Sector investment programs can foster decentralization : emerging lessons from Zambia

22763 A%n AGRICULTURE & NATURAL RESOURCES DEPARTMENT DISSEMINATION NOTES TOWARD SUSTAINABLE PRODUCTION SYSTEMS AND RURAL POVERTY REDUCTION Number 14 July 1997 Sector Investment Programs Can Foster Decentralization: Emerging Lessons From Zambia Over the past few years donors and governments undertaken carefully to maximize the benefits and have become increasingly interested in the minimize the risks.2 potential of decentralization for improving the efficiency of public expenditures and the There are three main dimensions to effectiveness of service delivery. The design and decentralization: political, administrative and implementation features of sector investment fiscal. First, political decentralization, sometimes programs (SIPs) can facilitate decentralization. referred to as democratic decentralization, vests This note will discuss the principle dimensions of elected representatives of communities and decentralization, and the ways in which SIPs can subnational governments with substantial facilitate and support decentralization. It will also decision-making powers. The elected local and provide examples from the Zambia health and intermediate level governments have the authority agriculture SIPs. to institute policies and programs that reflect the priorities of their constituents. Political Dimensions of Decentralization decentralization can increase government responsiveness to local needs and make the The public choice literature and international decision-making process more transparent. experience suggest that moving effective control Second, administrative decentralization, or over public expenditures from central to local Second, trati ve ecetrlization, or fotr bra-ae ecoomi deconcentration, entails establishing field offices governments can fosterbroad-basedeof line ministries or parastatals at subnational growth, improve service delivery in localities, and administrative levels. Civil servants staff these help reduce poverty. This is achieved by offices and report to the central government or its empowering local governments and communities representatives at a higher subnational level. to make decisions about the services they want Deconcentation a in he cel and how they are provided. This can improve government's ability to respond to the needs and local resource mobilization, by fostering concerns of local people by increasing the willingness among communities to pay for infomaton low and intractingbtwe services or contribute to schemes. These changes gornment and iety. can lead to efficient and optimal public goverment and civil society. expenditure allocation and make service delivery Finally, fiscal decentralization occurs when the more effective, responsive, and sustainable, central government gives some control over Decentralization is not a panacea, and it must be revenues and expenditures to subnational governments. Without some degree of budget 2 See On the Dangers of Decentralization by See Decentralization: The Way Forward for Remy Prud'Homme and The Political Economy of Rural Development? by Andrew Parker. Decentralization (mimeo) by James Manor. AGR Dissemination Notes are an output of the Agriculture and Natural Resources Department of the World Bank. Further information and additional copies may be obtained by contacting Nwanze Okidegbe, ext. 37566. FILE COPY  autonomy, local governments can not implement The above elements are necessary for the smooth or sustain programs and services. Local implementation of the program, while ensuring investment and program planning are severely its feasibility and sustainability. impaired when central or higher subnational governments control expenditure decisions and Enabling Decentralization through SIPs. the right to collect and use taxes. Such control Although decentralization is not one the primary also stifles local choice and voice. objectives of sector investment programs, SIPs can facilitate and support the process. SIPs are Sector Investment Programs (SIPs) and designed by local stakeholders and implemented Secentorainstment Programs (SIPs) and through local institutions. By putting the program Decentralization administration in the hands of beneficiaries and Sector Investment Programs. The defining local entities, they foster administrative Secto Invstmet Prgram Thedefining decentralization. In addition, SIPs include characteristic of SIPs is that their scope is mechanisms for the regular monitoring of normally sector-wide. Some donors view these progamimplem e an caniclrespon programs as an integral part of their strategy to to shifts in beneficiary needs and desires. By improve results on the ground. SIPs address moving responsibility for service delivery from several shortcomings of traditional investment the central government to subnational and local projects such as: insufficient local ownership and gove gments, SIPs help build capacity at the commitment that impair sustainability; a sector levels of government that are closest to framework that is inconsistent with the overall beneficiaries, and thus promise to enhance the fiscal program; project duplication and efficiency and effectiveness of service delivery. fragmentation that lead to inefficient use of SiPs promote bottom-up planning of work plans development assistance; and the contradictions and budgets. They engage independent local associated with the varied policies and institutions, such as universities and research implementation practices of different donors, institutes, to conduct annual analyses of the impact of services on intended beneficiaries. Most SIPs currently under implementation invest Thu loa -niishv oecnrloe in a specific subsectors while taking into account delivering and financing sectoral services. the needs of the sector as a whole. They are also larger and their coverage is more ambitious than conventional investment projects. It is important The Zambian Experience that SIPs are based on certain essential elements: Zambian local governments are the district * sound and coherent sector definition and councils, and there is one in each of the 64 policies; districts. In rural areas, they are responsible for * a sector strategy and public expenditure delivering public services, such as rural water program; supply and rural roads. However, the central * adequate institutional capacity for government and donors provide most of the funds undertaking the sector-wide program; and personnel needed to carry out these activities . local stakeholde partic(for example, the centrally managed National inloalvemsnta ofde prticipationoand Roads Fund provides funds to maintain rural involvemen ofaroads). District and provincial officers of the * regular monitoring and evaluation; and sectoral line ministries are responsible for * common donor implementation arrangements. overseeing the operations of the district councils and assuring that funds are transferred appropriately. District councils receive most of their funds from 3 For a detailed description see Fostering the central government. In 1992 about 80 percent Sustainable Development: The Sector Investment of these funds were spent on salaries of district Program by Nwanze Okidegbe. councilors. About 15 percent of the money was 2  designated for capital investments, although less districts. They are responsible for service than 1 percent was actually used for district-level delivery but have delegated the responsibility for capital projects. The remaining five percent