The Ethiopian Civil Service College is the national leader in providing education programs ranging from short term courses to Bachelor and Masters degree’s, research and consultancy to the country’s civil service. Aloysius Bongwa is a senior expert in urban inance, urban policy and capacity building at the Institute of Housing and Urban Development Studies (ihs) at Erasmus University Rotterdam (eur). Samson Kassahun is associate professor and academic vice president of the Ethiopian Civil Service College. decentralization and service delivery in ethiopia ihs is an international institute of the Erasmus University Rotterdam, in the ield of housing and urban management. It offers post graduate education, training, advisory services and applied research. a. bongwa / s. kassahun / m.p. van dijk (eds.) Following a period with a centralized government during the regressive Derg regime, the Ethiopian government has followed a decentralization policy, building the capacity of lower levels of government. Decentralization in Ethiopian urban centres has played an increasingly important role in the service delivery to the urban inhabitant. Hence, the purpose of this book is to assess the situation of decentralization and urban service delivery in Ethiopia. This book concentrates on decentralization and service delivery in urban Ethiopia. The book covers three elements of decentralization: Political decentralization, where powers and responsibilities are devolved to elected local governments. Administrative decentralization; transferring of functions performed by federal government to regional and woreda level administrative units. Financial decentralization, entailing the transfer of inancial resources in the form of grants and tax-raising powers to regional and woreda levels of government, have also been covered in the book. These variations in the form and content of decentralization have an important bearing on service delivery outcomes, and on processes of participation, accountability and responsiveness. The book is based on selected papers presented at the third national conference, organized jointly by the Ethiopian Civil Service College and ihs, Erasmus University Rotterdam, in July 2010. a. bongwa / s. kassahun / m.p. van dijk (eds.) decentralization and service delivery in ethiopia Meine Pieter van Dijk is an economist and professor of Water Services Management at unesco-ihe Institute for Water Education in Delft and professor of urban management in emerging economies at the Institute of Social Studies (iss) of Erasmus University Rotterdam (eur), msm and ihs. This is the third book in a series on Urban Management in Ethiopian Cities. The titles of other books in the series are: Managing Ethiopian cities in an era of rapid urbanization Formalization and informalization processes in urban Ethiopia: Incorporating informality ihs is the international institute of urban management of Erasmus University Rotterdam Decentralization and Service Delivery in Ethiopia ii Decentralization and service delivery in Ethiopia Institute for Housing and Urban Development Studies (IHS) Erasmus University Rotterdam (EUR) Ethiopian Civil Service College (ECSC) June 2011 Decentralization and service delivery in Ethiopia iii Decentralization and Service Delivery in Ethiopia A. Bongwa, S. Kassahun and M.P. van Dijk (eds.) Shaker Publishing, Maastricht June 2011 iv Decentralization and service delivery in Ethiopia ISBN 978-90-423-0408-6 Shaker Publishing BV St. Maartenslaan 26 6221 AX Maastricht Tel.: 043-3500424 Fax: 043-3255090 http://www.shaker.nl Cover design: © 2011 ZEE Grafisch en Architectonisch Ontwerpen Printed in The Netherlands. © Copyright Shaker Publishing 2011 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. © 2011 IHS. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission in writing from the proprietor. © 2011 IHS. Alle rechten voorbehouden. Niets uit deze uitgave mag worden verveelvoudigd, opgeslagen in een geautomatiseerd gegevensbestand, of openbaar gemaakt, in enige vorm of op enige wijze, hetzij elektronisch, mechanisch, door fotokopieën, opnamen, of op enig andere manier, zonder voorafgaande schriftelijke toestemming van de rechthebbende. ©2011 ECSC. All rights reserved. No part of this publication may be reproduced, stored in a retrival system, or transmitted, in any form or by any means, electronic, mechanical, photocophying, recording, or otherwise, without the prior permission in writing from the proprietor. Keywords: Formal economy, Shadow economy, Case studies, Ethiopia, Finance, Financial aspects Authors: Abuye Anelye, Aloysius Bongwa, Ayele Mulugeta, Belaye File, Emaculate Ingwani, Frew Mengistu, Jan Fransen, Kassa Teshager, Meine Pieter van Dijk, Ranauijai Bahadur Sing, Samson Kassahun, Sudir Kuma Sing, Tesfaye Teshome, Tilahun Fekade English Editing and type setting: S.N. Welsh This is the third book in a series on Urban Management in Ethiopian Cities The titles of other books in the series are: Managing Ethiopian cities in an era of rapid urbanization Formalization and informalization processes in urban Ethiopia: Incorporating informality Decentralization and service delivery in Ethiopia v Decentralization and Service Delivery in Ethiopia vi Decentralization and service delivery in Ethiopia Table of Contents List of Tables ........................................................................................ vii List of Figures ..................................................................................... viii Preface ................................................................................................... ix Contributors ........................................................................................... x Part I: Overview: Decentralization and Service Delivery in Ethiopia....... 1 Professor Meine Pieter van Dijk Part II Political Decentralization Gives More Power in Decision Making .................................................................................................... 12 Political Decentralization and Service Delivery in Addis Ababa Kassa Teshager Part III Administrative Decentralization: To Redistribute Authority ...... 28 The Challenges of Public-Private Partnerships: The Case of Merkato Millennium Development Partnership (MMDP) Frew Mengistu and Professor Meine Pieter van Dijk Part IV Fiscal Decentralization: to Have Adequate Revenues ............... 57 Assessment of the Budget Balance: Challenges and Opportunities of Fiscal Decentralization in Addis Ababa City Administration Belay File and Ayele Mulugeta On the Concept and Measurement of Fiscal Imbalances in Ethiopia .................. 74 Aloysius Bongwa Part V Sectoral Case Studies ................................................................ 90 Housing Decentralization and Cooperative Housing in the Oromia Region ...................... 90 Tilahun Fekade Incorporating Informal Settlements in Addis Ababa: From Centralized Urban Planning to Local Partnerships ................................................................. 104 Jan Fransen and Samson Kassahun Environment ....................................................................................... 117 Role Pluralism and Performance of Local Governments on Solid Waste Collection Service Delivery: The Case of Addis Ababa City Mesfine Tilaye Reflections on Women Participation in Solid W aste Collection in Bole Sub City, Addis Ababa, Ethiopia Emaculate Ingwani Education ............................................................................................ 145 The Effects of Administrative Decentralization on Education Provision in Addis Ababa Tesfaye Teshome, Ranavijai Bahadur Singh, and Sudhir Kumar Singh Part VI Support of International Development Agencies ..................... 158 Decentralization and service delivery in Ethiopia vii Decentralization and the Support Role of International Development Agencies in Ethiopia’s Urban Development Abuye Anleye Part VII Conclusions ........................................................................... 168 Conclusions and Future Research A. Bongwa and S. Kasahun Bibliography ....................................................................................... 174 List of Tables Table 1: Context Analysis ....................................................................................................... 42 Table 2: Accountability of the Task Force .............................................................................. 45 Table 3: Organizational Culture of the Task Force ................................................................ 45 Table 4: Organizational Values of Respondent’s Organization.............................................. 46 Table 5: Role of Respondent’s Organization in the Partnership ............................................ 46 Table 6: Resources Contributed by Partnering Parties to the Partnership ............................ 47 Table 7: Expectation of Partnering Parties from the Partnership ........................................... 47 Table 8: Representation Modalities of Members ................................................................... 48 Table 9: Capacity Analysis ..................................................................................................... 50 Table 10: Strength of the Partnership .................................................................................... 52 Table 11: Weaknesses of the Partnership ............................................................................. 53 Table 12: Achievement Rate (in Birr) ..................................................................................... 66 Table 13: Trends of Tax and Non-tax Revenue ..................................................................... 67 Table 14: Percentage Share of Major Revenue Sources in Total Revenue .......................... 69 Table 15: Budget Balance in Birr ............................................................................................ 72 Table 16: Vertical Fiscal Imbalances in Ethiopia .................................................................... 80 Table 17: Horizontal Imbalance Ethiopia................................................................................ 80 Table 18: Ethiopia: Regional Fiscal Operations as a Share of Consolidated Government ... 81 Table 19: Ethiopia: Regional Fiscal Operations as a Share of GDP, 1998/99-2003/04 ........ 82 Table 20: Effective Potential Revenues ................................................................................. 83 Table 21: Expenditure Needs ................................................................................................. 84 Table 22: Indicators and Distribution of Special Funds to the Emerging Regions ................. 84 Table 23: Federal to Regional Government Block Grant Transfers from Treasury ............... 87 Table 24: Shares Vertical / Vertical and Horizontal Equalization ........................................... 88 Table 25: Incentives For and Against Formalization ............................................................ 107 Table 26: Addis Ababa Solid Waste Collection and its Pluralistic Nature ............................ 122 Table 27: Features of Indicators ........................................................................................... 123 Table 28: Correlation Co-Efficient of each of the Scale Items with Summated Score ......... 128 Table 29: Correlation Co-efficient of each of the Scale Items with Summated Score ......... 129 Table 30: Correlation Co-Efficient of each of the Scale Items with Summated Score ......... 131 Table 31: Correlation Co-efficient of each of the Scale Items with Summated Score ......... 133 Table 32: Distribution of Schools in Addis Ababa by Ownerships and Levels, (2007/08) ... 150 Table 33: Distribution of Kindergardens by Ownership and Sub-city ................................... 151 Table 34: Distribution of Primary Schools by Ownership and Sub-city ................................ 151 Table 35: Distribution of Secondary Schools by Ownership and Sub-City .......................... 152 Table 36: Student Enrolment at Different Levels in Addis Ababa ........................................ 152 Table 37: Responses to the Question “How Decentralization has improved the Conditions of Education Provision and its Service Delivery in Addis Ababa City” .............................. 154 viii Decentralization and service delivery in Ethiopia List of Figures Figure 1: Integrated Theoretical Framework for Analysis of Public-Private Partnerships ...... 33 Figure 2: Indictors of Decentralization - The soufflé Theory .................................................. 61 Figure 3: Growth Rate of Achieved Revenue ......................................................................... 67 Figure 4: Growth Rates of Tax and Non-tax Revenue ........................................................... 68 Figure 5: Trend of Major Revenue Sources, Compiled from BoFED. .................................... 68 Figure 6: Trends in the Percentage Share of Major Revenue Sources ................................. 70 Figure 7: Expenditure and Revenue Per Year in Birr ............................................................. 71 Figure 8: Recurrent Expenditure and Captial Expenditure in Birr .......................................... 72 Figure 9: Summary of indicators .......................................................................................... 108 Figure 10: Analytical Framework for Administrative Decentralization. ................................. 123 Figure 11: Role vs. Available Resource Compatibility for Local Governments as Expressed by Local Governments .................................................................................................. 126 Figure 12: Clarity of Power, Role and Duty as expressed by local Governments. .............. 127 Figure 13: Evolution of WID’s Approach to Gender Issues .................................................. 141 Decentralization and service delivery in Ethiopia ix Preface This is a very enlightening book on decentralization and service delivery in urban Ethiopia. Decentralization refers to the reorganization of authority so that there is a system of co-responsibility between institutions of governance at the Federal, regional and local levels. Decentralization also contributes to enhancing good governance, through increasing opportunities for public participation in planning and decision making. It also assists in enhancing the government responsiveness, transparency and accountability. Following a period with a centralized government during the regressive Derg regime, the Ethiopian government has followed a decentralization policy, building the capacity of lower levels of government. Decentralization in Ethiopian urban centres has played an increasingly important role in the service delivery to the urban inhabitant. Hence, the purpose of this book is to assess the situation of decentralization and urban service delivery in Ethiopia. The book is based on selected papers presented at the third national conference, organized jointly by the Ethiopian Civil Service College and IHS, Erasmus University Rotterdam, in July 2010. In the conference several papers were presented covering topics of decentralization policies and practices in Ethiopia in the past decade and a half. From the papers presented in the conference 12 were selected to be included in this book. The book commences with an introduction, which contains the theories of decentralization and outlines the structure of the book. The book covers basically three elements of decentralization: - political decentralization, where powers and responsibilities are devolved to elected local governments, which is a form of decentralization that is synonymous with democratic decentralization. Administrative decentralization, which sometimes referred to as deconcentration, is about the transferring of functions performed by federal government to regional and woreda level administrative units. Financial decentralization, entailing the transfer of financial resources in the form of grants and tax-raising powers to regional and woreda levels of government, have also been covered in the book. These variations in the form and content of decentralization have an important bearing on service delivery outcomes, and on processes of participation, accountability and responsiveness. The chapters in the book have demonstrated, aside from accountability, the other issues pertaining to decentralization include shortcomings, clear responsibilities at different level of government structures, capacity constraints, financing of decentralization, among others and how these problems impact service delivery. This book could be regarded as a contribution to the discourse on decentralization with a focus on the extent to which decentralization enhances service delivery for the urban population. This book represents the contribution of many, to whom I wish to express my thanks. I thank the contributors for their input and the organizers of the conference for their creditable job and the participants for their contributions and participation. Finally, my thanks go to Dr. Samson Kassahun, Mr. Aloysius Bongwa and Prof. Meine Pieter van Dijk, for editing the book. Dr. Hailemichael Aberra Presidnet of Ethiopian Civil Service College x Decentralization and service delivery in Ethiopia Contributors Abye Anelye is director of Urban Development Capacity Building Office at Ethiopian Ministry of Urban Development and Construction Aloysius Bongwa is a senior expert in urban finance, urban policy and capacity building at the Institute of Housing and Urban Development Studies at Erasmus University Rotterdam. He has over 20 years of international experience in lecturing, research and advisory services. Aloysius has worked in Ethiopia on a regular basis for the past decade. Ayele Mulugeta has an MA in economics from University of Kansas, USA. He is a senior lecturer in economics and he is currently the Academic Vice President of Ethiopian Police University College Belay File is a lecturer at Ethiopian Civil Service College. He has an MA in development studies, specialized in Economics of Development and is currently doing PhD research on small business success in the urban informal sector at IHSEUR. Emaculate Ingwani is a lecturer at the Urban Management Masters Program, at the Ethiopian Civil Service College. Frew Mengistu is a lecturer at Ethiopian Civil Service College. He has a background in architecture and town planning from Addis Ababa University and in Urban Management from IHS, Erasmus University Rotterdam. He has extensive experience in construction projects, urban planning studies and restructuring of municipalities. Currently he is pursuing his PhD research at IHS-EUR. Jan Fransen is deputy director of the Institute for Housing and Urban Development Studies (IHS), Erasmus University Rotterdam. He has 20 years of experience in education, research and advisory work on urban employment, capacity building and development. Jan has worked in Ethiopia on a regular basis for the past decade. Previously he co-edited a book on urban management in Ethiopia. Kassa Teshager is an instructor in the Ethiopian Civil Service College. He obtained his BA degree in Development Administration from Ethiopian Civil Service College, Ethiopia, his MA in Development Studies specialization in Local and Regional Development from the Institute of Social Studies (ISS), The Hague, The Netherlands. Currently he is doing his PHD in Development Studies from the University of South Africa (UNISA). Mr. Kassa has publications including: “Sector Wide Approach: the Case of Health Sector in Ethiopia”, Microfinance as a Strategy for Poverty Reduction in Ethiopia”, “Strengthening Governance for Improved Health Services in Addis Ababa” (at the final stage of publication by OSSREA). In addition to his experience in teaching and research, he had worked as a junior clinical nurse in the health sector, Ethiopia Meine Pieter van Dijk (PhD Economics Free University Amsterdam) is an economist and professor of Water Services Management at UNESCO-IHE, Institute for Water Education in Delft and professor of urban management in emerging economies at the Institute of Social Studies (ISS) of Erasmus University Rotterdam (EUR), MSM and IHS. He is a member of the research schools CERES and SENSE. His work has been focused on developing countries since 1973, as lecturer, consultant and researcher. His recent books are on the Chinese presence in Africa (Amsterdam: University Press, 2009), Managing cities (Cheltenham: Edward Elgar, 2006), with C. Sijbesma (eds., 2005): W ater and sanitation in India (New Delhi: Manohar) and with M. Noordhoek and E. W egelin (eds, 2002): Decentralization and service delivery in Ethiopia xi Governing cities, New institutional forms in developing countries and transitional economies (London: ITDG). Ranauijai Bahadur Sing is working as Assistant Professor in Urban Management, at Ethiopian Civil Service College, Addis Ababa, Ethiopia since 2007. He conducted his PhD research on the topic: Environmental Problems and Management of Lucknow City and Masters Degree in Geography (Specialization- Applied and Regional Planning) both from Banaras Hindu University, Varanasi, UP, India. He has an appointment as Coordinator for the Urbanization and Urban Development Planning Course and Land and Real Estate Management Course, in Urban Management Masters Programme, ECSC, Addis Ababa. Mr. Sing is currently teaching the Masters Courses in Environmental Planning and Management, Land and Real Estate Management and Urban Development Planning. His expertise/interest areas include: Environmental Planning and Management, Climate Change Issues, Urban Land use and Regional Planning and Urban Water and Sanitation issues. Samson Kassahun is associate professor and the academic vice president of Ethiopian Civil Service College. He is an urban planner, demographer and sociologist with extensive professional and research experience. His current research interests include urban poverty, urban social development, housing, social capital, neighborhood development and reproductive health. Sudir Kumar Sing (Master Degree in Social W ork, Certificate in Disaster Management) is currently working as a Lecturer in Urban Management Masters Programme, Ethiopian Civil Service College Addis Ababa, Ethiopia since February 2009. Mr Singh has more than 10 years of working experience particularly in the development sector with Indian Institute of Management (Lucknow), UNDP New Delhi and Voluntary Services Overseas (UK). His teaching areas are Urban Governance and Management, Local Economic and Social Development and Urban Social Development and Poverty Alleviation. His research interests are in local economic development, urban governance and cross cutting issues like gender, HIV/AIDS and Youth development. Mr Singh has strong academic leadership qualities and skills testimony as a Coordinator in Urban Governance and Management and Local Economic and Social Development courses and he accomplishes all tasks in a professional way. Tesfaye Teshome (MA in Human Geography) is currently a lecturer at the Ethiopian Civil Service College, Urban Management Masters Programme and also th served as Deputy Program Manager for the above mentioned programme from 12 st November, 2007 to 1 November, 2009. In the summer of 1998 he successfully participated as a research assistant in the research project conducted on selected ethnic minorities of Gamo, Hamer and Wolaita in southern Ethiopia based on the agreement signed between the Federation Council and Research and Publication Office of Addis Ababa University. He has also many years of teaching experience and served as part-time lecturer and research adviser to senior and post-graduate students in Addis Ababa University, Addis Ababa University Commercial College, Royal College and Asmara University. His areas of interests include research, consultancy and reading. Tilahun Fekade has an MA in Regional Development Planning (December, 1991), from the Institute of Social Studies, The Hague, The Netherlands and a BSc in Agricultural Economics (July, 1987) from Alemaya University of Agriculture, Dire Dawa, Ethiopia. He has over 23 years of experience in the urban development sector , where he has participated in multidisciplinary research conducted as part of master plan projects for towns located in various s regions of Ethiopia. He has xii Decentralization and service delivery in Ethiopia strong research interest and is the author of several research papers on diverse urban development related issues including urban planning, local economic development, urban-rural linkages, urban housing, integrated solid waste management and microfinance. Many of his research works are presented at national and international conferences, while most of them are published in journals, proceedings and books. He had also served as the head of the Economic Research Department (2003-2005) and later as the Deputy Director General of the Federal Urban Planning Institute (2005-2007) before he joined the Urban Management Masters Program at the ECSC. He is currently serving as the Director of the Institute of Urban Development Studies and continues to lecture at the Urban Management Masters Program. Decentralization and service delivery in Ethiopia Part I: Overview: Decentralization and Service Delivery in Ethiopia Professor Meine Pieter van Dijk Int r oduct ion In this introductory chapter we shall first introduce the concepts and the major theoretical reflections on decentralization. We will then give an example of analyzing what decentralization could mean for the urban poor in the case of Tanzania and Ethiopia. Van Dijk (2006: 4) argues that in the framework of decentralization urban managers are not only dealing with social issues (such as urban poverty and inequality), they are also responsible for the economic development of their city and for the environmental impact of the development process. The decent r aliz at ion concept The different forms and types of decentralization according to the CheemaNellis-Rondinelli-Silverman paradigm are well known (for example Rondinelli and Ruddle, 1978). According to these authors three forms of decentralization can be distinguished on the basis of their objectives. These three main forms can be mentioned and will be discussed briefly: 1. Political decentralization to give more power in decision making 2. Administrative decentralization: to redistribute authority 3. Fiscal, to have adequate revenues Ad 1 Political decentralization would give more power in decision-making to lower levels of government, the people concerned or other stakeholders. It would include political participation, meaning elections of some kind of a local council. Ad 2 Administrative decentralization: transfer of planning, budgeting, staffing, program and project implementation, information management and operation and maintenance to a lower level of government, mean a replication of a national government structure at the that level: a department of health, education, etc.: Ad 3 Fiscal decentralization means: • Mobilisation of resources, self-financing, or cost recovery through user charges • Co-financing or co production, users participate in providing services and infrastructure through monetary or labor contributions • Expansion of local revenues through property, sales or other local taxes or indirect charges • Intergovernmental transfers of general revenues from taxes collected by central government to local governments for general or specific uses • Authorisation of municipal borrowing, including loan guarantees by central government Often market or economic decentralization is added to this list. Responsibilities are transferred to the private business or non-governmental (NGO) sector. Waste collection in Addis Ababa is good example and will be discussed. This often requires removing legal and policy constraints to allow the private sector to take up these responsibilities. This is the most complete forms of decentralization from a government’s perspective and involves privatization and deregulation; the shift responsibility for functions from 2 Decentralization and service delivery in Ethiopia the public to the private sector. This allows functions that had been primarily or exclusively the responsibility of government to be carried out by businesses, community groups, cooperatives, private voluntary associations, and other nongovernmental organizations. Privatization and deregulation are usually accompanied by economic liberalization and market development policies Ethiopia has undergone remarkable transformations in both political and socioeconomic terms. The transformations were largely centred on the need to shift from the centrally planned, command and control system of the previous regime to a more open market economy. The package of reforms that Ethiopia has been undertaking includes extensive decentralization, de-monopolisation and a promotion of private sector investment. These reforms are now yielding results in the form of economic growth and socio-economic development, the challenge that Ethiopia faces is to ensure their sustainability. A combination of the three main forms of decentralization results in three types of decentralization: 1. Deconcentration, the weakest type of decentralization: redistribution of functions to non central government levels within sector ministries or other sector-specific national agencies that tend to stay in control. 2. Delegation is more extensive, involving the transfer of responsibility for decision-making and administration of public functions to semi-autonomous organizations not wholly controlled by the government, but ultimately accountable to it 3. Devolution is even more extensive and involves the transfer of authority for decision-making, finance and management to quasi-autonomous units of local government with a corporate status. The essence of devolution is giving discretionary authority to lower levels of government; certain tasks can even be subcontracted to the private sector. Cohen and Peterson (1999) analyze decentralization from the perspective of roles distribution. They distinguish three states: 1. Institutional Monopoly, or centralization, where roles are concentrated at the spatial centre in an organization or institution 2. Distributed Institutional Monopoly, or decentralization to local level governmental institutions or private sector firms and organization through deconcentration, devolution, and/or delegation, but where roles are distributed spatially and concentrated in one organization or institution 3. Institutional pluralism, or decentralization through deconcentration, devolution, and/or delegation, but where roles are shared by two or more organizations or institutions, which can be at the spatial centre, distributed, or a combination of both This would lead to the following states of decentralization and distribution of roles. The quadrants can be explained in the diagram on the following page: i. Quadrant I represents centralization or institutional monopoly, where roles are not shared, but instead are monopolized within one central public institution ii. Quadrant III represents distributed institutional monopoly, where roles are not shared, but responsibility for roles is spatially distributed. Included in this quadrant are the deconcentrated and devolved types of decentralization ii. Quadrants II and IV represent institutional pluralism, where roles related to a specific task are shared by 2 or more governmental institutions and/or private sector firms or community organizations. Institutional 3 Decentralization and service delivery in Ethiopia There 1. 2. 