Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia 2017 © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Examples of components can include, but are not limited to, tables, figures, or images. ii TABLE OF CONTENTS ACKNOWLEDGEMENTS v ABBREVIATIONS AND ACRONYMS vi GLOSSARY vii EXECUTIVE SUMMARY viii 1.0 INTRODUCTION 1 1.1. Urban Service Delivery and Inclusive Development 1 1.2. Objectives and Methodology 2 2.0 BACKGROUND AND CONTEXT 4 2.1. Recent Economic Trends 5 2.2. Urban Poverty 6 2.3. Urban Expansion and Built Form 9 3.0 THE STATE OF SERVICE DELIVERY 11 3.1. The Current Situation 12 3.2. Quality of Services Provided 15 4.0 GOVERNANCE FRAMEWORK AND CONSTRAINTS TO SERVICE DELIVERY 35 4.1. Governance of Service Delivery in UB 37 4.2. Constraints to Service Delivery 42 iii 5.0 FINANCING MUNICIPAL SERVICES 49 5.1. Intergovernmental Fiscal Relations 49 5.2. Expenditure Responsibilities and Arrangements 52 5.3. Allocative Efficiency and Equity 56 6.0 POLICY IMPLICATIONS AND RECOMMENDATIONS 60 6.1. Enhancing Urban Planning and Management 60 6.2. Improving Governance and Finance 61 REFERENCES 66 Annex 1: Intergovernmental Fiscal Relations in Mongolia 68 Annex 2: Maps of Service Accessibility 70 Annex 3: Services provided through UB and District administrations 74 iv Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia ACKNOWLEDGEMENTS T his report was prepared by a team comprised of Judy Baker (Task Team Leader), Huong Mai Nguyen, and David Ryan Mason and is based and Arailym assistance. Murat provided administrative on a work program developed by a broader team Peer reviewers of the concept note and the draft also including Meskerem Brhane (former Task report included Meskerem Brhane, Arturo Ardila Team Leader), and the authors of background Gomez, Rama Krishnan Venkateswaran, Peter papers, Hernando Garzón (municipal finance), Blunt, Matt Glasser, Lili Liu, and Ritu Nayar- David Ryan Mason (municipal services) Huong Stone. Helpful comments were also received by Mai Nguyen (governance), Gayatri Singh (urban Tae Hyun Lee, Davaadalai Batsuuri, Altantseteg poverty and social welfare services) and Jean Paul Shiilegmaa, Pagma Genden, Rabia Ali, Tungalag Velez (transportation). Gayatri Singh also led the Chuluun, Aparnaa Somanathan, and Junko Onishi. surveys team, consisting of Huong Mai Nguyen and Battuya Dash, to build the evidence base for The work was carried out under the guidance of this report. The Mongolia Marketing Consulting Abhas Jha (Practice Manager), Coralie Gevers Group carried out the household survey and (former Country Manager for Mongolia), Mark focus group discussions, and MAD carried out Lundell (former Sector Manager for Sustainable field work on service usage. Lydia Yu Liu and Development for Mongolia and China), James Battuya Dash provided data analysis and research Anderson (Country Manager, Mongolia) and Bert support. Additional graphics were prepared by Hofman (Country Director, China, Mongolia and Joseph Muhlhausen and Gayatri Singh. Erdene Korea). Ochir Bardach, Chandan Deuskar and Artessa Saldivar-Sali provided valuable inputs to the The activity was made possible through the conceptualization of the report. Rumana Huque, generous support of the Swiss Agency for Toyoko Kodama and Gauri Gadgil also provided Development and Cooperation. helpful inputs to the team. Isabel Duarte A. Junior v ABBREVIATIONS AND ACRONYMS BL Budget Law CBD Central Business District CCLSL Law on the Legal Status of the Capital City CIT Corporate Income Tax CPM Citizens Public Meeting FGD Focus Group Discussion FY Fiscal Year GDP Gross Domestic Product GIS Geographic Information System GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit ICT Information and Communication Technology LATUG Law on Administrative and Territorial Units and their Governance LDF Local Development Fund LPD Law on Persons with Disability LSPSC Law on Social Protection for Senior Citizens MNT Mongolian Currency Unit MOE Municipal Owned Enterprises MUB Municipality of Ulaanbaatar NGO Non-Governmental Organization NSO National Statistics Office OPTA Open Trip Planner Analyst OSS One-Stop-Shop OSNAAG Housing and Public Service Authority PPP Public-Private Partnership PSMFL Public Sector Management and Finance Law PUMA Platform for Urban Management and Analysis SWL Social Welfare Law UB Ulaanbaatar UNFPA United Nations Population Fund USUG Ulaanbaatar Water Supply & Sewerage Authority vi Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia GLOSSARY Aimag: An administrative district equivalent to a wooden frame that is covered with felt and heated province. There are 21aimags in Mongolia. by a small stove. District: The report discusses municipal districts Khashaa: A parcel of land allocated for private (duureg), which are a second-level administrative residential use. In Ulaaanbatar, the plot may be no unit that is separate from rural districts (soum). larger than 700 m2. There are 9 districts in UB, six of which are contiguous. Khoroo: An administrative unit below the municipal district. There are 152 khoroos in UB. Ger: A portable tent structure traditionally used by herders for shelter. A ger has a collapsible circular Soum: A rural administrative subdivision of an aimag. There are 331 soums in Mongolia. vii EXECUTIVE SUMMARY Introduction Urbanization has provided opportunities for iii. identifies institutional and financing issues economic growth and poverty reduction in that may be compromising the efficiency, countries all over the world. Cities are well quality, reliability, and equity of municipal positioned to provide services due to the service delivery; and economies of scale that the density and spatial iv. proposes policy options and management concentration of people and firms allow. That strategies based on international best being said, if not carefully managed and planned practice, and identifies areas that UB can for, the benefits of urbanization are not equally undertake to enhance service delivery. realized by all and urban growth can aggravate inequalities in access to services, employment Chapter 1 of the study provides and introduction; and housing. This is particularly true in rapidly Chapter 2 covers background and context; Chapter growing cities where services are not able to keep 3 examines challenges to service delivery for a up with demand and land located near jobs is often few key municipal services including education, constrained. health, transport and street lighting using map, satellite and the khoroo-level data, Chapter 4 Ulaanbaatar, the capital and largest city in discusses issues of governance related to service Mongolia, has grown rapidly with a population of delivery and Chapter 5 analyzes financing of close to 1.4 million. The rapid growth, designated municipal services. Chapter 6 presents a set of urban form, and weak fiscal management has recommendations. This overview summarizes key resulted in a number of urban management findings and recommendations. challenges, particularly with regard to the delivery of public services. Background and Context This study focuses on assessing the performance, Ulaanbaatar is a rapidly growing city, with the quality, and equity of service delivery in population in the city having doubled between Ulaanbaatar with the aim to establish benchmarks 2001 and 2011. It is now home to approximately and identify priorities for improving the policy 43.8% of the country’s total population of 3 and planning of the delivery of services for million. Poverty levels have declined remarkably Ulaanbaatar City. The study: in recent years, from 31.8 percent in 2010 to 16.4 percent in 2014. However, the rate of poverty i. describes and quantifies the quality and reduction has slowed down considerably in the coverage of basic urban services in UB, 2012-2014 period as compared to 2010-2012 and particularly those that have the greatest levels of inequality have continued to remain high. bearing on the welfare and livelihoods of The Gini coefficient for Ulaanbaatar is estimated the poorest residents; to be 0.45 according to recent World Bank ii. analyzes the technical and political (2014) estimates using the National Statistical economy factors that influence variability Office’s (NSO) socio-economic household survey in service delivery across districts and data. Poverty in UB is highest in the ger areas, socio-economic groups; especially in fringe and middle ger areas. A viii Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia citywide random sample survey of Ulaanbaatar delivery, financing and expenditure responsibility carried out by the World Bank in 2014, found that to local governments. Recent laws allow UB the mean household income in fringe and middle government to establish network infrastructure ger areas was almost half that of the households such as roads, transportation, communication, living in non-ger areas. information, and technology, and to some extent power, to generate revenues from new sources, and UB’s growth stands out not only for the population have delegated financing social welfare services growth, but also for the substantial expansion and benefits to the city. In practice, however, in urban form. Density is low by international these reforms have not resulted in substantial standards, encouraged by the current land improvements in service delivery to Ulaanbaatar’s administration policy which provides free plots of residents. land – up to 700m2 per registered resident of the city. Though many plots are in practice smaller Challenges to Service Delivery (between 400-550m2), this is possibly the most generous entitlement in any world city. As a result Spatial Disparity in Access to Services of rapid expansion by large residential plots, ger areas have become the predominant built form in Access to many services depends on where the city. As the city has expanded outward, these residents live. Both across the city and within low-density areas house about 60 percent of the districts, there are substantial spatial disparities in population and necessitate enormous infrastructure coverage and quality of education and health care investment in the newly developed areas. From services, street lighting, and public transportation 2000 to 2013, eighty-seven percent of all new access points. The report finds that income levels expansion in Ulaanbaatar occurred in the form of are not necessarily indicative of access to services. a discontinuous low-density urban fabric that is Rather, resident location in the city, such as reflective of the built forms of ger areas. peripheral ger areas or central apartment districts, are closely linked to the quality and provision This low density urban form presents a number of of services. For example, citywide about 30 challenges in the delivery of services particularly percent of each the highest and the lowest income for the ger areas and skews the benefits of quintiles report waste collection several times per agglomeration in the delivery of services normally month. However, compared to peripheral ger area found in cites. The sprawling form requires residents, twice as many non-ger area residents substantially longer distances and thus increases report this frequency of service. This suggests that the unit costs of providing infrastructure and certain services can take advantage of density and transport to citizens. Most ger area residents rely economies of scale for improved coverage. on truck water supply, rudimentary forms of sanitation, and heating through coal stoves rather • In education, the biggest concerns are than connections to trunk sewer lines or central related to access by those in ger areas due heating systems. to space constraints and the location of schools relative to where residents live. Ulaanbaatar City is responsible for the provision Schools in the fringe areas are located far of water supply, sanitation and drainage, public from residential areas they serve, where transport, roads and bridges, housing, and as in central areas the demand for space utility services for public areas including street exceeds supply. On average, ger area lighting, cleaning and waste removal. Mongolia children have to walk more than twice as has grappled with the decentralization of service long as the apartment area children to get delivery with more recent reforms moving service to school (18 minutes versus 9 minutes). ix • In health, the spatial distribution of city, which can create inequity and raises facilities also presents challenges as they security risks. This is due to both unevenly are concentrated in the central city area, distributed installation of lights and a range leaving large parts of residential areas of light equipment types, the brightness unserved. Khoroo (sub district)residency they afford and the maintenance cost requirements are another spatial constraint required for each. In ger areas, residents because they reduce residents’ access report a lack of street lighting with higher to health care facilities near where they vulnerability to petty crime, thefts and live, but which may be located in another increased likelihood of pedestrian accidents khoroo because they are not eligible to use at night2. them The spatial mismatch of these services with the • The city’s low density urban form makes urban population can encourage corruption or rent the extension of bus routes to outlying seeking among service providers. Where there areas expensive, and much more so at is limited capacity or poor location of schools frequencies associated with high quality and clinics, users will either have to go without services and as a result most routes these services, or pay a higher cost to reach them converge on the CBD. Challenges in elsewhere. The high demand for limited space in transport result in relatively long commute schools and clinics raises opportunities for bribery. times, estimated at 37 minutes, which is During FGDs, residents reported bribes in the form especially long for a city of its size, longer of ‘gifting’ to ‘thank’ medical professionals for than most cities in East Asia and only taking care of a patient, or to school administrators surpassed by megacities such as Bangkok, for providing a place for students in local schools. Manila and Beijing. Road quality and These costs can be substantial, especially for the coverage is inconsistent across the city, poor. For public transport, informal providers have a lack of secondary roads reduces inter- picked up the routes that are not well covered by district connectivity, public transport public transport in order to accommodate demand access decreases with distance from the and they provide a vital service for those in the ger central city area. In the ger areas, it is areas where access to transport is most limited, estimated that only 10 percent of the streets though there is no assurance of passenger safety or are paved making transport by any mode fare rates. difficult, particularly in harsh weather when they can become impassible. Governance of Service Delivery: Accountability and Coordination • Street lighting1 is an important enhancement for overall public safety and Service delivery could be improved by addressing a marker of economic activity in most the city’s coordination and capacity issues and cities. In UB, the location and quality integrating participatory processes to enhance of the service varies widely across the 2 For instance, the lack of streetlights, especially on 1 In choosing a municipal service that could be objectively primary roads, prompts many drivers to use their high observed and compared across districts, and for which beams at night to avoid dangers such as curves in the financial and other data were available, the research for road and potholes etc. As a result, drivers on the alternate this report focused on street lighting. Functional street side of the road are blinded, creating a very dangerous lights could be observed through nighttime satellite road environment for pedestrians and drivers alike. imagery, providing the spatial analysis, while people’s Furthermore, a recent systematic review of research in the experience of the efficiency of the service were analyzed US and UK finds that street lighting significantly reduces through surveys and focus group discussions (World Bank the incidence of crime in public spaces (Welsh and 2014 survey). Farrington 2008). x Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia accountability. The spatial challenges to service City and district governments may each contract delivery for the city are linked to weaknesses in with different service providers to provide the incorporation of residents’ voice into decision- the same service. Furthermore, planning and making and institutional coordination, mechanisms investment activity in services from other levels of for accountability and3. Three key findings emerge: government may be done independently from and without coordination with local governments and First, urban service delivery requires continuous service providers. feedback between the city administration, service providers and citizens. While there have recently • There is a gap in understanding how city- been significant political commitments and owned and locally owned enterprises are concrete measures aimed at increasing government contracted, their performance agreement responsiveness and citizen engagement, there are is overseen, and their fiscal impact on the concerns that the voice and representation of the municipal budget measured and reported. broad constituencies, especially among the poorest There is no clear performance indicator and most vulnerable, has not been reflected in the for service providers to ensure that service decision-making process in service delivery. standards, in terms of investment efficiency and maintenance, are met. Accountability • In focus group discussions, participants and responsiveness to voters is further mentioned that they did not see results weakened as members of these entities are from the feedback given during citizen’s appointed rather than elected. meetings and that felt that their concerns were not taken seriously. In particular, • The gaps identified in street lighting residents of low income communities coverage are due in part to the structure raised concerns of retribution from of service delivery and the way in which khoroo officials which prevents people streetlights are operated and maintained from actively voicing genuine concerns and are illustrative of institutional and which is referred to in Mongolian as the administrative challenges that the city faces bureaucracy grip, or “засгийн зуулт.” in delivering other services as well. UB City, along with each district is charged Second, the city and district governments have few with providing street lighting. Due to this, tools to effectively assess the quality and coverage investment in the lights as well as their of service provision to improve accountability maintenance will vary according to district to residents. The city-owned enterprises, funded priorities and capacities and do not take by the city budget, provide core services ranging from hospitals, libraries and museums, to public of 7 districts (i.e. Bagakhangai, Bayangol, Bayanzurkh, awareness and information campaigns. Similar to Khan-Uul, Nalaikh, Songinokhairkhan and Sukhbaatar) of UB, locally owned enterprises with commercial the city owned enterprises, District Councils may activities were set up for waste removal and street/road also set up locally owned enterprises and locally maintenance. However, these districts seem to lack a owned enterprises with commercial activities4. uniform strategy in setting up the enterprises for the provision of service above. For example, Bayanzurkh 3 UB residents are able to vote for their representatives at District set up 4 such enterprises called Common Service multiple levels of government and can express concerns Units, with each responsible of both waste removal and and demand for more and better services through election street/road maintenance while Songinokhairkhan district of the District Council (which can set the rates for some set up a locally owned enterprise with commercial local taxes and fees), and participation in the Citizen’s activities called “Common Service Center” for waste Public Meetings at the sub-district (khoroo) levels, removal and another enterprise of same category, called meetings with the micro-district (kheseg) leaders, or the “Landscaping & Cleaning Service” for road/street City’s online and call system, “UB is listening to you.” maintenance. In case of Chingeltei district, provision of 4 According to the information available on the websites same services is contracted to private companies. xi advantage of economies of scale5. rather than own-source revenue collected through user-fees, service charges or existing taxes, such Third, due to the lack of direct and open linkage as the property tax, each of which are typical between service providers and users, decisions revenue sources for local governments. This, over service provision, spending and investment do along with the current budget reporting system not appear to be based on evidence of actual needs makes it difficult to track expenditures on services and demand. The high degree of fragmentation to assess effectiveness and cost efficiency. The in service provision across districts, particularly current intergovernmental fiscal arrangement is in network services, such as street lighting and underpinned by a lack of clarity in expenditure transportation, manifests the limited capacity in assignments set by the central government, as well holding MOEs and service providers to account. as required revenue sharing, which undermines A number of existing data systems are relatively incentives for effective and efficient service up to date and provide important information, delivery. however these data are not shared with other departments or agencies, which reduces their • There is a large mismatch between ability to improve planning and investment for expenditure responsibilities and decision- service delivery. making authority. For example, in education, decisions on the number of Financing Municipal Services to improve equity teachers and on wages are taken at higher and efficiency levels, leaving little room for resource management at the local level. Norms The city needs a better understanding of are set at the national level, yet there is its budget expenditures in order to identify no systematic mechanism to ensure that opportunities for more efficient and inclusive the city has adequate resources to deliver service coverage. Decentralization reforms quality services. For transport, the low have placed additional responsibility for service density form of the city makes it difficult delivery at the local level. However, there are to design efficient bus routes to maximize a number of challenges faced by city and district ridership and fare revenue administrations to finance the services they are charged with providing which directly affects the • Funding is unpredictable which makes scope, level, quality and efficiency of delivery. A planning difficult, and the system penalizes key challenge for the city is a reliance on transfers, local revenue raising by cutting back on the tax-sharing rate of transfers. There are also 5 Municipal government had been made in recent years to install new, more efficient and in some cases, solar major deficiencies in the existing budget powered streetlights. Donors and the municipality have system leaving UB highly dependent on devoted considerable time and resources to installing central transfers, which weakens local and upgrading street lighting infrastructure particularly incentives for fiscal restraint and poses within the ger areas. For example, the Swiss Development Cooperation program as well as Germany’s GIZ have used challenges for developing a medium term their programs to support improvements in street lighting spending plan6. in the ger areas. Street lighting is one of the elements of the “Manaikhoroo” community mapping program initiated by the Asia Foundation, which focuses on mapping the Most of the city’s decisions about public ger areas and has been developed in cooperation with the investments are made by the UB city Ulaanbaatar City Mayor’s Office. However, the analysis shows that the City’s efforts to scale up the provision of street lights in ger areas seems to be somewhat 6 An assessment of UB’s finances and budget reporting haphazard, with access to streetlights continuing to be was completed in 2014 (“Ulaanbaatar Financial Self- highly inequitable across khoroos dominated by ger and Assessment”) as part of a World Bank technical assistance apartment areas respectively. program at the request of the city government xii Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia administration without extensive consultation management, and improving governance and with the district administrators. This can result in finance. duplications and gaps of investment and service coverage. The current system also does not allow Enhancing Urban Planning and decision-makers or the public to know exactly Management how much each entity spends on which particular service nor what actual demand for services on While Ulaanbaatar has in place appropriate the ground are. This reduces the transparency policy tools and a mandate over urban planning, of expenditures on service delivery, and limits land use management, land taxes and zoning the space civil society groups have to demand regulations, they are not being carried out in improvements. Finally, the budgeting system practice. The implementation of these key is fragmented; with district investment plans policies could ultimately result in better levels based on the lists of State Budget and UB City of service provision that are also more cost- Investment plans. efficient, affordable, and thus more equitable for city residents. Such implementation will require A final key challenge is related to significant prioritization by the city and the introduction of differences across districts in their local economic incentives to encourage policy makers and city bases and thus their fiscal capacities. This results administrators. in poorer districts having less financial ability to contribute to the provision of local services and Prioritize planning and land use regulations to thus substantial inequity in the level of services promote density and diversity throughout the across the city. City. As the city continues to grow and the city tries to keep up with the service delivery needs, Recommendations better urban planning and land management aimed at promoting density will be critical to The various issues raised in the report related to creating a more sustainable, livable city and will the city’s rapid demographic growth and urban create substantial savings in service provision. expansion, sprawling spatial form, complex Implementing the existing policy tools will require governance and financing structures result in a concerted political effort, and the introduction a number of challenges related to the efficient of more informed decision making using evidence delivery of high quality, affordable services to based information. As an example, the service residents of Ulaanbaatar. Recommendations are data and household surveys could serve as a useful aimed to reduce the spatial disparities in service baseline for UB’s administration in devising more delivery across the city by improving the links and effective public investments. feedback mechanisms between service providers and residents. The report will also suggest areas Increase integrated land use and transport for capacity enhancement to improve coordination planning to improve access and mobility. The and finance for municipal service delivery. city’s low density and segmentation of land use Based on the analysis of service delivery in a promotes a mismatch between residential and number of key sectors, several priority areas are service and employment centers. The Master Plan identified for recommended action by the UB City has reflected initial steps to reduce congestion administration, guided by principals of equity, by placing commercial areas and service centers efficiency and quality. They draw upon many of outside of the central city area. There is also a the existing policies that are in place, though call mismatch in transport services which don’t always for deepening implementation particularly in two link routes with rider demand. A more systemic main categories of enhancing urban planning and approach to transport planning to address traffic xiii management, bus route planning and rider demand systems would increase fiscal discipline at local analysis and ICT systems could better align levels. Matching expenditure assignments with supply and demand, and inform future capital or authority would improve local government operations investment priorities. Linking land use accountability. The government should also and transportation planning will ensure that public develop mechanisms for streamlining funding investments in road and transport infrastructure (single-pipe funding), use equalization formulas better align with private-led development along for the distribution of transfers, and consolidate the major corridors and nodes. An integrated approach provision of national public goods, such as policy in transport requires substantial changes to the formulation, monitoring, and evaluation at the regulatory framework, licensing process and route center coverage to strengthen the formal transportation sector, and to make it more reliable, safe and Use pro-poor targeting of expenditures to ensure service-oriented for its users. In this integrated equity