The UNCDF/UNDP Experience With LGRP Basket Funding Arrangements in Tanzania

An Internal Assessment

Per Tidemand UNCDF Regional Technical Advisor

July 2003

Currency Unit Tshs 1040
Tanzania Shilling (Tshs) US$ 1.00 (as of June 2003)
LIST OF ABBREVIATIONS ALAT CBFSC CDD CRT CSRP DED DCDO DPLO DSW GoT IFMS IPF LDF LGA LGRP LGRT LGSP MRALG MIS PE PER PO-RALG PS PSU OC O&OD RAC RAS RS SDP RTA TAS UNCDF UNDP VA VC VEO WDC WEO ZRT Association of Local Authorities of Tanzania Common Basket Fund Steering Committee Community Driven Development Council Reform Team Civil Service Reform Programme District Executive Director, District Community Development Officer District Planning Officer Decentralisation Sector Work Government of Tanzania Integrated Financial Management System Indicative Planning Figure Local Development Fund Local Government Authority Local Government Reform Programme Local Government Reform Team Local Government Support Programme Ministry of Regional Administration and Local Governments Management and Information System Personnel Emoluments Public Expenditure Review Presidents Office - Regional Administration and Local Government Permanent Secretary Programme Support Unit (SDP Mwanza) Other Charges Opportunities and Obstacles to Development Regional Advisory Committee Regional Administrative Secretary Regional Secretariat Support to Decentralisation Programme (UNCDF/UNDP Mwanza) Regional Technical Advisor (UNCDF) Technical Advisory Services United Nations Capital Development Fund United Nations Development Programme Village Assembly Village Council Village Executive Officer Ward Development Committee Ward Executive Officer Zonal Reform Team
UNCDF Experiences with LGRP Basket Fund
List of Contents 1. INTRODUCTION.... 1 2. UN SUPPORT TO LOCAL GOVERNANCE... 3 2.1 UNDP/UNCDF.... 3 2.2 UNDAF.... 4 2.3 WORLD BANK AND IMF.... 5 3. LGRP..... 6 3.1 BACKGROUND... 6 3.2 MAIN ACHIEVEMENTS 1999-2001.... 8 3.3 REVIEW RECOMMENDATIONS AND OBSERVATIONS... 8 3.4 GOT RESPONSE TO REVIEW.... 9 3.5 POST REVIEW ACHIEVEMENTS 2001-03... 9 4. THE BASKET FUNDING MODALITY... 11 4.1 INSTITUTIONAL ARRANGEMENTS.... 11 4.2 MANAGEMENT PRACTICES.... 11 4.3 FINANCIAL MANAGEMENT AND REPORTING.. 12 5. THE FUTURE LGRP... 14 6. KEY LESSONS AND RECOMMENDATIONS FOR UNCDF/UNDP.. 15 6.1 LGRP EFFECTIVENESS... 15 6. 2 INSTITUTIONAL ARRANGEMENTS FOR LGRP... 15 6.3 RELEVANCE OF UNCDF/UNDP PRESENCE IN CBF.. 16 6.4 FUTURE UNCDF AND UNDP SUPPORT TO LGRP... 17 ANNEXES.... 19 ANNEX A: DOCUMENTATION.... 19 ANNEX B: MASTER LOG FRAME OF LGRP 2002-2005.. 22

1. Introduction

During the formulation of the UNCDF/UNDP Programme Support to Good Local Governance, in 1998/99 it was decided to allocate some of the programme funds as contribution to the basket funded Local Government Reform Programme. The major share of the 6.9 million US$ programme was devoted to the extension and deepening of activities of the Support to Decentralisation Programme in Mwanza Region. A small part of the budget was set aside for selected studies and earmarked activities for support to national processes in support of decentralisation, but most of the national level support was allocated in the form of a 1 million US$ contribution to the existing basket funded Local Government Reform Programme (LGRP). The contribution to the basket fund was controversial as UNDP funding to basket funding arrangements up to this stage had been virtually non-existent, UNDP/UNCDF are multilateral institutions receiving funding from many nations with bilateral representation in Tanzania who already contribute to the basket fund, Concerns similar to many of the participating bilateral donors - regarding how to report on achievements in a manner that establish a link between received funding and accomplishments.

In addition concerns were also raised regarding the LGRP institutional arrangements the programme was seen as heavily relying on consultants and hired project personal with the risk that the reforms would bypass the (then) Ministry of Regional Administration and Local Government. On the other hand the LGRP was recognised as the main programme for practical implementation of the Local Government Reform as outlined in the Policy Paper of October 1998. The rationale for providing a direct contribution to the CBF was described primarily as1: 1. It provides a direct financial contribution to the programme of activities identified in the LGRP APB and, whilst this contribution cannot be attributed to any particular activity, nor can the specific activity be attributed to the UN contribution, the contribution and the manner of it, ensures the smooth or comprehensive implementation of a prioritised programme in a way that earmarking of funding activities may not.
UNCDF/UNDP & GoT: Programme Document Support to Good Local Governance 2000, page 28.
2. A financial contribution to the Common Basket Fond gives voting rights on the CBF Steering Committee and will enable UNDP/UNCDF to have greater influence on the national policy formulation, the prioritisation of activities within LGRP APB, their method of implementation and quality control. The 1 million US$ contribution from UNCDF to the basket funding was partially seen as a pilot. Though not very explicitly formulated, it was to test: 1. The LGRP itself and its achievements of intended objectives. By directly contributing to the CBF it would be easier to assess the effectiveness of the programme on close hold, 2. The basket funding arrangement as such i.e. the institutional modalities for managing the reform; is it an effective mechanism for donor co-ordination and stakeholder dialogue? Does it strengthen Government and local authorities capacity for reform? 3. The CBF as a forum for dialogue with GoT and Donors on relevant experiences from other UNCDF/UNDP programmes in support of local governance. The latter was deemed important not least in view of the emphasis of UNCDF support to pilot activities in Mwanza. The purpose of this report is to assess the experience in respect to these three areas of concern. The report does not aim for providing details on description of programme outputs (provided in semi-annual progress reports) or details on broader programme achievements (reported on in mid-term review report and forthcoming evaluation). The methodology applied for the assessment is: Review of documentation regarding LGRP effectiveness and modalities (see list of references), Active participation as Consultant in the Joint review of LGRP (see Review Report June 2001), Active participation August 2001 July 2003 in LGRP meetings (CBF meetings, Consultative Forum, LGRP Planning meetings for a new three year plan, Task Force Meetings etc). Interviews of stakeholders from UNCDF, UNDP and LGRP as well as GoT regarding expectations and experiences of the basket funding modality.

