Sierra Leone Institutional Reform and Capacity Building Project

Sierra Leone Institutional Reform and Capacity Building Project Yongmei Zhou AFTPR

Objective of presentation ¨ Share with participants the experience of the design phase of a decentralization and local government support operation

Identification: which reform to support? ¨ Original coverage of IRCBP envisaged in TSS 2002 -4: PFM, Decentralization and Local Gov Capacity Building, HRM, Legal & Judicial Reform, Agricultural Sector Capacity Building. ¨ Too ambitious: stretching implementation capacity of Go. SL and Bank team

Key objectives of governance reform in post-conflict Sierra Leone ¨ Restore core functions of government for effective economic and fiscal management ¨ Restore trust in government ¨ Rebuild social capital in communities ¨ Address issue of social exclusion ¨ Address urgent needs for recovery and reconstruction

Why support decentralization? ¨ “Hot button” issue – Popular support for devolving power – Reestablishing local councils is incumbent SLPP government’s top agenda ¨ Potential benefits – Reducing conflict by opening up space for political participation and improving democratic accountability of the state to citizenry – Long term effect on democratization: LCs as training ground for political leaders – Potential for improving service delivery

Decentralization drives broader PSR reforms ¨ Instill a new culture of transparency and accountability at the local level: will translate into same expectation of the center ¨ Decentralize FM and HRM to local councils: will later trigger changes at the central government level ¨ Fiscal decentralization: shift resources to LGs and force restructuring of central ministries and agencies

Local Government Act 2004: key features ¨ Election of local councils ¨ 20% of Paramount Chiefs in each locality will be un¨ ¨ elected councilors Ambitious plan for devolution of functions, expenditures, revenue authorities to local councils (Schedule III of LG Act) Local councils have autonomy in HRM and FM under guidelines Require transparency in council operation Transition arrangements

Current local administration: employment agencies rather than service providers ¨ Local councils were abolished in 1972. Since then Management Committees have been appointed by President ¨ Few service delivery responsibilities ¨ Very poor performance in service delivery – Revenue collected cannot sustain service delivery: 80% revenue paying salary of staff and allowances of management committee members – Staff largely unskilled: 80% are casual workers; little, if any, training to upgrade skills.

Decentralization does not automatically improve services or accountability ¨ Local councils may remain employment agencies, if current unskilled and surplus staff are inherited, or if councils do not practice restraint in hiring ¨ Local councils may have inadequate revenue capacity and expenditure management capacity to discharge new responsibilities ¨ Local councils may be captured by local elites and fail to address needs of marginalized groups ¨ Local councils may engage in corrupt practices

Key challenges ¨ Design and implement a sustainable decentralization strategy, where phased functional devolution is supported by fiscal and administrative decentralization strategies as well as capacity building support. ¨ Address the issue of social justice and inclusion and establish a new culture in local governments

Go. SL Decentralization Program: Sequencing ¨ Jun-Dec 04: grace period for implementing functional devolution – Build basic LG capacity to make collective decisions and utilize resources – Announce phases of functional devolution – Design fiscal decentralization strategy and sectoral devolution plans ¨ Jan 05 -May 08: transition period for implementing functional devolution – Gradual transfer of service delivery responsibilities – Building LG capacity – Intensive M&E to identify improvement in policy and implementation ¨ Jun 08 & beyond: sustainability phase

World Bank support to decentralization ¨ Pre-2004: Social Fund, Education, Health projects – Empower communities and local service providers to contribute towards the repatriation, resettlement, reintegration, recovery process ¨ 2004 -8: IRCBP (supporting Go. SL Decentralization Program Phases 1 & 2) – Help design a sustainable fiscal decentralization strategy to ensure adequate resource transfers to LGs and sustainable development of local revenue capacity – Help build sustainable local government institutions to deliver services to communities – Support the establishment of a reform platform for other donors to chip in

Decentralization Component of IRCBP: Objective ¨ Help Go. SL establish a functioning local government system – LCs institutionalize participatory planning – LCs have basic FM capacity – LCs establish local revenue mobilization capacity – Service delivery at local level maintain at current level and later expand improve ¨ Outcome and output indicators in Annex 3 of PAD

