Efficient local government key to economic development

The Decentralisation Policy, adopted in May 2000, was conceived to achieve three main goals, promoting democratic governance at local level, strengthening pro-poor service delivery and creating a basis for sustainable participatory community development. These objectives were outlined as very important in the area of broadening grassroots participation and government responsiveness through decentralisation. Moreover, Vision 2020 has outlined decentralisation as a part of good governance. In particular, it stipulates that “Good governance is essential to successful development…respect for human rights and increased popular participation in Government, through the bottom-up approach to democratisation, is critical. The general observation is that several achievements have been made under decentralisation, especially in the area of policy, legal and institutional framework. Laws and policies relating to elections, administrative functions, and local community development, fiscal and financial decentralisation have been elaborated. Institutionally, administrative and financial management structures and procedures are in place and operational, albeit not yet efficiently; and more importantly, local and grassroots elections are being held regularly for democratisation and people’s empowerment. Beyond the general significance of administrative decentralisation specific achievements of the first phase of the Decentralisation include the establishment of the Common Development Fund (CDF) which has successfully funded several local government initiatives and gradually gained donor confidence, establishment of institutional arrangements for coordination of the decentralisation process and the creation of the Rwanda Association of Local Government Authorities (RALGA), whose main role include advocacy and lobbying for its members. Since the year 2002, 3 per cent of total domestic revenue is being transferred to support recurrent expenditure of the local governments. The progress on priority actions (preparation of districts budget, and CDF matching resources and responsibilities) can be summarised as follows: Districts have been preparing regularly their annual budgets and projects proposals for submission to Community Development Fund (CDF). The relation between resources and responsibilities of districts has been closely monitored leading to territorial and administrative reforms in 2005 aimed towards improving the fiscal capacities of districts and bringing services closer to the people through further devolution of responsibilities to the sector level and by reinforcing capacities at district level. Fiscal transfers have been introduced to match the increase in district responsibilities. Modalities for the CDF are now operational. CDF was established to facilitate and monitor the flow of funds and management information between the centre and the districts. Development budget transfers through CDF have increased on an annual basis from Frw2.7 billion in 2003/2004 to Frw8.4 billion in 2005, indicating a gradual increase towards meeting the 10 percent target for development transfer. Since the year 2003, 3 per cent of total domestic revenue is being transferred to support recurrent expenditure of the local governments. Fiscal transfers to districts, also through the CDF, have been lower than anticipated, due to limited planning and absorption capacities of the districts. The transfer of resources has not matched the political transfer of responsibilities but local government’s own revenue-raising could be significantly strengthened. Despite the achievements highlighted above, implementation of the decentralisation policy faces serious challenges in the following areas: Legal and policy framework: some of administrative laws and regulations need to take into consideration sectoral laws and regulations that may not be in line with decentralisation. Institutional set up and capacities: weak information flow between various levels of government, instability of human resource at districts level, limited involvement of civil society, inadequate logistical facilities at the Local Government levels (LG). LG and community planning: the CDC’s, that are required to assume leadership in the planning process are still very weak and their involvement very limited; the planning process tends to be controlled by intervening agencies and donor-funded projects. Another concern is the persisting incoherence between the local planning and the national priorities and sectoral strategies. Fiscal decentralisation and financial management: inadequate funding mechanisms and low financial capacities, absence of information on revenue potential at local level, insufficient orientation of local authorities on proper financial/accounting management and reporting. What can be done through the EDPRS? Future priorities in decentralisation will follow the vision of the territorial reform policy to achieve the following specific objectives: To promote and enhance effectiveness in service delivery and collection of data and information (statistics) at sector level by making the sector a truly service delivery focal point with adequate human, material and financial capacity. To streamline and strengthen the coordination of “public services” and local economic development at district level by availing more technically competent personnel as well as financial and other resources to the district, to streamline and strengthen the coordination of development at the provincial level. To establish and strengthen coherent Rwanda relevant monitoring and evaluation institution of accountability tools and systems and ensure sustainable, equitable decentralised fiscal regimes. Priority actions to be included in the EDPRS: Capacity building programme and basket funding mechanisms for its implementation Develop a human resource management policy for LG and subsequent administrative manuals. Strengthen cross-sectoral coordination at local/district level for better service delivery and develop service delivery manuals. Clear definition of intergovernmental fiscal transfers and relations (Fiscal Decentralisation Policy). Conduct a fiscal census to identify the financial capacities of the new districts. Coherent central and LG planning processes and definition of clear indicators and clear targets for decentralised entities. Ends