[ North East Local Services Improvement Project TABLE OF CONTENTS NORTH EAST LOCAL SERVICES IMPROVEMENT PROJECT 1.1 THE CASE FOR LOCAL SERVICES IMPROVEMENT IN NE SRI LANKA…………………….......…6 1.2 PROJECT DESIGN AND OBJECTIVES……………………………………………..…………...........8 1.3 CO-FINANCING BY AUSAID……………………………………………..……………...................10 1.4 RESULTS TO DATE……………………………………………..………………………......................11 This is an extract from the first Annual Report of the AusAID-World Bank Partnership for South Asia Umbrella Trust Fund (UTF). To read and download the complete report visit www.PartnershipForSouthAsia.com. The report has been prepared by the PFSA Secretariat led by Tara Sharafudeen, Program Manager and main author. Nicola Vesco, Communications Specialist worked on the design and Nishtha Mehta, Knowledge Specialist assisted with the writing and editing of the report. Information for this section was also provided by the task leader Seenithamby Manoharan. PHOTO CREDITS NELSIP SECTION COVER: SIMONE D. MCCOURTIE/WORLD BANK PHOTO CREDITS/AKNOWLEDGMENTS BACKGROUND: CURT CARNEMARK/WORLD BANK ILLUSTRATION PAGE 12: YOSEF HADAR/WORLD BANK 1.1 THE CASE FOR LOCAL SERVICES IMPROVEMENT IN NORTH EAST SRI LANKA The northern and eastern provinces of Sri Lanka these regions would continue to lag behind the rest constitute a lagging region of the country that has of the country in terms of poverty, income, educa- experienced armed conflict for nearly three de- tion, and other MDG indicators. Years of civil conflict cades. Though the economy has continued to grow and natural disasters have traumatized populations, even during conflict, growth remains skewed with resulting in a lack of trust in many communities. Provi- more than 50% of the country’s GDP coming from sion of basic local infrastructure and services along the Western Province, which includes the Colombo with avenues for voice and participation and hold- area. Per capita incomes in the north and east are ing local governments accountable for service de- 50% less than in the Western Province. The decades livery, can help the healing process and build confi- of fighting have negatively impacted growth in the dence in the local state. region and the country at large. The armed conflict in the Eastern Province ended in July 2007 and in the Local governments are best placed to deliver basic Northern Province in May 2009, bringing to an end services according to community priorities. The Lo- 26 years of armed conflict. During this period, start- cal Authorities (LA) comprise the middle and lower ing in the early 1980s, people in the North and East tiers of government in Sri Lanka. The 13th Amend- have been repeatedly displaced and their houses, ment of the Constitution created a sub-national sys- public facilities, and basic infrastructure damaged tem with Provincial Councils (PCs) at the provincial or destroyed. There is a considerable, conflict in- level and below them, the Pradeshiya Sabhas (PSs) duced backlog of local infrastructure and services in in rural areas, and Urban Councils (UCs) and Munici- the Northern and Eastern provinces. Rural roads that pal Councils (MCs) in urban areas. These institutions provide connectivity, and village level infrastructure, together constitute “Local Authorities.” The LAs as such as drainage systems, primary health clinics, elected bodies mandated to deliver services, could schools and markets, were all severely damaged play a vital role in participatory planning, prioritiza- during the conflict. Most urban, peri-urban, and ru- tion, execution and maintenance of local facilities ral drinking water schemes were in disrepair and and services. LAs in the North-East however face needed to be reconstructed. Essential local services, several impediments in delivering services. These in- such as street lighting and solid waste management, clude lack of administrative and technical capac- were either not available or were insufficient in many ity, inadequate resources, and poor responsiveness locations in this region. to citizen’s needs and priorities. Central government transfers, the main source of funding, are insufficient The major challenge after initial resettlement of the and often unpredictable. The central government displaced families was to restore and sustain the vi- makes two types of grants, through the PCs to the tal economic infrastructure and services needed for LAs Criteria-Based Grants (which are allocated on communities to ensure their livelihood. The destruc- the basis of a formula encompassing population, tion of property and basic infrastructure had severely level of poverty, and other socio-economic indica- undermined the capacity of people to rebuild their tors) and Province-Specific Development Grants. lives and develop their local economies. Without restoration and