of implementation to the district directors of health. central transfers was applied to non-salary The Boards' funds, which come from government recurrent costs, such as office expenses. Thus grants and patient fees, cover operating costs and district councils had very little control over public other expenditures as agreed with the Ministry of funds and virtually no scope for investing in local Health. infrastructure. Indeed deconcentrated line offices of the central government have effective control District health boards submit their annual of over 90 percent of both capital and recurrent proposals and work plans to the central board for public expenditures. approval, and they contract out actual service delivery to the district directors of health and Sector investment programs in health and hospital boards. It is expected that these health agriculture in Zambia are helping local boards will eventually be privatized. governments and communities gain control of public funds and decision-making power by Meanwhile, the Ministry of Health is transferring promoting bottom-up budgetary and program its staff positions to the district boards. Persons planning; reducing the role of the provincial currently occupying these civil service positions governments; involving local stakeholders, will have to apply to district health boards for including the private sector in setting priorities; jobs. Staff members who fail to secure positions and reducing the reporting burden on districts by will be offered severance packages or funds for harmonizing and simplifying reporting retraining. requirements for donor funds. Decentralization under the Zambia agriculture Decentralization under the Zambia health SIP. SIP. The agriculture sector investment program is The Ministry of Health intends to separate also fostering decentralization of the sector. financing from delivery of health services and Under the SIP district agriculture committees views decentralization as an intermediate step have been established in every district. Most towards this goal. The health sector investment committees are comprised of 10-12 members, and program provides the framework for this include district-level staff of the Ministry of initiative. Under the health SIP, district boards of Agriculture, Food, and Fisheries (MAFF), health have been established in every district. farmers, local chiefs, school teachers, The boards are comprised of inhabitants from the agribusiness owners, and others. They are surrounding rural communities, chosen either generally headed by a committee member from through election or the through appointment by either the private or non governmental sectors. the Ministry of Health. The government has delegated authority to the district boards to make District-level line ministry staff prepare the decisions on health delivery issues in their agriculture work plans and budget proposals each districts. The district health boards receive year. The district agriculture committees review technical support from a secretariat, headed by the and endorse the plans and budget proposals, then district director of health and staffed with health present them to national level authorities to be care specialists, who are currently civil servants. included in the country's annual budget. The To oversee the activities of the district boards, the district agriculture committees do not have the Ministry of Health has established a central power to change the plans or budget proposals board, whose members are appointed. When fully however. The final aggregated budget is decided staffed, this board is expected to have a staff of after an annual joint review meeting with donors, 150, all of whom will be offered three-year who provide feedback and conmmit their funding. renewable contracts. Based on donor feedback, the SIP steering committee modifies the budget to ensure that the The district boards have limited authority over program can be fully funded before submitting it health policy and expenditure decisions in their 3  to Parliament for final approval. Districts then Suggested Reading receive their respective allocations. Bhatia, A. and Nwanze Okidegbe. 1997. Sector The measures introduced within the agriculture Investment Programs: An Update. Africa sector investment program have brought new Region Knowledge Information and credibility to the district budgetary and planning Technology Center. Washington, D.C.: system and have provided the basis for serious World Bank. district planning. The new system compares favorably to the old arrangement in which the Deininger, Klaustand NwanzecOkidegbe. 1997. provincial administrative coordination units had "FromgAdjustment toaSector Investment? ful pwertochange the budget proposals. Under Program-Based Approaches to development full power to chnetebde rpsl.UdrLending." Entwicklung and Laendlicher the former system final provincial and districts Raum. budgets often bore no resemblance to either the Raum. approved or requested budgets. In the past the Harrold, Peter and Associates. 1995. The Broad district planning process had very little credibility Sector Approach to Investment Lending. at the district level. Officers usually requested a World Bank Discussion Paper 302. Africa incremental increase of 5-10 percent over the Technical Department Series. Washington, previous year's budget, but did not expect to D.C. receive the funds needed to deliver services adequately. Now the provincial administrative Manor, James. 1997. The Political Economy of coordination units have virtually no role in Decentralization. mimeo. controlling the district agriculture budgets. Okidegbe, Nwanze. 1997. Fostering Sustainable District committees (and staff) now trust that their Development: Sector Investment Programs. overall budget priorities will be preserved, even if World Bank Discussion Paper 363. they do not receive their precise budgetary Washington, D.C. requests. Parker, Andrew. 1995. Decentralization: The Way Forward for Rural Development? Conclusion Policy Research Working Paper 1475. If designed appropriately, sector investment Washington, D.C.: World Bank. programs can help facilitate and support Prud'homme, Remy. 1994. On the Dangers of decentralization. Emerging experiences from the Decentralization. Policy Research Working Zambia health and agriculture sector investment Paper 1252. Washington, D.C.: World programs show how SIPs can serve as vehicles to Bank. decentralize service delivery. District health boards and agriculture committees now make This dissemination note has been prepared by Keith McLean many of the key decisions about how funds and Nwanze Okidegbe and edited by Wendy Ayres and should be spent in their sectors, and have Melissa Williams under the supervision of Hans Binswanger and Graham Kerr. Julie McLaughlin also made valuable increased their control over the nature of district contributions. It is based on Fostering Sustainable services. This is major improvement over the Development: Sector Investment Program by Nwanze way sectoral decisions that affected districts were Okidegbe and on the interim findings of the Decentralization, made in the past. Fiscal Systems, and Rural Development research program. Despite some progress to date, the participation of community members is still inadequate. While the membership of district health boards and agriculture committees is broad and diverse, the committees have not sufficiently encouraged the broader community to participate in making choices. This remains a goal for the future. 4