in service provision. The system of fiscal approach, it is also important to recognize the transfer and revenue-sharing across districts need importance and limitations of the growing to incorporate poverty and deprivation measures. informal sector in filling the demand gap currently For example, districts with higher incidence of unfulfilled by the formal system. poverty and a lack of schools should be allocated additional resources based on these or other service Improving Governance and Finance needs. Many elements of the existing structure provide a Develop an evidence based capital investment solid basis for improving governance and finance planning framework. In the short term, the to better deliver services. Yet many of these development of an evidence-based capital policies are not being implemented, and there are investment planning framework that draws from other issues that still need to be addressed, with existing data sources and leverages existing venues the ultimate goal of providing a more strategic, for citizen participation at the district and khoroo effective, efficient and equitable approach to levels can serve to identify realistic investment service delivery. needs. A more structured application of existing data sources, particularly GIS and demographic Introduce a Medium Term Expenditure data, could be used to develop better mapping Framework. The current capital investment of the levels of access and service needs in the planning system is limited by a one-year term and city. Public information and outreach campaigns there is no strategic, multiyear plan for sequencing could be used to promote participation in local- investments, nor are there criteria for assessing level meetings as well as dissemination on the need, demand or delivery options. Developing procedures, rights and responsibilities for service medium-term investment plans can improve the users. coordination of budget planning and investment, and can also be a way to encourage routine citizen Introduce standards, quality controls, and participation and involvement from sub-local transparency mechanisms for service providers. entities. Examples are provided in the report on The MOEs provide a range of core services such how this could be approached. as hospitals, libraries and museums, to public awareness, and information campaigns yet there Reform the revenue sharing system. is relatively little oversight in their performance. Improvements in the revenue sharing system to Any accountability and responsiveness to voters is provide local governments with more revenue- limited as the heads of MOEs are appointed rather generating authority and more stable tax-sharing than elected. The city’s adoption of procurement xiv Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia and performance evaluation standards could Better coordination across khoroos and at the city, improve the transparency of contracts with service district and khoroo level could result in overall providers and provide a means to monitor the improvements in service delivery. The instability quality of services provided. Closer monitoring of intergovernmental transfers and changes in the could also aim to eliminate the current system assignment of service provision duties between of bribes which has the greatest impacts the the national government and the capital city is poorest. In addition, existing channels of citizen beyond the city’s control, but a clear mandate and participation, such as khoroo council, LDF resources for additional services responsibility consultations and district Mayor’s offices can would improve the ability of the city to develop provide critical inputs on citizen feedback on the planning and financing strategies. Introducing quality and access to services at the neighborhood an intergovernmental task force or committee to level. All Districts have established “Citizen’s foster collaboration across the multiple levels of Hall” and have branches in some Khoroos to government, and establishment of systems that promote citizens’ voice and participation in policy collect and utilize information about gaps and development7. duplications in services would ultimately provide efficiencies and better outcomes for residents. Develop mechanisms for improving coordination across government to avoid gaps and Implementation of these proposed duplications. The example of the fragmentation in recommendations are technically feasible, but will service delivery for street lighting highlights the require a strong commitment by local government. challenges of overlapping responsibilities across The benefits of such reforms have the potential for levels of government and subsequently results major improvements in Ulaanbaatar, ultimately in inadequate service provision. In health, the resulting in a more livable, sustainable and residency requirement means that residents must equitable city over time. use the designated family clinic in their khoroo but that clinic may not be the closest by distance, thereby imposing a burden in getting to a clinic. 7 Citizen’s Hall or Community Hall initiative was supported by the JSDF funded Bank Project called Community Led Infrastructure Development for Urban Poor Phase (2011- 2015), which established a Citizen’s Hall in 6 khoroos of UB. xv Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia 1.0 introduction 1.1. Urban Service Delivery and Inclusive Development T he development of cities as engines of economic growth and livable spaces has been and will continue to be a critical path for much cheaper than connecting a household outside the city to the same water system. In this way the cost to a government of building and maintaining promoting shared prosperity and ending extreme network services, such as water, sewage and poverty. It is however, not without challenges as heating pipes, roads and power lines are greatly the benefits of urbanization are not realized equally reduced when there is a high physical density of by all. If urban growth is not well planned and the network users. managed, it can aggravate inequalities in access to services, employment and housing, particularly in On the other hand, services are not always rapidly growing cities where services are not able provided equitably and are typically based on tax to keep up with demand and land located near jobs revenue. To compensate those in lower income is often constrained. neighborhoods, targeted local services and functions are instrumental in ensuring equal access Cities have unique opportunities to promote and opportunities, as well as safety nets for the inclusive development through ensuring affordable poor and the most vulnerable. This, however, is and efficient service delivery. On one hand, cities not always the case as is evidenced by the lower are well positioned to provide a number of services access to services in Ulaanbaatar’s lower income due to the economies of scale that the density and ger areas. spatial concentration of people and firms allow. This is especially true for certain public goods a The form of local governance directly influences city provides, such as police and fire protection, the ability of municipal entities and functions public parks, street lighting, which anyone may to respond to citizen demands for coverage benefit from, whether or not they are a resident or and quality of services, and manage service whether they pay for them directly through taxes8. delivery in a sustainable manner. Service delivery For the same reasons of density and proximity, arrangements depend on a number of different cities benefit from infrastructure networks that factors specific to each city, including legal reduce the cost of adding additional people to mandates, fiscal capacity, political constraints, the service (World Bank 2009; Altshuler et al. and the varying priorities for efficiency and cost 1993). For example, connecting one additional recovery versus equitable access (World Bank household that lives close to a trunk water line is 2003). For example, utilities such as water and electricity may be delivered by a city-owned utility 8 These are public goods, which are items or services which company, or through a contracting arrangement all may enjoy without diminishing the supply or cost for with a private operator, where costs are recovered others to enjoy. 1 through consumption-based user charges9. For The study draws on the analytical framework of services such as urban solid waste management, the World Development Report - Making Services public and private sector organizations can hold Work for the Poor (World Bank 2003), as well a variety of configurations for waste collection, as more recent documents, and employs four transfer, disposal, financing, and revenue collection research instruments to build the evidence base depending on cost considerations, technical for the report: quantitative and qualitative surveys, capacity and administrative environments spatial data mapping, institutional analysis and (Wilson et al. 2012). Facilitating service expenditure review. Building on analysis of these delivery arrangements to ensure that growth information sources, recommendations are made is shared equitably, including the poor and the regarding the means of service delivery, potential most vulnerable, will be crucial for creating an sources of financing, and appropriate incentive inclusive, world-class city. structures for providers, service standards and regulatory measures, and organizational design. 1.2. Objectives and Methodology For the purposes of this study, services are defined The objective of this report is to assess the quality as basic public services that residents of a city and efficiency of service delivery with a view to expect a city government to provide in exchange guide the prioritization of future investments in for the taxes which citizens pay. It refers to urban services for Ulaanbaatar City. Specifically, municipal transit services, health clinics and the study will: services, schools and education, water system, trash collection and solid waste management, i. describe and quantify the quality and street lighting, and social welfare administrative coverage of basic urban services in services. Ulaanbaatar, particularly those that have the greatest bearing on the welfare and The primary data used for this study includes the livelihoods of the poorest residents; following: ii. analyze the technical and political economy o Household Survey on Service Delivery factors that influence variability in service in Ulaanbaatar: a geo-referenced, city- delivery across districts and socio- wide random sample of 3000 households economic groups; collecting information on services including, access to water, sanitation, solid iii. identify institutional and financing issues waste collection, coverage of functional that may be compromising the efficiency, street lights, to the costs and locations of quality, reliability, and equity of municipal health clinics and schools that was carried service delivery; and out in 201410. Henceforth, World Bank Survey 2014. iv. propose suitable policies and management strategies based on international best o Focus group discussions: 18 focus group practice, and identify reform areas that UB discussions with residents of nine districts can undertake to enhance service delivery. in Ulaanbaatar City on the perceived quality, accessibility and outcomes of health and education as key locally- 9 For example, UB owns the Ulaanbaatar Water and Sewerage Authority (USUG) with which it contracts provided social services. These focus group for extracting and cleaning water. Another city-owned enterprise operates distribution under city-owned pipe 10 The results of this quantitative survey instrument will be infrastructure. used throughout this report to illustrate the analysis. 2 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia discussions were also carried out in 2014. o Municipal budget data: information from Henceforth, World Bank FGDs 2014. 2012 and 2013 data is used to examine the levels of spending among districts o MAD Investment Solutions Report and across sectors, and examine levels on: 1) actual service usage levels; 2) of equity in access to services, as well as quality of services provided (frequency, the decision-making processes for service reliability, and accessibility); and 3) users’ delivery, especially those regarding preferences, for public transportation, expenditure allocation. Henceforth, street lighting, social welfare, and land and Municipal Budget Data, 2012, 2013. property titling and registration services. Henceforth, MAD 2014. The analysis was based on the above information along with interviews with key stakeholders. The o Spatial data from Ulaanbaatar’s Master quantitative and qualitative surveys were used to Planning Department (MPD): Mapping of assess citizen satisfaction and analyze the quality the distribution of service points, such as of service from the user perspective, as well as public transit nodes and network, schools, hindrances in service provision and accountability clinics, and streetlights. Such maps were to users. The service gap analysis focuses on the overlaid with the data points from the following demand-side information on actual quantitative surveys to cross-examine the usage levels, quality of services and preferences. quality of services provision. The findings An institutional analysis was carried out to identify allow for comparison across districts, the political economy factors that have or can and for service providers to learn from undermine policy implementation. It explores the one another and to establish performance constraints to service provision that may exist as benchmarks overtime. The results will also a result of internal processes or the relationships enable MUB leaders to make evidence- among UB entities, or whether it is a product of the based investment planning decision that way that the system is organized and operates (e.g., will seek to improve service quality and inter-governmental fiscal transfers). equity of access. Henceforth, World Bank Spatial Analysis 2014. 3 2.0 backround & context M ongolia is a unitary state with three levels of subnational government; 21aimaags,(roughly the equivalent of a province or A city’s spatial pattern of urban growth and provision of services can have important impacts on its economic development, its environmental state), 331 soums which exist under aimags and a sustainability and its ability to ensure social greater number of bags which are the smallest unit equity (World Bank Group 2015). In Ulaanbaatar, of administration and have shifting administrative the pattern of spatial growth has three important borders. Ulaanbaatar is the capital and largest city implications tothe ability of the city to provide in Mongolia and it occupies a slightly different quality service to its residents. First, the city’s place in the country’s administrative structure. sprawling urban form has further induced vast As Capital City, UB itself is roughly equivalent expansion in the periphery and makes it costlier to to an aimag and its nine districts (duuregs) and provide and maintain basic urban services. Second, 152 khoroos are counterparts to soums and bags, much of new urban growth has been in the form of respectively. Each level includes a structure for ger areas, where most of the poorest live, which self-governance; aimags and soums (as well as lack adequate connection to network services and duuregs and khoroos) for example have elected are heavily prone to natural hazards. Third, the assemblies that approve budgets and elected low-density spatial development also hinders cost- governors that administer them. effective investments in the urban transportation network that could facilitate greater connectivity Ulaanbaatar’s urbanization in recent years has for UB residents and expand accessibility to jobs been characterized by rapid expansion due to and opportunities for low-income groups, as mass migration of people from the hazard-prone well as for other network services such as water rural areas, with much of the settlement having and sanitation. Going forward, addressing the taken place along the river basis and flood prone sprawling urban form of Ulaanbaatar’s growth will zones (Ulaanbaatar City 2013). Approximately be critical to ensuring sustainable urban services 43.8 percent of Mongolian citizens now live in for all. Ulaanbaatar. 4 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Map 2.1: Districts and Bus Routes in Ulaanbaatar 2.1. Recent Economic Trends As the capital and largest city in Mongolia, Monetary Stimulus Programs. As these sectors Ulaanbaatar has a relatively well-diversified continue to drive growth and generate employment economy. Up to 99 percent of local output is in UB, further diversification in the service sector, comprised of construction, mining, transportation such as financial services, hotel management and services, retail, light manufacturing and restaurants, will expand employment opportunities processing. UB accounted for 41 percent of for UB’s population (World Bank 2014). the total labor force in 2014. Construction and maintenance works, retail and wholesale industries Ulaanbaatar’s average nominal GDP growth was in UB accounted for 64 percent of the total around 33.8. percent between 2008 and 2012, national output in 2014. The real estate sector has compared to the national growth rate of 27.6 grown significantly, driven mainly by increasing percent. During the same period, the monthly demand (rapid in-migration, rising disposable average salary of workers in UB increased by 170 income, and interest rate subsidies), as well as percent. In spite of the global economic downturn, boosted supply resulting from direct government when national GDP decreased by 1.3 percent, funding to construction companies, producers of UB’s growth rate grew by 6.4 percent, reflecting construction materials and developers to support a high degree of economic resiliency. Economic new construction, as part of the government’s 2012 and revenue bases in UB have been broadening 5 due to the demographic dividends. However, 2.2. Urban Poverty national economic growth slowed to 3 percent in the first half of 2015 due to a combination of both Although Mongolia has made great progress commodity price declines, and low demand from in poverty reduction, especially in Ulaanbaatar China. This has resulted in lower levels of foreign though the pace of poverty reduction has slowed and domestic investment, dampening income down in more recent years11. According to recent growth, particularly in UB, where the growth rate World Bank (2015) estimates, Ulaanbaatar is has averaged about one-third of what it was in the home to 32.5% of Mongolia’s poor. Poverty in period 2008-12 (World Bank 2015b). Ulaanbaatar declined by 11.4 percentage points during 2010-12, but the pace reduced to only 3.4 Ulaanbaatar’s population is estimated at around percentage points during 2012-1412. With the 1.36 million (2014), or about half of Mongolia’s poverty line at MNT 146 650 (nominal USD 78) total population. The average income per per person per month, approximately 16percent household in UB is 15.9 percent higher than of UB households are extremely poor and a the national average, and income per capita substantial percentage are clustered around the is 33.6 percent higher in 2014 (NSO, Annual poverty line, and hence vulnerable to economic Statistic Report 2014). Its primacy in the national shocks13. In addition, there is a clear spatial economy is both a source of opportunity and dimension to the distribution of urban poor in concern. Opportunity, because the city provides Ulaanbaatar. Based on the Census 2010 data, new livelihood options for incoming migrants, Khoroos with the highest poverty ratestend to be translating into improvements in their living located in the peripheral areas of the city, along the standard, especially subsequent to the loss of rural edges of Songinokhairkhan and Khan-Uul, as well livestock and livelihoods due to persistent harsh as in the rural districts of Nalaikh, Bagakhangai, winters. Concern, because the population growth and Baganuur. Of these rural districts, Baganuur creates urban management challenges in terms of and Nalaikh have become satellite cities of provision of public services, local public goods and Ulaanbaatar following a referendum in 2015. amenities. There is a high level of sub-district variation within Ulaanbaatar with khoroos in the city center having less than 6% urban poor as compared to come of the peripheral districts where poverty rates range from 35-45% of the khoroo population. Map 2.2 shows the distribution of households below poverty line by khoroos. 11 The pace of poverty reduction was higher in Ulaanbaatar during 2010-12 when poverty declined by 11.4 percentage points, but poverty subsequently declined by only 3.4 percentage points during 2012-14. 12 World Bank. 2015. Draft Report titled “Poverty reduction and shared prosperity in Mongolia: Well begun, but can it continue?” prepared by Obert Pimhidzai, GPVDR 13 Value in 2014 prices 6 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Map 2.2: Poverty Headcount Source: Census 2010 Data from National Statistical Office (NSO), Mongolia The total percentage of the extremely poor and the heavy vehicles cannot access the areas in the near-poor residing in a ger dwelling is 65 percent. steeper topography, particularly characteristic Among the extremely poor, 39 percent live in a to fringe ger areas. Similarly, only 19 percent ger dwelling, 39 percent live in non-ger detached households in the lowest income quintile have housing, and 22 percent live in an apartment. In piped water, while more than half of those in the contrast, for the non-poor group, 22 percent live highest quintile have this service. Similarly, while in a ger, 33 percent in non-ger detached dwelling, almost 100% of apartment dwellers have flush and 45 percent live in an apartment. toilets, most ger dwellers utilize unimproved sanitation facilities (including open pit latrines Access to basic services also differs greatly and open defecation). With respect to urban among both dwelling type and poverty levels. poor, 77% of household in the poorest income For example, nearly all apartments have access to quintile lack access to improved sanitation as piped water while under 4 percent of those living compared to 43% of the richest quintile. While in gers or detached dwellings have coverage. Ger these data suggest that poorer households face and detached home dwellers are disproportionately significant barriers to basic water and sanitation reliant on water kiosks that depend on tanker services, they also signal that the inequalities in trucks to deliver water, followed by kiosks service provision are not neatly mapped on to connected with piped water, and tube wells. income poverty. For both networked services of Kiosks served by trucks are known to face water water and sanitation, spatial location within the shortages during winter and rainy months when city and the dwelling type that is associated with 7 it are highlight relevant. Urban poor are also less bottom two quintile who have primary or less than likely than their better-off counterparts to have primary education, with a majority of urban poor high levels of educational attainment. Three times having at least high school diplomas. (See Table more respondents in the highest income quintile 2.1 below). Multiple dimensions of urban poverty have attained graduate education than those in the and their spatial expression in Ulaanbaatar are lowest income quintile. That said, there is overall explored in a forthcoming World Bank publication a very high level of literacy among urban poor in that delves deeper into the profile of urban poor Ulaanbaatar with only 3-4% respondents in the and mechanisms of urban poverty. Table 2.1: Poverty and Services, by Quintile (percent)   1 (lowest) 2 3 4 5 (highest) Tenure Status Possession or owner 55 59 62 63 64 Renter 10 8 7 12 9 No Certificate 35 33 31 25 27 Total 100 100 100 100 100 Water Delivery Piped water 19 28 31 42 54 Kiosk connected to central pipeline 24 22 23 20 15 Tubewell& other 19 17 18 13 11 Kiosk with truck delivery 37 33 28 25 20 Total 100 100 100 100 100 Access to Toilet Facility Flush 19 28 31 41 54 Improved latrine 3 3 2 3 3 Unimproved or none 78 69 67 56 43 Total 100 100 100 100 100 Frequency of Garbage Collection Multiple times per week 12 20 18 24 29 Multiple times per month 32 31 34 30 28 Once a month 35 33 26 24 20 Irregular or not collected 21 16 22 22 23 Total 100 100 100 100 100 Education of HH head Primary or below 3 4 3 2 1 Middle school 18 12 8 8 5 High school 48 47 38 32 22 Technical and vocational 10 9 13 10 8 Undergrad or above 21 27 37 48 63 Total 100 100 100 100 100 Employment of HH head Unemployed 29 17 15 13 7 Pensioner 16 16 20 18 16 Student 6 5 2 3 1 Self-Employed 16 18 17 18 23 Employed 32 44 46 48 53 Total 100 100 100 100 100 Source: Data from World Bank Survey (2014) 8 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia 2.3. Urban Expansion and Built Form Ulaanbaatar’s low-density is a product of its urban From 2000 to 2013, eighty-seven percent of all form. Two distinct urban form patterns can be new expansion in Ulaanbaatar occurred in the form observed throughout most of the city, both leading of a discontinuous low-density urban fabric that to a low-density use of space. The first pattern, is reflective of the built forms of ger areas. This predominant in the central areas, seems to be growth was concentrated in peripheral districts derived from the city’s soviet-style city planning such as Bayanzurkh, and Songinokhairkhan where legacy. Large-size blocks serve as the structural populations doubled and in Sukhbaatar where the element, buildings show limited heights (4-5 population grew by 30 percent. However in each stories on average, 10-12 stories for the highest of these districts, built-area population density buildings), and generous open space allocations are increased by no more than 25 percent, and in the distributed widely in the form of frontages or inner case of Sukhbaatar, it actually fell three percent block courtyards14. Mongolian citizens registered (World Bank 2015). While the city occupies a to live in UB are entitled to a plot of land of up to large land area of 3,257 km2, its population and 700 m2 without charge even though many plots are economic activities are concentrated in a relatively in practice smaller (between 400-550 m2).1516 small area. According to a World Bank spatial analysis (PUMA 201417), only 263 km2 consisted The second pattern of urban form is seen of urban built-up areas in 2010. This amounts to primarily in the periphery of the city, and results about 10 percent of the administrative area of the from Mongolia’s law granting free ownership city. of unsettled plots of land to every citizen. The outcome is patchwork of plots divided by fences, Density in Ulaanbaatar is low by international and occupied with detached single-unit homes standards. Figure 2.2 compares UB’s average ranging from traditional gers, to more classically density with other East Asian cities with built houses. Low-income residents populate many populations between 500,000 and 1.5 million. It of these areas, build their own gers, but lack basic shows that UB is below average in terms of density services and infrastructure provision, such as (indicated by the dashed line). Among 869 East paved streets, parks, streetlights, water connection Asian cities with a population over 100,000, UB and sanitation (World Bank 2015). ranks 748th in terms of the density of its built-up areas. The city’s low-density pattern has negative As a result of rapid expansion by large residential environmental impacts related to high carbon plots, ger areas have become the predominant built emissions, poses significant challenges to the form in the city. As the city expands outward, these provision of high-quality network infrastructure, low-density areas house about 60 percent of the and hampers the connectivity and accessibility for population and necessitate enormous infrastructure UB residents, which is discussed in the following investment in the newly developed areas. sections. 14 Nowadays both spaces commonly taken up by parking. 