1. Workshop on State Management Role and Functions Workshop IPSARD 2007-09-08 Introductional Remarks and Questions for Discussion Arne Svensson

2. Part I: State Management Role and Functions

3. Workshop discussion I  What would be the future roles?

4. Part II: State Management Reform

5. Decentralisation of State Management Functions: How to make it work  Different types of decentralisation  Fundamental reasons for and benefits deriving from organizing government structures in a decentralized fashion  Constraints  How to overcome the constraints  Conclusions

6. Different types of decentralisation  Deconcentration implies a shifting of functions and resources, including personnel, from the centre to other locations.  Delegation is the transfer of functions and duties to semi-autonomous bodies or public enterprises.  Devolution implies transfer of power, resources and administrative responsibility from central government to sub-national authorities.

7. Change of Roles and Functions Decentralization  Local Government  Local Governance

8. Fundamental reasons for and benefits deriving from organizing government structures in a decentralized fashion (1) Transaction costs are assumed to be lower in a decentralised system (2) Strengthening of social capital by mobilisation of communities (3) The fact that providers of services pay more attention to local circumstances and needs when the local community become direct clients as well as controllers of the service.

9. Fundamental reasons for and benefits deriving from organizing government structures in a decentralized fashion (con´d) (4) It serves to create additional civic space. By generating more centres of power, there are inevitably more venues in which civil society organizations ‑ interest groups, business associations, labour unions, the media, etc. ‑ can develop and find sustenance.

10. Fundamental reasons for and benefits deriving from organizing government structures in a decentralized fashion (con´d) (5) It provides more options for individual citizens seeking a positive response from government. (6) It creates numerous training grounds for the development of democratic skills and practices. Local government provides not only a stepping stone to higher office but indeed serves as an initial training experience for many people in the processes of negotiation, compromise and the like that are necessary elements in the process of democratic governance.

11. Fundamental reasons for and benefits deriving from organizing government structures in a decentralized fashion (con´d) (7) It more readily provides for diversity in response to popular demands. Obviously, in the case of many countries, different regions have different kinds of resources, different kinds of needs and are the home to different ethnic, regional or tribal groupings. A decentralized governance system provides at the same time opportunities for a certain measure of uniformity across a country but also opportunities for making required local adjustments in order to be more responsive to the needs and interests of the local population. (8) It often provides the citizenry with a greater sense of political efficacy. In general, people tend to respond more positively to government that is nearer to them and more tangible.

12. Fundamental reasons for and benefits deriving from organizing government structures in a decentralized fashion (con´d) (9) It provides the opportunity for local economic initiatives. Hence, it is an effective means to poverty reduction. Highly centralized governance systems tend to concentrate both political and economic power in the capitol city of the nation. When power is highly centralized, communities some distance from the capitol city often have great difficulty in creating the environment that can facilitate community and economic development. They typically will lack revenue to invest in the kind of infrastructure necessary to make it feasible for private economic development to take place. Decentralized resources and authority serves to provide much greater opportunities for meaningful and responsive economic development.

13. Constraints  Decentralisation is in itself a difficult and an expensive process.  The weak implementation capacities of administrations means good intentions are not fulfilled.  Lack of political will  A compromised or corrupt centre has not supported genuine devolution  Capacity deficits

14. Constraints (con’d)  An inability to focus on empowerment and real participation in the planning and budgeting process  Inadequate management systems  A mismatch between the vertical plane of decentralization and the horizontal plane  The absence or ill working of accountability and transparency from the centre to the periphery and vice versa  The conflict between unity and fragmentation  The political and institutional inheritance of the country from the colonial period

15. How to overcome the constraints (1) Recognize the Complexity of the Task (2) Citizen Empowerment Underlies Effective Governance (3) Build Sustainable Partnerships (4) Understand the Fragility of the Reform Process (5) Strengthen Management Capacity and Management Systems (6) Recognize the Centrality of an Adequate and Dependable Revenue Base

