The Local Public Sector Matters Matters · · 2013-10-21Local Public Sector Matters Matters ......
Transcript of The Local Public Sector Matters Matters · · 2013-10-21Local Public Sector Matters Matters ......
Local Public Sector MattersMattersMattersMatters
Information about the LPSI Local Public Sector Finance Study (December 2011)
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Local Public Sector Matters – December 2011 – www.localpublicsector.org 1
While it may seem obvious that “all service delivery is local”,
the public sector arrangements that are used to provide
people with key public services vary dramatically from country
to country. A common feature in many developing countries,
however, is that only a relatively small share of public financial
resources flows down to the local level where these resources
can be used for the front-line delivery of public services.
Instead, funds often remain stuck at the central government
level, where resources frequently fund bloated and inefficient
bureaucracies. This systemic problem limits the ability of many
developing countries to effectively deliver critical, pro-poor
public services such as basic education, health services, and
other public services that are essential to economic
development and poverty reduction.
While many donor agencies address the symptoms of this problem on a sector by sector basis, the common
underlying cause of this imbalance often remains unaddressed. Therefore, an important challenge for the
international development community is to determine which governance structures are able to make sure that
resources flow down to the local level to improve public service delivery. In addition, there is a need to better
understand how the political, administrative and fiscal arrangements within a country’s public sector impact the
ability of the country to effectively provide key public services at the local level.
The Local Public Sector Initiative (LPSI) was launched by The Urban Institute in December 2010 to address this
challenge. As part of this Initiative, the Urban Institute will prepare a set of comparative Local Public Sector
Country Profiles during 2012. The LPS Country Profile will identify the level of funding that flows to the local
public sector for the delivery of key pro-poor public services, such as basic education, health services, water and
agriculture. In addition, the country profiles will describe the role that local and regional administrative and
governance bodies play in the management and delivery of these public services. The LPS Country Profiles are
intended to give USAID as well as other development practitioners (and the research community at large) tools
for developing a better understanding of the structure of the public sector in developing countries, and provide
detailed information on how local public sector entities are governed, administered and financed.
What is the Local Public Sector?
The local public sector can be defined as that part of the public sector that regularly interacts with residents, civil
society and the private sector. The local public sector is where residents and businesses receive services from the
public sector and where residents interact with government officials.
There are different approaches by which central governments interact with—and deliver services to—the people.
As discussed further below, these approaches include centralized public service delivery, delegation,
deconcentration and the provision of public services by elected local governments (devolution). As a starting
point, the Local Public Sector Initiative does not assume that any single type of institutional arrangement at the
local level is inherently better than others. Instead, the Initiative seeks to explore under which conditions
different institutional mechanisms might be appropriate and efficient for the delivery of government services
within the local public sector.
Local Public Sector Matters – December 2011 – www.localpublicsector.org 2
Measuring the Local Public Sector and Local Public
Sector Finances
The main measure of subnational public sector
finances that is currently available on a consistent
basis is the local government finance data reported
by the IMF’s Government Finance Statistics, which
reports on the revenues and expenditures of elected
or “devolved” local governments.
A frequent concern with regard to the IMF’s
financial data on the local government sub-sector is
that this data set only captures one specific type of
dimension of local public sector finances, notably
finances that involved devolved local governments.
However, roughly half of the countries around the
world deliver public services (predominantly or
exclusively) through non-elected, or
“deconcentrated” local administrative structures.
Local public sector finances for deconcentrated
entities in these countries are not recorded in the
current Government Finance Statistics as being part
of sub-national finances.
Even in countries that rely on elected local
governments to deliver important public services to
the people, considerable funding for public services
is often provided through delegation or through
deconcentrated structures, on top of (or around) the
funding separately provided to the local government
level.
As such, a comprehensive metric of local public
sector finances ought to recognize that virtually no
country around the world is purely devolved or
purely deconcentrated, but rather, that central
authorities in each country simultaneously interact
with residents, civil society and the private sector
through four mechanisms: through the direct
delivery of public services (by central government
entities); through the delegated delivery of public
services (for instance, through NGOs or para-statal
organizations); through deconcentrated subnational
departments or jurisdictions; or through devolved,
elected local governments. Together, these four
institutional and fiscal mechanisms comprise the
range of arrangements that make up the Local
Public Sector (Figure 1).
However, a good measure of Local Public Sector
Finances should not simply aggregate the different
funding streams to the local public sector into a
single measure of local public sector finance, since
different types of political, administrative and fiscal
arrangements at the subnational level are likely to
result in different levels and quality of public
services, and different intergovernmental structures
are will yield different levels of economic or
governance benefits.
