh.
Swati Dogra, COOF India:
I have learned a lot from the presentation on Performance Based Grant Systems. I enjoyed the combination of experience sharing and theoretical insights. The learning project presented not only additional resources on the topic but also a concrete document. This is a topic that needs to be explored further in a country like India. I am sure that the government is interested in hearing about this approach. What I would like to see emerging from this Learning Project is an analysis of the countries where such an approach might be feasible. I am sure that this system might work better in some countries than in others.
Petar Vasilev, SDC Serbia:
The SDC Serbia and its partner organization Municipal Support Programme (MSP) from Kraljevo has develop a case study on municipal finances. The case study covered the topic of capacity building and networking. In order to better integrate this study in the DLGN learning process, representatives of the SDC Serbia participated in the F2F with two representatives of partner organizations: MSP and the Standing Conference of Towns and Municipalities.
Our overall impression is that the workshops have been carefully planned and carried out in an efficient manner to cover the wide range of topics, both conceptual and practical. From my point of view, two things were exceptionally appealing. The first was a presentation of the Performance Based Grants Systems. The concept behind this system was particularly interesting, showing a comparison of liberalism and marxist thinking. The value of this idea being put into practice lies in its ability to break the vicious circle of poverty and inability of local governments to perform better for their citizens.
The second workshop from where I learned a lot is the political economy discussion. In particular, the uses of simple instruments, such as the power map. This instrument might help decision makers to analyze the power relations and quickly adapt their projects and programmes to constantly changing stakeholder structures in a non-time consuming manner.
As recommendations for the future, I would like to recommend that since the method used by the Learning Project on Municipal Finances enhanced learning, but since this process can be time consuming, it could be better to have it when COOF activities are less intense.
