Dissatisfied with the systematic failure of centralised approaches to delivering local public services, a large number of countries are decentralising responsibility for these services to lower-level, locally elected governments. What problems have been encountered with decentralising service delivery and how can these challenges be overcome? This paper provides a framework that explains both why decentralisation can generate substantial improvements in service delivery and why it often falls short of this promise.
In the last quarter century, over 75 countries have attempted to transfer state responsibilities to lower tiers of government. Even when it is not explicit, improving service delivery is an implicit motivation behind most of these decentralisation efforts. Centralisation is commonly associated with service delivery problems because services are consumed locally, resource allocation may not reflect local preferences and through fear of corruption and misuse of funds.
The hope of decentralisation to locally elected governments is that by narrowing the jurisdiction served by a government and the scope of its activities and responsibilities, citizens will find it easier to hold government accountable. Decentralisation is intended to improve outcomes to the extent that physical proximity increases voter information, participation and monitoring of performance. While success or failure is difficult to judge, some common problems associated with decentralisation have begun to emerge:
- The most frequently-cited problem is the lack of capacity at sub-national levels of government to exercise responsibility for public services.
- Incomplete decentralisation processes, possibly for political reasons, has led to misaligned responsibilities in some instances.
- While decentralisation was in some cases intended to strengthen the political power of lower tiers vis-à-vis the centre, it has also increased the possibility of political capture within these lower tiers.
- A host of other problems, not associated with service delivery, have served to undermine service delivery in decentralising economies, including the ‘soft-budget constraint’ which has forced sub-national governments into over-borrowing.
- Even where poor citizens can hold politicians accountable, the politician may not, in turn, be able to hold the provider accountable.
Decentralisation is not a one-off policy change, but rather an ongoing process. The end point of accountable and efficient local governments may take decades to achieve. The various instruments of decentralisation, incentives facing policymakers and politicians and decentralisation processes and relationships are complex and far from being fully understood.
- The assignment of expenditure and financing responsibility between different tiers of government can have a direct impact on service delivery and mismatches occur where political realities and historical legacies have leverage to determine these decisions.
- How sub-national governments access financial markets will determine the extent to which such markets will influence the health of the sub-national government and its ability to ensure good service delivery.
- Administrative decentralisation invariably claims far less attention than political and fiscal matters and decentralisation proceeds without explicit staffing strategies or public administration reform.
- In the absence of straightforward channels of information transmission, local voters may have little or no information regarding the resource envelope available to their local community and what those resources are intended to provide.
- Even if decentralisation is aimed at improving service delivery, it will be resisted by those who benefited from the previously centralised system.
