Local Governance

To grow sustainably, cities first need to get their finances right

About this series

More blog posts

Local and municipal governments often operate with limited financial resources, yet they are responsible for delivering an ever-expanding range of infrastructure and services. In many countries, decentralization also tends to put additional pressure on municipal finances, as cities and towns are increasingly expected to take the lead in implementing national policies locally. Yet, this transfer of responsibilities from the national to the local level often does not come with an adequate transfer of resources.

In other words, cities are expected to "do more with less"... This can only happen if local government practitioners have the right tools and knowledge to manage their resources as strategically and efficiently as possible. To help cities get their financial house in order, the World Bank has developed the Municipal Finances Handbook (available in English and Spanish), which provides government officials with extensive guidance on controlling expenditures, strengthening revenues, mobilizing external funds, achieving creditworthiness, and adopting good borrowing practices.

Lead Urban Specialist Catherine Farvacque-Vitkovic tells us more about the handbook and the associated e-learning course: “Municipal Finances - A Learning Program for Local Governments”.

Please note the next edition of our online course will run from March 30 - May 23, 2016. Click here to learn more and sign up (registration ends March 30).

#9 from 2014: Exit, Voice, and Service Delivery for the Poor

Our Top Ten blog posts by readership in 2014.
This post was originally posted on January 08, 2014

Inspired by Jeremy Adelman’s wonderful biography of Albert Hirschman (Worldly Philosopher: The Odyssey of Albert O. Hirschman, Princeton University Press, 2013), I’ve read and reread Hirschman’s masterpiece, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States, (Harvard University Press, 1970) and his follow up essay “Exit, Voice, and State” (reprinted in The Essential Hirschman, Princeton University Press, 2013). Although Hirschman produced these works over 40 years ago, his simple model of flight (“exit”) or resistance (“voice”) in the face of unsatisfactory economic, political or social conditions remains highly relevant for policymakers and development practitioners concerned with eliminating extreme poverty, reducing inequality, and improving basic services accessible to the poor.

Hirschman’s ideas provide much cause for reflection within the context of present-day Indonesia. Indonesia has enjoyed over a decade of macroeconomic stability and economic growth. From 2000 to 2011 GDP expanded by 5.3 percent per year, and the official poverty count halved from 24 percent in 1999 to 12 percent in 2012. This period also saw notable improvements in health and education. Access to education has become more widespread and equitable. Girls are now as likely as boys to graduate from secondary school. In health, Indonesia is on track to meet Millennium Development Goals for reducing both the prevalence of underweight children under five years old, and the under-five mortality rate.

Exit, Voice, and Service Delivery for the Poor

Inspired by Jeremy Adelman’s wonderful biography of Albert Hirschman (Worldly Philosopher: The Odyssey of Albert O. Hirschman, Princeton University Press, 2013), I’ve read and reread Hirschman’s masterpiece, Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States, (Harvard University Press, 1970) and his follow up essay “Exit, Voice, and State” (reprinted in The Essential Hirschman, Princeton University Press, 2013). Although Hirschman produced these works over 40 years ago, his simple model of flight (“exit”) or resistance (“voice”) in the face of unsatisfactory economic, political or social conditions remains highly relevant for policymakers and development practitioners concerned with eliminating extreme poverty, reducing inequality, and improving basic services accessible to the poor.

Hirschman’s ideas provide much cause for reflection within the context of present-day Indonesia. Indonesia has enjoyed over a decade of macroeconomic stability and economic growth. From 2000 to 2011 GDP expanded by 5.3 percent per year, and the official poverty count halved from 24 percent in 1999 to 12 percent in 2012. This period also saw notable improvements in health and education. Access to education has become more widespread and equitable. Girls are now as likely as boys to graduate from secondary school. In health, Indonesia is on track to meet Millennium Development Goals for reducing both the prevalence of underweight children under five years old, and the under-five mortality rate.