The report is divided into the following sections: 1. Introduction, with overview of issues and methodology,
2. Overview of UN programmes in particular UNCDF and UNDP programmes in Tanzania in support of local governance, 3. Assessment of the achievements progress and problems of the LGRP; this is divided into a discussion of achievements and issues prior to and after the joint GoT-Donor Review 4. Assessment of the Basket Funding Modality itself: institutional and reporting arrangements, 5. Outline of the Future Plans of LGRP 6. Recommendations and lessons regarding UNCDF/UNDP funding through CBF
2. UN Support to Local Governance
The support to the basket funded LGRP has to be seen in context of other UN support to the Tanzanian efforts for improved local governance - in particular other support from UNDP and UNCDF.
2.1 UNDP/UNCDF Up to 1998 when the national Local Government Reform Policy was adopted, UNDP and UNCDF support to local governance had mainly been in the form of area-based support: Capacity 21 support to Mbozi and Sengerema Districts supporting participatory planning in the two districts with residential national advisors, and The much larger UNCDF/UNDP support programme in Mwanza Region supporting the six rural districts in the region in the areas of general development planning and managements as well as feeder road rehabilitation. The programme initiatives of capacity building and systems development is underpinned by practical piloting of development grant transfers in the form of non-sector specific general development grant (the Local Development Fund LDF) and conditional grants for feeder roads rehabilitations.
In 1998-99 it was discussed how UNCDF and UNDP more deliberately could support efforts at national level for supporting the nationally agreed policy for local government reforms. Two programmes were subsequently developed:
URT/99/001 Strengthening Capacities for Good Governance in Local Government. With a total budget of 619,500 US the programme aimed at
building the capacity of MRALG to oversee the LGRP programme. The programme included activities in support of establishment of a MIS, facilitation of national policy dialogue, learning from existing experiences in LGAs and support to improved village governance. The programme Document was signed April 2000 and was foreseen to be implemented over a two-year period. It has during the mid of 2002 being in the process of redesign as affective delivery of the programme up to that time had been rather limited. A revised programme has now been developed which pays greater emphasis to the strategic planning and reorganisation of PO-RALG in line with the overall Public Sector Reform in particular how this is to be implemented at the level of the Regional Secretariats. URT/99/005 & URT/99CO1: Support to Good Local Governance. With a total budget of 6.9 million US$ (UNCDF 5.7 and UNDP 1.2 million US$), the programme seeks to o Extend and deepen the experiences in Mwanza where the Local development Fund Component pilots the use of unconditional grants to plan and allocate resources for districts and community based infrastructure and the Roads component which pilots the use of conditional grants to local authorities for rehabilitation of feeder roads through application of labour based technologies, o Support technical co-operation between ongoing field based activities in support of decentralisation and national dialogue through various activities including provision of a UNCDF Regional technical Advisor, o Strengthen the national LGRP through earmarked and non-earmarked contributions to the basket fund. 2.2 UNDAF Other UN Agencies had until recently no explicit programmes in place in support of local government reforms. An UNDAF working group on Community Driven Development (CDD) was established in 2001 in order to co-ordinate programme activities and formulate joint working programme - in support of the local government reforms. The UNDAF is chaired by UNICEF, which for long has been a key player in support to community based programmes through local authorities. UNICEF has for instance for long supported a community based information system at village level. UNICEF has no engagement in the national Local Government Basket Fund. The UNDAF CDD aims at establishing a joint programme and has in principle agreed on a three-year programme with contributions from various UN agencies mainly UNICEF, UNDP/UNCDF, UNFPA, WFP and ILO. The total three-year budget is 3.2 million US$. The programme focuses on three areas:

1. Enhancing governance within local authorities, 2. Communication and Public Information, and 3. Community Based MIS.
The UNDAF CDD document describes a wide range of issues to be addressed and activities to be supporting in each of these areas. The programme remains to a large extent an overview of ongoing UN programmes within the common broad areas rather than one focused and uniform programme. To aim at a common programme is probably also initially over ambitious there is under all circumstances ample scope for initial coordination of various approaches. The single most prominent feature of the UNDAF CDD is support to piloting and up scaling of the O&OD Planning approach under PO-RALG. The concept of O&OD Planning originated from work in 1998-99 where at that time MRALG developed a concept for linking local government planning to central government planning and budgeting based on existing opportunities and obstacles to development2. The Ministry and later PORALG has since then mainly with UNICEF assistance developed the approach with emphasis on community planning. The approach suffers from some weaknesses. Its focus on a range of particular facilitation techniques and high costs have led to concerns within the UNDAF in particular from UNCDF and UNDP regarding the appropriateness of developing a joint programme around that particular approach3. 2.3 World Bank and IMF World Bank support to local government reforms has until recently been limited to support to selected urban authorities through the Urban Sector Rehabilitation Programme. However, in 2001 the World Bank undertook a major analytical work4 and later decided to prepare for a Local Government Support Credit. The envisaged World Bank Local Government Support Programme (LGSP) will partly address the special needs of Dar es Salaam local authorities, but mainly provide nonsector specific capital grant funding to a large part of local authorities in the country in a manner that give the local authorities incentives to improve their functional performance. The World Bank LGSP will in this manner fill a gap in the local government reforms in Tanzania, which only have addressed policy, procedural, and capacity building issues. The LGSP will provide much needed non-earmarked development funds to allow local authorities effectively to plan in accordance with their mandate. The programme will be designed during 2003 and probably start effective implementation 2004.

Operational Guideline to Regional Secretariats 1999 and the later Planning and Management guide to Regional Secretariats, 3 The problems are most briefly described in the Joint Government and Donor Review of the Local Government Reform programme (Annex 6) as well as in later reports from Hyden (2002) and field report from Mabina, Anoushka and Tidemand 2002. 4 World Bank, United Republic of Tanzania: Decentralisation Sector Work, March 2001.
The UNCDF LDF Programme in Mwanza was late 2001 redesigned in order effectively to pilot the introduction of this national non-sector specific development grant. This redesign included in particular the design of an effective incentive based LDF allocation system and a replicable system of indicative planning figures below district level for more effective community participation and transparency in resource allocations. IMF has provided limited support in the form of analytical work on fiscal decentralisation5.

