__ _ _ ~~~~ilim numiN u Sil.l|_ _ mm.ttm ! i YiW I i 1: i i, i' j iij:' l;1 .tfii 4 il,d, il .. ' - jr - r,i l f g ti ii i t !ii illiLl'i;ll i!*i ; >l¡l41 > '4i i ' 8 i ll I iii "i . | jj4 . * = ; , jj Z j 8 ,, X jq jiljii <,! < X L¡ 1 - ~ ~ ~ ~ ~~~~~~~ íS -1 ' ¡! : itsZ|Ei:r"1tr1 í s v1 s. I 1 : S ti:; li ilil 1 á ; Miig~ ~ . '1 ji3 } : "II , '.i !'4 $L."ll !. s: jfi iJ !l1 jjjj,j.,ig;i i il -Ii:kiil j j S ~~~~~~~~~~* N liil I 1t fl .. . f:! JI'IIf1Sfl: ..................... i.: ll1 g1,'I II f TI i 1. Si , . ' "" j -ji'! Il il! ' il S j l , 1 ji,i F L LI !J . L il !ii ,1 Jl _ _ _ RU WL 'iU¡ lUhLtfIf¡U nnmummum!' i Y' Ej j; ." - IJ: ¡srm ma mí ma j r 'irij i:i ¡rflWlUrív nr!! ii ¡m uun mw uun umI =~4, tvMuvluíHsEtntfm;umrÉuf ,1 _ _' _¡ _ _ 1_ __ .~~~ ~ ~ -Ñ FrXn6 ll illl UNDP/UNCHS/World Bank Urban Management Programme Urban Management and MuIicipal Finance 11 Elements of Urban Management Kenneth J. Davey Published for the Urban Management Programme by The World Bank, Washigton, D.C. This document has been prepared under the auspices of the United Nations DevelopmentProgramme/United Nations Center for Human Settlements abitat)/World Bank-sponsored Urban Management Programme. The firdings, interpreations, and conclusions expressed here are se of theauthorsand donotnecessarilyrepresent tie views of the UJnted Natotas Development Programme, uNas, World Bank, or any of their affíliated oaitionsr DeputyDirector Chief Chief Division for Global Technical Cao tion UrbanDevelopment Division and Integional Programmes Division Transport, Water, and Urban United Nations Development United Nations Center Devopment Department Progranue for Human Settements EnviumentalynSusta ble (Habitat> Development The World Bank Copyright C 1993 The Interational Bank fbr Reconstruction and Development/BEWO RANIC 1818 H Street, N.W. Washington, D.C 20433, US.A Al rights reservad Manufactured in tie United States of America -lrstprintirgNovember 1993 The Urban Managemen Programme (ut) reprts a majr approach by thie United Nations famly of organizations, togetherwithextealsupportagtscies(nsA s)ostrthecontinbutionthatcitiesandtownsindevelopingcountries make towards economc growth, social development, and the alleviationof poverty. The program seels to develop artd promote appropnate policies and tools for municipal finance and admuistration, land management infrastructure management aand evrdroinental nagemt. Tbrough a capacity building component the UMP plean to establish an effective parhip with national, regional, and global networks and ESAs in applied research, dissendnation of i;nfonation and experiences of best practies and promuisig options. The fiding, interpretations, and conclusions expraesed n tiis paper are entirely those of the autor(s) and should not be attrlbuted in any manmer to the World Bank to its afflliated organizations, or to members of its Board of Executive Diors or the countres they represent. Tie World Bank does not guarantee the accuracy of the data included in this publication and accepts no responslility whatsoever for any conseence of their use. Any maps tiat acoompany the teuxtlavebeemprepared solely for the convuence of reades; tie designations and presentation of maerial ¡i themdo not imply the expression of any opmionwhatsoever on te par! of the World Bank, is afiflabtes, orits Board or nmemer countries concing thie legal status of any cuntry, territory, city, or area or of the autorities thereof or concerning the delimitation of itsboundaries orits national affiltion. Tiemateril in tbispublicationiscopyrighted. Requestsforpmion toreproduceportions of it should be sent to the Office of the Publish~ at the address shown in the copyright notice aboye Tne World Bank encmurages dissemination of its work and wil normally give permissio promptly and, when the reproduction is for nomnonmercial purposes, without asking a fee. Per=misson to copy portions for dassroom use is granted th thie Copyright Clearance Center, 27 Congess Street Salem, Massachusets 01970, U.S.A. Libray of Congres. Cataloging-in-Pcblicafion Data Dave, KennethJadcson ElemenIts of urban mnargemrnt 1 Kenneth J. Davey. p. cn - (Urban managemen program. Urban management and laind, ISSN 1020-021) EN 0-8213-2424-1 L Municipal gomet--Case studie. 2. Urban polic-Case stu . L Titlie IL Seria JS145.D38 1993 332.0072'0722-dc2O 93-19385 . . , . ~~~~~~~~~~~~~~CIP M . . .~~~~~~~~c . <,,- .-. , fr ABs¶RAar This paper summar~izcbe fidigs of a research program on the institutional framewodc of urban nmnanagmetResearchforthpaerhasbeencanied outbythe Instituteof Local Government Studics, ie Univea"ty of Birninghan, Unired Kingdom, under the sponsrship of the Overseas Developmnent Admiis¡ado(United Kingdom) (ODA)andt¡he Intemnational Bank forReconstruction and Development (World Bank). Urban rnanagemn=t is concenied with the policies plans, programs, and practices ¡ba seek ¡o ensume ¡bat populatdongrow¡h is matched by accessto basic infrasnctrure, shekeor, and emnployment Wbile such access will depend as much, if not more, on private initiatives and enterpdse, these are cúitically affecte by public seto policies and finctcons that only governnent can perform. TIbis paper focuses on selected elements of urban management arragemecnts and on their impact on ¡he effectiveness of urban govenument mn managing urben growth.. Cbaracteristics examuned are die sftuctur of udunm govenrnnent agencies, the divison of ¡asks between flern, dhir stafling and resourc bases dhir u~ena organization and managenien proccsses their ielailoos with centra government4 and their ineractionwth púivateandcommunity organizations. It discusses how differences in ¡bese characteristics contribule to (or detzac fiom) effcienes. In doing so, it ackcnowledgces fully that tese charactersts thernseves aire only one set of fatcors diat determn ¡he success or failure of urban govemiment. ACKNOWLEDGMENTS The author would like to acknowledge the wotk of the team f[om the bstitute of Local GovemmentStudies which was instnrnentalmin edevelopmentofthispaper. Membersoftheteam include Philip Amis, RichardBadey, Ian Blore, Nick Devas, MaIcolm Nonis and David Pasteur. Tappan Bannerje of te Institute of Local Govemment and Urben Studies (Calcutta), Shyam Dutta of te Indian Town ard Countiy Planning Organizaion, Gleisi HeislerNeves of the Brazilian Institute of Municipal Adminisua- tion, Phang Siew Nooi of the University of Malaysia, Edward Mugabi of the Uganda Institute of Public Administration, Moffat Ndlovu of Bulawayo City Council, and Mario Guadanmia Hemandez in Mexico shared in preparation of te case studies in their rspectve countries. Funding for this publication has been provided by the United Kingdom's Overseas Develop- ment Admiistration. Case studies refcntd to in this paper are available thmugh the Urban Management Programme Worlcng Paper Series. For more details contact Editor, Room S-10-108, The World Bank, 1818 H Street, N.W., Washington, D.C 20433, U.S.A. FOREWO.D ibis paper has been prepared for dic Municipal Finance component of dic joint UNCHS/ UNDP/World Bank/-Urban Management Pkr_zranrn (UMP). Thc UMPrepresens a major app:roach by dic UN family of organizatious togetier with extemal support agencies (ESAs), to strengthen dic contribution that cities aind towns in developing countries mnake towards economiic growth, social development and dic alleviation of poverty. Tbe programn seeks to develop and promote appropriate policies and toois for municipal finance and administration, land mnanagement, infrastructure managcmnent, environmental management. and poverty alleviation. Tbrougk a capacity building component, dic UMP plans to establish an eifective partnership with national, regional, and global networks and ESAs in applied research, dissemnination of infonrnation, and experiences uf best practíces and promnising options.. This r.poS tshdi first ofa sedes of mana-gcmrnen tools to be produced by the UMP municipal finance component. As a whole dic municipal finance component is intended to addr=fies be questions: 1) how to mobilize resources to fínance dic delivery of urban services; 2) how to improve dic financia] manageme,ntofdioseresouires; and 3)how to organize municipal institutions topromnotegratrefficicnc and responsiveness in urban service deliveiy. Work during dic initial phase of the Urban Míanagemcent Programnrn has focue on dic first of diese questions--focusing specifically on local tax rcformn, intergovernnctal tranfers, aid local acces to long--term credit. Case studies and background papa cn dic Iaucrquestions--documenting issues in local financia¡ rnanagernent and thcoarganzton of municipal governmnent---iave also been piepard and wi-.II provide dic basis for publications to be issued under tiis sedies in the future. ¡'base 2 of dic UIMP (1 992-96) is concemed with capacity building at both tluc counfty and regional levels and with facilitating national aid mnunicipal dialogue on policy and prograin options. It emnphasizes apartcipatory stnrcurc thatdraws on thcstrengths ofdleveloping countrycexpcrtsandcexpedites dic dissemnination of tb-at expertise at dic local, national, regional, and global leveis. The mnaín goali of the UMOP in Phase 2 is to bujid dic capacity for infr-astructur management4 -municipal finance aid! adniinistmtion, laid management, urban environmental managenent4 and poverty alleviatdon by mieans of diree inteatve procsessc * City and country consultations. The UMP brings togethcr national and local autliorities, private-sector networks, community represetatives, and odier actora to disus spcciflc problems within tic UMP`s subject arcas. and to propose reasned solutions. e. Regional panels anid tecuical cooperat¡on. To ensure sustained and cifective support for dice activities to follow country consultations, dic UMP is establish- ing regionual offi=.cs ach headed by a regional, coordinator, in Kuala Lumpur for the Asia aid Paciflc region, ín Accra for Aflica, in Quito for ¡sain An'eica and thie Caribbean, and ín Cairo for dic Arab States. Fromn 1993 to 1996 dic UMP wilI gradually build up regional paneis of urban vi manageent expeite for each of the prom's five areas of concein, wbich will provide the slne nee to insftionalize the UMPs capacity-building objecfive over ¡ie long teITn. Developing countries will be able to draw on tfhis Poo1 of experse for technical advice on a sused basis. Global support ainthesis. Nucleus e in Naiobi and Washington, D.C, support ¡be regional pmels and national institutions by synthesizing s karned, conducting staof-the-art research, idenifying best praies, and diin g proga-related materiais. The present paper is pant of a series of management tools prced by he UMP. Mr. Michael A. Cohen Chief Urban Development Division Trspo don, Water, and Urban Developrnent Depar¡mcn The World Bank _z . E ,~~~~~~- . . ,'X- .- , -''':'- CONTENTS EXECUTIVE SUMMARY ix L INSlTRUTIONAL VARIETY: THE CASE EVIDENCE 1 ntoduction 1 Zimbabwe: Bulawayo and Mutare 1 Brazil: Porto Alegre and Recife 3 India: Ahmedabad in Gujaret 4 Uganda- Jinja and Kabale 6 India Baruipur mad Bhadreswar in the Calcutta Metropoitan Arta 7 Mexico: Campeche and Hermosillo 8 Malaysia Penang Island 10 IL ELEMENTS OF URBAN MANAGEMENT: TBE WORKING PAPERS 12 Intoduction 12 Public and Private Sector Relationships 12 Urban Govenmnent Structre and Functions 15 Inta Organization and Management Proces 17 Executive authority 17 Admintive leadersip 18 Snbmunicipal ogaization 19 Strategic planning and management 19 Perfomancemanagement 20 Urban Govenmnent Emance 21 Adequacy and buoyany 21 'JIe iptce of cbaging 21 Taxaion 22 Capital funding 23 Fmancial mapagement 24 Urban Govenment Staffing 24 Critical factois 24 Personal status and influence 25 Personal benefits 26 Work satisfaction 26 Orgaizaional identity 26 IIm DRIVING FORCES 27 Political Accountability 27 Pblitical RiSK 27 Incentives 28 Vaiues 29 IV. SERVICE DELIVERY 30 Inlroduction 30 Responsbility for Service Provision 30 Responsibility for Service Production 31 Generalconditions 32 V. OVERALL DEVELOPME 34 lnto n 34 Locus of ContrOrganization of Adrninisndon/Stuctu of Adminision 34 VI. REFORM. DIRECTIONS AND EXPERENCE 37 lnduction 37 Jmprovement of Municipal Managemt Systems 38 Tzproving Revenues and Cost Recoery 39 Tmproving Provision of Ctedit for Capital Investnt 40 Rewaids and Peniries for Municipal Peformance 40 Disi on of Experience 41 Tbe Soope of Reforn 41 VIL CENTRAL-LOCAL RELATIONS 43 The Dilenim 43 Effiieney and Autonomy 43 Refmg Controls 44 Cooperaive lInvesnt Planming 45 VIIIL SUDMARY OF CONCLUSIONS 46 11w Research Focus 46 Mngement of Individual Services 46 Mangmct of Citr Drveloprnnt 47 Extral Intervention 48 Central-local Relations 49 Orgizational Eftectiveness 49 REFRENCES 51 ANNEX: CASES OF GOOD PRAC1ICE 53 -:~~ ~ ~ - - EXECUTiVE SUMM.ARY The Urban Macagemet Poramme Tbis paper sunmnirizes i findings of a resea¡vh progrnm un die institutional frarewodc Of urban managemien¡. Research for dic papa has beno canired out by dic Institute of Local Govcenment Studies, ¡he University of Birmiinghr, United Kingdoni, under the sponsoiship of the Ovaes= Development Adrniinisu¡on (United Kingdomn) (ODA) and dic Wodid Bank «the Bank). U. The rcsarch is acontributdon to the Urban ManagermentíProgrmm (UMP), which basbeen mnitiated by dic UNCHS (EHabitat) and ¡he Wcsid Bank with the supportoftdic UnihedNadons Developmn Progranme. l¡e UMP is concmed wi¡hie governmental responseto tescale and paceuofrbanzon inAfiica,Asia, LatnAmerica,anditheArab StaesNorthAfrica..Urbanpopulatdonint¡hesedireecondtinns is cun-endly growing at tie rate of 6.3 percen a year andeas muchi as 8.8 percent in low-income countdes (World Bank, 1991). Ibeirtotal~ubnpopulatoníisductoincr=ets o atotal of 1.1 biuho» bytheyear2000. Half of tbis incitasend hence of the tota urban population wili be concentrte in cities of over 500,000 population. nii. The UMP's objectvc is to "sireng¡hen the contribdition that citdes aocd towns make toward economic growth, social deve1opnrient, and ¡he alleviation of povertyY" Moreover, itíaseeks to develop and promote appropriate policies andi tools for land managernent, inhatocture, municipal finance, andci ¡e urban environment (UNDP, 1989)." The Role of Urban Governmient Wv Urban mnagement is concerned with the policies, planis, prograrns andi prcces that seek to ensur tha population growth is matched by accss to basic infr:astnicti, shelter, and cemploymcnt Wbile such access will depeod as much,4nomot~ onpñivate inidatives andenterprise,thiese are critícaily afeted by public sector policiess and fuincdonis thai only governinen can perfonin. Y. ILe perfoiniace of govenviret is critúcal to the elfective maagme of urban groMh During the last decade in particular, botb govemrnents and interaional agencies Lave shown iníres ln improingthe structur, process, and resources of u~ba governmnent ins¡tudionr Policies of decetualiza- dion bave delegate functional resonibihtids and resources lo Iower levels of govcmnment, and new financial flows Lave bec=radtosuimulatepublicinvestent.Manydcvelopnientprojectsbaveiirluded techoical assistace to improve ¡he planig and operational processes of urban agencies. vi. ILe eifectiveness of urban governnienis cleaudy dependent on a range of contextual factoi polítical stabilhty, social cohesion, andeeconomicbuoyancy, to neme only the mostobvious. Italsodependis on the skills end motivations ofits policynmakers and dic staff who serve themn. But dhe widespread concemt to change and mimprove tic management arangements sugges¡ a behief *mathei s¡ructues processes, and resource bases aretdemnselves factors dwacontñbufteto effectiveness&To ilIustrate,tie perfornance ofa car owes much both to íts dhiver aocd to dic driving conditions-d-at is, the state of the rod the traffic, the weather. Rut its inherent charactersiscs-enigine power, road holdimg, fuel efficiency, andi so on- x constitute a ird elenmnt to ihe equadon. Jus; so, the insdtutional cha istics of urban govemment play a part in detennining its effectiveness, along with te people who run it and the environment within which -tope vii. Ihis paper focuses on selected elements of urban management arrangemenis and on their impact on the effectiveness of urban govemment in managing urban growth. Characteristics examined are tihe sructue of urban govemment agencies, the divisiorn of tasks between tihem, their .-affing and resource bases, their intma ogan3zadion and management processes, tieir relations with central governmentm and their interaction with private and conununity organizations. It discusses how differences in tese cbamctsdcs contribute to (ordeaet from) effectiveness. In doing so, it acknowledges ftilly that these charistics themselves are ordy one set of factors that determine the success or failure of urban government. viii. In evaluating tie effectiveness of urban government anangements, six iteria have been used by the reseach teanr 1. Technicalcompetenceinthechoice,design,andexecudonofinvestmentininfrastuc- ture and in its operation and maintenance 2. Efficiency in tite use of resouzes-financial, human, and physical-hrough good budgeting, project appraisal, personnel management, and program execution. 3. Fiancial viability based on vigomus exploitation of the local revenue base and on sound funancial mnagement. 4. Resiveness to the needs anising from urban growwt, widt the ability to plan the development of the city and its services ahead of, or at least in pace with, demand. 5. Sesitivity to the needs of tie urban poor and a weighting of public interventions to promote ¡heir acess to shelter, basic services, and employment. 6. Concem for eniironmental protection dirough publie service provision aud the regulation of the priva sector. The Content of he Reseerch ix. Aprlimunay phase of tezeseach wasfundedby the World Bank and concentratedon local govemnieformlThisresearchwas documentedinbriefcasestudies ofBiazil (Davey, 1989) andTurkey (Davey, 1988) and in te Bank discussion paper "Strengthening Municipal Govemment"(Davey, 1989). x. -Tec ntphse,sumnmiized spTape,aslookedat~bngovemmentinstitutionsmore broadly and has included case stadies of Bral (Porto Alegre and Recife); India (Ahmedabad and Anand in Gujat and Banupur and Bhadreswar in tie Calcutta metropoliptn area); Malaysia (Penang Island); _ ', .; _ . : r. e '.-.= . is> 'z 'e ~c,w .¿-r;- ,- ' ..- - 0,.'. -.'',''.