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Urban Sector Strategy : IV. Objectives and Policy Priorities
B. Policies for Promoting Urban Governance
1. Principles
81. Four principles for achieving good governance underlie all policies for strengthening
urban management in DMCs.
Accountability. If city managers and staff are to be more accountable to central government policy makers and to residents, their work will need to be assessed using performance indicators and benchmark criteria. Accountability is also increasingly important in the delivery of services by the private sector. Participation. Greater participation is an essential prerequisite of good governance, represented by a growing web of interest groups that want more say in policy development and implementation. Participatory approaches are of particular relevance to reduce urban poverty and enhance the role of the informal sector. Community participation will also be enhanced where the principles of demand management are used to improve service delivery. Predictability. With many cities growing faster than the institutional capacity to manage their growth, administrative and legal procedures are often applied unevenly and to the disadvantage of the poor. An overhaul is required, so that, for instance, housing and land regulations and standards are affordable to poor families. Innovative land tenure policies could allow squatter families and informal businesses to enter the formal housing and land markets. Streamlined procedures for land registration and the validity of titles give confidence to households and businesses. In addition, potential private investors in the delivery of city services need confidence that the legal system is adequate in terms of contract law, dispute procedures, and clear allocation of responsibilities. Transparency. In dealings between the private sector and local governments, transparency is too often lacking. As an example, data on land markets is often not freely available, resulting in increased costs to the potential developer and often the payment of illegal demands for money. This problem should ease as, for example, computer-based land information systems facilitate the storage and dissemination of data and as the benefits of freely available data are realized. To promote transparency and accountability, specific anticorruption measures should be put in place and enforced.
2. Decentralization
82. Decentralization is a commitment to sustainable development through empowering citizens and their locally elected officials, accompanied by a reduction in the monopolization of resources and powers by central authorities. From the perspective of intervention, external resources should be used not so much to produce direct results as to strengthen local capacities to initiate and manage activities that produce benefits for the local community. This implies a demand-driven process, where communities define what they feel they need in terms of development, and where participatory processes for such input are institutionalized.
Decentralization should not be viewed as a goal in itself, but as an instrument for achieving more effective service delivery systems, opening institutions to wider civic participation, and increasing public trust in government.
83. There are compelling reasons for DMCs to pursue decentralization policies, which, properly conceived, will greatly improve the management of urban areas and support the better delivery of urban services. The Local Government Code (1991) in the Philippines, the Decentralization Act (1998) in Nepal, and the 74th Constitutional Amendment in India for
example, are landmark pieces of legislation by which local governments have been given greater authority, responsibility, and resources to implement urban development projects. A prudent decentralization program should include
the simultaneous decentralization of responsibilities, resources, and autonomy; strengthening of local government capabilities, powers, and responsibilities; the collection and diffusion of information on local government services; the retention by central government of certain functions for reasons of efficiency, such as income redistribution and macroeconomic policy; and review of city government remuneration, incentives, and career structures.
84. Three critical types of coordination are needed to support the decentralization process.
Policies are needed to address the following:
Vertical coordination will remain important to urban management as central government will continue to be responsible for the legal framework of the public sector and for various critical functions. Responsibility for services should be assigned to the level of government whose boundaries best incorporate the beneficiaries of those services. Horizontal coordination will be needed among public sector stakeholders involved in city development as well as public-private sector coordination. Cross-border coordination will be needed where large contiguous urban areas are composed of numerous local governments (such as the Metro Manila National Capital Region, the Calcutta metropolitan area, and Indonesia’s JABOTABEK, the Jakarta metropolitan area). Internal coordination mechanisms are critical to overcome poor coordination of interdepartmental, sectoral, spatial, and financial planning; poor coordination of service provision; inadequate staffing; and unfamiliarity in dealing with private service delivery companies. In addition, cities face many cross-sectoral issues such as poverty reduction and environmental protection that require new arrangements for coordinated action.
3. Community Participation
85. Development programs funded through external assistance have often been criticized
for having been designed in a top-down fashion, dictating the kinds of activities that should be
undertaken. Such programs were typically not designed in consultation with stakeholders who
would be affected by the project, or worse, by those required to implement, operate, and
maintain them. The following principles support community participation:
Support and utilize participatory processes. Learning from past experience, current development theory encourages stakeholder participation in community and urban development. For this to work, people must be aware of the issues, and have the authority to make decisions, act on them, and mobilize the required resources. Develop effective systems for communication, replication, and feedback. Participatory decision-making processes, by design, require decentralized local governments that can be effectively responsive. Inherent within these processes are systems for communication, replication, and feedback.
4. Private Sector Involvement
86. The introduction of market-based principles and private sector expertise into the urban sector can bring a variety of benefits, particularly in larger cities.
Market-based approaches. The adoption of market-based approaches may allow existing agencies to deliver better and self-financing services. In other cases, the private sector may bid to operate a service, either on a contractual or an ownership basis. For example, the corporatization of public sector water enterprises to allow more autonomy and better human resources than local governments, can lead to improved services, increased operational efficiency, reduced tariffs, and access to private financial resources. Similar approaches can and are being applied in public transport, markets, and solid waste management in many DMC cities. However, the possible problems associated with replacing public monopolies with private monopolies in the delivery of services should be considered, especially in Pacific DMCs whose market size is extremely limited. Training and familiarization for local officials. Whichever form of private sector involvement in service delivery is decided upon, government officials will need to be trained in their new responsibilities as a party to the contract. The contract will bind the private operator to provide services in which payment is by results, while the government retains overall regulatory authority. A national statutory framework is needed as a starting point for contract negotiations and must cover factors such as minimum quality standards and environmental parameters. Regulatory framework. At the local level, regulations will need to address the quality, price, and required reliability of the service; the investment program; maintenance of assets; and rights of access in the public domain. Risk assessment is another skill where public agencies will need to gain understanding so that they can create an environment conducive to attracting the private sector. Furthermore, in forging agreements with private sector providers, the rights of the urban poor to enjoy equitable access to basic urban services must to be protected.
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