Sierra Leone Institutional Reform and Capacity Building Project Yongmei Zhou AFTPR

1. Sierra Leone Institutional Reform and Capacity Building ProjectYongmei ZhouAFTPR

2. Objective of presentation • Share with participants the experience of the design phase of a decentralization and local government support operation

3. Identification: which reform to support? • Original coverage of IRCBP envisaged in TSS 2002-4: PFM, Decentralization and Local Gov Capacity Building, HRM, Legal & Judicial Reform, Agricultural Sector Capacity Building. • Too ambitious: stretching implementation capacity of GoSL and Bank team

4. Key objectives of governance reform in post-conflict Sierra Leone • Restore core functions of government for effective economic and fiscal management • Restore trust in government • Rebuild social capital in communities • Address issue of social exclusion • Address urgent needs for recovery and reconstruction

5. Why support decentralization? • “Hot button” issue • Popular support for devolving power • Reestablishing local councils is incumbent SLPP government’s top agenda • Potential benefits • Reducing conflict by opening up space for political participation and improving democratic accountability of the state to citizenry • Long term effect on democratization: LCs as training ground for political leaders • Potential for improving service delivery

6. Decentralization drives broader PSR reforms • Instill a new culture of transparency and accountability at the local level: will translate into same expectation of the center • Decentralize FM and HRM to local councils: will later trigger changes at the central government level • Fiscal decentralization: shift resources to LGs and force restructuring of central ministries and agencies

7. Local Government Act 2004: key features • Election of local councils • 20% of Paramount Chiefs in each locality will be un-elected councilors • Ambitious plan for devolution of functions, expenditures, revenue authorities to local councils (Schedule III of LG Act) • Local councils have autonomy in HRM and FM under guidelines • Require transparency in council operation • Transition arrangements

8. Current local administration: employment agencies rather than service providers • Local councils were abolished in 1972. Since then Management Committees have been appointed by President • Few service delivery responsibilities • Very poor performance in service delivery • Revenue collected cannot sustain service delivery: 80% revenue paying salary of staff and allowances of management committee members • Staff largely unskilled: 80% are casual workers; little, if any, training to upgrade skills.

9. Decentralization does not automatically improve services or accountability • Local councils may remain employment agencies, if current unskilled and surplus staff are inherited, or if councils do not practice restraint in hiring • Local councils may have inadequate revenue capacity and expenditure management capacity to discharge new responsibilities • Local councils may be captured by local elites and fail to address needs of marginalized groups • Local councils may engage in corrupt practices

10. Key challenges • Design and implement a sustainable decentralization strategy, where phased functional devolution is supported by fiscal and administrative decentralization strategies as well as capacity building support. • Address the issue of social justice and inclusion and establish a new culture in local governments

11. GoSL Decentralization Program: Sequencing • Jun-Dec04: grace period for implementing functional devolution • Build basic LG capacity to make collective decisions and utilize resources • Announce phases of functional devolution • Design fiscal decentralization strategy and sectoral devolution plans • Jan05-May08: transition period for implementing functional devolution • Gradual transfer of service delivery responsibilities • Building LG capacity • Intensive M&E to identify improvement in policy and implementation • Jun08 & beyond: sustainability phase

12. World Bank support to decentralization • Pre-2004: Social Fund, Education, Health projects • Empower communities and local service providers to contribute towards the repatriation, resettlement, reintegration, recovery process • 2004-8: IRCBP (supporting GoSL Decentralization Program Phases 1 & 2) • Help design a sustainable fiscal decentralization strategy to ensure adequate resource transfers to LGs and sustainable development of local revenue capacity • Help build sustainable local government institutions to deliver services to communities • Support the establishment of a reform platform for other donors to chip in

13. Decentralization Component of IRCBP: Objective • Help GoSL establish a functioning local government system • LCs institutionalize participatory planning • LCs have basic FM capacity • LCs establish local revenue mobilization capacity • Service delivery at local level maintain at current level and later expand and improve • Outcome and output indicators in Annex 3 of PAD

14. Decentralization Component of IRCBP: strategic choices • Invest in implementation capacity and embed it in government structure • Learning by doing approach of capacity building: offer LG with discretionary resources so they can practice planning, budgeting, spending, accounting, monitoring, reporting skills. • Consciously create demand for performance • Tap multiple sources of training providers

15. Decentralization Component of IRCBP: operational subcomponents 1. Strengthen policy and implementation capacity: DS, LGFD 2. Finance start-up administrative infrastructure of new LGs 3. Capacity building: for LGs and other stakeholders 4. Local Government Development Grant 5. Monitoring and evaluation

16. Strengthen policy and implementation capacity of decentralization program • Decentralization Secretariat of MLGCD (serving Inter-ministerial Committee on Decentralization and Local Government) and Local Government Finance Department of MoF (serving LG Finance Committee) • Legislative/regulatory changes • Fiscal decentralization strategy • Project planning/implementation/M&E

17. Capacity building for LGs: demand side • Demand v.s. need • How to increase demand for performance? • Electoral demand • Competitive pressure among LGs • Enforce LG Act and minimum conditions for accessing LGDG • Types of support • Orientation training • Skills training and hands-on mentoring

18. Capacity building for LGs: supply side • Training providers: using existing institutions or encourage creation of training market? • IPAM • Pro: existing infrastructure • Con: lukewarm response from leadership; weak training capacity, curriculum • Private providers • Pro: motivated, as reward based on performance • Con: limited # of local trainers; no guarantee for sustainable capacity • Training of Trainers: identify entrepreneurial individuals, open to IPAM staff • Mentoring by practitioners

19. Local Government Development Grant • Objectives: • Offer resources to LGs so they can practice basic resource management skills (planning, budgeting, contract management, accounting, monitoring, reporting) • Use LGDG as a carrot to induce desirable behavior of LGs: focus first on governance culture, then skills • Establish a credible transfer system for other financiers to use in future

20. Local Government Development Grant • Provide block grant to LGs for financing development projects, as part of IGT • Access rules focus on transparency and accountability requirements of LG Act 2004 • Encourage transparent and accountable governance culture from the very start! • Address fiduciary concerns of IDA • Give incentive to develop management skills • Allocation of LGDG among LGs based on equity criteria, infrastructure needs, other financing available

21. Eight Steps of Successful Change* • Increase urgency • Build the guiding team • Get the vision right • Communicate for buy-in • Empower action • Create short-term wins • Don’t let up • Make change stick * John P. Kotter and Dan S. Cohen, the Heart of Change

22. Donor coordination • Government coordinate donors: political oversight by IMC, technical implementation led by Decentralization Secretariat, MLGCD • Donor harmonization to reduce transaction costs for gov • Shared/joint consultation with stakeholders, diagnosis & analytical work • Common implementation arrangements • Joint M&E • Shared capacity building framework

23. Working with the Country Team • Sector programs • Adjustment of existing projects: social funds • Design of new projects • Implementation arrangement needs to adjust to new functional assignment • New CAS

24. Other tricks for task managers • Get a PHRD grant for gov to finance preparatory activities • Get good consultants • Recently retired civil servants: practioners and devoted • Practitioners from countries your client aspires to • Talk to the urban group • Build quality assurance in the project

25. Challenges for Bank supervision • Intensive supervision requires big budget and time commitment • Work closely with FM and Procurement staff • Joint M&E with GoSL and other donors • Collect baseline data before decentralization, if feasible • Design research framework and build data collection as part of M&E • Be ready for difficulties • LGs not responsive to LGDG incentives • Political pressure for using LGs as employment agencies • Ministries resist changes