15 According to Article 3 of the Law on Procedures for Observance of the Law on Land Allocation for Mongolian Citizens for Ownership. According to UB Mayoral Decree no. A/726 of 2013 the entitlement is currently applicable The Platform for Urban Management and Analysis 17 to UB residents who had registered their residency before (PUMA) is a database that combines demographic and 30 May, 2013 satellite data that analyzes urban expansion and population 16 Previously, the law allowed a plot of this size for densities across the East Asia region. The database is residential use per household accessible at: http://puma.worldbank.org 9 population over 100,000, UB ranks 748thin terms of the density of its built-up areas. The city‟s low- density pattern has negative environmental impacts related to high carbon emissions, poses significant challenges to the provision of high-quality network infrastructure, and hampers the connectivity and accessibility for UB residents, which is discussed in the following sections. Figure 2.2: Comparative Urban Built Area Density Figure 2.1: Comparative Urban Built Area Density 30,000 Density (People per sq. km. of built-up 25,000 20,000 15,000 area) 10,000 5,000 0 500,000 1,500,000 Population East Asian Cities (Pop 0.5 -1.5 million) Ulaanbaatar Source: World Bank Group (2015) Source: World Bank Group (2015) 17 The Platform for Urban Management and Analysis (PUMA) is a database that combines demographic and satellite data that analyzes urban expansion and population densities across the East Asia region. The database is accessible at: http://puma.worldbank.org 10 10 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia 3.0 the state of service delivery U laanbaatar City provides important services that can directly improve social inclusion and economic competitiveness. The city is responsible residential areas remain far from basic service facilities. As a result of the pattern of spatial development described above, it is well known for delivering key services, such as the provision that ger areas are generally under-served, and of water supply, sanitation and drainage, housing, continue to be systematically disconnected from public transit, roads and bridges, and utilities for both social service locations, as well as networked public areas including street lighting, cleaning and services such as street lighting and public transit waste removal (see Chapter 4 for the full list). The access points. In the areas with broader access municipal government is committed to providing to services, the varying levels of quality and public transportation, education and health care users’ experience point to issues with service at little or no cost to residents. Quality urban provision arrangements, along with the governance services provide the basis for the development of a mechanisms to ensure that the services provided healthy and productive labor force18 along with the respond to needs and demands of city residents. safety, mobility and connectivity needed to foster This analysis provides clearer evidence of the investment and economic growth. They are also extent of disparities in service provision across the an important foundation for inclusive urbanization city. because extending access to the poorest segments of the population would substantially reduce the This chapter focuses on the current challenges costs to poor households in obtaining them. of service delivery, especially to the poor in Ulaanbaatar, the quality of services delivered, Meanwhile, the rapid expansion of the city has and the range of constraints to service provision. strained its ability to deliver services efficiently Information is drawn from the World Bank Survey and equitably. Services are not provided evenly 2014, the FGD Survey 2014, spatial mapping, as across the khoroos, and a large number of well as interviews with UB and district officials. A full review of the service quality and delivery UB’s primary and secondary education system has 18 mechanism for all types of municipal service a prominent role in improving resident’s economic is beyond the scope of this study, though is prospects. Given that one third of Mongolia’s schools recommended for future research. are in UB, the city is in a vital position to influence employment through the broad and accessible provision of public education. Changes in Mongolia’s demographic and economic structures underline this. For example in 2010, 27 percent of the country’s population was 14 years old or younger. Despite sustained economic growth from 2000 to 2010, the number of people reporting that they were not able to find a suitable job increased by 35 percent, suggesting that there remain constraints to providing adequate skills to new graduates (UNFPA 2012). 11 3.1. The Current Situation The city faces several key challenges in ensuring by low population density. Ninety percent of ger broad access to basic services. Demand for social area residents own their khashaa plot19, and an services generally exceeds supply, leading to additional 6.6 percent have legal papers to prove overcrowding and poorer quality of services. possession or were in the process of formalizing Furthermore, health clinics and schools are in their tenure title. In contrast, 62 percent of the some cases inefficiently located in areas with apartment residents are classified as non-poor, less demand, while the areas with higher demand and apartment buildings tend to be concentrated are not adequately served. The high demand densely in the UB central areas. for limited space in schools and clinics raises opportunities for bribery. The poorest residents Ger areas refer to land occupied by detached who have less money to pay bribes or offer gifts to houses and by gers and cover approximately 55 direct service providers are either excluded or only percent of settlement areas in UB. “Non-ger areas” able to obtain a lower level of service. The access typically contain apartment buildings. These areas points for key municipal services under the scope are in roughly three concentric zones around the of this study are plotted on maps overlaid with city. “Central ger” areas, accounting for 22 percent population density to showcase the mismatch in of land areas, are understood to be 12 old pocket service needs and the gaps in provision. ger neighborhoods in the center of the city and As noted in the previous chapter, there appears are surrounded by apartment/non-ger areas. “Mid- to be a high concentration of poor households tier ger” areas, representing 44 percent of the land living in ger dwellings, and as the city expands area, are newer, have some infrastructure, and are outward, ger area type of development is becoming outside of the concentrated apartment areas of the most common and visible in the peri-urban and city. Fringe or “peri-urban ger” areas represent 44 fringe areas of UB City. Gers range widely from percent of the land area and are on the edge of the durable structures to makeshift construction. mid-tier areas where land is still being claimed They also tend to be located in low-lying areas and there is little or no infrastructure. A final prone to flooding. Ger areas are characterized classification, public centers in ger areas, accounts for 6 percent of the land area20. 19 A fenced plot will typically have one of more gers among open space, distinctly separate from the next plot. 20 Source: Amended Master Plan for UB City Development up to 2020, UB Master Plan, Volume III, pp. 86-89. 12 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Table 3.1: Income, Employment and Education by geography Location/Dwelling Type* Peri-urban ger Mid-tier ger Income Characteristics Central ger Apartment area area areas Mean HH income (MNT)  191,818  179,904  220,910  337,795 Share of quintile  1 (lowest) 26 25 22 13 2 21 23 20 17 3 19 22 22 17 4 18 18 19 23 5 (highest) 16 11 17 29 Sum of bottom 3 income 66 70 64 47 quintiles Employment Status of HH Head  Unemployed 14 21 19 13 Pensioner 28 17 15 15 Student 0 3 2 6 Self-Employed 17 17 21 18 Employed 41 42 43 48 Education of HH head  Primary or below 5 3 3 2 Middle school 19 9 16 4 High school 39 46 46 25 Technical and vocational 11 13 10 8 Undergrad or above 25 28 25 61 Source: Data from World Bank Survey (2014) Note: Ger areas consist of households that live in a ger or detached house While tenure security is less of an issue for UB imposes extremely high unit infrastructure and residents, access to services for the majority of transportation costs. As an example, a World Bank ger areas is a considerable challenge. Given the funded pilot project connecting ger households to sprawling urban form of UB, many ger areas, the main water supply and sewerage systems in particularly those classified as the peri-urban ger Dambadarjaa found that the cost was relatively or fringe areas lie far from the city center where high, revenues failed to cover operation costs, businesses and workplace are concentrated. Low- let alone the high investment costs associated density urban form has become one of the causes with the low-density expansion of network for the high costs of extending service provision services. Furthermore, household connections for peri-urban and fringe areas. The uneven, hilly and secondary pipes froze in the extremely cold terrain of most ger areas, and extremely low climate when ger residents failed to use heating temperatures for a large part of the year, make the cables and insulation intended to prevent pipes task of fetching water onerous for ger residents from freezing due to high electricity costs. This is in fringe areas, and practically impossible for explained in greater detail in Chapter 5. the elderly and disabled. The low density and undulating terrain in the middle and fringe ger The data from the World Bank Survey (2014) areas of UB not only makes it challenging to illustrate notable differences in service coverage provide network services such as water and supply, across residential typologies. Under official sewerage, heating, and even road access, but also mandate, the UB city administration is responsible 13 for providing services for the central area, where water is available in the city center, while USUG most of the apartments are concentrated, as well trucks deliver water to water kiosks in ger areas. as the ger areas. The level of service varies by See Table 3.2 below. location and dwelling type. For example, piped Table 3.2: Quality of services by residential location, percentage of respondents   Location/Dwelling Type* Peri-urban Mid-tier ger Non-ger Service Type Central ger ger area areas area Tenure Status   Possession or owner 62 63 57 56 Renter 4 6 15 11 No Certificate 34 31 28 32 Total 100 100 100 100 Water Delivery Piped water 14 3 3 84 Kiosk connected to central pipeline 10 28 46 3 Tubewell & other 37 19 17 5 Kiosk with truck delivery 39 49 34 7 Total 100 100 100 100 Access to Toilet Facility Flush 13 2 4 84 Improved latrine 4 3 6 0 Unimproved or none 83 94 90 16 Frequency of Garbage Collection Multiple collections per week 16 5 10 40 Multiple times per month 14 29 42 31 Once a month 32 44 38 8 Irregular or not collected 38 21 11 21 Total 100 100 100 100 Streetlight Functionality All or majority functional 24 26 32 60 A few work 6 17 15 14 None or non-functional 70 57 53 27 Total 100 100 100 100 Walking Distance to School 15 minutes or less 40 64 61 84 Greater than 15 minutes 60 36 39 16 Total 100 100 100 100 Source: Data from World Bank Survey (2014) Note: *Ger areas consist of households that live in a ger or detached house Table 3.2 provides key statistics based on the non-ger area residents had access to piped water. World Bank Survey (2014) data. According to Infrequent garbage collection also surfaces as the Survey, almost 40 percent of ger residents in a significant problem for ger areas despite the peri-urban areas travel more than 200 meters to payment of a garbage collection fee applied for a source of drinking water, while 84 percent of all residents. Nearly 40 percent of ger residents 14 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia in peri-urban areas reported lack of garbage Nonetheless, the number of schools only meets collection or irregular collection despite payment 86 percent of existing demand. According to data of the municipal fee, as compared to only 21 available from khoroo level household registry percent of apartment area residents and 11 percent data from 2014 were able to accommodate of central ger residents. Most ger area residents only 30% of children eligible for enrollment. rely on own heating through coal stoves, trucked However, recent efforts to improve the capacity water supply, and rudimentary forms of sanitation. of kindergartens have improved this figure to 57 Access to flush toilets and piped water remained percent of the eligible population (UB Education at or under 4 percent for households in mid-tier Department 2015)21. or central ger areas (World Bank Survey 2014). A more in-depth analysis of the level of access The distribution of schools across the city does to and affordability of transportation, health and not optimize the use of existing educational education services is discussed in the following facilities. The khoroo-level household registry section. finds that the current capacity of schools and kindergartens to meet existing demand varies 3.2. Quality of Services Provided widely by district and by khoroos (UB Master Planning Department 2012 and 2014). Map 3.1 This section examines five key services provided shows the total estimated school capacity in each by the UB City: schools and education, health khoroo22. Dark green-shaded khoroos represent services and clinics, social welfare services, street an excess of demand for the available amount of lighting and urban transport service. Evidence and school space, and light green shows khoroos with findings are mainly drawn from studies carried out adequate school space. These areas are found just by World Bank team and consultants, the focus outside of the central city area, for example in groups discussions, and spatial mapping. Chingelei, Sukhbaatar and Bayanzurkh.Orange and red khoroos show that the supply of space i. Education far exceeds the demand. The map also shows that school capacity is sufficient mainly around Most educational facilities in the city are publicly the central city area, but becomes increasingly provided. In both apartment and ger areas, 90 overcrowded in the core areas. By contrast, percent of respondents with school-age children khooros in Bayanzurkh, Songinokhairkhan and reported attendance at a public school (World Nalaikh tend to have an oversupply of space. Bank Survey, 2014). 21 The age range threshold used by khoroo offices and the Education Department for reporting kindergarten may also account for part of the difference. 22 This is estimated by comparing the total number of potential students per khoroo to the total available seats in all of the schools within the khoroo. 15 Map 3.1: School Capacity by Khoroo, 2014 Source: Data from World Bank Survey (2014) While there are fewer schools serving the fringe minutes). Table 3.3 shows that even if children areas of the city compared to the central city areas were to walk 30 minutes each way to school, many due to population density, schools in the fringe of those living in ger areas, especially the fringe areas are also located far from the neighborhoods ger areas, are not able to access a school within a that they serve. There are a number of settlements reasonable distance. For example, a greater share in the far north and west of Songinokhairkhan that of the population of Songinokhairkhan lives more either have no school or which are far outside of a than 30 minutes’ walking distance from a school typical walking distance of 30 minutes (see Maps than those located near a school. By contrast, 3.2 and 3.3 in Annex). The time taken to walk to all residents in Khan Uul are served by a school schools differs considerably for children depending within 30 minutes’ walking time. Kindergarten on where they live. Almost 40 percent of children locations demonstrate the same locational pattern living in ger areas take 30 minutes or longer to carried by schools. The inequality in spatial walk to schools, compared to only 17 percent distribution of schools has real consequence for of apartment area residents; and on average, ger ger area residents in the context of Ulaanbaatar, area children have to walk twice as long as the where access to public services is tied to residence apartment-area children (18 minutes versus 9 within a particular khoroos. 16 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Table 3.3: Population within 40 minute walking distance of schools, by district, 2014 Schools Population within Population outside Percentage outside District 30 min walk of 30 min walk 30 min walk Bayangol 29,346 658 2.2% Bayanzurkh 50,078 315 0.6% Chingeltei 16,689 12,335 73.9% Khan Uul 20,969  -   0.0% Sukhbaatar 19,450 1,694 8.7% Songinokhairkhan 33,094 39,046 118.0% Total 169,626 54048 31.9% Source: Data from World Bank Survey, 2014 Box 3.1: Observations of Bribery to Gain Access to Schools “Even if school is school of one’s residential-administrative district, one has to give gifts and arrange with someone in order to get one’s child study in that school as its capacity is full. Some schools open donation classes and accept kids. You have to give bribes in order to enter school. This is done under the guise of donation. It can’t be called bribery as it is called donation.” Female, central ger area in Sukhbaatar district “One of my friends is a widow with 3 children. She is a resident of 14th khoroo and she tried to enroll her child to school no.35, which refused saying her residency is assigned to school no.49. She explained that her family lives only 5 streets away from School no.35 and her child would have to pass over the mountain to get to school 49. However, the school still didn’t accept. Then, she met with its principal who said that her child would be accepted for enrollment if she gave 50’000 tugrik as a donation to the school. This is very common.” Female, fringe ger area in Chingeltei district “Our residency is assigned to School no.72, which is further away to Belkh so it’s far. School no. 58 is not assigned to our residency so I enrolled my child giving money for donation, as well. I gave 50’000 tugrik” Female, fringe ger area in Sukhbaatar district “Pre-school education is very problematic. There are only 2 kindergartens in our neighborhood, which are not sufficient when we think of the number of pre-school age children. My child stayed 3 years at home. Actually children may enroll a kindergarten at age of 2 but they say that no seat is available and come next year when you try to enroll your child. When you come next year, then they say again - come next year, we don’t have seats available for your child. People stay in queue overnight to enroll their children. A high school friend of mine works in the kindergarten, which is assigned to my residency 17 I learned from my other friends that they gave bribe of 100’000 tugrik to her & kindergarten principal to enroll their children though that kindergarten is not assigned to their residencies. So I called a TV channel and inspectors from Ministry of Education & Municipal Inspectorate. The Inspectors checked children’s documents. The class had 45 children, 23 of whom were from non-assigned residencies. That’s how I managed to enroll my children without giving any money at the age of 4.” Female, central ger area in Bayanzurkh district Source: FGDs (2014). The mismatch of school location and capacity long queues overnight to register their child. Those has serious consequences for access to quality who missed the seating quota have had to resort to education. One of the biggest constraints is bribes and are expected to pay a widely-known set overcrowding in schools and kindergartens in the amount. In other cases, there is a preference among central areas due to unmet demand and an excess families to enroll their children to public schools of classroom seats in fringe areas. Participants from located in the central city, which are perceived to the focus group discussions confirmed the informal be more prestigious. Map 3.1 shows the variation in practices of paying extraordinary fees for otherwise school capacity across the city. It demonstrates that free public education from their own experiences or enrollment in central city schools exceeds capacity experiences of others they knew. In some cases, as in a number of khooros. By contrast, khooros in enrollment is accepted on a first-come, first-serve Bayanzurkh, Songinokhairkhan and Nalaikh tend to basis, some parents have reportedly had to wait in have an oversupply of space. Map 3.4: Distribution of Kindergartens in western Songinokhairkhan, 2014 Source: Data from World Bank Survey (2014) 18 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia ii. Health Most healthcare facilities, and in particular the family clinics, are concentrated in the central Public healthcare services and facilities are city area, posing challenges in access, especially managed by the city government. Funded by the for the disabled and the elderly. Map 3.5 (see state budget, public hospitals23 in UB consist of Annex 2) shows the residential areas in which four categories: 1) district hospitals and health health clinics are located within 30 minute-or- centers24; 2) maternity hospitals25; 3) specialized less walking distance. Similar to the educational health centers26; and 4) family clinics. The family facilitates, the concentration of family clinics in clinics are under the Municipal Health Agency, and around the central city area has left large parts while the other three types of facilities are under of fringe and remote residential areas un-serviced the Ministry of Health. The largest segment (yellow shaded areas are highly concentrated in of coverage is family clinics or household downtown). Table 3.4 below shows the population health centers; and there are 130 such facilities in each district within a 30 minute walking throughout the city. These clinics are mandated to distance of health clinics. It shows that in most provide healthcare services free of charge to the districts, more than one third of the population is residents, temporary and non-residents without located outside of this accessibility radius. discrimination27. There are district hospitals in Bayanzurkh, Khan-Uul, Sukhbaatar, and Songinokhairkhan districts. Table 3.4: Population within 40 minute walking distance of health clinics, by district, 2014 Health Clinics Total Population within Population outside Percentage outside District population 30 min walk of 30 min walk 30 min walk Bayangol 200,162 155,577 44,585 28.7% Bayanzurkh 304,322 276,888 27,434 9.9% Chingeltei 155,858 113,204 42,654 37.7% Khan Uul 131096 92,955 38,141 41.0% Sukhbaatar 127,469 92,478 34,991 37.8% Songinokhairkhan 277,311 203,442 73,869 36.3% Total 1,196,216 934,544 261,674 28.0% Source: MPD 23 The list of all municipal health service providers are available on www.ubhealth.mn 24 The district health centers are outpatient clinics that provide preventive, diagnosis, treatment services, while the district hospitals are in-patient clinics. 25 There are three maternity hospitals, which provide services related to pregnancy, delivery, post-delivery and infants. Pregnancy control services are provided mostly through district health centers. 26 Includes the emergency center, addiction treatment facility, rehabilitation center, dentistry & maxillofacial center and a clinic serving vulnerable groups. 27 According to Government Resolution No. 364 of 2011 on Comprehensive Regulation on Household Health Centers, item 4.1 & 4.3. 19 Box 3.2: Residency permit requirement Constrains Timely Access to Healthcare Services “Family clinics are very bureaucratic. They are supposed to provide primary health services to the permanent as well as temporary residents. But they don’t even measure blood pressure of an elder who is residing temporarily. They just say that you are not from our jurisdiction so take your ID and go. When I bring with me the proof document for my temprorary residence, they don’t accept me.” Male, central ger area in Sukhbaatar district Source: FGDs (2014) Basic health insurance is mandatory and Residents living in the built-up residential (shaded) membership is issued according the khoroo of area nearby the clinic designated for khoroo 28 registration.28 The residency requirement posits would still have to go to their clinic in khoroo 20, that residents use the designated family clinic in which is a 30-minute walk away. Administrative their khoroo, but the clinic may not be the closest boundaries and the residency restriction pose by distance, thus greatly reducing residents’ access an artificial and unnecessary constraint to the to the most conveniently located facilities. As an government commitment in providing accessible example, map 3.6shows the location of clinics in quality healthcare services to its residents, Bayanzurkh district displayed by the yellow circles. especially ger areas. Box 3.3: Inefficient Management at Local Clinics Leads to Long Queues and Significant Wait Time “For medical tests, one has to go to medical center no.15 at 3 am. By going like this, I was able to get in queue for 3 tests. The hospital is locked and people have to stay outside in the queue, otherwise people would claim that you were not in the queue. No numbers are distributed; therefore, people have to go as early as possible to stand in the queue. It is very disorderly. If one arrives at 7 or 8 am, other people would claim they have arrived at 2 and 3 am and would not let anybody in.” Female, central ger area in Bayanzurkhdistrict “I went to family clinic on Monday morning for check-up but was told that appointment numbers were finished. They open at 8 am. Also, one visits district health center in the morning where there’s massive queuing. By 7 am, they say that the check-up appointments are full.” Male, central ger area in Bayanzurkh distritct “To get an appointment, have to go there by 7 am and have check-up. One appointment for one dental check-up of a child. Tomorrow, have to queue to get another appointment again. Have to go there at 6 am and stand in a line and get it, otherwise no appointments.” Female, fringe ger area in Chingeltei district “When I go for check-up, they say that the appointments are full for next 7 days. It’s hard to get appointment. One goes there at 6 am to queue for the appointments but appointments are full for 3 or 4 days. I have no idea why the appointments are full. Last year, i had bleeding and Icouldn’t get a appointment for both check-up and ultrasound scan so Iwent to a private hospital.” Female, fringe ger area in Bayanzurkh district 28 The Law on Health Insurance (2015) provides for both Source: FGDs (2014) mandatory coverage and an optional voluntary plan. The mandatory plan provides coverage for basic in-patient and out-patient services, medicine discounts and maternal care. Formal employers pay half the amount of the premium and unemployed or informally employed workers pay a small monthly premium out of pocket. 