3. pluralism can be spatially centralized as in Quadrant II or decentralized as in Quadrant IV are high expectations concerning the results of decentralization, for example: Political benefits include strengthening of the democratization process, with and new initiatives taken & improved management at the local level Decentralization will lead to a reduction in rural-urban disparities through providing employment and basic social services at local level and thus diminish the high rate of rural-urban migration Contributes to poverty reduction Role Based Centralization & Monopoly Center Decentralization & Pluralism I II Centralized monopoly Institutional pluralism at centralized level Spatial III Local Level Distributed Institutional monopoly IV Institutional pluralism at decentralized level Source: Laryea-Adjei G., 2007, Decentralization plus pluralism for basic services provision: water and Which theoretical framework can be used for research concerning decentralization? In principle there are five key questions, each with a different body of literature, in relation to decentralization. a. Which functions and responsibilities have been transferred to which lower level of government? Van Dijk (2006) shows that in India, Indonesia and Thailand a very different choice has been made which functions and takes responsibilities to transfer to lower levels of government, this has created a very different position for the urban 4 Decentralization and service delivery in Ethiopia managers involved. We could call this the basic situation created by the legislation and part of the ‘reality of decentralization’ in the countries concerned. Research focusing on this issue would have a comparative angle and argue that a certain choice limits or stimulates local level managers to take up their own responsibility. It should be noted that the emphasis in India and Ethiopia is on the (region) states, while in Ghana and Tanzania power is given to (usually smaller) districts. In other countries responsibilities are given to local governments (India and Indonesia for example), which may correspond with a city, or a city could be made up of several local governments, implying even smaller spatial units and the problem of coordination at the city or metropolitan level. b. Is decentralization achieving its objectives in the country concerned? To answer the question whether decentralization is achieving its objectives in Tanzania we first have to agree on the objectives in the country concerned. It is possible to focus on the improved service delivery in Tanzania, a before and after comparison is necessary showing whether the performance has improved. The World Bank financed a study on the effects of decentralization on service delivery in Ethiopia, the results are very optimistic as is shown by the title: Achieving better service delivery through decentralization in Ethiopia (Garcia and Rajkumar, 2008). c. Effects of decentralization on the poor Van Dijk (2008a) wants to assess the effects of decentralization on the poor in Tanzania. Van Dijk used household surveys before and after decentralization became effective and tried to argue that the improvements were the result of decentralization. Research into economic of market decentralization, where private parties would take over certain government functions, usually also focus on the results for the poor (Van Dijk and Schouten, 2008) d. Effects of decentralization on different sectors Mollel (2010) wished to determine the effects of decentralization on different sectors, in particular health and education. This PhD focuses on the planning process, which should become more participatory as a manifestation of the decentralization process and be more effective. However, is one interested in the planning process? or is one interested in the results of planning a more development friendly environment for local farmers and businessmen? Van Dijk (2006: 4) argues that in the framework of decentralization urban managers are not only dealing with social issues (such as urban poverty and inequality), but also responsible for the economic development of their city and for the environmental impact of the development process. If the environment is not properly managed, it has the potential to undermine the development prospects of the country. Ethiopia’s urban centres are facing growing environmental problems. These environmental problems are rooted in failed markets and their resolution requires that the government takes firm action. There is evidence that market based instruments can achieve positive environmental outcomes at considerably less cost relative to Ethiopia’s command and control approach. e. What kind of decentralization do we find in a certain country? Using the typology of Rondinelli’s three main forms of decentralization, firstly, political decentralization: this gives more power in decision making to the lower level, here participation is important. Secondly, administrative decentralization: to redistribute authority, allowing the lower level of government to improve service delivery and/or to promote economic development. Finally, the fiscal decentralization: this should help the lower level of government to get adequate revenues to achieve the previous forms of decentralization. In this type of research one could ask, which types of decentralization do we find in Ethiopia? and to what extent has decentralization been successful? Several chapters in this book deal with these issues, in particular in Ethiopia, some of the findings are summarized below. Decentralization and service delivery in Ethiopia 5 The following good framework for analyzing has been developed by Rondinelli and his associates: 1. Assessment of goals and objectives 2. Assessment of concepts and approaches to decentralization 3. Preliminary analysis of political supportstakeholder analysis 4. Analysis of existing institutional structure 8. Development of decentralization implementation strategy 7. Selection of feasible decentralization options 6. Assessment of financial options 5. Assessment of organizational alternatives Examples of Decent r aliz at ion: Et hiopia and Tanz ania Et hiopia Decentralization in Ethiopia has been through different phases; political decentralization (Part II of the book), administrative decentralization (Part III of the book) and fiscal decentralization (Part IV of the book). Garcia and Rajkumar (2008) have separate chapters on improvements in health and education services, the delivery of basic services and intergovernmental fiscal transfers. The book contains a chapter evaluating decentralization at the woreda level, focusing in particular on a number of constraints for decentralized service delivery, which are still in existance. The study repeatedly asks whether the changes over the past 15 year are due to decentralization, or to other development initiatives. Garcia and Rajkumar study discusses how Ethiopia has made substantial progress during the last 15 years in achieving the Millennium Development Goals, 6 Decentralization and service delivery in Ethiopia in particular those concerning education and health. The study also points to some shortcomings. For example the targets for child and maternal mortality and for access to clean water and sanitation that will not be achieved. The woredas also need mired funding to adequately undertake service delivery and the capacity of local governments need to be increased. The major constraints are the lack of clarity in assignment across tiers of government and the fact that citizens do no hold service provincial accountable. Subsequently a lot of interesting policy conclusions have been formulated, such as: 1. To implement an appropriate tax-collection and revenue-sharing mechanism 2. To improve local government capacity 3. To clarify the functional roles between regions and woredas 4. To strengthen transparency and accountability in service delivery 5. To use public information campaigns to improve education and health outcomes and 6. To systematically evaluate key reforms Tanz ania Van Dijk (2008a) provides an analysis of the decentralization process in Tanzania. The major objectives for the promotion in this country were: 1. Promote economic developments in the regions 2. Accelerate development efforts for rural poor 3. Reduce interregional disparities, in particular concerning social service 4. Redress rural-urban imbalances and arrest rural-urban migration Like in the case of Ethiopia, Tanzania started with a very centralized system of government, then a decentralization strategy was introduced. The conclusions of the research showed that the implementation of decentralization strategy after 1997 has not been totally satisfactory. A number of shortcomings were noted, one of these shortcomings was that central government continued to maintain a strong presence at the regional level. However, the decentralization process had also strengthened the democratisation process by introducing mechanisms of accountability and by forcing local governments to compete for funds. The following evidence was produced for the positive interpretation of the results. In the first place the government became convinced that an economic basis is needed to justify decentralization. Secondly, they found out that it is good to make people responsible through elections. Currently the Tanzanian authorities take decentralization very seriously Recently the president even suggested a code of conduct for people at the regional level. Politicians now know that they will be held accountable for what they have promised. In the case of the capital, the three new municipalities in Dar es Salaam have been more active in developing economic policies, by providing space and infrastructure for economic activities, because they had to compete with each other for government funds and private investments. These and other local governments organized private solid waste collection with some success. It was also a remarkable achievement of Tanzania that it improved its accountancy system for decentralized projects by training 400 accountants, who are now active through out the regions. There are also examples of improved management at the local level in Tanzania: 1. There was a rehabilitation of physical infrastructure, particularly the trunk and regional roads under the Integrated Road Program (IRP) after 1997 improved significantly the marketing networks Decentralization and service delivery in Ethiopia 7 2. Recently government worked on the privatization of the railroads, hoping to use the port of Dar es Salaam more effectively, once the railroads work again 3. A lot of money has been spent on improving infrastructure & transport, which can facilitate rural development 4. Improved transport contributes to poverty alleviation by assuring costeffective transport of goods and people 5. Improved transport also links the country to the global economy and assists neighbouring landlocked countries to connect to the world 6. The Agriculture sample census 2002/03 shows some improvements in assets owned in the rural areas 7. Higher levels of regional economic growth in recent years are also probably the effect of decentralization: cumulative positive effect of the infrastructure built by different levels of government and of the higher level of expenditures of local governments 8. Direct central government support to regions, for example by setting up offices in specific regions Due to decentralization there are more initiatives at the regional level and efforts have been made to reduce rural-urban disparities (Van Dijk, 2008b). An effect of decentralization is for example that more regional initiatives are taking place as has been shown by comparing two districts: the Arusha and Kilimanjaro districts in the north. The Arusha district is better managed and more booming because of tourism and migration into the region, but also because of agriculture and trade links with Kenya and Uganda: wheat, coffee and flowers (with some Dutch horticulturalists), plus mining can be mentioned, although the latter concerns mainly some small-scale activities. In general of course the tourism takes place outside Dar es Salaam and hence contributes to rural development. The continuously increasing number of tourist has had a positive impact on rural demand for goods and services, because people earned more money in these regions. Also the regional budgets and tax revenues give an indication of how much is spent in different regions and that these amounts have increased. A combination of these factors have contributed to higher regional growth and spreading of economic growth, which is fuelled by decentralization. The St r uct ur e of t he Book In part II, political decentralization, Kassa Teshager (ECSC) has looked at political decentralization and assesses how it has been legally designed, implemented and how successful it has been in achieving the intended objectives of being an instrument of facilitating service delivery and promoting participation of grass-roots people in the decision-making processes. He gives a working definition of political decentralization and assesses the constitutional and legal framework of political decentralization. In this chapter he also examines the level of decision making autonomy of local governments; the participation of citizens in different decision making activities; and inter-governmental relations for improved decentralized service delivery. The chapter is based on experiences with political decentralization experiences in Addis Ababa city. The study analyzes the constitution and the various policies formulated for the formal transfer of powers and responsibilities from the central government to Addis Ababa city, sub city and kebele levels of administration. Teshager points out that in practice, there have been very little devolution of authority and functions from city government to sub city and kebele levels. The structure is characterized by top-down approach of control and supervision. The representation of different segments of people and organizations of civil society in 8 Decentralization and service delivery in Ethiopia policy-making and political processes of sub city or kebele governments is extremely low. There is no consultation and citizen input in deriving development plans, projects and goals. Therefore, there is a need to revise the political decentralization policy and focus on its practical implementation which is responsive to the needs of local community In part III administrative decentralization: Frew Mengistu and Meine Pieter van Dijk argue that Public Private Partnerships (PPP) are an attempt to transfer management to a combination of government and provide parties. Taking the Merkato Millennium Development Partnership (MMDP) as a case, this chapter analyzes the challenges in public private partnerships for urban re/development projects. The theoretical framework is composed of strategic and behavioural factors embedded within the specific local context. The strategic level factors include: vision/goal, strategies, leadership, political and societal support, and communication. The behavioural interaction level factors include trust, power balance and positions, mutual respect, perceptions, commitment and interaction rules. Both groups of factors are interdependent and closely related to the principles of good governance. These process variables were contrasted to the goal achievements or performance outcomes of the partnerships. The chapter shows that in order to use Public Private Partnerships effectively two conditions are necessary: a meaningful decentralization which empowers urban local governments with enough political space to influence policies to promote local development, and a higher level of political support. The Merkato Millennium Development PPP was lacking these conditions. The other challenges of the partnership had been managing too many stakeholders with different organizational values and expectations, and lack of clear demarcation of roles. The partnership also suffered from generic challenges of public private partnerships which are lack of clear accountability and identity. In part IV, fiscal decentralization, Belay File and Ayele Mulugeta note that fiscal decentralization is often considered the manifestation of other types of decentralization. Fiscal decentralization involves the devolution of both revenue generation and expenditure management power to the lower levels of government. Devolving such a power would result in efficient and effective utilization of scarce resources. However, implementation of such systems varies among regions due to factors such as implementation capacity, the tax base, and level of economic development. The purpose of this chapter is to investigate the practices of fiscal decentralization in Addis Ababa City and to analyze the opportunities and challenges of the city administration in raising sufficient revenue and delivering public services to satisfy the needs of its citizens. Aloys Bongwa looks at the formula for fiscal decentralization in Ethiopia and suggests several alternatives. He addresses the issue of measuring fiscal imbalances in transitional and developing economies and in particular in Ethiopia. Fiscal imbalance indicators are of special interest in transitional and developing economies, where peculiar developments question the validity of conventional indicators. This chapter discusses different approaches to fiscal imbalance measurement. Based on a review of fiscal policies in Ethiopia, and explains why the fiscal imbalances are an important phenomena that needs to be monitored and hence the imbalances have to be measured, which can be done in different ways. The author suggests using the net worth of government which gives a specific insight. W hat mechanisms do federations need to deal with fiscal imbalances between governments? The results show that fiscal imbalances in Ethiopia were much larger between 1998-2004 than conventional indicators suggest. In part V an example of sectoral examples of decentralization housing has been reviewed. Tilhun Fekade chapter is about decentralization and cooperative housing. Housing cooperatives can play an important role in housing provision as Decentralization and service delivery in Ethiopia 9 emphasized by enabling strategies promoted by the United Nations Centre of Human Settlements (UNCHS). The adoption of decentralization policies in Ethiopia that followed the change of government in 1991 led to a redefinition of the legal and institutional framework and hence the support available to the cooperatives. This study was therefore undertaken with the aim of exploring the impacts of decentralization on the performance of housing cooperatives in Oromia Region. The chapter is based on an extensive literature review and was supplemented by interviews held with relevant resource persons. The chapter’s major finding is that, despite changes in the legal and institutional frameworks for cooperatives that were adopted at the national level, the role of housing cooperatives in Oromia Region has been limited due to long years of policy neglect of the housing sector as well as failure to create adequate capacity to promote, support and regulate housing cooperatives. The chapter further highlights the lack of institutional alignment between the activities of institutions responsible for housing and cooperative sectors that have deprived housing cooperatives from obtaining support that are responsive to their specific demands. The study also revealed that, as things stand now, the role of cooperatives has been apparently downplayed in favour of a basically government-driven condominium housing construction program. The study forwards recommendations to be taken up in future efforts that aim to come up with innovative housing provision modalities. Jan Fransen and Samson Kasahun suggest a different way for incorporating informal settlements in Ethiopian cities. They assess if and how informal settlements can be incorporated into the urban fabric of Addis Ababa by answering two questions: Does urban planning in Addis Ababa offer an enabling environment for local governments to incorporate informal settlements? Do present experiences offer opportunities to incorporate informal settlements? The study has practical and theoretical relevance. Practically, it aims to offer recommendations in order to reverse the trend towards dualism by creating incentives to invest in informal settlements and to capture land value increases. These recommendations are targeted at the macro (national policies and regulations), meso (revised master plan of Addis Ababa) and micro level (kebele level upgrading projects). Theoretically, it is relevant as hardly any definition, theory and research methodology exist on incorporating informality. Mesfin Tilaye looks in his chapter at pluralism and performance of local governments in the case of solid waste collection in Addis Ababa. The chapter tries to test hypotheses about the effects of decentralization on accountability of the local governments, taking into account the impact of selected institutional factors on solid waste collection service. The hypotheses tested specifically in this chapter are: has the reform process (in particular decentralization) which took place in Addis Ababa improved task specificity of local governments in solid waste collection service delivery. Secondly, Mesfin wants to find out whether administrative decentralization under institutional pluralism improved the task environment of local government in Addis Ababa hence improving its solid waste collection service function? Emaculate Ingwani reflects on solid waste collection in Bole from a gender point of view. She notes that for many years management of solid waste in African countries, including Ethiopia, has been a burden of governments and local authorities who were often overwhelmed by other service provision obligations. Following decentralization initiatives by the Ethiopian Government through PASDEP; women are now seen playing significant roles in solid waste collection. Bole sub city of Addis Ababa Ethiopia has been implementing a variety of methods in collection of its solid waste. Using the Gender and Development (GAD) framework this research explores the role of women in solid waste collection; reflecting the fundamentals of gender analysis and gender diagnosis. This 10 Decentralization and service delivery in Ethiopia descriptive case study made use of both primary and secondary methods of data collection which include interviews with 35 women who participate in solid waste collection, the Delphi technique with 3 purposively selected city administrators, on site observations of the process and practice of solid waste collection in Bole sub city Kebele 14/15. This research established that the practice of solid waste collection in Bole Sub city Kebele 14/15 is not mechanized, however it is very efficient in keeping the environment clean. Both women and men participate in solid waste collection activities; but women make up the bulk of the workforce. Scaling up the opportunity on community participation in solid waste collection through training and access to equipment is a necessary prerequisite for sustainability of decentralization initiatives and effort in solid waste collection at local level. Tesfay, Singh and Singh look at decentralization and education. A popular form of deconcentration in education is to give additional responsibilities to schools. This is often called school autonomy or school-based management and may take the form of creating elected or appointed school councils and giving those budgets and the authority to make important educational decisions. Deconcentration may also take the form of empowering school directors or directors and teaching faculty to make decisions within the school. Recent studies in developing countires, which are currently trying out new forms of decentralization, show that these countries are ruled by their own specific political traditions. They are often faced with competition from different political legitimacies, in particular those linked to policies of more or less "socio-democratic" inspiration and those bound up with the resulting budgetary adjustment and restriction policies advocated over the past many years. The lastmentioned policies, tending towards greater decentralization, are usually underpinned by ideas of efficiency, participatory democracy or governance. Ethiopia turns out not to be an exception to this state of affairs. In part V, support by International Development Agencies, Abuye Anleye gives an overview of the support role of International Development Agencies in Ethiopia’s Urban Development process. He notes that remarkable achievements are being registered in the field of decentralizaiton and intends to provide an overview of the various federal government initiatives that have been executed in collaboration with bilateral and multilateral agencies since the ascendance of the incumbent EPRDFled government to power in 1991.He browses through secondary sources under the custody of the Ministry of Works and Urban Development (MW UD). The author aims at effectively capturing the major achievements claimed to have been attained in the pursuit of decentralization policies in league with bilateral and multilateral agencies. In part VI the conclusions Aloysius Bongwa and S. Kasahun draw some conclusions and look at their implications for future research. Conclusions Autonomy at lower levels of government allows a more active role for urban managers in formulating, economic, environmental and social policies and collecting more local revenue. The challenge for urban management is to focus on the most important urban issues and develop a strategy concerning the future development of the city. The question is, who determines what these issues are? Urban management has also become more complicated because it has become more and more a multi-actor event. Inhabitants, entrepreneurs, organizations of inhabitants or entrepreneurs, environmental activists and project developers (or organizations of these actors) all want to play a role. To be able to deal with this situation the urban manager needs clear responsibilities. This leads to the theme of decentralization, which provides new opportunities for local actors to take Decentralization and service delivery in Ethiopia 11 initiatives. Decentralization offers urban managers more opportunities to create the conditions for growth. The conditions for successful decentralization will be studied in this book. 12 Decentralization and service delivery in Ethiopia Part II Political Decentralization Gives More Power in Decision Making Political Decentralization and Service Delivery in Addis Ababa Kassa Teshager Int r oduct ion Backgr ound and Rat ionale Decentralization has become an increasingly widespread and significant dimension of political and administrative reform in many developing countries including Ethiopia. This is associated with the hope that “bringing government closer to the people” will improve the provision of public services by increasing people’s voice in decision-making, and by making the government more accountable to them. Decentralization is presumed to have a number of benefits, including positive outcomes in both democratic and developmental terms. It is assumed that democracy will be deepened by the extension of political representation to the local level, with democratic processes strengthened through enhanced political participation at the local civil society actors. In addition, it is assumed that benefits in socio-economic development will accrue through local government being more responsive and more accountable to citizens’ needs and desires. These benefits are interlinked in that local-level representation and participation is believed to lead to the delivery of public services that are relevant to the local context. The current Ethiopian government officially declared a decentralized ethnicfederal system in its 1991 transitional charter and 1995 constitution which was aimed at devolving political, fiscal and administrative power from the central to sub national governments. The decentralization drive in Ethiopia has proceeded in two phases – first from the federal to regions and chartered cities (Addis Ababa and Dire Dawa) (1991-2001/02), and subsequently into W oredas or sub cities (2002/03). While the first wave of decentralization has registered significant achievements, it was not capable of bringing genuine self-rule and better service delivery particularly at lower levels of administration (Taye and Tegegne 2007). This circumstance prompted the central government to take an initiative to further devolve powers and responsibilities to the woredas or sub cities and kebeles in 2002/03. Following this initiative, the revised Addis Ababa city charter (proclamation No 361/2003) became effective in 2003 and is valid until today. Prior to the reform, Addis Ababa was structured in 6 zones, which were divided into 28 woredas (districts), which were again divided into 328 kebeles (sub districts) (proclamation No 87/1997). After the reform woredas were renamed to sub cities and there is no zonal structure. Today, the city is divided into 10 sub-cities and 99 Urban Kebeles as per the new administrative structure (Proclamation no 361/2003). Following the path of decentralization the sub cities and kebeles were empowered and endowed with the duty to provide a multitude of decentralized municipal services. However, to what extent these decentralized powers are exercised and the anticipated benefits actually realized are so far remaining limited. Therefore, this chapter looks at political decentralization in Addis Ababa City Administration and attempts an assessment of legal framework, local government autonomy, and its Decentralization and service delivery in Ethiopia 13 success in achieving the intended objective of being an instrument of promoting participation of grass-roots people in decision-making and better service delivery. St at ement of t he Pr oble m Political decentralization is the territorial division of state power. It is a popular governance arrangement aimed at achieving complete devolution of decisionmaking power and transferring political responsibility to sub-national governments. In such a political structure, sub-national urban governments have an independent legal existence guaranteed by constitutional arrangements. Often, there are legal provisions to prevent any undue interference by central governments in matters determined to be of local jurisdiction. In federal systems, the independence and autonomy of the constituent units are so important that authority and responsibility are constitutionally shared between the central government and other subsidiary units of government, which can be regions, woredas and chartered cities. Such a division of state functions and responsibilities is the hallmark of genuine decentralization. Apart from legal guarantees for autonomy, politically decentralized governmental units have independent revenue and taxing authority, and can prepare and approve their budgets and socio-economic development plans without having to seek central authorization. Further, they can also have elected councils primarily accountable to the electorate. In modern politics, the closer a political system gets to such direct participation and the more people it offers an opportunity to influence policy making, the more decentralized and democratic it is (Barkan et al. 1998). According to the W orld Bank, Political decentralization aims to give citizens or their elected representatives more power in public decision-making. Advocates assume that decisions made with greater participation will be better informed and more relevant to diverse interests in society. The concept implies that the selection of representatives from local electoral jurisdictions allows citizens to know better their political representatives and allows elected officials to know better the needs and desires of their constituents. From this explanation, political decentralization often requires a constitutional/legal framework, democratic elections and pluralistic political parties, local government, and the encouragement of effective public participation. The decentralization program of any government must be guided by the principles of political decentralization and the measure of success must be its contribution to democratic self rule and facilitated service delivery at local level. By the same token, the current decentralization policy of the Ethiopian urban governments must be evaluated from this perspective. However, there is a gap in this arrangement because the role and responsibilities of Cities, Sub cities and Municipalities as well as their place in the broader realm of administration are not clearly and adequately stated and implemented in Ethiopian state structure. This has resulted in the apparent neglect of Cities and Municipalities as separate decision making units. In particular this implies that urban centres are not recognized as distinct units of governance and their authority and functional relationships with the federal, regional, zones and woredas governments have not been clearly defined. This has handicapped sub cities and municipalities from delivering services and infrastructure to urban residents. Though Addis Ababa city administration is different from other cities in the country, there is no evidence that shows how political decentralization is exercised at sub city/ kebele level. Obj e ct ives of t he St udy The main objective of the study is to examine how political decentralization affects public-service delivery in Addis Ababa. Specifically, the study aims to 14 Decentralization and service delivery in Ethiopia achieve the following objectives: (1) to assess the constitutional and legal framework of political decentralization; (2) to examine the level of decision making autonomy of local governments; (3) to examine the participation of citizens in different decision making activities; (4) to examine inter-governmental relations for improved decentralized service delivery. Signif icance of t he St udy Political decentralization is now recognized as a key pre-requisite for facilitating public service delivery and promoting good governance. It is therefore crucial that policy-makers, scholars, practitioners and other stakeholders in Ethiopia should advance their understanding of issues related to local government and political decentralization. Though there are different reform measures taking place in the country related to decentralization, there is little empirical evidence on the improvement of service delivery at the sub city level as a result of political decentralization. Therefore, it is important to study how political decentralization facilitates service delivery at the decentralized level. The study wishes to give an indication for policy makers on how to make the service delivery effective and efficient through different decentralization reform measures. It is hoped that the study will contribute to the existing body of knowledge relating to decentralization in general and political decentralization in particular in Ethiopia. Scope and Limit at ion This study mainly focuses on Addis Ababa city administration. However, to illustrate cases, the researcher has chosen Bole Sub City because of the constraints of time, costs and availability of information. Since this chapter depends on both secondary and primary data, inconsistency and unavailability of relevant up to date information have affected the quality of the chapter. In addition, the researcher used semi structured interviews and applied qualitative approaches. This has also had an affect on the quality of the research. Since the research is a case study on political decentralization, it does not give the real picture of all types of decentralization in the city. Appr oaches and Met hodology This study looks at political decentralization in Addis Ababa and aims to assess the extent to which local governments exercise democratic self-rule, representativeness of elected councils, popular participation and independent decision-making power on matters pertaining to service delivery. Although the study is in Addis Ababa, the sub city level of administration is taken as the focal point for case presentations due to its strategic place in the present city government structure. In this research, qualitative data from mainly secondary and primary sources were used. The primary data obtained from 15 key informants (kebele officials, sub city officers, elected councilors, heads of NGOs and community representatives) through semi-structured interview in Bole sub city. Secondary data was obtained from books, journals, articles, city and sub city documents and research works. The federal constitution, city charter and other laws were reviewed for the purpose of examining the formal powers and duties of the city, sub city and kebele level administrations. In addition, the same sources were used to sketch the formal institutional framework and inter-governmental relations between sub city and the other tiers of government. Official reports and publications were used to prepare the socio-economic and demographic profile of Addis Ababa. Decentralization and service delivery in Ethiopia 15 Or ganiz at ion of t he St udy With the above introduction as the first part of the study, the remaining parts of the study have been organized as follows: The second part of this paper deals with the theoretical discussion about political decentralization. The third part of this paper is about data presentation and analysis. The fourth part of this paper describe the findings and observations made by the researcher and the final part of this paper is the conclusion. Theor et ical Discussion When studying political decentralization for improved service delivery in Addis Ababa, it is important to reflect on decentralization issues, because the institutional setting and functioning of the city determines to what extent certain laws and policies can be implemented at different levels. To be able to understand how political decentralization functions, first of all a definition will be given of the concept. Next, the concept will be framed into service delivery, referring to how political decentralization can improve service delivery. This theoretical framework aims to highlight and bring together the most important components of political decentralization with respect to service delivery. Though political decentralization can be seen from different perspectives, this analysis will be made based on the perspectives of UNDP/WB. Decent r aliz at ion The term decentralization has different meanings for different people. However, most authors on the subject agree that decentralization means transfer of authority and responsibility from higher to lower level government bodies and functionaries. According to Falleti (2005), ‘decentralization is a process of state reform composed by a set of public policies that transfer responsibilities, resources, or authority from higher to lower levels of government in the context of a specific type of state’. Decentralization by Rondinelli and Nellis (1989) is described as transfer of responsibilities for planning, management, and the rising and allocation of resources from the central government and its agencies to field units of the central government, semi-autonomous public authorities, regional authorities, or nongovernmental, private or voluntary organization. According to UNDP, there are different types of decentralization- namely political, administrative, fiscal, and market decentralization, which are distinguishable by their different characteristics, policy implications and conditions for success. However, this chapter focuses on Political decentralization in line with the perspective of UNDP and is discussed in the following section. Polit ical Decent r aliz at ion Political decentralization refers to the decentralization of political power and authority to sub-national or local levels where elected and empowered sub-national government units exist (Martinussen, 1997). It is a popular governance arrangement aimed at achieving complete devolution of decision-making power and transferring political responsibility to regions, woredas and chartered municipalities. In such a political structure, sub-national governments have an independent legal existence guaranteed by constitutional arrangements. Often, there are legal provisions to prevent any undue interference by central governments in matters determined to be of local jurisdiction. The primary objective of political decentralization is to push decision making down to lower levels of governments and empower communities to exercise self-rule at the local level. 