development of local infrastructure, 6 Actual transfers are often lower than agreed allo- higher tiers of the state and the local community cations due to cash flow problems, revenue short need to be enforced through institutionalizing partic- falls or other problems affecting national finances. ipatory approaches for the planning and manage- This hampers effective planning and implementa- ment of local development. Increased fund flows tion of local infrastructure investments. LAs are the designed to enhance the role of local government front line of service delivery at the local level. Due to also need to be accompanied by improvements in their closeness to citizens, they offer opportunities for operational systems, management procedures and community participation in local decision-making. accountability mechanisms for local government to However, participation and dialogue with communi- deliver results. ties needs to be institutionalized and strengthened to enhance accountability and responsiveness. The GoSL strategy in the north-east region stresses re- lief, resettlement and rehabilitation, along with the Lessons learned from post conflict regions in Asia and restoration and development of livelihoods and re- Africa indicate the importance of rebuilding the lo- construction of basic infrastructure. It also focuses on cal state from bottom up through community par- the restoration of services and establishment of ef- ticipation and ownership, and providing basic local fective administration and service delivery arrange- level infrastructure facilities. Extensive information ments. AusAID and World Bank strategies also stress and communication to inform citizens about proj- the need for reconstruction and improvement of ect design, work plans, and a grievance redressal services in the region. After the initial humanitarian mechanism are necessary ingredients for successful activities are over and once the displaced people implementation of projects. Experience from local return to their villages, it was important to quickly im- government operations in South Asia and elsewhere prove local infrastructure and services in the north attest to the positive impacts of improved resource and the east and to restore confidence in local gov- allocation at the local level, along with enhanced ernments by allowing communities to participate accountability in planning and expenditure man- and hold their LA accountable. It was in this back- agement based on community needs and priorities. ground that the World Bank designed the North East These aspects are inter-related. To hold local govern- Local Services Improvement Project (NELSIP). The ments accountable, it is important that these agen- project which became effective from December 15, cies have the resources to deliver services in a trans- 2010 will be operational until December 2015. parent and accountable manner. The upward and downward accountability relationships between the 7 1.2 PROJECT DESIGN AND OBJECTIVES NELSIP, which was designed and prepared in the af- erment of the different communities in the Northern termath of the conflict in the north-east, addresses and Eastern Provinces. Strengthening local govern- many of the issues noted above. The primary objec- ment institutions and the ability of LAs to respond to tive of the project is to improve the delivery of lo- local needs will help advance a durable solution to cal infrastructure services by local authorities in the the concerns of citizens in the North-East region. The Northern and Eastern Provinces of Sri Lanka in an ac- basic components of the project address the infra- countable and responsive manner. It provides much structure gap through additional resources for ser- needed support for local infrastructure services, such vice delivery, along with accountability measures to as rural roads, drinking water supply, drainage and ensure resources are expended in a transparent and waste disposal that are provided and maintained by accountable manner. They also build the capac- LAs in the Northern and Eastern provinces. By build- ity of local governments to deliver services and of ing the legitimacy and capacity of the local state, it higher tier agencies and communities to hold them also addresses the causes and consequences of the accountable. The three components are expanded conflict in Sri Lanka. Besides targeting development, upon below. NELSIP also addresses issues of voice and empow- Infrastructure Service Delivery This component funds the reconstruction of infrastructure and services by providing resources to improve local service delivery in a transparent and predictable manner within the context of a sound inter-govern- mental fiscal framework. It provides predictable and transparent capital grants to the LAs through the coun- try’s budget