20 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia The level of broad-base access to healthcare check-up and tests at district hospitals. Due to service is also impeded by high unmet demand for high demand, temporary residents are deferred in healthcare in certain areas and informal payments favor of formally registered residents, according to receive standard care. Participants from the to participants from a focus group. Long wait time focus group discussions, which represent the and residency requirement often deter people, experiences across all districts, pointed to long especially the poor and elderly residents, from queues, time consuming processes, bureaucratic accessing needed care, as they may lack the time or requirements, and unavailability of beds at district means (e.g. proper paperwork) to obtain treatment. health centers.As there is no system for getting These constraints reduce the overall effectiveness a service ticket number, people are required to of the universal healthcare services that the stand in line for hours to get an appointment for government has committed to provide. Box 3.4: The Poor Are Hardest Hit from Overloading Service “I needed to be admitted to the hospital but had to to wait for about a month in order to stay in hospital for treatment. Hospital which is supposed to provide 10 days of treatment only allows a week of treatment and sends off patient. Poor people are poorly treated like this. Rich people are treated for 2 weeks and given more than 10 injections. Such people with means and wealth and can give things to doctors are provided with high quality treatment and treated for 14 days.” Female, central ger area in Bayanzurkh district “I lost my baby while giving birth for the first time in the Maternity Hospital no1. I heard that pregnant women usually gave 100’000 tugrik for bribe. I didn’t give that money directly so i was neglected. I was in pain continuously for 10 hours and was scolded for screaming.” Female, central ger area in Chingeltei district I spent 10 days to get treatment. There was one guy whose condition worsened and was admitted to intensive care after being sent home twice due to the bed unavailability. Money issuesare explicit… Those with social connections receive treatments while those without social connections are left behind, like people who are always ready to die” Male, fringe ger area in Sukhbaatar district “To get hospitalized, one waits for at least 20 days. [They] say-wait till the beds become available or you can get hospitalized in the corridor. One puts a mattress in the corridor to get hospitalized. It’s difficult to stay in the corridor. I stayed 7 days at home after getting a queue for hospitalization and then I went to the emergency unit for treatments for 12 days. I stayed in the hospital for 11 days as my condition was serious and I was released. People like me can’t get a complete treatment. There’s a severe overcrowding and this happens only in ger areas.” Male, Central ger area in Bayangol district Source: FGDs (2014) The overload in the system also gives way to seen to be much better than at family clinics, opportunities for bribery in exchange for what the need for bribes at district hospitals was also would otherwise be standard services which are higher. Reported bribery takes places in the form supposedly free to the public. Participants from of ‘gifting’ to ‘thank’ the health professionals focus group discussions pointed out that, while for taking care of the patient. The need for the quality of services at district hospitals was using social connections and gifts appears to be 21 common for different procedures or treatments, for medical doctors; MNT 50,000-100,000 for from getting appointments and in-patient care to head of doctors’s team that helps pregnant women surgical and obstetric procedures. Maternal health give birth; MNT 20,000 for nurses; and MNT services were cited as a common circumstance 10,000 for service staff. According to both male for giving money to specialists at each phase of and female respondents from the focus group, the obstetric care, amounts can be significant. Tip lack of such gifts may result in poor treatment or amounts for medical service providers mentioned negligent care (World Bank Focus Groups 2014). during the FGDs included: MNT 5,000 tugrug Box 3.5: Experiences of Bribery in Obtaining Services “One must to have friends and acquaintances at district hospital. I have 2 friends from our province who work there. I call them before I go to the district hospital. I put MNT 5,000 in the pocket of my friend. Then I follow her around in the hospital and able to visit all doctors. This is how I manage everything.” Female, central ger area in Bayanzurkh district “When there are lots of queues, one has to give money. When my wife gave birth, i was told that there were 9 nurses and 3 doctors who should be tipped on that shift. I gave MNT 550’000 tugrik in total. This is Maternal & Children’s State Hospital. One girl who didn’t give anything to medical staffs gave birth before my wife and then stayed in the same room with her. It was hard to look her belly but my wife had only one stitch. So that’s the difference. When i visited my wife at the hospital, i felt like i was at home because i gave money and i was given a room to change my clothes to take food inside. Those, who didn’t give money, ask someone through windows to call their people inside.” Male, central ger area in Bayangol district “Nowadays, bribes are prevalent in every sector. I receive disability pension for lost labor capacity. To extend my pension, i usually give something (e.g. money, sweet or other things). For medical check-up at the district health hospital, i place 5’000 tugrik and a collection of sweets inside my medical book. After receiving small things, [doctors] treat differently, they do check-up very well. In terms of abilities, doctors at district hospitals are better than those at family clinics. Also, i gave 50’000 tugrik to obstetrician and 20’000 tugrik to others when my daughter was giving birth. Before giving the money, the doctor didn’t care her but later started caring. Female, central ger area in Chingeltei district “When a person is sick and ambulance is called, it comes after 2 hours. After getting to the hospital somehow, the doctors are away. Says they are having lunch. Then the child continuously cries. Then doctor came after 5 pm, gave a shot of injection and said to get hospitalized. After having a doctor of my acquaintance to talk over, I was able to get my child hospitalized for 12 days. It’s difficult without a connection.” Male, fringe ger area in Sukhbaatar district Source: FGDs (2014) 22 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Map 3.6: Disparities in access to clinics in Bayanzurkh Source: Data from World Bank Survey (2014) Note: Khoroo residency requirements for clinics result in inefficient service delivery iii. Street Lighting29 and Bayanzurkh 21, 23 and 28, as well as remote district khoroos such as Nalaikh 5 and 6, are Street lighting is a basic municipal service; it is essentially dark. Lack of street lighting in ger areas crucial for enhancing public safety across the city. poses security risk, which has been associated The current costs for provision, operations and with higher vulnerability to petty crime, thefts maintenance is also an important budget item for and increased likelihood of pedestrian accidents at UB Municipality. Most of the densely populated night30. residential areas of the central city area are well provisioned with street lights. However, this is A spatial analysis of street lighting in UB based on not the case in the ger areas, especially those in the location and density of street lights provides peri-urban peripheries of the city. Most middle an estimate of brightness by district (See Map and fringe khoroos have low levels of street light 3.7 in Annex 2 and 3.8 below).31 Given the lower provision. Fringe khoroos such as Sukhbaatar 19 30 For instance, the lack of streetlights, especially on primary roads, prompts drivers to use their high beams at night to Street lighting is one of the key basic municipal services 29 avoid danger such as road curves and potholes. Opposite- that can be objectively observed and compared across side drivers are therefore blinded, creating a very dangerous districts. It is also a service for which financial and road environment for pedestrians and drivers alike. other data were readily available. Spatial analysis using 31 The metric is based on percentage of pixels within each nighttime satellite imagery provide an assessment of khoroo’s residential areas that have no street light. Pixels functional street lights, while users’ experience of the represent light or no light in the residential areas, with a efficiency of the street lighting service was analyzed buffer radius of 35 meters applied to each street, with through World Bank Survey (2014) and focus group the pixel size also being 35 meters. The level of lighting discussions. is calibrated dark, dim, faint, moderately lit, well lit, and 23 density and comparatively recent development maintenance of streetlights in ger versus central of peripheral ger areas, it is expected that these city apartment areas. Sixty-one percent of ger area areas would have comparatively lower overall respondents reported not having any functional brightness than the central core. The brightness streetlights on their street, compared to 16 percent of different khoroos outside of the central area of the respondents in apartment areas. The survey also varies considerably, such as the portion data was further validated by a separate ground- of Bayangol between Songinokhairhan and truthing exercise, which found that many lights Chingeltei, Bayangol khoroo 21, which is are in the state of disrepair. Streetlights are either “moderately lit” borders Songinokhairkhan khoroo broken due to poor installation and weather 31, which is “dark.” Disparities also exist within damage, or from vandalism. A sample of khoroos districts: Chingeltei khoroo 12 is categorized as in six urban districts found that more than 20 “dark,” while every other surrounding khoroos are percent of streetlights (out of a total of 563) are not classified as “moderately lit” or “well lit.” functioning at any given time.32 The variation in brightness in the central city is shown in Map 3.8 Findings from World Bank Survey (2014) below and a city wide view is shown in Annex 2. also reflect disparities in the operations and Map 3.8: Khoroo level map displaying an index of street light provision in Ulaanbaatar Source: Data from World Bank Survey (2014) extremely well-lit (e.g. when more than 93 percent of the pixels have no light, the khoroo is considered dark; when less than 30 percent of the pixels have no street lights, the 32 Surveyors visited the sampled areas before and after the khoroo is considered extremely well-lit). The lesser the city-wide 8:30pm illumination time to determine which access to “light from street lights” within the residential lights turned on and which remained off. The exercise was areas of khoroos, the darker it is. carried out in May 2014. 24 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia The gaps in street lighting coverage illustrates (42 percent of the lights), while older and less the institutional challenges that the city faces. In energy-efficient florescent and incandescent lights particular, it is due in large part to the structure of are in mainly ger areas (74 percent of the lights). service delivery and the way in which streetlights Both UB City and its districts are charged with are operated and maintained. There are four main street lighting provision. As a result, investments types of streetlight (LED, incandescent, fluorescent in the lights as well as their maintenance vary and solar panel); each of which have different according to district priorities and financial and costs, brightness levels, expected service lives, administrative capacities33. Further analysis of the and maintenance requirements. Newer and LED delivery mechanism of street lighting is provided lights are found predominately in central areas in Box 3.6 below. Box 3.6: Street Lighting in Ulaanbaatar: The Case of Fragmentation in Service Delivery Ulaanbaatar’s street lighting service highlights the challenges of overlapping responsibilities across levels of government, and subsequently, fragmented and inadequate service provision. Under the legal mandate, both the City and the districts have responsibility over provision and maintenance of street lighting. The City contracts UB Netgel to provide the service in the central city area, while each district contracts out to a city-owned enterprise to provide coverage in their respective jurisdiction. Such overlapping mandates lead the City and district governments to each developing their own street lighting investment plans and procurement arrangements. In addition, the khoroo leaders are also charged with identifying equipment and maintenance needs, and must submit funding requests to the district or the city each year. As a result, the central city area now has seven different entities involved in street light provision, and the quality of lighting vary widely across districts. The lack of coordination between street light providers, as well as their uneven capacity and contractual agreement with the individual districts, reduces the quality of the service and equity in service provision. With services that often transcend district jurisdictions, optimal efficiency can be achieved from having a regional service provider to oversee the provision, and to ensure quality and adequate, timely and cost-effective maintenance. There are five key advantages to this arrangement. First, the installation and maintenance of streetlights can be consistently provided by a single entity across the network, allowing for potential cross-subsidy across districts. Second, the cost to the provider of a networked service in adding and maintaining an additional light declines as the network expands. Third, the needs assessment for future demand can be still based on inputs from the individual district governments. Fourth, if the service is provided by a single entity or agency, this would allow citizens to easily and directly report servicing and maintenance needs as it arises. Last but not least, given the above reasons, having one single entity for services like street lighting can enhance centralized performance reporting to the city leadership, as well as accountability and quality of services to its citizens. 33 In recent years, the municipal government had made efforts to install more efficient, and in some cases, solar- Source: World Bank staff with inputs powered streetlights. It has worked with donors to direct from MAD (2014) resources toward installing and upgrading public lighting infrastructure, particularly in the ger areas. The Swiss Development Cooperation and the GIZ have supported improvements in street lighting in ger areas. Street lighting is also a key element in the Asia Foundation’s “Manaikhoroo” community mapping program, which focused on mapping the ger areas and which was developed in cooperation with the UB Mayor’s Office. Nonetheless, these efforts have not appeared to reduce the high inequity in lighting between ger areas and the apartments, as well as across khoroos. 25 iv. Public Transit Public transit is a key service in facilitating Furthermore, ger area residents have incomes mobility and accessibility to schools, jobs, and below the city’s average, making the share of commercial centers in the city. It is the most transport expenditures for ger households possibly common mode of transportation in UB city. even greater. This is due in part to the remaining The mode share of commute trips is: public inefficiencies in route planning and integrated transportation (34 percent), walking (31 percent), transit network, which requires commuters to make private car (23 percent), taxi (9 percent), and at least one or more transfers involving formal others (3 percent)34. Transit services are provided buses, informal transport or both. In these cases, by private bus operators, which receive license the lack of a transfer discount, or an integrated for assigned routes. The public transport system fare collection system, can double or triple the cost consists of buses, trolleybuses, and microbuses. of a trip, no matter the distance traveled. These A total of 1,155 buses and trolleybuses service very high share of transport expenditures results 79 core routes along the city’s main corridors and in people being either restricted in their general highest demand areas; and 386 microbuses service mobility if they live in remote areas, or greatly 49 complementary sub-routes of lower demand. constrained in their ability to access jobs that Different routes and sub-routes are integrated with could supplement their household incomes and one another by different bus stops throughout the livelihoods. city. The public transit system concentrates trips within Public transportation provides affordable transit and toward the city center, and to reach schools, options for most residents. There is a flat fare of employment, commercial areas and service MNT 500 (US$ 0.27) charged to adults, and MNT centers, which tend to be clustered in the central 200 (US$ 0.11) for children. Students, people city area, ger residents must continue to travel with disabilities, and the elderly, collectively far to reach their destination. Estimates from an constituting 40% of the ridership, travel for free35. accessibility-modeling tool38 suggest that most Nonetheless, public transportation is still costly to commutes in Ulaanbaatar take almost twice as the poorest residents. Based on assumptions about long by public transport and walking as by car. transit routines and incomes, monthly household Map 3.9 shows the areas of the city that can reach expenditures related to transportation can range the Central Square in an estimated 35-minute39 between 9-18 percent of average city household morning commute trip. It shows the area for public expenditures36, and 24-36 percent of expenditures transport and walking is restricted to the central of poorer households in the peripheral areas37. areas of the city, leaving out the east and west edges of the central city and most peripheral areas. 34 Master Planning Agency, 2020 Master Plan Technical Summary, p. 24. 35 Ibid. district, the average household income is MNT 250,000 36 Assuming per trip cost of MNT 1,000 and MNT 2,000, per month, meaning monthly transport costs could amount and that daily round trips may cost between MNT 2,000 up 24% to 36% of the household income. and MNT 4,000. For a 20-workday month, an individual’s 38 OpenTripPlanner – Analyst (OPTA) is a web based open commuting cost would be between MNT 40,000 and MNT source tool that enables the measurement of access to 80,000 per month. Assuming a very conservative public spatially distributed variables (people, jobs, schools, key transport trip rate of 12 trips per week per household –i.e. locations) via public transport, walking, biking or driving. monthly household transport costs between MNT 60,000 More information and access to the tool available at: and MNT 120,000– transport costs would add up to 9% to http://conveyal.com/blog/2015/01/09/transport-analyst/ 18% of the household income. According to Ulaanbaatar’s (World Bank and Conveyal) Statistics Department, the average household income for 39 OPTA operates with 5-minute intervals, so 35 minutes the city was MNT 652,000 per month for 2012. chosen as proxy to the official average commute in the city 37 Based on a case of a household in khoroo 10 in Khan Uul of 37 minutes. 26 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia In comparison, Map 3.10shows the corresponding comparatively long by international standards area for private cars, which covers the majority for a city of its relatively small population - of the city’s built area with the exception of the approximately 37 minutes40. Due to the low density most remote ger areas. Wealthier residents have urban form, this average commute time is equal more transportation choices, including private to cities that are 10 to 20 times its population automobiles. Poor residents living in fringe and size, such as Bangkok and Manila (See Figure ger areas are unlikely to afford a private vehicle, 3.1).Through a series of short-term plans and but would have the greatest need for an efficient, investments, the road network has been expanded affordable public transportation. incrementally, but often in a piecemeal fashion and is still inadequate in keeping pace with the city’s As a result, the average commute time in UB is rapid expansion. Map 3.9.Areas in Ulaanbaatar reached within a 35-minute trip fromthe Central Square by public Map transport 3.9. and Areas in Ulaanbaatar reached within a 35-minute trip from the walking Central Square by public transport and walking Source: Study team, using OPTA with data provided by Ulaanbaatar and Worldpop Source: Study team, using OPTA with data provided by Ulaanbaatar and Worldpop 40 Urban Services Study Household Survey; Business- Mongolia.com 27 Map Map 3.10.Areas in 3.10. Areas Ulaanbaatar in Ulaanbaatar reached reached within within a 35-minute a 35-minute trip fromthe tripSquare from the Central by private Central Square by private car car Map 3.10.Areas in Ulaanbaatar reached within a 35-minute trip fromthe Central Square by private car Source: Study team, using Source: OPTA Study with team, data using provided OPTA with by Ulaanbaatar data and provided by Worldpop and Worldpop Ulaanbaatar Source: Study team, using OPTA with data provided by Ulaanbaatar and Worldpop Figure 3.1. Peer City Analysis: Average Commute Time vs. Population Figure 3.1. Peer City Analysis: Average Commute Time vs. Population Figure 3.1. Peer City Analysis: Average Commute Time vs. Population Source: Authors using data from Ulaanbaatar, the World Bank‟s Urban Transport Data Analysis Tool, and Appendix World :Bank E in Source (2015). Authors data from using Authors Ulaanbaatar, World Bank‟s Urban the Ulaanbaatar, Transport Data Analysis Tool, and Appendix Source: using data from the World Bank’s Urban Transport E in World Bank (2015). Data Analysis Tool, and Appendix E in World Bank (2015). 30 30 28 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia The public transit system in UB is overseen and roads that provide inter-district connectivity42. Map regulated by the Department of Transport and 3.11 below demonstrates how the layout of paved Infrastructure. While the majority of service roads in the city reflects its two distinct urban form providers are private bus and taxi companies, the patterns. In the central area, there is a structured City managed the licensing, pricing and route network of paved streets, marked by a clear grid schedules. Ulaanbaatar has a good foundation for with a noticeable hierarchy. In the ger areas, paved traffic management seen at the existing Traffic streets are limited, a few primary roads reach out Control Center and recent innovations in junction to the periphery, but much of secondary or local design, but the effectiveness of this cannot always access roads – up to358 km of local roads, or 57 be seen on-street. Frequent congestion results percent of the total length of local road network in from unclear functional road hierarchy, poor Ulaanbaatar – remain unpaved43. (MAD 2014) connectivity of network, and high number of vehicles in circulation. Street design is relatively Furthermore, operating bus service to peripheral inefficient and unsafe for all users, as reflected in ger areas is very costly and many areas are thus traffic collision and fatality rates. underserved, which increases the number of transfers and overall trip times44. The situation Initial assessments of the city’s transport system is worsened by the lack of information about bus suggest several interrelated challenges41. Apart routes and schedules at bus stops in ger areas, from the size and form of street networks, which in effect leads to even longer wait times and the coverage and quality of the transit service overall low service quality due to irregular arrivals. is constrained by current regulatory and This encourages the use of informal transit options, administrative structure that oversees route which falls outside of the regulatory purview of the planning, ticketing and fares, and oversight of city. bus operators. First, Ulaanbaatar’s road network appears to lack necessary secondary and feeder 42 For example, a preferred sequential distribution of road types could be: 15% primary, 25% secondary, 60% local, where each road class has a greater share of the total road area. This contrasts with UB, where primary and secondary roads occupy a nearly equivalent share of total space. 43 Capital City Master Planning Agency, “Ulaanbaatar 2020 This analysis draws heavily from a parallel study, World 41 Master Plan and Development Approaches for 2030: Bank. 2015. Ulaanbaatar: Sustainable Urban Transport: Technical Summary” (Ulaanbaatar, 2014). Integrated Review of Urban Transport in Ulaanbaatar, 44 The longer the route, the higher the operational costs (fuel, Washington, DC: World Bank. labor, etc.). 29 Map 3.11. Ulaanbaatar's paved street network Source: Study team with data provided by Ulaanbaatar Department of Transport Second, the lack of route planning negatively areas where service is the worst, bus stops lack impacts the revenues that bus companies generate, schedule, stop or route information. and therefore the quality of service provided. High demand corridors are burdened by a myriad Third, there are 21 companies licensed to of overlapping services that create unnecessary operate in the city according to assigned congestion and add operational inefficiencies. Due routes and based on a fare quota system45. to the overlapping, the revenues from high demand The fare quota system has been designed corridors are split between various companies, to discourage competition among different making it harder to leverage and cross-subsidize in support of low demand routes. Operators on low demand routes, because of the lack the ridership 45 Companies receive a quota of tickets each month based on and income, tend to provide very low quality of ridership estimates from the Transport Department. When a company sells all of the assigned tickets, it is expected to service and typically operate at a loss. In the ger cease operations until the start of the next month. 30 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia companies, though there appear to be no effective meet the specific needs and cost restrictions of measures to ensure compliance46. Furthermore, their trips. UB City provides significant subsidies to bus companies both in kind and in cash through soft loans for vehicle purchases, fuel discount, and v. Social Welfare Services annual transfers to repay for the fully subsidized travel of students, the elderly and people with The social welfare system of Mongolia is complex disabilities. However, the city has no effective and composed of various welfare-related benefits, mechanism to estimate the actual number of services and assistance aimed at supporting the subsidized passengers that ride on each route any most vulnerable groups49. The system is governed given day. Instead, subsidy transfers to companies by the package law on social welfare, which are calculated under the assumption that every consists of the Social Welfare Law (SWL), Law eligible person makes two trips every day, and on Social Protection for Senior Citizens (LSPSC) then the sum distributed proportionally among and Law on Persons with Disability (LPD), and companies by the routes they serve. As a result, supporting legal acts. There are a total of 35 while UB is unable to calculate the full benefits welfare benefits and services currently available to citizens of its subsidies, these transfers are for the eligible people and 11 of these were likely to exceed the amount consumed by target newly introduced with the latest SWL50. The new populations; effectively becoming an additional welfare benefits and services include five types of subsidy to the bus operators47. livelihood support allowances, three community based services, and three social development Finally, given the inefficiencies in public services. transportation service, residents have turned to informal transit options. Fares for unregulated Prior to 2012, the municipal administration microbuses or regular cars vary from MNT 700 was only the implementer of social welfare to 1,00048 – a price point that reflects an acute service provision, with the financing transferred awareness of people’s need to transfer beyond to the city from the state budget. However, the regular bus services, and the cost that this with the introduction of Article 58 of revised implies. Routes are flexible rather than fixed, Budget Law, UB City was assigned with a providing services to key employment hubs or new responsibility to finance the social welfare areas of interest, while avoiding congestion of services out of its own budget51. Since FY2013, the CBD. Shared informal cabs can be used to UB City has been financing the provision of all reach bus stops so that riders can reach their final social welfare benefits and services stipulated destination. Unbound by ticket quotas or fixed by the aforementioned package law, except routes, microbuses and cabs can accommodate two entitlements (namely, allowance for senior more realistic price and destination demand. In all, citizens with honorary titles and allowance for informal services enrich the possibilities available mothers with honorary medals). The recurring to the poor, and provide additional travel options expenditures, such as salaries of the local service administrator, however, continue to be financed by 46 The clustering of routes in the central city area is also motivated by driver incentives. In order to meet their 49 According to the Guideline on Legal Acts on Social rent payments, drivers may operate outside of mandated Welfare, there are total 67 welfare benefits, services and schedules and routes as they look to find more passengers assistance available to different target groups. and collect unregulated fare revenue. 50 Based on review of SWL of 2012 and SWL of 2008. 47 However, in spite of all these different channels of Other estimates place the number of welfare benefits and support, bus companies still report total industry losses of services at 70 or more (see World Bank 2015c) MNT 17 billion (US$ 9 million) per year. 51 The BL of 2012 (Article 58.1.4) states that “Capital city 48 MAD Investment Solutions. 2014. Service Delivery in shall implement social care and welfare services with its Ulaanbaatar, p. 20. budget among other functions.” 31 state transfer. However, the economic downturn support of varying monetary value for livelihood has constrained the city’s budget and as of 2015 is also extended to under16 year-old children they have adjusted expenditure priorities on staff needing permanent care, single-headed family, and and overhead costs. pregnant women and mothers with infants55. Social Welfare Benefits Social welfare services There are two types of welfare benefits according Social welfare services are divided into to SWL of 2012: social welfare pensions and community-based services and specialized care allowances. For social welfare pensions, target services. Community-based services include skills groups include the elders that are ineligible for trainings for confidence building, self-reliance, social insurance pension, persons with disability, working skills and talent development, counseling, children who lost their guardians, and both female rehabilitation, temporary accommodation and and male heads of single-headed families. The care, day care service, home-based care and monthly pension amount is MNT 115,000 (USD service, support to homeless citizens and their 59)52. For social welfare allowances, a monthly family members, help with civil registration, allowance of MNT 48,000 (USD 24.67) is given and accommodation in a temporary shelter. to:1) care-taker of double orphans, 2) children who Support is also available for individuals and are victims of physical and psychological violence; households, who require welfare assistance to 3) elderly and disabled persons without children or form a community group or implement an income- relatives to take care of them; and 4) the elderly, generation project56. Typically, these community- disabled children, or disabled persons who need based services are delivered to the elders, the permanent hospital care53. disabled, children in difficult conditions57, victims of violence, persons returning from correctional Social welfare allowances are also provided for service, alcohol or drug addicts, persons with an emergency and livelihood support. A one-time incurable disease, the homeless58, new-incoming monetary aid of MNT 1,200,000 (USD 617) for 55 A livelihood support of MNT 60,000 (USD 31) is granted emergency support is provided for a household monthly to a child under 16 years old who need permanent that may have become homeless, whose home care and once a quarter to a person aged 16 years and has become unsuitable for living, or when a more who need permanent care.A single head of family with 3 or more children under age of 14 and a mother person has lost their livelihood due to a sudden with the state honorary medal may annually receive the accident, disaster or unforeseen other reason54. allowances of MNT 120,000 (USD62) and MNT 100,000 As for livelihood support, a one-time monetary (USD 51.5) or MNT 200,000 (USD 103), respectively while a pregnant woman and mother with infants is allowance staring from MNT 1,000,000 (USD 514) provided with monthly allowance of MNT 40,000 (USD is available to caretakers of twins or triplets. The 20.5) starting from the 5th month of pregnancy for 12 months. 