16 Decentralization and service delivery in Ethiopia According to the World Bank 1, political decentralization often requires constitutional or statutory reforms, the development of pluralistic political parties, the strengthening of legislatures, creation of local political units, and the encouragement of effective public interest groups. Further, advocates of political decentralization often always assume that decisions made with greater community participation will be better informed and more relevant to diverse interests in society than those made only by national political authorities. The concept implies that the selection of representatives from local electoral jurisdictions allows citizens to become better aquainted with their political representatives and allows elected officials to better understand the needs and desires of their constituents. According to Mehret (2006), political decentralization is usually assumed to have the following benefits: • Transferring power and authority from the central government to legally established units of local governments so that decision-making power will be in the hand of local-authorities who are more aware of the local situation and hence are in a better position to take judicious decision; • Promoting democracy at the local level through periodic elections and elected councils; (3) encouraging citizen participation in government and development; • Guaranteeing the independent decision making authority of local governments; • Helping in the development of a robust civil society; • Promoting equity at the local level by ensuring the fair representation of all societal groups in the community. According to John-Mary Kauzya (2007), Political decentralization can also be understood to refer to either or both of the following: (1) transferring the power of selecting political leadership and representatives from central governments to local governments, and (2) transferring the power and authority for making socioeconomic decisions from central governments to local governments and communities. The first sense of political decentralization refers to the vote (in the choice of their local leadership and representatives) while the second one refers to the voice (to have strong influence in the making, implementation, monitoring, and evaluation of decisions that concern their socio-economic wellbeing). A combination of both enhances the influence of local people on the decisions that concern them. John-Mary Kauzya (2003) argues that political decentralization requires a process that combines both vertical and horizontal decentralization. While vertical decentralization transfers power and authority from central government to local government, horizontal decentralization empowers the local communities and enables them to receive and utilize the powers that are transferred to them especially in problem analysis, priority setting, planning, and constantly demanding accountability from their local and national leadership or any governance actor at the local level. Horizontal decentralization would require growth of civil society as well as structuring local governments in such a way that they are legally obliged to seek and promote the participation of the local communities in setting priorities, planning and making decisions that the local governments will implement in a whole range of socio- economic activities. This study used the perspective of UNDP, and the benefits of political decentralization identified by Mehret are used as a parameter to assess the success of political decentralization policies in promoting self rule and service delivery at local level. 1 http://www1.worldbank.org/publicsector/decentralization/political.htm Decentralization and service delivery in Ethiopia 17 Decent r aliz at ion in Et hiopia Ethiopia’s decentralization policy, elaborated in the 1991 transitional charter and the 1995 constitution, was created by the current ruling party (EPRDF) to devolve fiscal, political and administrative power to the ethnically organized regional governments and chartered cities to bring political stability and contribute to democratic governance, and improve service delivery. Unlike previous, heavily centralized Ethiopian regimes, the EPRDF introduced a decentralized federal system, and officially allowed different political parties to compete and participate at both central and regional government levels. The first phase of decentralization created a federal state structure, consisting of 9 ethnic regional states and 2 city administrations responsible for a broad range of the country’s political, economic and social objectives (Mehret 1998, FDRE 1995). While the first wave of decentralization registered significant achievements, it was not capable of bringing genuine self-rule particularly at the lower levels of administration. Though the constitution allows for the creation of woredas with their elected councils, the lack of power, resources and authorities has limited them to effectively engage in democratic self-rule. It is within this back-drop that in 2002/03 the government launched a second phase of decentralization, designed to shift the decision-making process closer to the community level and to improve the responsiveness of service delivery. This was achieved through the District Level Decentralization Program (DLDP) and Urban Management Program (UMP) (Taye, 2008). The process entailed enabling legislation for local governments, fiscal reform, institutional restructuring, capacity development, etc. Along this line, it is not difficult to see that there is a room for improvement in order to maximize the benefits of decentralization. However, while decentralization has changed the political climate of the country, it has certainly led to questions regarding its various procedures, ramifications and impact. According to Paulos Chanie (2007), on the political front, the EPRDF controls all the regional state governments in the Ethiopian federation, either directly through its member parties or indirectly through affiliate parties. The relationship between the central and regional parties is between patron and clients. Therefore, a lot remains to be done to get deeper into the decentralization process in Ethiopia, particularly in light of recent developments. Further research and investigation will help to fill knowledge gaps and provide policy makers with adequate, sufficient and reliable data to improve the decentralization drive in Ethiopia and this research is part of this process. Decent r aliz at ion in Addis Ababa Before the revolution and dethroning of Emperor Haile Selassie by the military, Addis Ababa had been one of a few self-governed cities of Ethiopia. The mayor nominated by the Emperor, was able to reign autonomously. He was independent from the strong hand of the Ministry of Internal Affairs and was hence able to command internal and external resources for the implementation and acquisition of programmes as he pleased. The city government had a city council consisting of 30 members, with legislative powers. The council was formed by eight appointed department heads and 22 elected citizens of the city. The right to stand for election was a privilege to those classified as great land owners (Mehret 1999). After the political change in 1974 and the power shifted towards the provisional military council called the “Derg“, the city government lost all its influences and Addis Ababa eventually lost its autonomy. The appointment of the mayor and other civil servants required the membership in the single political party the “W orkers Party of Ethiopia”. The growing politicization and hierarchy of the administrative 18 Decentralization and service delivery in Ethiopia structure created a culture of “Command and Control”. The increasing relevance of party membership led to the recruitment of “cadre” instead of professionals and thus to the bureaucratization of the administrative machinery and as a result hindering the adequate provision of municipal services to the citizens of Addis Ababa (Kokebe 2007). In 1991 the communist government was replaced by the government that is ruling Ethiopia up until today. In 1994 the provisional government was declared as the “Federal Republic of Ethiopia”, thus introducing a democratization process. Addis Ababa became the capital of the federal state and a chartered city with a decentralized structure. Dat a Pr esent at ion and Analysis Backgr ound of Addis Ababa Addis Ababa, the capital city of Ethiopia and the diplomatic centre of Africa, founded in 1886 at the time when emperor Menelilk II and his wife Empress Taitu made their principal town at Entoto. Established in 1887 with a few tents and scattered huts, Addis Ababa has shown a great geographical expansion to the area of about 540 Km² to date. Prior to 1974, Addis Ababa was one of the few chartered cities of the Empire of Ethiopia administered by a lord mayor (kantiba) appointed by the Emperor. It had considerable local autonomy because the lord mayor was largely free from the political control of the then powerful Minister of interior. In addition, it was the only local government authority empowered to finance projects by issuing its own bonds and borrowing from internal and external sources on its own right (Kokebe 2007). After the political change in 1974 and the power shift towards the provisional military council, the city government lost all of its influence and Addis Ababa eventually lost its autonomy. In 1991 the communist government was replaced by the current government that is currently ruling Ethiopia and Addis Ababa is a chartered city having its own administration led by a mayor. According to UNHABITAT (2008), hosting 30 percent of the urban population of Ethiopia, Addis Ababa, is one of the fastest growing cities on the continent. Its population has nearly doubled every decade. In 1984 the population was about 1.4 million, in 1994 it was 2.1 million, and it is currently thought to be 4 million. UN-HABITAT estimates that this number will continue to rise, reaching 12 million in 2024. Its geographic location, combined with its political and socio-economic status have made it a melting pot to hundreds of thousands of people coming from all corners of the country in search of employment opportunities and services. A high rate of unemployment, concentration of slum dwellings, and poor housing, infrastructure and sanitary development, characterize Addis Ababa more than the few good features it posses. Until recently an inefficient centralized service delivery system was among the big manifestations of the previous city administration system. The City Governance Needs Assessment demonstrated a lack of vision and appropriate strategies, lack of commitment and attitudinal change, absence of participation of all development actors; weak public institutions, unsupportive policy environment and centralized service delivery systems were among the manifestations of the administrative system (AACG 2006). However, currently the city is decentralized into 10 sub-cities, which are sub-divided into 99 localities called ‘kebeles’. Kebeles are the lowest levels of city administration with negligible decision making power in urban development activities. However, together with sub-cities kebeles play a key role in executing municipal activities. Decentralization and service delivery in Ethiopia 19 Socio- Economic Pr oblems The economy of the City mostly depends on industry, trade, large and smallscale factories run by the government and private investors. Handicrafts and cottage industries are numerous and play an important role in the development of the city. Commerce and tourism are growing and some agriculture is undertaken in the surrounding kebeles. However, growing urbanization, industrialization and population influx put continuous pressure on the cities administration. The economic condition is low and social services are minimal. The magnitude and intensity of the problems are beyond the financial means of the City to alleviate them. The most visible manifestation of the urban crisis in Addis Ababa is the lack of the essential basic amenities such as piped water, sanitary facilities, electricity, telecommunications and road networks. Where they are provided, these facilities are insufficient and therefore do not meet the requirements of the users. According to UN HABITAT (2008), basic indicators clearly show the extent of the problem in Addis Ababa. For instance, 26 percent of the houses have no toilet facilities (not counting the informal houses), 33 percent of households share a toilet with more than six families, 29 percent has no separate room for cooking, and 34 percent of the residents depend on water from frequently interrupted public taps. This implies that over half of the households in Addis Ababa including informal settlements, have neither private nor shared toilet facilities, resulting in an indiscriminate use of drains, open spaces and waterways. Solid waste disposal is also a major problem in the city. Drainage facilities are absent in most areas and this makes the most part of the city liable to flooding during heavy rainfall. A city’s economic activity and its competitiveness depend heavily on the reliability of its power supply. Deficiencies in power supply in Addis Ababa are so high that power rationing has become a norm. As a result virtually all manufacturing firms, big enterprises and institutions are forced to have their own electric power generator to cope with the unreliable public power supply. It is clear that Information and Communication Technology (ICT) has been playing an important role in tackling a wide range of health, social and economic problems. The ICT services in Addis Ababa provided by the publicly owned Ethiopian Telecommunication Corporation (ETC), has not been able to meet the growing demand of the population. Poor transportation service, traffic accidents, congestion and pollution are among the serious problems of the city. The housing problems in the city are overwhelming and the total housing production has been inadequate in relation to need. The housing problems in Addis Ababa manifest themselves not only in terms of quantity but also in quality. The majority of the population live in areas where the housing conditions have deteriorated significantly with the associated degree of lack of necessary facilities. Therefore, the full force and commitment of the federal as well as competent, responsive and autonomous city government is required if the city is to overcome the pressing problems most residents face on a daily basis. Legal Fr ame w or k Const it ut ional Pr ovision Addis Ababa, the capital city, has a constitutional right to self-government. Art. 49 (2) of the federal constitution provides that “the residents of Addis Ababa shall have a full measure of self-government”. However, as argued by Mehret (1999), following the coming to power of the EPRDF in 1991, the city of Addis Ababa assumed multiple identities. First, it was declared the capital city of the Federal Government of Ethiopia in 1995. Second, it serves as the seat of government of the 20 Decentralization and service delivery in Ethiopia Oromia Regional State. Third, it is also an autonomous local government authority in the Ethiopian federal system of government with an elected council and city governor answerable to the residents. This multiple status has made it difficult to clearly determine the formal lines of responsibility. With this complication the city has not been responsive to the needs and problems of the residents mainly because it has to balance between its accountability to the federal government, the Oromia regional government and the electorate. These are pertinent issues that need to be addressed in order to make Addis Ababa a self-governing and independent urban entity. Although Addis Ababa residents are guaranteed a full measure of self governance by the federal constitution to exercise higher level autonomy, both the old and revised city charters empower the prime minister in consultation with the parliament to dismiss the mayor and dissolve the city council where he deems it necessary and to order the election of a new council. This shows that Addis Ababa’s city government in practice works under the supervision of the federal government and is not fully autonomous. Cit y Char t er The City Municipality was recognized as a local government for the first time in 1954 when Notice No. 172/1954 gave the Charter status to the city. This notice was the first tentative attempt ever taken by the Ethiopian government towards the recognition of the self governing right of the city dwellers. Then, the administration of the city was entrusted to the city council consisting of elected councillors and a Kentiba who was nominated by the Emperor. The fact that the city was given full freedom to administer its internal affairs, issue its own structure, and generate fund from internal and external sources had given the municipality significant political and financial autonomy (Shimelis 2003). The progress towards self-administration of the city faced set-backs following the overthrow of Emperor in 1974. During the Derg regime (1974-1991), the three proclamations that were made, drastically affected Addis Ababa’s Municipality. First, the proclamation No. 47/1975 issued to nationalize the land and all extra houses of private owners significantly reduced the municipality’s revenue based property tax. Then, proclamations, No. 4/1976 and No. 206/1981 which were prepared to confirm the plan-led and highly centralized economic policy of the government changed the organizational structure of the city. Crippled by the sudden decline of revenue, lack of power and the new organizational structure that changed the city government to urban dwellers’ associations with a role of ideological promotion, the municipality neglected its service delivery and infrastructure development tasks for more than a decade (ORAAMP 2000). Even after the radical government decentralization of the country in 1991 and later on, during the adoption of the FDRE Constitution, municipalities in Ethiopia seemed to remain overlooked. In 1997 Addis Ababa became a chartered city with significant self-government rights. Its City Charter proclamation number 87/1997 was revised and replaced by proclamation number 361/2003 that gave full autonomy to the City Administration. This proclamation was meant to empower the Addis Ababa City Administration (AACA) to make the city a suitable urban space for work and residence fulfilling modern standards, maximizing the achievements of its development objectives and coping with time through self-renewal. At present Addis Ababa City Government is structured along three layers: The City Government, 10 Sub-cities and 99 Urban Kebeles and 20 Rural Kebeles, which consists of peasant associations as per the new administrative structure (Proclamation no 361/2003). Decentralization and service delivery in Ethiopia 21 Pow er and Funct ions of Cit y Gover nme nt Under the present structure the units of the City Government includes a City Council, a Mayor, City Cabinet, the Office of the Chief Auditor and City Judicial Department. The City Council is the supreme authority elected every five years and appoints the mayor. As the chief executive officer of the city, the mayor is accountable to the city council and the federal government. The new executive wing of the administration is led by the city manager who is accountable to the mayor. The City Government undertakes its functions through 8 bureaus which are accountable to the Mayor and 11 agencies, institutes and offices organized under City Manager Office (Proclamation No. 361/2003). According to Article 11 in Proclamation No. 361/2003, Addis Ababa City Government has legislative, executive and judiciary power to function over issues specified in the city charter and that have not been included in the powers and functions of the executive units of the Federal Government of Ethiopia. Proclamations No. 261/2003 indicates that the city has a right to generate its own revenue from designated sources, obtain loans from local resources, and establish its own executive bodies, institutions and enterprises. Moreover, the City Government is responsible to define the power and duties of each unit within it. It also issues and enforces regulations and directives on matters connected with its jurisdiction. This legal framework shows that power is decentralized from federal to city level but in reality inter governmental relationships among the federal government and city government and their lines of authority and structure is characterized by a top-down approach of control and supervision. City government works under the direct supervision of the federal government which is against the purpose of political decentralization that empowers and gives autonomous power to sub national governments. Pow er and Funct ions of Sub Cit y Council Sub-cities are the second layer of the Addis Ababa City Government and each sub city is structured comprising of three departments: a Sub-city Council, a Subcity Administration and an Executive body. The functions and power of each Subcity Council in general are related to governing the Kebele Administrations within its boundary and ensuring how laws and orders are being exercised. According to Addis Ababa city charter (Proclamation no 361/ 2003), a Sub-city Council, being accountable to residents of the respective sub-city and the City Council, shall: approve economic, social development and municipal service plans of the respective Sub-city; elect the Chief Executive and the Deputy Chief Executive of the Sub-city from among its members recommended by the political party with the majority of seats in the council; approve the appointment of members of the Standing Committee of the respective Sub-city upon nomination by the chief executive thereof; allocate the budget set aside to it by the City Council; constitute the committees of the council of Sub-city; receive, examine and decide upon the annual and periodic reports from the chief executive of the respective sub-city; issue internal regulations that govern the operations of the Sub-city council. However, the sub city council role focuses more on the implementation of policies rather than formulating and planning their own issues. According to key informants, sub city administrations are not fully empowered in the approval of their plans and use of the collected revenue to finance their expenditure. They are supposed to submit it to the city government, they collect local taxes - but not use it and prepare budgets, but not approve it. They are unable to recruit their staff when necessary without the approval of the city government. According to the key informants, this has affected the service delivery in the sub cities. For them sub cities are expected 22 Decentralization and service delivery in Ethiopia to provide adequate service. However, due to lack of financial, human, material and information networking problems there are complaints from service users. This is due to their inability to recruit and use what they have collected for their own purposes. Pow er and Funct ions of Ke be les Kebeles are the lowest level of government in Addis Ababa City Administration. The Charter also stipulates that Kebeles have the following organs of power: a) Kebele council, b) Kebele chief executive, c) Kebele standing committee, d) Kebele social courts. According to proclamation no. 361/2003, a Kebele, being a centre for development and direct popular participation as well as a location for the delivery of basic services, shall: with its council accountable to the resident there of and to the respective Sub-city Council, have such powers and functions as to be specified by the city council, facilitate conditions in order for services to be available within reach of the respective residents. However, kebeles are still detached from full decentralization of power. Almost all key informants agreed that kebele administration is given more responsibility than the resource and power given to it. Like that of sub cities, kebeles suffer from serious lack of human resources and they do not have the autonomy to recruit their own employees. It was reported that many of the kebeles in Bole Sub City were under-staffed and under-financed, and thus unable to deliver services to the community. Some of the officials at kebele level complained that city and sub city governments routinely assigned functions to kebeles without adequate resources (skilled personnel, money, equipment, vehicles, IT services, etc) and this kind of mandate without the needed resources will create public mistrust about the ability of local government to deliver efficient services. For them, kebeles most often operated as recipients and implementers of decisions and orders from city /sub city governments rather than semi independent institutions of self-government at the grassroots level. For example, kebeles are not involved directly in development planning and the plan is usually prepared by the city and sub city experts mainly by the office of finance and economic development in cooperation with sector offices. Due to such reasons, kebele officials confirmed that they are not providing adequate service to the citizens though there is a change as compared to the previous situation. This clearly shows that political decentralization is the key for better service delivery but must be fully practiced and supported by other types of decentralization (mainly fiscal and administrative). Local Gover nme nt Aut onomy The new City Charter adapts the federal government’s policy directives on decentralization, governance restructuring and civil service reform to Addis Ababa and clearly defines the extent and methods of self-government of the city. Formally, the city government has been given full powers to exercise complete decisionmaking authority. In practice, however, commands and instructions flow from top to bottom in an unbroken bureaucratic line from the central government to the city, sub cities and kebeles. As confirmed by key informants, this bureaucratic chain of command has limited the local discretionary power and decision-making authority of the city, sub city and kebele tiers of government. According to Mehret (1999), Addis Ababa does not have legal authority over the utility corporations operating in the city. MWUD (2000) clearly stated that services that involve major inter-regional externalities or those that have important distributional implications such as electricity, telecommunications, postal services etc remain in the hands of the federal government. This was the challenge for Addis Ababa city government not only to meet the demands of the electorate but it has also been incurring tremendous costs to repair the damage to houses and Decentralization and service delivery in Ethiopia 23 streets caused by the uncoordinated activities of the utility companies. This constitutes a serious gap in the city’s autonomous power because it has handicapped the municipality’s capacity to match the demand for utility services with the growth of the urban population. Avilability of both financial and human resources, and other institutional amenities play a significant role in efficient public service delivery. For this local government autonomy in decision making is a necessary condition. That means decision-making power has to be devolved in an adequate way. However, as confirmed by interviewed officials, sub city and kebele council discretion in employment policies and budget resources is limited. In order to have the necessary flexibility to respond to local needs, local governments need to have political decision making autonomy. Democr at ic Ele ct ion Political decentralization deals with the number of elected sub national tiers, the existence of direct elections for local governments, and the fairness of such th elections. National elections in Ethiopia began in the 20 Century. However, it was not democratic in its very nature because political parties were not allowed to function or to take part in elections. After coming into power, the current government established a democratic system in the country. Based on this, the Ethiopian 1995 constitution Article 38 (1) clearly states that: “Every Ethiopian national, without any discrimination based on color, race, nation, nationality, sex, language, religion, political or other opinion or other status, has the following rights: (a) To take part in the conduct of public affairs, directly and through freely chosen representatives; (b) On the attainment of 18 years of age, to vote in accordance with law; (c) To vote and to be elected at periodic elections to any office at any level of government; elections shall be by universal and equal suffrage and shall be held by secret ballot, guaranteeing the free expression of the will of the electors” Following this legal provision, Article 8 of Addis Ababa City Charter Proclamation no. 361/2003 stated that elections for the councils at all levels of the City Government shall be conducted in accordance with the electoral law of the country. There were three national periodic elections (1995, 2000 and 2005) and one local election (2008) in Ethiopia in general and in Addis Ababa in particular. In those elections, there were three levels of direct local government elections in Addis Ababa (city, sub city and kebele level). Unlike other election campaigns, the 2005 national election brought a landslide victory to the opposition party Coalition for Unity and Democracy (CUD) in Addis Ababa’s city council. None of the mandates were won by the ruling party EPRDF. However, the opposition parties did not join the parliament saying that the election was rigged and they did not take over administrative duties of the city government. Following this action, Addis Ababa was governed by a care-taker administration. According to the National Election Board, elections were held in 2008 for kebeles and to replace sub city councils and the result were totally the reverse that of in 2005. All the parliament seats, city council seats and all of the seats in all 99 kebeles of the 10 sub cities were won by EPRDF. The reason for this total shift, according to interviewed EPRDF officials was that the dissatisfaction of Addis Ababa residents on the alternatives of opposition parties. However, according to many writers and international observers, the 2008 local election in Addis Ababa was seriously flawed and affected the participation of the opposition parties. Despite the non-participation of the main 24 Decentralization and service delivery in Ethiopia opposition parties in the 2008 local election, the government claims that the elections reflected a popular, democratic legitimacy due to the 93 percent turnout of registered voters. However, this part needs further investigation to critically identify the causes for the complete shift. Cit iz en Par t icipat ion A perceived benefit of political decentralization is the enhancement of political participation in processes of political decision-making and socio-economic development at local levels. The assumption is that citizen and civil society participation in the decision-making processes of the state can improve good governance and public service delivery. Moreover, participation