3. LGRP

3.1 Background Local governments were abolished in the early 1970s and re-introduced in Tanzania in 1982. However, a substantive programme for enhancing their effectiveness in service delivery as well as reforming the overall public sector along the principles of decentralisation was first taken up as an issue through the Civil Service Reform Programme (CSRP) in 1994. In October 1996 the Prime Ministers Office presented the Local Government Reform Agenda a paper developed with technical support from the Civil Service Reform Programme Secretariat. The Reform Agenda made substantive policy proposals regarding the vision of local governments as: Largely autonomous institutions, Strengthened in financial and HRD aspects, Democratically governed and conducting business in a transparent and accountable manner, Deriving their legitimacy from service delivery to the people
The role of central government should in such a future decentralised context be confined to policy development, management of regulatory framework and monitoring of local authorities. The document also outlined the main elements of a local government reform strategy and an action plan including proposals for management of the reforms. The proposed programme would be constituted by six main components: 1. 2. 3. 4. 5.
Institutional and legal framework, Restructuring of local authorities, Governance Finance, HRD
IMF: Fiscal Decentralisation Issues Tanzania May 2001.
6. Programme management. The programme was to be implemented through the Prime Ministers Office (PMO) that at that time had the mandate to oversee and support local authorities. It was foreseen that a strong secretariat would be established within the PMO to manage the LGRP. The Reform Agenda was endorsed by the Steering Committee of the Civil Service Reform Programme in 1996 and subsequently in 1998 GoT published its Policy Paper on Local Government Reforms. These two documents constitute the policy framework on which the reform of local government in Tanzania mainland is based. A detailed Action Plan and Budget (July 1999 June 2004) was developed by the Government of Tanzania and endorsed by a joint Government Donor Appraisal mission in 1999. This document has until recently been the master plan for the LGRP. It was during the formulation process decided to establish a dedicated management unit within the ministry responsible for local government (initially PMO, later MRALG and now PO-RALG), but with a large degree of autonomy. The management unit includes national component mangers for the above-mentioned six components, 2 international Advisors, Zonal Reform teams based in selected regions for outreach and support to approximately six reforming councils each and various support staff. Component Managers report to the Programme manager (supported by the Chief Technical Advisor) who reports directly to the Permanent Secretary. An important strategic choice was the decision to phase the reforms initially by including one third of the councils (the 38 batch one councils), approximately 1-2 years later to include the next batch etc in order to cover all local authorities within the foreseen five year period. The total budget of the Action Plan and Budget (July 1999 June 2004) was approximately 50 million US$. The programme was funded through a basket fund arrangement further detailed below with contributions from Denmark, UK, Norway, Netherlands, Ireland, Finland, Sweden and EU, UNCDF. Sweden (SIDA) was the latest donor to join (2001). The LGRP aims principally at: Revising and harmonising laws and policies in support of local government reforms, Developing mechanism for block grant financing and strengthening financial management in local authorities, Developing regulations and systems for a decentralised personnel management system including comprehensive training of staff and councillors, Restructuring the first batch of reforming councils (38 out of 114) to ensure a more effective delivery of services.

3.2 Main Achievements 1999-2001 The programme has supported policy development and legal reforms, including: The restructuring (with substantial retrenchments) of the Regional Secretariats based on the 1997 Regional Act, The Local Government reform Policy approved by cabinet 1998, Amendments to the Local Government Act (1999), which more clearly established the autonomy of local authorities in areas of planning, budgeting, and personal management. Detailed regulations in areas of fiscal block grant regulations and staff regulations (December 2000), Activities for dissemination of new policies and reforms to the wider public have been undertaken.
The Programme has designed and initiated a process of restructuring the first batch of councils. A manual with 17 steps for a restructuring was developed. Zonal reform teams have been employed to support local authorities in the restructuring process. Substantial delays have occurred in this exercise. A substantive programme for capacity building has been designed for training of councillors. A programme for training of grass root leaders (leadership at ward, village and Kitongoji levels) has been undertaken in most of the country (more than 1000 trainers were trained to undertake the exercise). A system for integrated financial management (platinum) in local authorities has been designed and rolled out in selected councils. Effective utilisation of the system is however limited.
3.3 Review Recommendations and Observations A joint donor government review of the LGRP was undertaken June 2001. The review endorsed the basic principles of reform, but took note of the many problems: Most importantly a lack of reform implementation in areas that matters most. The block grants were in spite of legislation never effectively introduced to the reforming councils. Line ministries and central government ministries (including PO-RALG itself) often overruled effective local government control of staff in reforming councils - in spite of new staff regulations. This absence of systemic reforms were recognised as being outside the direct control of the LGR team, but noted as crucial for the relevance of the overall
programme. The Review thus recommended more emphasis on these aspects, including the revival of inter ministerial working group and other institutional arrangements. Substantial delays had occurred in many of the planned activities especially in the restructuring of local authorities. This was reflected in a continuous and substantial under spending compared to budgets. Continued extensive use of consultancies for various analytical reports with subsequent limited effective follow up. The reforms appeared to be with limited ownership at local government level. Few incentives were in place to ensure that local authorities change. An initially envisaged component for a capital grant to local authorities was abandoned during the appraisal in 1999. Local authorities that undertook painful retrenchment exercise would not be able to retain any of the finances saved. The LGRT was established as a semi-autonomous unit to drive the reforms. However, the work and institutional set-up appeared on a number of occasions to work in parallel rather than in support to the permanent government institutions such as the PO_RALG in Dodoma and the Regional Secretariats. It was noted that better co-ordination between the LGRT and PO-RALG was needed, that activities in support of the PO-RALG and Regional Secretariats should be strengthened and a strategy for integration of the reform programme over time into PO-RALG to be developed.