- - '-'. *' xi Mexico (Campeche and Hermosillo); Uganda (Jinja and Kabale); and Zimbabwe (Bulawvayo and Mutare) (ILS 1991-92). An additional cas study in ice Philippines focused specifically on the impact of Bank- funded municipal development projects (Pasteur, 1991). xi. Each of th case studies (sprt froin that of the Philippines) analyzed urban govemment in the study towns in tenns of the individual characterisrics listed in paragmph vii. The study attempted to assess tie broad effecdveness of the local system in managing growth, and also teswed it by examining in gitater detail the operation of hee services 1) water supply; 2) refuse collection; and 3) pñmaíy education. Accessibility played a part ín the selection of the case study towrs; however, the analysis was designed to pro,ride coverage botu of dic three urbanizing continents and of a range of instihutional aangements, as discussed in Chapter 1. xii. Individual aspectsofurbangovemmenthavebeenanalydin sixworkingpapers.Tesedraw substantially, but not exclusively, on the case studies. fley benefit also from other comparadve material and ftom the experience of the esearch am, who have worked fuJi-time in seven otier counoies nd as hort-term consultants in an additional fourteen. These SiX ppers focus oa - Tbe Strucbn and Functons of Urban Govermment (No. 1) - intemal Organizan and Management (No. 2) - 'Ue Staffing of Urban Govemrmet (No. 3) a Urban Government Fmance (No. 4) a Central Local Relations (No. 5) - Public, Piivate and CO mHuity Orgaization (No. 6). xiii. These worling papers have been published mi draft form They are intended to fonn the bais fordiscussion with intemational sciarlistn in urban management. Final vesios will bepublislrdafcrthis review. Resuits of the Researci xiv. Aspects covered by tdi ieseach have been the slixctui and fumctions of urban govemnment, itsintmalorganizadonandmanagementprocess,itsstaffngandfinancing,anditsnladonswikhdrprivate sectr and community orgmization. Ihe followmg genr onchioas ae alluded lto im (he paper. xv. Ma emet of Individual Servkes. Private provision of seriices may be more effective in cases in which consumen can be charsd dhe scale of investnent, die technology, and inatuÑy of the business sector penmit conmpetition. WheretcLnology and dc "ce of invesct arl Iely to deter competition and encourage monopoly supply, pivate provision may aiso be ef~ecive, but only if urban governenthas ¡be capacity to protect the public from excessive charges and to ensme affordable sevices- xii tolow-inconeconsumers.Whetierservicesarepubliclyorprivatelymanaged,hespecificativnandcosting ofperformancestandards, includingmaintenance and wplacenentcycles,ae vital toeffectiveandefficient delivery. xvi. Managmet of City Development. Effective urban rnanagement requires more than .ompetnce in running individual services. These need some degee of integration in relation to new setdement,redevelopmentofdeprivedareas,andtieresponsetooverallchallenges, suchas unemployment, the decline of traditional economic activity, and environmental deterioration. Municipal govenuncnt may provide effective leadership in planning the overail developmcnt of a town and in responding to economic, social, andenvironmental problems-that is, if ithas the necessaryatrributes. 'rhesc include comprehensive boundaries, wide responsibilities, a buoyant revenue base, and well-qualified, professional staffing xvii. Ex l Intervention. Attempts by national govements and donors to irnprove urban maagement need to conze the political nsks and exposure of urban govemrnent¡ Enhancing cost recovery, labor productivity, or regulatoiy enforcement needs to be closely associated in time with visible improvementsinservicesandenvironmentalconditionstoencouragepublicsuipport Politicalcriticalpaths are importan, including attention to the tems of municipal office and to the timing of elections. xviii. Cenl4-ocalRelations Despiret he current emphasis o0 dcentnizauion, ¡he role of cent government will remain nitant in most countries because of its comrnad over major investment funding, ¡be statutory framewotk, andtheoperatingcontrols overlocal agencies. Central-local relations are crítical to ur mmnagement and need to be as positive and collaborative as posible. xix. OrganizationalEffectiveness. Individual attnbutes andpiacticescontibutetoeffeciveness. But itdepends above all on a culureofperformance, public service, andefficieccy. This derives essentially from a combinaion of cicunstances-challenging tasks, adequate powers and boundaries, buoyant rcsources-all enhamcing ibe agency's ability to deliver service and command public respec. -le Purpose and Content of this Paper xx. Ibis paper is ffie seventh and last in ¡he seres of working papers. It seeics both to provide an overviewofthefindings ofthecasestudic,sandworkingpapers, andtofocusspecificallyon theprocessand experience of reforing urban govemnment institutions. xxi. Ihe paper is organi7ed in eight chaptes Chapiers 1 and In su=rnaize dic case studies and working pp Chaptes IR, IV, and V seek to link institutional frameworks with eifective management Chapteis VI md VII look at the directions and experience of attempts to reform urban govemrnent; and Chapter VIII contains conclusions and reconurendations. 41 . .. L INSTONAL VARIETY: THE CASE EVIDENCE hitroducion 1.1 What urban govermentdoes, who precisely does it, and wi¡h what resources it is done vay grea~ly fom countiy to country and even from town to town. In deing with arrangements for urban manageient, we ate dealing with diversity. 12 Histoúcally, thc tem. urban govenmnent has been synonymous wiith ¡iat of municipal adinistratior. In Europe, growing medieval towns secured sorne degree of local self-governrent, partly because urban commerce and environments demanded interventions that rural administration was not accustomed to providc, and in pan because towns could genemtoresoures for civic improvemenL The sanie process t7as repeatd in tie nineteenth centuzy, both in die new industial cities in Europe and in the gmwimg towns in ffie Amencas and Asia LocaI govemmcnh instimutions were also widely fostered by the colonial powers in Africa and Asia in ¡he post- 945 prelude to independence. 13 During te 1960s and 1970s.thenatíonal, sae, and provincial govemnents bocamefarmore closeiymhvolvedinurbanmanagement,eiderdiecdyortrughthepaaswagencieses¡blihbedbytcese governments. ~e were a number of reasons for ¡b-is developmeiz including a growing appration of die scale and challenge of urbaniztion, a post-Independence backlash agast decentalization, and ¡he intervweion of Intmational donors thatwere boundby prol to opera thiroughnationalgovermments. Duringhepastfifteen years or so, policies of govemmentsand donors have gnerally favored arevival of municipalresonsibllities andresources. Bothcentralizing and decenralzingmovements, however,vaiied in theriensty. 'Me rrsult is aetdiversity in thedistibution of urban govemment ~taS andresoces between central r state govemnrnen, p al bodies, and local government. The role of municipal admnistion vanes frmrn dominant to residual. 1.4 Ahe balance of activity between public and private sectors also varies substantially. In many towns, urban growth has frequendy outpaced te public sector response with the result that communiies, parmcularly in the poorer neighborhoods, have had to fend for thneselves in tenns of basc services, such as water supply orrefuse collection. The mo afiluent fixquently choose to pay for private services, such as education and medical cate, in preference to those provided by govemment. in recent years, government and donor policies have often favored paricipaion by the pnivate secor in the provision or mnagement of urban services, botd to case the saiI on úublic resources and to gain greater efficiency. 15 The varying relationships between public and private sectors in the managementofurban services adds to the diversity within thepublic sector itself. This is compounded by otherfactors, such as the size ofjurisdictions, ¡he compositior of local revenue and staffing bases, and tic naure of dic political system. The spectrum of institutional aragements is well-illustrated by die following case cities. Z¡mbabwe: Bdawayo and Mutare 1.6 Bulawayo andMutarrepresenttheclassicalmodel ofurbangovenrmetin which the elected localgovermentplaystfedoinhantrole.Minicipalboundaiesenconpassthewholeurbansetldemcntand are readlly expne to take in amas of poential expansiorL Municipal functions are comprenensive and 2 include roads, housing, water supply and sewerage, primary education and health cae, and planning and development control. The major (and disasrous) exception has been bulk watr sourwes, wbich are controlled by central governrnent. Councillors, who are elected regularly and competitively and esm t individual wards, supervise the municipal adminishaion, they are mvolved in executive as well as legislative oversight through an Anglophone comnmittee system Local accountability is reinforced by an active network of residents' associations and by a systematic process of public consultation preceding the annual formulation of budgets and the revision of taxes and charges. 1.7 lhe central govemment pays the school teachers' salaries. Otberwise, ¡be municipalities are largely self-sufficient so far as rcurrent expenditui is concemed, most capital investnent is financed by loans that their tax and charging revenues service. Theirrevenue base is a combination of property taxes, service chares, vehicle and other licensing fees, a 5 percent surcharge on electicity bills, and the profits onliquorundertakings. Thegeneralrevenueshavekeptpacewithinflationbecauseofregularratesandtariff revision, but not quite as weil with population growth. Viability has been sustained, however, by carei budgeting and budgetary control, restraint on overhead cost, and a deternined service charging policy doat has lkpt water chages, housing rents, and so forth, in lne with overaill cost, including debt service. 1.8 Services are lagey managed by n a departnental structures, which are supervised by council comrittees. Municipalities appoint and employ their own staff, althougb they are subject twcental governmnt approval. They have been successful m mainraig a higb standard ofprofessional qualifica- lion and competence among senior staff and in fighting off attemnpts to relax these forpaironage purpose Particularly in Bulawayo, town clerks play a key role in the dination ad pres on of a resp ve and efflicient organational culture, which goes well beyond eir formna audionty. 1.9 Both cities aregrowing fast with esimated populations of 820,000 and 100,000, respectively, in 1991. Bulawayo's last recorded intercesal rate was 6.5 percent a year and Mutare's, 5.1 percent Nevertheless, te general standard of services and ic ur has been we]l-maintained. Ihe majcr exceptonhas beher(1enlgvcwa nt)toaugnttieqtyofdhewatesmagedaniswwhhas iadl cathicsolimagiBua w duúingtbDentedughtlitedcnti hasnotiesp edfulytopoulongmwthand¡oihecapacitiesofelowes tinrmg h heese d d has be reted m oveowding and "backyald squatrino' r t sblanlty towns, so dtat standds of inufiastruta 1xoihtre ~ae1y been sus 1.10 Public provision of low-income housmg has been increagly modified by diversified aproaches that accoid larger roles to employers, copeatives, commercial developers, zrd householders in housing construcion, although municipalities retain an impnrtant role in providing serviced land. Oheise, local governnent has largely retained its traditional rome in diect service provision and- producdtn Nevertheless, it is considering con¡aing out avariety of services, including security, nmIrSCY education, community halls, and mecational fhcilities. 1.11 Both nmncipalities have maintamed a professional and busnesslike approach to the management of iheir cites. This was atened by one peiiod of political leademhip in Mutare but was resioredaftercentralgovermntitervention.Wirhexceptions,theroleofftecenfllgovennenthasbeen supportive; its ambiions have been diectedmn to the upgrading of adminision and sondesin m ml atas. - _ - . :, , ~- .... --5 - .-c -...... 3 Bil: Porto Alegre and Recdfe 1.12 In Brazilmunicipaladmínistationalsooccupiesap¡meminentpositioninurbangovemmnt It has at least ixeesounces ofpotential stzengtr one is a dege of constutionallyproected autonomy dhat is probably unique. The Constitution procs the regularity of municipal elections and gives dte municipalities the faedom to detem their anizaion and functions and to exploit their allotted revenues wñhnoextenal interference otler han an audit. It also allocates to te municipalites guaranteed andrising es of federal and sate taxrevenue, including that denived from income and'value-addedplus theirownleviesonservices,popery,andfiieL.Fmally,tcone ntmtionofexecudveauthorityinadirecdy elected mayor provides a strong potential focus for leadenhip and accountability. 1.13 'ibs potenüally strong municipal cciy for urban managcment is undermined in pactice by a number of factors, the first is geographical fiagnentation. Porto Aleg - city of 1.4 million people, isonlythelargestof22 municipalities inametropolitan area of2.5 million. Recife, with 1.3 millionpeople, is one of 12 municipalities n a metropolitan regio of 2.3 million. Major problems of water source protecton, refuse and sewage disposa, drainage and public tanion mai unresolved through the lak of metrmpolitanwide agxement and action. There have been metropolitan planning and cooodinaon authoities in both aras- OPLAN im Porto Alegre and FIDEM ia Recife. Political nvahry betweea municipaities and between them and the stte adhinisfaions, however, has mbbed them of the authoity to impose solutions or gain compliance, except were ey have had investment funda (largely firom the Bank) to dispense 1.14 Second, tbe Constitution gives m palities ample freedom to under¡ake tasks but few exclusivefnctions.Asaresult,theeismuchfuetiMSfamrdtionSa in unicipal iaio and thepnrvate sectorundertake parallel activities in sectors such as housing, health cat, roads andpublic transport,indusrandconmialdevelopment,andpreschoolprimaryandsecondary education.Astate enceprise, COMPESA,provideswaterandsewegínRecife,butthisremainsamunicipalrspnibility in Porto Alegre. Parallel provision is not a bad thing in itself. It ofen potential for choice and competition, but its weakness is che abser.,x of a clear focus of respnsibility for ensuring that an adequate service is 1.15 A second factor is the fragenta win mmuicipal adminion. A separation of the executiveandlegis1aivepowersandtheindependentelectionof-nayorsandcouncilsplacesthetwoalmost ínptiponLCootmoteontrollteexecutive,buttheycanobstmctitparticularlywhenhypernfon subjects budgets to repetitive adjusment Similarly, w~iin the executive, seceriaes, autarchies, and smiaucononous foundations can behave lilce feudal fiefdoms, deying sic direcion. heirheads are apoind by the mayor-of len to pay political debts. 1.16 Acirdfactorispoliticaldiscontinuityansingfromtheweaknessofpoliticalpartisasasource of cohesion, the constitutional ban on eelction of officials at al] levels, aad the `posts of confidence" sys under wbich 11 manage«ial-level posta (m Porto Alegre down to head park keeper) are heId by gubernatoril o mayoral apintee for die terim of a single administion. A large proportion of ¡bese appointments are in fact made from within ¡he ratnls of the agency concemed, but tenure is neveless lind Again, discontinuity is not all bad. It can bring a f$ess of apprach and permit a new leade to choose subordina wedded to bis or her values and prionties. Similarly, withi the executive, resp - bilicies are divided between secretariats and "arms lengtb" autarchies aad fouaons all can bebave as 4 feu fiefdos, defying stgic direclion. Their heads arte appointed by the mayor, his control is oflen wcakencd by tie need to pay political debts. 1.17 Hyperinflation is a final source of instabili. Botlb cides have elaborar hierachies of pias, imvolving extensive public participation and professional lput But from case evidence, the only deciiomaking processes mftat haye much real impact an rtsource allocaton are die budgets goveming limited periods-no more tan tinte months. Any plan of longer duration loses relation to real leveis of remue and costi Although most tax and fee rates are idexed to,tames of inflation, they rarely keep up fully with p-ce increases 1.18 Tbe revenue base of boti muiicipal and pstatal, authotiúes Las been undem by poor adniratio-defective reg oan, assessnmnt, aud blling and colleclion. During die study peioio, seníous antempts at inprovement were underway in both cities wihi early success in Pato Alegre but with unknown results in Recif The main clty has bern fallig lewIs of capital investment with the significant exception of muncipally rn water supply ¡a Poto Alegre. 1.19 Privare acies pe a number of services ¡n plel to public provision, including educalion nlthcare,adnsport¶Ihesenonnalycarertondidleandhigerincomegroups.Inbothchites atange of ceansig opaons, including refuse collection, have been conncre outto pivate prise in cenaaa pats of the city. Diect munici labor coadues to serice d¡e poorer and less accessible aras. Ib conracs aremoreefficientin tbcirmangeentoflaborandequiprnen¡ although differeaces in the wou env ts me overail conson difficul. 120 By compes with die Zimabwem cies, servies ad conitions ¡a Porto Alegre and Reie are of more uneven coven.age and quality. Tbese services and conditions are aot as speor as differences ¡a economic levels and urbe growd rares would suggest Ibis silso applies to a co mp betwecn Por Alegre and Recife bnselves, wbich are locad in egions with radically differnt moome levels.) In both cities, usecollectionis effective, butdisposl is higbly defective wil lihtlesepadation of roxic wastns sud hence with contminion of water sounres Waer supply coverage is abundant in Porto Alegre but is srbject to severe raioDng in Recife. Sewe cagecovers only 46 pent of households ¡u Porto Alegre and 20 peient in Recife; ¡ bodi, sewage is dischnged into drver or oastal warers unte Furdrmore, 40 peirct of Recifc's roads are unpaved. 1.21 In both cities,majorefforts are being made toincase Uhe covege ofpnary educaion and teprovisionforadultlira nd to retain childrn ofpoorhouseholds tmrougschoolmal provision. But drupoutraesrmamnhigl C~ aemzshas ua~dftumn wfdebrao ksand utsd¡es but nesouldm alarerdiwctcnim oramormmloaaf e¡f enwaotnpre dbyh1bh m hnive ovaefads ard, ¡m somn =m axexve st afi The de of annomy wii which sil a e ,eare in Bi and tde l tad tn ofoice of ros seumanas mu s fis iniies asd mspasesiopceivedasofneed. Buthea rofxpedionddpoltcal dioizy are uedn to aainedeflcanc d systematc servicecoveaage- India-, An Gujarat 1.22 Ibe case of Ahead has sorme sniladties to die Zmbabwei and Brazilian cas As in Bawayo, ¡he Municiparl Cporation (die Corportion) has a faidy com nsv ranga of functional . . -, ~ c. fl-s , esponsibilities and gulatorypowelswithin its boundauies including health tfnsport, pmayeducation, and water and sewerage. Only in the case of bousing is there a significant overlap with higher leveis of govemment LikePorto Alegreand Recife, Ahmedbdhas adiverse andpotentially buoyantrevenue base with octro4 a tax on goods entering the municipality for sale or processing contibuting a growing pmortion-nearly half. 1.23 In thepast, diis system of admdiistraton has provided te base forrelatively effective service coverage-for exaniple, a large proportion (about 80 pect) of residents living in foma housing, a comprehensive network of water conmecions and sewer lines, and enoagh school places to meet demand 124 Yet Us coverage shows marced signs of deteñioration. Water supply extensions have only beenpossibleatthecostofsevererationing.Corasionandseepagehavebeenresponsibleforlossofquality. Cwupled with a situation in whicb 500,000 out of the city's 3 million population have no sanitary facilities, this has led to increasing diseae and lo areversal of the previous decline in infantmortality. School dropot rates are higb The quality of piivate schools is said to be better, although they have bigger classes, fewer and lower paid teachers, and spend Iess foreach pupi. Only refuse collection can be said to be ñnpzoving as a result of tecbnical changes intrduced by a Bank loan, but even so, frno an abysnal situation in wbich refuse was only collected after being dunped in te sueets and even then only in fomally authorized neighborhoods. 125 Several institutional shortcomings contribute to this modest level ofpublicperfomnce. lIhe fst relats tojurisdictiont The practice has bem to extnd the municipal boundaiy to take in new aoas of urban setflenent4 but orny after they have been developed. le Corporation's area has doubled in roughly eveiy twenty-five years. The last extension was in 1991, but even so there are still about 425,000 peopleinperipheralurbanareas. Outside the Copoan's boundary, therearefewpublic serviesandlittle control; induses dischage untd effluentstright intonvers, dere is no refi,se collection orsewemge, and only one sclhool exis~s (with no buildg) for an area with 60,000 people. Whenever the Corpaion's jutiiton is extended, It has to wresde with a massive bacldog in infrastructute. 