Modernising municipal governance

For the first time in human history, there are more people living in urban areas than in the rural sector. Responding to rapid urbanisation is one of the key challenges of the 21st Century. The demand for basic services and infrastructure among the rapidly increasing urban population is a daunting task for many governments in the developing world.

The increasing gap between the demand for services and infrastructure on the one hand and the resources available on the other in large swathes of the world has focused attention on ways and means of modernising municipalities.

With local government elections in Sri Lanka’s municipalities taking place today, it is timely to address some of the issues related to modernising municipal governance. In doing so, it would useful to address the following issues: The principles that should underpin modernisation of municipal governance; a possible Citizens’ Charter; local government service partnerships; financing municipalities, including funding for infrastructure; increasing accountability through performance management; communication strategies and public relations; and central government/municipality relations.

Underlying principles

Good municipal governance should be based on the following principles: sustainability; subsidiarity; equity; efficiency; transparency; accountability; civil engagement and security. It is important that urban citizens have sufficient information to ensure that urban governance is founded on these principles. In this respect, it is noteworthy that the Right to Information Act, in India, came about because of the pressure exerted by grass-roots initiatives.

Towards a Citizens’ Charter

The main purpose of municipal government is to provide essential services for citizens and to strengthen democracy at the local level. The average citizen counts on municipalities to provide basic amenities and services and will inevitably judge their efficacy by the type and quality of the services provided.

Citizens are more likely to pay their taxes and charges, and show a keener interest in the running of municipal government, if they are confident of obtaining satisfactory services. Good leadership along with active engagement of the people as well as civic pride and consciousness are prerequisites for building sound and responsible municipal governance. Often, local bodies are weak and incompetent due to the apathy of the citizens, who believe municipal affairs are dominated by party and group politics.

Enlightened citizens and an articulate civic consciousness are valuable assets for the effectiveness of municipal institutions. Information technology, particularly social networks, provide new opportunities for engaging the citizenry. One of the ways of securing sustained public participation in making municipalities strong is through the adoption of a Citizens’ Charter.

Municipalities need to consider service partnerships with the voluntary and private sectors for a variety of reasons. Gaining success to additional finance is clearly one advantage. However, partnerships can also add value through access to professional knowledge and skills; more advanced technology; project management capacity (which is in short supply in municipalities); understanding of community needs; and expertise in working with disadvantaged communities.

Key stages in establishing successful partnerships include: preparing the partnership environment; identifying partnership projects; preparing a business case; identifying partners, negotiation and award; and supporting implementation and operations.

Partnerships should be developed in an environment that supports the public interest. This requires the creation of an autonomous, accountable and independent regulator, as well as a robust legal framework. There also needs to be effective competition in the market for partnership opportunities.

The municipal authorities should be committed to providing the following as part of such a charter: representation of all sectors of society, including women, young people and the disabled; adequate and safe drinking water; proper roads, drains and sewerage systems; adequate street lighting; sufficient number of parks and recreational facilities; prompt approval of permits (time bound); and prompt registration facilities (time bound).

The municipality should carry out its functions and duties with a sense of: commitment to high quality service delivery; objectivity, accountability, responsibility and transparency; promptness and efficiency; and courtesy and a positive attitude

Municipal service through partnerships

As cities develop, there is a growing gap between the demands on Municipalities and the resources available to them from traditional public sources. They are required “to do more with less”. It is necessary, therefore, to explore innovative styles of governance, which involves bringing together stakeholders in order to pool resources to deliver better services.

“Business as usual” is not sufficient. There must be a leadership capable and willing to innovate on the basis of a forward looking agenda. Such an agenda needs to be based on: a performance driven approach; new methods, skills and resources; and a strong focus on equity in service delivery to address the needs of the poor and disadvantaged. (In this respect any resettlement programmes of shanty-dwellers will be based on international best practice.)

Municipal service partnerships with the voluntary and private sectors can bring about real improvements and lasting benefits that can be shared by all parties. This requires a genuine spirit of cooperation, shared objectives and trust between the parties involved.

However, there must be a thorough appreciation of the risks involved. Poorly planned arrangements and weak contracts can shut out the community from an effective voice in decision-making and even result in excessive prices or reduced service standards. Hence great care should be exercised.

On the upside, there is a great deal of experience, both good and bad, from around the world. There is no need to “reinvent the wheel”. Instead, one should access information and best practice networks and customise the partnership agreements to suit local conditions.

Municipalities need to consider service partnerships with the voluntary and private sectors for a variety of reasons. Gaining success to additional finance is clearly one advantage. However, partnerships can also add value through access to professional knowledge and skills; more advanced technology; project management capacity (which is in short supply in municipalities); understanding of community needs; and expertise in working with disadvantaged communities.

Key stages in establishing successful partnerships include: preparing the partnership environment; identifying partnership projects; preparing a business case; identifying partners, negotiation and award; and supporting implementation and operations.

Partnerships should be developed in an environment that supports the public interest. This requires the creation of an autonomous, accountable and independent regulator, as well as a robust legal framework. There also needs to be effective competition in the market for partnership opportunities.

Where do we find the money?