In addition the Review noted particular issues to the various components and the detailed work plan of the LGRP. 3.4 GoT Response to Review The GoT responded positively to the Review basically endorsing all major findings and recommendations. However, practical response and redirection of the LGRP took long. A series of consultative workshops for the reprogramming were initiated early 2002 and completed July 2002. The new programme is briefly outlined in section 5 and the logical framework presented in annex. More immediate response to the recommendations of the Review included the establishment of two task forces on finance and personnel/organisation respectively to advise on how the above-mentioned systemic aspects of reforms could be more effectively addressed. 3.5 Post Review Achievements 2001-03 In particular in the area of fiscal decentralisation the new arrangements were successful in facilitating important systemic reforms. Georgia State University was contracted to
develop a system of intergovernmental grants as replacements for the hitherto negotiated allocation of funds for local governments. The new formula based approach to allocation of finances to Local Governments is gradually to include all recurrent fund transfers within the sectors of education, health, roads, water, agriculture and administration. From next Financial Year it will be applied to health and education. The new system will rectify previous years very unequal distribution of resources, which has favoured urban local governments and local governments with well-developed infrastructures (districts with more schools received more money than other districts even through the number of children in school going age was similar). The new system will also gradually give local governments more discretion in allocation of resources and would bring them some incentives for more rational allocation of e.g. staff. Similar systemic progress has not been achieved regarding devolution of staff to local governments. A new Public Service Act was passed by Parliament in 2002 and later amended. The Public Service Act does not provide for a clear legal framework for local accountability of staff. In fact a review of the Local government Service Regulations 2000 and the Draft Public Service Regulations in the context of the respective parent legislation and underlying policies (Shivji 2003) concluded, the Public Service Act centralises the administration and management of the public service, including the local government service, in the organs of the central government while deconcentrating powers from centrally based to locally based executive officers. It is suggested therefore that centralisation and deconcentration are the twin principles, which underlie the Public Service Act (Shivji 2003, paragraph 21). The report further adds In practice, no doubt, there will perhaps be consultation and some involvement of the local councils in the administration and management of local government service, but this would be as a matter of policy and practice rather than law. It is understood that some discussion still is ongoing within Government, including consultations with ALAT and that further revisions of regulations and even the Act still is possible. Under LGRP progress was in the same period made regarding implementation of nationwide training programmes for all Local Government Councillors and District Executive Directors. The restructuring exercise was slightly simplified within the period and most LGAs reached the final stages of the process. Two benchmarking exercises of LGA functional capacities were undertaken 2002 and 2003 (under the Fiscal Task Force for preparation of recurrent block grants as well as under the consultancy for preparation of the LGSP). Overall the period 1999-2002 seemed to lead overall improvements in LGAs performances in particular within financial management (starting with less than 10% of the councils in 1999 receiving a clean audit opinion). More interestingly the benchmarking exercises showed limited correlation between LGA performances and the many expensive capacity building exercises undertaken by LGRP (restructuring etc) and various area based programmes.

4. The Basket Funding Modality
4.1 Institutional Arrangements The government and donor partners set up two main bodies charged with programme oversight: The Joint Government Donor Consultative Forum chaired by PS PO-RALG with representation from line ministries, central ministries, donors, ALAT and selected local authorities. The Consultative Forum discusses and advices on the substance of LGRP plans to ensure that activities are prioritised, comprehensive and relevant. The Common Basket Fund Steering Committee chaired by the PS PO-RALG with representation of the funding agencies of the basket Fund. The Steering Committee is according to the LGRP Financial Manual open to all donors, but only donors actually contributing to the CBF may vote. All plans, budgets and disbursements from the Satellite Account to LGRT Common Basket Fund Accounts are to be approved by the CBF.
Component managers report to the overall LGRP Manager, who reports to the Permanent Secretary PO-RALG on a monthly basis. In addition there are formal consultative arrangements with three fora: The Inter-Ministerial Technical Committee (IMTC) of Permanent Secretaries, The Inter-Ministerial Working Group (IMWG), chaired by the PS CSD, The Local Government reform Inter-ministerial Working Group, chaired by the PS, PO-RALG.
4.2 Management Practices In practice the CBF Steering Committee has especially after the Review - tended to overshadow other institutional arrangements for oversight and dialogue with the LGRP. This is explained by: 1. The meeting frequency of the CBF under the LGRP could not be less than quarterly as quarterly plans and budgets were to be approved by the CBF, 2. The participants in the CBF felt a bit at unease with the extents and speed of LGRP response to the Review recommendations. This resulted in a number of queries and reluctance in many instances to approve plans/budgets immediately. This was reflected in the lengthy (one day almost) meetings and the need to call for extraordinary subsequent meetings in order to pass budgets.

3. A change in the majority of embassies and missions represented in the CBF during or after the Review. This in turn led to need for briefing of new members, repetition of discussions that otherwise were agreed upon with previous members as well as genuine new concerns. 4. Lack of pro-activeness from other bodies the Consultative Forum, Interministerial Steering Committee etc. The latter committee only met once during 12 months. The established task forces had substantial representation from donor agencies. This was partially based on technical competencies but also the interest of the particular donor agency. Donors participating in the basket fund felt it obviously necessary to co-ordinate views prior to CBF meetings. These donor meetings chaired by the Norwegian Embassy tended to become more formalised having minutes prepared etc. The end result was that in the 12 months after the Review before a new medium term Plan was developed discussions on local government reforms tended to be dominated by the participating donor agencies present in the CBF.
4.3 Financial Management and Reporting The Programme Manager is the accounting officer for all funds managed by LGRP. Participating donors funding activities through the basket fund transfer contributions to a Satellite Bank Account as per agreements. Funds are transferred from the Satellite Account to the basket Account on a quarterly basis on approval from the CBFSC. This account is used for funding all basket-funded activities under LGRP. The system is illustrated in the diagram below.
Participating Donors of CBF: Danida, EU, DfID, UNCDF etc Satellite Account
Transfers approved by CBFSC

Basket Account

Authorised by Programme Manager
Quarterly Reports and Requests for funds

Programme activities

In addition individual special accounts are maintained for those donors who fund earmarked activities within the programme rather than contribute to the basket fund. Financial reporting has been done quarterly to the CBFSC. Semi-annual audits have been undertaken by a private audit company (KPMG). Audits have generally been satisfactory, with some minor problems of accounting use of some of the (minor parts of the overall LGRP) funds transferred directly to LGAs. LGRP management has emphasized strict adherence to financial management of funds. The quarterly financial reporting has been accompanied with detailed reports on progress compared to planned activities. Reporting has been rather detailed, with reporting on sacral activities per output. In the current plan outputs number more than 50 and detailed quarterly reporting on each leads to rather overwhelming documentation, where management during and immediately after the review has been criticised for dwelling too much on details at the expense of strategic oversight.