126 TIhesecondsholxmingrelates to the fact that although octroiisrelativelywell-adzinistered and buoyant, oater major revenue sources are p~orly exploited. Propty oxan is hamstung by judicial rstaints on valuation and weiak enforeemet, while litigation affects neay two-irds of curent demand. As only l2percentofrevenue, thisperfornance wouldnotmatter too much in itself, but itdrags down water chargingwithilheconsequencesincludedeclningpercentages ofcapitalfnncingadopteraingdefícits in five out of the last six years 127 Behind this decline in effectiveness lies a fragmentationrof power and a reactive rather thai swtegc style. Ahmedabad has a direcy, regularly, and competitively elected councíl, or general boar. Witb 127 members, the city has alargely ceremonial mayor, an elabonte committee structure, and weak party orgizaicn aid thus lacks cohesive leadership and direction. Executive authoñty lies not widh the electedbody, butwid the municipalcommissianer, who is a civil servant nomin andpostedbytbestate govemment. Although strong in power ad presige, commissioners serve on average fbr no more an one year, far too short a period to ass~rt real autoirity over a large ogizaian. Effective authority lies with a hierclhy of deputy commissioners and departental heads, who are strongly wedded to the defense of deprt al nteests. Powerisdiffused; evenfinancial manaeentrecponsibilityis shared betweenfour deputy cammissioners, and professional continuity is provided by relatively junior officials. Budgeting is 6 largelyincremenylwithdepamental sharesjealouslyprseved.Staffinglevelsarenotexcessiveandhave generally declined in relation to population, but there is little fornal tng, and what linmited pmrotion iere is depends largely on seniority. To quote Batley, "at its best this is a system which gives due respect to professiona standads and which maintains continuity tbgugh routines. At its worst it is not a syste which can be easily mobilized to achieve institutional objectives." 1.28 lheprivatesectorprovides alterarive servicesforhigherincomegrops mnhealtb,education, aMd tnport, being able to offerbetterstandazdleducationatlowercostrough its ability torecruitgmduate teachers (who are debanred fmn service in public pimnaiy schools by tate reglation, despite their superfluity).EIectricityisalsoprivatelyopatedunderatateregulation.Butcontractingouteven inthecase of capital construction, is virually nonexistentL Joint venure activity is undertaken im land pooling and development schemes, hough under stong state government direction. Uganda: Jnja and Kabale 1:29 TIe Ugandan cases ilustrare a histoically strong system of municipal govemment ¡bat has b'eerundmninedbyapwolongedperiodofpoliticalconflctandeconomiccollapse.Recoveyistakingplace but only by significant deparu fron the fonna modi The extreme difficulties under wbich urbe govcment is opcraig make the case exceptional. But sore of the factas aiding recovery have gteater relevance for otherecononies under severe stress 130 GovernedydecyelectedcouncilsoperainghroughanAnglophonconunit stem municipalities fonnally have ¡he doniat rolein muban nanagemenl Of the major urban functions, only water supply and sewerage oautade their remt lTheirax base includes prperty rig and a graduated pesonal x. The cental govemmnentpays ¡eachers' salaries, has song supervisory powers, and seconds the principal officers f¡om cenral cais. 131 fIhelongpeiodofpoliticalinatabilityfrom 1971 to 1986andthehyperladonthatcontinued until 1990 had many devatang effects on urban management. They led to the closure or dasic decay of mosroftheinxstyonwhich Jmja'sprospeityhadbeenbased.Theyremoved the Asianpopulationswho owned most of the property and business in central districts and reduced the real value of many revenue sources, including properry taxes and staff wages to nominal levels. They tumed municipal vehicle and equipment pools into "graveyards"-for example, to disconnect defaulters, the Kabale water departnent even has to borrow tools. Physical infrastructue decayed in the absence of maintenance and repair. Govermnent revenues have declined to as low as 5 percent of GDP in 1988- 90. 132 Recoveiy isunderwaybutbyvariedroursJinjaand, toalesserextent, Kabalehave increa revenuessubstantiallymin real tm~s byexploiing the sourcesof mrket, bycollectingbus and taxi parkdues, and rhmugb a graduated personal raxaion that pceneau the diiriving infomal economny and trade in foodL Jinja and, ¡o a lesaer extent Kabale, have increased revenues substantially in rel tms by exploifing ¡be sources of marke, bus and taxi park dues and graduated personal taxation hiat penetre a diriving formal econorny and ~dc in food. 1.33 Meanwbile, parents effectively finance te schools by their own contrbutioms augmcning tbe neg-igible budget forteachersalaica, equipn, and building repair. Eion has been sustabedyb y, - 7 this proces, though cquity has suffered. The best teachers are attracted to die most aflluent (or least poor) neighborboods; children of poor households may be tumed away. 134 Donors effectively supply what drugs and immunization are available, repair the roads, provide school books, and renew [he water supply plant. These aspects of local services have become not so much centralized as `projectized." 1-35 'he municipal councils are the fourth tder in a hierarchy of Resistance Councils, di~cty eced at ie lowest tier and each appointing members of the nex tier above. The members take an active role in urban management, supervising expendiure in detail, physically checldrig revenue collections, collectingmoneytopaylocalstandpipecharges,andensuringihatrefuseisdiscardedinthemunicipalskips. Princpal officers lack support staff, only the top jobs thatprovide housing and transport can ailractrecuits, becauise these, rather titan meager salaries, are the real rewards. The professional competence and cmment of tese seconded officers has been crucial to the survival and recovery of municipal government, although management is inevitably hand tr mouth and personalized. 1.36 Water supply and sewerage provides a contrast beiween the two towns. In Jina, tese are operated by [he Nadonal Water and Sewerage Corporation. With substantial donor aid this is an effective organizaion, which has carried cut a widespread epairand extension of planti has invested in the tziining and perforniance-related rewai of a well-motivated staff7 and places great emphasis on cost recovery. Default by die government and paras is sdll a major financial weakness, but the Corpoation is self- sufficient so far as zecuntn costs are concemed. In Kabale, ronsibility lies with the local branch of the inistry ofminerl and water development. Its staiTstruggle to mamtain an exiguous service witvirtually no tools and equipment; cost recovery is neglígible. India: Baripur aBadrBswarin the Calcuta Metropolitan Ara 137 Urban goernient in the Calcutta mepolitan areaisextremely fratgmented, geogaphically mndfimctionally. Thepopulation of 13 million isdividedbetween 107 local authorities, varying inunensely in size and legal status. These canry out a restrícted set of maintenance tasks. State-level agencies are reponsible, amongothertbings,forplanninganddevelopmentcontrol,education, medicalcare, bulkwatr supply, trunk sewemage, .nd land development. Private enterprise operates electricity supply and (ineffec- tively) bus transpot. 1 38 With major assistance fromi he Union government and the Bank, the Calcutta Metopohtan Autlodity, a state govemrnment subsidiamy, has played the main role in coordinating and executing large extensions of trunlc infrascture and siam improvement Its relative success in these efforts was offsetby an inabiliíy to secare nuiricipal cooperaion in maintaining the assets it created, and a failure to develop effective secoay distinbution systems, such as local roads, water conmections, sewers, and alemative sarity provision. 139 In resonse to dhese defects and to the growing dependence of local autihorities on state subventios titeWestBengalgovemmentlaunchedamajorprogrmnof municipalreforminthenmid-1980s. Election of local bocies was rein-sd after a lengthy period of state.administration. Stae govemnient offlcers 'were to be seconded to chief officer pots in muniucipaities. A central valuation board was &¡ablished to oveitaul property tax assessrnenL A municipal finance commission reconimnended a grant 8 system that expected and thusrewarded improvementin local revenuecollection andrestraintin tite growth ofrecurrent, and particulañy personnel, costs. Above all, municipalities were accorled access to loans and grants to undertake a wide range of local infrasrnucnnl improvements selected by them frorn an "a lacarte" menu. 1.40 The reforms have had nixed sucoess. So long as Bank funding lasted, the infrastrnctural iovement program was highly effective both in volume and quality. Attempts to increase tihe incidence of prope and water rating met much resistance and litgation, but collection ratios improved markedly, although at a considerable administafive cosi Expenditure restraint gave way under the pressure of state ordaied pay rises and increased asset niintenance costs. The incentive grant system was undenmined by the failure of state govement to applypenalties. Secondmnert failed to aumct chiefofficers ofquality, but subprofessional staff proved adequate for most technical requirements Tie introduion of execudve chainnen has generally added direction to municipal performance. But tite financial collapse of state government and the withdrawal of tie Bank has brought the refonn process to a halt, and the fiture is extremely uncertain 1.41 Given Calcutta's long-standing econonick decline, he prevalence of povermy and unemploy- ment, ite unfavorable physical envñnnnt, azad the administrative and political turbulence, the standard of seces is better tan might be supposed. Water supplies and sanitation have improved considerably as a iesult of recent investment. and local road networks are relatively well-maintained. Housing conditions renain poor, though access to basic services has imprved. As usual, the collection of refuse is better tian its disposal. A rudimentary, but widespread, system of education and medical care is provided by a mixture of local, state, private, and voluntary agencies. Public transport is congested and unreliable, and not helped by the concentation of most public investment in a very [immted metro system. 1.42 Public participation is highly politicized. Ward conimitees are very active in formulating denands and monitoring local capital works but limited to suppcrters ofthe miling party. The pñivate sector hasits own spheresofoperation,butisnotwelcometoshareinthoseoftiepublicsector,exceptinexecuting capital works. Mexico: Campeche and Hermosllo 1.43 - On paper, urban management is highly fagmented in Mexico as wel . Some cities are divided beweenjurisctions-stateaswellasmunicipal--thoughthisisnotthecaseinCampecheandHennosillo, where municipal boundares encompass the core town and substantial rural hinterlands 1.44 Functional fragmentation applies to all towns. Although the Constitution invests municipali- tieswithresponsiblityforcorcurbantasks,tieyareveiy dependentonhigherlevelsofgovernment Lacking any legislative pow-er, they must rely on state congresses to approve the rates and assessment conditions of taxesandcharges,zoningregions, andanyotherdecisionsimposingrestraintsorobligations oncitizens. Federal revenue shares provide 70 percent of tieir revenues, exchanged histonicaliy for surrender of local raxes on commerce. Nonrenewable, three-year terms of office for municipal presidents and assemblies togeer with.pe- d postelecuon hiatus severely esnict penods of effecive municipal action. Because many managenal posts (or in smafer auhoriities all employment) are occupied by single-ten appoint- ments, executive discontinwty is extreme. - .. - -: .:' .- 9 1.45 Federdl secretarats have been diwctly resonible for most educalion and! medical servees. Federal enterprises provide electricity and ¡elecommunimcations, while stat entepses provide most water and seweiage. State-led companies are hea'vily involved in land developffwwt and housing. Tite, private sector also engages heavily in the Iatter sectors, sormtimes in partnership and sometimes merely lin consultation with the state. Much residential development is iniially informal, land invasions being common andoften virtually state-sponsoied, and subsequent legalizadon andservicing involveadegreeof parmnership between communities and sitáe machinery. 1.46 In practúce, urban management is farrnore interatd ¡hnthe fonnal stnc¡uies suggest. Cohesion comes from at leasttwo sources.Thefirstis thepervasiveroleoftherulingparty. RILAhierarchy of nomiánationandpatronage ¡inks-fedalsrwe,andmunicipalofficials.AcIosenetworkofprofiessionals--- Iawyers, enginícers, planners, accountants, and the like-rotate between the appropriate posts in adminiís. naionsandenteñrsesattdieetlevels.híntrestgroups,suchasbusinlessandlaborunions,andcommunity associations are incorporated in the political movemnent-again by des of consultation and patronage. 1.47 This degree of poblitcaI integration could be a recipe for comiption and inerta, but for ono courntervailing force. Opposition parties have begun to pose a seúious threat to PRI's monopoly of Dower, makcing tie Iast presidential election a close cafl and ac¡ually winning control of isolated states and municipalities. PRI has liad to respond ¡o die challenge wkth mnore dynaraic policies. Jmproving the living conditúons of urban inmmigrants has becomn one of the prioiities on ¡bis urgent political agenda. 1.48 Tibe second source of integration has been a coordinated planning process, stimnulated bythe political cohesíon and puioriíties just described. Sta and mnunicipal planning committee bring toge¡her reprsentatives oflead agencies at ailIevels and ofprivateen¡erpse. AnnuaI agreements in contracua form govem ¡he indivdual investmentrplans of federal, state, and municipal agencies togetlie withi ¡e allocation of regional development and national solidanity funds that are availale for projects funde cooperalvely but natnly designed and executed by municipal administ-ations. 1.9 In thte case of Hermnosillo, ¡bis structure of coordinated investnment ita been augmeted by titee agencies responsible for different types of land and housing development, agan linking state, municipal, an, pvate sector interests. -1.50 Akthough the systems of finance and mnwagemnent are universal within Mexico, diere are con~rc¡ in performanc betwen ¡he ¡two tows studied thatcan be attributed to diflerences in organiza- ional culturebetween thefast indust¡úalizing nordi andtite lrgly agricultual su&Hermosiiloindhefast idunaizingnorth, has grown attwice dierate of Canpechein tesoudihovcrthe lasttwo decades, spends less per capita, and s¡iIl manages to provide better services. The whole popuIation is serval by water connections and. twen¡y-four hour supply, and ¡he bulk by sewemage; charges are weUl-collected, and they cover operating costs fully and capital costs parúally. Refuse collerdon is both efrective and efficienti lbe rate of formal hous¡ng consrction has kept ahead of population growth and ¡he backdog is lessening. Ini Campeche, water supply is intermtitent, and informal settlements do not have sewers. Charges are poorly collected and even operaing: costs require sorne subsidy. Refuse coIlection is indqot ini both covenge aid frequency. Neardy 40 percent of the population uive in infonmal housing seudements, and ¡he pac of regularizaton and servicing fali well beh find¡at of Hemrsillo. lo 151 Ptivate aid comnmunity organizations are dmawn into dic developmnent of infratructur in Mexico, butnotintotheroudneope~onofpublicservices.beciniainfirmllyinfthhandsofpubflcagen~s Suffgf-rveidsrpublcsecriow-possi'blytoolowinsonmecascs.ndr~ 1980s,¡hedivis;ionofrspomBtly bewm=stafandmuncipal adiuszosanddicebuoyacyoffedezalrevenn sangled toa scveredeclincin ¡¿alrvenues pauiuliy propexty taxaton, athougb inclusion of inetve clenicts in a new federal wevenu dong fómua have partially ivverscd dic tvnd icenty. aysia: Penang Island 152 Urban managcment ity Penang Isand is daninated by to c state govermmnt of Pertang Athough functions are fragmented btween federal, state, and municipal gov ients aod their subsicdar- ies, it is dic Mnate goverment that gives a degree of strategic direction. 1-53 Altbough enliarged in 19174 fican dic historic core ofGeorge Town to take in the whole island, dic muncipalityhas lost íts fonmercentralrole i a sequence of changes. Sie= 1966, elctions to itscouncil havebeenn spended aidmenibers are nownominated bythestate govenuient Its responibi lityforwater supplywas takenoverbyb thenangWaterAuthority; forelctiyby afdeenterprse forfireservices, by a fedema nrsh forhousing, by ihe sea govcrnmni The Penang Developbaent Corpmoation (PDC) has constructd ed industrial ctates, new townshipsm and low-c housiipg promnoted a freerade zone, and undertaken extensive urban renwal. ]3duca¡ion and health care are amnaged ~lrcty by the federal govesnmenta 1.54 Thbe muincipal role i subordinate aid restricted but tilr substantial. It inciudes physícal planning and developmeint control and a host ofotherregulatory powers, roadns, rereationa toi s ces tliat no one else wants, such as sewerage, reus collection, andi dic operation of tic bus company- Its performaneenhas been patchy, consraned by a nanrwrevenue base, a Lrge arnd overIy securt workforce, goverhead, and conditions of service dthatattractw ell-qualified staff butdetrambition. Sericesrange insoplisfcationfrom computercontrolled. and intrkednfficlights to bucketlatríaang RefDieconlection has suffered finon dic fil discipline of dic public anci difficulties in supervising contrctrs. Lackc of capital has prevented adequate investmt n sewage treatmen, to dic obvious detrimiont of ie tourist beachesd Revenuesgrew modestly until aproperty tax revaluation was mishandled, butneversufficienly to support major capital expenditure. 155 Federal- and state-run services have becn rell-sustaimll sbe wawtr authoiny has ainstalned high levels ofcoverage and cost covery. ahe education service has bgen well-funded and mhanaged, with local goveming bodies augmcnting federal supervision. 156 Despite thefrgatmcnyaon ofsresponsibiliees the developnent of Penang Island has notrlackdc sttgicdetoaan Twonthings hae helped. Oncis the proximity of stategovermentand the stronge ieresm t of a long- serving chiel nister. the Island occupies neaay a dtie of d stat's arca and has over half (530h p in 1t989)ofits 1,142,000 population. s I sizeratmertheanconstitutional status, the stategrovurnment conespond¡sto a mtetopolitan government. 1-57 TLe other imnportant factor is dic s¡rang sense of direction ¡m~ate by dic federal Burmiputra a15 vision 2020 policies b ser have given much i tuso the PDC's proa, pro ing housming aid 1mpoymnt opportumties to the ower inome groups ad promoting industrial andi tourist dcvelopmentl s- tgciet&nTohnsavhliOesepoiiosazgvmetnnesrnitrs X ~~~~~~~~~~~~~~11 Of ali te case cities, Penang Island demonstrates the most concerted govemnent action to stimulate econo3iic activity.In contast witi a 14percentunemploymentratetwentyyeamago,theIslandnowsuff«rs from a labor shortge. The biggest failures are in the environmental arcas to which little priority has been attached until recently. 158 TMe vigorous, motivated style and lean organization of ¡he PDC cont~st strly with the municipality. Yet, the PDC is untranneled by responsibilities for maintenance and onhy plays die glamorousparts.Itisalso questionablewhetheran agencymorexpose topublicpressure would havebuilt anything as controversial as te KOMTAR tower, a 65-storey office, sbopping and recreational cornplex which dominates the ciy's skyline and contrasts with its ntlditional architectual charater. U,1 ELEMETS OF URBAN MANAGEMENT: TEJ WORKING PAPERS 2.1 'Ibis chapter summarizes the flndings of ¡he working papers that exarnined individual cemenets of urban management aragmns t stt with thc topic of publ¡c and private sector wladonsbips(Woddng PaperNo.6),whichestablishestbescopeofurban govemnment. cleaeo cetl áclrelations (No. 5) is summarized in Chapter VII. iNiblic aud Private SectorReaonhp .2.2 The role of urban govemment in nmaaging urban growth cannot be taken for granted in Uh contcxtof todys debate. Tbe first questdon is not how wel govcmmcnt is performing a task, but whether it should be undertaking it at all. Orn- must first examine tlie boundaries of public intervention. 