52 Exchange rate: USD 1= MNT 1945, from Central Bank 56 These services are articulated in detail in Articles 17-22 in of Mongolia of 31 January 2015. These amounts were Chapter 4 & 5 of SWL. documented during the survey period in 2014 and may 57 According to an unofficial translation of the Article 15.2 have changed since. of the Law on Protection of Children’s Right, a child in 53 Person requiring permanent care is defined in the SWL difficult situation is defined as “a child who is double (Article 3.16) as “individual have no capacity to carry out orphan, disabled, extreme poor, ownerless or a child who daily routine life independently or without other’s help, has been exposed to mental and physical damages due to or individual with mental development disorder or with pornography, violence or assault or child who is engaged serious mental mischief”. in labor dangerous to his or her well-being and life.” 54 The same amount of one-time assistance is also extended 58 The Annex 1 of Social Protection Labor Minister Decree to an 18-24 year-old person, who became a double orphan A/91 of 2012 enacted the procedure on provision of before reaching the age of 18. A homeless person who was community based welfare services. For homeless and released from prison, and a homeless person or household wandering household or person to be included in the may also receive the same aid. trainings for confidence building, self-reliance, working 32 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia migrants, and single-headed families. With Welfare departments also expressed concern regard to specialized care services, the elders, the over the fact that some of the welfare payments disabled, and children living in a difficult condition were made to all qualified families, regardless of aged up to 18 are provided with institutional care their socioeconomic level instead of targeting the services. Food vouchers are provided for people economically vulnerable segments of the city. For whose living standard is lower than the specified instance, the welfare pension for the elders is based threshold set by the Ministry of Social Welfare. on age cut-off rather than the recipient’s income level and associated need for additional support. In Currently the social welfare benefits and services other words, it is possible for people with sufficient (expect food stamps) are determined on the financial means to receive state support, while basis of target groups specified by the SWL of others who may be under severe financial strain Mongolia instead of on an economic basis. The are not qualified, or receive insufficient support. law also permits UB no authority to change An income-tested approach may allow the city to or modify the targeting mechanism to reach direct resources toward assisting the urban poor, beneficiaries. Without doubt, these benefits and instead of a one-size-fits-all model of distributing services improve the living conditions of families welfare benefits. that fall into the vulnerability categories specified the law. For example, a Social Welfare Service Another issue raised during our interviews was the officer in Bayangol district interviewed for this impracticality of some of the key provisions of the report highlighted the case a family of six living SWL. For example, one target group of the welfare in Bayangol district receiving disability and child pension is female single heads of households that benefits in addition to food vouchers, which are are 45 years or older (50 for males), and have four crucial in allowing the family to meet its basic or more children under the age of 18.According to needs. the officials in the Social Welfare Service Office in Songinokhairkhan district, only one person With regards to the quality of administration was qualified to receive this pension as of July of these welfare services, the district Social 2014, even though official district statistics reports Welfare office staff interviewed in Bayangol 3,315 single-parent families living in the district60. and Songinokhairkhan emphasized considerable This demonstrates that the legal basis for welfare constraints to providing support to vulnerable benefits and services needs to be reexamined to individuals and households, particularly due to the increase the efficiency of social welfare funds and fact that benefits and services are not linked with coverage of the most needy, vulnerable groups. income levels of beneficiaries. The group-based eligibility requirements for beneficiaries leave no The chapter has shown how the quality and room for people in actual need of welfare due to type of services vary according to location more monetary deprivation. For example, the Social so than income. This is due in part because of Welfare Service Office of Bayangol district has a the low density form of the city which makes list of households (which has 60 as of 2014) that it expensive to provide fixed location services are living in extreme poverty, but are not qualified stairs of apartments and cleaning apartments, whom the for any welfare support59. The staff of Social officers felt should be a welfare target group in itself but they are not included in the target groups stipulated skills and talent development, an assessment of situation in the law. The social welfare office currently registers and reference document by a professional social worker, these people as the residents of door number zero of an which examines and identifies the homeless and apartment and provides supports and services if they wandering situation, is required. qualify for any of them. 59 Based on the interview with the officials from Social 60 Based on the interview with an official in Social welfare welfare service office in Bayangol district. Another service office of Songinokhairkhan district who also example mentioned was that of the ‘guards’ living under shared a copy of proposals for amending the SWL. 33 (such as schools and hospitals) to areas where providers reduces the quality of coverage because the population is low and widely dispersed. areas of need are poorly identified and investments Networked or labor-intensive services such as are mismatched with resident needs. The next street lighting or waste pick up are more costly section will examine the implications of this to provide the same level of coverage that denser mismatch, particularly how current institutional areas enjoy. However, these spatial disparities are and administrative structures limit the participation also due to weaknesses in planning and financing and feedback of residents in demanding service the provision and maintenance of these services. coverage and improvements and how they invite The lack of coordinated planning between service service providers to take advantage of residents through bribery. 34 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia 4.0 GOVERNANCE FRAMEWORK AND CONSTRAINTS TOSERVICE DELIVERY T his section seeks to identify key political economy factors and constraints that have and can undermine government accountability there are municipal subdistricts or khoroos, of which there are 152 in the city total and are the municipal counter part of provincial subdistricts and regulatory effectiveness in service delivery or bags. Below the khoroo level are micro-districts in Ulaanbaatar61. The framework for analysis, (kheseg) of which there are about 1168 (they do illustrated in Figure 4.1, examines the key not have an official designation), though they do actors and stakeholders, relations of power, and not have any officially designated administrative accountability for service delivery. In the context authority. See Table 4.1 of UB city, three key constraints affecting service delivery are identified. Among the key constraints affecting service delivery are: first, while there has been significant The city of Ulaanbaatar is administered through a political commitments and concrete measures complex structure comprised of 35 agencies and aimed at increasing government responsiveness 79 city-owned enterprises overseen by a mayor, and citizen engagement, there are concerns six vice mayors, and a 45 member city council. that the voice and representation of the broad UB functions as a distinct administrative entity constituencies, especially among the poorest as described in the 2006 Law on Administrative and most vulnerable, has not been reflected in and Territorial Units and Governance which the decision-making process in service delivery. designates it as the Capital City, which provides Second, regulatory effectiveness over service administrative functions roughly equivalent to a quality – the compact between the state and the province62. The city is divided into nine municipal service providers (most of whom are MOEs) – districts (two of which, Baganuur and Nalaikh, has been largely undermined by the lack of a are in the process of becoming satellite cities clear accountability arrangement between the after a referendum in 2015).), which are second service providers vis-à-vis the state. There is a level administrative authorities similar to districts gap in understanding how MOEs are contracted, (soums) found in each provinces which have their performance agreement is overseen, and some budgetary autonomy, have local offices and their fiscal impact (such as the debts they may are overseen by elected councils comprised of 35 accrue) on the municipal budget measured and members each63. Within each municipal district, reported (World Bank 2014b)64. There is no clear performance indicator for service providers 61 The assessment is based on the analytical framework outlined in the 2004 World Development Report, Making to ensure that service standards, in terms of Service Work for Poor People. 62 There are 21 provinces in Mongolia population above 180’000. 63 LATUG sets the number of district council members This was a key finding in the Ulaanbaatar Financial Self- 64 depending on district population (Article 10.4): 17 Assessment (2014) and the City Finances of Ulaanbaatar members for population up to 20’000; 25 members for (2013) studies, respectively. Data limitations preclude a population between 20’000-80’000; 35 members for more detailed discussion of the types and legal structures population between 80’000-180’000; and 41 members for of MOEs 35 investment efficiency, maintenance and quality, are Once established, citizens and interest groups may met. Third, as a result of the absence of direct and provide direct feedback to service providers about open linkage between service providers and users, the quality of service provision. decisions over service provision, spending and investment do not appear to be based on evidence There are of course a number of variables that may of actual needs and demand. The high degree of affect how this framework operates. For example, fragmentation in service provision across districts, citizens and service user constituent groups may particularly in network services, such as street exclude the needs of the poor who lack resources lighting and transportation, manifests the limited to organize and exert pressure on politicians and capacity in holding MOEs and service providers service providers in the same way that wealthier to account. This results in the poor maintenance of groups can. Furthermore, politicians often have a public services. number of competing service delivery priorities, and may lack the tools or systems to effectively Inclusive and responsive service delivery occurs gauge needs and priorities for different groups through a cyclical coordination between the that need services. In UB for example, the legal government, service providers and service users. structure and origins as well as the reporting It relies on a continuous flow of activities and arrangements of many of the city’s MOEs are responses between each of these stakeholder not clear, which has made it difficult for the city groups, as summarized in Figure 4.1 below. to assess expenditures relative to performance65. Citizens and service users, though coalitions and Also, service providers may have poor capacity interests groups, can exert demands - “voice” - to or performance incentives and may not have any elected officials and policymakers for the type and channels to obtain timely feedback to improve the form of services they need. quality and operation of their activities. Government officials respond to this by developing service provision arrangements with providers (such as public sector organizations, the private sector, PPPs, etc) which in turn respond to citizens’ needs. 65 For example, Law on State and Local Properties (1996) permits the state, city and districts to form publicly- owned enterprises that can be funded through budgets or through self-finance. UB can create city-owned enterprises and city-owned enterprises with commercial activities. An example of the former would be the UB Design Institute which with support from the city budget provides mapping and geodetic services to the city and other agencies, while the latter would include UB Netgel, a utility. Similarly districts can set up the same types of entities. An example of a locally-owned (budget funded) enterprise is the Bayanzurkh Shijir Resort for elderly and disabled people, while a locally-owned enterprise with commercial activities (self-financing) would include entities established for road cleaning and waste removal. A more comprehensive assessment of these enterprises, their budget needs, revenue generation streams and operational capacities needs to be undertaken to better understand their role as service providers on behalf of the city. 36 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Figure 4.1: Governance Framework for Service Delivery Source: World Development Report 2004, 49. 4.1. Governance of Service Delivery in UB There have been significant attempts to increase Mongolia explicitly states that local governments clarity in assigning roles and responsibilities for share authority with the central government in expenditures across levels of government. The functions such as health, education, social security, PSMFL in 2002 assigned the provision of key sanitation, energy supply, transportation road social services (education, health care, culture, building, communication, parks, and public order labor, social welfare, and social security) to the and safety. The 2011 Budget Law stipulates the central government66, but stressed that some of operation and maintenance of high voltage and these could be delegated to local governments electricity lines by the UB government, as well as with financing from the state budget. These the establishment of network infrastructure such as responsibilities are carried out through contractual water supply, sewerage, road, and transportation. arrangements between local governments and Table 4.1 provides a snapshot of the service line ministries. The 2006 Law on Territorial and assignments between levels of government. Administrative Units and Governance (LATUG) of Financed at the national level, these expenditures enhance 66 economic efficiency and inter-jurisdictional equity. 37 Table 4.1: Assignment of Municipal Services by Levels of Governments Types of Ulaanbaatar City District services Admin Capital city management District management Admin/ Urban planning, construction and Infrastructure establishing new infrastructure Capital maintenance of construction and buildings owned by capital city, Infrastructure establishing new property and making investments • Within the territory of districts, utility services for public areas, public hygiene, street lighting, cleaning and waste removal. Utility services for public areas, • Recurrent maintenance of lighting in Infrastructure landscaping, public hygiene, street public areas within the district territory. lighting, cleaning and waste removal • District landscaping, and development and maintenance of sidewalks, recreational areas and children’s playgrounds. Establishing water supply, sewerage and Infrastructure drainage systems Infrastructure/ Housing and public utility services Social Infrastructure Road protection Infrastructure Public transport services Establishing large-scale roads, bridges Infrastructure and their lighting, traffic lights and other respective construction Operation and maintenance of high voltage and electricity lines and sub- Infrastructure stations and other activities to ensure normal functioning Social care and welfare services Social Social care and welfare services subsequent to the discretion of district governors Environmental protection and Protection of nature and the environment Social rehabilitation within the district territory Implementing programs and measures to Social support employment and alleviate poverty Fight of infectious livestock and animal Promotion of intensified raising of Economic diseases, pest eradication and control livestock Development of small and medium-sized Economic enterprises Economic Pasture management Other Other functions specified in law Other functions specified in law Source: World Bank staff adaptation from 2011 Budget Law. 38 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia As a result of various decentralization reforms representation and engagement. UB residents can and competition between city departments and vote for their representatives at multiple levels line ministries, functions and administrative of government (See Table 4.2). They have the jurisdictions can be unclear or duplicative. For de jure power to vote a council chairman, or a example, Table 4.1 shows the responsibilities khoroo governor, out of office based on their of the Capital City and the Districts in service report and performance. Furthermore, residents provision; Districts are charged with supporting can also express concerns and demand for more livestock production while the Capital City and better services through participation in the is tasked with both pasture management and Citizen’s Public Meetings at the district and sub- minimizing the health risks the animals present. district (khoroo) levels, or meetings with the This assignment gives partial authority to each micro-district (kheseg) leaders. The 2006 Law entity in ways that inhibit coordination and may on Administrative and Territorial Units and their provide conflicting incentives to each entity. Governance (LATUG) prescribes that, for each Another example is the UB Streets Project khoroo, there must be three public sessions open implemented by the Ministry of Economic to all eligible voters every year. For a session to be Development, a national level authority. The considered effective, there must be the presence of a project aims to widen existing streets, create others representative for each 20-30 households. The Law through compulsory land acquisition and improve also empowers the citizen engagement by letting the circulation through a number of intersections. residents directly influence the city’s affairs. By law However, it is not clear what involvement if any (Article 17.1), in addition to the power by majority the city’s Planning or Transportation Departments to elect and dismiss council chairmen and khoroo have in project preparation or if there will be governors, they can also provide collective inputs budget support for the city and districts to maintain on: temporarily exempting the households from the new roads and equipment. tax duties, proper utilization of particular natural resources within the jurisdiction, and proposal to UB City has a broad-based framework for citizen assign public awards toward certain households. Table 4.2: Municipal Administrative Levels and Citizen Representations in Ulaanbaatar Average Number Channels/ Population / Elected / Level of Key functions Structure of citizen representative appointed entities representation (No of rep.) Mayor, Citizen Repre- Mayor ap- 17 core urban services, Capital sentative Council (Cit- pointed, 1 28,158 (45) budgeting, planning, City izen’s Representative Council elect- maintenance Khural) ed Governor, District Governor ap- Düüregs Maintenance duties, 9 4,294 (295) Council, (Citizen’s pointed, Coun- (districts) revenue collection Representative Khural) cil elected Khoroo 152 Registration, voting (sub- 8,336 (152) Governor Appointed administration district) Kheseg Volunteer, Outreach, information (micro- ~1168 1,085 (1,168) Leader Self- sharing district) nominated Source: World Bank staff compilation from the websites for UB Mayor’s Office, UB City Council, and nine districts, as well as the UB community maps. UB population=1,267,024 (NSO 2013). 39 In spite of the city’s attempts to introduce such meetings. mechanisms to enhance public participation in local decision-making processes, broad-based Second, FGD participants reported that authorities participation and engagement remain limited. The didn’t treat the citizens’ meetings with adequate focus group discussions (FGDs) on the quality seriousness or sincerity. For example, participants and ease of access to a range of municipal services identified the issue of holding citizens’ meetings point to three major hindrance to the ability of during working hours, which significantly reduces citizens to provide feedbacks towards decisions the ability for working residents to participate. related to the public services they receive. Third, there is a perception among FGD First, there appears to be a real disconnect participants that only influential members among between the government representation that the constituents are allowed to speak up during the takes in feedback from residents, and those with meetings. The fear of raising collective concern the political mandate to effect concrete change. and of retribution from khoroo officials, especially Mostly, the authority present at the citizens’ among low-income constituents, prevents people meetings are seen as conduits of information to from actively voicing genuine concerns. This is higher administrations. Focus group participants known in Mongolian as the bureaucracy grip, or had considerable doubt about the effectiveness of “засгийн зуулт.” See Box 4.1 below. Box 4.1: Barriers to Genuine Voice and Representation “It is not our matter. Only the personal connections of the khoroo governor participate in the meeting. They just report false figures and that’s all. Sometimes they postpone because the attendance is small, but next time they say the meeting had already been held.” Male, Fringe ger area, Songinokhairkhan district “They have a list of all the households with the marks of their party membership. For example: if the khoroo employee is a member of one party, he won’t help the household, which is marked as the member of another party.” Male, Fringe ger area, Chingeltei district “People refrain from going to khoroo to present common problems. They say later, later as they are afraid of getting trapped in bureaucracy grip. . They remember that you were complaining before. When you solicit something at khoroo office later, they tell you to go district [office], which then tells you to go back to khoroo office, in this way you are trapped in the bureaucracy grip.” Male, Fringe ger area, Songinokhairkhan district Source: FGDs (2014) The City’s online and call system, known as “UB middle-tier ger, and fringe ger, reported being is Listening to You” (“Улаанбаатар сонсож unaware of or never using the service. Some байна”), has experienced low participation confused the city’s call system for complaints and limited familiarity among the constituents. and grievances with the government call center Naturally, this would tend to cater to middle- and number 11-11. This can all be due to the lack of higher-income residents who have access to the information dissemination of the city’s available telephone and the internet. But FGD participants services to citizens. from all groups, namely from the apartment, 40 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia UB City aimed to enhance resident participation 2012 Budget Law (Art. 63.1) requires that the local in local budgeting by allowing them to provide budgeting process include public surveys to form direct inputs into the Local Development Fund the basis for the prioritization of capital programs (LDF), a formula-based intergovernmental and projects to be financed by the LDF. Such transfer to sub national governments that is used to surveys were expected to identify the needs and finance selected services and small infrastructure preferences of the residents in jurisdictions where investments based on a participatory model. The investments are made. See Box 4.2 below. Box 4.2: Barriers to Genuine Voice and Representation (con’t) “We hear that meetings were held but the allocated budget for our khoroo does not go to us but to governor’s people.” Male, Fringe ger area, Songinokhairkhan district “I attend. The meeting is held at school. Attendance rate is very low. Some people have work so most don’t come. It’s free to express one’s opinion and opinions are recorded. In that meeting, people who are disgruntled are present.” Male, Central ger area, Chingeltei district “Local communities are given a power. Governor does not know about that budget. The Citizens’ Public Meeting decides on that. When I go there to attend, there is no one I know. People there talk about the parties. Not interesting. I think the opportunities to express one’s opinion freely there is poor. When I observe usually elders following some party attend and have conflicts.” Female, Central ger area, Chingeltei district Source: World Bank FGDs (2014) The management of public surveys on LDF For those who participated in the LDF surveys, however highlights the institutionalized barriers the prevailing observations are that close circles in incorporating residents’ inputs into the city’s of khoroo governors decided on the budget-related decision-making in an inclusive manner. After two matters, and that “influential people” drove much cycles of LDF have been conducted at the khoroo of the decisions in the same way they did at the level, two independent studies – one by the Swiss Citizens’ Public Meetings. Altogether, these Agency for Development and Cooperation and constraints have significantly curtailed the space one by the World Bank – have shown that there is and incentives for residents to actively provide still limited knowledge among the studied groups inputs in decision-making and budget allocation about the purpose and significance of the LDF. toward services that best match their needs. 41 4.2. Constraints to Service Delivery i. Accountability of Service Providers Ulaanbaatar City has 700 legal entities, as well as Once they are established, it is politically difficult municipal-owned enterprises (MOEs), charged to abolish them and fire their staff. There is with administering various public services and a perception that MOEs are created and used city-owned properties67. The municipal services as a means to circumvent existing municipal provided by MOEs range from core services such administrative arrangements68. as hospitals, libraries and museums, to public awareness and information campaigns, and food It is also unclear how the quality of services and furniture production. provided by MOEs is validated. There is no public guideline to set performance and reporting The proliferation of municipal-owned enterprises standards for MOEs69. Voice and representation in UB City could undermine accountability of the residents will be increasingly important in and budgetary flexibility at local levels, as well allowing UB City to identify and respond to the as responsiveness to voters. The large number growing demand for municipal public services and of municipal-owned enterprises introduces their effective governance. coordination challenges across the services provided, as well as huge budget fragmentation. 68 For example, the Mayor’s Office has established eight district-level public outreach and engagement offices designated as MOEs. This duplicates and competes with the purview of district governors. 