system in accordance with the GOSL’s guidelines for participatory planning. The use of country systems to deliver aid is an integral part of the global aid effectiveness agenda. These grants cover infrastruc- ture and services such as rural roads, drains, culverts and bridges, community buildings, markets and fairs, waste disposal, rural water supply, parks, recreation facilities and libraries, nursery schools, playgrounds, and dispensaries. The funds can also be used to improve local government utility services. Institutionalizing Accountabilities This component ensures that LAs undertake public expenditures and deliver local services in a transparent and accountable manner. It strengthens upward and downward accountability systems at the local level. Activities under this component include improving accountabilities by instituting sub committees, standing committees and advisory committees to enable participation and oversight by stakeholders. It also includes an education and communication campaign to disseminate project information to various stakeholders. Preparation of participatory LA Development Plans that prioritize community development needs are an- other feature. Building Capacities This component strengthens the service delivery systems and capacities of LAs to deliver services. It also strengthens the monitoring capacities of provincial and national level institutions. It supports improvements in systems and processes related to planning, budgeting, financial management, revenue management and procurement at the LA level. It strengthens the audit of funds by improving the efficiency, timeliness and follow up of the internal and external audits of LAs. The funds under this component support the training of elected representatives and staff of LAs on financial management, procurement and project management. 8 Better and more effective technical support to LAs provided by the district local government staff is also funded. Another important feature is the development of a long-term capacity building strategy for LAs including the Organizational Development Unit (ODU) of local government departments. The project covers all the Local Authorities in the Northern and Eastern Provinces of Sri Lanka. The 79 LAs include 66 Pradeshiya Sabhas, out of which 28 are located in the 5 districts of the Northern Province and 38 in the 3 districts of the Eastern Province. In addition, it covers 9 Urban Councils – 5 in the North and 4 in the East and 4 Municipal Councils namely Jaffna, Kalmunai, and the newly created Akkaraipattu and Batticaloa. NELSIP will result in an increase in the quantity and quality of public goods delivered and maintained by Local Authorities. Improved infrastructure connectivity will enable post-conflict communities in the north-east to benefit from enhanced access to social services and economic opportunities. The capacity of Local Authorities to deliver services will also be strengthened. Through these steps the project will help reduce poverty in the project implementation areas. Table 1 - NELSIP Coverage of Local Authorities in the Northern and Eastern Provinces URBAN PRADESHIYA MUNICIPAL PROVINCE DISTRICT TOTAL COUNCIL SABHA COUNCIL JAFFNA   3   13   1   17   KILINOCHCHI   -­‐   3   -­‐   3   NORTHERN   PROVINCE   MULLAITIVU   -­‐   4   -­‐   4   VAVUNIYA   1   4   -­‐   5   MANNAR   1   4   -­‐   5   SUB  TOTAL   5   28   1   34   TRINCOMALEE   2   11   -­‐   13   EASTERN   PROVINCE   BATTICALOA   1   10   1   12   AMPARA   1   17   2   20   SUB  TOTAL   4   38   3   45   TOTAL   99   66   4   79   9 1.3 CO-FINANCING BY AUSAID AusAID is co-financing the project to the tune of AUD The higher-level outcomes from this partnership and 24.86 million. Co-financing provides AusAID with the project are expected to be a reduction in poverty, opportunity to support the development of a lag- improved health and well-being, new economic ging post conflict region and of the vulnerable com- opportunities, and more efficient and effective de- munities within this region. It will also help deepen livery of infrastructure and services. The project can the engagement with the Bank at the country level. also be replicated and scaled up to other lagging Greater engagement with multilateral partners is a regions of the country, and GoSL has expressed inter- key recommendation of the Government of Austra- est in expanding the project to other provinces. lia’s Independent Aid Effectiveness Review, 2011. It also enables AusAID to leverage the Bank’s resourc- AusAID was to initially co-finance the project to the es, both financial and non-financial including the tune of AUD 37.77 million. These funds were to be de- expertise of its staff, relationship with the client, and livered in three tranches, of which the first tranche of Bank processes and systems, and