2.3 Rondínehli defines thc four tak of urban govemiment as: i1. "proviig nfactmessentiaI to the efficient operadon of cities; 2. pmvding services tatdevelop human icourtes,improveproductivity,andrmisethec standard of living of urban residents; 3. reguIating private activities that affeca community welfare and the health and safety of tbe urb populaioi and 4. providing services aund faciIities that support producuive activities and allow prívatec enterpris to opear efflciendy in urben aas(RcndineIli, 1990). Ahí butthe ¡híof tee tsks invoivet¡heprovision of inrsrueand services. Adistinction isfi-equently aid iighty drawn, however, between providng a service and producing it. Pirovision is ¡akcen to mean deciding on the qunty and quahity of a servie and ensuring tba it is financed and executed, while producdion describes Éhiedepioymentandmanagementofstaffandodherresources todeliver it.he two can be, ¿und ofuen are, divozced. 2.4 At sorn tim aid place, however, almost ahl urban services are provided by private o¡gniztins.Moieover.eveniftheyareprovidedbythepublicscctor,theymaywelibeproducedbyprivate organadons. Are diere any ciiteuia for dccidíng tic properdivision of responsibility between tie public and private sectors? 2.5 lheoxy suggests that public intervention is only-necesaiy when privat enterprise cannot or wnih not provide a service at a level essential to public welfare. First, privatre enterprise cennot do so ¡f. T 'Dere is no means of mcovering costs from the consunmer, because a service is of collective, beneft anid dic amount of individual consumption cennot be measured (euvení bealth, for example). *Individual consumption can be measuwed, but dic service involves en eiement of |~ ~ z . 13 coilective, ratbor thai personal benefil for which the consumner would be unwilling to pay. Imposing ful costs on the consumer would prevent equitable access to a sorvico thai al] income groups should enjoy. 2.6 Second, private enterpriso will not provide a service 1! ¡he investiment needed 18 beyond ¡1s r,esources and dhie returns would be too low, risky, or delayed. 2.7 Thir,iero are circumstances in whicb private enterprise can and wiIl provide a sovce, buí its technical nature or the scale of investmnent prohibit competition. Govemment intervention might tben be. necesa~ to protect dio public from the exemcise of monopolistic power. 2.8 Although dies argumentsjustify public intervention in a rango of sorvices, ¡bor are various options for the manner in which this takes place: *f fthe problem relates solely to mionopolisdc power, government can ¡eave provision withihopúivate sector butregulawtois standa¡ds andtarff(asintihe case ofprivadzed electricity supply or telecommunications). *f Ithe problemiís tho inability oflowerincormegroups topay fora service, govenment can again beavo it in private sector hands but subsidize iheir incomies or their consurnption, however, provding thicosi and eligibility can be deenie (xot always a» easy task). In all tho odier circuínstaances requiring intervendon, goverment can, at len theorouicafly, provide a servicro by paying the private sector lo produce it. *Finally, govermment can intervene both by pmoviding and producing a secrvic 2.9 Oneneednot,ofcourse, acetthelimnitsonpublicinterventionthiatclasscaeconomiicthoa inposes. Socia]ist syst do not, and a number of cenl Euro countries, inc.uding Ge.nany, hayo long traditíons of mniwicia engagement ¡in conimrcal enterprisw that do not fit any of ihe categories of miarket failure outlined in paragraphs 2-5 to 2.7. But it is difficult to countor dio argument tha public intervention in these wcirunstances is notfuIly subjecttlo temrket tests of demaudthatdeíermine efficient, supplyr. Governmen can, and somxtimo do a) iecac dat ail pupilsshoud mwaradio unifetim theyn¶úghtno lik and b) awand theseves the solo ¡ight to seil it at an unoompeutive cosi. 2.10 Ifcpublic intervention is justified, should goveneient produce a service? Or should govemin moi finance* subsidize, or regulate te delivey of a private organtzaton? Vive argucnies are faquently advanced in favor of private sector productiorr 1. Ibo intrinsic meiSes of privato enteiprise in thems of encorgng insi adve aid breaking tte concentraion of power. 2. lthe possiblity of msobihzlzg extra resources of capital or expertclso 14 3. Tbe superior efficiency arising from die tbreat of competition and a gaer fredom orpropensity to rationalize labor, reward perfonnance, and so forth. 4. The freedom from the rigidity of buitaucratic procedure. 5. 'he ability to realize econonies of scale, particularly in serving a number of jurisdictions. 2.11 Public choice theory adds tie additional argument that the involvemet of private organiza- tions in service production expands opportunity for consumers to exercise a arkcet choice betwen type and soune. 2.12 beo atwolnofcounterargument Thefirstist2t hthemeritsofprivatcsectorproducdon deped un d ie following assumptions: * Private organizations haye die capacity to invest in die physical plant or human resources needed for the task. * ihere will be altemative sources of supply and a fiee and honest choice between themr-hat is, genuine comnpetition. * Private supply will be both susceptible and subject to effective regulation by the governInenL rnesemaynotasbevalid. Start-upcostsorheimnmatuntyofthebusinesssectormayrestrictthenumber -fpotential supplicmNepotism or'ringing"mayhinderan efficientchoicebetweenhemandsubsequendy ilet cosls. The lack of sills or integiity may 1inpairgovemmental regulation. Alteraiively, the sthength of competition ay drive producers to cut the quality of service or to exploit their labor fore. 2.13 T¡e second cow te tisthatthe saieadvantages can be obtainedwithinpublic sector pmduction. Efficiency can resut from a sense of public servike that is reinfod by prfessionalismn, polítical accountability, a clearer specification of expected standards, and performace-related pay and promotion strucus ket choice can be provided within die public sector by greaterparticipation by useas (tmugh parent govemors of schools, for example) or by internal markct-self-accounting institufions competing for custom and paid according to usage. 2.14 What light does the empirical evidence of case material and parallel experience shed on diese argunts?In thecase studycities,privatesectorpatticipation ismostcomnon inpublic tport,narcets, education, housing, and refuse collection. Communities are typically involved in irnproving residendal sofflements ad inoontrbuting topublic works. Lnd developmentis frequendy undertaken by sorne fom - ofparneship bctweengovemniantdanprivateenterprise. hestatetypicallyprovideslandracquisitionand nk in icn while private enteprise undertakes the invesú t in on-site services and housing consuiaL Only the liian cases offerexarnples of private electricity supply under franchise. There are nocassofprivatesuppliesofpipedwateralughdisedooperteinpartsofFcophoneAfrica.Pivato groundwaters pply and watervendmng are impormt o as =o wbich the infrastctume does not include d.epubhcpzpcs.Gcnramlly, unspns pvatprovisionis cmnon with repeatoall ypesofservic- p d-0;eA' 0;,E ;;'i' .:: -:0' : ;- :,; 15 whemever govemment fails to provide such. But private production under public sponso¡ship is less widespread dan the theoretical advocacy would suggest (except at ibe stage of capital construction). This couldbebecauseitis lessfeasibleoreffecíivetan itsapolcgistsprofessorbecausethepublicsectorisoverly jealous of its own direc¡ supply. lte truth probably lies in between these explanations, alkhough the degree of involvement of the private sector-wheter drough contracúng out, ftanchising, or establishing joint venturesdoes not seem to correspond with the professed ideological leanings. 2.15 lTe presumption that production by the private sector is mole efficient tban public is given only selective support by the case studies. Refuse collection illustrates a mixed experience, for example. Contrcled collection is clearly more efficient than the direct municipal service provided in the Brazilian cities where both operate, even allowing for the more difficult woking conditions in the ameas still served by direct labor. It has bten less successful in Penang Island, and municipal services in Bulawayo and Hermosillo seore some of ¡be highest efficiency raings. Primay education offers more examples, because supply offered in tandern bythepublic andprivate sectors is comrnon. In Ahmnedabad, private schoolsoffer better education at less cost. The main explanation-a ban on the employment of the cheap and plentiful graduate teachers inpublic schools-can be regarded as anontypical factororas one typical ofpublic sector nigidity, whichever inierpreiation suits one's cause. But, the public education systens in Malaysia and Mexico also scorehighly on perfoniance indexes 2.16 One conclusion is perbaps unfortunate. Tbe most favorable cicumstnces for contrcting out-genuine competition within the pñvate sector and the greatest public sector capacity for contract xeguaMion-end to occur in those cities where it is least needed. That is, because the same environment encourages a businesslíke management of public supply. Urban Government Stture and Fnnctious 2.17 Urban govemment tasks are not confined to services. Regulatory functions have been as inportant to the historical evolution of urban management and are being brought back to the center of atiention by environmental concerms Both service provision and environmental protection depend on the planning and coordination of development, including the efficient placement of new settlement and responsive investment in lnk infrastructuje 2.18 Within the public sector, responsibiliWty for urban tasks again v'aes between centrad or state govenments,parasalboies,andlocalgoverumentMunicipalgovemmentbasbetetradihionalfocus forurbangovemmenttasks,butcental andstategovemmentsintervenedinaesinglyinthe 1960sandeady 1 970s. The last fifteen years have witnessed a general revival of municipal resouves and responsibilties. 2.19 TIe role of municipal goverment withi urban management ranges from domainat m Bulawayo) to residual (m Penang Island). Many factors contribute ro its relative weight, some of ¡bem poliftcal and historcal. Whether an urban area tba includes peñipheral development is covered by a single jiurisdicioniscrucialtotheabilityofmunicipal govemení¡ttopr~vide snasedvictad¡oplanandserv¡ce developiment. Tiis is well-illusmed by the lndian cases. The Ahmdb Corporation, as a single, local authority, is clearly more influential ¡han the fragmented municipalities in Calcutta but is stfill hamsng because te perúpheral ameas are not aJded to its junísdiction until aheady setled. The range of municipal funci ansd the scaIe and buoyancy offinancial andprofessional resources also detemiine tie significance of local govemnent wihin urban gcvemment as a whole. 16 2.20 Tuming to the criteria of effecdveness defined in the Executive Summary, the case evidence does not indicate any inherent difference in teehnical competence berween types of urban govemment agency. The provision of a service by acennal governmrent needsan element oflocal participation Loavoid rigidity and overstain. Silgle-purposestateentewprisesmaybemoresuccessful indevelopingad retaining skil!ed profeisionals, where they are in short supply. Small municipalities have obvious difficulties in deploying skilled personnel and equipmenr, although diese are overcome in a number of countries by intermunicipal coaperaion (ilustrated by the case of Brazil and Turkey) and contracring. 2.21 Incasesofhighunemployment,unionmilitancy, orboth thatcoincide with political volarility, municipal govemment is pnme to overmanning with adverse effects on its efficiency. Conversely, the provision of employment becomes a lever of política] support. This is not a universal characterisric, and efflciency may be sigificantly inproved during periods when the local business community intervenes strongly in local politics to upgrade the physical and economic fabric of thecity. Insome cities, thecoalition between business and municipal leadership is a permnanent featre with lasdng impacta on the style of local autboñity m gm me Anand and Hermosillo are cases in point. In othes, the interest or the business community represents a purely oraey foray, and its values of srrategic diztcrion of resources recede in imporance when leadership reverts to the habitual políticians-the teachers, rraders, lawyers. and trade unionists. 2.22 Ihe quality of service managementdoes depend considerably on two orherfactors. The first pIiority is anhed to rhe individual service as aresult of its visibility and the political weight of its rlientele. Sewage irearnent suffers from neglect on the first count and primary education on die second (when public scbools serve only tbepoorerfanilies). The second is the extent to which service quality depends on public behavior as well as on staffconwipetence refuse collecion clearly suffers in Uds respect. 2.23 Case evidence reveas no marked difference between type of urban government agency in the derinaton wiith wich tbey maintain financie] viability by uprafing tariffs andenforcingpayment. Both municipalities and parastal entepnses (and theirparent mnirstries) have shown temerity and tiniidity in face of these challenges. Theparastatal enterprises are not more markedly successful in costrecoveiy tan local authorities; the political leaders of their parent goverments art even more prone to give in to public resistance to tariff revisia..s or enfoxvement because they are not faced directly with the financial conequences. 2-24 The case studies provide sorme exanpJes of a flexible response by municipal govemments to the needs of poar communities, to whose demanda they are most directly exposed. That they at equally exposed to elite pressures and to an overail bias to te low-income groups or neighboods is not a typical orlasingc cha rdac oflocal goverment. Suchprioritiestendrtobespasmodic, arisingoccasionallyfrom political ideology, more commonlyfioomaemporamy thieatto electoral position orarising from theservice of particular paran-client relationsbips between individual leaders and commnunihies. 2.25 Local aurtoriries often play a highly effecuive part, however, in implemendng national policies of poverty alleviation, usually with financial aid from the central government or donors. A sense of ultimate responsibility for political position and stability may spur central govemment to atnend to the needs of low-income groups in countries with inclusive political systems. In any case, central govemnments often control most of the public economic levers affecting income distribution. - .~~~~~a 17 2.26 Parastatal enterprises may also pomote services or employment forlow-income groups under strong political direction, the work of INDEUR in Hermosillo being an outstanding example. But they are often oriented heavily to the development of services for middle-class and comiercial areas, driven by the pressure to maximize rates of retum on their invested capital and by the technocratic bias of their management. 2.27 With comprehensive boundaries and functions and a srrong financial and professional base, municipalgovenmmentshaveshown thecapaciy forsustainingieasonablecoverageandstandardsofservice in thefaceofrapid urbangrowth. Butthiscomrbinarionofamibures is the exceptionratherthanitherule. More conmonly, utansetiements are fragmented between municipal jurisdictions, and the functions that need to coalesce in responding to growth are divided between public agencies. These shortomings are most acutely felt in the larger metropolitan areas. 2.28 Various solutions to fragrncntation are examined in Working Paper No. 1. These solutions include the arnalgamation of municipalities, boundary extensions, atwo-tier system of local government, intermunicipal cooperation, and the creation of metropolitan planning and development authorities. Each has success stories to its credit; each serious obstacles to general replication. Political rivalry is often the biggest impediment; it can jeopardize amalgamations, thwart boundary extensions if both core and peripheral areas are govemed by municipalities of equal legal status, and undermine tne necessary degree of cooperation between multiple tiers of govemment. But the expenence is not all negative; the research has illustrated cases in which common political loyalties are a cohesive influence. 2.29 The multipurpose development autborities established in many Asian cities have been succe.sful in developing large tracts of Iand for middle-income residence and commercial use. But conflicts of interest, divorce from responsibility and resources for maintenance, and weak lines of public accountability have generally undemnnined their performance in the planning of pbysical development and investmnent. Their Latin American counterparts have generally been dependent on political and financial support from national govemrnments and donors that has proved too ephemeral for sustained perfonnance. 230 Fragmentation, both functional and geographical, is aparticularly strong impediment to environmental protection. Pollution rarely respects boundaries. Most of the relevant regulatory tasks are normally performed by municipal government, but often their implementation arouses politically ambivalent attitudes. In the larger ciües, environmental improvement usually depends on extensive cooperation between the levels of government as well as between thejurisdictions and thus on a sense of political urgency and extemal intervention by national government and donors. The air pollution abatement progran in Mexico City provides a vivid illustration. Inte~n Organization and Management Process Ex~euve authority 2.31 Expenence shows tha sructa solutions alone cannot rectify die deficienries of urban govemment. Inproving urban managernent is also a mar of process, of te way decisions are made between and within organizations. I8 2.32 A central need is political leadership with the authority, vision, and commitment to addrss the overall challenges of city growth, degion, and deprivation. 2.33 Within municipal government, the location of executive authority varies between extremes of a) concentaion in an execudve mayor, elected at large (according to the Brazilian patlem); and b) diifflusion betweencouncil committees, as indihe traditional Anglephone systernsof UgandaandZimbabwe; or c) between council, committee, and govemment-appointed administratora, as in Indian municipal corporaions (case of Ahmedabad). 