As a result, the metric of local public sector finances
developed by the Local Public Sector Initiative
provides a breakdown of the different types of local
public sector revenues and expenditures, rather
than simply aggregating them). In addition, in order
to understand how local public sector finances are
used, a comprehensive profile of the local public
sector needs to provide an institutional profile of
the political, administrative and fiscal governance
arrangements that guide the different funds that
flows through the local public sector.
Accordingly, the LPSI framework for the preparation
of Local Public Sector Country Profiles has two main
components. First, the LPS Fiscal Profile provides a
systematic overview of expenditures, revenues, and
funding flows that take place within the local public
sector, including expenditures on direct (centralized)
service provision, delegated expenditures,
deconcentrated expenditures and devolved
expenditures (Figure 2). Second, the LPS
Institutional Profile provides a detailed overview of
a country’s territorial-administrative structure, its
subnational governance arrangements and its
intergovernmental (fiscal) systems, covering the
political, administrative as well as fiscal aspects of
the local public sector (Figure 3).
Local Public Sector Matters – December 2011 – www.localpublicsector.org 3
Figure 2: Local Public Sector Fiscal Profile (Sample Screenshot)
Figure 3: Local Public Sector Institutional Profile (Sample Screenshot)
More information on the methodological framework for preparing Local Public Sector Country Profiles is
available online at www.localpublicsector.org.
Local Public Sector Matters – December 2011 – www.localpublicsector.org 4
Next Steps for the Local Public Sector Initiative
In accordance with the LPS Country Profile
framework described in this document, the LPS
Initiative is preparing to collect an initial set of
comparative Local Public Sector Country Profiles for
12 developing countries during 2012. Additional LPS
Country Profiles will subsequently be collected and
updated regularly with the ambition to achieve
global coverage by 2015. Preparing Country Profiles
according to a consistent methodological framework
will not only provide development agencies, policy
practitioners, and researchers in each selected
country with a useful “big picture” assessment of
the structure of the (local) public sector, but will also
allow for the comparison of the country’s local
public sector with local public sector structures for
other countries in the region, or other similarly
situated countries.
Completion of the Data Collection Methodology. An
expert seminar has been scheduled on local public
sector finances, subnational governance, and local
public service delivery in Washington, D.C., for
January 13, 2012, bringing together experts from
USAID, The World Bank, the IMF, academia, and
other selected policy practitioners. The purpose of
the seminar and roundtable is to finalize the Local
Public Sector data collection methodology in a way
that is informed by existing practices, experiences,
and shortcomings in the measurement of the local
public sector and local public sector finances.
Initial LPS Country Selection. The Local Public Sector
Initiative seeks to conduct and complete Country
Profiles for 12 countries by the end of 2012,
although additional funding may allow us to include
additional countries in the survey. While the study
will initially focus mainly on countries in Africa and
Asia, country selection is also driven by USAID
mission interest, and no country or region is a priori
excluded from consideration.
If you are interested in including your country in the
Local Public Sector Finance Study, please contact Dr.
Jamie Boex ([email protected]) by January 13, 2012.
Relevance of the Initiative to USAID Missions and
Other Development Agencies
The role of the local public sector is not only
relevant for development officials that specifically
deal with public financial management, public sector
reform, or governance, but this issue is increasingly
relevant across all development activities.
For decades, many development agencies have
sought to avoid the complexities of providing
development assistance through the local public
sector, or have simply provided development
assistance around country systems altogether.
Although it is sometimes necessary to work around
highly ineffective (local) public sector institutions, it
appears that the centralized or parallel mechanisms
on which many development agencies have relied
are often neither sustainable nor necessarily more
efficient than host country systems.
Working with and through host country systems
(including the host country’s local public sector)
becomes unavoidable to the extent that the
ultimate goal of the international development
community is to strengthen public sector institutions
in partner countries so that host country systems
are able to deliver public services in an efficient,
responsive and accountable manner.
Before deciding (how) to align its programs and
interventions with partner country policy objectives
and systems, USAID and other donors would be
well-armed if they better understood the nature of
successful public service delivery. As such,
understanding the structure, governance and
financing of the local public sector is an important
building block for preparing successful Country
Assistance Strategies.
Furthermore, in order to design development
interventions that effectively strengthen existing
government systems, there is need to clearly
understand how the host government delivers
public services in different sectors; what the role of
the local public sector is in public service delivery;
how the local public sector is governed and
financed; and why existing public sector systems are
failing to deliver adequate pro-poor public services
in areas such as basic education, health, agriculture,
water, roads and other infrastructure.