is clearly a key element of effective popular control over government. Indeed popular local participation in local decision-making is explicitly stated in the constitution as an objective of decentralization in Ethiopia but to what extent such aspirations are realized in practice is a difficult question. In Addis Ababa, to enhance the participation of the community in decision making, People’s Advisory Councils 2 were established at all three levels (city, subcity and kebele) with members drawn from all sections of society (women, youth, elderly, private sector, non-governmental organizations, academia, influential personalities, etc.). Any policies, programs and budget proposals initiated by the City Government have to be deliberated by these councils before they are proclaimed for implementation. However, according to key informants, though its purpose is very important in practice this people advisory council is not functional. Key informants appreciated the purpose of the council but they have confirmed that this council is not doing what it intends to do because on the one hand members are not interested in participating; and on the other hand some members feel that their voices will not be considered by the concerned bodies. Governemt officials informed the researcher that there is still a push from the city government to involve the community through this council. Leagues, Forums and Federations have been established to involve youth and women at different levels. This means that public forums and leagues exist where different groups can express dissenting opinions and personal interests, and where these viewpoints are treated as serious input in the decision‐making process. However, there is still a problem related to the participation of both youth and women in the political process without the influence of the ruling party. According to the key informants, some associations like youth leagues are politically affiliated. In all of the kebeles of Bole sub city, plans were prepared by experts at sub city or kebele levels without the direct consultation with the people, later the councils and leagues were asked to comment on the already prepared plan. This shows that the participation of the community in decision-making process was negligible. The programs are planned and prepared at higher levels of the city or sub city administration. Thus the community has a symbolic representation in decision-making process and even in the process of implementation. Some officials stated that citizen participation is significant in labour and financial contribution. For example in bole sub city, kebele 14/15 bridge construction, Goro police station building, Bole high school maintenance, kebele 04/06/07 386 meter asphalt road construction were made through the direct 2 People’s Advisory Councils are established at all three levels (City, Sub-City and Kebele) with members drawn from all sections of society (women, youth, elderly, private sector, non-governmental organizations, academia, influential personalities, etc.) for the purpose of evaluating the policies, programs and budget proposals initiated by the City Government. Moreover, the council can also evaluate the involvement of NGO’s to minimize duplication of efforts in the city. The council serves as a link between the government and citizens. It can give information from the higher governments to citizens and provide feedback (concerns of citizens) to the government. Decentralization and service delivery in Ethiopia 25 contribution from the community. Though kebele structures are organized as a means to reach people at grassroots level, there is no clearly institutionalized structure for coordination and participation of local communities in decisions concerning public service delivery. Civil Societ y Or ganiz at ions ( CSOs) Political decentralization measures are expected to increase the level of citizen participation in local decision making and public service delivery through their organizations. According to Article 31 of the Constitution of Ethiopia, every person has the right to freedom of association for any cause or purpose. Since then there were many local and international CSOs established in Ethiopia for both lobbying and operational purposes. However, the current charities and society’s legislation restrict a substantial section of civil society to a limited set of activities. According to Article 14(5) of the proclamation no. 621/2009, only Ethiopian Charities or Societies i.e. those groups that receive less than 10% of their income from foreign sources - are allowed to work on: (a) advancement of the practical implementation of human and democratic rights, (b) promotion of equality of nations, nationalities, peoples, gender and religion, (c) promotion and protection of the rights of children and the disabled, (d) advancement of conflict resolution or reconciliation and, (e) promotion of the efficiency of justice and law enforcement agencies. Other types of charities and societies are relegated to undertaking only service delivery activities. Given the lack of fundraising opportunities inside Ethiopia, most organizations rely on foreign sources of funding. Therefore, by cutting off the sources of funding for local Ethiopian CSOs, the proclamation would result in the closing down of many vocal and prominent organizations, particularly those who continue to work in area’s of human rights, good governance and policy advocacy. Some of the interviewed CSO leaders stated that, unless the government revised the policy they will not be able to continue their interventions in mobilizing and empowering different sections of society to engage in governance and human rights issues. This will result in reduced participation of citizens. Some of them will be prohibited from participating in the formulation of policies, laws and programs related to governance and human rights and this will minimize policy dialogue among the public, which will, in turn, affect the formulation of appropriate and responsive polices as well as better service delivery. Findings and Obser vat ions The first essential step to improve public service delivery in Addis Ababa is to give the city genuine autonomy and make its city councils responsive to the citizenry. At present, the city government is subject to the pressure that can come from the federal government, the Oromia regional government and the electorate. It is very likely that this political pressure will erode the city’s autonomy and compromise the mayor and city council’s commitment to serve the public. It is absolutely necessary that Addis Ababa becomes an independent urban authority with sufficient legal powers in order to alleviate many of the problems its residents face on a day-to-day basis. The constitution and the various policies provide for the formal transfer of powers and responsibilities from the central government to city, sub city and kebele levels of administration. According to the city charter, sub cities and kebeles are formally declared to be independent local government authorities but in reality inter governmental relationships among the city, sub city and kebele administration and their lines of authority are not clearly defined. The structure is characterized by a top-down approach of control and supervision. Kebele administration works under the direct supervision of the sub city administration. Sub city administration works 26 Decentralization and service delivery in Ethiopia under the direct supervision of city administration. Kebeles most often operate as recipients and implementers of decisions and orders from sub city governments rather than semi independent institutions of self-government at the grassroots level. It is however necessary to equip sub cities and kebeles with adequately trained staff and office facilities in order to enable them to shoulder the delegated responsibilities. If given adequate budgets and authority to work as autonomous local institutions, they can indeed prove to be popular outlets for service delivery because they are near to the community and can thus be responsive to the needs of the public. They can also be easily accessible to ordinary citizens and less bureaucratic than the central municipality administration. Key informants indicated that the overall performances of the delivery of basic services were noted to have shown improvements after political decentralization. The improvements, however, were found to be low which makes it difficult to conclude that there is a significant change contrary to the expectations hoped to be realized after decentralization. Formally, the sub city/kebele government has been given full powers to exercise complete decision-making authority. In practice, however, commands and instructions flow from top to bottom. The bureaucratic chain of command has limited the local discretionary power and decision-making authority of the sub city/kebele tiers of government. Moreover, respondents confirmed that the availability of both financial and human resources, and other institutional amenities play significant role in efficient public service delivery. This confirms that sustainable and effective decentralized service delivery need not only institutional, organizational and human resources capacity building at local level, but also a functional financial mechanism, and a clear and appropriate allocation of roles and responsibilities. That means decision-making power, institutional capacity; fiscal and technical resources for services delivery and their management have to be devolved in an adequate way. In other words, political, administrative and fiscal decentralization should go hand in hand. In addition, roles and responsibilities in the respective social sectors should be devolved to the lowest appropriate and competent level. The potential of community’s initiatives and participation can go a long way in making local decisions and improving the administration of the city of Addis Ababa. However, there is a relatively low consultation and citizen input in deriving development plans, projects and goals. This resulted, on the one hand, in insufficient knowledge about the plans by the people, on the other hand, the plans, projects and regulations are often perceived as; “the government’s” ideas. Additionally, in recent years, while social movements, regime-critical civic organizations and NGOs are stigmatized and limited by legislative means, government-sponsored NGOs have often been encouraged. As part of this initiative, regime-sponsored youth organizations have been created to increase control, disseminate the ideology of the political organization in power and suppress political dissent. Exclusion of community organizations, mainly working in advocacy, from the urban development process and general decision-making on their daily lives has impeded the development of feelings of belonging to the city. This has an implication on better service delivery in response to local community needs. Therefore, the government should reverse its policies regarding CSOs and needs to consider their substantive role in good governance efforts of the country. Conclusion The professed goal of decentralization in Ethiopia is to progressively transfer the delivery and management of public services from the central government bureaucracy to democratic sub-national governments. However, one needs to differentiate between rhetoric and reality in the ongoing process of political Decentralization and service delivery in Ethiopia 27 decentralization in Addis Ababa. The constitution, city charter and the various policies provide for the formal transfer of powers and responsibilities from the central government to city, sub city and kebele levels of administration. In reality, however, there has been very little devolution of authority and functions from city government to sub city and kebele levels of administration because the bureaucratic chain of command has limited the local discretionary power and decision-making authority of the sub cities, and kebele level of government. Sub cities and kebeles do not have sufficient decision-making authority to serve as autonomous institutions of decentralized governance, nor do they manage public and community services on their own without strict guidance and supervision by city administrations. The problems of Addis Ababa city, in particular, its multiple identities are crucial in this respect. What is needed is a government body that is primarily accountable to the electorate. The participation of the people in decisionmaking at all levels of city government is a concrete manifestation of political empowerment. However, the representation of different segments of people and organizations of civil society in decision making processes at city, sub city or kebele level is becoming minimal nowadays. Therefore, the government should reverse its policies regarding CSOs and needs to consider their substantive role in good governance efforts of the country. Effective decentralized service delivery needs not only the devolution of political power, but also institutional, organizational and human resources capacity building at local level and a clear and appropriate allocation of roles and responsibilities. That means decision-making power, institutional capacity; fiscal and technical resources for services delivery and their management have to be devolved in an adequate way. Thus, political, administrative and fiscal decentralization should go hand in hand. In addition, roles and responsibilities should be devolved to the lowest appropriate and competent level. 28 Decentralization and service delivery in Ethiopia Part III Administrative Decentralization: To Redistribute Authority The Challenges of Public-Private Partnerships: The Case of Merkato Millennium Development Partnership (MMDP) Frew Mengistu and Professor Meine Pieter van Dijk Int r oduct ion Ethiopia is among the several African countries which have made notable progress in meeting the Millennium Development Goals (MDGs). In 2005 the percentage of the children enrolled in primary school reached 75 percent which is the result of an impressive 9 percent annual growth in enrollment since 1993. Immunization coverage for measles rose 57 percent in the same year from 40 percent in 1995. These improvements in service delivery are attributed to the massive decentralization first from federal to regions and subsequently to woredas (World Bank, 2008) and later on to urban administrations. Decentralization can be defined as the transfer of authority and responsibility for public functions from a higher level of central government to subordinate or quasi-independent government organization, or from government to non government organization or the private sector (Rondinelli, 1983). The institutional approach to decentralization theory states that decentralization places decision making authority closer to the people; creates an incentive structure and minimizes information and transaction costs. Decentralization is one of the guiding principles of good governance, public private partnerships (PPP) are part and parcel of good governance. Various definitions of PPP abound, however a general definition of public private partnership can be adapted in the Ethiopian context as a spectrum of possible relationships between public and private parties with possible involvement of community/civil society groups for the cooperative execution of development projects and provision of infrastructure and services. Regarding the methodology of the research, the main research strategy adopted was a case study research. The main data collection instruments used included interviews with key informants, questionnaires distributed to 10 members out of 15 members of the Task Force who served at different times, an archival documention search and a desk review of previous studies. This research has also benefited by making use of the discussions and findings of the assessment workshop that was carried out by members of the Task Force for Merkato Millennium Development Partnership and stakeholders which was moderated by a consultant in the field of organizational development in February 2005. Response to the questions in the questionnaire schedule were predominantly in a Likert scale of 1-5 ranging from (1) strongly agree to value (5) strongly disagree or in a quality range of (1) excellent to (5) worse and dichotomous choices of yes or no. The cut off point for the Likert scale is taken to be the median value 3. W here frequency counts are put in percentile, the cut off point is considered to be 50%. Backgr ound The concept of public private partnership is not new. Different authors agree that many examples in history show that some cooperation between the private and th the public sectors existed in the 18th and 19 centuries (Hodge & Greve, 2007; Nisar, 2007 cited in Taseska 2008). They were widely used on the international scene in the seventies. In the US they were used for urban renewal projects and Decentralization and service delivery in Ethiopia 29 spread to other countries at various rates. They are sought after by governments especially in Europe in the effort to look for new institutional arrangements to provide services for their citizens (Klijn et al., 2000). PPPs have also played a special role in the transition to market economy as instruments to restructure the provision of public services to meet social needs and develop a civil society. The case of Hungary after the 1990s can be mentioned as an example. Public private partnerships are also widely utilized in urban development projects in China (Han and W ang, 2003). However not everywhere are PPP’s welcomed. In some East Asian Confucian societies where they exist they are treated in the form of vertical, hierarchical arrangements rather than voluntary collaborations (Common 2000). The two most important public private partnership initiatives at city/local level in Ethiopia include: the Clean and Green Addis Ababa Society and the Merkato Millennium Development Partnership. The Merkato Millenium Development Partnership (MMDP) is the first of its kind in Ethiopia in terms of its composition of partnering parties. This study focuses on the challenges of the Merkato Millennium Development Partnership. The Merkato Millennium Task force was established in November 2003 with the aim of implementing the Merkato Local Development Plan. The partnership has been successful in bringing together different parties and launched the redevelopment project of Merakto. However, it has also faced challenges which resulted ultimately to its suspension. This study focuses on the challenges that the partnership faced. Lit er at ur e Review Khanom (2009) summarized four approaches in defining PPPs. Three of them are discussed here. As a tool of governance or management, PPPs are either interorganizational or financial arrangement between the public and private sectors. The most important aspects here are cooperation between organizations, sharing risks, resulting in some new and better products or services and finally the involvement of a longer term commitment (Van Ham and Koppenjam 2001). Van Dijk defines a partnership as a form of cooperation between parties with similar objectives but different (complementary) qualities, whereby each contribute resources and share in the investment risks. Definitions stressing the financial relationships are prominent in the literatures on infrastructure building. These mostly include BOT (Build-Operate-Transfer), BOOT (Build-Own-Operate-Transfer) and BOO (BuildOwn-Operate). In the context of urban development in areas of multiple deprivation, the UK government has defined a partnership approach as involving; “voluntary commitment by the wide range of bodies with a contribution to make to urban development or regeneration (including the local communities, the local authorities, government departments and agencies and private sector) to an agreed long-regeneration strategy for their areas” (The Scottish Office, 1993). Peters discusses Public Private Partnerships both as institutions and policy instruments for the implementation of urban policy. Categorization of PPPs by different authors (Stephenson, 1991; Dunn, 1999) includes policy based-partnerships and project-based partnership. Policy-based partnerships aim to lay down a set of general rules for private investment and operation through co-operative ventures and without a definable end point while project-based partnerships focus on a specific site or circumstances to deliver a certain product and having a clear end. Another categorization includes contractbased partnerships (formal) and trust- based partnerships (informal) such as gentlemen agreements. Public private partnerships though with many challenges help to facilitate transparency and bridge understanding between the private sector, community and public, thereby building up social capital which is a necessary ingredient in 30 Decentralization and service delivery in Ethiopia maintaining political stability and economic growth. Though the substantive meaning of social capital is contentious among scholars, the definition by Putnam (2000) is adopted here as; “the connections between individuals – social networks and the norms of reciprocity and trustworthiness that arise from them”. He further goes to make a distinction between bonding (exclusive) and bridging (inclusive) social capital. Bonding social capital occurs among homogenous population, is often parochial and benefits those with internal access. Because of its essential elements such as tight bonds of trust and solidarity it may ultimately prevent its entrepreneurial members from reaching their full potential. Rather entrepreneurial members will only become successful if they are able to forge ties with others in 1 the wider society . Traditionally, the market and hierarchy have been seen as distinct and opposing mechanisms. Recent debates on the pros and cons of market based models in the public sector led to the argument that if market criteria and public service providers are allowed to play a role in the design, production and delivery of public services, both the state as well as private sector would be better off (Jon 1997). This has led to a congruent discourse from one based on the traditional state – market dichotomy to one looking for hybrid governance arrangements. Public Private Partnerships are among one of such arrangements. Other hybrid arrangements include: strategic networks, alliances, coalitions, consortia, societies established with specific objectives, and other partnership forms between public (state) and private (market) actors. However there also exists a different view by Klijn and Geert 2002 in which referring to Jacob (1995) and Simon (1990), they argue that since the public domain is characterized by the guardian syndrome i.e. avoiding trade and commerce, striving for discipline and loyalty, fatalism linked to strong devotion to the tasks at hand etc. and the private domain marked by the commercial syndrome characterized by avoiding violence, agreement on voluntary basis, honesty and competitiveness etc.; they reasoned that the two syndromes can not be merged without problems. According to McQuaid, success with PPPs depends upon how partnerships are led, legitimized, resourced, managed, and evaluated. This varies according to local circumstances, the issue to be dealt with, the institutional framework and on the partners themselves. From a similar perspective Murray (1998) identifies four sets of factors which influence the successfulness of negotiation. These include: the type of collaboration sought, the type of organizations entering into collaboration, the process of developing and implementing the collaborative process, and environmental and contextual factors. Brinkerhoff (2002a) attests that most of the benefits of a partnership arise from the relationship itself. Helina (2005), in her research on Merkato Millennium Development Partnership focused on the partner’s relationship aspect. Referring to Brinkerhoff 2002(b) the variables she used constitute the salient factors in defining relationships in a partnership which include mutuality and organization identity. The specific variables she used include: power, mutual respect, trust, partner’s perception of partnership, communication, participation and representation, and ethnic differences. Klijn and Geert noted that the number and variety of actors, different objectives, variety of perceptions, contrasting backgrounds and value conflicts are some of the factors which inhibit cooperation. Whatever the variation in the factors, a partnership should be ultimately judged in terms of achieving its objectives or satisfying the expectations of the partners. When discussing how partnerships are led and managed, the theory of organizing capacity comes to the forefront. The theory of organizing capacity emphasizes a broadly shared and accepted vision that can be translated into strategies, implemented by strategic networks of either public-public or publicprivate, supported and championed by strong leadership and enjoy sufficient levels Decentralization and service delivery in Ethiopia 31 of political and societal support and an enhanced two way communication (van den Berg et al, 1997). Capacity includes the abilities, skills, understandings, attitudes, values, relationships, behaviors, motivations, resources and conditions that enable individuals, organizations, networks, sectors and broader social systems to carryout functions and achieve their development objectives over time (Bolger 2000). From the perspective of governance, capacity building goes beyond government organizations and includes the private and civil society groups as well empowering communities. In most African societies both their central and local governments as well as their private and civil society suffer from capacity constraints. These constraints include not only human, material and financial but also in terms of institutions, systems, information, knowledge and skills. Capacity building is a continuous process at individual, organizational and societal level. Actors as leaders and members work through their respective organizations and organizations operate within the broader context of society. People work in organizations and organizations operate in society. However, it is people not organizations and sectors that create and sustain partnerships. Society must offer basic policies, practices and attitudes that encourage collaboration and the accumulation of social capital (The Synergos Institute 2002, web based). Organizations need to develop their institutional capacity which involves institutional change, organizational restructuring and human resource development. Individuals within the organization and sector need to be prepared with the knowledge and skills to engage in collaborative efforts with people from other organizations and sectors. Theor et ical Fr amew or k From the institutional perspective the challenge to develop a theoretical framework for a specific type of Public-Private Partnership at a certain level is to link the process approach to the result oriented evaluation in a specific political, economic, socio-cultural, and institutional context and try to measure the specific explanatory variables (van Dijk and Pfistere, forth coming). In view of the above review of literature, the theoretical framework for this case study is composed of strategic and behavioral interaction level factors within a specific local context. The strategic level factors include: vision/goal, strategies, leadership, political and societal support, and communication. The behavioral interaction level (mutuality) factors include, perceptions, trust, power balance, mutual respect, commitment, partnering bodies i.e. their role, motives/expectations and underlying values; partnership identity expressed in mandate, norms and values, organizational culture; and the interaction rules (Ostrom, 1994). Both group of factors are interdependent and are closely related to principles of good governance and the institutional framework. These process variables are contrasted to the goal achievement or performance outcome of the partnership. Cont ext The aspects of the city and the local context identified are political and administrative, spatio- demo-economic, socio- cultural and the relevant institutional framework. The political/ administrative context and the relevant institutional framework influence the pre-conditions under which actors can cooperate (van den Berg, et al. 2003). Antecedents are specific environmental conditions or stimulus changes that exist before the behaviour of interest which constitute opportunities or problems/constraints for the partnership activities. 32 Decentralization and service delivery in Ethiopia St r at egic Level Fact or s The strategic level factors correspond to the organizing tools in the analytical framework for organizing capacity as developed by van den Berg et al., 1997. Shared vision helps to formulate objectives and strategies. It helps also to guide the relevant actors in their behavior (van den Berg, et al. 2003). Congruency of strategies needs to be maintained to realize the mental journey in materializing the vision or in dealing with the strategic issues. Leadership of key actors contributes substantially to the successful design, development and implementation of the partnership project. For success at least one competent individual who champions and nurtures the partnership is important. Political support as a recognition and support by national or local level political bodies i.e. “having their blessing” is prerequisite for success of Public – Private Partnerships. Societal support, the need to consult societal actors regarding on such issues like decision on quality and quantity of services and level of satisfaction is crucial in the success of partnership projects (van den Berg et al. 1997). Communication refers to the twoway flow of information. Communication strategies can help to mobilize political and societal support. Behavior al Int er act ion Leve l Fact or s Behavioral interaction level (mutuality) factors are interpersonal and inter organizational relationship factors as well as the interaction rules developed by the partnership. Relationship factors mainly include: trust, power balance, mutual respect, perception and commitment. Trust is to act as expected. A more comprehensive definition of can be; “…the willingness of a party to be vulnerable to the actions of another party based on the expectations that the other party will perform a particular action important to the truster, irrespective of the ability to monitor or control the other party” (Mayer et al., 1995). Trust and confidence are the foundations of partnership (Drewry 2000). Greater level of trust results in a greater likelihood of cooperation. This will help save time and money spent to monitor the actions of others. Power balance is the level of influence one has over others in a relationship. It might depend on either size of partners, or resources brought to or expertise in the partnership, and on the power base of the partners for e.g. whether elected or non-elected. Mutual respect can refer to recognition of indispensability of each partner and its contribution (Brinkerhoff 2002 a). Perception (of each other among partnering bodies) defined as the extent the partner perceives whether partners are committed to the alliance (partnership) and find it to be productive and worthwhile (Bucklin & Sengupta, 1993 in Ramaseshan and Loo, 1998). Commitment is another factor which affects relationship and consequently success of the partnership. When commitment to each other fails separation of responsibilities follows, each actor concentrating on his own task and gradually disintegrating. Interaction rules are rules that regulate interactions such as establishing positions, assigning positions to participant, entry and exit conditions, providing information, conflict management, access etc. (Ostrom et al., 1994, 2005). This research will only focus on the type of rules the partnership had developed. Decentralization and service delivery in Ethiopia Figure 1: Integrated Theoretical Framework for Analysis of Public-Private Partnerships Context: political/adm., spatio-economic, socio-cultural, institutional Governance Partnership identity Strategic level Factors Antecedent Partnering actors Capacity Process Behavioral Interaction level Factors Formal institutions Goal Achievement Monitoring & Evaluation Decentralization and service delivery in Ethiopia Partnering actors & role demarcation: Partnerships are cooperation among organizations. The four major indicators used for describing the characteristics of the partnering actors (parties) include: organizational values, role, expectations and resource capacity of the organization. Organizational values are collectively shared principles or beliefs that guide the organization’s purpose or the deepest convictions through which members view reality. Expectations are concerned with expected rewards. Resource capacity is manifested through the major resource the organization contributes to the partnership. It includes manpower, financial capacity and intangibles i.e. knowledge, skills, management and leadership qualities. Partnership identity: is the aggregate quality of a partnership as the result of this relationship built up and development process through the interaction of strategic and behavioral factors. The indicators for partnership’s identity include: number and type of members, organizational culture, identity recognition, and clear mandate/purpose. Capacity: Public private partnerships in order to be successful require individuals and leaders to be trained and educated to develop certain core competencies; and also need to build skills and attitudes towards collaborative partnership with individuals from other organizations. The stronger each individual partner is, the more effective the partnership will be. As such, the main competencies analyzed in this research include: resources contributed by members (technical, managerial and administrative skills etc.), negotiation skills, contribution of innovative and constructive suggestions. Governance: is the process through which local political institutions implement their programs with civil society and private actors and interests. As such the indicators used include whether the partnership had been instrumental for collective actions across the public-private demarcation, and other attributes such as the modality members are represented in the Task force (election vs. delegation by the executive), accountability, and working culture. Goal Achievement A partnership should be judged in terms of achieving its objectives or satisfying the expectations of the partners. Towards this end the indicators include: whether greater synergy is achieved expressed in terms of whether the achievement of the partnership could have been achieved without it, the specific objectives of the partnership achieved, whether outcomes are a win-win, win-lose or lose-lose situation expressed in terms of whether the achievements are to the satisfaction of all of the members or not, and mission fulfillment. Int er connect edness of Fact or s All the factors discussed above are interrelated within and across categories. The political and administrative as well as the spatio-economic and socio-cultural context determines the problems and opportunities. Political ideas or ideologies shape the mental constructs that individuals use to interpret the real world around them and make choices. A common cultural heritage provides a means of reducing the divergence in the mental models. Social evolution, economic base and the environment crystallize in distinct social values. Existing institutions limit the socioeconomic space and the rule boundedness in which actors make their choices and take action. Expectations of partnering actors are intimately related to shared vision. Leadership helps to stimulate commitment and enthusiasm of actors. Strategies are manifestations of consistency in behavior. Communication helps to convey the message of the vision to the partnering actors, the networks are connected to politicians and society. Political support stimulates local commitment and strengthens Decentralization and service delivery in Ethiopia 35 societal support (van den Berg et al. 1997, 2003). Trust and respect are related to communication. Perceptions about power differences influence trust in relationship. Differences in trust levels result in different levels of commitment. Respect follows a trusting relationship. The tendency towards strategic thinking and planning in communities comes after the community or group of actors reaches a certain level of maturity. The move from behavioral interaction to strategic level interactions i.e. dealing with long term issues is often gradual in the development of groups for collective action. There are no marked phases but a gradual transition within the process of development. Cont ext Nat ional & Cit y Level Cont e xt Ethiopia, in its political and administrative structure is a country established based on a Federal system since the take over of power by the EPRDF led government in May 1991. According to the constitution of the Federal Democratic Republic of Ethiopia, the form of government is parliamentarian. Nine regional states and two city governments constitute the Federal Democratic Republic of Ethiopia. Addis Ababa being the federal capital, its administration was made responsible to the Federal Government. Further decentralization measures taken by regional states have granted urban administrations with a considerable share of administrative and fiscal power. Regarding Addis Ababa a tremendous change has taken place following the finalization of the Revised Addis Ababa Master Plan. A transitional government (2003-05) was established. The city was granted a charter by the Federal Government and a Citizens Council was established. The governance and administrative structure of the City Government was obliged to undergo a sever reform (City Government of Addis Ababa, 2005). With respect to state ideology, the political and socio-economic development principles of the incumbent government are based on tenets of the developmental state. Currently some symptoms indicate a move towards recentralization. Examples can be cited like; administration of street parking and garbage collection, which had been outsourced to the private sector are now being reorganized under kebele administrations. The reasons given include the improved service delivery on the part of the public sector due to the ongoing civil service reforms and Business Process Reengineering (BPR). Regarding laws which provide for the establishment of public private partnership the only provision at the constitutional level is the Revised City Charter Proclamation no. 361/2003, which in its Article 11 on powers and functions of the City Government stipulates: “Constitute the executive bodies of the City Government and to establish public enterprises, as legal entities, on its own or in partnership, per applicable laws, with the private sector or other third parties.” Though one of the outputs of the Office for the Revision of the Addis Ababa Master Plan (ORAAMP) is a “Public Private Partnership Model Scheme,” it has not yet been further developed or utilized. The second attempt was in 2004 by the Addis Ababa City Government - Policy Study and Plan Commission under the title ‘Public Private Partnership Policy Framework,’ however this study too has not been endorsed. Mer kat o in Cont ext Historically Merkato traces its origin to the Italian occupation (1936-41). The colonial master plan based on racial segregation divided the capital into different 36 Decentralization and service delivery in Ethiopia zones. Consequently with the launching of the 1937 resettlement program, 100,000 natives i.e. 90% of the then total city population were forced to resettle in an empty area called Addis Ketema (New Township) in the Northwest of Addis Ababa. This led to a distinct settlement camp for the local people: the Merkato Indigeno; ‘market for the local people’ and the Ethiopian settlement Qurteri Indigeno surrounding it. The new market and the Ethiopian settlement surrounding it later became know known as ‘Addisu ketema’ (“the new township”) which was the predecessor of the current Merkato. Spatially Merkato largely encompasses the current Addis Ketema Sub City or the former Zone One and some kebeles in the former Woreda 7 of Zone Two, like the areas surrounding the main regional bus terminal and Gojam Berenda. Merkato in its spatial layout is characterized by its morphology of specialized quarters 2 (terras) for retailing of similar items and related services. An updated map of Merkato central shows 44 such specialized quarters or terras (Tibeb Consultancy, 2005). According to the latest census (CSA, 2007), Merkato is also a residential area inhabited by 255,000 residents. By its tenure structure 90 percent of the built up properties in central Merkato are nationalized houses administered by kebele 3 administration or the Agency for the Administration of Rental Houses (AARH) . The businessmen in Merkato were basically tenants. In its economic activity Merkato is a major trading center catering for the wholesale and retail demand of the country and the city. It is often referred as the biggest open Market in Africa. Merkato is also a tourist attraction. All tourists that arrive to Addis Ababa go to Merkato at least twice during their stay. According to some estimates Merkato generates 20-25 percent of the annual revenue of the City Government (Getachew D., 2000). It is not without reason such phrases are used praising Merkato: “the Wall Street of Addis,” “the Taiwan of Africa,” “hope for the rural migrant,” and many others. Merkato is also a major transport hub of the city with about 200000 people arriving daily by bus and taxi. Merkato’s social and cultural aspectsinclude, mutual tolerance, peace, industriousness, and unity. There is a friendly and peaceful interaction between various ethnic groups and followers of different faiths. Traditional organizations generally known as maheber (associations) provide arrangements for cooperative efforts. Ikup (saving arrangements which enable members to benefit from the joint savings in rounds) and Meredaja Idir (a communal society to coordinate and organize funeral ceremonies and consolations of the bereaved families) are abundant as traditional forms of associations. The ´culture of credit transactions´ is a unique arrangement in Merkato based on trust and reciprocity. Lending in kind without collateral is a common practice. However, it is not easy for new entrants to assimilate in to the Merkato business community, the social capital is limited to a bonding type of social capital. Merkato is also not without its problems. Its residential environment is characterized by slum habitation and very poor health conditions. Merkato Central as a market place in contrast to its high land value gradient is also an area characterized by low service standards, poor physical conditions with small scale and informal economic activities some of them classified as illicit trade activities. Its infrastructure, buildings, and open spaces are becoming obsolete. Waste management is well nigh non-existent. There is no sewerage system in Merkato. Storm water drainage is inadequately minimal. The only places available for parking are the sidelines of the already overcrowded narrow streets. Congestion, inappropriate road infrastructure and unsafe electrical line installations combined with cramped and contiguous old buildings without internal fire safety systems frequently exposes the area to fire hazards. Decentralization and service delivery in Ethiopia 37 Ant e cedent From the institutional perspective two aspects of the institutional framework: the Lease proclamation and the Master Plans studied for Addis Ababa specifically the Merkato Local Development Plan provided the socio-economic space and the rule – boundedness in which the businessmen in Merkato and other stakeholders made choices and took action. The Lease Pr oclamat ion The Ethio-Italian Master Plan (1986), studied under the ideological principles of socialist command economy was approved in 1994 after a change of government. It proposed a development plan with the aim of replacing Merkato’s traditional activities with higher order uses and multi-storey (5-9 stories) building development. The accompanying land use and building regulations (with 5-9 stories) become sources of dissension. On the other hand the Lease Proclamation No. 80/1993 (promulgated on 23 December 1993) Article 5 stipulated that a town administration shall only grant lease holding permits for those uses which conform to the land use provision of the Master Plan of the town. The lease rate is determined by conducting competitive public tendering. Pursuant to this national proclamation, Region 14 Administration (the current City Administration of Addis Ababa) issued Proc. No. 3, 1994 stated that two modalities of lease payment: the total amount of the lease price at the signing of the contract (Article 14.2a) or periodically with bank compound interest on the unpaid portion (Article 14.2b). Consequently those business associations in Merakto who already had acquired land through lease (a total of 52 plots were leased between 1996 and 1999) declined to continue with the construction work. Other businessmen complained too, for they were requested to make a down payment of 25 percent of the lease price and to pay the balance in 5-15 years. The proposed benchmark price for 2 Merkato on average was about Birr 3,541/m . This was higher than the rate of other 2 2 city centres such as Legehar (Birr 2,274/m ) and Piazza (Birr 1,996/m ). The situation reinforced the bias against the lease policy. The City Administration started to issue notifications to the defaulters to fulfil their obligations. The tense situation invited other actors to become involved. Some of the higher level businessmen who were also members of the Addis Ababa Chamber of Commerce approached the Chamber to stand beside them. The Chamber positively responded and a meeting between the Chamber and the th business community was held on 9 June 1998 and this led to the establishment of the committee by the name of “Merkato and Surrounding Special Committee” (MSSC). The other concern of the businessmen was the possibility that the area might be leased to others for development. Their fear was not unfounded. There was news on public media that a Malaysian company named the Adorna- Shebele Investment Group is intending to undertake a massive investment activity by which one billion USD will be invested in transforming Merkato into “the largest and neatest market place in Africa”. Investment agreement had been signed between Adorna-Shebele and the Addis Ababa City Administration in 1999 (Addis Tribune Sept. 24/1999). Then a top official of the City Administration announced the withdrawal of the Malaysian company on grounds that the negotiations had failed. The Merkato and Surrounding Special Committee in its letter addressed to the Chairman of the Addis Ababa City Administration forwarded the identified problems th Hamle 1993 E.C.). Among the together with its proposal in July 2001 (18 proposals that were forwarded by the Committee they included reduced percentage of advance payment, payment holidays to be given until construction completed, the lease payment to be distributed through out the whole lease period, and 38 Decentralization and service delivery in Ethiopia number of stories be reduced to G+ 2 stories. Finally the City Administration decided that the development requirements be addressed in the master plan revision process for which the Office for the Revision of the Addis Ababa Master Plan (ORAAMP) had been made operational from January 1999 (Heyaw T., 2005). A national conference on implementation of land lease policy and its problems was held in December 2001 in which representatives of the Merkato and Surrounding Special Committee played a significant role. Finally the lease proclamation was amended by proclamation No. 272/2002. The advance payment has been reduced to a minimum level of 5 percent of the total lease price (Art.10.1b). The rate of interest over the remaining payment is to be determined by the rate of interest on loan offered by the bank (Art.10.1d). The modalities through which land lease hold would be acquired were also extended to include negotiations or by the decision of the City Government (Art. 4.1b). Compounded interest on the unpaid amount has been replaced by a bank penalty (Art. 10.1e). The lease regulation of the City Government was also amended accordingly. The cost approach method of determining reserve price (determination of reserve price based on infrastructure and compensation cost) resulted in much reduction ranging from 70-27 percent. Down payment reduced to 10-20 percent while repayment period was extended to 20-30 years for businesses (Addis Ababa City Government Regulation No. 29/2002). The Addis Ababa Mast er Plan Revision & t he Local Deve lopment Plan f or Mer kat o The Office for the Revision of the Addis Ababa Master Plan (ORAAMP) was established in 1999 with a mandate to update and revise the 1986 master plan in order to make it a more effective tool to guide the development of the city. From the outset ORAAMP has adapted a participatory and strategic approach. In line with its approach the project had organized more than 100 workshops, public events, panel discussions and meetings. The International conference held in December 2000 “Addis 21: planning the future of our city” was a forum in which the issue of Merkato was particularly discussed. Representatives of the business associations who participated took the opportunity and insisted on a lower building height (2-3 stories) in which they finally succeeded. 4 According to the Merkato Local Development Plan which was completed in 2002, Merkato was envisaged to develop as a primary market center in a typology characterized by low-to-medium rise (3-5 storey) buildings. Among the implementation principles recommended by ORAAMP include implementation through privately managed and financed projects. The block associations, individual businessmen and local residents become the main actors. The other important mechanisms for the implementation of the LDP were public private partnership (ORAAMP, 2002) and the Urban Development Company (UDECOM) which itself would be established as a public private partnership. The Case of Mer kat o Millennium Deve lopment Par t ner ship 5 The Merkato Millennium Task Force was established in November 2003 initiated by the German Technical Cooperation (GTZ) with the idea of creating a result oriented dialogue to bring the businessmen and the City Administration into consensual understanding. GTZ was attracted to the issue after being influenced by the exhibition “Merkato in Millennium” which was organized by Merkato and 6 Surrounding Special Committee . One of the objectives of launching the Exhibition was to lobby city authorities and garner support for its proposal submitted to the city authorities. Decentralization and service delivery in Ethiopia 39 Members of the Task Force include: three members from the Addis Ketema Sub City (one of them from the City Government), four members from the business community (one of them from the Addis Ababa Chamber of Commerce Merkato 5 Satellite Office ), two representatives of local non-governmental organizations active in Merkato area - one from Pro Pride and another from Christian Children Fund (CCF), one member representing the 13 Idirs in Merkato neighborhoods, and one member from GTZ. Though representatives of CCF and Idirs in Merkato abandoned the partnership from the beginning, the rest, nine members of the Task Force continued as functionary members. Based on the interviews the two members abandoned the partnership on the ground that their objectives and anticipation were different from the issues of demolishing existing business buildings and replacing them with modern multi storey buildings. The organizational structure of the task force was composed of one chairman (the CEO of the sub city), vice chairman (from representatives of the businessmen) and secretary (from Pro Pride) supported by one project coordinator and an assistant. The office for the Task Force was apparently located in the Sub City premises. The Task Force had also opened a bank account to be operated by joint signatories. GTZ contributed the initial year budget of Birr 200,000. The Partnership was established basically to implement the Merkato Local Development Plan (MMTF, 2005). The vision of the Task Force was “Merkato: a modern, clean and safe Africa’s biggest market”. Its objectives include: 1. To accelerate the implementation of the Merkato Local Development Plan 2. To improve service delivery in Merkato 3. To strengthen Merkato as a center for employment generation 4. To strengthen public private partnerships in Merkato 5. To develop a sound and sustainable development strategy for Merkato. The mandate of the task force was basically coordinating all implementation activities in Merkato which include: 1. Contribute to the implementation of the Merkato LDP development projects and programs through sensitization of all actors and stakeholders 2. Mobilize funds, materials and technical know-how from members to run Merkato LDP 3. Establishing a sustainable strategy on how to align all development activities in Merkato 4. Promote the establishment of Merkato Business Improvement District 5. Safeguard the interests and benefits of members and stakeholders in the design, execution and management of development projects and programs in Merkato area. The Task Force hiring a consultant on Organizational Development (OD) 7 organized a review workshop in February 2005 to assess the performance of the partnership and identify measures to strengthen and reorganize it. Analyis and Findings Cont ext The context provides the historical, politico- administrative, spatio-economic, socio-cultural and institutional environment in which development plans are conceived and implemented. The context determines opportunities and constraints. History influences the path dependence on the accumulated experience and skills for example on cooperative action and concerted efforts of existing communities symbolized in the existence of historical buildings and stories. Political ideas shape the mental constructs that individuals use to interpret the real world around them 40 Decentralization and service delivery in Ethiopia and make choices. A common cultural heritage provides a means of reducing the divergence in mental models. Social evolution, economic base and the environment crystallize in distinct social values. Existing and proposed institutions (as rules and regulations) limit the socio-economic space and the rule – boundedness in which actors make their choices and take action. Analysis on the contextual elements is presented in table 1. The analysis on the context elements shows that there are many contextual aspects which constitute opportunities for collaborative development by the different actors. Nevertheless the unfavorable institutional environment, the high solidarity and trust among the business community in Merkato which is limited to bonding social capital, the focus on the construction of new business buildings (lack of attention for social aspects), the ignorance to the traditional and historical values of Merkato, and the high cost (actual and induced) of its development pose challenges for Merkato Millennium Development Partnership by eroding its political and social support, being abandoned by its members, eroding its ground for legitimacy and jeopardizing its performance. St r at egic Level Fact or s Strategic level factors are factors which transform the interaction and relationship among partnering bodies to the goal achievement of the partnership through formulation of shared vision and execution through policies/strategies, programs and projects. Leadership: was basically fairly distributed among the partnering bodies and there was an intention to circulate the chairmanship in rounds. The CEO of the Sub City had been elected as the first chairman. Members believed that since he was more familiar with the workings of government offices as well as the concerns of the businessmen he would help in cutting short the bureaucratic red tape. Respondents agree on the vision and mission of the partnership being mutually agreed upon and all activities of the partnership being coordinated by the leadership. However responses on a Likert scale of 1-5 ranging from 1 strongly agree to value 5 strongly disagree, on whether the leadership had acted responsibly to maintain continuity of the partnership’s development activities, a mean value of 3.8 is obtained showing the leadership didn’t commit itself to keep the momentum going. Societal support: responses on a Likert scale of 1-5 ranging from 1 strongly agree to value 5 strongly disagree, on whether neighborhood residents living in Merkato had been involved in the redevelopment project from the very beginning, a mean value of 3.3 shows that efforts to involve neighborhood residents of Merkato had been low. This compounded by the early withdrawal of representatives of the Idirs and one of the NGOs shows that societal support had been given less attention and this resulted with lack of incentives for their representatives to participate. Two out of the three businessmen respondents agreed strongly. Communication: The Addis Ababa Chamber of Commerce committed its monthly Amharic newspaper ‘Merkato’ to introduce the establishment and propagate the activities of the Partnership. The first issue of a quarterly magazine by the name ‘Merkato Today’ was published by the Merkato Millennium Task Force in July 2005 to serve as a medium of communication between the public and the business community of Merkato. However the magazine was never published after its first issue. 70 percent of the respondents agree on the instrumental role of the magazine ‘Merkato Today’ as a medium for communicating information. A new Merkato Tourist Guide Book was also published by the Task Force. Decentralization and service delivery in Ethiopia 41 Strategies: responses varied to the set of actions/strategies followed in the medium to long term by the partnership. However 100 percent of respondents have a broader view of what they are trying to achieve in the medium to long term i.e. beyond the mere construction of commercial buildings by associations. Political Support: respondents agree on the fairness of the Sub City Administration in handling conflicts between public and private interests as well as the role played by the Sub City Administration in facilitating the collaborative activities of the partnership with mean values of 2.9 and 2.5 respectively on the Likert scale of 1-5 ranging from 1 strongly agree to value 5 strongly disagree. Regarding higher level political support interviews with some key informants and members of the task force remarked that the lack of enthusiasm in the part of higher city and federal public officials might be due to the CEO of the Sub City not selling the very idea of “public private partnership.” Behavior al Int er act ion Leve l Fact or s Power balance: regarding on who controls the financial resources of the partnership 70 percent responded by saying ‘all members.’ To the question who does often speak on meetings and influence the rest of the Task Force and to which group do these belong to, 70 percent of respondents answered that majority members belonging to all groups participate. Mutual respect: respondents have remarked that members who come to meetings in time do check whether all members are able to attend before proceeding with the meeting. Respondents agree to the remark that meetings are scheduled with consideration of all partners and the opinions and ideas of all partners are openly discussed before decision is made, with mean values of 2.4 and 2.0 respectively on a Likert scale of 1-5 ranging from 1 strongly agree to value 5 strongly disagree. Trust: In general there seems an established and widely observed mistrust between the main partnering actors (value of 4.0 in the Likert scale). The public sector view the businessmen as “thieves and cheats” and unwilling to pay tax and the businessmen view the Sub City tax collectors as “thieves and people used to bribes.” Further more in the later days of the partnership the businessmen suspected the Sub City Administration turning to be secretive. Respondents were asked about their perception on the honesty, integrity, reliability and dependability of the other partners in a Likert scale ranging from (1) ‘Excellent’ to (5) ‘worse’, the least mean value (3.1) is assigned to the representatives of Idir who withdraw early followed by the Sub City Administration (2.9). The highest mean value (1.7) goes to GTZ. Being asked to evaluate the performance of the other partners in achieving the partnership’s objectives in the same scale, respondents assigned a fair positive value ranging from ‘good’ to ‘very good’ with the minimum mean value 2.9 to Idirs followed by the City Administration and a maximum mean value (1.6) again to GTZ. Commitment: attendance of members in meetings held by the Task Force in a Likert scale ranging from (1) ‘regularly’ attending to (5) ‘never’ attending shows a mean value of 3.6 for Idirs who attended the few meetings at the beginning of the establishment of the Task Force, followed by NGOs with a mean value of 3.0. The best attendant is GTZ with mean value of 1.3 followed by the Sub City Administration and City Government. Another indicator used for commitment is contributions of members in innovative ideas or constructive suggestions. Analysis of respondents’ response on a Likert scale ranging from (1) ‘Excellent’ to (5) Decentralization and service delivery in Ethiopia Table 1: Context Analysis Aspect of Element context Historical Historical establishment: evicted from the existing main market on grounds of segregation, Existence of historical buildings Institutional Policy/Legal provision for PPP Lease Proclamation Revised Addis Ababa Master plan & Merkato LDP Opportunities Constraints Remark Strong and passionate historical attachment, Makes difficult for late joiners /new entrants, Duality: modern and historical promotes inclusion, tourist attraction Conflict between preservation & creation of more commercial space Family business and right to business spaces are considered as inheritance from ancestors; Resulted in demolition of historical buildings e.g. Mars Hotel Proc. No. 361 /2003, City charter, Article 11, Lease was instrumental for tenure change Revised plan recommends PPP as implementation instrument Stimulate people to take initiative, an opportunity for management of urban development at local level Political Decentralization Social Social capital High trust and solidarity creates high potential for collaborative actions Economic Major trading center, illicit trading, tourism Merkato epicenter of national economic and financial growth & center of employment No policy /regulatory framework on PPP at national or city level; Lease price and modalities were restrictive ORAAMP’s model scheme on PPP and attempt by Policy Study and Plan Commission of AACG relegated, Those unable to afford were forced to pull out Most issues raised by businessmen were considered policy issues beyond the sub city mandate Social capital limited to bonding type restrains new entrants Constrained decentralization limits space for managerial discretion and local development policy initiatives Conflict b/n enforcing ethical business and prevalence of illicit trade Makes difficult for late joiners (e.g. the resistance to the lease sale of road side plots in Minalesh Terra) Preference to high quality shops and improper handling might lead to exclusion of micro and small enterprises 43 Decentralization and service delivery in Ethiopia Spatial Slum habitation, obsolete infrastructure, poor physical condition Tenure: 90% government owned Existence of specialized quarters- Terras Necessitate concerted efforts of all concerned actors Redevelopment as opportunity to tenure change Duality: modern and traditional, high tourist attraction INCENTIVES: (1) Help win political and social support for the PPP (2) Improve the performance of the PPP (3) Help to expand membership and networks (4) Build the legitimacy of the partnership Source: own analysis Requires high financial investment , conflict of interest b/n construction of new buildings and social rehabilitation, Land grabbing tendency, Loss of traditional market (1) (2) (3) (4) Excludes unable members of the business community, Turned to be a series challenge for MMDP, led to be abandoned by two of its members, Aggravated by irresponsible architecture & urban design might lead to exclusion of traditional traders DISINCENTIVES: Erode the political and social support of the PPP Reduce the performance of the PPP Members might withdraw Erode the legitimacy of the partnership Decentralization and service delivery in Ethiopia ‘worse’, shows a mean value of 3.29 for Idirs followed by NGOs whereas the best contributors goes to GTZ (mean value of 1.5) followed by business association representatives (mean value of 2.0). Interview results show that though initially meetings were held every two weeks, later the intervals between meetings became longer (2-3 months) and the business men developed the impression that the partnership had started losing its momentum. Perception: responses to the belief respondents have on effectiveness of the partnership in achieving its goals in a Likert scale ranging from (1) very strong (optimistic) to (5) very weak (pessimistic) is remarkably high with a mean value of 1.7. This is reinforced by the regretful expression of respondents considering the partnership as missed opportunity. Interaction Rules: the question in reference to this issue enquires what rules, norms of practice etc. the Task Force had established. The questionnaire states that rules need not be in written form but have to be commonly agreed upon. 40 percent of respondents do not recognize the existence of such rules. Among respondents who recognize the existence of such rules or norms of practice the most frequently mentioned types of rules are: rules specifying roles and responsibilities of each position (Position can vary from ordinary membership to leadership) (83%), rules for rotational leadership i.e. chairmanship of the partnership (83%), rules specifying what action to take or not take at some decision point or which decisions can be taken by members in a position and which decisions need collective consensual decisions (67%). Considering the fact that most of the respondents in this later group are from the leadership including the Sub City Administration, the business associations and other representatives from the Chamber, and GTZ; it is possible to deduce that there were some perceived norms in directing the behavior of actors. However archival document search revealed that a TOR had been prepared to hire consultants to draft such norms of practice and codes of conduct at later days of the partnership. Partnership Identity: W hen the partnership was established it had been assumed that it possessed a mandate i.e. decision giving power pertaining to all the implementation activities of Merkato redevelopment. However later it was observed that there were issues which need decisions beyond the Task Force and they started feeling that the partnership had not been really empowered. Representatives of the business community become frustrated by the fact that the Task Force served only to voice their suggestion, where as no action was being taken. The other problematic aspect of the partnership was the number and composition of members of the Task Force. 60 percent of respondents have the opinion that the Task Force had failed to address the anticipation of all partnering bodies. Regarding other indicators for the identity of the partnership such as organizational identity, 70 percent of respondents ‘disagree slightly more’ in the organizational identity of the partnership being clearly recognized, resulting in total mean value of 3.3 in the Likert scale. This is reinforced by the various responses given to the question to which public body was the Task Force accountable in addition to accountability of its members to their respective constituencies. Table 2 summarizes the results. 45 Decentralization and service delivery in Ethiopia Table 2: Accountability of the Task Force No. Category- to which public body was the task force accountable 1 The Addis Ababa Chamber of Commerce and Sectoral Associations 2 The Addis Ababa City Government 3 The Addis Ketema Sub City Administration 4 5 Not clear (Non respondents) Respondents Organization Business association, GTZ GTZ, NGO, Business Assoc. Business Assoc., NGO City Adm., GTZ Percentage 20 30 20 20 10 100 Source: own computation on questionnaire results Regarding the mandate of the partnership in the development of Merkato being recognized by higher level bodies of the City Government and other stake holders, 80 percent of respondents do agree with a mean value of 2.6 on the Likert scale. 