16. How to overcome the constraints (con´d) (7) Build Coalitions of Support by Drawing Upon the Strength of Civil Society (8) Strengthen the Partnership between Local and Central Governments (9) Develop Effective Public-Private Partnerships (10) Need Based Planning and Budgeting are at the Heart of Responsive Government (11) Accountability and Transparency are Critical to Building Citizen Confidence (12) Recognize the Importance of a Long Term Commitment

17. ………………Conclusion……………….. It is of critical importance that national and local officials, as well as civil society representatives, work together. In that regard, it is especially necessary that those at both the local level and the national level recognize that the strengthening of one or another level of government does not represent a “zero sum game” in the sense that, if one level of government is enhanced, another will inevitably become weaker. Indeed, much contemporary experience, particularly in those countries where governmental institutions are highly developed, suggests quite the opposite. When one level of government becomes institutionally stronger and more competent, pressure builds for the other existing levels of government to follow suit and likewise enhance their capacity.

18. …….Which implies changing role of leadership  A need for strong and sustainable leadership in implementing performance management  Leadership for changing the organisational culture (”from rules to results”)  Leadership in changing other management systems  How are leaders changing their own leadership style?

19. …………and more Dialogue …………. Dialogue on goals Performance incl Quality standards Visions OutcomesResources Politicians Arena for dialogue Officials

20. …….and supporting administrative and managerial systems  Regulations (character of legislation and complementary regulations)  Management policy (contractual arrangements etc)  Staff remuneration policy  Supervisory authorities (control, analyses)  Auditing, incl. value for money auditing

21. ….and quality is not only setting standards………CQM (Commitment Quality management)

22. Workshop discussion 2  If you compare the process so far in MARD and Vietnam with the general experience as stated in the Introductional remarks what lessons can be learned?  What would be the optimal division of responsibilities between central, provincial and local level?

23. Part III The Reform Process

24. The Modernisation Agenda – the Swedish Example (1) Topics of the Swedish Modernisation Agenda  1976 – 1982 - streamlining bureaucracies - support of private care and private education - end of public sector employment privileges - introducing competition in selected areas  1982 – 1989 - “free municipalities” experiments - public sector career model abolished decentralised and flexible personnel policy - management by results - budget process reform - deregulation of telecommunications and financial markets

25. The Modernisation Agenda (2)  1989 – 1994 - deregulation of public transport, aviation, public broadcasting - privatisation of municipal services allowed - decentralisation of education and elderly care to municipalities - client-provider split introduced in some local governments - experiments with service vouchers in day-care and schools - creation of public enterprises as stock companies  1994 - - tax increase and budget consolidation  - harmonisation and alignment to European Union regulations  - de-ideologisation of public sector modernisation instruments

26. The Modernisation Agenda (3)  2006 – - focus on growth and employment - tax decrease - increased quality and freedom to choose

27. What are the key management issues in service delivery at the local levels? Resources: human capacities in government, private sector and civil society Resources: financial capacities in all levels of government, private sector and civil society Resources: information for planning, decision- making, implementation and evaluation & IT Networking and partnerships vertically and horizontally Achieving and improving results / performance

28. Strategy of Regulatory Reform  Adopt broad programmes of regulatory reform at the political level that establish clear objectives and frameworks for implementation.  Review regulations systematically to ensure that they continue to meet their intended objectives efficiently and effectively.  Ensure that regulations and regulatory processes are transparent, non-discriminatory and efficiently applied.

29. The Reform Process Implementing Innovative and Effective Management Systems (1) The first phase has involved addressing the full range of familiar bureaucratic shortcomings: waste, unnecessary activity, over complex regulations, overlap and duplication of functions, confused lines of responsibility, slow and over centralised procedures for decision making, divided authority, unclear performance standards and lack of information about results and costs. Such reforms have focused on matters like the elimination of outdated reporting systems, of expensive work being conducted by government when it is clear that external purchasing is cheaper and of common services being provided free of charge to user departments.