2.34 Thee are dangers with the strong political executive-that is, of guerilla warfare between mayor and council, of partisan use of resources, of oveipersonalized adniniration. (¡he inscriptions on the sculptuis in the Belo Horizonte Park in Brazil give morpreminenceto the name of the mayor, whose admininsraion installed thern, tan to the artists or the subject) A combination of a business-oriented political cultre and strong adrninistative leadership clearly works mosteffectively in Bulawayo. Buton bailance, poitical executive authority-whether execiised by a mayor alone or in concert with some form of cabinet-appears to provide dte best focaus of public accountability ad dic capacity to take a sntegic view of city needs and developnent. There is a trend toward such systems in South Asia, with mayors or chairsonsassuniingexecutiveleadeasbipinBangladesh, Pakistan,WestBengal,theGujartmunicipali- lies,suchasAnand(butnotthearemunicipalcorporations),andSrilanka(thoughusuallywithapolitical cabinet). They a, of course, universal in Latin America 2.35 Strong muncipa Ieadership does not guarantee the effective coordination with cr & dr managemnent of fimunions perfonned by die governmnt deparments and by the parastals. But an executive mayor is generally in a stronger negoatidng position beause of his or her persoa electoral mandateandtieabilitytodelivertdemunicipalsideofabargain.TheMalaysianandMexicancasesiilustrate te possibilities of integrated policy in which municipal leadship is part ofawider andcohesivepolitical system. in the Mexican case, it is the strcngth of he nmling party at provides iis continuity. 2.36 Strengthening the role of political leadeship may beariskyoption, however, if local poiltical systems are particularly immature and office is an almost exclusive path to fiancial advancement In such cirumstane die diffusion of power in conúníttee systems may retain advantages. Adminisiradve leadership 2.37 Political authority needs tfe support of snnng adíninistrative leadership. The principal, adminitúveofficer-townclerk, secetary, orwhateverthe title-needstbepowerandstas to exeise clearmanagerial control pricularly overdepantal heads, and to deterpolitical leaders fromexcessive intmsion inmanagerialfunctions. Politicalandmanagaeentfunctions arecomplementaryand,at tcrbest, mutually supportive, but they are neveríheless separate. The prncipal admmistrative role may be defined, in general tenus, by law or by adoption of a standard job description. But it s~ould remain suboniate to political leadcrsbip. Atternpting to ennhncb manageiia independence in the law does not work welJ, as deonsratd by the comnissioner sys in India 2.38 Both the professional status and span of control of financia nanagers vaíy considebly. Financialfunctionsmaybeintegratedinasingledepartnentordhvidedbetwecnunitszesponsibleseparately, for ivestmentpa g, budgeting, acm ting, rvenue adíministration, and intemal audit. These may be, 19 headedby caeerprofessionals orby a s wmovingbevween assorted fiional roles. Onbalanc, te financial management of a large public agency, whctber a municipality & a para co ation, descrvesateddirconbymanagerswithprofessionaltr dingandcommianenLnITereisalsoastrong caseforinposingon financial mnaagein afiduciaryduty to advisecouncilsorboardson issues ¡batinvolve fcial probity or risk4 thus preventing ingularity. Submncipul oiaI 2.39 Fourpattemsofsubmunicipal organization havebeen identified 1) administrativedecentrrli- zadon; 2) submunicipal govemnt; 3) municipal or government-spons community rpresentative structusm and4)independentcommunityassociadons.ibesemaycontiburetofourmainflmctions l)area managcment and coonination of services by manager 2) participation by community representatives in direction of local services; 3) reprsentation of comnunity inteiesu to public agencies; and 4) contrbution to servioz provision through self-belp. Ihis is a comnplex patnm of stcural and funcdonal options. 2.40 Delegatingmsnagementofndivdlservices to costcentershas many advantages; tiis nay be acconwlihed with user participation trough paent govemors or tenant associations. It can impove cfdiciercy, mobilize extra resources, and conrarj to expectaion, incitase budgetary controL Effective Inancialdelegatondoesdepend,however,onccaflidenceinrevenucexpectiosf,whichisdifficultincases of bypen on or of a highly volalie revenue base. It also s the suppert of cetent financial information sys¡emt Equity can sufferif financial stringency leads to a sitauion in which cost cenas ase expected to rase money for costs that ighdy belong to central tax-bonr budgets. 2.41 It is mor questionable whether muMpurpose arcea marnents or submunicipal govern- ments are deiable, exceptpes in very largecities. Both foms ofgovemmentarecomplex and cosdy, involving a new level f anh on andchang inrelationships between department ln ¡he frst case and risks of poliícal coflict between tiers in lhe second. 2.42 Conmunity-based stiuctures are piaymg an incramg part ¡n supporuing uran senices hugh self-help, even talng on contracts for service components. Case evidence provides effective enlesofconsutationwithrcsidents' associationsoverreveueincmrases ortbedesignofneighborbood provements. In Porto Alegre, community repesentatives are involved in deciding oveil budget priorides. Cases bave also provided example of a community organindon diat is h~aily ncoporated ln te ruing parry stuctue on balnc it is more effective if tbis is not the case, aldhough galiion is rlky. The grea¡es¡ poteni strength of community organizauion is ¡o providing an active counter to the dangers of executive abuse and a stimulus to public accountability. 2.43 One variable is the extent to which municipal counclors playa loca representative role. ihis is much stronger if tbey are elected by wazds than on a clmwide, paty list basis. Alive bases of community representation are more necessary if die latter elecl systems prevail. Slrategic planning and D - 2.44 Ihe evolution of urban mangenet is hitred with atempts to develop an effective meodologyforstra¡egicplanningandmnanagementthewnpolitanandmunicipallevels.Thelierature has umcoveed few exanples of good practice in ¡bis respect case sundies reveal the usual array of land-use 20 plns dhat are inielevant or ignored (aboye ali by government agencies), capital development plans diat are not reflected in annual budgets, md budgets that are based incrnentally o"t previous years with limited reviewofpolicy.Hypeinflation,incounbiessuchasBrazil,undenninesanyplarmingforperiodsexceeding dime months at a time. 2.45 ParaIlel research by die Urban Magment Progamme through EDU International has concluded that rolling dhee-year investment fomcass have a bener chance of success ¡han fixed period (usually five-year) developmnxt plan0s These should be piimarily action plans for the development of individulurban services, combining nmedium-tern capital invesbnentprograms with forecasts ofrevenue andrecatnexpenditure(mcluding debt serice). rhis ties in wid die issue of performance management discussed below.) Far m= emphasis is needed on the projection of opng and maintenance costs. The related disciplines of maintenance planning and cosdng have received far too little attention that has been lavished on the more esoteric tools of projeca appraisal, which are given so much weight in the selection of schemes for donor credit. 2.46 Investment planning needs to be related to ¡he expected or desired directions of physical gnwt, and these need to be located as efficiently as possible in tenas of servicing cost. The is a general consensus that physical planning needs to be more indicative and less prescúptive and ¡hat patrms of setement are lilkely to be more readily influenced by incentives (~nk infi asructe=, land assembly, and so fori) thai attempts at land use pro1lbitoin 2.47 Research slesses ¡he need to improve the management ofservice delive¡y and maintenance, togeterwit theproductivityofstaffandodierswourcesemployeProceduresandtechaiquesareneeded that are both simple enough not to ovedload the capacity of man and also xalistic in tenrs of the activities being measured. Components of such a system rane • Inventories of infasrucwre to be main ed or services to be delivered. * Service delivery standards and indicators (for example, Bombay Corporation aims to have at least 93 percent of its buses on the road every day, and Curitiba expects planning applications to be approved or objections notified within a fortniz:ht of submission). * Specifications ofservice maintenance tasks and frequency, together with budget estimates of staff and resources required for execution (as with the Indonesian POMMS systc). * Jndicaors of service efficiency in cost-output tenms widli year-on-year companson at constantpaices. * Short-term work planngi organg, resource planning, and control. * Poductivityimpvementmeasues, incentives, andaning(forexale, Bombay's bus mechanics r e abonus if they achieve betgetdesmcbd in Component 2). 21 Urban Government Fnance Adequaacy d buoyancy 2.48 Growth in prices, population, and economic activíty in rapidly urbanizing countries imposes demands for public expenditure tbat can only be met by both substantial and buoyant sources. The challenge is to identify sources that combine these characteristics with an equitable incidence and ¡he encouragement of efficient use. 2.49 Both the yield and buoyancy of a specific revenue base depend to some extent on its inherent qualities, such as the volume of activity charged or taxed, and its rsponsiveness to growdl in prices, population, and so forth. But political sensitivity and the relative ease or difficulty of administration-rhe degme of hassle involved in identifying payers, assessing liabilities and recovering payment-also play a farlargerpart tan acknowledged by the conventional public finance literature. Revenue administration is much easier, not necessarily more equitable, if the obiect of a tax orcharge and tie extent ofits liability are automatically identified and do not have to be sought out Taxes and charges are more readily assessed and paid when the payer can transer the ultimate cost to others. (Such indirect extraction may be regarded as objectionablebecause of the weakening of public accountability, but itdoes, afteralL, apply Lo mostnational government revenue sources.) The most difficult revenues to levy tend to be taxes on corporate profits and property as liabilities are more difficult to assess and more readily disputed by payers, because they cannot passthemon. Difficultalso are sales and servicetaxeson srnall businesses, which are under nocompunction ¡o record liansactions openly and accurately. 2.50 The adequacy and equity of a revenue source are also intercomected, because diene is a liink berween the perceived relationship of a tax to ability to pay and its political acceptability. Ifthe distribution of a tax burden is not seen as relad to he taxpayer's capacity, the levy will only be acceptable at a low rate of incidence. 2.51 Conversely,anytax,whichisnottoodifficulttocollectanidnotglaringlyinequitable,mayhave to suffice in economies with large propotions of informal employment and commerce. This is anply illustrated by the comparative success of Jinja in taxing ¡be informal economy througb market fees and by graduated personal taxation based on presumpuve incomes. Levies on fuel orelectricity conswunption have similar virtues of rough justice and simple administration in similar circumstances. The importance of charging 252 Tbe familiar arguments for charging for services that benefit individuals measurably and exclusively are well-known a) the need to raionalize limited resourees, to test market dernand, and to generate the reces to meet demand; and b) the fairness of imposing costs on those who benefit. 2.53 There are drawbacks to charging as well: te practical difficuities and costs of measuring conswnptionandexcludingnonpayers; thereluctancetodeterorpena~izeconsumersifsomecollectivespin- offs are involved (for example, the reducdon in communicable disease by treated water supplies and sewerage); the danger of depriving ¡he poor of access to services tdat are regarded as a basic human right, 22 suchasprimayeducation.Sornevariatoninpracúccandir degme of costrecoveryaiisefrom thesedoubts; full cost charging for gas, electricity, markets, and telecommunications is normal, but water supply, sewerage, public rental housing, and public transport receive tax borne subsidies in some, though not alt cases 2.54 . Te case evidence tends fo support tbe more conservative approaches to charging. Services, such as water supply and sewerage, are improved for all if charges fully cover both operating and capital costs(tbelatterusually troughamortisingloans). Ifwatersupplycosts are notfullyrecovered, forexample, low-income groups end up witb a few hours of treated water a day, or none at alt. If fares remain staiic (unchangedinCairofortbirtyyears,forexample),busessimplybreakdown.Thepublicdoesnotreallygain fmrn subsidy, least of all the poor. Taion 2.55 Taxation is still te corect way to fund services of collective benefit, and the relative ability to pay is the right basis for its distibution. A variety of channeis ffimugh which fax revenues support urban services include: *Local axes, levied by local autborities. Local swcharges on national and state taxes. - Transfers of national and state tax revenue to local authorities or parastatl agencies through grants, subsidies, orpercentage revenue shares. N National and stse taxes spent direcdy by central depanments. 2.56 Levy of local taxation has theoretical advantages forurban govemmentin ts ofproviding a separateandpotentiallyautonomousrevenuebase.An independenttax base sbouldallowurbanauthorities to respond more flexibly to local demands and to pronote efficient decisions over the respective levels of taxing and spending. 2.57 These advantages can only be realized, however, if the division of taxes between tiers of government bears some relation to the division of tax-berne expenditure. This is compromised in practice by a number of factors, including te fiequent preemption by the central government of ihe more elastic souzves; the technical efficiencyatrachedtocentral orsiategovernmentcohlecton of majorrevenues, such as excise, value-added, and corporate profits taxes; and the need for some jedistnbution of tax revenues to mitigate dispaities in local, taxable capacity. 2.58 Thecasestudiesprovideonlyoneexampleofalocal tax base thatisalmostsufficienttosupport a range of devolved functions [bat include expendiwire on education and health-that is, the octroi levied in Ahnedabad and Anand. MIbis is a tax on goods entering a town for processing or consumption, levied inNepal,PástanandpartsofIndia4Thisisasubstantialandbuoyantievenue,thoughcontroversialbecause of the delays to tspt caus by its collection. Zíimbabwe's combination of property tax, vehicle tax, and aS percentlevy on electricity bills has proved adequate in Bulawayo and Mutare butonly with central govemrnmentfundingmnosteducation andhealticosts.InAnglophonecountúes, the leadinglocal tax ismost 23 frequendy on property; and elsewhem, a [evy on business payroll or tumover-for example, the patente. These levies are important and could usually.yield considerably more with improved administation. Replacing plot-by-plot valuation by mass appraisal techniques can improve property tax assessmen; a combination of multiple collection points, computerized tracking, and tougher sanctions can boost collection of any tax. But die relationship of most local property and business taxes to differences in the taxable capacity of their payers is too tenuous to make substantially higher levels of incidence pclitically tolerable, and they can thus only support a limited range of public good services. 2.59 A wide measure of local responsibility actually requires access by urban governments to the morebuoyantandpotendallyequitablefieldsofincomeandexpendituretaxation.Thesetendtobeexploited primarilybynationalandsateaxes.Urbangovemmentsmaygainaccesstothembygrantsorbypercentre revenue sharing. Such grants are only of limited importance in the case study cities, although far more significant in some oí.er countries, such as Indonesia Rey are signifin mainly if services with major national policy objectives, such as education, are devolved to urban government But peentage revenue sharing is more common in the case cides and is generally gaining in significance, partly because of tie inceasing emphasis on decen"alization, pardy as a rplacement for local )evies perceived as inimical te economic growth. 2.60 The disadvantages of intrgovemmental Éransfers are the Iack of local control over the levels ofesources allocated, and in some, but by no means all cases a degite ofunpredictability. The unreliability of discredonary ¡nmsfers has been a serious weakness in several Afiican countries, but this experience has not been widely repeated elsewhere; most formula-based systems are dependable Trnsfers can promote inefficiency if their scale is unrelated to the devolution of expenditure onsibility. Rhe importance of tansfers tends from experience to inmase with econonic growth., because of the greater devolution and concem for equaization. Much more investment is thus needed in the development of formulae, such as fose operaing in South Korea and ecentIy introduced in Malaysia, which aim to match transfers to differences in local spending need and ~axable capacity. 2.61 Te sorne extent sharing tax bases thnxgh surcharging represents the best of both worlds. It can give urban govemrments borh access to tie more buoyant taxes on income and expenditre levied by central or state govemrnmnts and to the technical efficiency in revenue administration of [le latter. At the same time, it eves scope for local discretion over rates of taxation. This does depend, however, on die feasibility ofdifferentsucharges andthus ofthe varianceofgross tax ates betweenjurisdictions. In Europe and Japan, surcharging has applied most substantially to personal income taxation, a tax with far gra potential in economies with a large percentage of the labor force in regular wage employment. The yield ofasurharges, as ofstraight loca] taxes, reflects dispaiitíes in local fiscal capacity equalizingpolícies would stil depend on some form of intergovemmental írnsfer. Capitl funding 2.62 Access to credit is often important in financing capital investments that generate revenue or are too lumpy"tobe bomebyannual budget surplus. Municipal developmentffundshaveplayedavaluable pan in making loan finance available to a wide range of towns for basic inftasiuctuie. There are dangers, however, of such funds being diven by national or donor investinent targets dtai outmn local debt service capacity, particularly when tendersareprotected fromriskbythededucdonofrepayments and iníerestfrom intergovemnmental tran~fera, a familiar scenario. Credit should always be demand rather tlan supply Ied. 24 intergovernmnntal ransfers, a farniliar scenario. Credit should always be demand rather than supply led. Debt service cpacity also needs careful forecasting of revenue and expenditure trends (and of the governnent policies on which [bey may partially depend) rather [han die application of blanket ratos. Municipal credit banks can have a useful role, but can only sustain their effectiveness in a true market situation of ccmpeting both for capital and borrowers. 2.63 Oter souces of capital finance often deserve more attenúon. These include a) the various mechanismsforrecovering ecapital costoflocal infastnucturcfrom ownersanddevelopers, who benefit fromenhancedlandvalues; andb)theuseofdepreciation orrenewals fundstoreplacelimitedlifeequipment. Fmancial management 2.64 Caseevidenceshows that[hequalityofserviceprovisionisdependentoncarefulmanagement ofexpenditure, as well as the buoyancy, ofdhe revenue base. The specification ofservice standads and unit costingadvocatedinthesectionentitled'intemalOrnization andManagementProces" is alsoimportant to dic efficient use of rsources. Another vital element is resraitin the growth of ainisiuativverhead costs that can absorb an excessive and growing proporuon of local resources, unless rigorusly controlled. Tiis is an area in which more, ratler than less, govemment intervention may be well justified. 