Decentralization Component of IRCBP: strategic choices ¨ Invest in implementation capacity and embed it in government structure ¨ Learning by doing approach of capacity building: offer LG with discretionary resources so they can practice planning, budgeting, spending, accounting, monitoring, reporting skills. ¨ Consciously create demand for performance ¨ Tap multiple sources of training providers

Decentralization Component of IRCBP: operational subcomponents 1. Strengthen policy and implementation capacity: DS, LGFD 2. Finance start-up administrative infrastructure of new LGs 3. Capacity building: for LGs and other stakeholders 4. Local Government Development Grant 5. Monitoring and evaluation

Strengthen policy and implementation capacity of decentralization program 1. 2. 3. 4. Decentralization Secretariat of MLGCD (serving Inter-ministerial Committee on Decentralization and Local Government) and Local Government Finance Department of Mo. F (serving LG Finance Committee) Legislative/regulatory changes Fiscal decentralization strategy Project planning/implementation/M&E

Capacity building for LGs: demand side ¨ Demand v. s. need ¨ How to increase demand for performance? – Electoral demand – Competitive pressure among LGs – Enforce LG Act and minimum conditions for accessing LGDG ¨ Types of support – Orientation training – Skills training and hands-on mentoring

Capacity building for LGs: supply side ¨ Training providers: using existing institutions or encourage creation of training market? – IPAM • Pro: existing infrastructure • Con: lukewarm response from leadership; weak training capacity, curriculum – Private providers • Pro: motivated, as reward based on performance • Con: limited # of local trainers; no guarantee for sustainable capacity ¨ Training of Trainers: identify entrepreneurial individuals, open to IPAM staff ¨ Mentoring by practitioners

Local Government Development Grant ¨ Objectives: – Offer resources to LGs so they can practice basic resource management skills (planning, budgeting, contract management, accounting, monitoring, reporting) – Use LGDG as a carrot to induce desirable behavior of LGs: focus first on governance culture, then skills – Establish a credible transfer system for other financiers to use in future

Local Government Development Grant ¨ Provide block grant to LGs for financing development projects, as part of IGT ¨ Access rules focus on transparency and accountability requirements of LG Act 2004 – Encourage transparent and accountable governance culture from the very start! – Address fiduciary concerns of IDA – Give incentive to develop management skills ¨ Allocation of LGDG among LGs based on equity criteria, infrastructure needs, other financing available

Eight Steps of Successful Change* ¨ Increase urgency ¨ Build the guiding team ¨ Get the vision right ¨ Communicate for buy-in ¨ Empower action ¨ Create short-term wins ¨ Don’t let up ¨ Make change stick * John P. Kotter and Dan S. Cohen, the Heart of Change

Donor coordination ¨ Government coordinate donors: political oversight by IMC, technical implementation led by Decentralization Secretariat, MLGCD ¨ Donor harmonization to reduce transaction costs for gov – Shared/joint consultation with stakeholders, diagnosis & analytical work – Common implementation arrangements – Joint M&E – Shared capacity building framework

Working with the Country Team ¨ Sector programs – Adjustment of existing projects: social funds – Design of new projects – Implementation arrangement needs to adjust to new functional assignment ¨ New CAS

Other tricks for task managers ¨ Get a PHRD grant for gov to finance preparatory activities ¨ Get good consultants – Recently retired civil servants: practioners and devoted – Practitioners from countries your client aspires to ¨ Talk to the urban group ¨ Build quality assurance in the project

Challenges for Bank supervision ¨ Intensive supervision requires big budget and time commitment ¨ Work closely with FM and Procurement staff ¨ Joint M&E with Go. SL and other donors – Collect baseline data before decentralization, if feasible – Design research framework and build data collection as part of M&E ¨ Be ready for difficulties – LGs not responsive to LGDG incentives – Political pressure for using LGs as employment agencies – Ministries resist changes