69 However, the city does internally review contracts it holds with these entities through an annual working group 67 MOEs play large role in providing municipal services meeting which based on meeting performance targets. The through contractual agreement and output purchase working group also sets performance targets for the next agreement. World Bank 2012, p. 9. year. 42 agencies Figure 4.3: MunicipalFigure and 4.2: budgeted Municipal agencies under entities and Vice Mayors budgeted entities &under other Vice level officials high Mayors & other high level officials CAPITAL CITY COUNCIL CAPITAL CITY MAYOR & GOVERNOR OF UB VICE MAYOR VICE MAYOR GENERAL ARCHITECT CHIEF OF THE VICE MAYOR VICE MAYOR VICE MAYOR VICE MAYOR FOR URBAN FOR ECOLOGY & OF UB & DIRECTOR OF MAYOR’S FOR ECONOMY FOR TRANSPORT & FOR SOCIAL FOR SOCIAL DEVELOPMENT GREEN MASTER PLANNING OFFICE & FINANCE INFRASTRUCTURE DEVELOPMENT PROTECTION &INVESTMENT DEVELOPMENT AGENCY 1. Economic 1. Ger Area 1. Tourism Board 1. Labor Agency 1. Air Quality Agency 1. Road Agency 1. Master Planning 1. Agency for Development Development 2. Physical Training & 2. Social Welfare 2. Agency for 2. Transportation Agency Archive Agency Agency Sports Bureau Agency Environment & Agency 3. Education Agency 3. Social Insurance 2. Internal Audit 2. Taxation 2. Ger Area Green Development Agency 4. Arts & Cultural Agency 3. Agency for Industry Agency Housing Project 3. Specialized Agency 4. Agency for Child & Agriculture 3. Procurement 3. Ger Area Inspection Agency 5. Health Agency ren & Family 4. Veterinary Agency Agency Development 4. Emergency 6. UB Ensemble Development 4. Statistical Investment Management 7. Mongolian Children’s 5. Unur Center for Agency Support Program Agency Palace Children & Family 5. Property Relations 8. Children’s Crafting Development Agency Center 6. Elders’ Committee 6. Agency for 9. UB City Museum Information 10. UB City Library Technology 11. Maternity Hospital 1 7. Registration Office 12. Maternity Hospital 2 8. Agency for 13. Maternity hospital 3 Common Services 14. Emergency Hospital 9. Police Department 15. Dentistry & 10.Court Service Maxillofacial Center Agency 16. Enerel Hospital 11. Elderly Town 17. Narcotics Hospital 12.Traffic Police 18. Central Cultural Palace Source: UB Mayor’s office- Strategy, Policy & Planning Department Source: UB Mayor’s office- Strategy, Policy & Planning Department 43 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia 9 ii. Administrative procedures benefits and assistances, including employment support and new skills trainings, are tied to The administrative procedures for applying for residency status and provided at the respective social services and welfare benefits requires khoroos or district facilities. Lack of understanding multi-stage steps. This starts with a visit to the of formal procedures, or lengthy administrative local khoroo office to obtain required information requirements that require time off work, has on specific services, and verify information on resulted in denied access, loss of wages and even residency, income and household composition other economic costs, such as the inability to with the staff at the facilities. The khoroo offices use registration and residency documentation as play a central role in the interaction between UB guarantee for a loan. Not having UB registration residents and the municipal service administrators leaves families in a precarious situation, for or facilitators. Applications along with sufficient instance, when a family member falls sick and supporting paperwork have to be processed at is unable to access healthcare services70. The the District Social Welfare office. There are World Bank qualitative study also found cases presently no mechanisms to resolve social welfare where families had lost their documents during requests and claims at khoroo offices. Incomplete the migration process, or the documents had been applications get sent back, causing time and cost destroyed in a fire or stolen along with other delays for applicants. belongings, without getting the needed assistance to reapply for them. Another type of restrictions Interviews were carried out to understand the that, while being well-intentioned for all users’ experiences at social welfare facilities, administrative purposes, impedes residents’ access which includes interviews with the district services to basic services. This refers to requirement for and welfare administrators (MAD, 2014). The UB residents to access services in their designated service administrators pointed out to the lack of khoroos. The regulation indeed creates superficial a common platform to exchange data between barriers to accessing services that have been different government offices. For instance, social thoroughly articulated in the previous chapter. welfare and service administrators are not able to access the Civil Database to verify particular iii. Public Awareness information about the applicant, resulting in increased burden of multiple visits to various One key factor of effective service provision offices to obtain necessary documents for their is raising awareness among residents and users application. On the service providers’ side, the about their entitlements. Currently, information lack of common information exchange platform dissemination about social services and welfare between social welfare offices and civil registration authorities means outdated profiles of service 70 A study conducted in fringe ger areas of Ulaanbaatar in recipients, resulting the inefficiencies, wastage and 2012 highlighted the case of a mother who was unable to register her daughter with disabilities after moving leakage of funds, and leading to instances in which to Ulaanbaatar because she had deposited the daughter’s individuals or households continued to receive the identity card at the pawn shop in Nalaikh, and was benefits even when they were no longer qualified. not able to repurchase it before the family moved to Ulaanbaatar. As a result, the daughter was not entitled to receive social benefits, as she could not be registered in While there has been strong waves of rural- Ulaanbaatar without the supporting identity document. urban migration in the past few years, the Even though the family would be eligible to apply for a disability grant in this case, the family is unable to access administrative procedures to integrate incoming the sufficient funds to care for the daughter due to the lack residents into urban life have not kept up. Access of UB registration. (Willach. S. 2012. Behind the Khashaa to health services, public school and kindergarten Fence – Neighborly Relations, Community and Social enrollments, land titling, and various welfare Networks in the Ger Districts of Ulaanbaatar. Masters Thesis. Humboldt University, Berlin) 44 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia benefits, and the processes to obtain them, was launched in 2007. The OSS service centers remain fragmented and inefficient. Service users allow applicants to receive a range of public and interviewed cited the absence of marketing administrative services under one roof with the campaigns as one of the important reforms needed main objective of streamlining the processes and to increase the efficacy of welfare services - second procedures in the provision of public services. only to suggestions to increase the amount of Observation of the OSS operations were carried welfare being provided (World Bank FGDs 2014). out within the World Bank 2014 study, and pointed According to the interviewees, any communication to a high level of utilization. However, than using regarding user eligibility, changes in policy, the one-stop-shops to complete the application or or procedural instructions could be done via amendment process from start to finish, users have informational boards, or help desks at the khoroo only been able to use one-stop-shops to obtain offices, or through word of mouth. Any new social paperwork but not to complete the full process. welfare campaigns or policy initiatives may also be This demonstrates a lack of understanding about consulted with and communicated to the pertinent one-stop-shop service provision model and the kheseg leader. benefits they can bring. Analysis of the users’ exit interviews at social The municipal administration, however, appears welfare offices found that 81 percent of the to make good use of one-stop-shop model. Under respondents (120 out of the 136 users) had learned the new public service delivery centers and about the service they were coming in for, on integrated service delivery frameworks which the day of the questionnaire by word of mouth, was implemented in 2015, ten new public service at the khoroo office, or by a designated welfare delivery centers, the physical infrastructure employee. While the governor of the 1stkhoroos for which is already under construction, were in Chingeltei District pronounced that information introduced. One central Service Center will had been disseminated via the media (radio or serve the entire city, with an additional center television), only 16 percent, or 20, users surveyed serving each District. The impetus behind the in the exit interviews, claimed that they learned establishment of Public Service Centers is to about the social welfare service they were using enable citizens to obtain public services from through media (TV or radio). Only one respondent the nearest Service Center regardless of their claimed that they had received the information residential address. on the social welfare service from a government pamphlet, and two referred to information iv. Evidence Base for Assessment of Service and obtained from the Internet, indicating that these Investment Needs sources of information are either not well known or are not readily available. Limited information The budget allocation for services and investments impose additional burdens of time costs on the in UB is primarily based on negotiation between service users, who can only practically access the the city administration and the districts. As part information at the service office, and therefore will of the yearly budget cycle, and in principle, in need to take time away from work, which could be consultation with the local communities, each disproportionately burdensome for those working district gathers information regarding local service in the informal sector. and investment needs. The proposals for each district are submitted to UB city administration, The problems of coordination between different which reviews and checks their alignment with administrative functions and government levels, as the city’s investment plan. Negotiation takes place well as the informational gaps were the impetus for between the city administration and the districts, the concept of the One-Stop-Shop (OSS), which after which the investment plan is approved and 45 incorporated into the administration’s yearly By and large, UB city faces two fundamental investment plan. This plan also needs to be tensions in its delivery of municipal services. The consistent with the five-year development plan. first is the tension between maintaining budget discipline and ensuring the adequacy and quality Most of the public investments in UB city are of service provision. The second is the need to determined Most byof UBthe public investments inwithout city administration UB city are determined provide services byatUB cityby scale administration the capable without service extensive consultation with the districts. This is in line with extensive consultation with the districts. This providers, while extending service official mandate that UB city administration provision to the is in charge of providing service and financing investments for 60 percent is in line with official mandate that UB city poorest that reside in the fringe of the cities where of the population. As a result, the districts have less actual decision-making power and authority over a large part of their own administration is in charge of providing service per capita expenditure tends to be higher because jurisdiction. Nonetheless, participatory budgeting still has a significant role in informing the design of and financing specific investments investment. for 60 percent For example, of thecompleted the recently of the inherently “Tomorrow‟s higherCity” cost of service delivery. (Ulaanbaatar 2015b) population. As a result, the districts have less Deliberative Polling exercise supported by the Asia Foundation is a important first step in helping to align actual decision-making large scale power and investment priorities with residentover authority needs There are significant and preferences. differences could This experience across districts serve as a a large to model part of their develop own jurisdiction. mechanisms for more Nonetheless, regular citizenin their local even consultation, economic bases, at district andandkhoroo thus in their levels. In this regard, the participatory would districts still budgeting has beaa more suitable significant role entity to solicit fiscal public capacities. support over Residents of fulfilling service poorer districts gaps in or deciding informing the new investments. ondesign of specific investment. tend to have less financial ability to contribute For example, the recently completed “Tomorrow’s to the provision of local services and to their By and large, UB city faces two fundamental tensions in its delivery of municipal services. The City” (Ulaanbaatar 2015b) Deliberative Polling sustainability. For example in FY 2012, the per first is the tension between maintaining budget discipline and ensuring the adequacy and quality of exercise supportedThe service provision. by second the Asia is theFoundation need to provideis capita servicesrevenue at scaleofbySonginokhairkhan the capable service (the poorest providers, a important while extending step in firstservice helping to provision tothe align large poorest that urban residedistrict) was MNT in the fringe of the25,534; compared cities where per to the capita scale investment expenditure tends to priorities be higherwithbecause of the needs resident inherently highest higher per cost capita revenue of service of MNT 175,983 in delivery. and preferences. This experience could serve Sukhbaatar. This is a sevenfold difference in fiscal as a model There to significant aredevelop differences for mechanisms across more districts in their between capacities local economic districts (See and bases, thus 4.5). Figure in their In fiscal capacities. Residents of poorer districts tend to have less financial regular citizen consultation, even at district and order to improve access to and quality of services ability to contribute to the provision khoroo of local levels. In services and to this regard, the their sustainability. districts would to For example all in FY 2012, UB residents, the there ispera capita need to revenue achieveof Songinokhairkhan (the poorest urban district) was MNT 25,534; compared to the highest per capita be a more suitable entity to solicit public support greater fiscal balance by, among other options, revenue of MNT 175,983 in Sukhbaatar. This is a sevenfold difference in fiscal capacities between over fulfilling districts (See Figureservice4.5gaps or deciding ). In order on new to improve access reducing to and qualitytheir of current services toobligations for service all UB residents, there investments. is a need to achieve greater fiscal balance by, among other provision in accordance options, reducing their with their obligations current own financial for service provision in accordance with their own financial capacities. capacities. Figure 4.5. Per Capita Revenue in UB City and Districts in FY 2012 Figure 4.3. Per Capita Revenue in UB City and Districts in FY 2012 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - Source: World Bank staff calculations based on FY12 budgets and net population Source: World Bank staff calculations based on FY12 budgets and net population. The Local Development Fund (LDF) funding is allocated to the capital budgets of both UB city administration and the districts. While LDF transfer is fairly small for UB City as a share of capital budget, it accounts for the majority of capital funding for the districts and is still an important source of revenue for the districts. In FY 2013, it amounted to MNT 21 billion, or 76.4 percent of the districts‟ 46 12 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia The Local Development Fund (LDF) funding While UB has made progress toward improving is allocated to the capital budgets of both UB local participation, challenges remain. At the sub- city administration and the districts. While LDF municipal level, participation in khoroo, district transfer is fairly small for UB City as a share or LDF meetings is limited and lacks a plurality of capital budget, it accounts for the majority of interests. This raises the prospect that these of capital funding for the districts and is still an meetings can be dominated by a few interests or important source of revenue for the districts. In a single political party to promise rewards for FY 2013, it amounted to MNT 21 billion, or 76.4 support, which reduces the incentive for those percent of the districts’ capital budget. In the with differing views to participate (Bardhan and same year, the total funding from the LDF to UB Mookherjee 2012).Participants from focus group City was MNT 35 billion, which was equal to 6.4 discussions raised perceptions and widespread percent of UB City development budget. concerns that the LDF decisions were made based on influence by more wealth-off residents. Due to The capital allocation per district is based on a this, there are also few channels to gauge resident formula aimed at meeting equity and economic satisfaction with service quality or to identify efficiency criteria. The formula is based on major or persistent issues related service provision population size, area of the district, and the at the khoroo level. This is especially true for level of dispersion of its population. However, the urban poor, who have the most difficulty in the formula doesn’t include poverty criteria to accessing services, and the least capacity to in raise account for the significant differences in poverty their concerns. This also reduces the information rates across districts, or the variations in districts’ available to decision-makers about neighborhood economic base and hence revenue-raising capacity. level priorities related to service delivery, such as Such a design can be seen to exacerbate the inter- issues related to access or deficiency of coverage. jurisdictional inequity in the system. If the goal of Opening a channel to address how the downside the LDF is to improve inter-jurisdictional equity, of sprawling build-up is affecting their access to then the inclusion of poverty rates, possibly to the service in an inclusive manner will allow for UB to khoroos level, needs to be incorporated into the implement sustainable solutions aimed at improving allocation formula. their residents’ quality of life. See Box 4.3 below. Box 4.3: Accountability within the LDF Largely, the participants in the focus groups did not know about the significance of LDF though it was acknowledged that some of the residents from their communities did take part in the LDF survey. Some participants were not optimistic about the LDF, reporting that the close circles of khoroo governor decided the budget-related matters and that these meetings would give preferential treatment to influential people in the same way as the CPMs did. “We hear that meetings were held but the allocated budget for our khoroo does not go to us but to governor’s people.” Male, Fringe ger area, Songinokhairkhan district “The Governor calls 50 people s/he knows and the door is closed. We don’t get inside. The khoroo police is outside looking after the door and does not let in saying the door is closed.” Male, Fringe ger area, Chingeltei district Source: FGDs (2014) 47 While the structure for administration and Bank 2015c; Lkhagvadorj 2010) but is necessary citizen representation has improved due to recent for linking local demands for services with tools changes in the decentralization of governance, to ensure their financial sustainability. The next such changes need to be supported by appropriate chapter covers UB’s current budgeting and fiscal and financial decentralization reforms. financing arrangements for municipal service Indeed, recent literature suggests that fiscal delivery through examining the efficiency of decentralization has been slow to follow (World expenditures. 48 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia 5.0 financing municipal services I n parallel with reforms to improve participation and representation at the local level, decentralization reforms have moved service of expenditure, UB city faces the compounding challenge of matching adequate revenue sources and institutional capacity to the increase in delivery, financing and expenditure responsibility expenditure responsibilities (World Bank 2013, 29). to local governments. The 2011 Budget Law Currently, the city does not have a separate portfolio has provided some guidance on improving the in the state investment plan, though it did under budgeting process, clarifying functions and a previous administration. This requires capital responsibilities of government entities, as well investment proposals drawing on the state budget as identifying revenue collection, borrowing be sent to line ministries, which in turn submit capacities and criteria for fiscal transfers. their proposals to the MoF. The process creates an additional layer of review and reduces the city’s For UB City, several issues still affect how the ability to undertake investment planning to meet city and district administrations finance service service delivery challenges that cross sectors. provision, and the effectiveness of municipal service delivery. First, the budget classification Decentralization reforms, particularly the system does not allow decision-makers or the Integrated Budget Law (2011) have also public to know exactly how much each entity changed the financing obligations the city has spends on which particular service. This reduces for service delivery. For example, prior to the transparency of expenditures on service 2012, the city provided social welfare services, delivery, and the space for citizens to demand with the financing reimbursed from the state improvements. Second, the budgeting system is budget. The 2011 Integrated Budget Law72 fragmented; with district investment plans based on further delegated the financing of social welfare the lists of State Budget and UB City Investment services and benefits to UB City. Under plans. Finally, the city’s receipt of transfers from Article 58 of the revised Budget Law, UB city the national government varies year-to-year, which is also responsible for the financing of social further limits its ability to coordinate priorities and welfare services from its own budget, while align investments across the city. the recurring expenditures (such as salaries) for service providers at local administrations 5.1. Intergovernmental continue to be financed by a state transfer73. Fiscal Relations Since 2013, the city has financed the provision of all social welfare benefits and services Mongolia has been grappling with the 72 The new Budget Law combined the former Law on decentralization of service delivery71. In more Unitary Budget of Mongolia and the Law on Management recent years, with the significantly higher level & Financing of Budgeted Organizations. 73 The BL of 2011 (Article 58.1.4) states that “Capital city In-depth analysis of intergovernmental fiscal relations in 71 shall implement social care and welfare services with its Mongolia is provided in Annex 3. budget among other functions.” 49 except two entitlements, namely the allowance social welfare services amounted to MNT 76.6 for senior citizens with honorary titles and billion, and in FY 2014 they increased to a total allowance for mothers with honorary medals. of MNT 83.8 billion. In FY 2013, the city’s total expenditures for the Table 5.1: UB City Expenditure Assignment ROLRE OF DIFFERENT GOVERMENTAL LEVELS OF AUTHORITY EXPENDITURE SERVICE- EXPENDITURE FINANCING ASSIGNING DELIVERY FUNCTION AUTHORITY AUTHORITY AUTHORITYa Education Kindergarten Central Central Localb Primary School Central Central Local Secondary School Central Central Local Universities Central Central Central/Local Health Hospitals Central Central Central/Local Health Centers Central Central Local Epidemiology Central Central Central/Local Social Welfare Social Protection Central Central/Local Central/Local Social Assistance Central Central/Local Central/Local Housing and Services Housing Central/Local Central/Local Central/Local Sanitation and Disposal Central Local Local Water Supply Central Central/Local Central/Local Sewage Central Central/Local Central/Local Recreation and Culture Recreation Central Central Local Sports and Culture Central Central Local Economic Sectors Fuel and Energy Central Central Central/Local Road Construction Central Central/Local Central/Local Transportation Central Central/Local Central/Local Environmental Protection Central/Local Central/Local Central/Local Public Order and Safety Central Central Local Source: A comprehensive summary of functions may be seen in Ariunaa (2010). a. As part of the CCLSL, UB may be required to deliver (subject to a contract) some of the social services currently provided by the CG through the line ministries. b. The legal term “local” is inclusive of UB and/or its districts. Source: World Bank staff adaptation from Brhane et al (World Bank, 2012). The revenue sources of UB City, however, have uncertainty to budget planning at the city level74. remained the same in these two years. Since 2014, the budget resources for both the city and 74 In May 2014, the Central Government adopted Resolution No. 147 which prioritizes saving resources for the national governments have dropped considerably, budget. Item 1.3 of the resolution allows for reducing which has influenced staffing plans and added the number of positions including Vice Mayors, Vice Ministers, Deputy Directors and Assistants and Advisors 50 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Capital transfer to UB via the Local Development are to be delivered effectively by UB city. Fund will drop for FY 2015. The Capital City Tax Compared to other regions of the country, the city passed in 2015, which was first established in the generates much of the revenues for the central 2002 PSMFL and reinforced in the 2011 Budget government due to the concentration of people Law (BL), will be another potential own source and economic activity and receives about 25 revenue for UB moving forward, but it is not yet percent of its budget from central government fully implemented. With the reduction in capital transfers (World Bank 2013). First, transfers from revenues, the financing of these new expenditure the center to different levels of government help obligations has necessarily had to come either address imbalances that result from a mismatch from: (i) UB’s yearly cash balances in operations, between local expenditure responsibilities and (ii) a transfer of the capital budget to the operating revenue-raising capacity. Second, transfers also budget through a reduction on investment plans help address inequalities across jurisdictions that in other services, (iii) an increase in revenue may result from the differing economic conditions collection efficiency, or (iv) a combination of the or capacities. Third, transfers are to assure that above three main alternatives, particularly the first expenditures have had a reasonable degree of two. consistency across districts. Effective local taxes in Mongolia do not provide The current intergovernmental fiscal arrangement sufficient resources for UB to fulfill all expenditure is underpinned by lack of clarity in expenditure assignments bestowed on them by the central assignments as well as revenue sharing. For government, as well as fulfill local responsibilities. each service, the assignment of expenditure For example, the city collects a property tax responsibilities is by level of institution, but not (a common source of local revenue for many by function (regulatory, financing and provision municipal governments) but due to a number of of service). For example, the central government exemptions, the amount captured is very small directly controls tertiary institutions in the health relative to land and property values; representing and education sectors (universities and specialist less than 3 percent of the budget (World Bank hospitals), but delegates the responsibilities for 2015). The financing of the new nationally- primary and secondary education and health mandated expenditure responsibilities in social to lower tiers of government. Even so, central services is non-discretionary spending for the ministries and agencies often lack the funding to City Council that competes with the financing fulfill their oversight mandates. of the rest of UB City’s financial obligations. Specifically, the provision of new services The 2011BL leaves the financing of several local competes for discretionary resources that could services open to negotiations between central be used for investments in urban services and government and the UB governor, and between local infrastructure. This is of particular concern the UB governor and the district governors if financial obligations for health and education (World Bank 2013, 29)75. Due to the limited are given to UB city in the coming years without adequate financial transfers. 