2.65 Urban govemment operations are frequendy undermined by growing deficits. These are usually due to urealistic budgeting, with revenues inflated to avoid uncomfortable budget decisions. HIowever strong or weak the underlying revenue base, conservative estimation is crucial to sustained viabilty, coupled with the striet monitoring and comparison of the actual progess of revenue and expenditure throughout the budget year. 2.66 Consultants' reports on financial management in urban agencies habitually conclude that accounting records are badly in arrears and that more complex systems are needed. The resulting recommendations are inherently contradictory. It is usually advisable to concentrate effort on bringing existing systems up to date and on introducing modest additions to the records. Systems, such as accrual or capital cost accounting, can simply delay the production of records as well as giving misleading information. Accounts are of no practical value unless they can be produced punctual ly, and their degree of sophistication needs to be matched to the skills and equipment available to their maintenance, and the ability of decision-makers to utilize the information they provide. Urban Govennet S;tafing Critica factors 267 Past analysis of urban govemment staffimg has been heavily influencedbytheUnitedNations classification of employrnent systems and their respective attributes. This classifíes staffing systems as * Separae, meaning tehandau úporna tandem ploysitsownstaff. * Unified, meaning tat posts are filied by deputation from a central cadre employed specifically for senrice in local authorities. . '- .- 25 Integrated, meaning that staff of central and local govemment agencies form a corrunon cadre and exchange fi-eely between leveis of govemment and localities, according to central posting. 2.68 Case evidence shows that effective staffing conditions derive from a far more complex variety of factors. Four factors are of particular importance to staff commitment, interest, and work satisfaction: 1. Personal status and influence. 2. Financial reward aid other material benefits. 3. The intrinsic sadsfaction of the work itself. 4. Tbheawarenessofbeingofconsequencewithinaclearlydefinedor-ganization,whether a corporate body or a component deparunent. Good staffing practice should contribute to these circumstances, but individual systems or practices are unlikely to have a significant impact in their absence. Whether g,ood professional staffwill work for urban govemnent depends largely on their total effect. Personal status and influence 2.69 Ihere are both internal and extemal dimensions to personal status. Certain intemal practices make an obvious contribution, including: * A clear definition of the job and its requirements. - tRecruitrnent with a sensible rather than slavish adherence to these specifications. Pmion based on a nied process, clearcriteria, and objective assessment. Ihe case of Bulawayo shows how well a separate system can foster such practices; that of Penang, the sensitivity of promotion issues in a closed authority, and that of the Latin Anerican cities how effectively an unstmctured system based on patonage can operate, that is, if tihe game is understood and played consistendy. Ie Indian cases also underline the problems created by reserving the senior municipal posts for state officials and by the static grade strucrures, allowing litte mobility for the lower level work forne. 2.70 T'e extemal dimension relates to the status and public image of urban govemrnment agencies. A naarow range offunctions dominated by maintenance tasks, such asrefusecollection and steet cleaning, invites low public esteern a wider range including significant involvement in capital investnent enhances status considerably. 26 Personal benefSts 2.71 Cases suggest that urban govenment tends to offer terms sufficient to attract and retain most of the skills equired, especially when combined with a high degree of security. Good practice includes a) comparability between public sector agencies, wi¡h flexibility topay more forrare skills; and b) significant incremental and promotion progression to reward resonsibilities and performance. fle Uganda National Water and Sewerage Corporation presenis an effectve example of consolidating allowances into a single bonus that can be eamed or forfeited for well- defined reasons. Practice of questionable value is reflected in the compression of scales in India, and a mass of automatic allowances comparable in value to the basic salary. Work satisfaction 2.72 Worksatisfxction isassociated with the intrinsicinterestofthe job, its professional ingredient, the worker's ability to see a task tlirough from inception to completion, and the human relationships of the workplace. hoemotivating impactofiese circumstances is bestillustrated by some of the waterauthorities surveyed in the case wsearh, possíbly because of die measurable and controllable nature of die tasks and of tie value attached to their commodity. The esearch also demonsrated the perverse effects of exposing staffo monotonous roles witb low-porformance targets, potential conflict with the public, and no prospect of alteative ernployment. Organizational identity 2.73 The identity and status of an organization have an important influence on its ability to attmt and retain good staff. These are reflected in a sense of corpore awareness and by a concem for st s and improvement, demonstmted in tde case research by agencies such as Bulawayo City Council, the Penang Waterand Development Corporation, and the Uganda National Waterand Seworage Corporation. These qualities tend to be intemally generated, and state intervention generally has only negative consequences. Again, the intrinsic challenge of the organizationial Lasks helps to encourage such a culture. It is also more difficult to develop in agencies with largc manual work forces, particularly ifcombined with inflexible terms of service and powerful union affiliations. 2.74 Individual practices and well-structured training systemns contribute to the development of a positive working enviímnent, but are not enough in thiemselves. A sense of belonging to an organization with positive values of service and achievement is important to individual commiment, more so the feeling that one is of consequence to it. The best of the urban govemment agencies visited have consciously sought to encourage such awareness. mL DRPIVING FORCES Politid Acoeuntability 3.1 Ihe case. evidence illus:rates the importance of political commitmnent to effective urban management. There is a tendency to regard political will as an independent variable, an Act of God. Ifí hispresent,thingswork; if itis absent, everything fails.This is, however, too simple an explanation. There is a strong interaction between die force and directioii of political commitment and its institutional setting. 3.2 Local accountability is usual¡y regarded as thc hallmark of municipal government. It should be the characteristic that distinguishes this form of public agency from most other forms-one thit makes govemment more responsive to local needs and municipal officials more direcly answerable for dteir decisions and performance. 3.3 Inpracticecahostofpolidcalandconstitudonal factorsrestrictanddilutethepoweroftheballot box. Councillors may be appointed by [he government (in Malaysia) or elecdons may be frequently suspended (iin India). Electoral choice may be limited by single-party monopolies, by elecrions dominated by national rther than local issues, and by tumouts that are too low to be iepresentative. Moreover, the elected representatives' powers may be curtailed by unstable political alliances da many undennine consistent policy or by the extemal appointnent of chief executives (of Indian municipal corporations, Indonesia). 3.4 Buthowvercosduedandforaeveneson,murucipalgovemmentisgyeosedtopolitical gaze It is far more accessible than other govemment levels and agencies, both in tems of distace and public eqecion. Witinnostmmiwcipalemsy s iee is alsoadewnt balnce ofpolitical andprofessional weightin decisionming mompd ~ dt centhal goverment orparastal bodies. 3-5 This heightened political exposure is matched by vulnerable relations with higher levels of govemment Mostgovemments adhere to therhetoricof decentralization, buttheircomrnitmentcanbeboth equivocl and ephemeral. To the Indonesian govenunent, decentalization means strengtbening tie capacity of local govenunent to implement the mandates of central govemi int (at least there is no concealmentorhypocy about Mhis). Ibe WestBengal govemmentrestored elective councils in its batfle to "subjugate die bureaucracy"; it aimed to reinforce [be power of CPIM)--not to share the power. Others espouse devolution mainly to pass tbe fiscal kzc in hard times. Political upsets can blow even the best- intnded decentralization policies offcourse; an example is ethnic tunmoil in Sri 1mka. Local govemnment leades can rarely be certain of stability in their relationship witb te center and in the responsibilities and resources that this confers on them. Political Risk 3.6 It is in [his exposed and uncertain political environment that ]ocal leadens are called on to provideeffeciveurbanmanagement. Butaccording tomostprescriptions, thisinvolvesahostofpolitically cosdy and riyactions: increasing watrates tuning off water supply if notpaid for, firing surplus labor, sending polluting cars off to te scrap heap, and vetoing multistory redevelopment projects in congested downtown arcas. (This is a tall order!) 28 3.7 Pasteur refers to tbe differences in styles of leadership illusarated by atio case saudies. These rango from a strategic appmoach-althat is, from atho readiness to addross priority needs in alio comimunity and to talco aggresive action, i;f needed, ca a largely reactive style halia is concomed with averting 'isk and responding to theo loudesa complaint. 3.8 The straaegic approach involves poliuical risks, but abose may be acceptable in two, usually complcmentary circumstanccs. The first occurs wben city polilics are dominated by a managerial culture thiat values efficiency, environmental impmovemenarí, and so on and also shares tbe willingness of private enterprisc, to accept risk. Baaley refeérs to alio gmowth coalitions of civic and business leadership that clearly establisb the businesslikc culture in whichi urban managen mona operates (in a city such as Curitiba or Hermnosillo, for example) and ahat supported Dalan's rulhless drivo to "clean up` Istanbul. '¡he sccond circumstance occurs w.hen civic Ieadership is confident cf the abiliay to show resuidas far tough accion-for example, to demonstrato that bigher- aariffs do resul in betuer water pressure, that labor discipline docs fr-ee tchsutrcs of litterandpothioles, andthatclamping downoanfñue¡emnissions does cleantheioair.Thisconfidencc dependsondaioecommand oftcheresources and functional rspnsibilities tomaketabosetliingyshappen. Sucli confidence is diflicult to muster when municipal revenue base are narrow or restricted by legal constraints and functional powers are highly fragmented. It is no wonder diat ae mrunicipality of Penang Island is cor.demned ao "satisfice," ro use Nonris and Phang's description (liS 1991 -92). 3.9 Thie Porto Alegre caso lias illustrated a third siruaton i'n which a strong ideological comnna irnent to restouing raxation as an agent of social jusrice has also prompted straaogic risk taakng. Tliis is a smnking example but regretaably raro and unfashianable. 3.10 It is importat for external agencies to recognize the political cast-benefia equation of urban management. The failuro of interventions sucli as the Cuk.,orova Pojct lin Turkey illustrate alio importace of tbe politicaI critica] pat.- For example, improvements ir, revenue baess and collections shioukl not be expected tao lar ahead of adio capital investments tatia would demnonsarate results-and ceraainly not in an electian year. Incent¡ves 3.11 Classical economic abcory seeks ta explain al] human beliavior ini tenns of rational seif'- interesa. Ibis theory has been fallowed bythe remainder of thesocial science fields that interpret social and political beliavior in similar temis, whether applied to individuals, groups, or cleasses. 3.12 Psychologists, however, tend to recognize that peap]e are driven by rnixed mnotives, wanaing to defend and possibly enhance their standard of living, perhaps whiule under social press ure ro do the samne lar thieir neighbors and kin. Butahiey also derive satifaton fian doing,a good job, and notjustlfor rlieesee tha it niay ern, Tlis insight was echoed by. Samuel Beer (in Wallace Oates'"Hsca Fecleraim) wlio ciiticized ali fiailwe Lo rcoagnize, "aloter-regard" es a significant elementlf humnan behavior. 3.13 It would be foolísh to ignore the wídespread abuse of office by politicel leadership to fuirahe famdly foraunes; the recent erosion of die purchasing, power of urban wago carners, es a result of structranl adjustment, has also oncoaured an increase in rent -seeking throughout many bureacracies. But the case saudies do not support a pumely cynical view of public service motivation. Commiaxnent to public service and hand work characaerized many of abose interviewed. 29 3.14 The discouis of public service management has somewhat belatedly recognized the importance of motivation. But it tends to focus on incentives, on the supposition that politicians and bureaucratshavetoberewardedmateriallyfortaldngactionin laSenul.cinterest.Thismaynotbeanaccurate way of assessing the problem. It may be betterto assume thatthese public servants actually want to perform more effectively and then to taclde what discourages them. The latter may take many forms-te complex legal procedures involved in enforcing aproperry tax demnd, te hassles of interagency coordination, the prospectofanacrimoniousdispitewithunionsoverchanges inworkloadandmanning.Theemphasisneeds to be on removing disincentives, making it casier to get a job done. Values 3.15 What public servants perceive as doing a goodjob depends, however, on tleir values and on the things they think important. These are conditioned by a number of factors including background, training, and organizational direction. The Ahmedabad and Perang Island case studies stress the high value placed by most staff on adherence to established routines, functional perhaps in enforcing regulations, less so in responding to growing and changing service needs. This is notjust the preserve of rniddle-level clerks. Consultants are prone to peddle what their professions consider best practice, whether it is really applicable or not. Medical officers have been known to prefer to close an eye to shanty dwellings without sanitafion rather tan to give their formal approval to lowering formal standards of provision. 3.16 According to teciteriaused inthisiesearch, effectivemanagement dependson the adoption ofvalues tatgo beyondthepriorities absorbedinmostpeoples'preparation fortheirjob. Value formoney, responsiveness, a blas to the poor, concem for the environment are not necessarily alien to public servants; tey simpIy do not figure on die syllabus for accounts clerks, mosquito sprayers, or master plumbers. 3.17 mhepromotionofvalues tagoesbeyond terecognizedboundsofprofessionalandtechnical scill requires a conscious effort to emphasize amd to demonsite the importance attached to these values by organizational leadership. The case studies provide examples of this. Tbe Penang Development Cor on'sprovisionofworkandshelterferlowerincomegroups(albeitMalay)clearlyreflectsstrategic i on. Amis describes the deliberaxe cultivation of values of commiunent and self-sufficiency by the Ugandan National Water and Sewerage Corporation «LS, 1991-92). At a humbler level, the terminal in Curitiba's City Hall lobby, which prints out the zoning and construction requirements pertaining to every plot, expnesses a public comnniitnent to ranparency and speed in processing planning appllcadons. The bankof oomplamtdesks im the head office of Istanbul WaterCompany demonstrates concern to respond to consumen' grievance. fe introduction of the multiple "one-stop" payment centers for a wide range of public sector bills ad of sireaniined interdepartmental procedures for handling licensing applications representanemptstomakelocaladminisnhioninPenmgIslandmorecustomer-onented.Itissuchpracsices that show to staff and public alike that the leadership's comniitment to change in orgazizational behavior goes beyond rhetoric. IV. SERVICE DELIVERY Introduction 4.1 This and die following chapter attempt to evaluate die impact of insitutional characteristics on effectiveness. This chapter deals with the management of individual sen ices, while Chapter V looks at the overail development of cides and to the response to the general challenges of grow¡h, deprivadon, enviromenal degradation, and so forth. 4.2 Recalling the criteria of effectiveness deFtned in the Executive Sumnmary, this chapter is piincipally concemed with issues of technical competence and efficiency in the use of resurces, aldiough theo¡hercriteriadoapplytosomeextenttotheopaionofindividualservices,aswellastocitymanagement as a whole. It is worh repaig the recogniuion that ¡be institutional framework is only one of dhe factrs detrrniningeffectiveness; te social,political,andeconomicenvironmentisjustas,ifnotmore, important 4.3 Iheanalysiswill distinguish betweenztsponsibility forprovision andproduction ofaservice, as used in the section entitied "Public and Pyvare Sector Relationships" in Chapter II. Responsibility for Servia Provision 4.4 Services may beprovided by a) dbe public sector, (with or without contracting out producúon ¡o private organizaúons); b) the public and pnivare sectors in parallel; c) the public and private sectors in pareh; d) the private sector under public supervision tbrough franchised monopolies or regulaed compeútion; or e) ¡he private sector Qncluding self-help) widhout public intervention. Within the public sector rsponsibiliíy may lie with ¡he central, the state or provincial, or the municipal govemments. ihis eponsibility may be exercised by in~emal deparmten¡s or by subsidiary entities enterprises, boards, or foundations each with its own legal personaliry. Tiis presents a fonnidable array of organizational options. Examples can be found of virtally every tye of organizational arrangement for evexy urban service 4-5 Regrettably, neither the case reearch nor d¡e wider expeience indicate categorically which arrangement works best in ixcect cf any particularservice Ourfindings have tobe faidy agnosic. A st water enterprise works well in Hermosillo, but indifferently in Campeche. Municipal refuse collection is conmpetnt in Bulawayo, farless so in Ahmedabad. Even thesameorganizaúonperfonns var¡ably in respect of different ¡ta. 4.6 Somegeneralizadons wfl be offewd, butguardedly. Privateprovision is always possible and usually preferable if a) consumne can be charged; and b) ¡bor are no obstacles (technology, sale of investnent, and so on) to operatingparalel services in competition. These conditions are likely to apply to bousing, bus and taxi services, commercial refuse collection and disposal, and the retail trade (markets, shopping premises, and so on). Any subsidies required to protect poorer consumers can be selective. 4.7 Piiva¡eprovisionmaybepossibleanddesirableunderthesamecúiteoainthecaseofeducation and health car Neverdheless, there are strong collective benefits and equity considerations in respect of dxese services; as a result, parallel public provision, a substantial degree of public subsidy and regulation, orboth, will be needed. . .- :- v~~~~~~~~~~~~~~~~~~~~~~~~~~~~- t ... -. 