Decentralisation and local governance

For over 25 years decentralisation and local governance have featured prominently on the development agenda in many developing and transition countries. The main arguments for decentralisation are:

Proximity: The delivery of crucial services contributing to the achievement of the Millennium Development Goals (MDGs) is not possible without effective and responsive local institutions that are closer to the common citizen and can therefore better address their needs.
Effectiveness: Participatory decision-making and accountable local public management are crucial for local actors to meet their development goals in the context of Poverty Reduction Strategies (PRS).
Democracy: Participatory local governance reinforces local and national democratisation processes and increases the legitimacy of states.

In spite of this promising scenario, decentralisation and local governance involve significant risks, dilemmas and challenges. It constitutes a highly political process that creates political winners and losers; requires more complex systems of financial allocation, oversight control, and accountability. It demands more widely distributed management and technical capacities linked to service delivery. All in all, reforms on local development and decentralisation have political, institutional, administrative and financial implications on a number of stakeholders in a given country and this complexity requires a thorough analysis and make high demands on intervention strategies.

Local development programmes have very different origins and characteristics. Traditionally they have been influenced by social funds and other multi-sectoral and demand-driven programmes. They aim to increase access among the poor to basic services and thereby contributing to local development and poverty alleviation. These programmes generally include financing -usually in the form of grants- to community groups, civil society organisations and to local governments.

Since a couple of years a consensus has been emerging that in order to ensure sustainable local government structures and service delivery these approaches must be embedded in the decentralisation processes which are on-going in many countries. An existing legal framework is a basic pre conditions for a successful decentralisation process. Further it is very important to ensure that decentralisation policies are integrated in a wider process of public sector reform and improved public finance management. This involves processes of institutional change and good governance that strengthen the linkages and synergies between communities and democratically legitimised local governments. This includes appropriate financial transfers from central to sub-national government levels, as well as to give local governments the authority and capacities to collect their own taxes and fees.