5. The Future LGRP

The Permanent Secretary and the LGRT presented June 2002 a new Medium Term Plan and Budget (MTP) for the period July 2002 to the Consultative Forum and Common Basket Fund. The master log frame is enclosed as annex. The MTP three-year plan includes a number of substantial changes to previous LGRP plans: 1. The Local Government Reforms should be seen in a long term perspective - the LGRP plan would be based on a nine year period (from 2002) to be in line with the public sector reform planning perspective, 2. The LGRP should consequently be planned in the form of 3 three year plans - to be updated regularly. The first plan to cover the period 2002/03-2004/05. 3. Capacity building of the PO-RALG and Regional Secretariats should be undertaken - activities should be planned for in support of this. A decision on whether these activities will be fully/partially supported through the basket funded LGRP or through another mechanism will be taken later (in view of CSD support to PO-RALG and the outcome of a commissioned study supported by Irish Aid on Regional Secretariats), 4. The new LGRP three-year plan should include activities for a gradual integration of LGRP activities within PO-RALG and RS, 5. The focus of the new plan will to a larger extent be on achievement of overall outcomes rather than activities/outputs. 6. The plan will be linked to progress in systemic reforms (fiscal, HRD, legal) and thus guided by the three task forces. 7. The idea of three distinct phases of reforms will be dropped: all Councils should from January 2003 be eligible for support under LGRP (e.g. on the HR &OD Task Force we are about to complete advice on how the Staff Regulation of 2000 can be rolled out to all districts no later than January), increased fiscal autonomy for LGAs will depend on their individual fulfilment of "minimum access conditions" - along the same principles now applied in Mwanza LDF but more focused on financial management practices. A comprehensive evaluation of the programme should take place September 2004,
6. Key Lessons and Recommendations for UNCDF/UNDP
6.1 LGRP Effectiveness The LGRP Programme as such is a reasonable effective programming mechanism for achievement of several key reform objectives. At present there is no alternative programme mechanism for driving the policy development such as harmonisation of sector legislation, continued refinement of local government legislation etc, continued analytical work in support of systemic reforms (fiscal and personal decentralisation in particular) as well as generic capacity building. These activities are time consuming to manage and can at the moment not be undertaken within PO-RALG without the additional human resources provided by LGRT. However, the overhead costs of LGRP are high (now a total of 4 million US per year for LGRT salaries, vehicles etc). Plans have also during the period 1999-2003 continued to be overoptimistic and actual spending compared to budgets have generally been around only 70%. A discussion of the effectives of LGRP in achieving objectives should also bee seen in light of alternative arrangements. UNDP has during the same period as discussed here provided direct support to PO-RALG for internal capacity building. That programme has been even more difficult to implement in time. Of the different specific activities undertaken under LGRP, especially the effectiveness in LG restructuring can be questioned. The restructuring of the first batch of councils took much longer than expected and the impact in terms of improved LGA performances in e.g. financial management has not been impressive. A number of other capacity building activities are also moving very slowly. Although LGRP is not sole responsible for e.g. introduction of Epicor and LG M&E systems, then the unsatisfactory progress in these areas can in part be subscribed to lack of initiative from the relatively well resources LGRT. 6. 2 Institutional arrangements for LGRP Are the institutional arrangements of LGRP appropriate for achievements of overall reform objectives? The institutional arrangements for the direct management of LGRP (the CBFSC and Consultative Forum) can only be effective if overall policy guidance is clear. This requires effective guidance from IMTC and IMWG. In retrospect, the original LGRP plan may have assumed too rapid implementation of the 1998 Local Government Reform Policy without due consideration of the immense problems the Government of Tanzania is facing by implementing a wide range of other reforms (for each of the sectors, for the overall public service etc). The new MTP thus includes planned activities for support to more effective overall reform co-ordination. The institutional arrangements for the direct management of LGRP (the CBFSC and Consultative Forum) have in the period 2001-03 shown some unfortunate bias towards

Annex A: Documentation GoT, PO-RALG/MRALG and LGRP General Documents: Local Government Reform Agenda 1996-2000, Local Government Reform Policy Paper 1998 Joint Government and Donor Appraisal of LGRP 1999. LGRP Action Plan and Budget July 1999-December 2004 Vol. 1 and 2 LGRP Work plan and Budget July 2000-June 2001. LGRP quarterly implementation Progress Report (October-December 2000) and forward Work plan (April-June 2001) March 2001. Local Government Laws revised 2000. Restructuring Manual. LGRP Audit Report December 1999, September 1999, May 1999, June 2000, March 2001. Audited Accounts and Management Audit Report on the Financial Statements of LGRP for the year ended 30th June 1998. A framework for coordinating Local Government and Sector Reforms. Internal Review Report on the achievements of key milestones for the period July 1999 to June 2000. Financial Management Manual.
LGRP Governance Component: Framework for Governance Component of LGRP, May 1999 Code of Conduct for Councillors and Council Staff, June 2000 Guidelines and Booklets on Good Local Governance, September - November 2000 Sensitisation Booklet on Local Government Reform, December, 2000 Preparation of National Framework on Participatory Planning and Budgeting at District Level, March 2001 Report on Sensitisation Seminars, April 2001 LGRP Restructuring Component Report on the restructuring study in Kondoa District Council and Mbeya Municipal Council 1999. Final Report (Study was to test the practicability of 17 steps restructuring process outlined in the Restructuring Manual).
LGRP Finance Component Financing of Dar es Salaam Local Government authorities, June 1999. Regulations for Management of Block Grants December 2000. 19
Preparation of a Financial Management Manual for Council Heads of Department, October 1999 (completed and in use). Improved Revenue Collection Procedures, January 2000 (completed and being introduced). National Minimum Standards and Block Grants for the year 2000/01, February 2000. Arrangements for Support to Local Authorities Implementing Platinum SQL, July 2000 (completed). Restructuring of the Local Government Loans Board by Nordic Consulting Group a/s, November 2000. Transformation of the Local authorities Provident Fund by the Solomon Consortium ongoing. Fiscal Decentralization Issues (commissioned by the Ministry of Finance) by IMF Mission, March 2001 completed. Data Collection and Processing for Assessment of Financial Performance of Local Government Authorities, Study by PricewaterhouseCoopers for Fiscal Task Force for the development of eligibility criteria for fiscal decentralisation. Study funded by DfID. June 2002. Developing a System of Intergovernmental Grants in Tanzania, Georgia State University, Andrew Young School of Policy Studies, (Jamie Boax et al) Various reports 2002-03.