31 4.8 Thisleaves services in cases in whichconsumercharging ispossible, buttechnology and scale of investment discourage competition. Rail transport, elecaricity, water supply and sewerage, and teleconnunications fall ¡to this category. Private provision under franchise may be a satisfactory altemative to public provision, but only if a) urban govrnment has the sufficient authority and kaowledge to exncise its regulatory power (forexanple, tojudge areasonable level of operating and investnent cost and ofprofit asa basis for approving tariffs); and b) the extension of service to low-income areas wíth less favorable rentms on invesnt t can be ensuredL RespoxLsibiity for Service Production 4.9 This leaves the public sector responsible for providing services if * No compiehensive charging is feasible (forexample, roads, police surveillance, and fire protection). * The degnee of collective benefit requires at least parallel provision (for example, education, health care, and domestic refuse collection and disposal). * The efficient and comprehensive private provision under monopoly condibons cannot be guaranteed (the case of water supply and sewerage, for example). * Private enteprise simply fails to provide a service ofmajor public intest, nomy becase invesnent costs are too high in relation to te likely risk or rata of remorn. 4.10 When thepublic sectorpmrvides aservice, thepossibility of contracfing outproduction to a private orgnition (corneial or comnmunity) remains. There must be a presunption in favor of connctng out Tibs is not because the private sector is inherently more efficient; tbis is not supported by iec evidence. It is simply because the enfobreme t of sandars is intrinsically easierin an anos ength relationship.Itisusuallyeasiertoreprmanaconractorthanone'sowncolleag-ues; andeasiertorepfrnand subordinaes when under the appaent duis of extenal supervision- 4.11 Productionundercootrctneednotberetictedtoprivateorganization.Publacsectoragencies including in-bouse municipal departments, can also deiverservices effectively withbn such a system. lhe important factors are the conpettion and contractual relationship between the so-called provider and producer-not prvate sector delivery as such. 4.12 ..Co ng out can also have a galvanizing impact not only on the deliveiy of the individua smvice, but on tbe whole culture of the parent organization. It can liberate the leadship from the picccupationa of managing a huge, unreive work force ando mutine task supervision, crating space andenergfornore straegic andresponsive appraches tocity managerentl Even ifin-housedepartments operte servies underwmpetitive contacts, new disciplines and values may be infused. Ie incentives are not just the fear of redundancy, tbere is also the opportunity to introduce more positive rewards for * -pnian 32 4.13 But contrcting out is only preferable if: • Private enterprise or community organization is sufficiently mature to offer genuine competition for supply. * There is adequate social control of urban govemment to ensure that the award and supervision of contracis are not govemed by nepotism or corruption. * Thetasks to be perfoonned can be clearly specified in terms ofgeographical coverage, fiequency and performance standaxlds, and achievement measured. * Urban govemment has the capacity to enforce contract fulEIllment and to substitute services when contctors fail completely. Tiese conditions are far from universal, particularly in the rapidly urbanizing countries. Advocacy of contracting out requres caution. Ges conditions 4.14 Whether services areproduced by public orprivate sectors, certain othergeneralizations can be offered In either case, the clear specification of service st rs is critical to both effective control, covee, andefficiency.These needtobe costed in rlation to both investmentand operating implications, thelatterincludingamgularmaintenancecycleandannuallybudgetedprovisionfordeprcciation ofvehicles aid other linited life plant. Budget formats may need revision to idcntify and group these costs in relation teindividualsse cesndat salsoneedtobetranslatedintosysicstaffinglevels, workloads, and work programa Tbis process cames forward into improved job desciptions and recruitment specifications at the individual level. 4.15 Jf dte existing provision falis well short of the standards adopted, a medium-term financing plan wll be necessary to achievephased, incremental progress toward them. This may providefihe basis for arevisioninrevenue,thusincieasingtariffs,gmnts,andsoforth.Technology,siandards,andoperatingcosts, however, may also need to be chmged to makc the service affordable. Only a multiyear program hat incorposasurveyofservicedeficitsandtheprojection ofdemandcanprovide afornatand thesufficient tirne fnme for such decisions to be made and implemented. This type of review is demanding and should be made selectively, hat is, in major problem areas. Such planning also depends on budget franeworks which bring together all dhierevenues and costs attributable to a specific function; bis may be achieved as in Porto Alegre by creating semi-autonomous service agencies, but more simply as in Bulawayo by opemang separ aws for services hIe water and housing. 4.16 Ifmajorimprovements are necessarytoachieve betterservicecoverageordelivery,staff(and insomnecasesthegeneralpublic)ncedextensivebriefing,bothonthechanges tobemadeandtheunderlying reasons fcr thm Professional mining and associations can play a valuable role in this process, providing they ar sensLtive to dic priorities and problems that are beyond the techmical scope of theircalling. 33 4.17 In the case of chargeable services and of water supply and sewerage, in particular, effective coverage (including low-income consumers) is generally associated with a highb-eg¿ee of cost recovery, including both operation and investment. The regular uprating of tariffs and its rigorous enforcement are important to this end. 4.18 Direct communication with consumerrepresentation is helpful both in maintaining operating efficiency and in securing public cooperation, not least in paying charges. Direct user participation in management may well be fruitful, but there are dangers of this leading to ¡he abdication of public responsibility for its financiad support, wiih adverse impacts on equity. 4.19 Asingle-purposeorganizationhasadvantages inconcentratingattention on specific needsand perfonnance measures, reducing the span of control, developing team work, and simplifying the managenientprocess. Iftheseareinshortsupply, itmay bemore successful inrecruiting and retaining skilled staff, 4.2 These advantages of single-purpose organization can be offset, however, by the cost of funcional fragmentation, particularly in responding to the overall challenge of growth, deprivation, and degradation. A compromise may well be the development of cost-center delegation within mulipurpose organizations. This can replicate many ofthe advantages of contracting out with less of its risks. Its success will depend, yet again, on ¡he clear specification of costs, standards, and performance measures. Direct relationships with consumer representation (thar is, not simply ffrough the elected members of parent govements) are again likely to help. V. OVERALL DEVELOPMENT Inroduction 5.1 Effectiveurbanmanagementrequiresmorethancompetenceindeliveringindividualservices. Somedegreeofintegation isrequired inrelation to newsettlement, todheredevelopmentofdepxivedareas, and to the response to overail challenges such as unemployrnent, environmental deterioration, and the decline of traditional economic activity. Among (he critena of effectiveness defined in the Executive S'ímmaiy, responsiveness to growth, sensitivity to the needs of the poor, and concern for environental protecdon depend essentially on multisectoral approaches. Locos of Conlro'Organization of AdmbiistationfAtructure of Adminitration 5.2 Private entapnise and community organization play vital roles in ponding to the ovemal development challenges facing a caty and may effectively direct die development of individual neighbor- hoods, estats,and so forth. Buturban govemmentalone has themandate,he legal power, and thepotential command of fiance to play the lead role on acitywide basis. Where wihiin the structe of govenmuent is such responsibiliay most effectively located, and how is it best supportd? 53 The case studies offer two exarnples of cities in which government appears to be effectve in promoting overall development The first is in Zimbabwe, w. ere the lead is taken by the municipal government. Tiis is blessed by certain attributes that support the role: comprehensive boundaries, a wide range of clearly demacated functions, a diverse revenue base, a professional, well-qualified staff, and generally supportive relations with central government (that is too preoccupied with rural development to interfere unduly). The main failure lies in the one important ficed for which the nmunicipality has no rcsponsibility: the provision of bulk water supply- 5.4 The Z imbabwean model coonds to the traditional image of local self-govemment; tfis model might be seen to support the general revival of tiis inage of governínent. It creates a single, local gover=nent in each conurbation and gives itresponsibilityforall the main functíons and an elastic revenue base. The impediments to replicadon can be insumnountable, however. Chief among these are tbe poliical ad adndinistrative rivaies and fears that defend geographical and functional fragmentation and keelp municipalities legally and financiaUy on a short rein. .5.5 Afragmeed system of urban govemment can also work effectively. This is deinonsed by tie second case of effecdveness, diat of Hermosillo. Here different levels of govemrnent, patal agencies,andprivatesectorandcomnmunityorgaizatonsaredrawntogetherbyapervasivepoliticalnexus and a strng national commitment to both economic growth and poverty alleviation, which are supported byanequallystrongbusinesscultueOnceagain, although thse areconditionsthatseem toworkwell, tbey are not easily rrplicable. Moreover, they are particularly vulnerable to change; pluralist politics have been growing in Mexico and could wreak havoc on govemmental integraiom Policy has not always promoted econowic growth nor always taken much notice of the poor. 5.6 Theodiercasestudiesdemonstfatearmorepartialsuccess.Inanotherfiagmentedsysten,tbat of Penang Island, state-led development has achieved great and integrated progss in the fields in which the State is interested, such as employmnent creation and low-income housing development. Sever 35 problema occurin the areas in which the Sta laiS not particulady interested and responsibility remains with a marginalized municipality, environmental services being the main example. 5.7 Tbe Brazilian and Gujamti municipalities are closer to tbeir Zimbabwean counterpafl in haig a wide furctional remit and a potentially strong revenue base (though hamstrnng by legal constraints in the Gujrati case). But the larer Brazilian cities ae geographically fmagmered; highly compettive politics and the discontinuitry of limited tekma of office, frustate the degrees of cooperation betwcen autlorities needed to address tie serious envirounental problema. In Gujar, municipal juñisdictions ar not extended until peaiphera setdement has aken placr, much ofitin the absence of adequate services and control. Responsivenessandefficiencyaw also undemiinedin the case ofthe largermunicipal corporadons by the diffusion of authority between elected representatives and state-appointed executive. Effecdveness is very dependent on a combinadon of atributes. Buoyant revznues are insufficient witlout a cohesive managmtslructureto utilizetbemi andawide fmctional xm inadequate without control ofthe urban periphery. Staffqualiy and conunitmrent are associated with organizational tasks dtat provide satisfying work and public esteenn. 5.8 Without this combinaron illust by Zimbabwe's s¡mngmunicipal mle orte comns- dion of sae-led polica! cohesion shown in Mexico, integnated responses to urban growth aad problems are far harder to achieve. Geograplúcal and funcional ntation are e biggest obstacles and pose especially severe problems in die large meropolitan areas. Atacmpted solutions are eidher strucual, inmpsing cordination by autority, or pmcedral, seeking it by negotiadon. At a struc leve!, intoducing ametpoitan level oflocal governentm besuccessful if itresults frn die iiitidveofthe constituentmunicipalities dhemalves (the case ofToronto) or if it isgiven such strngpowranddresourves that it is notheavly dependent on teircooion in implementing its sregicplans (the case ofTuikey). Bh c need a vexy favorable political climate at the inception. 5.9 The alenve to structual appoes is an ateWt to integre respones by proess. MeoolitanplamingautahotiesmaybeabletoixnpartsomesegccoordaiatoninafWentedsyem Ther success generaily depends on controling access to capital invest t funds. Rey sbould not get involved direcdy in projectexecutionasthisprcjudices theirrelaaonshipto otheragencies. Norshouldthey combine roles of stgc planner and quasi-comnercial land developer which are hiconpatible- analogous to the gamekeeper and poacher. Rhe responsiblity for the design and execution of invent should not be divorced from its aron and maintenance. 5.10 In a fmented system of urboan govemnent, integraed ses essentially tesulÉ from r,egotiation and bargaining. TIis empbasizes tLie advantage of a srong political executive at the municipal level.Ifrewonsesto local necds are neededfromavaríetyofpublic agencies, diese responses aremore licely to be secrd by a polítical leader with te personal mandat to presa the local case and authoriry to rnake sud deliverbarains. 5.1 1 Whateverdestructureorprocess, teresponsetogrowthrequies arevenue basett tmatches it. his reans accesstohe more buoyant bases of taxationof coiameorexpture, whetderbyydielevy cr soe foxn of revenue sharing. A nxow and inelastic base forces local leadsbip uto alargelyzeacive sud definsive salye. 36 5.12 - Reponse to environmental degradation usually requires action at both national and local leveis, and therefore depends on a high degree of central-local collaboration. 5.13 The integration ofphysical and investment planning is rarely adequate, andan appropri- ate methodology has proved elusive. Selecting the most efficient direction of future growth and using them as the basis of trunk infrastructure development is a more effective strategy than reliance on highly prescriptive plans, but even diis depends on a high-degree of discipline, particularly within the pubhlc sector itself. : : - :.. -: VL REFORM: DIRECTIONS AND EXERENCE Inoction 6.1 This chapter looks at attempts to reforn the structure, processes, and resources of urban govemment and to draw lessons from their experience. These attempts have usually been matters of national policy. They have been heavily influenced by donors, however, often reflecting conditions attached to investment loans or even the central focus of an external assistance program. 62 This external involvement has helped to inject common themes at common times into urban govemmentrefonrns. Indeed, they have been heavily subject to changing emphasis and fashion. Three broad periods can be discerned. During the first period, which ran mainly through the 1960s and early 1970s, approaches were basically project led. Capital investment concentrated on individual sectors-housing, watersupply, transportation,and so forth. Donors preferredprojects to beexecuted by specialized agencies. Single-purpose, parastatal bodies, such as housing corporations and water boards, were established or strengthened usually at the expense of municipal responsibility. (In Arglophone Africa such enterprises mainly stayed local and under the municipal umbrella). Emphasis was also given to metropolitan planning, and special planning authorities were widely created in Asia and Latin America. African cities largely avoided this particulardevelopment, pardy because few were of metropolitan size or shared die same problems of fragmentation. 6.3 The second phase, running approximately over te past fifteen yeais, maired a reversal of priorities. Donor finace turned increasingly to multisectoral investment in smaller and moir localized improvemens in infrastructure, ting in a wider range of towns- he focus of implernentation and wefonn mzied to municipal govenment, pardy because of die diffused naur of die invesmet, pardy because oftheproblems with theoperation andmainenaneofassetscreated n thedearlierperiodandpary because of an incxeasing concem over cos recovery and revenue generation in more stringent circumssnces. Ihe sirengdicningofmunicipalcapacityhasbeenacomrnondescriptionofavarietyofinstitutionalrefonnstbat will be categorized below. 6.4 Much of the agenda for municipal reform is sUl in vogue. But new eínphases are emerging. These include private sector and community participation in service provision. Tbe economie function of cities is now emphasized, and one must expect a concem with business and employment creation, which has been strangely absent firom most urban development prograrns. Finally, concern about enviromnental improvement and protection is reviving interest in the issues and processes of metropolitan planning and management. 6-5 Changing emphases may simply reflect an international process of learning, a common response to common experience of what works or fails. Ihis in itself is good. But there are dangers in `fashion." There is a bandwagon effect, particularly among the consultants and project managers who staff the development industry. There are risks of generalizing experience that is unique to particular contexts. 6.6 Tme following sections will discuss briefly the diffexent foci of refonn prograns. 38 Improvement of Munipl Managment Sysm 6.7 Most recent reformn progm have focused in one way or another on improving municipal organization and process The exact emphasis varies. It may be on: * Intemal organization and personnl systems, such as the introduction of executive mayors and chairnen and he secondment of siate officers to chiefofficers (in die Calcutta municipalities). * Financial management, especially budgeting, acnting, and budgetary control. * Upgng thd operation and maintenance systems forservices, such as die POMMS system in Indonesian cities. * Mediun-tenn investment plamiing and project appraisal, as in the Philippines Municipal Developnent Project or Indonesi's IUIDP. 6.8 The effciveness of these interventions is hard to assess because it is ¡arely measured or , recordad. One of the most comprehensive projects of this type has been die Sn Lanka Municipal DeveopmentPogram.Itsexperienceisinstructive.Itgotofftoabadstart,eoccupiedwiththepreparation ofoperational mauals that were not based on field testing and diat were largely ignored The govermnent's snsee of ownaship, howcver, was sufficient to insist on flexible evolution. Much improvement in - perfoance was achieved, mainly though: * Emphasisonielativelysipleimp vement,suchascautionandaccuacyinrevenue estimation orthe issuance of rmnrs to tax defalters. * Incentvesforregularandpuncualcompliancewithexistingpoceduresthathadbeen neglected * An exbensive traning progm tailored to the needs of ibe urban local authonities and totheprioritiesofthewholeprgrmMuchofthiswasdeliveredbyexistingspecialist mstitutions but under contacts tbat precisely specified adaptations to municipal needs- * A change in the style of centl govemment inteivention from inspection to temiical assistance. 6.9 ']Iree major problems have atended systems development prograrns The first is that iovationshavefrequentlyrunaheadoflegalchange. Refomns haveoftenfailedtoinvestsufficienteffort mi p=suading burscm to change legal requirements to make revised procedures lega, paicularly if finaciai and persa management are conaeeL Pojects are oflen negott with the ministines of plarmng or urban development, entites thatdo not relat ese system Many such pograms also focus on municipal 'Wpilotgroups" and ateptuto intrduce geographically selactive changes in procre which. are .prac y difficult for, and emotionally abhonret to, central bureaucracies. Compettion between. donors and the pnesu on dbemr to "show results" account for soue of dese waknesses. 