Governance in Business and Government

1. Governance in Business and Government Rolling down the state: decentralisation and development

2. What is Decentralisation? • Basic definition is the delegation of authority • Has become very popular in recent years • This is due to democratisation and arguments about technical efficiency • Various types of decentralisation

3. What is Decentralisation? • World Bank identifies four types of decentralisation: political fiscal administrative market

4. What is Decentralisation? Turner and Hulme (1997) identify two bases for decentralisation: Territorial Functional And three forms for each base Within formal political structures Within public admin. From state to private

5. Forms of Decentralisation Source: Turner and Hulme 1997

6. Good governance • Decentralisation is linked to good governance and democratic governance • Governance is ‘the action or manner of governing’ • Not simply the government but also includes ways in which the population, civil society and private sector participate in governing • Decentralisation is a mode of governance expected to involve a variety of actors and bring a range of benefits

7. Benefits of decentralisation • Responsive to local needs • Empowering the poor • Efficiency • Reduce resistance to change • Reduce congestion in central government • Unity and stability • Political participation • Mobilisation of resources • Coordination • Accountability

8. Problems of decentralisation • Narrow local focus or secession • Centre sheds functions • Centre regains power through regulation • Local elites capture benefits • Unpopular • Capacity problems • Inadequate funding • Inequality

9. Problems of decentralisation • Poor excluded from decision-making • Low expectation by community of officials • Local bureaucracy instead of central bureaucracy

10. Indonesia

11. Indonesia 1 • In 1998 President Suharto was ousted • His regime was centralised authoritarian • In 1999 an interim government passed radical decentralisation legislation • Law 22 on regional governance and 25 on central-local financial arrangements

12. TERRITORIAL SUB-DIVISIONS IN INDONESIA National Government Province (propinsi) District (kota) District (kabupaten) Sub-district (kecamatan Sub-district (kecamatan) Village (desa) Urban community (kelurahan)

13. Indonesia 2 • Legislation was a radical change from old arrangements • Old regional hierarchy removed • Province stripped of considerable power • Focus of development to be the districts (kabupaten and kota)

14. Indonesia 3 • Large number of functions decentralised to districts • Districts responsible for most services • Power of local assemblies increased • Various methods of accountability for head of region • National and local administrative structures combined in districts

15. Indonesia 4 • 2.4 million public servants transferred • Representative structure at village (desa) level • A general allocation grant (DAU) replaced other major financial transfers • Revenue-sharing on natural resources • Grants for special initiatives (DAK) • New decentralisation laws in 2004 gave some authority back to provinces

16. Indonesia 5 • Human resource management (HRM) remained under central control • Need for a more strategic approach to HRM identified • Improved recruitment and selection • Making merit more important in promotion and advancement • Making training demand-oriented • Rewarding performance • Managing performance for organisational improvement • Are such changes possible under conditions of clientielism?

17. Problem of Clientelism P C C/P C C/P C C C C C C C

18. Lessons from Indonesia • Purpose of decentralisation should be clear • Function and finance should be matched • Brief laws should contain clear guidelines for implementation • Radical decentralisation laws create huge implementation problems • Rapid implementation schedules create problems • Expect the unexpected – 2001-2011, 292 districts became c500 districts; 26 provinces became 33 provinces • Local governments can be the source of innovation

19. Innovation and local government • Kota Biltar - block grants • A portion of city government’s budgets for small projects allocated direct to communities • Mostly infrastructure at first • Maros – participatory planning • Citizen-driven planning assisted by NGOs • Local law mandates citizen participation • Lumajang – water provision • Helps poor communities gain access to safe water supplies and high quality sanitation services using community participation

20. Innovation and local government • In Philippines since 1993 Galing Pook awards for innovative practices in local government • Judges look for • Positive results/impact • Popular participation and empowerment • Innovation • Transferability • Sustainability • Efficiency • 230 programs of 152 local governments have won awards

21. Galing Pook winners Peace and development in Sarangani Province Turning trash into cash in Cebu City

22. Beyond Free Funeral Service – Baliwag, Bulacan

23. Municipal Query: Participatory Governance - Iloilo

24. Cambodia

25. Cambodia 1 • Post-Khmer Rouge (1979) rebuilding the state • Very few educated people • Aim for bureaucratic centralisation • Interest in decentralisation with increased political stability and improved functioning of bureaucracy

26. Cambodia 2 • In 2001 government adopted a policy of cautious incremental decentralisation • Policy involves both political decentralisation and deconcentration (D&D) • Political decentralisation is through commune councils (about 1600 of them) • Popularly elected bodies with very limited budgets and only one administrative staff • Involved in interest articulation and some participatory planning

27. TERRITORIAL SUBDIVISIONS IN CAMBODIA National Government Province Capital District (srok) Municipality District (Khan) Commune Sangkat Sangkat

28. A Commune Council Building

29. Cambodia 3 • Deconcentration (admin. decentralisation) to promote improved service delivery • Slow process left to the initiative of individual ministries • Has been progress in health, education and development planning • Ministries generally reluctant to let go of their functions and funds

31. Cambodia 4 • Commune Councils judged by government to have been successful • Institutions for participatory planning • Accepted as legitimate institutions • Improved peace and security • ‘strengthened, stabilized and legitimized the central government’ • Platform for other reforms

32. Cambodia 5 • New Organic Law on subnational government in 2008 • Referred to as subnational democratic development and ‘partial autonomy’ • Creation of ‘unified administrations’ at provincial and district levels • Not yet clear which functions and what funding to be decentralised • ‘representative government’ at province and district levels – councils elected by commune councillors not popular vote

33. Conclusion • Decentralisation continues to be a popular policy • There can be major gains in democratisation and service improvement • But there are obstacles and difficulties which may prevent the realisation of these gains especially in very weak post-conflict states