Development Theory v Practice: Visiting Oxfam’s Work in Mindanao

For me, one of the most fruitful aspects of ‘field trips’ such as last week’s visit to see Oxfam’s work in the Philippines is the exchange it sets up in my head between the academic literature and debates I’ve been ploughing through in the UK, and the reality of our work on the ground. A good trip confirms, improves or adds to your thinking, and occasionally shows you that you have got it all wrong. This was particularly true on this occasion as our staff and partners in the Philippines are both real thinkers (one guy passed a long car ride by listening to a lecture on Hegel on his laptop ‘for fun’) and activists (more on that tomorrow). The quality of discussions in a Manila seminar on active citizenship and food justice was truly impressive – nuanced and open minded, with no sign of the dogmatic, fissiparous Left I saw on my last visit in 1998 (when I had to give the same lecture twice because different fractions refused to sit in the same room). First some (relatively minor) new insights from all these interactions:

What Difference Does Accountability Make? Six Real Life Examples from Tanzania (and A Great Job Opportunity)

One of my favourite Oxfam projects is Chukua Hatua (CH) in Tanzania, which is using an evolutionary/venture capitalist theory of change to promote accountability in a couple of regions of the country. CH is now looking for a new coordinator, because the wonderful Jane Lonsdale is moving on – if you fancy taking over, check out the job ad (closing date 20 July).

Talk of ‘Evolutionary theories of change’ all sounds very abstract, so here are six specific examples of the kinds of change the project is bringing about.

How Can Aid Agencies Promote Local Governance and Accountability? Lessons from Oxfam’s Work in Five Countries

Community discussion class participants in Bardiya village talk about their plans for building a community clinic. Oxfam is publishing a fascinating new series of case studies today, describing its programme work on local governance and community action. There are case studies from Nepal (women's rights, see photo), Malawi (access to medicines), Kenya (tracking public spending), Viet Nam (community participation) and Tanzania (the ubiquitous Chukua Hatua project), and a very wise (and mercifully brief) overview paper from power and governance guru Jo Rowlands. Here are some highlights:

“Governance is about the formal or informal rules, systems and structures under which human societies are organised, and how they are (or are not) implemented. It affects all aspects of human society – politics, economics and business, culture, social interaction, religion, and security - at all levels, from the most global to the very local."

From One-Way to Two-Way Exchanges: Gearing Up to Use Communication in Support of Decentralization in Mongolia

Since Mongolia shifted to a multi-party political system and market economy in the early 1990s, it has become a young and vibrant democracy. Debates among politicians, policymakers, civil society organizations, political and social commentators, and other stakeholders are now an integral part of Mongolian society. These happen through local newspapers and on the TV channels, at citizens’ hall meetings, as well as during cultural events, particularly in rural areas as nomadic herders gather for such event and authorities take that opportunity to communicate with them.

However, these debates may not always be particularly effective in getting to a consensus. Indeed, the heritage of the socialist system can still often be felt: public authorities, particularly at the local level, see communication as a way to disseminate and diffuse information through a traditional media approach. There is much to do to transform communication from a one-way dissemination tool to an instrument for two-way engagement.

Bangladesh Local Governance at Work: Learning from the Field

The Local Governance Support Project (LGSP) is the centrepiece of a broader program to strengthen accountable forms of local governance across Bangladesh. The LGSP provided matching grants and capacity building support to Union Parishads (UPs), which is the lowest tier of rural local government bodies. The project was initiated in July 2006 and in the final year (FY11), it has covered nearly 97% of the 4500 UPs. Each year the UPs are audited, and those that receive a clean audit received an expanded block grant. The LGSP is the first project of its kind in Bangladesh that supported systemic, country-wide reforms in the system of local governance.

The “State-Sponsored” Public Sphere

In India’s 2 million villages, public meetings at the village level called Gram Sabhas (GSs) have provided a structured, institutionalized space for dialogue between the local government and its citizens. In a recently released paper on the topic, Vijayendra Rao and Paromita Sanyal have coined these GSs as “state-sponsored” public sphere. In fact, these meetings are mandated by national legislation.

In India, these public meetings not only offer a space to dialogue and feedback between citizens and local power holders, they also pair it with real decision-making on how to manage local resources for beneficiaries for public programs. This is the most striking feature of the GSs. While the government provides data on families living below the poverty line that could be eligible for local resources, the GSs are required to have these lists ratified by those attending the meeting. Citizens can directly challenge the data in “a forum where public discourse shapes the meaning of poverty, discrimination and affirmative action.”

Political Efficacy and Citizen Participation in Bosnia and Herzegovina

A post from Sarajevo, Bosnia and Herzegovina (BiH), somewhere in the heart of the medieval section of this deeply multicultural city. I’m here with a team organized by the World Bank Institute (WBI), working with local partners on preparing a capacity building program for low income municipalities on increasing citizens’ participation in local governance. Colleagues from the WBI facilitated sessions on participatory budgeting and citizens’ feedback mechanisms. Two of us from the World Bank’s Development Communication Division contributed a few modules on participatory communication as a cross-cutting issue in enabling and sustaining citizen participation in local governance.