LGRP Human Resources Component Review of the implications of decentralized staff management on Central Ministries and agencies, 2001 Pay Reform in Local Government (SASE), 2001, Training of councillors and its operationalisation, 2001. Teacher Rationalisation Study, 2001 Training of Grassroots Elected Leaders, 2001 (booklets, training guides) Appraisal study of the Organizational Development Needs of Regional Secretariats, 2001 Consultancy to Formulate an Institutional Strengthening Programme for regional Secretariats by Barbara Noest et al 2002. Review of the Local Government Service Regulations 2000 and the Draft Public Service Regulations in the context of the respective parent legislation and underlying policies by Professor Shivji 2003. Legal and Institutional Component Study to review legal and institutional framework governing Local Government System, 1998; Legal framework for implementation of Local Government Reform, 1999; Review of sector legislation, Revision and consolidation of Local Government laws by incorporating all amendments including Act No.6 of 1999, Attorney General Chambers,
completed and the Revised and Consolidated Local Government laws published; Popular version of the Local Government Laws, 2000
Monitoring and Evaluation Baseline Impact Assessment Study for the Local Government Reform Programme Framework for Local Government Monitoring and Evaluation System A Proposed System of Local Government Monitoring and Evaluation Piloting a National Monitoring and Evaluation System.
PORALG Strategic Plan Functions and Organization Structure, July 2000 Opportunities and Obstacles to Development Guidelines Rural Development Policy Rural Development Strategy
Annex B: Master Log frame of LGRP 2002-2005 Goal REDUCTION IN THE PROPORTION OF TANZANIANS LIVING IN POVERTY IMPROVED QUALITY, ACCESS AND EQUITABLE DELIVERY OF PUBLIC SERVICES, - PARTICULARLY TO THE POOR, - PROVIDED THROUGH REFORMED, AUTONOMOUS, LOCAL AUTHORITIES Principles of good governance7 adhered to at all levels of Local Government Assumptions Macro economic stability Economic growth Assumptions Socio-political stability Adherence to the goals of the Vision 2025 Continued top political commitment to decentralization by devolution 1. Goals and objectives of LGRP disseminated to stakeholders 2. Civic education programmes designed and introduced to LGAs 3. Improved ways of conducting council business developed and introduced into LGAs 4. Compliance by LG Laws monitored through RS 5. Gender issues mainstreamed in LG plans and operations 6. Mechanism for two way information flows and feedback between LGAs and the general public developed and disseminated 7. Methodologies and approaches for coordinated and participatory local development designed and introduced 8. Guidelines on planning and budgeting unified into one poverty focused system to be adopted by LGAs 9. Poverty Audit approach introduced to LGAs through RS 10. Guidelines on decentralization to lower LGA levels prepared and disseminated to all LGAs

Capital : Nairobi

Area:580370 sqkm Population: 34 millions inhbts Density: 59,0 ctzns/km2 Average growth: 2,2%
FOCUS The expected devolution The Local Government Reform Programme (LGRP) initiated by the World Bank in late 1990 has made it possible for some service delivery functions to be decentralised to local government authorities and the revenue base of local government has expanded. The LATIF block grant has increased the viability of local government authorities. However a proper legislation to support these reforms is yet to be enacted. But the implementation policy is to have real devolution of powers and functions to local authorities. The Local Government Act Cap 265 of the laws of Kenya, which was enacted in 1977 and it is still in force with various amendments over the years needs to be repealed to allow for real devolution of powers and functions to local government authorities. The short or long term project in Kenya for local government is to enhance the viability of local authorities. Increasing their revenue sources, and enacting a proper legislation (including a review of the Constitution) which supports their existence as discrete spheres of governance local government would guarantee the decentralisation process in Kenya.

GENERAL INDICATORS

HDI Total GDP (millions $US) GDP/per capita (units of $ US Annual Growth (2001) Life Expectancy Literacy (%) Access Internet/1000 ctzn) Communalized Population Average Communal area Decentralization Urban Population Numbers and tiers of local government (councils) 39,4 County Municipal Town City 0,3,1% 47,0 Men Women 12,70 100%

Human Development

90,0% 78,5%
I- The decentralization policy Evaluation:
The decentralization policy reform touched various and essential areas. But, the decentralization is not back up by the ambitious law. There is a big confusion between deconcentration and decentralization leading to a non consistent administrative arrangement.

Indicators:

1.1. Establishment of the LG system : 1.2. Consistency of the legal framework: 1.3. Consistency of administrative arrangements:
The establishment of the Local Governance system The advent of multi-party politics in Kenya in 1992 ushered in a major shift towards devolution through local authorities. Local authorities are increasingly being recognized as effective partners in the governance and development process. The ministry of local government in collaboration with the ministries of Finance and other central level ministries has been undertaking various reforms focused on improving the intergovernmental fiscal structure, enhancing local financial management, strengthening citizen participatory planning has been introduced through the local governance. Participatory planning has been introduced through the local authorities Service Delivery Action Plans (LASDAP) and it now involves over 43,000 citizens participating in over 1,000 community meetings nationwide to identify local priorities. The current Kenya Economic Recovery Strategy for Wealth and Employment Creation (2003- 2007) continues to stress the need to accelerate the local government reform process in order to further improve local service delivery,
governance an poverty alleviation. The strategy specifically places priority on: Restructuring of local authorities based on viability, Rationalizing central-local financial relations, Improving local authority budgeting, financial management and revenue mobilization, Legal framework for decentralization A strong legal framework does not yet exist to back up the decentralization policy in Kenya. This was expected to come through the 2004 draft Constitution that was rejected in the 2005 National Referendum. What exists since 1990 are piecemeal reforms, which have focused on improving the fiscal aspects of the Local Government Authorities. The 1977 local Government Act Cap 265 of the laws of Kenya provides for the local government The Administrative Organization The local government system in Kenya comprises the Ministry of Local Government, and the 175 local authorities comprising 3 city councils, and 67 county councils. Local government is single-tiered in both urban and rural areas. Urban local authorities are the 3 city councils (Nairobi, Mombasa, and Kisumu), 43

