FINDINGS
Quality of Bank Support
To understand the quality of Bank support, the evaluation reviewed all Country Assistance Strategies in the 20 countries, more than 40 pieces of relevant economic and sector work, and 203 lending activities with decentralization components. The 203 lending activities in these 20 countries had associated financial commitments of about $22 billion, of which about $7.4 billion was specifically for decentralization-related activities.
The quality of Bank economic sector work on decentralization was mixed during the 1990s. The work was not always timely and in several countries did not influence the design of Bank Country Assistance Strategies. Of the 20 country cases, the evaluation found decentralization-related diagnostic reports in 16, but only in 8 was timely analysis of the implications of decentralization policy undertaken within five years of issuance by the countries of the relevant laws. The evaluation also found little evidence that broader analytical work on decentralization had substantial influence on Bank operations in the countries studied. Sound analysis, when it was done, tended to affect assistance from the same Bank sector unit that undertook the analysis, but not usually beyond.
The quality of the Bank's lending portfolio to these 20 countries was also mixed during the 1990s. Weak understanding of political economy factors and associated risks led to overly ambitious objectives, often limiting development effectiveness. Bank support for decentralization was provided by various sector units, with objectives that were not always consistent at the country level. Bank support focused on decentralization frameworks, but did not always provide support in parallel to strengthen the technical capacity of the subnational governments to whom responsibilities and resources were transferred. Monitoring of the progress of Bank support for decentralization was weak;Â the Bank focused on output or process-level indicators such as the passage of laws or fiscal transfers rather than on the performance of local governments and other institutions in delivering services.
In the last five years of the evaluation period, the quality of Bank support for decentralization improved in 15 of the 20 countries. Bank analytical work provided a better understanding of the broader implications of decentralization for service delivery and governance and in turn influenced the design of country strategies. Country-level assistance was therefore internally more consistent. In several countries, support for policy reform was combined with technical assistance to strengthen different levels of government, and the Bank increasingly supported country efforts to assess the results of decentralization in terms of strengthened local government performance. Donor collaboration also improved during this period, and in several of the 20 countries joint diagnostic and analytical work, including at subnational levels, led to joint support for decentralization.
This said, the organizational structure within the Bank has in general resulted in less-than-optimum support for decentralization at the country level. An absence of clear leadership and coordination across sectors persists, except in a handful of cases where country directors and/or vce presidents have broken the sector-silo approach, thereby enabling more consistent support to client countries.
Results of Bank Support
The evaluation divided the review of the results of Bank support for decentralization into two parts: support for the development and/or strengthening of decentralization frameworks and support for improving service delivery in the education sector.
In supporting the development and/or strengthening of decentralization frameworks, the Bank generated outcomes that were high or substantial in 7 countries, modest in 12 and negligible in 1. Bank support for decentralization was most successful in helping strengthen the legal underpinnings of intergovernmental fiscal relations. The Bank helped establish frameworks for prudent borrowing and debt management, generating substantial results in half of the countries to which it provided support. Support for strengthening financial accountability of subnational governments to higher levels of government also generated substantial results. The Bank was less successful in helping to strengthen frameworks for own-source revenue or enhancing such revenue; it contributed to substantial and sustained results in only five countries. The Bank also was not very successful in helping clarify the responsibilities of the various levels of government or in supporting monitoring at the local level.
The Bank contributed to better results in countries where the political will to decentralize was strong, where there was greater clarity on the type of fiscal and administrative decentralization to be pursued, and where Bank support was aligned with the client's decentralization strategy. This was the case notably in two post-conflict countries, where consensus on the need to minimize the potential for conflict was compelling. In countries where there was less consensus on the approach to implementing fiscal or administrative decentralization, the results of Bank support were weaker, often because the Bank supported approaches that were inconsistent with client country objectives.
The evaluation reviewed Bank support for decentralization in the education sector in greater depth in 6 of the 20 countries of focus (there are ongoing IEG evaluations in health, water, and municipal management). The evaluation found that sector-level efforts to decentralize education services were not usually sustained and effective unless they were designed and implemented within a broad decentralization framework.
The evaluation did not attempt to aggregate ratings of the quality of Bank support or ratings of the results of Bank support for decentralization frameworks into a single rating for each of the 20 countries. However, a comparison of the ratings for quality and results indicates that when the quality of Bank support improves, the results also get better. This suggests that closer monitoring of the quality of Bank support for decentralization will likely improve the Bank's contribution to overall results in the country.
RECOMMENDATIONS
In many of its country programs, the Bank has made a de facto strategic decision to support decentralization and subnational government capacity development. In a few cases, notably where the client country has made decentralization a cornerstone of its development strategy and has demonstrated political commitment to decentralizing, Bank support has been built upon an explicitly cross-cutting approach. In most cases, however, Bank support has taken a sector-specific route, targeting decentralization and/or subnational government capacity development as a logical way of supporting more effective and responsive service delivery in the sector in question. In these latter cases, the various Bank sector units have not always provided consistent and coherent support for decentralization. |
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