In many of the presentations and discussions, similar general issues were brought up that related to scaling up CDD in the region. Broadly, these issues fall under two fundamental categories of (1) institutional issues, and (2) country-specific issues.
Institutional issues
Recognizing that CDD approaches improve development effectiveness and that projects with CDD components often have higher ratings, the Bank has given greater emphasis to CDD in pursuing our two central priorities of poverty reduction and good governance. However, several important challenges were brought up that addressed the Bank's and its client countries' institutional settings in relation to greater emphasis on CDD. These important challenges are:
1. CDD's compatibility with the Bank's institutional comparative advantage;
2. Appropriateness of the CDD approach with projects;
3. Change in attitudes in both client countries' governments and the Bank;
4. Institutional coordination. 1. CDD can be a tremendously powerful approach to enhance development effectiveness. For instance, the communities that participate in the Social Development Funds' sub-projects, have witnessed a positive change in governing practices, local communities have become more entrepreneurial and less dependent on transfers from the central government. However, it was noted that the CDD activities are typically time-consuming and presuppose a good understanding of local level institutions and practices. A concern was voiced that working on the local level is not a comparative advantage for the Bank because typically there are neither sufficient skills or experience to work efficiently at the local level. As such, more cooperation should be sought with NGOs and other organizations that possess the skills and experience for this type of work. Nevertheless, it should be pointed out that the Bank has comparative advantage and the unique set of experience and skills to offer in promoting broader policy and institutional reforms that create the all important enabling environment for CDD to be effective. 2. It has to be recognized that although CDD has a great potential as a tool for poverty reduction, it is not a panacea: many services can best be provided by the private sector or national public sector. However, the CDD approach is appropriate in settings and sectors where community groups have comparative advantage in providing services. CDD is appropriate in various contexts where local cooperation is required (e.g. producers' organizations for agricultural production and marketing, infrastructure, heath, education, etc.) and its potential may be greatest in the case of common goods (e.g. management of common pasture and surface-water irrigation systems), public goods (e.g. road maintenance), and civil goods (e.g. public advocacy, social monitoring). 3. Assuming that at the Bank the CDD approach is indeed perceived and accepted as a way of doing business, one central task is to convince the countries that have no or limited experience with CDD to engage in this type of new thinking. The Bank can promote and facilitate wider participation that will enhance local initiative to complement the new evolving roles of government. Quick wins from CDD should be emphasized and publicity about these activities can be used to increase awareness. 4. Institutional coordination remains a challenge inasmuch as the CDD agenda runs across different parts of government, society, and the Bank. In this regard, it is crucial to promote and practice openness, transparency, improved communications, better governance and accountability. Additionally, effective CDD also demands more innovative, flexible and simplified institutional arrangements that are able to respond to the needs of a specific community. As for the Bank, the CDD sub-sectoral and cross-sectoral approaches are often deemed suitable. However, budgets within the bank are allocated in single-sector basis that sets constraints for further cross-sectoral cooperation. Furthermore, the Bank itself is too compartmentalized and often there is no or only a limited integrated approach to the subjects that run across several sectors.
Country-specific issues
There are many opportunities, but also considerable challenges to scaling up CDD in ECA countries. Many countries in the region, especially among the CIS countries and some South East European countries, still suffer from the legacy of authoritarian political regimes and highly centralized command economies. This affects not only the economic performance, but also the attitude of the people towards collective action and extremely low trust in institutions, both formal and informal. Additionally, many countries experience serious problems with corruption and poor governance. These problems are often exacerbated by weak state structures that lack legitimacy among their citizens. At the same time, populations continue to have high expectations regarding the services the state ought to deliver. Two main areas of challenges are:
1. Policy issues of enabling the macro environment;
2. Institutional issues of regional and local capacity building and sustainability. 1. Enabling the macro environment comprises broader policy and institutional reform, including decentralization. Enabling the macro environment facilitates community access to markets and information, provides individuals with incentives for collective action, furnishes links to elected local governments, and offers support for community actions. In this context it is important to address the role of the central and local government in CDD and top-down versus bottom-up approach. Although CDD by definition is a bottom-up approach, CDD can not always be sustainable unless complemented by appropriate government programs, i.e. top-down approach. For instance, local level community efforts to improve school buildings are questionable if on the national level decisions are made to consolidate schools. Thus, top-down and bottom-up are complementary approaches and have to run together in order for community level activities to work best. Local government should be actively involved were local cooperation is required. At the same time, it has to be realized that there are situations where the local government might be too distant and not closely involved with communities. Another related matter is that while in general ECA countries have decentralized, i.e. instituted a subnational administration, many governments nonetheless hold very tight control over budgets and local governments consequently have little say about local fiscal matters. 2. Regional and local capacity building and sustainability remain serious issues. This problem is exemplified in providing opportunities for acquiring appropriate skills and experience, creating sustainable formal and informal structures to support CDD activities beyond project life cycle, and designing mechanisms for replicating successful experiences.
The way to deal with promoting CDD under difficult circumstances (e.g., difficult economic environment, low interest in the country, limited financial resources within countries and the Bank) lies in the phased approach, spread over time, realizing "easy-wins" first through relatively simple operations and progressively moving towards complex, multi-sector operations.
 Presentation on Community-Driven Development: A Way Of Doing Business (67k ppt)
 Notes from the BBL (12k pdf)
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