Rwanda’s New Decentralization: Design and Implementation Issues

1. Rwanda’s New Decentralization: Design and Implementation Issues Kigali, Wednesday, September 21, 2005 DRAFT, September 21st, 2005

2. Context • Rwanda is in the midts of a major territorial reform aimed to improve decentralized service delivery • Provinces are deconcetrated entitities, and may be phased out over time Provinces (4+1) Provinces (12) Local Gov Districts (30) Districts (106) Sectors (416) Sectors (1516) Cells (9165) Cellls (~9000) Facilities (00s) Facilities (00s)

3. Challenges • What do your structures cost and how are they financed? • What would the new structures look like, what would they cost, and how would they be financed? • What are critical implementation issues during the transition period?

4. Stocktaking • The analysis needs to occur at both districts and provincial level • Available Data • 2004 & 2005 (1st Semester) • What do existing figures express? • Expenditure Realization on a cash basis or actual expenditure commitments made? • Former will underestimate actual expenditure responsibility • Difference between the two represents hidden debt accumulation on an annual basis • VALUE OF THIS ANALYSIS DEPENDS ON HAVING QUALITY DATA…

5. Key Expenditure Categories • Permanent Staff Expenditures • Wages • Frais Sociale • Temporary Staff Expenditures • Operations & Maintenance • Electricity & Water • Other Recurrent Costs • Social Welfare • Capital • Revenue Generating • Infrastructure

6. Own Source Revenues • Calculate Existing Magnitude • Identify Alternative Revenue Options • Administration Problems Under Existing Tax Structure • Any choices at all • Are all (legal) tax options being fully exploited • Options for Additional Assignment • Available bases Own source revenues serve resource mobilization purposes, but also have key roles in enhancing local autonomy and accountability

7. Central Transfers • Minaloc Recurrent Transfers • Realizations Matter (as opposed to budget data) • CDF Transfers • Note that many investment projects will impose future recurrent responsibilities • Donors Funding

8. Debt Financing & Arrears • How to you deal with existing debt stock? • Accumulation of past annual deficits • How do you close the existing annual deficits? • Difference between actual expenditure obligations incurred during the year and own source revenues + transfers

9. Existing Debt Stock • Estimate Magnitude • Rwf 3.5 billion • About same as annual Minaloc recurrent transfer • How to clear the debt stock? • Declare existing districts bankrupt • Have Minecofin do bailout • Have new districts become liable for existing districts debts • How do you assign (e.g., prorate by sectors)? • How do districts repay? • OSR (but may only be viable for some…) • Central Transfers • But money fungible, so payment from OSR will require bigger transfers

10. Existing Local Debt Source:Note on Debt Structure of Rwanda’s Local Governments (9/2005)

11. Existing Debts: By Vintage Source:Note on Debt Structure of Rwanda’s Local Governments (9/2005)

12. Existing Debt: By Province (% of OSR+Minaloc Tran.) Source:Note on Debt Structure of Rwanda’s Local Governments (9/2005)

13. How to deal with existing deficits? • Impose Hard Budget Constraints • Monitoring • Enforcement Mechanisms • Intercepts (take out of transfers) • May be politically difficult • Moral Suasion • Need Realistic Financing Arrangements • Create Realistic Expenditure Responsibilities • Ensure sufficient financing to ensure expenditure responsibilities • Own source revenues base • Transfers • Effective Establishment & Enforcement of Borrowing Restrictions • Link to capacity to repay • Revenue Generating Projects • Own source revenue

14. Current Wage Expenditures to Minaloc Transfer (%) DRAFT WITH INCOMPLETE DATA!!!

15. Ratio Wage Expenditures to Own Revenues (%) DRAFT WITH INCOMPLETE DATA!!!

16. LOOKING FORWARD What would the new structures look like, what would they cost, and how would they be financed?

17. Operationalizing Expenditure Assignments • Rwanda has a unique opportunity to apply best practice in the design of its decentralization • National Conference of Dialogue Expenditure Assignments with all Sectors (September 15-17, 2005) • Government commitment to rationalize exiting structures for more effective decentralization of service delivery