70 percent of the respondents had the opinion that the norms and values of the partnership support the work that it intended to do. There are mixed responses regarding to the organizational culture of the Task Force in its operation. The following Table 3 summarizes the results. Table 3: Organizational Culture of the Task Force No. Category 1 Hierarchical and bureaucratic 2 Democratic and decentralized 3 Not bureaucratic but centralized 4 Mixed and confusing 5 Yet not developed its own organizational culture 6 Not yet developed its own however centralized and a bit bureaucratic 7 Non-respondents Percentage 20 20 10 10 10 10 20 100 Source: own computation on questionnaire results Though the Task Force was in its early stage, results in Table 3 indicate a higher tendency to centralized and bureaucratic culture in its operation. This can be shown by taking out the 20 percent for democratic and decentralized category. This is expected in a hierarchically structured administrative culture trying to fit with a new arrangement based on negotiation and equal status. To the question whether partners have had prior knowledge of other partners’ track records, competence and operations; respondents from GTZ, NGO and Sub City Administration do have such prior knowledge about the other partners. Partnering Bodies and Role Demarcation: Responding to the question what the values of member’s organization are, respondents have the following answers as shown in Table 4. 46 Decentralization and service delivery in Ethiopia Table 4: Organizational Values of Respondent’s Organization No. Organizational Values Respondents Organization 1 Respecting traditions and GTZ hierarchy 2 Profitability & competitiveness Business association 3 Populism Business association 4 Humanitarianism NGO 5 Technical cooperation GTZ 6 Promotion of socially Chamber-Business community responsible trade and investment 7 Development advocacy NGO 8 Public service AA City Government 9 Populism and humanitarianism Sub City Administration 10 (Non-respondent) Percentage 10 10 10 10 10 10 10 10 10 10 100 Source: own computation on questionnaire results The results show an interesting variety of organizational values. However responding to the dichotomous question (yes/no) whether the respondent’s organizational value aligns with the values of the Merkato Millennium Development Partnership, 80 percent of the respondents agreed. Moreover respondents responding to the question whether the partnership’s objectives complement to those of their respective organizations, 90 percent agreed. Therefore such values can be taken as complementary values in collaborative actions for development. The responses to the role of the respondent’s organization in the partnership are summarized in Table 5. Table 5: Role of Respondent’s Organization in the Partnership No. Role in the partnership Respondent’s Organization 1 Advocacy NGO 2 Administrative/financial and GTZ technical support 3 Facilitator Business associations, Sub City Adm., AA City Government 4 Advocacy, major stakeholder & Chamber of Commerce/business beneficiary, facilitator community 5 Resource mobilization and NGO public support 6 (Non-respondents) Percentage 10 20 40 10 10 10 100 Source: own computation on questionnaire results Still one can observe the various but complementary roles of the partnering bodies which might be essential in partnership for development. The resources contributed by partnering parties for the partnership are summarized in Table 6. 47 Decentralization and service delivery in Ethiopia Table 6: Resources Contributed by Partnering Parties to the Partnership No. Resources contributed Respondent’s organization 1 Technical know-how and NGO, AA City Government experience 2 Management Business association skills/administrative clout 8 3 Finance, technical know-how GTZ, Business associations and experience 4 Technical know-how and NGO, Sub City Administration experience, Management skills/administrative clout 5 Coordination skills Chamber/ business community 6 (non-respondent) Percentage 20 10 30 20 10 10 100 Source: own computation on questionnaire results Regarding the expectation of partnering bodies from the partnership, Table 7 summarizes the results. Table 7: Expectation of Partnering Parties from the Partnership No. Expectation Respondent’s organization 1 The lives and livelihood of Merkato poor NGO and low income residents improved 2 Developed, safer and cleaner Merkato Sub City Adm., GTZ, AA City Government 3 Developed, safer and cleaner Merkato Chamber/business attractive to tourists, and affordable community construction 4 Developed, safer and cleaner Merkato with NGO Pro-poor development 5 Developed, safer and cleaner Merkato with Business association affordable construction 6 Pro – poor and small businesses devt.; Business association developed, safer, and cleaner Merkato; with affordable construction 7 Pro – poor and small businesses devt.; GTZ developed, safer, and cleaner Merkato; affordable construction and a cooperative culture flourished 8 (non-respondent) Percentage 10 30 10 10 10 10 10 10 100 Source: own computation on questionnaire results The expectation of 80 percent of the respondents which is a ‘developed, safer and cleaner Merkato,’ aligns with the vision of the Merakto Millennium Task Force: “Merkato: a modern, clean and safe Africa’s biggest market.” It is obvious from the table that even though the representatives of the business associations have also expectations for a ‘developed, safer and cleaner Merkato,’ affordability of building construction is also an important concern for them. Interviews indicate that the relationship among the partnering bodies in deliberating the partnership tasks was based on willingness to cooperate and trust rather than contract based. However, there was no as such clear demarcation of roles among the partners even though responsibilities for the different positions in the Task Force (some by de facto) existed. One thing which might be taken by 48 Decentralization and service delivery in Ethiopia default is financing of the construction of commercial buildings which has been carried through private investment. Gover nance it is clear from the composition of the urban actors involved that the partnership was instrumental to involve governmental, civil society groups and private businesses in the decision making process of Merkato development. One of the indicators used for governance has been the modality through which members were represented in the Task Force. Table 8 summarizes the result. Table 8: Representation Modalities of Members No. Category: Representation modality Respondents Organization 1 2 3 Through election (voting) by the general assembly Delegated by the leadership/executive Hired Business community, GTZ GTZ, Chamber- business community, NGO, AA City Government GTZ (project coordinator) Percentag e 30 60 10 100 Source: own computation on questionnaire results Table 8 shows that the representatives of the business associations (with the exception of a respondent represented by the Chamber of Commerce Merkato Branch Office) were represented through election carried by their respective general assembly while most other respondents are delegated by the executive of their respective organization. Regarding transparency, responding to a question whether the working culture of the Task Force can be expressed in terms of openness and integrity 80 percent of respondents agree resulting to a mean value of 2.7 on the Likert scale. Interviews show that the businessmen were expressing openly their view with out beating around the bush. Capacity analysis The analysis of capacity involves identification of the key players and their major stakeholders, who they are (public sector, private sector, civil society groups, donors, development co operations at local community, regional, national and international level etc.), understand what capacity they possess and what capacity they lack vis-à-vis their roles. There was no formal assignment of roles and responsibility of each partnering actor. It was at its later period that the Task Force drafted a TOR to a hire a consultant for drafting of its internal rules. The list of roles in the preceding table is reconstructed from what each partner had been performing. Apart from the capacity limitation of its members, Merkato Millennium Development Partnership (MMDP) as an organization has been plagued by many capacity related problems. The Task Force did not have its own structure. It lacked formally written interaction rules. The task Force also lacked its own office space. To whom the project coordinator was accountable was not clear. There was no common understanding on how development should continue among its members. Rather opportunities were utilized to promote own interest and agenda. Financially apart from the amount contributed by GTZ, no member had contributed what it pledged. Goal Achievement In responding to a set of dichotomous questions used as indicators for goal achievement, 90 percent of the respondents have confirmed that what had been Decentralization and service delivery in Ethiopia 49 accomplished by the partnership could not have been attained by the business community alone. This signifies synergy being attained. 70 percent of them (+20% responded ‘partially’) do not believe that the partnership had fulfilled its mission and 80 percent of them have the opinion that the development and management problems which the partnership tried to solve still persist. 60 percent don’t believe that the accomplishments so far are to the satisfaction of all members. 80 percent of them answered ‘no’ in response to whether they still owe allegiance to Merkato Millennium Development Partnership. Nevertheless 70 percent of them are hoping that political and ideological trends of the City Government will support such collaborative arrangements between the public, private and civil society groups. Respondents from representatives of the business community agree on the enthusiasm of the Sub City Administration expressed in facilitating the construction activities by organizing design competitions, tendering and bidding on construction work and settling disputes. Among the main practical problems solved by the Task Force was the provision of space on public alleys for construction of temporary shops so that the livelihood of the businessmen and their families would not be affected while construction was progressing on sites where their former shops were demolished and cleared to give way for the new constructions. The Task Force was also serving as an arbitration body. Sometimes an individual investor claimed land that was occupied by one of the associations. This is often met with reactions of members ranging from covert negotiation to intimidation against life. This required a third party to pacify the situation with local mediation skills. Regarding the construction of commercial buildings by associations, in 2006 there were only 6 projects under construction in central Merkato. By 2010 six buildings have gone operational while only five additional projects were under construction. These achievements need to be measured against a total of 52 plots which were leased since 1996. Infrastructure development save the installation of street lighting by the Sub City Administration with an investment worth of 6 million Birr seems to be relegated. After the turbulence following the May 2005 election, the former CEO of the Sub City Administration was transferred to another public responsibility and the chairmanship shifted to the representative of the business community. The meeting venue also changed from the Sub City office to Merkato Chamber of Commerce and Sectoral Association Office. However in November 2006 a general meeting was called for improving the operation of the MMDP. A document search shows the last minutes of the partnership recorded in the month of June 2007. Currently members’ allegiance to the partnership is being replaced by commitment to their respective block associations. Monit or ing and Evaluat ion Based on the questionnaire the Task Force had carried evaluations 1-3 times and tried to make use of the evaluation for further improvement. When asked whether inputs of monitoring and evaluation reports were utilized 30 percent answered “yes, most often”, 20 percent “seldom” and “20 percent “never” with the remaining not responding to the question. Decentralization and service delivery in Ethiopia Table 9: Capacity Analysis No 1 Key players & major stakeholders Merkato businessmen’s block associations Category Role Unique capacity Capacity limitations Remarks Private businesses Construction of business buildings and infrastructure, Resource mobilization, facilitation, Advocacy Flexibility, Quick practical decisions, Management & coordination skills Experience and skill in negotiation Coordination skills Low collaborative effort: Allegiance to the partnership gave way to commitment to ones block association Limited advocacy capability, less organizing and coordinating skill Progress of construction of business buildings has been retarded Know how on government working procedures, management skills, Political capital and networking, Conflict handling skills Shortage of skilled professional staff, Itself at early stage of establishment, Less selling skill in the promotion of the ideas of PPP, Less communication 2 Addis Ababa Chamber of Commerce Private business associations Organizing and coordination, Capacity building (information system, good business practice etc), Resource mobilization & facilitation, Awareness raising, Networking and advocacy 3 Addis Ketema Sub City Governmental Facilitation of construction routines (arranging temporary shops, access to supplies, dumping site for excavated soil etc), Maintain overall quality of Redevelopment, Regulate financial flow of the PPP, Provision of infrastructure, Communicate (policy related issues to the City Government e.g. lease, tax etc.) Not able to sustain the magazine ‘Merkato Today’ after GTZ withdrew, Unable to sustain the momentum and reorganize the partnership It failed to resolve issues related to lease (modality of payment and selling price) 51 Decentralization and service delivery in Ethiopia Addis Ababa City Government Governmental 4 Administrative backing and facilitation, Policy direction 5 Pro Pride NonGovernmental Organization 6 Christian Children Fund 7 Iddirs in Merkato NonGovernmental Organization Community Based Organizations Advocacy (whether redevelopment adversely affects the livelihood of the people), Resource mobilization Advocacy 8 GTZ International Development Cooperation Technical and professional knowledge on planning & design, legitimate authority and eminent domain to acquire property Long years of experience in poverty alleviation projects in Merkato Lack of experience in PPP, Absence of legal framework for PPP (-) Limited to passive observance and choose not to take action to provide policy framework on PPP (NA) (NA) Unable to find its niche and withdrew earlier Advocacy for resident communities of Merkato Local knowledge on the needs of resident communities Unable to find its niche and withdrew earlier thereby abandoning its advocacy role Financial and technical support, Networking and assist in resource mobilization, Facilitation of participatory fora Experience in PPP Expertise knowledge Networking skills Low negotiation skills, limited innovative & constructive suggestions (-) Served as secretary of the Task Force GTZ seems satisfied by the length it traveled to create the partnership as a joint forum between the main parties Source: Reconstructed from own survey questionnaires and interview results (specifically Table 6), reports of the Task Force, Report on assessment workshop by the OD consultant, and other studies. 52 Decentralization and service delivery in Ethiopia Table 10: Strength of the Partnership Strategic level Results factors on Likert Scale or percentages Shared vision Strategy Political support Facilitative role of sub city adm. & handling conflicting interests Governance -openness and integrity -participation 80% (Table 7) 100% Behavioral interaction Level factors Perception Orgn. Value alignment Complement ary objectives Expectation 80% Commitment (clear direction) Growing cooperati ve activity at early stage Commitment 2.5 & 2.9 2.7 All (70%) Values on Likert Scale or percentag es 1.7 Mutual Respect 90% 80% 2.2 (fair) Power balance Remarks High belief on the effectiveness of MMDP, Conviction that orgn. value and objectives align with that of the partnership All have broader view of development than mere construction of shop buildings The sub city administration showed great enthusiasm in the redevelopment There is mutual respect and all members actively participate in meetings Source: own computation and summary Synt hesis From the synthesis using Table 10 and Table 11 the major strengths of the partnership are in respect with vision and strategy. Here ‘strategy’ is limited to having a broader view of development objectives and clarity on how to reach there i.e. through collaborative efforts. All members have broader views of development than mere construction of shop buildings. Members were optimistic on effectiveness of the partnership in achieving their development goals. Members were convinced that what had been accomplished through the partnership could not have been done by the business community alone i.e. synergy is attained. The major weaknesses of the partnership included inability of the leadership to keep the partnership going, the passive observance or lack of enthusiasm about the partnership at higher political level of the City Government, lack of societal support, mistrust among the main partnering bodies (between the businessmen and City Government), lack of clear demarcation of roles, the interruption of the communication medium of the partnership for which most members were enthusiastic, unclear accountability and organizational identity. Decentralization and service delivery in Ethiopia Table 11: Weaknesses of the Partnership Behavioral Strategic Results on Likert interaction level Scale or Level factors factors percentage s Leadership 3.8 Commitment Societal support 3.3 Commitment Political support (Passive observance ) Commitment Communica tion 70% agree on the magazine Merkato today Trust Governanc e `Accountab ility (not clear) Partnership identity -bureaucratic & centralized 53 Values on Likert Scale or percentage s (interval b/n meetings 2-3 months) Remark (representa tives of the societal groups with drew earlier) (businessm en felt a forum for voicing but no action) Mistrust b/n the main partnering bodies (4.0) 4.0 (70%) / 3.3 (100%) Lack of Involvement of residents in implementing Merkato LDP 80% Failed to maintain the continuity of devt. activities of the partnership Passive observance of higher level City Government “Merkato today” stopped publishing after its first issue Accountability and organl. identity of the partnership is not clear; it adopted the bureaucratic culture Source: own computation and summary Conclusion & Recommendat ions This case study on Merkato Millennium Development Partnership (MMDP) exemplifies a case in point where a collaborative effort in the form of partnership between government and private businesses is necessary when private investment is required to build commercial buildings and the city government in addition to its interest in redevelopment of the city will be benefited from tax revenue increase due to expanded commercial activities as the result of creation of additional commercial space. The main strategic level weaknesses include lack of leadership which was able to maintain the momentum and continuity of the partnership, lack of societal support, lack of political support, and failure to maintain the communication organ of the partnership which was the magazine “Merkato Today” after GTZ transferred to the City Administration. The major weaknesses at the behavioral interaction level factors include the lack of trust between the key partners i.e. the businessmen and the Sub City Administration, and lack of formal interaction rules. However the Merkato Millennium Development Partnership also suffered from many capacity related challenges both on an individual and organizational level. The Task Force for the partnership as an organization had no structure of its own, lacks its own office space, no power of its own to give decisions on the development issues raised by the businessmen, and was not able to maintain a common understanding on how an integrated development (beyond the physical construction of modern 54 Decentralization and service delivery in Ethiopia buildings) should come in Merkato. Individual members of the partnership also suffered capacity problems which can be expressed as lack of experience in PPP and consequently lack of main competencies such as collaborative skills, negotiation, advocacy and communicative/lobbying skills. Shortage of skilled and professional staff in the part of the Sub City Administration has also limited its supervisory role in maintaining over all quality of the redevelopment. Several identity aspects of the partnership such as organizational identity, mandate, accountability, demarcation of roles and responsibilities, number and composition of members, organizational culture, its being trust-based are not in favor of promoting its identity and legitimacy. Contextual factors such as redevelopment which needs high investment cost, the lack of conducive institutional framework for PPP, constrained decentralization (issues like lease price, repayment period, grace period, height regulations, phasing and modalities of payment couldn’t be decided at the sub city level), bonding social capital working against the advantage of the partnership, the conflict between traditional and modern and between prevalence of illicit trade and the need to enforce ethical business practice - all obliged the partnership to operate in unfavorable environment. Regarding goal achievement of the partnership, members (90 percent of respondents) in particular the private businesses have realized that the accomplishments so far achieved couldn’t have been achieved without the concerted effort through the partnership. 70 percent of them (+20% responded ‘partially’) do not believe that the partnership had fulfilled its mission and 80 percent of them have the opinion that the development and management problems which the partnership tried to solve still persist. 60 percent don’t believe that the accomplishments so far are to the satisfaction of all members. 80 percent of them answered ‘no’ in response to whether they still owe allegiance to Merkato Millennium Development Partnership. This is evidenced by the fact that no significant progress has been made since 2005. Finally the cumulative result was the abandonment of partnership which was disbanded after 2007. In order to make the best use of such collaborative efforts in the form of public private partnerships for urban redevelopment projects, the first measure to be taken need to be the provision of facilitative policy/legislative framework. Such a framework shall address the typology of PPPs for different development collaborative efforts. Meaningful decentralization which empowers urban local governments with enough power to manipulate local level development polices is essential. One of the basic characteristics of partnership arrangement is that each participant is a principal. It has to be capable to bargain on its own behalf rather than having to refer back to other sources of authority. This however doesn’t overrule the need for consultation and reconciliation before reaching decisions. This is necessary on the basis that decisions on development issues are taken by different arenas and networks. Nevertheless when a decision is completely beyond the mandate of the partnership and the stance of the upper authority doesn’t go along with the objectives and pace of the partnership, this will constitute a serious challenge to the success and even survival of the partnership. All aspects related to the partnership identity and organizational capacity need to be rectified including a shift from trust based (informal) to contract based (formal) partnership, clear demarcation of roles, assignment of responsibilities and drafting of interaction rules. Capacity building efforts in governance framework need to involve all parities including the private sector. Priority in capacity building at individual member level shall focus on building basic competencies for collaborative action: negotiation skills, communication and lobbying skills, contribution of innovative and constructive suggestions, and positive attitudes and interaction rules. Partnerships exist in different networks (physical development, social development, environment etc.) and in different arenas. The MMDP can be Decentralization and service delivery in Ethiopia 55 rearranged as a network including different partnerships in the social development field which involves the Idirs, the NGOs, government and in fact part of the private businesses, international development co-operations; and another one on physical construction sphere which mainly involves the private businesses and the City Government. Higher level political support is necessary to introduce and maintain such kind of collaborative action between public and private businesses. A practical first step in this regard could have been assigning members representing the Federal Ministry (Ministry of Works and Urban Development) to listen and follow up at arms length the policy related issues of the partnership. This is justifiable on the accountability of the City Administration to the Federal Government. Finally, as forthcoming institutional/governance arrangements and taking the experimental nature of its current practice, establishing a knowledge center or research center on Public-Private Partnership might be necessary. Examples can be given like; the Dutch Knowledge Center on PPP and the Commission on UK Public Private Partnership. Note: 1 This categorization of Putnam was criticized on the ground that bridging social capital has also exclusionary aspects and for its analysis being simplistic. 2 . Terra is a distinct block specialized on similar items of merchandise items defined by streets and internally served by alleys 3 Kebele is the smallest administrative unit in the administration unit closest to the community. Though they were established after the two proclamations which put under public ownership of rural land and nationalization of urban land and extra houses they are still maintained up to now and even given constitutional ground. According to the proclamation urban Kebele administrations do administer houses with rental amount below Birr 100 at the time of the promulgation of the proclamations. Where as those rented Birr 100 and above are under the Agency for the Administration of Rental Houses. 4 A local Development Plan is an instrument that facilitates the implementation of the city’s master plan by focusing on strategic investment areas located both in the inner city and expansion area. 5 The Merkato Millennium Development Task Force was envisaged to replace its predecessor the Merkato Coordination Office (MCO) which was established in January 2000 by the Chamber to coordinate the activities of the four Sub Committees established by Merakto and Surrounding Special Committee (MSSC). The sub-committees include: Master plan and Lease, Business Improvement District (BID), External Relations and Business Ethics. 6 The Addis Ababa Chamber of Commerce established a Satellite office in Merkato in 2001 with the aim of serving the Merkato business community. However after serving up to November 2004 its services discontinued due to lack of budget and reopened in July 2006 following the financial assistance from the German Technical Cooperation (GTZ). It was later upgraded to a branch office level in November 2007 by the project support of the Royal Netherlands Embassy in Addis Ababa which extended from November 2007 to June 2010. The vision of the branch office was “to make Merkato a vibrant business hub as well as historical and tourist attraction through the concerted efforts of the business community and other stakeholders.” One of its objectives is networking with the Addis Ababa City Government, Sub City Administrations and other development partners for the growth of Merkato. The adopted strategies among others include: promoting public private partnership (PPP) forum in Merkato, organizing annual festivals inside Merkato that exhibit handicraft products of MSEs, publishing annual magazine on Merkato’s historical, social, trade and economic perspectives. 56 7 8 Decentralization and service delivery in Ethiopia Among recent major activities which the branch accomplished include the launching of a Local Area Network (LAN) and Wide Area Network (WAN) Information Technology Capacity Building Program to establish computer and internet training center in Merkato. The project is intended to facilitate information sharing from the head office and enhance awareness of the business community on the significance of Information Technology to advance their businesses (Activity highlights, Merkato Past and Present, May 2009). Participants of the review workshop were asked to jot down their concerns about the development of Merakto. A highlight on some of their concerns include: lack of political support and lack of public awareness, the lack of faith in cooperative development between the business community and government i.e. the prevailing view that only government is developmental, the mistrust between the business community and government, preservation of the tourist attractiveness of Merkato, the lack of adequate infrastructure, and shortage and exorbitant price of building materials. Participants were also asked about what they expect from the workshop. Some of their expectations include: clear demarcation of the responsibility and mandate of the Task Force, demarcation between government role and that of the Task Force, establishing the norm of practices/rules of conduct for the Task Force, enhancement of accountability and interaction between members of the Task Force and their constituencies, and how to turn the poor and low-income groups as partners in the redevelopment of Merkato. Financial contributions made by the business associations were concerned with the financial investment they made on the construction of the new commercial buildings. Only GTZ contributed an initial budget to make the Task Force operational. Decentralization and service delivery in Ethiopia 57 Part IV Fiscal Decentralization: to Have Adequate Revenues Assessment of the Budget Balance: Challenges and Opportunities of Fiscal Decentralization in Addis Ababa City Administration Belay File and Ayele Mulugeta I Introduction Decentralization has been defined as the transfer of responsibility for planning, management, and resource raising and allocation from the central government to field units of central government ministries or agencies, subordinate units or levels of government, semi-autonomous public authorities or corporations, area-wide regional or functional authorities, or organizations of the private and voluntary sector. There are four types of decentralization: political, administrative, fiscal and market decentralization. Many studies argue that fiscal decentralization is the manifestation of all other types of decentralization. Fiscal decentralization involves the devolution of both revenue generation and expenditure management power to the lower levels/tiers of a government. It has been advocated that devolving such a power would result in efficient and effective utilization of scarce resources. However, implementation of the system varies among regions due to several factors such as implementation capacity, the tax base, and level of economic development among others. Hence, the purpose of this study is to investigate the practices of fiscal decentralization in Addis Ababa City Administration and to analyze the opportunities and challenges of the city administration in raising sufficient revenue and delivering public services to satisfy the needs of its citizens. The city administration is striving to increase its revenue raising capacity through various mechanisms such as by decreasing the tax rate and thereby broadening the tax base by calling in evaders such as micro and small enterprise operators in the informal sector. Secondly, there are efforts to increase accountability and trust between the tax payers and the collectors. Awareness creation among the pubic, improving the service delivery system of the city through BPR and capacity building of the relevant institution are among the major efforts. Despite such efforts, there is evidence that revenue is not being generated to its full capacity and that there are also service delivery problems. Moreover the rapidly increasing urbanization rate has posed sever challenges to the capacity of the city administration to meet demands. To this end the study investigates three main questions: to what extent has efforts in boosting revenue achieved the targets? What are the opportunities and challenges of raising revenue by the city administration? Is the city administration covering all its expenditure by its own means? To meet its objectives, the study relies mainly on secondary data. However, some primary data has also been used to support the arguments in the study. To analyze the data the study employs trend analysis and computation of percentages, averages and ratios etc. The study is expected to yield important insights that could help the city administration in meeting such an increased demand and provoke extended research in the area. 58 Decentralization and service delivery in Ethiopia II. Theoretical Framework 2.1. Decentralization Decentralization is a very broad, complex and multifaceted term which is defined as the transfer of authority and responsibility for public functions from the central government to the different tiers of lower level governments, intermediate and local governments, or quasi-independent government organizations and/or the private sector (World Bank, 2008). Broadly speaking decentralization in the system of government is nothing but “transfer of power from a central