Table 1 : Administrative and territorial organisation Territorial Division Local Govt. Constituency Name. Nber City council 3 Yes Municipal Council 43 Yes Town Council 62 Yes County-council 67 Yes Municipal division 34 No Parish/Ward 5225 No Village 44402 No Source: Ministry of Local government, 2007 Delib. Organ
Strengthening Local Authority participatory planning and service delivery, Rationalizing Local Authority staffing and structure, Reviewing Local Government Act and legal framework.
system in Kenya in terms of the mandate, management and operations of local authorities. Other laws that affect the management of local authorities and their revenue base include: - Local Government Loan Authority Act (Cap 270) - Land Planning Act (Cap 303) - Trade licensing Act (Cap497) - Valuation for Rating Act (Cap 255) - Agriculture Act (Cap 218).
municipal councils and 62 town councils. Rural local authorities include 67 county councils whose geographical boundaries coincide with those of administrative districts. Some of the local authorities are quite small and lack the resources to maintain adequate levels of service delivery.

Executive Organ

Supervision/Control
II- The implementation strategy Evaluation:
The local government doesnt have a big proficiency in the area of implementation strategy. The central government is yet to really transfer powers and function to the local authorities. Thus the spatial planning processes are not structured from local to central levels.
2.1. Implementation planning : 2.2. Transfer of competencies and sector-based policies: 2.3. Structuring of decentralization and spatial planning: 2.4. Technical support and M&E of the process:
The decentralization implementation planning Kenya has since the mid-1990s initiated reform of LGs that foremost, has focused on improving the fiscal aspects of the LGs without, to date, substantial legal reforms. However, as part of the ongoing Constitutional review, much wider and very radical reforms are being introduced. The 2004 Draft Constitution of Kenya recognized local government as a separate sphere of Government, but this draft was rejected by the National referendum albeit Local Government was not among the most contentious issues. In Kenya, the Local Government Act has remained relatively unchanged for a long period. It gives Local Governments very limited mandates as de-concentrated administration, and sector ministries provide most of the local services.
Institutions in charge of technical support and monitoring The institutions in charge of technical support and monitoring of Local authorities in Kenya are: - The Ministry of Local Government, - The Association of Local Government Authorities of Kenya. Kenyans has introduced various market oriented reforms in public sector management since the 1960s. On the local government front there have been various attempts. The Omamo Commission of inquiry on local government in 1996 for example, pointed to the large number of small and non-viable local authorities. However this problem was not dealt with at the time. In the late 1990s, the World Bank established and funded the Kenya funding. The focus of this programme has been on institutional development. The government is fully committed to devolution of powers and functions to local authorities as it considers them as effective partners in the governance and development processes. The Kenya Economic Recovery Strategy for Wealth and Employment Creation (2003-2007) places emphasis on the need to accelerate the local government reform process in order to further improve local service delivery, governance and poverty reduction.

Transfer of competencies and sector based policies Local government in Kenya is not yet seen as a separate sphere of government. In this regard, the transfer of competences from central to local governments has not actually taken place in Kenya. The appointment of senior staff is done by central government. Local Authorities have no powers to hire and fire senior staff. Central government through the Minister for local government has to approve local authority budgets.
Decentralization and spatial planning Spatial planning powers and functions have little been decentralized in Kenya. The physical planning Act No 6 of 1996 vests most of spatial planning powers in the ministries responsible for Local Government, and Lands and Housing. Evaluation:
The LGs organs are functioning with respect to their agendas. However, appointed officers from the Central Government limit local organs autonomy although their presence helps improving the quality of the technical staff. They are symbols of the State control over LG functioning.
Some spatial planning powers are also centrally vested in the ministry responsible for Environment. In this regard local authorities are mainly charged with plan implementation, and enforcement of development control.
III- The Local Government structures and management
3.1. Functioning of the political organs : 3.2. Quality of the technical organs: 3.3. The level of the State control:
The political Organs The council which is made up of councilors and the mayor (for cities and municipalities), or Chairman (for town and counties) is the main political organ of a local authority. The mayor or Chairman is selected by councilors from among themselves. The council is the main policy making body supported by statutory committees which deliberate on policies before they are taken to a meeting of full council for approval.
Control of Local Government by the Central government Local authorities in Kenya are semi autonomous legal entities with administrative and legal powers delegated by the central government under the local government Act. The Act empowers the minister of local government to approve local authority revenue sources, budgets, and to dissolve a council and appoint a commission if it is not justified. The public service commission a central government body determines the The technical Organs The Town Clerk is the chief Executive for a local authority. He is an appointee of central government and he serves as Secretary to the council. He is assisted by heads of departments and each department has various sections with middle and lower carder staff. All departments are linked to appropriate council committees. appointment of local authority senior staff. Central government oversight and control in Kenya is very strong at all levels down to provinces, districts and locations. The ministry is required to ensure that local authorities have the instructional and policy framework systems and capacity to effectively provide the required local services in a responsive, efficient accountable and transparent manner.

IV-The Human Resources Evaluation:
The process of HR transfer from the Central to local levels has started, but is still to be completed. The bulk of the local staff is constituted with junior and lower carder. In these conditions, its difficult to pretend to have autonomous in the level of local government contracting power.
4.1. The qualifications of local agents : 4.2. The transfer of the human resources: 4.3. The LG contracting power:
The existence and qualification level of local agents Recruitment and appointment in Kenya for junior staff is done by the LG while for the senior staff is done by the PSC. Employments for both junior and senior staff are done by the LG whereas transfers are not applicable for the junior staff but are done by the PSC for the senior staff. Performance appraisal on the other hand, is done by the clerks and supervisors for the juniors while for the seniors are done by the province/PSC and MOLG. Salaries, benefits and incentives for both the juniors and the seniors are done by the ALGE and unions whereas the training for both the staffs is done by the LGs/MOLG. Discipline on the other hand for the juniors are done by the clerks while for the seniors are done by PSC/MOLG and terminations for the juniors are done by the LGs while The transfer of personnel In Kenya, Senior staff in local authorities can be transferred between local authorities, and to and from central government line ministries. The only The local government contracting power. Given their semi autonomous status, Local Governments contracting power is limited. They have no powers to hire and fire senior staff. All capital projects have to be approved by the minister responsible for local government and so are the contracts for the same. staff that can not be transferred are junior staff who are employed by the local authorities themselves. PSC/MOLG for the seniors. The staff at HLGs is in finance, Administration and works while in the LLGs they are not applicable. Vacancies are significant in all senior positions in most areas and functions. Issues of LG structures are bloated lower staff and stability is not good at all as there are very frequent transfers. Salaries are higher in LG than CG while the local incentives and variation are bigger in LGs and higher salaries, but the payments are not timely at all. Pensions have been problematic with LG because of contributions. The councilor staff conflicts are there and there are no pay reforms so far. Level of capacity building in Kenya is quite low. Main modalities of Capacity Building are LG own contributions and are discrete projects.
V- The local democracy Evaluation
Elections are organised regularly. The system promotes the participation of political parties. Citizen participation lacks tools and framework for implementation. Bottom-up accountability and citizen control are quasi-inexistent. The municipal movement has risen as a key player in the decentralisation implementation process.