75 The Law was the centerpiece of the government’s reform agenda toward building effective market economy- enforcing institution, as well as improving service delivery As a result, a well-designed system of through devolution. Its main thrust called for a shift from intergovernmental transfers is crucial if services an input-based budgeting to output- and performance- based budgeting. Nonetheless, the cumbersome (lack to Ministers.The LATUG was amended in January 2015 to of accountability) and non-transparent (lack of clarity) set the maximum number of Vice Mayors/Ministers to two framework gives UB city few incentives to rationalize (rather than six).While all ministries are now operating expenditure, increase service delivery, or support regional without vice ministers, UB to date not complied with this equity. The multiplicity of lower-tier government levels amendment and retains six vice mayors. and agencies has also prevented the nascent financial 51 capacity at the local level, the same local staff is are ultimately responsible for paying for local often asked to carry out both delegated and local services from central taxes, local officials are functions, and it is likely to be very difficult to likely to focus their energies instead on extracting separate which tasks are delegated, and which greater resources form the center rather than are local. Such discretion in delegation makes developing the local tax base (World Bank 2003)76. separating “delegated expenditure” from “own However, while UB has made strides in budget and expenditure” virtually impossible. In turn, it expenditure reporting, the reporting arrangements renders the intergovernmental transfer unwieldy, between the city and districts remain unclear, unpredictable, and difficult to implement. as well as the expenditures and deficits incurred As revenue sources are fixed by the central by MOEs. These issues have been exasperated government, UB city officials are deprived of in recent years by the economic downturn and the capacity to increase or decrease levels of frequent changes to annual budgets as a result of service if desired by the community. Under the uncertain revenue streams and changing laws. 2011 Integrated Budget Law, the Health and Education Departments, respectively, estimate 5.2. Expenditure Responsibili- budget needs for local government entities and ties and Arrangements distribute accordingly, without consultation from the city government or without mechanisms There are seven local services that are assigned to to accommodate changes in need for schools UB city administration as well as its nine districts, within local jurisdictions (World Bank 2015c). according to Article 58 of the IBL (see Annex Greater local autonomy over revenues is likely to 3). The city provides these services in the central increase local accountability, as well as strengthen area, which covers approximately 60 percent of the link between services and cost. When local the population, with its own budget. Accordingly, elected officials must raise their own revenues the districts cover these functions in the remaining from the local population, they are likely to be areas, which caters to about 40 percent of the more responsive to the community’s need. By population. contrast, in a situation where central authorities 76 Local control over taxation requires a great deal of local planning and administrative capacity. Property, personal income and excise taxes are generally considered more appropriate local taxes. In contrast, VAT and CIT are bad local taxes, because both bases are highly mobile and particularly sensitive changes in income. Taxes management institutions from disciplining budget relying on more mobile tax bases may lead to tax-induced execution effectively. Incentive systems for service movement of factors of production and tax competition delivery are poor due to conflicts between expenditure and among regions. Taxes that are more sensitive to changes revenue assignments, and efficient and inequitable transfer in income expose regions to cyclical fluctuations (World mechanisms. Bank 2002). 52 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Table 5.2. Population Served by UB Administration and Each District in FY 2014 Population Population Percent of Population Percent of of khoroos of khoroos population   Districts of entire Population served by UB served by served by district served by UB Adm. Districts districts   URBAN           1 Bayangol 200,163 133,563 66,600 0.67 0.33 2 Bayanzurkh 304,323 236,293 68,030 0.78 0.22 3 Chingeltei 155,859 100,803 55,056 0.65 0.35 4 Khan-Uul 131,097 60,660 70,437 0.46 0.54 5 Songinokhairkhan 277,312 134,292 143,020 0.48 0.52 6 Sukhbaatar 133,293 89,424 43,869 0.67 0.33   Sub-Total 1,202,047 755,035 447,012 0.63 0.37   RURAL           7 Nalaikh 33,603 - 33,603 0.00 100 8 Baganuur 27,168 - 27,168 0.00 100 9 Bagakhangai 3,809 - 3,809 0.00 100   Sub-Total 64,580 - 64,580 0.00 100   TOTAL UB 1,266,627 755,035 511,592 0.60 0.40 Source: National Statistics Office (NSO) and World Bank staff projections for this chapter. UB city contracts most of the services under its 2014, UB districts still had separate budget reports purview to city-owned companies. Similarly, local from UB City administration. The new accounting services provided at the district level, including system will allow decision-makers to determine waste removal, street lighting, road drainage, how much the city actually spends oneach of sanitation, flood protection, landscaping and these services. A transparent budget reporting pollution reduction, are contracted to district- system is needed to ensure service accountability, owned companies. The contracting is done by sustainability, and cost efficiency. a “package,” and as a result, the expenditures associated with these services are reported in an The majority of the districts’ expenditure goes to aggregated manner, for example, under a budget social programs and welfare services and benefits. item called “City Greening77. In FY 2013, social welfare and social assistance accounted for more than half of UB districts’ total With the assistance of the World Bank, the UB city current expenditures. This amounted to MNT government has begun to undertake an expenditure 141.1 billion, while UB spent MNT 73.4 billion review and reform the budget reporting system. for the same group of services. These expenditures The purpose of these activities is to provide a are in practice financed by the city’s budget based basis for a creditworthiness assessment by an on actual spending. As a result, districts were not external rating agency (including allowing for required to include the disbursement of social audits and reviews of financial statements) and welfare benefits in their budget reports. See Figure also to give guidance on the capital assets held by 5.1 and 5.2 below. the city and the income and liabilities incurred by MOEs (World Bank 2014b). One example of these activities is budget reporting by services. Up until Budget code number 16.1. 77 53 total current expenditures. This amounted to MNT 141.1 billion, while UB spent MNT 73.4 billion for the same group of services. These expenditures are in practice financed by the city’s budget based on actual spending. As a result, districts were not required to include the disbursement of social welfare benefits in their budget reports. See Figure 5.1 and 5.2 below. Figure 5.1. Breakdown of Districts' Figure 5.1. BreakdownCurrent Expenditures of Districts' Currentin FY2013 Expenditures in FY2013 Other Transfers Maintenance Small Expend. 3% 2% 2% Works on behalf of public 4% Outsourced work & services 4% Social welfare & soc. assist. 51% Street lighting 6% Waste disposal & treatment 8% General Adm. & Other Exp. 20% Source: World Source: World Bank staff Bank staff calculations calculations based based on districts’ on districts’ budgets budgets for FY2013. for FY2013. 5.2. Figure of Figure 5.2. Breakdown Breakdown UB’s Current of UB’s Current Expenditures in Expenditures FY2013 in FY2013 Subsides (Heat, energy & O.) Maintenance Small Expend. 3% 2% 6% 77 Budget code number 16.1. Waste disposal & treatment 19 General Adm. 8% & Other Exp. 41% Street lighting 8% Environmental protection 9% Works on behalf of public Outsourced services 10% 13% Source: Source: World World Bank staffBank staff calculations calculations based on UBbased on City’s UB City’sbudget executed executed budget FY2013 FY2013. A significant A significant share share of ofUB city’s current UB city’s the to services),goes currentexpenditure general actual administration expenditure (MNTmay in services 50.5 billion) and expenditure the to goes remaining goes to local(MNT general administration be Compared services. to FY underestimated. 2012, There is the someshare of general discretionary administration reduced from 60 percent to 41 percent. However, given that 50.5 billion) and the remaining goes to local spending for services provided by UB City, as general administration expense also cover payments to employees (for e.g., of municipal-owned enterprises) devoted to the services. Compared to FY 2012, the share of prescribed under “other services required by provision of specific services), the actual expenditure in services may be underestimated. There is some general administration discretionary spending forreduced from services 60 percent provided law.” by UB City , asThese services prescribed account under for 10 percent requiredof “other services by to percent. 41 These law.” However, services given account that percent for 10 general UB’s current current expenditures of UB’s expenditures and are primarily and are primarily the the administration responsibility of UB city also expense cover payments administration. only allocatedof Districts responsibility UB one city administration. percent of their budgetsDistricts to the financing to of these employees services. (for e.g., of municipal-owned only allocated one percent of their budgets to the enterprises) devoted to the provision of specific financing of these services. Figure 5.3.Breakdown of UB City Administration’s Expenditures in “Other Services Required by Law”in FY2012 54 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Figure 5.3. Breakdown of UB City Administration’s Expenditures in “Other Services Required by Law” in FY2012 UB's Traffic Authority Crime prevention 3% 18% Physical education 6% UB's Traffic Ulaanbaatar Authority Crime prevention Training & Educ. Ensemle 3% 18% Center 6% Physical education 10% 6% Ulaanbaatar Training & Educ. Ensemle Center for Children's Center 6% Cultural Urguu 10% Educ. 11% [Palace] 20% Children's Children's Invention Center Center for Children's Cultural Urguu Palace 11% Educ. 11% [Palace] 15% Source: 20% Bank staff calculations based on of UBcity’sbudget for FY 2012. Source: World Bank World staff calculations based on of UBcity’sbudget for FY 2012. Children's Palace Children's Invention Center Nearly all of the capital 15%investment for service provision is carried 11% city. In FY 2012, out by UB the UB all Nearly cityof the capital government investment spent 96 percent forofservice the capital UB city oversight investment budget,also went and the to rehabilitation districts4 of percent. The provision districts’ is carried small Source: World out aggregate Bank by staff UB city. budget calculations FY Inbased did not 2012, go toward public spending on of UBcity buildings. in local ’sbudget for In 2012. FY but services, FY 2013, UB in the city executed rehabilitation of public the UB buildings under their city government purview. spent 96 percent of the Half of the capital budgetof 88 percent under UB city oversight the aggregate also went capital budget. Theto Nearly rehabilitation of all of the public capital investment buildings. In FY for service 2013, UB provision city executedis 88 carried out of percent UB aggregate by the city. In FY 2012, capital capital investment budget, and the districts4 concentration of capital budget at the city level the UBThe budget. government spent cityconcentration 96 percent of capital budget of atthe thecapital investment cityenables level enables budget, and significant the districts4 larger-scale percent. The investments in percent. districts’The districts’ small while aggregate small aggregate budgetfrom did not gobudget toward spending significant in local larger-scale investments services, but in the rehabilitation inof public services, benefitting cost savings from centralized management. did not go public toward under buildings theirin spending local services, purview. Half of but public budget the capital services, while under UBbenefitting from cost alsosavings city oversight went to Figure in 5.4. Investments the rehabilitation rehabilitation of public of of UB’s Central public buildings. buildings In FY Administration under UB 2013, from FY 2012 88 citycentralized executed management. percent of the aggregate capital their purview. budget. Half of theof The concentration capitalbudget capital budget atunder the city level enables significant larger-scale investments in Water supply & from swerscost 2% savings from Buildings & public services, while benefitting centralized management. Buildings & Public housing & 0%0% infrastructure 0% infrastructure 5.4. 3% utilities Figure Investments of UB’s Figure 5.4. Central of Administration Investments 0% UB’s Central FY 2012 Administration FY 2012 2% Power and elect. Water supply & swers 2% Buildings & Buildings & Public 5% & housing Lines 0%0% infrastructure 0% infrastructure utilities 3% 0% Flood protection 2% 8%and elect. Power Lines 5% Rehabs. Own Buildings Cleaning, Flood lighting & protection 48% mgt. equip. waste8% 10% Rehabs. Own Buildings Cleaning, lightinglighting & 48% Roads, bridges, & waste mgt. equip. traffic lights 22% 10% Source: World Bank staff calculations based on and data from 2012 budget of UB. Roads, bridges, lighting & traffic lights 22% Source:The city World Source: government Bank staffBank calculations World is also responsible based on and staff calculations the from fordata based execution budget on and 2012 of the yearly of UB. data from 2012 investment plan. This budget of UB. corresponds with UB’s authority and capacity in collecting the biggest share of local revenue source, The city government is also responsible 21 55 for the execution of the yearly investment plan. This corresponds with UB’s authority and capacity in collecting the biggest share of local revenue source, 21 The city government is also responsible for the important revenues such as vehicle tax, land user execution of the yearly investment plan. This fee. Not only is it the appropriate level and scale corresponds with UB’s authority and capacity for investment, but it also allows for redistribution in collecting the biggest share of local revenue and cross-subsidization of service investment costs source, which is the wage tax. Wage tax constitutes across districts with unequal poverty level and 32 percent of total city revenue, along with other fiscal capacity. Table 5.3. Current and Capital Expenditures of UB City and Districts in FY 2012 UB City Government Current Capital Total and Districts In mi. MNTs % In mi. MNTs % In mi. MNTs % 1 UB city gov't 56,407.7 55.65 159,856.6 96.08 216,264.3 80.77 2 Bayangol 5,853.9 5.78 802.2 0.48 6,656.1 2.49 3 Baynzurkh 7,825.0 7.72 371.2 0.22 8,196.2 3.06 4 Khan-Uul 5,827.7 5.75 540.7 0.32 6,368.3 2.38 5 Sukhbaatar 5,897.6 5.82 1,606.4 0.97 7,504.0 2.80 6 Chingeltei 7,176.9 7.08 2,454.7 1.48 9,631.6 3.60 7 Songinok 5,861.8 5.78 371.0 0.22 6,232.7 2.33 8 Baganuur 2,090.9 2.06 372.0 0.22 2,462.9 0.92 9 Nalaikh 2,991.7 2.95 0.0 0.00 2,991.7 1.12 10 Bagakhangai 1,430.9 1.41 0.0 0.00 1,430.9 0.53 Total of Districts (2-9) 44,956.4 44.35 6,518.2 3.91 51,474.4 19.23 Total 101,364.0 100 166,374.7 100 267,738.7 100 District Average   4.93   0.44   2.14 Source: World Bank staff calculations based on data from executed budgets for FY 2012. 5.3. Allocative Efficiency and Equity The UB central administration provides services central administration. to portions of each of the six central districts. Due to this, districts must provide services to some, Regarding the service type, Bayanzurkh had the but not all of their residents. Given the different highest per capita spending in urban services in FY amount of resources and differing expenditure 2013. Bayanzurkh also has the largest population priorities between UB central administration (over 300,000). The district’s strong fiscal base and the districts, expenditures per capita can appears to be aided by two key factors. First, given vary considerably, even across the same district. the large population, it is able to depend on a large Furthermore, given the fact that services can revenue base. Second, according to current service depend on khoroo residency, it is possible that arrangements between UB and districts described residents of neighboring khoroos are provided above, it only has to provide urban services to 22 services through different contractors. Finally, it is percent of its residents with the rest of the population not clear how existing channels of representation (78%) resides in UB’s central area and is served by (e.g. kheseg leaders, khoroo councils, district the UB central administration. The two districts councils) are used as venues for feedback or that have the next highest per capita spending are engagement by residents on the quality or access to Sukhbaatar and Chingeltei, and are also relatively services, especially if they are provided by the UB well-off districts as shown in Table 5.3 above. 56 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Meanwhile, per capita expenditure in social welfare With regard to the total current expenditure, across districts appear relatively equitable. As which sums up both the costs of service provision Meanwhile, the qualification and per capita criteria are the same in expenditure social and across welfare acrossadministration, general districts appear it relatively shows equitable. that the As the qualification and criteria are the same across districts, and as the funding is independent from the districts, and as the funding is independent from less population in a district, the higher the per fiscal conditions in each district, it is expected, and as in reality, expenditures for social welfare services the fiscal reflect theconditions in each districts‟ actual district, needs. Per is expected, it capita spendingcapita for mostspending. Among the districts fluctuates nineMNT around districts 55,000andin and as in reality, the better-off districtexpenditures Bayangol and for MNT welfare social60,000 UB, in the Bagakhangai poorest ranks the highest The district Songinokhairkhan. in per capita difference services reflect in per capita the districts’is expenditures actual rather smallPer needs. capita relative current to the expenditures difference in poverty aboutThe at rate. MNT two 350,000. districts The with the highest spending forspending in social most districts are twoMNT welfarearound fluctuates of the rural districts. difference In addition, between the institutional Bagakhangai and the capacities rest of and efficiency 55,000 in the administration in the better-off district Bayangol of these programs and MNT theare relatively districts is similar . For example, quite significant; the Bayangol Bagakhangai per Social Welfare department operates with 69 staff for a population 60,000 in the poorest district Songinokhairkhan. capita current expenditure is about six times larger of about 204,000, while Songinokhairkhan employs 72 staff for a population of 270,000. This means that Songinokhairkhan The difference in per capita expenditures is rather than the average of the other districts. Nalaikh and operates with 2.6 staff per 10,000 inhabitants, while Bayangol works with 3.3 staff. small relative to the difference in poverty rate. The Baganuur have the next highest per capita total With with two districts regard theto highest the total spending in social expenditures current expenditure, which sums up about at both theMNT 80,000 costs of serviceand MNT provision welfare are two of the rural districts. In addition, 70,000 respectively. These and general administration, it shows that the less population in a district, the higher the per capita are also low-density the institutional spending. Among capacities the nine and efficiency districts and in UB, outlaying rural theBagakhangai ranks districts of UBin the highest city, perand theircurrent capita small expenditures atof administration about theseMNT 350,000.are programs The difference urban relatively between Bagakhangai centers do not andform the rest of part of the districts UB City is quite significant; Bagakhangai per capita current expenditure is about six similar. For example, the Bayangol Social Welfare urban area (see Figure 5.5).The main reason for times larger than the average of the other districts. department operates withNalaikh and Baganuur 69 staff have the such for a population next high highest perper capita capita total expenditures expenditure at about is the minimum MNT 80,000 and MNT 70,000 respectively. These are also low-density outlaying rural districts of UB of about 204,000, while Songinokhairkhan employs fixed cost required for general administration city, and their small urban centers do not form part of the UB City urban area (see Figure 5.5).The main 72 for a staff for reason population such high per 270,000. ofcapita This means expenditure thatminimum and the is the operational fixed expenses cost required needed for gene to provide ral administration and the operational expenses needed to provide minimum services and to operate the local district Songinokhairkhan operates with 2.6 staff per 10,000 minimum services and to operate the local district inhabitants, government. while Bayangol works with 3.3 staff. government. Figure 5.5. UB City and Districts’ Total Current Expendituresper Capita (MNT) Figure 5.5. UB City and Districts’ Total Current Expendituresper Capita (MNT) 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - Baynzurkh UB Admi. Nalaikh Bagakhan. Sukhbaatar Bayangol Songinok. Baganuur Khan-Uul Chingeltei 3,809 27,168 33,603 128,172 138,757 159,015 199,383 262,110 301,705 1,189,143 Source: World Source: Bank staff calculations World based Bank staff on UB and calculations Districts based on UB executed current and Districts expenditures FY2012. executed current expenditures FY2012. Similarly, there is an inverse relationship between population size and the per capita general administration cost. Per capita expenditures in general administration across the nine districts vary from Similarly, about MNT there inverse is an in 19,670 to MNTbetween relationship Songinok general 194,248 in administration Bagakhangai. Among the six the across nine urban districts districts that form the UBsize population and central area the per which mostly general arecapita vary financed by from UB city about MNT separate administration 19,670 budget, in Songinok Khan-Uulto administration cost. Per capita expenditures in MNT 194,248 in Bagakhangai. Among the six 23 57 urban districts that form the UB central area which Overall, there is a cost efficiency gain from are mostly financed by UB city administration serving densely populated districts. For example, separate budget, Khan-Uul has the highest per an examination of the per capita expenditures has the highest per capita general administration spending of MNT 35,646. The concern with the capita general efficiency in GA administration spending expenditures emerges MNT of the from for about fact that a bundle 60-70 three key ofpercent urban of total services – of expenditures street UB 35,646. and concern The were districts with to allocated theGA efficiency in GA and between 20 andcleaning, public 40 to urban lightingAny services. and savings waste management in GA, either – expenditures through emerges increase from the fact in productivity, that about and/or 60- shows less spending per capita thatcould in GA, cost for be allocated these expenditures toward spending on 70 percent actual urban total expenditures of UB and districts are lowest in most densely populated districts, ofservices. were allocated to GA and between 20 and 40 to which are Bayangol, Songinokhairkhan, and Overall,Any urban services. there in efficiency is a cost savings GA, either gain from serving through densely Bagakhangai Baynzurkh. has For populated districts. example, solely 3,809an examination of the per capita expenditures for a bundle of three key urban services increase in productivity, and/or less spending in inhabitants, and the per capita cost amounted to – street cleaning, public lighting and waste management – shows that per capita cost for these expenditures are lowest in GA, could be allocated toward spending on actual approximately 80,000 MNT per capita, compared most densely populated districts, which are Bayangol, Songinokhairkhan, and Baynzurkh. Bagakhangai urban has services. solely 3,809 inhabitants, and the per capita cost amounted with less to than other three 5,000 in the 80,000 approximately MNT districts (See per capita, compared with less than 5,000 in the other three districFigure ts (See 5.6). Figure 5.6). 5.6.5.6. Figure Figure Expenditures Expenditures in Street in Street Cleaning, Cleaning, Public Public Lighting Lighting andand Waste Waste Management Management (MNT) (MNT) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - kh ai in ar i te kh ­ r ul l ng kh air no ur go uu m at Ba n l -U ge ha a lai nz Ad ba n kh ngi n an ya ga in Na k ya kh ga UB So Ch Kh Ba Ba Su Ba Source: World Source: Bank World staff Bank calculations staff based calculations on on based UB and UB Districts and executed Districts expenditures executed forfor expenditures FY2012 . FY2012. To furtherTo examine whether whether further examine or not urban or notdensity cost ofmay urban density serviceplaydelivery. With urban an important sprawl, role in it will the cost of providing may play an services roleCity, in UB important in thethis relationship cost of providing explored was cost for the a the taxpayers higherof service public level lighting. of public The spending results services confirm thisstreet that for in UB City, lighting relationship in explored was UB City, the to per serve the expenditure capita same number substantially declines of population. as It will population density increases. See Figure 5.7below. Such finding reinforces the policy for the service of public lighting. The results further lead to larger opportunity cost in future implications that the current patterns of low-density urban development will eventually translate into high cost of service confirm that for street lighting in UB City, the investment. Such costly form of development is delivery. With urban sprawl, it will cost the taxpayers a higher level of public spending to serve the same per capita number expenditure Itsubstantially of population. declines will further lead as opportunity to larger further compounded by the cost in future existing fragmentation investment. Such costly population density increases. See Figure 5.7 below. of institutional arrangement form of development is further compounded by the existing fragmentation of institutional and multiple service arrangement Suchmultiple and finding service reinforces in UBimplications the policy providers City and acrossproviders in UB districts, City and imposing across higher districts, imposing operational costs to that the current municipal patterns of low-density urban higher operational costs to municipal service service delivery. development will eventually translate into high delivery. 