Municipalities require resources in order to finance the services and activities for which they are responsible. This includes both direct provision of goods and services as well as contracting or subsidising the voluntary and/or private sectors to provide them. Municipalities also have a variety of regulatory roles, such as permits for building and development, as well as consumer protection, which have to be financed.

One of the principal justifications for decentralisation is that decisions made about local services are more likely to reflect the needs, priorities and willingness to pay of local citizens. Decisions about how much to tax local citizens and how to deploy revenues are core elements of local democracy and are critical to local accountability.

Municipalities have a range of local taxes and charges that are borne by the residents of the jurisdiction concerned. While a large city like Colombo is able to generate substantial revenues, smaller jurisdictions have less scope for mobilising resources. As a result, local revenue mobilisation needs to be supported by a system of fiscal transfers from the Centre to ensure that municipalities have sufficient resources to carry out their mandated functions.

There is an important educational task in raising awareness among the public of the need to pay taxes promptly. This objective can be best be pursued by providing information on how taxes are used.

Soliciting the assistance of community leaders in presenting the information and exhorting the community to pay its dues can yield positive results, particularly if the community leaders feel they have an input on how the resources are deployed and it is clear that the local community is benefited.

While one needs to be realistic about the efficacy of participatory programmes, particularly as the poor often struggle to have a “voice”, the attitude and commitment of politicians and officials towards interacting with the community is important.

Innovative municipal infrastructure financing

Since local taxes and charges cannot be expanded infinitely, many municipalities around the world are seeking alternative forms of financing, particularly for funding infrastructure. There are lessons to be learnt, especially for the Colombo Municipal Council, as it strives to make the city fit for life in a middle-income country.

It is important, however, that these efforts are firmly embedded in the principles of prudent borrowing, accountability and financial discipline. The case for raising market-based finance for infrastructure development is justified on the following basis.

(1) Public and donor financing is insufficient.

(2) Inter-generational equity – the “lumpy” costs of infrastructure are spread across generations and the useful life of the asset.

(3) Exposing a city’s development financing, where viable, to the rigors of market discipline and thereby mobilising financing for long-term investment.

The principal approaches for accessing private financing for municipal infrastructure development include the following:

(1) Borrowing from development banks and international institutions.

(2) Direct borrowing from capital markets i.e. issuing municipal bonds. These can be General Obligation Bonds (paid out of all forms of revenue) or Revenue Bonds (paid out of project revenues).

(3) Establishing specialised municipal funds or intermediaries to attract private capital. This can take the form of instruments based on equity and/or debt as well as facilities that offer contingent products (guarantees or insurance).

(4) Soliciting private sector involvement through various forms of PPPs. These can range from simple service contracts through to joint ventures and full privatisations.

Performance management

A number of countries are shifting from the traditional focus on inputs and outputs to performance management and performance indicators at the municipal level. In this respect, there are a number of “process” and “management” steps that are required to support service delivery.

Process steps: create conceptual framework for performance measurement; conduct a service inventory; identify goals, objectives and indicators; and devise reporting systems. Management steps: build performance teams and communications networks; build ownership and commitment; assign accountability; and use performance data in service delivery decision- making.

Measuring performance is essential for setting benchmarks; assessing effectiveness; and obtaining data sets for strategic reviews. In this respect, the Urban Governance Index (UGI) is a useful self-assessment tool. It allows international as well as local comparisons on the basis of participation, equity, effectiveness and accountability. It can help identify the required policy reforms and capacity-building interventions.

Communication strategies and public relations

Communications and public relations strategies are an important prerequisite for the smooth and coordinated modernisation of municipal governance. Open, timely and accurate communication with the community should be part of the operations of every municipality. Effective communication is particularly important in obtaining ownership of a modernisation process amongst all stakeholders.

Central government/municipality relations

A consistent and predictable relationship with the central government is essential for effective municipal governance. There should be a clear division of functions and responsibilities. Modernisation of municipal governance is not possible without a harmonious relationship with the central government.

Need of the hour: Visionary and forward thinking leadership.

Municipalities around the world face the same urgent challenge: rising demand for services confronting the reality of limited resources. A successful response to this challenge requires bold and accelerated modernisation and innovation. The modernisation required needs to be based on two pillars.

(1) An “open data portal” that provides citizens enough information to engage effectively in municipal governance, ideally within a Right to Information framework. An “open data portal” would provide new methods of using technology to increase civic participation; to support modernisation through innovation; and to make development more participatory and transparent.

(2) Strongly customer-focused service delivery methods, which streamline regulatory and licensing processes through creation of customer-oriented high-tech “one-stop shops.” These should be backed up with financial incentives to improve performance and eliminate bureaucratic silos and paperwork.

The Colombo Municipality, in particular, has the opportunity and means to be at the vanguard of modernising municipal governance in Sri Lanka. The end of the war has not only created the conditions for Colombo to become the template for a pluralist multi-ethnic society that is harmonious and prosperous, but also to take the initiative in modernising governance to make the nation’s capital one of the leading cities in Asia. This requires visionary and forward thinking leadership with a modern outlook, not just more “business as usual”.

 (Readers’ comments via email to [email protected] are welcome.)