30. The Reform Process Implementing Innovative and Effective Management Systems (2) The second phase of reform typically has focused on more general public management modernization. The objective has been to shift from procedures-based administration to a results-based management style, with improvement in performance. This provides measures on a yearly basis of results and costs and leads to better methods of using human and financial resources. This phase relied on a ”one- best way” management-by-objectives (MbO) philosophy strongly influenced by private sector experience. The main themes of the second phase have been:  Review of organisational structures – vertically as well as horizontally – in order to strengthen accountable line management  developing new systems, structures and priorities to decentralize financial management and cost control

31. The Reform Process Implementing Innovative and Effective Management Systems (3) The third phase of performance management reform involves the changing of culture, attitudes and behaviour in government so that continuous improvement becomes a widespread and built in feature in the search for better value for money and steady improvement of services. This phase can be summarized in the following way:  focus operational management responsibilities by clearly defining objectives and tasks  keep strategic policy and resource decisions at the centre, but devolve implementation decisions to the units responsible for results; and,  establish processes for agreeing on performance measures and “contracts” between the centre and the units responsible for programme results.

32. The Reform Process Implementing Innovative and Effective Management Systems (4) The fourth phase of reform is often quite different. This phase aims at large-scale structural reorganisation of public service delivery systems. A macro management process is always required to steer structural changes because they ultimately are beyond the control of individual organisations. Another defining feature of the new method of management is its responsiveness to stakeholders’ interests and needs. Thus, one task of the reform, if it has not previously occurred, is to identify and support the development of local partnerships (e.g. with community-based organisations, non-governmental organisations, and the private sector).

33. Key Functions at Central Level  International Co-operation  Policy Analysis  Strategies for Empowerment of Beneficiaries/ Stakeholders (Farmers etc)  Provide Legal Environment  Performance Budgeting  Organization of Public Service Delivery  Result Monitoring and Evaluation  Policy Impact Assessment

34. Experiences of PMS Performance Budgeting Techniques:  Fixed Total Budget  Per Capita Budget  Income Per Delivered Service  Income only Per Delivered Service with Performance according to Commitment

35. Experience shows the importance of performance measurement (1) It is critical to use the terminology that provides the structure around which performance measures or indicators can be constructed. Different types of indicators must correspond to each level of the hierarchy. Output indicators track the most immediate results - that is, the physical quantities of goods produced or services delivered (number of contraceptives handed out). Outputs may have not only quantity but quality dimensions as well (contraceptives meeting a technical standard). They often also include counts of the numbers of clients or beneficiaries that have access to or are served (examples: number of persons attending a workshop).

36. Experience shows the importance of performance measurement (2) Outcome indicators measure relatively direct and short-to- medium term effects of project outputs on intermediary organizations or on the project beneficiaries (clients, customers) - such as the initial changes in their skills, attitudes, practices or behaviours. Often measures of the clients’ preferences and satisfaction with product/service quality are also considered as outcomes (percent of clients satisfied with quality of health clinic services). Impact indicators measure the longer-term and more widespread development changes in the society, economy or environment to which the activity contributes. Often these are captured via national sector or sub-sector statistics (examples: reductions in percent of the population living below the poverty line, declines in infant mortality rates).

37. Experience shows the importance of performance measurement (3) Indicators on an aggregated level are generally conceptualised as long-term and significant sector or sub-sector development results. Development objectives differ primarily in perspective as they are viewed more explicitly as the consequence of multiple intermediate outcomes resulting from many different sets of activities rather than from the perspective of one activity. Intermediate outcome indicators on an aggregated level are similar in concept to outcomes from an activity but are much more comprehensive. They are inclusive of all outputs from all activities, grouped according to the intermediate outcomes to which they contribute.

38. Experience shows the importance of performance measurement (4) The indicators at the very top of the hierarchy are too long-term and broad to be of much use for guiding shorter- or medium term activity decisions, and moreover aren’t much good for measuring individual activities contributions. More attention should be given to developing good intermediate outcome indicators that are beyond outputs but still can be linked to individual activities/contributions. A number of levels of intermediate outcomes between outputs and ultimate impact may be needed to adequately demonstrate and measure the cause-and effect chain.

39. Inputs Activities Resources Specific Objectives Outputs General Objectives Outcomes Impacts Results Performance Desired Results Accountability Contribute to Strongly Influence Control Long-term Time Accountability with a Performance Management System

40. Workshop Discussion III  Which steps should be taken in the reform process?  Which are the additional development processes that should be discussed?