Lee-Roy Chetty
Lee-Roy Chetty

Matching reforms to institutional realities

Social service delivery is weak across the developing world.

While there is substantial heterogeneity across regions and countries, the picture of failing services is a familiar one.

Challenges such as systematically high levels of absenteeism among teachers, doctors and nurses, persistent rates of drug stock outs — particularly in rural health clinics, rates of leakage in public funds reaching the frontline health or school facilities of 50% or more and the use of safety net programmes as a source of political patronage are some extreme manifestations of those failures.

In addition, developing countries have shown grave difficulties in improving the quality of service to their citizens, including some of the most vulnerable and dependent in society.

Take the case of primary education.

A majority of developing countries show appalling performance in a variety of learning assessments. It is not an exaggeration to say that school systems in many developing countries are becoming large factories producing what will be, de-facto, illiterate young people.

Given this background, it is hardly surprising that service delivery reform has become almost a rallying cry among development policy practitioners.

A quick review of international case studies shows that over the last two decades developing countries have pursued a variety of reforms in the area of service delivery. Decentralisation of the responsibility for social services to local governments, delegation of management responsibilities to communities, creation of special agencies to run high-priority programmes (social funds, conditional cash transfers, etc) contracting out to NGOs and non-state providers and the introduction of management reforms within public bureaucracies are examples of this trend.

With the result of these reforms being implemented, incremental evidence of the impact of such reforms is emerging.

The World Development Report presented a familiar accountability framework focused on three key accountability relationships in the service-delivery chain. These included:

— Between users and providers.
— Between citizens and policymakers.
— Between policymakers and providers.

The long route of accountability (long because it comprises two separate legs) links citizens through voice (or politics) to policymakers and policymakers in turn to service providers through their managerial ability to supervise and monitor providers.

The short route of accountability links citizens more directly to service providers, representing the ability to monitor providers and hold them accountable.

Service-delivery failures happen when one or both of the routes of accountability are weak.

In both federal and unitary countries, the delivery of social services (health, education, safety nets) typically involves roles for both the central and local governments. Financing of social services involves a high share of central funds, often through a combination of programmes and activities executed by agencies of the central government and grants to local governments.

Even in highly decentralised settings, human resources (the largest budget item for both health and education in all countries) are often managed under policy settings that involve some level of national regulation.

To be clear, decentralisation is no panacea however. Under the right conditions it can provide an excellent platform for innovation and experimentation. At the core of successful decentralisation is a combination of improvement of the compact between levels of government and strengthening of local accountability to all citizens.

But elements that make decentralisation work are numerous and institutionally demanding for a weak state.

These elements would include — depending on the country and sector — simpler and more transparent use of inter-governmental transfers, the enforcement of hard budget constraints for local governments, clear definitions of responsibilities (including through legal and/or administrative instruments) and the strengthening of the capacity of central government to monitor and audit sub-national governments as well as the development of evaluation systems.

It may also require specific instruments for intervention (by national authorities or federal bodies) when service-delivery failures threaten the well-being of citizens.

In many countries, there is great heterogeneity in the size and capacity of sub-national entities (eg municipal governments ruling over large cities and very small localities with dispersed populations) which are in very different positions to deliver the various aspects of particular services.

In a decentralised setting, institutional options for delivery of services that in theory could be delivered efficiently by sub-national (local) governments depend on a range of institutional characteristics at the levels of both the central state and local governments.

When the central government influence is strong but local accountability weak, the former would be in a position to substitute for the latter’s weak accountability to the local electorate with accountability to the central government through means such as output-based grants.

When the central government influence is weak, which typically occurs when the central government’s own political accountability is weak, but when some local governments operate under relatively strong local accountability, desirable interventions would be to reduce policy distortions the central government might impose on local governments and promote learning among reform-oriented local governments.

Finally, when both central government influence and local accountability are weak, other non-governmental actors such as NGOs, local communities themselves or international donors would have to step in.

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