thus minimize ad- AUD 9.47 million was received in June 2011. However ministrative costs. there has been considerable delay in the signing of the Grant Agreement (GA) by GoSL. Both the Bank NELSIP covers the entire Northern and Eastern Prov- and AusAID have been actively following up with inces of Sri Lanka, including the 79 Local Authorities government on this. The government wanted the in these two provinces. The fund requirement of a project to be restructured after the Mid-Term Review LA is between LKR 200 to 600 million of which, only a (MTR). The MTR mission originally scheduled for De- small portion is covered by government transfers. The cember 2012 was finally approved by GoSL for March Bank’s funding of NELSIP provides a total of approxi- 2013. It has since taken place and AusAID staff from mately LKR 80 million over four years. AusAID funds the Colombo Post participated in the MTR. On the ba- will support the overall development objectives sis of the MTR and subsequent discussions with GoSL, of NELSIP and all the three components discussed steps are underway restructure the project to include above. The co-financing by AusAID enables some of areas in adjoining provinces that were also impacted this funding gap to be bridged It will enable the proj- by the conflict in the north-east. Due to the delay in ect to be scaled up and will help increase the size of signing the GA, the second tranche has been with- fiscal transfers to LAs. Along with increased capacity held by AusAID. The co-financing has thus been re- building it will lead to more and better service deliv- duced to AUD 24.86 million and will be limited to two ery by LAs. It will also improve local accountability tranches. The second tranche is now to be transferred both upward to Provincial Councils and downward in 2014. Government has agreed to sign the GA for to the community. the reduced amount. The GA is now expected to be signed after the restructuring takes place. 10 1.4 RESULTS TO DATE TThe mid-term review of the project has taken projects in the Northern Province. A key positive out- place from March 12 to 25, 2013. All three compo- come noted is the high level of satisfaction among nents received a satisfactory rating though areas of communities with regard to their LAs. Table 2 Results weakness in monitoring and evaluation and project Framework and Monitoring shows high satisfaction management were noted. Though cumulative dis- among citizens with regard to LA performance. The bursement to date is 74% there has been delay in targets for participation have been exceeded at the project approval and implementation in the North- midpoint in the project lifecycle. The preparation of ern Province which does not have an elected Pro- annual financial statements within 3 months of clo- vincial Council, this has resulted in the project imple- sure and acceptable audits of LA accounts are both mentation being noted as moderately satisfactory. outcome indicators that have been exceeded at Action is being taken to improve the approval of the time of the MTR. Table 2 - NELSIP Results Framework and Monitoring MTR March 2013 TOTAL MTR PROJECT OUTCOME INDICATORS MTR ACHIEVEMENT TARGET TARGET Rural and village roads (km) 1,000 618 303 Drainage systems (km) 245 32 16 Rural water supply schemes 439 6 2 Playgrounds, markets and nurseries 405 112 21 Rural electrification 79 16 16 % capita grants released against allocations (IDA) 70 90 70 Rising satisfaction of local people on LAs (%) 80 60 87 LAs preparing annual financial statements within 3 60 40 75 months of closure Acceptable financial audits of accounts 60 40 75 LAs with budgets prepared in a participatory manner 60 40 45 LAs whose revenues, expenditures and procurement 40 15 79 decisions are publically disclosed   11 In little over two years, the project has shown that government and by the communities they serve. The when local authorities are provided with resources capacity of local governments to deliver basic ser- and held accountable by the communities they vices is no longer in doubt, and a positive practice serve, they can provide quality service in an account- of constructive interaction between citizens and LAs able manner. NELSIP has empowered both local gov- to prioritize community needs has emerged. This is no ernments and citizens. Elected local governments are mean achievement in a post conflict environment, increasingly seen as an integral element of the local particularly in this short a period. service delivery framework by both the upper tiers of 12 COMMUNITY CONTRIBUTION, KULANAI ROAD, KARAVEDDI KILINOCHCHI GEMUNUPURA WATER SUPPLY MARKET STALL, MALLAVI MARKET COMPLEX, MUTHUR SERUWILA MARKET AARAYAMPATHY CHILDREN PARK UYILANKULAM WATER SUPPLY ELECTRICITY EXTENSION, POTTUVIL INFRASTRUCTURE SERVICE DELIVERY BY THE PROJECT 13