18. Functional Assignments Methodology • Unbundling of Service Delivery • Ten Sectoral Working Groups Worked through Specific Functional Assignments (September 17, 2005) • Result: Policy Making, Standard Setting, Administration/Contracting, Production, Monitoring & Evaluation by sectors/new structural levels • Further Validation On-Going • Broadeing: Were all sectors covered? • Deepening: Appropriateness of Assignments/Sub-Sector Issues? • Working Group Results were mapped into roles & responsibilities of structures • Roles & Responsibilities Assignments were mapped into potential staffing needs • Cadre Organique for Province/District/Secteur Level • Costing Simulations • Staff at various levels costed for levels/wage rates • Addition O&M responsibilities also considered

19. Functional Assignments: Working Group Results

20. Functional Assignments: Central versus Local

21. Main Conclusions of Working Groups Participants’ assignment were meant to use the Accountability Framework to clarify roles and responsibilities for different actors for service delivery functions • Main messages • Central level must remain strong on policy making and on standard setting • But local governments should take an increasing role in the day to day administration and contractual side of service delivery • Local goverment should be more involved in providing the financing for services (expenditure, collecting revenues, capital investments, wages, O&M, etc.) • The private sector and the NGOs should be called upon to provide financing and service delivery

22. Functional Assigments: Districts versus Secteurs

23. Roles for Districts and Secteurs • Districts • Should be more involved in the administration, the regulation and the financing of services • Secteurs • Should focus on delivering services • They evenly share the responsibilities for the monitoring and evaluation of service delivery

24. The New Cadre Organique: Addressing Human Resources • Minimum Cadre • District • Sector Level • Adjust Minimum Cadre • Size & Scale of District • Flexibility at Decentralized Level? • Provision Staff • Teachers, Health Workers, Extension Workers, Road Maintenance • Civil Service/Public Sector versus Contracted Out

25. I. Construct the Structure to Deliver Functions • Draft an Organizational Chart • Populate Chart with Posts • Decides Grades & Posts for Each Level • Write Job Descriptions for all Posts • Indicate Tasks & Outputs • Decide the Required Qualifications & Experience for Each Post • Produce Final Version of the Proposed Organization

26. II. Implement the Structure • Implement an Action Plan • Implement a Communications Strategy • Ensure everyone knows what is happening • Develop and HR Database • Assess existing staff • Performance & Qualifications Against Existing Requirements • Recruit/select existing/new staff into the new structures • Implement a Strategy for Dealing with Redundancies

27. III. Manage the Performance of the Structure • Maintain HR Database • Use reports to make accurate, timely decisions • Manage & Train the Existing/New Managers & Staff as Required • Develop and Implement Performance Appraisals Procedures for All Staff • Review overall performance against strategic plan • Aim for Continuous Improvements in Staff, Services, Targets

28. Staffing Simulations • Step 1: Indicative Mapping of Existing Staff into New Structures • New Districts • New Regions/Provinces • Step 2: Compare Current Staffing Levels with Indicative New Cadres • Step 3: Identify Mismatches • By Major Skill Categories • By Current Costing • Revenue Projections of Old Districts Mapped into New Structures

29. Local Civil Service Projections

30. Staffing Disparities DRAFT WITH INCOMPLETE DATA!!!

31. Financing Modalities • Conditional versus Unconditional Grants to Districts • Transfers to Secteurs • Via Districts? • Transfers to Facilities • Wage Payments to Schools • Effective Linking Different Expenditure Types • Wages • O&M • Capital Investments (& forward costs)

32. Implementation Recommendations • Articulate Road Map for Transition • Assess Needs for Critical External Assistance • Improve Data Management • Use Common Codes • Staff Inventory • Fiscal Information Data • Service Delivery Conference Follow-up • Integrate Findings in Revisions of Discussion Draft for Policy Development • Further Validate Findings (Sectoral Dialogues/Analysis)

33. Q & A

34. Roadmap (Draft, 1 of 3)

35. Roadmap (2 of 3)

36. Roadmap (3 of 3)