government to subordinate authorities”. In other words, “A decentralized government is the opposite of a centralized government, in which power is legally vested in the central government and local governments act merely as agents, having no decision-making power of their own.” (ibid) In practice, decentralization entails the spread of power from higher level to lower level units, within a central government, from central to regional and local governments or from regional to local governments (Tegegne and Van Dijk, 2005; Jha and Mathure, 1999). Similarly, Kibre (1994) argues that decentralization is the division of political, economic and administrative powers among government levels. Types of Decentralization Broadly speaking for the purpose of this chapter there are three types of decentralization. These are political, administrative and fiscal decentralization. For the purpose of clear understanding on the difference between them we have defined each as follows. Political decentralization: is a type of decentralization that transfers policy and legislative powers from central governments to autonomous, lower level assemblies and local councils that have been democratically elected by their constituencies. There are several prerequisites for Political decentralization to be effective and to meet its objectives as desired, among which the major ones are regular elections, clearly defined jurisdictions and powers, and the existence of appropriate legal, political and functional space to exercise the devolved powers and duties thereof. In addition, political decentralization often requires constitutional or statutory reforms, the development of pluralistic political parties, the strengthening of legislature’s creation of local political units and the encouragement of effective public interest groups (W B, 2009; Kumera, 2007). Administrative decentralization: is another type of decentralization that transfers responsibility for the planning, financing and management of certain public functions from the central government and its agencies to field units of government agencies, subordinate units or levels of government, semi-autonomous public authorities or corporations, or area-wide, regional or functional authorities. In general Administrative decentralization seeks to redistribute authority, responsibility for providing public services among different levels of government. It is also argued that there are several prerequisites for Administrative decentralization to become effective including the ability to make independent staffing decisions and ability to negotiate conditions of service are the major ones (Wikipedia.org; W B, 2009). Administrative decentralization is further divided in to three categories mainly depending on the extent of the decision making authority that is transferred from the central to the lower tiers. These are: Deconcentration: is the first and the weakest form of Administrative decentralization which is used most frequently in unitary states. This form of decentralization often redistributes decision making authority and financial and Decentralization and service delivery in Ethiopia 59 management responsibilities among different levels or organs of the central government mainly under the supervision of central government ministries as the extent of the authority and responsibility increases (W ikipedia.org; W B, 2009). Delegation: is a more extensive form of decentralization as compared to the former in that through delegation central governments transfer responsibility for decision-making and administration of public functions to semi-autonomous organizations not wholly controlled by the central government, but ultimately accountable to it. For example, Governments delegate responsibilities when they create public enterprises or corporations, housing agency, transportation, power, telecom authorities, regional development agencies, or special project implementation units. Usually they may be exempt from constraints on regular civil service personnel and may be able to charge users directly for their services (Ibid). Devolution: is the strongest type of decentralization in that it transfers authority for decision-making, finance, and management to the local governments that elect their own mayors and councils, raise their own revenues, and have independent authority to make investment decisions. In a devolved system, local governments have clear and legally recognized geographical boundaries over which they exercise authority and within which they perform public functions. It is this type of administrative decentralization that underlies most political decentralization (Ibid). Fiscal decentralization: is the third type of decentralization that transfers the autonomy and responsibility of revenue raising and expenditure management, including the power to levy taxes and user charges, to local governments. It can be argued that fiscal decentralization/financial responsibility is a core component of decentralization without which decentralized local governments can not carry out decentralized functions effectively. In other words, political and administrative decentralization without fiscal decentralizing/financial responsibility can not be effective as these functions would be jeopardized by waiting for someone else to decide on revenues as well as about expenditures (W ikipedia.org; WB, 2009). Oates (1991:133-156) argues that if local governments and private organizations are to carry out decentralized functions effectively, they must have an adequate level of revenues either raised locally or transferred from the central government as well as the authority to make decisions about expenditures. Hence, for fiscal decentralization to be effective and meet its desired objectives it strongly requires linking pleasure of spending with pain of revenue generation. Fiscal decentralization is now seen as part of a reform agenda to strengthen regional and local governments. This is because central government alone cannot satisfy all of the competing needs of its constituent units. Besides, local and regional governments help in the implementation of national economic development strategies and this can be more reliable with adequate taxation powers to meet their expenditure responsibility (Oates, 1991). However, Smoke (2004) suggests in many developing countries local governments or administrative units possess the legal authority to impose taxes but the tax base is so weak and the dependence on central government subsidies so ingrained that no attempt is made to exercise their authority. In general it is argued that effective decentralization requires a balance between administrative, fiscal, and political decentralization. Ignoring this fact and following the common tendency to implement political aspects of decentralization and undermining the remaining two will not make the decentralization process complete and effective. In short its effectiveness depends on the existence of genuine local autonomy, appropriate legal frameworks for Local Governments, and the level of responsibilities and accountability devolved thereof. In conclusion, literatures suggest that three conditions must be met to effectively improve governance: 60 • Decentralization and service delivery in Ethiopia Significant responsibilities and powers for local service delivery should be devolved to democratically elected local authorities (local governments) in line with their capacities and potential, based on a principle of subsidiarity (political decentralization) • Proper channels to encourage strong accountability between elected representatives and local bureaucrats and between elected representatives and their electorates (institutional decentralization) • Resources, through own revenues (especially local taxes) and grants from higher-level governments, sufficient to meet these responsibilities should be devolved to local governments (fiscal decentralization) (Bahl and Linn, 1992). In line with the third condition, many federations including the FDRE employ fiscal grants to correct fiscal imbalances and to offset spill over effects. Besides, central government applies it as an instrument to influence the spending pattern of sub national government. This mechanism serves as a political tool to pursue both national goals and regional plans through coordinated conditional transfers (Oates, 1999). According to Shah (1994), national fiscal transfers include the following six broad objectives: bridging vertical fiscal gaps, bridging the fiscal disparities through fiscal equalization transfers, setting national minimum standards, compensating for benefit spillovers, influencing local priorities and dealing with infrastructure deficiencies and creating macro economic stability in depressed regions. Transfers/grants are broadly classified in to two categories, namely General Purpose Transfers: transfers that are provided to sub- national governments to ensure horizontal and vertical equity that are not tied to or specified for any specific purpose (Rao, 1998). The second type is a specific purpose transfers: as the name indicates, these transfers are employed for specific purposes to be implemented at sub national or local levels. They are assumed to compensate spillover effects or are given for merit good reasons to ensure optimal provision of public services by federal and regional states (Shah, 1994). 2.2. The Soufflé Theory of Decentralization We have adapted the Soufflé Theory of decentralization to clearly show and create a common understanding on the impact of decentralization on economic development of developing countries. The figure below depicts clearly the impact of a well managed and balanced, in terms political, administrative and fiscal, decentralization on economic development of LDCs. The model show that decentralization entails three distinct choices each of these choices (political, fiscal and administrative) has their own outcomes in the system where political decentralization brings about political accountability, transparency and representation. Fiscal decentralization enhances effective and efficient resource mobilization, allocation and fiscal capacity as well as discipline which otherwise may increase sub-national indebtedness. The system outcomes in turn may translate into system results in the form of budget constraint (soft/hard), moral hazard, and macroeconomic instability, or responsive, effective, efficient and sustainable services. Finally, if the positive system results dominate it leads to development in the form of increased incomes, productivity literacy, etc. Decentralization and service delivery in Ethiopia 61 Figure 2: Indictors of Decentralization - The soufflé Theory 2.3 Economic Rationale for Fiscal Decentralization Even though much of the decentralization which has taken place in the past decade has been motivated by political concerns there is also a strong rationale for decentralization in terms of economic efficiency, public accountability and empowerment. Hence, the economic discussion of fiscal federalism has concentrated mainly on federalism as real decentralization where the lower level jurisdictions have competence over their own expenditures and revenues. The following benefits of decentralization are regularly mentioned: a. Decision making at the local levels gives more responsibility, sense of ownership and increased participation to local agents, and local information can often identify cheaper and way of providing public goods b. Regional differences can be better taken into account (i.e., local governments are better positioned than the distant national government to deliver public services as a result of information advantage); c. Lower planning and administrative costs due to the abundance of overlapping functions(i.e., decentralization reduces overload and congestion in administration and communication from the mainly higher level government); d. Competition among local governments favors organizational and political innovations (i.e., mobility of resources between localities rewards governments who better serve residents and businesses); e. Population mobility narrows the gap between local government policy and local communities’; f. More efficient politics as citizens have more influence (i.e., since voters pay for local public services in the form of taxes and user chargers, they hold local officials accountable for delivery of services at some acceptable quantity and quality by promoting good governance, enhances organizational effectiveness, and improve human power capacity) (Fritzen and Patrick, 2006; Oates, 1972; Brennan and Buchan, 1980; Mohammed, 2005; Conyers,1990; Maro, 1990; Tegegne and van Dijk, 2005; Jha and Malthure ,1999; Loop, 2002; Davey, 1983; Mwangi and Patrick, 2004) However, recently there have been several papers articulating challenges to fiscal decentralization. For example, Prud’homme (1995) and Tanzi (1996) pointed out a number of conditions necessary for the benefits of fiscal federalism to materialize: some of these concerns are related to the issues of the degree of 62 Decentralization and service delivery in Ethiopia accountability of sub national governments to constituents; the availability of qualified and integral staff at the local level; availability of clear rules of financial accounting and budgeting at all levels of government, freedom of people and resource mobility. Evidences and literatures show that both in the industrialized and in the developing world, nations are turning to devolution/decentralization of power to improve the performance of their public sectors (Oates, 1999). Article 47 of the constitution of the FDRE mandates a federal structure that divided country into nine national self-government or regions and two special city administrations of Addis Ababa and Dire Dawa (FDRE constitution1995,) Similarly, Article 51 of the constitution, gives the mandate of formulation and implementation of policies related to over all economic and social development which include defense, foreign policy, money, banking and currency and provision of basic infrastructures like; air, rail, waterways, shipping, major roads, postal, and telecommunication services to federal government. On the other hand, article 52 of the constitution grants the regions the power to establish a state administration that best advances self-government, enact and execute the state constitution and other laws, formulate and execute the region’s economic & social development plans, administer land and other natural resources according to the Federal Laws, levy taxes and collect revenue on sources demarcated to states; prepare and execute the regional budget; establish and administer a state police force. 2.4 Addis Ababa City Administration Addis Ababa, the capital city of Ethiopia, has an estimated population of about 3 million. Migration constitutes an important component of the population dynamics. Most of the migrants come to Addis Ababa for various reasons, the most important being search for better livelihood. Nonetheless, with limited capacity of the formal sector to absorb the immigrants, many of them particularly the women are involved/employed in the informal sector. According to the recent statistical surveys conducted by CSA (2003), the total number of people involved in the informal sector in the city reached 128,598, out of which, 65,719 (51%) are women (Central Statistical Authority.2003). According to the urban informal sector survey of 2003, most of the people engaged in informal sector are found in the manufacturing (42.78%), trade, hotels and restaurants (42.53%). These people are mostly crafts and related trade workers (44.72%) and services, shops and market sale workers (36.32%). Hence, urbanization is becoming a pressing challenge of Addis Ababa, as it is not accompanied by a well-built economy and a wide resource base that could adequately fulfill basic requirements for its ever-increasing residents. The informal sector contribution or share to the economic growth of the city is paramount. Unlike the formal sector, the informal sector is operating spontaneously and in an insecured manner; without fixed location, little technology and with no formal training. Nevertheless, the contribution of this sector to generate income for the many unemployed working age group and its role for the city’s development is significant. According to the Bureau of Finance and Economic Development (2010), there are challenges and opportunities that arise from the dominance of informal sector enterprises in the city. The challenges are that by nature informal sector operators are ‘hard to tax’ as they can easily under report or escape tax authorities. Due to small size and owner managed nature of their businesses, they are mobile and pose a big challenge to the taxing authority. However, the bureau also indicates on the opportunities if they exert efforts on taxing the “hard to tax”. Lowering the tax Decentralization and service delivery in Ethiopia 63 base, provision of trainings on business skill development, accountability and transparency are among the major efforts the bureau is working to tax the “hard to tax”. Recently there are reports that the city administration is running a budget deficit owing mainly to a rise in capital expenditure. However there are also unmet demands in the areas of drinking water, sanitation, housing and public safety and security. The question that remains is even if such expenditure might be justified, who would finance the debt if the deficit keeps on widening? The city administration seems to look into building its own capacity to tap its revenue potential, besides seeking support from the federal government. In other words there are efforts by the city administration to close the deficit in many fronts. This will be assessed in the discussion part of this chapter. The tax reforms that took place in the country have also been implemented in Addis Ababa and seem to have contributed positively. The reform was designed to correct the crucial policy failures focusing on the following key measures through the tax policy. • Reducing the very high rates: for payroll employees, business and agriculture income tax. • Removing undesired taxes: in order to promote export diversification and avoid reliance on mono-commodity, export taxes were removed, except for coffee. • Broadening the tax base: in this regard, new income, wealth and consumption taxes were introduced. The rental, capital gains and interest income tax as well as services sales taxes can be cited as additional levies embarked through the tax policy reform. • Enhancing revenue collection: through improving and modernizing the revenue collection institutions efforts are underway to provide stability in the revenue systems. These tax reforms were undertaken with an aim to meet several objectives. The first objective was to yield a sustainable source of government funding for a rapidly rising expenditure both in the country and in the city. The reform also aims at stimulating businesses by lifting unnecessary burdens. Creating an enabling business environment thus calls in many non-compliant businesses as is evidenced by the deputy head of Addis Ababa revenue bureau. According to him new tax payers are coming into the system voluntarily. A progressive tax system which the country is in principle applying was deemed to narrow income inequality. In general the reforms seem to have impacted a fiscal balance both in Addis Ababa and in the city in a positive direction. 2.4.1 Tax Paying Outlets In the city of Addis Ababa there are three tax paying outlets with an aim to enhance tax collection system and create a conducive environment for tax payers. These are: • Kebele: Category C tax payers pay taxes at kebele level. • Sub city: category A and B tax payers conduct their tax payments at sub city level. • Third party: All tax categories are allowed to pay taxes through the third party. The third parties are: selected banks in each sub city, Addis Credit and Saving Institution, and commercial nominees. The service charge will be paid by the tax payer and the bank transfers the money to the central treasury of the city administration. The revenue authority receives copy of the bank slip to balance (update) their account. There are also efforts to 64 Decentralization and service delivery in Ethiopia introduce an online declaration although this is not commonly used by tax payers. III. The Data and Empirical Results 3.1 The data The study largely relies on secondary sources for the analysis of data. However, some interviews were also conducted with deputy heads of the revenue bureau. The bureau of finance and economic development has a six years consecutive data on revenue and expenditure, both planned and achieved. This allowed us to see some trends for both revenue and expenditure components. Trends such as budget balance can thus be examined from the data. The expenditure components are broadly categorized as recurrent and capital expenditures. The trend of each is described in the six year consecutive period. The details of each of the components are included in the secondary data set. Revenue is broadly classified into two sub-units as tax revenue and non-tax revenue. The tax revenue is further divided in to direct and indirect tax components. The interview essentially provided us with qualitative insights about the subject. Information on efforts made by the bureau to boost the revenue raising capacity and the challenges faced was obtained using this method. 3.2 Revenue Base and Trends in Addis Ababa Although the city is strategically positioned as a political site of government and many NGOs, embassies and other international organizations, critics argue that a small amount of revenue is raised compared to its potential. There are also efforts exercised by the municipal authorities and other concerned government bodies to raise revenue through various means. Accordingly this study has investigated both qualitatively and quantitatively about efforts made by the city administration to raise revenue and also the extent to which these efforts have achieved targets. 3.2.1 Efforts exercised by the Revenue bureau According to the interview conducted with Deputy Head of the Revenue Bureau, six major efforts are underway to boost the revenue raising capacity of the city administration. Automation of the revenue system: the bureau has developed a system called Integrated Revenue Management System with the view of modernizing the revenue system. This effort has received recognition even at the continent level enabling the bureau to receive an award called Technology in Government in Africa ( TIGA, 07) Strengthening the Tax information system: with the view of raising tax compliance the bureau has implemented the Integrated Revenue Management System, has made a pilot test in the SIGTAS deployment of the country, introduced cash register machines and started issuing finger print based TIN and Tax payers Identity Card. Institutional Capacity building: W ith the view of boosting the implementation capacity of the bureau it has invested in capacity building by creating strong relationship with the ITC of the ECSC and by hiring foreign trainers. Raising the ethical standard of the staff: In this regard, trainings have been carried out in collaboration with the ECSC and the Anti-Corruption Commission on service delivery and corruption respectively. Beyond the training, they have developed draft ethical regulation of their own. Decentralization and service delivery in Ethiopia 65 Awareness creation programs to the tax payers: in this regard the bureau has established a separate body, the Education and customer service sub-business process, at all levels down to the Kebele level to take care of the awareness creation task. Accordingly, the awareness creation program uses several means: face-to-face, media, brochures, and the website of the authority. Developing enforcement mechanism: in this regard the bureau has started different ways to enforce the tax laws. These include negotiations with companies not to sell their products to those who have no TIN. There is also a strong cooperation with the chamber of commerce. There are field visits using some 30 intelligence workers of its own. The problem here is the number of intelligence workers has been very small compared to the 220,000 tax payers in the city. There is a close cooperation with federal police and intelligence institutions to assure enforcement. The authority mentions recurrent crimes related to Value Added Tax (VAT) as business men feel reluctant to pay VAT to the government. The authority also mentions that there are efforts to embrace the informal sector who would pay tax if it were explained well. In this regard the deputy head mentions the possibility of extending proper service delivery to the formal sector operators so that informal sector businesses will demand formality. Also raising transparency and accountability among tax collectors and informal sector businesses was explained to have increased the number of informal sector operators paying taxes. As a result of the above efforts, everyday ten to fifteen new tax payers are entering into the system in each sub city showing a good move towards modern fiscal discipline. Moreover, the revenue authority has negotiated with various companies not to sell their products to those who have no TIN (Tax Identification Number). 3.2.1.1 Business Process Re-engineering (BPR) and its Impact According to the interview with deputy head of revenue bureau, both the revenue authority and the bureau of finance and economic development have implemented a BPR. The BPR proved to have brought some positive impacts on revenue raising efforts. Some of these are: Attitudinal changes: Due to effective communications between tax payers and collectors on the “why” and “for whom” of tax collection, there are attitudinal changes in the public. According to the interview, due to the BPR people are now more aware that the tax collected will be for the benefit of the people themselves. As a result the number of voluntary tax payers has increased. BPR has increased confidence for tax payers. According to the interview, not only can tax payers participate in biddings, they feel they have contributed to their citizenship obligations. Tax payers are less exposed to harassment and confiscation and thus run their businesses with confidence. BPR has induced a performance based evaluation. The revenue authority conducts a performance based evaluation periodically. Moreover sudden observation is done by the capacity building bureau to monitor the performance and customer handling system of both the revenue bureau and the bureau of finance and economic development. 3.2.2 Achievement rate The table below shows the rate of achievement of revenue generated compared to what is planned. Achievement here is indicated by the performance rates in each fiscal year compared to the previous year. 66 Decentralization and service delivery in Ethiopia Table 12: Achievement Rate (in Birr) Year Planed 2004 2005 2006 2007 2008 2009 2,517,566,600.00 4,102,716,872.00 3,476,440,000.00 5,160,959,191.00 6,371,020,000.00 8,838,020,000.00 Achieved 1,565,742,663.06 1,976,437,918.60 2,677,590,305.74 2,425,217,518.58 3,008,488,465.53 4,313,064,776.61 Performance (%) 62.1927008 48.17388039 77.02104181 46.99160425 47.22145693 48.80125613 Growth rate of achieved revenue 0.26230061 0.354755584 -0.094253698 0.240502529 0.433631814 Source: own computation from BoFED data Performance growth trend over the past six years is shown as in the diagram below. As shown in the fourth column in the previous table, it is only in the year 2006 that the percentage growth of revenue performance, computed as ratio of the difference between planned and achieved to the planned revenue, exceeded a seventy percent performance rate. Even so, the main reason for such a high performance in this year is largely due to the low value of the planned revenue. In 2006, planned revenue was much lower than in the year 2005. In almost all other years the performance is below a 50% point indicating that much more effort has to be exerted by the revenue authority to meet its planned/targeted levels. Column 3 shows the actual revenue collected by the authority over the past six years and the growth rate of this actual revenue is indicated in column 5. There are positive growth trends in the first three years consecutive years before attaining a negative growth in the year 2007. A thorough observation into the data reveals that a negative growth in actual revenue is due to a fall in government investment income and specifically a dramatic fall in urban land lease in 2007. Urban land lease has achieved its peak in 2006 with a value of about half a billion birr. This could be largely due to the reform following 2005. The growth rate of achieved revenue is shown in the figure below. In the first three years there is a positive growth trend before it reaches its lowest level in 2007.This was largely due to a sharp fall in non-tax revenue. From there on, there is a positive growth trend in actual revenue collected although it is on the average about half of what is planned. Growth rate in actual revenue exceeded 40 percent only in the year 2009 and that was largely due to a sharp growth in tax revenue. This could signal an improvement in the trend of growth of revenue from a non-tax dominated source such as urban land lease to a tax dominated source. Tax revenue may yield a more sustained component than non-tax sources. This is explained in the next section under revenue structure. 67 Decentralization and service delivery in Ethiopia Figure 3: Growth Rate of Achieved Revenue 0.5 0.4 0.3 0.2 Growth rate of R 0.1 0 2004 2005 2006 2007 2008 2009 -0.1 -0.2 3.2.3 Revenue Structure This study has broadly classified the revenue structure into two as tax and nontax revenues; however efforts have also been made to include trends of for example, Value Added Taxes (VAT) over the past six years. The table below shows trends of tax and non-tax revenue. Table 13: Trends of Tax and Non-tax Revenue Year 2004 2005 2006 Tax revenue Growth rate of tax revenue No tax revenue Growth rate of non-tax revenue 629,733,978.47 292,192,626.85 2007 2008 2009 985,224,865.61 1,029,711,365.16 1,137,679,852.11 1,582,786,244.28 2,234,346,453.98 56 4.5 10.5 39 41 285,777,776.44 724,993,284.80 487,857,343.83 587,436,126.98 497,984,673.12 -2.2 154 -32.7 20.4 -15.2 Source: own computation from BoFED data The trend in growth rate is described in the diagram below. From the trend it can be noted that the tax revenue component has surpassed the non-tax revenue from 2007 and onwards. The non-tax revenue component has shown an irregular growth rate over the six year period indicating that it is the unsustainable source which could fluctuate over years. Looking at the average growth rate over the past six years, tax revenue has grown by about 25 percentage points while that of the non-tax revenue grew by 17 68 Decentralization and service delivery in Ethiopia percent. An exclusion of the outlier in growth rate of non-tax revenue in 2006 would yield a negative average growth rate. Hence although the non-tax revenue has shown a positive average growth rate for the past six years, this is largely due to a sharp increase in its value in the year 2006. Figure 4: Growth Rates of Tax and Non-tax Revenue 200 150 Growth rate of TR 100 Growth rate of NTR Year 50 0 2004 2005 2006 2007 2008 2009 -50 Source: computed by authors The data also allows analysis of trend of VAT over the past six years. The figure below shows trends of VAT, total revenue, tax revenue and non-tax revenue in millions of birr. The volume of VAT is in general increasing. In the year 2009, the volume of VAT is almost in par with non-tax revenue. This is promising, although an interview with revenue official reveals that VAT is exposed to corruption as collectors feel reluctant to pay the government the amount collected from consumers. The official mentions of strengthening law-enforcement mechanisms and other regulations such as increasing the number of intelligent workers to maximize revenue from VAT. Figure 5: Trend of Major Revenue Sources, Compiled from BoFED. Another way of looking into the revenue structure is to look into the percentage share of each revenue source in total revenue of the city administration to identify which of the sources are dominant and whether these dominant sources are 69 Decentralization and service delivery in Ethiopia sustainable or not. Accordingly, we have calculated the percentage share of all revenue sources of the city administration over the six years under consideration and presented the result for 20 items only in the following table. Table 14: Percentage Share of Major Revenue Sources in Total Revenue Year Description 2004 2005 2006 2007 2008 2009 100.00 100.00 100.00 100.00 100.00 100.00 1 Total Items of Domestic Revenue 97.31 97.13 99.76 97.98 97.79 99.51 2 Tax Revenue 40.22 49.85 38.46 46.91 52.61 51.80 3 Tax on Income, Profit and Capital Gain 38.11 37.02 28.36 35.41 37.78 36.70 4 Wages and Salaries 18.04 15.81 15.89 21.65 23.98 23.54 5 Rental Income 1.66 2.01 0.49 0.90 1.48 1.48 6 Profits to Individuals Value Added Tax (VAT) Excise Taxes on Locally Manufactured Goods Sales Turnover Tax On Locally Manufactured Goods 17.75 18.56 11.34 12.12 11.37 10.95 0.000 3.86 4.34 6.45 10.69 10.61 2.11 8.97 0.09 0.24 0.14 0.10 0.87 0.61 2.04 0.88 1.99 2.31 0.000 3.73 1.42 3.93 1.41 1.50 11 Service Turnover Tax Stamp Sales and Duty 0.92 4.45 2.20 0.73 0.61 0.58 12 Non-Tax Revenue 18.66 14.46 27.08 20.12 19.53 11.55 13 Administrative Fees and Charges 1.19 0.29 0.56 1.40 0.89 0.66 1.72 1.92 4.41 8.09 5.68 0.67 Ser. No. 7 8 9 10 11.41 9.50 19.89 7.12 7.71 7.67 16 Sales of Public Goods and Services Government Investment Income Miscellaneous Revenue 4.34 2.75 2.14 3.52 5.25 2.55 17 Capital Revenue 5.17 0.49 7.66 4.94 13.60 21.61 18 Subsidy Revenue 1.31 1.26 2.32 1.13 1.44 0.63 19 Municipality Revenue 31.95 31.07 24.25 24.88 10.61 13.92 20 External Assistance 2.69 2.87 0.24 2.02 2.21 0.49 14 15 Accordingly, domestic revenue source account for 97.13 - 99.76% of the total revenue of the city administration leaving the share of external assistance to be less than 3% of the total revenue. This implies that the city administration almost 70 Decentralization and service delivery in Ethiopia entirely depends on domestic revenue sources. This can be interpreted positively in terms of sustainability and at the same time negatively for failure to harness more assistance given the opportunity that it is the seat of all embassies and many other international organizations. Figure 6: Trends in the Percentage Share of Major Revenue Sources Source: own computation from BoFED data Percentage share of major revenue sources Tax Revenue 60.0 Non-Tax Revenue 50.0 Capital Revenue 40.0 30.0 Subsidy Revenue 20.0 Municipality 10.0 0.00 External Assistance 2004 2005 2006 2007 2008 2009 Value Added Tax (VAT) Year Within the domestic revenue sources, as depicted in the figure above, tax revenue is the dominant source that accounts between 38.48% (2006) and 52.61% (2008). After a fall to 40% in 2007 it recovered and reached 52.61% in 2008 and then showed a slight fall in 2009 to 51.8%. In 2004 and 2005 Municipality Revenue was the second largest contributor by accounting about 31% of the total revenue of the City Administration followed by Non tax revenue in the same year which accounted about 18 and 14 per cent respectively. But after 2005, the trend in both sources was so erratic in which successive fall was registered that ended up bringing down their share to 13.92% and 11.55% respectively in 2009. The contribution of capital revenue is becoming so promising after 2005 showing a steady growth after 2007 and has become the second largest contributor in 2008 by accounting 21.61% of the total revenue. Subsidy and external assistance are the least contributors in the list by accounting less than 3%. This trend calls for deeper study into the sub components of Municipality Revenue and Non tax revenue to investigate the reason behind their severe fluctuation and successive fall in the entire study period and the indication of the slight fall of the dominant tax revenue in 2009. Here we gave due attention to the trend in the value added tax (VAT) as one of the tax revenue sources. As can be seen from the previous table and figure VAT has shown a steady growth until 2008. Its share has increased from zero to three decimal points in 2004 and reached to 10.69% in 2008 with again slight fall in 2009 by 0.08 percentage point contributing that much to the fall in the tax revenue. Hence, the trend in VAT is encouraging but given the potential of the city administration a lot has to be done to further boost its contribution. Decentralization and service delivery in Ethiopia 71 3.3 Expenditure and Budget Balance Analysis Budget balance reveals the difference between expenditures and revenues at any level of a government. In public finance literature governments incur budget deficits largely because the revenues raised are so small to cover expenditures or that governments are involved in ambitious expenditures. The following graph shows the actual gap between revenue and expenditures as well as the six years trends in the gap. Figure 7: Expenditure and Revenue Per Year in Birr Source: own computation from BoFED data The data reveals that prior to 2007, the city administration was running surplus. However, from 2007 on wards the gap between revenue and expenditure has widened and that the administration is in deficit. Although there is an increase in total revenue over the six years, the deficit occurred from 2007, mainly because expenditure is increasing more than the increase in total revenue. This may provoke questions such as which expenditure type and why. An analysis of recurrent and capital expenditures may yield an answer to these questions. The following figure reveals trends in actual values of both recurrent and capital expenditures. Maybe the city government has embarked on several development projects such as road construction and this might have contributed to an expanding gap between revenues and expenditures. The next question that deserves attention is how this deficit is financed. An interview with the deputy head of finance and economic development revealed sources such as loans from the Commercial Bank of Ethiopia, Ethiopian Telecommunication Corporation and Ethiopian insurance company. According to the deputy head, currently there are efforts to finance deficits through issuing bonds to the Commercial Bank of Ethiopia. It should be noted here that such a size in deficit occurred by also including external assistances as parts of total revenue generated. An exclusion of the external assistance widens the gap between revenues and expenditures. The following table reveals budget balance with and without an external assistance. The table shows that the city administration is sinking down into debt especially from 2007 onwards and this reveals that many of development projects are implemented through loans. 