58 24 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Figure 5.7: Population Density and Streetlighting Expenditures, 2012 Figure 5.7. Population Density and Streetlighting Expenditures, 2012 Cost per light per person vs. Population Density (built-up area) 0.35 0.3 Cost per light per person 0.25 0.2 Cost per light per person 0.15 0.1 y = -3E-05x + 0.2905 Linear (Cost per light per R² = 0.4867 person) 0.05 0 - 2,000 4,000 6,000 8,000 10,000 Persons per sq. km. (Population Density) Source: Staff calculations based on expenditure review Source: Staff calculations based on expenditure review A more A more cost-efficient cost-efficient service service delivery deliverystructure system structure could is fragmented be devised and larger-scale to facilitate opaque, makingoperationsit in could be devised to facilitate larger-scale difficult to identify and track delivering urban services, either through partnership, or some form of integration of service providers expenditures on operations in deliveringSuch (larger companies). urban either particular services, arrangements institutional wouldservices. generate The size and substantial cost form savingsof through the reduction through in overhead partnership, expenditures, or some form of which could be integration potentially city allocated also raises to improve cost the per-capita access ofand quality of services, of services, and to enhance service providers service (larger sustainability. companies). Such especially in low density outlying areas, where institutional arrangements would generate the cost of reaching an additional resident is substantial This chaptercost has savings providedthrough reduction an overview of thein comparatively expenditure patternshigher than for service in more delivery in the densely city. It has overhead expenditures, emphasized that the which budgetcould be potentially reporting populated system is fragmented andcentral opaque, city areas. making The next it difficult chapter and to identify track expenditures allocated to improve accesson particular and qualityservices. The sizedraws of services, and form from of findings the city also raises in this the the and per-capita precedingcost of and services, to enhance especially in low density outlying areas, service sustainability. where the chapters to cost of reaching develop an additional recommendations thatresident will is comparatively higher than in more densely populated city city central help the areas.the improve The next cost chapter draws efficiency, quality from findings in this and the preceding chapters This chapter has provided an overview of the of coverage and structures for improving feedback the to develop recommendations that will help the city improve cost efficiency, expenditure patternsquality of coverage for service and structures delivery in the forandimproving feedback future investment and future planning for investment services. planning for services. city. It has emphasized that the budget reporting 25 59 6.0 POLICY IMPLICATIONS AND RECOMMENDATIONS T he rapid demographic growth and urban expansion in Ulaanbaatar has coincided with parallel shifts in government and administrative development planning, health and education require more consistent and reliable data sources, integrating their use in performance assessment, structures in the city. The city government is and greater coordination across departments in legally required to provide a number of key planning and program implementation (World infrastructure and social services to residents, Bank 2015c). Finally, issues such as fiscal transfers though UB’s government has faced a number of are outside of the city’s control, but have a direct challenges in adapting the current administrative impact on the prioritization of resources for service system to address resident needs and coordinate provision at the city level. activity across agencies and lower levels of government. While the city has an extensive There are several overarching areas raised in this system of representation from the neighborhood, report that point to room for improvements in the khoroo, district and city levels, there is a risk that delivery of services to UB residents, guided by this structure can dilute or marginalize priorities principals of equity, efficiency, and quality. Key in communities with limited resources, or with focus areas fall into the two main categories of low participation in civic issues. Further, the city enhancing urban planning and management, and has limited capacity to generate its own revenue improving governance and finance. to support and expand service provision according to needs and therefore must still rely on central 6.1. Enhancing Urban Planning government transfers. In spite of recent Mayoral and Management initiatives to improve resident involvement in prioritizing capital investments, the short budget Prioritize planning and land use regulations cycle precludes widespread deliberation and to promote density and diversity throughout coordination. The City therefore, is caught between the City. The current sprawling urban form in having the potential structure that could support Ulaanbaatar makes the delivery of services costly responsive and accountable governance for service and inefficient. As the city continues to grow and delivery, but lacks adequate and stable funding the city tries to keep up with the service delivery sources. needs, better urban planning and land management aimed at promoting density will be critical to The city has made progress in some areas; creating a more sustainable, livable city. Denser for example, the collection of GIS data on the urban development will create substantial savings locations of key services, roads, public buildings in service provision, as opposed to the high costs and demographic data at the khoroo level, which associated with the current low-density urban are important first steps toward building a more sprawl. UB City already has the appropriate policy coordinated, evidence-based system of service tools and mandate over urban planning, land use provision. Other areas such as transport and urban 60 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia management, land taxes, and zoning regulations, maintenance-based subsidies to bus companies, which if appropriately used, could make service and reforming the ticket quote system may be provision more cost-efficient, affordable, and explored to mitigate the high risks associated thus more equitable, and provide higher quality with increasing informality and ensuring quality services (World Bank 2015). Such decisions could services to service users. Ideally, public transport be linked to transportation planning, land assembly services should operate as an integrated system, for housing, green space or public facilities, maximizing all possible synergies and achieving through infill redevelopment in the central city or efficiencies as a whole, rather than managing land readjustment projects in ger areas. The service operations at individual corridors or areas. The data and household surveys could serve as a useful capacity required in high demand corridors is baseline for UB’s administration in devising more achieved through high-frequency services provided effective public investments. by few operators, rather than the aggregation of regular services provided by multiple operators. Increase integrated land use and transport The quality of coverage (or the extent for planning to improve access and mobility. The reliability and integration with broader network) city’s low density and segmentation of land uses of lower demand areas is cross-subsidized with promote a mismatch between residential and revenue from high demand areas. service and employment centers. The Master Plan has reflected initial steps in this direction with 6.2. Improving Governance the planned sub-centers component, which will and Finance reduce congestion by placing commercial areas and service centers outside of the central city Introduce a Medium Term Expenditure area. Similarly, transportation planning needs to Framework. The current capital investment be approached from a systemic level, beyond just planning system is limited by a one-year term street improvements and vehicle investments, to and must deal with multiple proposals from address traffic management, bus route planning departments and service providers across the and rider demand analysis and ICT systems. This city. There is no strategic, multiyear plan for will enable the city’s current public transportation sequencing these investments, nor are there criteria system to better respond to rider demand, which for assessing need, demand or delivery options. will inform future capital or operations investment Developing medium-term investment plans can priorities. Linking land use and transportation improve the coordination of budget planning and planning will ensure that public investments in investment, and can also be a way to encourage road and transport infrastructure better align with routine citizen participation and involvement private-led development along major corridors and from sub-local entities. As an example, the City nodes. of Johannesburg, South Africa, goes even further by mandating regular meetings with various It is vital that the municipality take an integrated stakeholder groups (including the poor and approach in revamping its regulatory framework, vulnerable), the Mayor’s office and representative licensing process and route coverage to strengthen councilors. Table 4.2 provides a partial list of the the formal transportation sector, and to make it groups, the frequency of meetings and the event more reliable, safe and service-oriented for its format. The current legal framework would not users. It is crucial to recognize the importance and prohibit the city’s establishment of an MTEF. limitations of the growing informal sector in filling As a step in the right direction, UB has hired a the demand gap currently unfulfilled by the formal consulting firm to advise and prepare a report on system. Stricter enforcement of quality of service, developing an MTEF. 61 Box 6.1: Building in Citizen Engagement: The Case of Johannesburg With a population of 4.9 million, Johannesburg is the largest city in South Africa and the capital of Gauteng, the country’s wealthiest province. Like UB, the city is located hundreds of miles inland, and is accessible only through road and rail connections. Despite a large population, Johannesburg built a municipal governance structure that emphasizes frequent, broad-based stakeholder consultation. The stakeholder engagement in Johannesburg is institutionalized and set the frequency of interface with stakeholder groups, from the residents and ratepayers at-large, vulnerable populations (such as the elderly, the disabled, youth and women), provincial government, neighboring municipalities, NGOs, and academics, business community, the media, and investors. This process aims to ensure the quality of service provision and timely feedback loops for service improvement that ranges from enforcement of law and order, quality of infrastructure development, availability of healthcare, and educational services, housing and recreation facilities, skills development for youth and caring for the elderly. It also specifies the method of engagement, whether it is through cluster community conversations, the establishment of technical working groups around a particular development or service challenge, and investor roadshows to communicate the city’s plans and crowd-source ideas and solutions from the stakeholders. Reform the revenue sharing system. Improvements Develop an evidence based capital investment in the revenue sharing system to provide local planning framework. In the short term, the governments with more revenue-generating development of an evidence-based capital authority and more stable tax-sharing systems investment planning framework that draws from would increase fiscal discipline at local levels. existing data sources and leverages existing Matching expenditure assignments with authority venues for citizen participation at the district would improve local government accountability. and khoroo levelscan serve to identify realistic The government should also develop mechanisms investment needs. A more structured application for streamlining funding (single-pipe funding), of existing data sources, particularly GIS and use equalization formulas for the distribution demographic data, could be low-hanging fruits of transfers, and consolidate the provision of in efforts to develop better mapping of the levels national public goods, such as policy formulation, of access and service needs in the city. Public monitoring, and evaluation at the center information and outreach campaigns could be used to promote participation in local-level meetings Use pro-poor targeting of expenditures to ensure as well as dissemination on the procedures, rights equity in service provision. The system of fiscal and responsibilities for service users. One area transfer and revenues-sharing across districts need where the city has sought to improve the use of to incorporate poverty and deprivation measures. evidence-based planning is the development of the A measure of need for schools and clinics, khoroo level Health and Safety Index that assesses facility qualities and capacity constraints could be residents’ quality of life, access to services and useful for helping local officials to better allocate other environmental quality measures. While this earmarked transfers in each of these sectors (World index provides important information on the type Bank 2015c). For example, districts with higher and distribution of deprivation across the city, it is incidence of poverty and, for example, a lack of not itself an appropriate instrument for assessing schools should be allocated additional resources capital investment priorities. based on these or other service needs. 62 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Box 6.2: The Calgary Model for Municipal Services Planning and Citizen Engagement Calgary is a landlocked metropolitan city of sparse population of about 1.2 million people. Like Ulaanbaatar, Calgary has an oil and mining sector that has traditionally dominated the urban economy, contributing to 12 percent of its real GDP. Nonetheless, this ratio is decreasing as Calgary diversifies into a range of industries, such as agriculture, light manufacturing and retails, transportation, e-commerce, high-tech, and financial services. During times of high oil prices, Calgary has invested oil and mineral windfalls into key municipal infrastructure to support a well- diversified economy and a growing workforce. Further, the City’s model of inclusive planning has helped ensure that municipal services provided are aligned with citizens’ needs and priorities. Using a participatory approach, the City provides its residents with information about where city funds are used, thus linking service costs to service levels and outcomes, and better connecting long-term municipal development goals with short-term spending decisions. The City’s budgeting and planning process gathers direct inputs from its residents, city employees and civil service organizations through face-to-face sessions, workshops, direct online tools and social media channels. In 2011, the Annual Report showed that 23,000 people participated in the process. While this only represented two percent of the population, it led to the creation of a community investment fund to support new municipal projects and upgrade public infrastructure. The new investments were based on residents’ demand and therefore received strong constituents’ support. The feedback from the residents also allowed the city government to further identify red tape and reduce bureaucratic delays in accessing services. This response was reflected in the 2011 Annual Citizen Satisfaction survey, which showed that 92 percent of Calgarians gave the city a positive overall performance rating, 80 percent rated “consistently high quality of service;” and 86 percent believed it was on the “right track to becoming a better city.” Source: World Bank staff compilation from Calgary City’s Annual Report (2013) Introduce standards, quality controls, and The accountability and responsiveness to voters are transparency mechanisms for service providers. further weakened as members of these entities are The compact between the state and the service appointed rather than elected. providers, mostly MOEs has been largely undermined by the lack of a clear accountability The city’s adoption of procurement and arrangement between the service providers vis-à- performance evaluation standards could improve vis the state. The MOEs provide a range of core the transparency of contracts with service services such as hospitals, libraries and museums, providers and provide a means to monitor the to public awareness, and information campaigns. quality of services provided. Closer monitoring There is a gap in understanding how MOEs could also aim to eliminate the current system are contracted, their performance agreement is of bribes which has the greatest impacts the overseen, and their fiscal impact on the municipal poorest.. In addition, existing channels of citizen budget measured and reported. There is no clear participation, such as Citizens’ Public Meetings, performance indicator for service providers or khoroo council can provide critical inputs on to ensure that service standards, in terms of citizen feedback on the quality and access to investment efficiency and maintenance, are met. services at the neighborhood level. 63 Box 6.3: Citizen Report Cards to Evaluate Quality of Services: Bangalore, India In 1993 (and later in 1999) with the help of the World Bank, the city of Bangalore developed a set of “citizen report cards” through which residents evaluated the quality of public services they received. The report cards provided a quantitative basis for assessing resident satisfaction, experiences of corruption. The findings also provided policymakers information about the performance of service providers in different sectors, which allowed them ore assurance in renewing or discontinuing contracts with providers. The report cards were developed with the assistance of NGOs and a market research firm. A representative sample of city residents were asked to rate their level of satisfaction with different municipal services on a seven point scale. Respondents were also asked questions about staff behavior, number of visits required and the resolution of problems. The results were presented to the providers of key services including the city, the telephone company and power and water utility companies. The exercise was repeated five years later and found moderate improvements in satisfaction with the service providers. The approach also led to substantive changes in service delivery. In part from public visibility and pressure from media and civil society organizations, poorly rated providers, such as the Karnataka Electricity Board formalized a series of public dialogues with resident associations to improve feedback and address grievances. The Bangalore Municipal Corporation partnered with local NGOs to develop a strategy to improve waste management. Similar report card approaches have been undertaken in other Indian cities as well as in Ukraine, the Philippines and Washington, DC. Source: World Bank. 2003. “Case Study 1 – Bangalore, India: Participatory Approaches to Budgeting and Expenditure Management” Social Development Notes, Note. No. 70, March. Develop mechanisms for improving coordination of intergovernmental transfers and changes in the across government to avoid gaps and assignment of service provision duties between duplications. The example of the fragmentation in the national government and the capital city is service delivery for street lighting highlights the beyond the city’s control, but a clear mandate and challenges of overlapping responsibilities across resources for additional services responsibility levels of government and subsequently results would improve the ability of the city to develop in inadequate service provision. In health, the planning and financing strategies. Introducing residency requirement means that residents must an intergovernmental task force or committee to use the designated family clinic in their khoroo foster collaboration across the multiple levels of but that clinic may not be the closest by distance, government, and establishment of systems that thereby imposing a burden in getting to a clinic. collect and utilize information about gaps and Better coordination across khoroos and at the city, duplications in services would ultimately provide district and khoroo level could result in overall efficiencies and better outcomes for residents. improvements in service delivery. The instability 64 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Box 6.4: Deliberative Polling for Investment Planning: The Case of Poznán, Poland UB’s recent experience with deliberative polling could provide guidance for mainstreaming this tool into planning and decision making as occurred for a city in Poland. Poznán’s approach to public investment planning stemmed from an exercise to determine what to do with an outdated sports stadium facility in 2009. Citizens were invited to participate in a poll asking them to identify what the facility should be used for and an operation and financing model for it. Two years later, the city leadership scaled up the consultation process to address the city budget. This consisted of three stages, first a series of consultations with city employees and executive leadership. Following this, a telephone survey of the perception of 800 residents on key city development goals and initiatives provided useful feedback on the extent of interest and support for what the leadership had initially proposed. The third phase consisted of in-depth citizen debates with participants drawn from the phone survey along with consultations with local NGOs. This approach provided two principal benefits; first, it gave policymakers feedback to better structure and sequence budget priorities and second it gave the budgeting process legitimacy because the discussions and consultations were widely publicized in local media outlets. Source: Milewicz, M. 2012. “Social Interactions Between City Government and Citizens” Mimeo, Poznan Municipal office To conclude, many of the issues raised in this suggested reforms will have lasting inputs for the report are of manageable size and scope to development, growth and social equity in the city be addressed if there is strong leadership and far into the future. political will at the city level. Implementing the 65 REFERENCES Altshuler, A., Gomez-Ibanez and Arnold Howitt. World Bank Group. 2015. East Asia's Changing 1993. Regulation for Revenue: The Political Urban Landscape : Measuring a Decade of Spatial Economy of Land Use Regulations Lincoln Growth. Washington, DC: World Bank. 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Focus Group Discussions. Ulaanbaatar. Ulaanbaatar, Mongolia : World World Bank. 2014. Mongolia - Ulaanbaatar Bank. financial self-assessment. Washington, DC: World Bank. 66 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Ministry of Population Development & Social Interview with Z. Davaajav, Head of Social Protection and National Authority for Social Welfare and Population Development Division, Welfare and Services of Mongolia. 2012. Social Welfare Service Office of Bayangol Collection of Legal Acts on Social Welfare by District, Ulaanbaatar city. Mongolia. Ulaanbaatar. Interview with Gereltuya, Head of Financial Ministry of Population Development & Social Planning & Social Welfare Service Department Protection and National Authority for Social of Municipal Social Welfare Agency, Ulaanbaatar Welfare and Services of Mongolia. 2013. city. Guideline on Legal Acts on Social Welfare. Ulaanbaatar. National Statistical Office of Mongolia. 2013. Household Survey on Housing Types. Ulaanbaatar: Interview with B. Tsovoo, Head of Social Welfare National Statistical Office of Mongolia and Family Development Division, Social Welfare Service Office of Songinokhairkhan District, Welsh, B.P. and Farrington, D.C. 2008. “Effects Ulaanbaatar city. of Improved Street Lighting on Crime” Campbell Systematic Reviews, Vol. 13. 67 Annex 1: Intergovernmental Fiscal Relations in Mongolia F iscal relations between the levels of government have moved back and forth on a sliding scale. In the mid-1990s, as the central these costs are fixed from the center, and account for over 50 percent of total spending in education (World Bank 2002). Even though UB can shift government tried to maintain macroeconomic resources across expenditure categories in the stability in the context of dramatically contracting budget once they receive allocations from the gross output, lower levels of government were center, the city has no control over the levels of asked to take on increasing responsibilities for transfer received from the center. The principal providing services, often with limited ability weakness in such division of expenditure to raise financial resources and with limited assignments grows out of the separation between capacity and decision-making authority. Local fiscal responsibility and the power to reduce or government’s share in general government increase expenditure commitments. expenditure rose to an all-time high of 35 percent. Financial relations between levels of government Second, accountability across entities responsible worsened, however, as local governments began for municipal service delivery is undermined by to build up arrears. By 2000, local government’s the complex webs of budget agents and local share of expenditure dropped to about 28 percent government units. The current body of legislation as the central government increasingly assumed is not clear as to which level of government is more expenditure responsibilities (World Bank meant to regulate, fund and execute (or provide) 2002, 73). The existing intergovernmental fiscal each service. Each level of government has some arrangement undermines incentives for effective authority to act in every sector; this is particularly and efficient service delivery in Ulaanbaatar in true in education, health, and social welfare. four ways. Setting objectives and overseeing quality standards is assigned to the central ministries, but local First, there are large mismatch between governments finance the service outcomes for expenditure responsibilities and decision- education and health. making authority. While UB city government is responsible for delivering many services, in many Third, unpredictable funding and sharing cases they do not have control over key decisions arrangements from the center undercut weak that affect service delivery. For example, in local government revenue-raising capacity. UB education, decisions on the number of teachers government relies on a number of sources of and the wages they will be paid are taken at higher revenue, but have little control over most of levels, leaving little room for maneuver in terms them. The bulk of local revenues come from of resource management. In addition, the city is what are called regulated or shared taxes. Sources responsible for providing quality education based for financing these tax sharing formulas remain on norms set by the central government, yet there unstable, which makes local government planning is no systemic mechanism to ensure they have unpredictable. Any increase in local revenues is adequate resources to deliver quality services. offset by reductions in either the tax-sharing rate For example, schools devote over 60 percent of of transfers. This system both discourages high expenditures to operating expenses such as wages, revenue collection and fails to provide stable and heating, electricity and water, but the prices of all consistent sources of local income. The system 68 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia instead encourages UB to find extra-budgetary This has led to constant changes in the tax- sources of income that will not affect their revenue sharing formulas over time, which affects budget assignments in the subsequent year. planning and allocation for municipal services. As a only portion of revenues collected in the Fourth, the existing system makes UB highly city are transferred back for inclusion in local dependent on central transfers and poses budgets, there is a disincentive to collect taxes, challenges for preparing a medium-term since the city will not capture all of the revenue. expenditure plan. Currently, transfers are Reliance on central transfers continues to weaken determined largely based on budget proposals UB local incentives for fiscal restraint, as local City sends to the Ministry of Finance and allocated governments do not bear the real costs of taxation, on the basis of informal negotiating processes which is comparatively high in Mongolia. In a with local budget entity officials. It is based on fiscally decentralized system, local authorities normative criteria that include infrastructure, are usually responsible for both taxing and education and health. Expenditure transfers are spending decisions, which helps ensure budget evaluated is based on the Ministry’s revenue discipline. Central government’s main role is to estimates and the intended expenditures of UB align local requirements for service provision government78. There is a lack of consensus on with local revenue-generating capacities. a methodology to be used to establish revenue forecasts that forms the basis for determining the size of subventions and tax sharing. Transfers to UB city government are divided between 78 fixed and variable costs. Fixed costs transfer, for electricity, heating, transportation, water, and sewerage, is estimated on an infrastructure basis and on the parameters from past experiences. The level of variable costs allocated to UB government is established by norms (e.g., education costs per pupil, student/teacher ratio) that reflect standards and costing. The establishment of the norms is most developed in the education sector, where norms are updated yearly, partially explaining the high share of education expenditure in GDP. 69 Annex 2: Maps of Service Accessibility Map 3.2: Schools within a 40 minute walking time, 2014 Source: Data from World Bank Survey (2014) REPLACE with high res for final product 70 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Map 3.3: Kindergartens within a 40 minute walking time, 2014 Source: Data from World Bank Survey (2014) 71 Map 3.5: Areas in walking distance of family clinics based on a radius of 30-minute walking time Source: Data from World Bank Survey (2014) 72 Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia Map 3.7: Nighttime Streetlight Brightness, 2014 Source: MPD (2014) 73 Annex 3: Services provided through UB and District administrations Provisions 58.1.1-18 in the Article 58 of the law 58.1.16. Utility services for public areas, lists following 18 functions/services that UB is landscaping, public hygiene, street lighting, mandated to provide with its own budget: cleaning, and waste removal; 58.1.1. Capital city management; 58.1.17. Within the territory of the capital city 58.1.2. Urban planning, construction and operation and maintenance services of high voltage establishing new infrastructure; and electricity lines and substations and other 58.1.3. Capital maintenance of construction and activities to ensure normal functioning; and buildings owned by the capital city, establishing 58.1.18. Other functions specified in law. new property and making investments; Similarly, the Provisions 58.3.1-8 lists following 58.1.4. Social care and welfare services; services that Districts provide with their own 58.1.5. Implementing programs and measures to budget: support employment and alleviate poverty; 58.3.1. District management; 58.1.6. Development of small and medium-sized 58.3.2. Social care and welfare services provided enterprises; subsequent to the decision of district governors; 58.1.7. Pasture management; 58.3.3. Within the territory of districts, utility 58.1.8. Establishing water supply, sewerage and services for public areas, public hygiene, street drainage systems; lighting, cleaning and waste removal; 58.1.9. Housing and public utility services; 58.3.4. Promotion of intensified raising of 58.1.10. Flood protection; livestock; 58.1.11. Public transport services; 58.3.5. Protection of nature and the environment 58.1.12. Fight of infectious livestock and animal within the district territory; diseases, pest eradication and control; 58.3.6. Recurrent maintenance of lighting of public 58.1.13. Disaster prevention; areas within the district territory; 58.1.14. Environmental protection and 58.3.7. District landscaping, and development and rehabilitation; maintenance of sidewalks, recreational areas and 58.1.15. Establishing large scale roads, bridges and children’s playgrounds; their lighting, traffic lights and other respective 58.3.8. Other functions as defined in law. construction; 74