5.1. Fairness of the electoral system: 5.2. Level of citizen political participation: 5.3. Transparency and accountability of local authorities and management: 5.4. Sustainability of the municipal movement:
The electoral system The Electoral systems for local authority leaders in Kenya follow party lines. This means that every registered political party in a Ward (the electoral unit) is expected to field a candidate to be elected as the Councilor of the Ward. Currently there are 6 main political parties in Kenya including: NARC, ODM, NARC Kenya, KANU, FORD Kenya, and LDP. LG elections are held simultaneously with the presidential and legislatives ones. The system combines elected councilors and nominated ones from the Central Government. 2/3 of the councilors are elected through universal adult suffrage in a single member Ward for a 5-year term. The remaining 1/3 is appointed by the Minister of LG from nomination made by parties according to their weight in the various local Councils.
The representativeness of the local authorities With the central government appointing 1/3 of the local councilors, the representativeness is a great challenge. There is no mechanism to guarantee or to promote gender consideration in local elections. Following the 2002 local elections, women represent far less than 3% of local councilors. In Kenya, the local government is not a separate sphere but rather a tier of government. In this way, local authorities representation in national and international issues is mainly through the local government line ministry. This picture is rapidly changing however with the local government reforms that are currently in place, albeit a substantial legislation to back up this process is yet to be enacted.
The local participation (relation between municipal organs and the civil society organization) In Kenya there is yet no policy and legislative framework for the participation of the civil society and the private sector in the management of municipal affairs. Civil society organizations are neither members of the Council nor the statutory committees of a local authority. This picture is rapidly changing with the current local government reforms, but their participation is yet to be formalized.
The transparency and accountability systems of local management
In Kenya, the ministry for local government supervises the activities of local government authorities. In this way Local government authorities are accountable to this central government line ministry for what they do. In case on non-performance or poor performance the minister for local government has powers to abolish the council and appoint a commission. He can also transfer the chief officers and bring in
new ones. However, a system of down ward accountability for the elected officials to account for their performance to those who elected them does not exist. Transparency does exist in that issues are discussed in a transparent manner in council and committee meetings. Members of public can participate are allowed to participate in full council meetings as observers.

The municipal movement and the decentralization cooperation The Association of local government of Kenya (ALGAK) plays a lobbying and advocacy role for local authorities. It has staff strength of 10 people and annual VI-The local finances Evaluation:
The intergovernmental transfer is effective and improving. However, the system is not automatic. The locally generated revenue is important, however, the LG effort is yet to approach the potentialities. The LG contribution to the national economy is still very low.
budget of 200,000 US percent of the budget while the remaining comes from the donors. Its impact on reforms is limited but increasing.
6.1. Consistency of intergovernmental transfers : 6.2. LG performances in locally generated resources: 6.3. The economic and financial weigh of LG:
Intergovernmental transfers The ministry of local government in collaboration with the ministries of Finance and other central level ministries has been undertaking various reforms focused on improving the intergovernmental fiscal structure, enhancing local financial management, strengthening citizen participatory planning. To enable local authorities to provide the services and facilities as required by the Local Government Act, the Government established the Local Authority Transfer Fund (LATIF) through an Act of Parliament (LATF Act no: 8 of 1988). LATIF is block grant that provides The local generated revenues supplementary funds to local authority budgets. This mechanism transfer 5% of the national income tax to all local authorities in Kenya based on an objective formula basis. LATIF transfers account for 25% of total local government revenues and support local expenditures such as personnel, operations, maintenance, capital projects and debt resolution. In addition to the LATIF block grant funds, the Government also provides a portion of the Road maintenance Levy Fund (RMLF) directly to some local authorities as earmarked grants for road maintenance.
Local generated revenue accounts for about 70% of local authority revenues. One main objective of the Kenya Local Government Reform Programme
established and funded by the World Bank from late 1990s is to strengthen local revenue resources.
The financial and economic weight of local governments Local government authorities are yet to identify and collect all their local revenues. A number of local authorities have put in place various strategies including GIS systems to assist them in VIIthis endeavor. Local authorities at the moment are not yet able to collect 50% of their local revenues, implying that if all revenue was collected most of them would be in surplus.
Local development and poverty alleviation

The local development planning is still to be improved. Service delivery by LG needs great improvement both in terms of access and quality. The support to the local economic actor is not efficient.

Evaluation:

7.1. Local development planning capacity : 7.2. Level of service delivery to the population: 7.3. Support to the local economic actors:
The local development planning Under the current local government reforms, communities are being mobilized to participate in the governance and planning process, thus enabling more effective targeting of priorities, more effective implementation, monitoring and ownership. Participatory planning has been introduced through the Local Authorities Service Delivery Action Plans (LASDAP). The LASDAP process introduced in 2001 currently involves over 43,000 citizens, participating in over 1,000 community meetings nationwide to identify local authority budget priorities. The Government is exploring further mechanisms of involving citizens in participatory budgeting through community contracting community monitoring.
Local government supply of basic services to the population The bulk of Local government services in Kenya is provided by sector ministries. Local Governments are given very little mandates under the Local Government Act as deconcentrated The support to the local economic actors Not mush support has been extended to local economic actors small businesses through micro finance institutions and cooperatives. The informal sector where the majority of businesses is found continues to be viewed by authorities as illegal and to be wiped out although it is the main employer in the local authority areas. administration. The LATIF block grant is meant to among other things improve the capacity of local authorities in service delivery.