39 6.10 The second difficulty is the customnay heavy reliance on consultants. Tfe finns normally employed on systems development typically derive theirexperience from industrial management or large- scalepublicenterprise. Suchmunicipal specialistsareoftendrawn fromlargecitygovemrnentsinthe United Kingdom and the United States. Local counterparts are ofien young graduates with foreign degrees, who also lack ability to bridge the communication gap between the foreign consultants and local officials. The resulting advice often consists of unnecessarily sophisticated procedures that have not been tested or scrutinized by those who are entrusted to implement them. Effective systems development can only result fron wodcing with urban govemment officials-either on thejob or through a training milieu. It has to be evolutionaryandfield-based.Theproblem istbatmanyconsultantsdonothavesufficientconfidence,which is based on relevant experience, to engage in such a pracess. 6.11 The third problem is that much systems development has focused on low-priority issues- accual (basis) accounting instead of a trae budgeting, elaborate cost-benefit analysis instead of simple standard setting aid opeiational costing. The success of the Bank's refuse collection improvement scheme in Gujarat and the Municipal Developient Project in Sri Lanka demonsts the benefits of focusing on basic operational systems and using simple technology. Iuproving Revenues and Cost Recovery 6.12 - Reforms of revenue systems have applied variously both to integovernmental ansfers and to local taxation and usercharging. There has been some distinction bewveen policies initiated by national govenuments themselves and those promoted by donors. 6.13 Donorstendrobeindiffcrentorhostle torecunttransfersbutlhavesoughtwidelytoincrease and rationalize the flow of national funds forcapital investment. They have promoted the substitution of a) invesmentgrants and loans made to local autborites fordirectexpenditue by central departents; and b) formula entidements for ad hbc, pok barrel distributions. Both emphases have had positive impacts on efliciency and local capacity, although ofRen requirng proted negotiation, which has initially delayed investment 6.14 Particularly in Latin Ameuica but also in countries such as Morocco, Nigeria, Turkey, and Zambia, national govemments have increased loca] sharing of national revenues. In anumber ofcases, this has coincided with the abolition of local business taxes, but it has also been a feature of general decentralization policies. It has rarely been associated, however, with any systematic realignment of expeuditure onsibilties. Apart from the West Bengal revised grant structure and the introduction of an equalizadon grant in Malaysia (with GCZ assistance), ier has been litte effort to develop distribution formulae forrcun-enttaesfeis linked toboth spending need and local taxcapacity.Asaresult, theincreased fumding has not always flowed to the areas where it is most neededL 15 - Aempts to ímprove local revenue bases have tended to focus narrowly on prperty taxes aud use charging. ¡n the case of property taxation, much donor assistance has bean provided to tax mapping, valuation, and coliection systems. This has often been successful in achieving higherrates of collection, but incwased incidence rhrough revaluation or tariff increases has generlly proved elusive. Reforms ¡ user cbarging have nomíaliy included insistence on tariff increases as a condition of capital investment and on iniprovements in billing and collection procedures. 40 6.16 The concem to improve properly taxation has been usually justified but myopic. Donors particularly show little awareness that any other form of local taxation exists and cherish hopes that it can replace other local taxes (such as octroi) or intergovemmental hopes. These transfers, however, are unsupported by experience in Europe and North Amedca, let alone the developing world. The self- confidence on which urban management relies erodes when politically exposed municipalities are made even more dependent on a tax that is so sensitive and difficult to administereffectively and whose faimess is so subjcct to dispute. Indifference to other local tax bases severely limits the impact of reform. Inproving Provision of Credit for Capital Investment 6.17 Donor investments in urban infrastructure are being increasingly channeled through munici- pal loans funds. This releases donors from direct involvement in distribution and supervision, enabling a widerdiffusion of investment. Ibe approach tends to be associated also with a normative view of credit as the "righr' way of funding capital investmnent, and a number of the Bank's programs have actively sought to promote the bonrowing habit among fiscally conservative authorities by simplifying procedures, accompanying loans with matching grants, or substituting loans forgrants or dectgovernment spending. Encouraging borrowing for its own sake is questionable in principie and dangerous in pracice. 6.18 Thesepolicieshavegenerallybeensuccessfulinincmeasingtheflow of urbaninvestmentfunds ¡o a wider range of projects in a largernumber of towns. Improvement in investment quality has also been achievedbyspecifying¡ic 'e"menu"ofprojectsandthemaxímumandminimumdesignstendardsthatqualify for loans. The altemative approach of requiring projecis to be incorporated in medium-tenn invesnment programs has been less successful, because it results in choices beirg made by consultants working for govemments and donors rather than local officials. The case-by-case scrutiny of project choice and design by the lending agency is also less effective and overstrains its time and objectivity. 6.19 Lesssuccessful alsohasbeeniheattempttouseloanfinanceandcreditagenciesasthevehicles of general improvement in municipal finance and management Secure in getting repaid by deduction from rnsfers, govemmental credit agencies lack die motivation or slil to concem themselves in die intemal padcces of iheir borrowers. The policy also tends to exaggerate ¡he aractions of access to credit; the offer or a loan is rarely a great incentive to politically cosdty action. Rewards and Pealties for Municipal Prformace 620 Incentives for municipal performance have been a recent innovation. Frfonmance related elements have been introduced into grant structures in Gujarat, West Bengal, and Sn Lanka; and a loan finance distribution (replacing capital grants), in Ecuador. Another innovation in Sri Lanka has been an annual competition in which ¡he bighest scoring urban local authorities receive acash puize [rm the prime iinister: The focus of such incentives is normally local revenue administration, but the Sri Lenican incentives measured other especta of administration and service delivery. 6-21 In Sri Lanka, the approach was succesful mi focusing attention on a range of management pxacticesfmpayingelectricitybilsandmonitoringbudgets-tomendingpotholes(andtog,ettingofficials to agree ¡liar dhese matter); In'Cabcutta, thie incentives did lead to revenue impovemnent, but ¡he scheme collised whentheswtegoveúnnentfailedtoóapplythegrantsanctions.Whetheraccesstocreditisagenuixi¿ incentive in Ecuador remains to be seen. &.0S1 ., - - -C 41 6.22 lbe Calcuttaexperience highlights the problem of applying performance-relaled criteria in a policlycompetitiveenvirolnent. Unlessobjectiveandneutral applicationcanbeguarAteed incentives simply introduce another unpredictable element in central-local reladons that furtder erodes the self- confidence of local government. Disse¡nnation of Experience 6.23 The opening section cautioned against the danger of generalizing prscriptions based n experience in unique contexts. Nevertheless, the experience of innovation deserves disseminadon, whether successful or not. Despite the valiant efforts of the Urban Edge, now published as the Urban Age, the urban nanagement literature is long on theories of what should be done and short on descnptions of actual practice. In advanced industrial countries associations of municipalities and of their various professional staffs are major channels of dissemination, through journals, conferences, in-service training and commissoned research. They deserve ecouragement in the countries to which the Urban Management Prograrnme is addressed. 6.24 TIe Annex gives some examples of good practice gleaned from the case research. Most describeprocesses thatarenotseverelydependentonaparticularformoforganizationorapa¡ticularpolitical or economic mnlieu. The Scope of Reform 6.25 Datta (Datta, 1991) argues that partial reforms of municipal government in India have been ineifective. Only a compiehensive strategy holds chance of success, embracing: * Aconstitutional amendmentguaranteeingcontinuityoflocalelectionsadprotecing municipal iesonsibilities from encroachment by parasat organiztiors. * Extensive contracting of municipal service delivery to private enterprise anJ volun- tary or cooperative orgaizations. * A systematic balancing of intemal and external funding, guaranteed by municipal finance conunissions. 626 Similarly, Nonisand Phang(lLS. 1991-92) considerthat municipalgovemnents in Malaysia can only be revitalized by changes that allow them to match the more streamlined and purposeful style of the specia purpose authorities. These include far more extensive contracting of service management, diversification ofrevenue bases, and ahigherprofile for strategic roles, such as town planning and property management. 6.27 Such calis for"root and branch" reform raise adilemma. One may argue in supportofDatta's contention that without sweeping change improvements simply will not workl This is basically because there wifl be no real atttudinal change, nodting to induce more self-confident, strategic, and businesslie aroacp sbymunicipal leadership.Theriskofthisradicalapproachisthatrefonntargetsoutrunthedege of political supportand thus nothing is achieved. 42 6.28 "Root and branch" ard refiorm does happen. Examples include die reoanization of the local govemnment in Nigeria in 1976 orthe inroductionofmetropolitangovemmentandchangesinlocalr.venue bases in Turkcy in die early 1980s. The 1988 Brazilian Constitudon considerably stengthened die powers and resources of local govemment and similar changes elswbere in Latin America have been chronicled by Campbell and Peterson (Campbell, Pererson, and Brararz, 1991). It 1s unpredictable and spasmdic, however, stemming from a peculiar conjunction of political and economic circumsrances 6.29 Advocates of reform usually have to wait fordie wind to change in their favor. This may cake a very long timc or never happen, and incremental improvement may have to suffice, however limeitd in its benefit. But preparing for more fundamental change is still important so dhat a suddcn change can be exploited; public opinion has been prepared, and a new navigational chart is available. 630 The important thing is to be arned with comprehensive and intcmally consistent propo- s for change. The pmblems with a number of decentralizadon programs, as Canpbell and Peterson have pointed out, is hiat they are radical but nevertheless incomplete. The biggest problem is e mimach betwcen the devolution of responsibilities, on the one hand, and of human and financial resources, on the other. This can nn both ways. Responsibilities can be devolved, but not revenues to suppoa~ em, Zambia providing a striking example. But diere have been just as many cases of devolving revenue sowtes or increasingnansferswithrltclwrisignmentsofresponsibilityorassessmentsoflocal spendingnee&dBoth ciramsrancstend todistededccentralizationpolicies.Thisisacutelydangerusbecausetherearealways national political and bureaucratic interest groups waiting avidly for excuses to revere a,V,00 -fE;SlEd-tX S00- ,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~--Z REFERENCES Workl Bank World DevelopmentReport¡991. Table 31. (New York: Oxford University Pn:ss). United Nations Development Programme. 1989. Revised Project DocumenL 6 Decmber. Davey, Kenneth 1989.Mwuicipal Governmem izBraz. InsntuteofLocalGovernment Siudies. Binning- ham,U.K. - 1989. "Sti ngtbening Municipal Govemment, a Discussion Paper." World Banl INU Discussion Papr No. 47. Washington, D.C.: flh World Bank. - 1988. Strengthening Municipal Govemnent: The Turkish Cure. INURD Working Paper No. 6. Ifiasliucti and Urban Development Depatmet, Washington, D.C.: The World Bank. lie Case Studies, all published by ¡he Insitute of Local Govenunent Studies, are: a. Amis, p. 1992. Urban Management in Ugana, Survival Under Stress. b. Bady,Richard. 1991. UrbanManagemeninBrazil.(vol.IGenralCharacteristics, vol. 2 Recife, voL 3 Porto Alege). c. Bailey, Richad, and Shyam Dutta.- 1992. Urban Management in India (voL 1 Conmmo Charac s, vol. 2 Abmedabad in Gujarat, vol. 3 Anand in Gujarat). d. Badey, Richard. 1991. Urban Managemewm i Mexico (vol. 1 General Charactrc vol. 2 Herosillo, vol. 3 Campeche). e. Biore, Ian. 1991. Cala~ Two SmaolMwuicipalilies in a Large Metropolis. F. Norfis, Malcolm, and Phang Siew Noii. 1992. Urban management in Penang Jln Malays¡a g. Pasteur, David. 1992. Good Locol Government in Zibabwe: Bulawayo and Mutare. Pasteur,David. 1991 .LendingforMunicipalDevelopmenlin thePhilippines, thelnsuiru¡ionalImpact ofWorldBankProjects, 1976-1990. Institute of Local Govermnent Studies. Birmingham, U.K. Rondinelli, Dermis. 1990. "Decenrlizing urba developmentpprogrmmes." USAID. EDU Inrrional. 1991. MwuNcipalResoreManagen,AnalyssndSynrhesisRepons. Quay jor ona Uo ban Affairs published by DANIDA, FCM, ¡he UMP, and the World Bank, retitled The UrbanAge in 1992. 52 Datta, Abijit 1991. LOcal GovernmeFinanes, Issues, Trends andReform (Delhi). CampbdL taw, and Bk 1991.Dec ntoLocadGoeimenzLAC iodd Bank). . -.A , ANNEX: CASES OF GOOD PRACTICE Intraducion Tibs Anney identifies some exarnples from die case studies of good practice imanagemnent. flIese were selected solely because they are innovative and appear to be of intes¡ for intemational cissemination. (References are to the case studies in the Executive Summay.) A.1 State-private tnmst in Hermosilo The two trusts established in Hermosillo, Metroplan and die Trust for te Special Pogramme, are examples of a successful approach to public-private parn p in urban development (Mexico pt II, p. 101). A2 Water and Sewge Department Deliberative Councll, Porto Megre. The delibertive council, represendng professional, business, aid community interes, subjects the municipal depae nt to an additional dimension of democradc control (Brazil pt IH, par. 155). .3 Residents associations. There are examples of well-developed systems of community representat on at the neighborhood level upwards in Brazil, Mexico, Zimbabwe, and West Bengal These structures usually also make contributions to development and/or services (Brazil pt. II par. 106, pL mI par. 38, Mexico pt. I p. 38, Zimbabwe ch. 6.4, Calcutta paras. 102 and 161). Srategic Management Process A.4 Mexico fd t ual plani system. he development plamiing aMn capital budgeting system, in which the municipal satuces andprocesssare integmted witd those ofthe stateMd national govemnts, is a major factor in securing adequate capitlá invesbncnt in urban arcas (above, Mexico pt. I p. 28, pt. Il p. 22, pt. l p. 20). A5 Municipal action plans in Brazil. Brazil offers die bestexample of strategic and action planning at the municipal level, even if plans are undernined by inflation and other factors. The system flows through from the level of strategic objectives to a medium-term financial and program plan, toan annual work program and budget, and to 3-monthly implementation plans (Brazil pt. II par. 29). A6 Penang Water Autbority mission statement. A concise mission statement is a business practice thrat should be copied by municipalities at the departmental level. The Penang example is one revealed by the research, which appears to be matched by the perfornance of authority (Penang Island p. 194). M :mtfPloa A.7 Performance indicators The use of perfornance indicators for basic services is demonstrated by Gweru Municipal Council in Zimbabwe, which has used them in its annual report and accounts to compare year on yearperformance in cost-output tenms (Zimbabwe p. 39 and figure 54 2.3).The Urban ProgrammeUnitin Sri Lankahas also developeda fairly extensiverange of indicators for tie pusposes of assessing grant entitlement and adjudicating performance award competitions among local authorities. - . A.8 Project identilcation and apprisal procedures in the Phil¡ppines. The central govern- mcntagenciesmanLgingtheWorldBank-fnded MunicipalDevelopmentProjctI-Mhavebetweentbemn developed an imprssive Iange of pzvcdures and tecimiques for identifying and appraising municipal capital projects, with ma emphasis on medium and sm=ll projects and on simplified procedures and - tecques (Philippines Chaps. 4-5). A9 Fcb for Soi Poa¡uneprojectsdedimn¡ MiwA simple dgpvedure is used forpmj dis poverty-foed pmam, which is b en as-efficivae prioioity red, use of isng bircume and pci by tbe omnmnfy (Mexio pt. H p. 26 aid p. 621 A.10 NeedsassesentforlowcomeareainPortoAlegreA diagnosis of the necds oflow- - income arcas using a simple methodology was undertaken to feed ¡ito the 1991 Budget and Action Plan.The city was divided into microregions, which were assessed on criteria of service priority, extent of community participation, slum population and infrastructure development strategy (Brazil p'* t. m par. 56). A.] 1 P cib , tining, and customer relations praeices in NationDal Water and Sewer- -ge Corporaion, Uganda. The National Water and Sewerage Corporadon provides an example of the - . application of sysemc wodc planning and output control methods to service delivery and revenue collection to - exceptonally difficult envunmreni The procedures are backed by a cultral approach bmfugh ing, motivadon, customerrelations, and leadeship, and dic twin approaches bavezesulted in - greay improved perfonnne and disciplie (Uda par. 169). A.12 Fíad control b Bulawayo. nr procedure in de Treaurer's Deparlnent of combined caso sun ies produced mmnolhy for budget montoring purposes (tuwgh an computerized accounting sem two weeks from the month end) has been refined widh the addition of a target figure at each month oid to facilitate compo (Zimbabwe p. 37n. £13 CODunDity oonsutan oan~i budget in Znbabwe and Brai. In Zimbabwe, a limited form of consultadon t;kes place with conmnunity organizations on dte level of revenue incases prposed in tre budget. While this procedure gives little real influence, it is symbolically significant and couldbedelopedintowiderconsultadononserviceprovision.IzBraziLconsulationonthebudge¡isquite commonandiswidcrinsopewithsomeeff-ectonbudgetpiortiesandlevels. InRecife, budgetconsultation involves sorne 200 civic aianizadions (Zinbabwe p. 86, Brazil pt. II par. 33 and 104). ' Slle and Cultu A.14 Councnnlr-oflcer and board-oflicer relatio. Examples of a balanced relationship of mutual rspect and cooperadon between tie councillors ¡nrd boad memb and die officeis are found puculady i BulWyo, Zimb and in the Penang WaterAuthoty. lhs comes aboutbecaus of iLe ac:eptanceofcainvalues,whichinuthcaseoflocalgovemntinvolvebalancingindividualaandgroup :intess mn pary polidcs andcivicd fais Zimbabwe p. 26, Penng Island p. 201). .--.. a:'.: .s; :::-:- A.15 National "Paierand SewerageCorporation in Ug~da Asdescribed aboye, the approach of the NWSC should be noted as an exanple of the cultura approach tomranagement, of which dhere are generally few examples. ': :::-,-- Distributors of World Bank Publications AILCENnINA lhU MlddbeEtCh I_IYA ., SOUTH AFRICA. UTSWANA CuloHmhSRL 4LSludfStree AjiRckew 5U. IR Cld CvGU Cili Quan ibasMm m aOrd Ualvetyfte ReuMda 165,ÉúPlowCk.4X5c/ PDO. B45W SatjeuAhlr 13»! ueneAf FRNANU Nbl P.C Bn 1S41 Akeate~ XlU ppp CpTown AUSTRALIAW PAANEWGXNEA C .o . 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