72 Decentralization and service delivery in Ethiopia Figure 8: Recurrent Expenditure and Captial Expenditure in Birr Source: own computation from BoFED data Table 15: Budget Balance in Birr Budget balance (R-E) including external assistance (Birr) Year Budget balance excluding external assistance (Birr) 2004 3,335,686,13.9 2,914,829,51.6 2005 4,692,806,86.1 4,124,821,43.6 2006 4,420,611,30.5 4,356,736,75.3 2007 -2,762,496,06.3 -3,252,185,47.8 2008 -8,313,831,20.5 -8,978,049,92.7 2009 -12,932,807,05 -13,146,042,07 Source: own computation from BoFED data Such a deficit could be justified as long as the city administration invests in development projects. However, without due attention to these deficit problems, the administration may run a stage where it totally fails to deliver important social and economic services as a result of debt servicing that could arise from such a mounting loan. Moreover such a mounting loan has an implication that the future generation should bear our current expenses. Therefore the city administration should still strive to narrow the gap and work on raising revenues that will cover more of its expenditures. IV. Opportunities and Challenges Addis Ababa being the capital city of the country enjoys a number of opportunities in increasing its revenue base. As an economic footprint it extends to all corners of the country. All goods and services marketed to all regions directly or indirectly touch Addis Ababa in their value-chains. According to an interview with the deputy head of the revenue authority the following opportunities are identified. First as a political capital the city gets a number of tourists and visitors who create a demand for goods and services thereby raising the volume of transaction in the city. A higher volume of transaction means that the revenue potential is also higher. Decentralization and service delivery in Ethiopia 73 Secondly, there are diverse economic activities in the city which would serve as a potential source of revenue. Owing to the initial advantage of infrastructure, capital goods industries prefer to set up a business in or around Addis Ababa. This forms a potential base to tax unincorporated businesses. Moreover there are a large number of potential informal sector operators that the city administration is planning to embrace by improving service delivery to these operators, raising transparency and accountability these operators may comply with tax regulations. Finally the rapidly growing population of Addis Ababa, as a result of demographic and rural-urban migration serves as a potential revenue source by raising demands for goods and services and also by raising the income tax base of the city. There are also challenges that the city administration is facing to date to raise revenue. Tax evasion is the most commonly mentioned challenge according to the officials from both Revenue Authority and Bureau of Finance and Economic Development. Due to the inherent backward systems, size and complexity of the city of Addis Ababa business’s are able to evade taxes. Implementation capacity of the Revenue Authority is also another major challenge. Lack of clarity of the tax law and subjective estimation might have posed challenges on fairness and equitability. Lack of accountability and poor transparency between tax payers and collectors as well as poor institutional capacity have also been cited as major challenges in raising revenue according to the deputy head of the revenue bureau. V. Conclusion This study has investigated trends in both revenue and expenditure in the city and tried to analyze the budget balance by assessing the difference between the two. Challenges and opportunities towards raising revenues or narrowing the deficit have also been discussed qualitatively. Currently the city is exerting efforts towards raising revenues through automation of the revenue system, tax information system, institutional capacity building and awareness creation. Business process re-engineering has also been implemented and started yielding positive results within a shorter amount of time, especially in the areas of attitudinal changes to both collectors and tax payers. The overall performance of revenue generation measured in terms of the ratio of achieved to the planned revolves around 40 percent indicating that much more effort needs to be exerted in this case. The city administration almost entirely relies on a domestic revenue source implying that its sources are sustainable. However, this can be interpreted as a failure to harness more assistance given the opportunity that it is the capital city of the nation, and the seat of all embassies and many NGOs. From the trend analysis major fluctuations in revenue trends emanates largely from non-tax revenue indicating that these sources are not sustainable although significant. Generally speaking growth rate in actual revenue is showing an increasing trend. Tax revenue is increasing at an average growth rate of about 25 percent over the last six years, while non-tax revenue is growing by about 17 percent over the same period. However, such a growth in non-tax revenue is mainly due to a more than hundred percent growth rate in the year 2006, again implying that non-tax revenue is a non-reliable source and the city government should work hard in strengthening its tax revenue bases. Value added tax has been increasingly becoming significant especially in recent years and this is an encouraging sign towards closing the deficit. Finally taxing the “hard to tax” can be realized if transparency, accountability, awareness and institutional capacity building is further strengthened in the city administration and these should be the major tasks ahead to combat the rapidly widening budget deficit that the city administration is encountering. 74 Decentralization and service delivery in Ethiopia On the Concept and Measurement of Fiscal Imbalances in Ethiopia Aloysius Bongwa Int r oduct ion The structure and institutional arrangements of federal countries - especially how the regions of a federation deal with one another and with the central government - vary widely around the world. Fiscal imbalances emerge from the interactions of the distribution of the tax base, a fiscal policy stance and the economic development in the different regional states of Ethiopia. There are three types of fiscal imbalance: vertical fiscal imbalances between the tiers of government, horizontal imbalances across a single tier of government, and structural imbalances in the tax and expenditure mix. They have figured prominently in recent public policy debates in many federations. The most widely used definition of vertical fiscal imbalance — the gap between government’s spending responsibilities and its own revenues — is inadequate as a guide for public policy. Many governments have put in place mechanisms to subsidize the fiscal deficits of regional governments. The magnitude and distribution of such federal subsidies poses three political economic issues: how to measure fiscal imbalance, deciding on the aggregate amount of federal subsidies from the total purse of the federal government and distributing this amount across regional governments. The chapter addresses the issue of measuring fiscal imbalances in transitional and developing economies and in particular in Ethiopia. Fiscal imbalance indicators are of special interest in transitional and developing economies, where peculiar developments question the validity of conventional indicators. This chapter discusses different approaches to fiscal imbalance measurement. Based on a review of fiscal policies in Ethiopia, this chapter will explain why the fiscal imbalances are important phenomena that need to be monitored and hence have to be measured which can be done in different ways. The author suggests using the net worth of government which gives a specific insight. W hat mechanisms do federations need to deal with fiscal imbalances between governments? The results show that fiscal imbalances in Ethiopia were much larger between 1998-2004 than conventional indicators suggest. The rest of the chapter is organized in the following manner. First the concepts and definitions of fiscal imbalance (the fiscal gap), horizontal imbalance (equalization) and structural imbalance (imbalances in the tax and expenditure mix) are discussed. Second, the measurement of fiscal imbalances in general is focused upon. Third the issues are contextualized by looking at the Federal Republic of Ethiopia. This is followed by a discussion section where arguments have been put forward for a different way of measuring fiscal imbalances. Fifth in a brief concluding section a few lessons on dealing with imbalances have been sketched. Fiscal Imbalances: an Obser vat ion In most federations, spending and revenue responsibilities are not perfectly matched. In other words, one order of government collects more revenue than is needed to finance its own programs and the other order does not collect enough. Virtually any decentralization of fiscal responsibilities will give rise to horizontal imbalances. Moreover, since in most federations, expenditures are decentralized Decentralization and service delivery in Ethiopia 75 more than revenues, there will be vertical fiscal imbalances as well. While, for the accountability reasons discussed above, it is desirable to minimize such imbalances, there are legitimate reasons for them to exist. Before launching the analysis, we need to examine the underlying concept of fiscal imbalance because much of the confusion and debate, especially with regard to vertical fiscal imbalance, has arisen from a faulty conception of what constitutes a fiscal balance. Here it is important to distinguish between accounting definitions and economic definitions. Measuring a gap between spending and revenues is the accountants’ role. Determining whether taxes and spending are too high or too low is the economists’ role. In any economic model of resource allocation, whether something is too high or too low depends on the gap between marginal costs and marginal 3 benefits, and not on the gap between revenue and expenditure . Similar principles apply in evaluating fiscal policy in the public sector. From an economist’s perspective, balance does not mean that revenues equal expenditures for a particular government at a particular point in time or across levels of government. It is not known whether taxes or expenditures are too high or too low unless we have some measures of the additional benefit from increased spending and the additional burden from tax rate increases. As discussed in the following sections, the distinction between accounting measures of balance and economic concepts of balance is crucial for evaluating the claims that there are horizontal, vertical, and structural imbalances in any public finance system. The Concept of Fiscal Imbalance The notion of fiscal imbalance appears early in the theory of fiscal policy in a federal regime. The issue is: which level of government would be economically more suited to take charge of certain expenditures and additionally to collect the 4 revenues for financing an optimal level of those expenditures? . Thus, the constituent regions, provinces or states should have entrusted to them all the expenditures producing little in the way of leakage of benefits to other regions, provinces or states.. In regard to revenues, economies of scale and scope can be secured if tax collection is entrusted to the central government, which would then see to making transfers to the federated regions, provinces or states. Moreover, the federated regions, provinces or states are not in the best position to levy taxes when the economic objects or agents one wishes to tax can move from one region to another. The federal government should therefore, theoretically, take charge of all taxation, and afterwards transfer part of the amounts collected to the member regions, provinces or states. Fiscal imbalance seems inherent in federal countries. As a rule, federal governments tend to collect most taxes while state and local governments are responsible for more expenditures than can be financed from sources of revenue directly under their control. The resulting difference between expenditures and own-source revenues at different levels of government is called Vertical Fiscal Imbalance (VFI). At the same time, within each sub national level of government there are invariably some jurisdictions that are richer than others. The resulting difference in the resources available to governments at the same level is called Horizontal Fiscal Imbalance (HFI). There is also the issue of distortions in the tax mix because the marginal Cost of Public Funds (MCFs) for the different tax sources 3 For example, the fact that a firm’s revenue exceeds its expenditure by $1 million does not tell us whether the firm’s output is too high or too low, given its goal of maximizing profit. To determine whether the firm should produce more output or less, we need to know its marginal revenue and its marginal cost of production. 4 J.M. Buchanan, “Federalism and Fiscal Equity.” 76 Decentralization and service delivery in Ethiopia are not equalized, and there are spending misallocations because the marginal benefits from spending on different types of public services are not equalized. This results into another source of fiscal imbalance, Structural Imbalances (SIs) in the tax and expenditure mix. Def ining Fiscal Imbalance s There are three aspects to fiscal imbalance: vertical, horizontal and structural. A horizontal fiscal imbalance is said to exist when “regions / provinces / territories differ in their fiscal capacity to provide similar levels of public services to their citizens at similar rates of taxation” (Standing Committee on Finance 2005: 19). A vertical fiscal imbalance exists when “the fiscal capacity of one order of government is insufficient to sustain its spending responsibilities while the fiscal capacity of another order of government is greater than is needed to sustain its spending obligations, while both orders of government provide public services to the same taxpayer” (Standing Committee on Finance 2005: 19). Although these issues come up in all countries, they are most obvious and most often the focus of political discussion in federal countries. Ver t ical Imbalances First, consider the conventional definition of vertical fiscal imbalance. The three definitions given below are drawn from American, Australian, Canadian and Ethiopian sources: • “The inability of one level of government…to fund its own responsibilities from its own revenue streams without monies from elsewhere, in this case by borrowing” (W alter 2004) • • “The difference between the relative revenue and spending responsibilities of the Commonwealth and States…” (Webb 2002) “The mismatch of own revenues and expenditures of governments located at various jurisdictional tiers — and the consequent flow of funds among governments….” (Breton 1996, 197) Although these definitions might be considered neutral, having no inherent policy implications, the word imbalance, as Breton (1997, 197–198) has noted, is like the words “distortion, irresponsibility, illusion, and manipulation, [which] if they do not speak of intrinsic evil, do not signal much that should be encouraged and nurtured, either.… Those who focus on the effects of vertical fiscal imbalance and on the money flows among governments…almost invariably decry vertical imbalance and the consequent flows of intergovernmental funds.” Hor iz ont al Imbalances Horizontal fiscal imbalances refer to differences in the capacity of state governments to provide ‘reasonably comparable levels of public services at reasonably comparable levels of taxation.’ Horizontal imbalance arises when there is no broad correspondence between expenditure responsibilities and fiscal capacity across LG to meet the responsibilities. Unreliable fiscal capacity is the result of existing fiscal disparities across jurisdiction (Shrestha, 2004). Commonly, lower levels of governments have different tax capacity because they have different economic base. Horizontal fiscal imbalance can also be attributed to difference in regional and local expenditure needs and variations in the ability of regional and LG to raise their own revenues (Vazquez, 2004). Decentralization and service delivery in Ethiopia 77 The principle behind this means that the public sector should provide the same net fiscal benefit to all who have the same standard of living. This is basically the equal-treatment-of-equals concept applied to the total impact of the public sector. This strong ethical position, if accepted, would justify equalization grants to regional / provincial governments with low fiscal capacity to permit them to provide the same net fiscal benefit to their residents as are provided in provinces with high fiscal capacity. St r uct ur al Imbalances: An Idealist ic Vie w Another source of fiscal imbalance is the structural imbalances in the tax and expenditure mix. By this what is meant is that there are distortions in the tax mix because the MCFs for the different tax sources are not equalized, and there are spending misallocations due to the marginal benefits from spending on different types of public services are not equalized. In Canada, these structural imbalances also have a federal-provincial dimension because of the overlaps in federal and provincial taxation and blurred lines of responsibility in spending. In this section, focuses on the excessive reliance on certain forms of taxation: the retail sales taxes levied by five provinces, the capital and CIT rates levied by the federal and regional governments, and the heavy taxation of the financial institutions. On the expenditure side, the continuing pressure for more spending on health care is threatening to crowd out other forms of spending. The blurred lines of expenditure responsibility between the federal and provincial governments need to be addressed, but majority voting, the federal spending power, and the interdependence of federal and provincial governments’ budgets means that it very difficult to achieve narrowly defined expenditure assignments. The Me asur ement of Fiscal Imbalances On the Measurement of Fiscal Imbalances Measurement: An essential pre-requisite to dealing with fiscal imbalances is being able to measure them. At minimum, it is necessary to measure government revenue and expenditure and population in a timely way. More complex mechanisms may require measurement of additional variables such as tax bases. Essentially, however, for each level of government (central, regional, state, local, and consolidated sub national) three progressively narrowing measures of vertical imbalances can be calculated as follows (see: Boadway and Watts, 2000, "Fiscal Federalism," 2000, and W atts and Hobson, 2000; Hunter (1977, IMF Government Finance Statistics Yearbook). Type 1: Unrestricted budget balances for the central, local, regional, and subnational governments (sum of regional and local governments): SVI j I = Revenues + Grants) j – (Expenditure +Lending) j (Expenditure +Lending) j 100% 1 Where j = consolidated central government, regional government, local government, or subnational government. 78 Decentralization and service delivery in Ethiopia Type 2: Budget balances, excluding net intergovernmental transfers between the government of interest and other levels of government: SVI j Revenues + Grants) j – NIG j - (Expenditure +Lending) j II = (Expenditure +Lending) j NT 100% 2 Where the superscript abbreviation NT indicates that figures are net of intergovernmental transfers and NIG denotes net intergovernmental grants Type 3: Budget balances, excluding intergovernmental transfers and intergovernmental net borrowing (the latter term, denoted in the formula as IGNB, is a negative of the Net Lending to Other Levels of Government account as it is used in the IMF Government Finance Statistics Yearbook): SVIj III = Revenues + Grants)j – NIGj - IGNBj -(Expenditure +Lending) j (Expenditure +Lending) j NT + IGNBj 100% 3 In addition, it is possible to calculated three country specific alternative coefficients of vertical imbalance reflecting the shares of sub-national expenditures that are covered with intergovernmental transfers (CVI 1 ) or intergovernmental transfers and intergovernmental borrowing (CVI 2 ), and not covered with own revenues (CVI 3 ) 5. CVI 1 : Intergovernmental expenditure: transfer share in sub-national government Net Intergovernmental grants) SNG CVI 1 = (Expenditure +Lending) SNG NT 4 In addition, two subcategory coefficients are calculated separately to reflect individual shares of net current and capital intergovernmental transfers that partially cover the total sub national government (SNG) expenditure: CVI 2 : Intergovernmental transfer and intergovernmental net borrowing share in the sub national government expenditure: Net Intergovernmental grants) SNG + IGNB SNG CVI 2 = (Expenditure +Lending) SNG NT 5 CVI 3 : Share of sub national government expenditure that is not covered by the sub national government's own revenues: CVI 3 = 1 Revenues + Grants) SNG – NIG SNG - IGNB SNG NT (Expenditure +Lending) SNG 6 Higher values of these CVI correspond to a higher degree of vertical fiscal imbalance and thus reflect a higher level of dependence by sub-national government (regional and local governments) on transfers and lending from the 5 These statistics are a variation of a methodology introduced by Hunter (1977) Decentralization and service delivery in Ethiopia 79 central government 6. The third coefficient differs from the first two in that it incorporates sub-national government budget deficits or surpluses. Although all three formulas should allow one to make similar conclusions regarding a time trend in vertical fiscal imbalances, the third CVI is thus somewhat more volatile. (It should perhaps be noted that the results would be almost the same if we used simply "expenditure" rather than the IMF GFS concept of “expenditure + lending." "Expenditure" in the GFS covers all non recoverable payments by government. Net lending (lending minus repayments) consists of government lending for public policy purposes minus repayments to government and government acquisition of equity participation for public policy purposes minus any sales of such equities by government. Use of the broader concept slightly increases the comparability of data from different countries that structure their public sector finances in different ways in order to achieve the same purposes.) The interpretation of the calculated HFI measures is as follows: Minimum (maximum) as percent of national average is the ratio of the per capita value in the lowest (highest) region to the national per capita average: Ymin .100% And y Ymax y .100% 7 Maximum to minimum ratio is the per capita value for the richest region divided by the per capita value for the poorest region: MMR = Y ma x Y max 8 A value of one for MMR would represent perfect equality. Larger values show regional inequalities. In many countries, of course, there are "exceptional" cases such as city-states (Germany), sparsely populated poor territories - Canada, Ethiopia – the lagging regions, the four smaller regions 8 Afar, BenishangulGumuz, Gambella and Somali , or sparsely populated rich territories; Alaska, in the United States, that may affect the results. Nonetheless, this ratio provides a simple and easy to comprehend measure of regional disparity. Fiscal Imbalances Et hiopia Decent r aliz at ion Widened THE Fiscal Asymmet r y Bet w e en Pending Mandat e s and Reve nue- Raising Pot ent ial The typical characteristic of all federations is the disparity between revenue sources and expenditure needs. The aggregate revenue raising capacity of the regions fails in much of their expenditure responsibilities, while the Central Government is able to raise more revenue than is needed to finance its own expenditures. This disparity between revenue sources and expenditure needs at various levels of government is referred to as vertical fiscal imbalance (World Bank, 2000:23). The reasons for the emergence of vertical imbalance are first, centralization of revenue sources by Federal Government due to capacity limitations of regions with respect to tax administration. Secondly, when inter regional equity is an important consideration, the Federal Government needs to hold some resources over and above those required for its own expenditures to 6 See Bird; Tarsasov, 2003. Closing the gap: Fiscal Imbalances and intergovernmental transfers in developed federations. 80 Decentralization and service delivery in Ethiopia distribute them among the sub national governments in a way that promotes equity leading to vertical fiscal imbalance (World Bank, 2001:80). When we see vertical fiscal imbalance in Ethiopia (the following table), as measured by the difference between regions’ own revenue and their expenditure needs, the decentralized expenditure ratio exceeded the revenue share of sub national governments by 16 percent. That means, their revenue raising capacity failed to match their expenditure needs. In addition, the other measure of vertical imbalance is the coefficient of vertical fiscal imbalance. The implication is that, a coefficient of zero, i.e., low vertical imbalance, indicates that the regions are pretty much autonomous in their fiscal decision- making. This happens when the revenue and expenditure share of the regions becomes the same. On the other hand, a coefficient close to one indicates absolute federal control over the regions. This happens when the regions’ revenue share in the aggregate is extremely small in comparison to their expenditure share. Table 16: Vertical Fiscal Imbalances in Ethiopia Indicator 1993 1994 1995/9 1996/9 1997/9 /94 /95 6 7 8 R4 .18 .15 .19 .17 .19 E5 F6 =R/E V7 = 1 – F .34 .51 0.49 .38 .39 0.61 .42 .46 0.54 .43 .40 0.60 .29 .65 0.35 1998/9 9 .18 1999/20 00 .18 2000/0 1 .17 Mean .26 .68 0.32 .25 .70 0.30 .33 .51 0.49 .34 .52 0.48 .18 V = Coefficient of vertical imbalance computed using a formula [1 – {(Rs/R) / ( Es/E)}] Where Rs = State (Regional) revenues; R = aggregate revenues (federal plus states); Es = State (Regional) Expenditures; and E = Total expenditures (federal plus states). Table 17: Horizontal Imbalance Ethiopia Indicator Tigrai Afar Amhara Oromya Somali Benishang ul Gumuz SNNP Gambella Harar Dire Dawa Addis Ababa 1993/ 94 18.6 1994/ 95 19.1 1995/ 96 26.7 1996/ 97 26.6 1997/ 98 24.9 1998/ 99 25.4 1999/ 2000 28.8 2000/ 01 32.4 Mean 9.1 20.6 27.9 60.1 6.6 13.7 19.4 26.8 58.1 7.4 11.34 18.34 31.4 30.6 9.4 22.0 16.9 23.4 21.6 5.6 7.7 22.0 31.4 12.3 6.6 4.4 21.7 30.9 11.7 6.3 4.7 22.36 45.8 17.0 9.3 7.9 29.1 32.0 9.9 8.1 8.1 22.45 31.21 25.8 7.12 19.5 8.7 33.7 94.1 18.9 9.9 13.4 69.5 23.8 8.6 19 52.43 23.3 5.9 15.5 51.9 27.4 8.2 10.4 45 22.5 6.8 22.7 41.8 33.5 8.6 12.0 15.5 27.1 8.4 16.5 52.1 24.5 8.12 17.9 52.8 64.9 68 105.6 77.2 96 100.5 121.3 121.2 94.34 29.05 Source: MoFED Dtat cited in Melkamu Bessie fiscal decentralization in Benishangul Gumuz Region:A review of Problems of Fiscal Imbalance *(p.50) 81 Decentralization and service delivery in Ethiopia It is usual that, regions in Federal Countries differ in their development level and resource endowment. Some may be industrial areas that could collect adequate revenues while others may be dominantly rural areas with high backlogs in the provision of physical and social infrastructures. Thus, these backlogs call for higher fiscal needs. The component states of a federal country also differ in their ability to raise revenue and expenditure needs. The same is true in Ethiopia. Regions in Ethiopia are vastly different in terms of population, area and level of economic and infrastructure development. As a result, those which have sufficient administrative and institutional capacity, including adequate trained manpower, relatively developed infrastructure and a sufficient local resource base, enjoy a relatively better degree of autonomy and independence than those with serious shortages of trained manpower and finance. For example, Amhara, Oromya, and Tigray are not subject to the same degree of interference by the Central Government as the manpower deficit regions such as Gambella, Afar, BenishangulGumuz and Somale (Ayenew, 2000:139). The inconsistency between the ability to raise revenue and the fiscal needs at the same levels of a government is what we call horizontal fiscal imbalance. In another way, the horizontal fiscal imbalance is the ratio of own revenue to their expenditures across the same levels of a government. The following table shows the extent of horizontal fiscal imbalance in Ethiopia. There is wide discrepancy among the regions ranging on average from 7.12 percent for Benishangul-Gumuzregion to 94.34 percent for Addis Ababa City Administration. In-between are Dire Dawa,Oromya, Tigrai, and Amhara and SNNP regions covering on average 52.8, 31.2, 29, 24.5 and24.5 percent t respectively. The four smaller regions 8 (Afar, Benishangul-Gumuz, Gambella and Somali) have covered on average 8.1, 7.12, 8.12 and 25.8 percent of their expenditure from their own revenues For instance, the federal government continues to collect over 80 percent of general government tax revenue, while the share of regional government fiscal operations has increased from about a quarter to a third of consolidated expenditure since1999/2000 (see the following table). Table 18: Ethiopia: Regional Fiscal Operations as a Share of Consolidated Government 1998/ 1999/ 2000/ 2001/ 2002/ 1999 2000 2001 2002 2003 In %of GDP Total revenue 2 14.8 15.8 14.2 15.3 13.4 Tax revenues 19.5 19.3 18.7 18.3 19.0 Nontax revenue 14.2 17.2 15.9 20.6 18.6 Total expenditure 29.2 24.7 32.6 30.8 30.4 Current expenditure (of 28.8 22.1 33.7 37.0 35.2 which) Social services 78.1 71.3 77.5 71.2 75.3 Education 85.2 83.3 83.8 80.9 81.2 Health 78.7 82.6 80.9 88.2 86.8 Capital expenditure (of 31.2 29.6 20.3 25.0 23.3 which) Social development Education Health Roads 36.0 16.3 24.7 43.7 43.2 44.5 19.8 21.9 53.1 37.8 67.1 26.1 43.3 31.4 57.9 40.3 36.3 27.1 51.3 38.8 2003/ 2004 12.6 18.0 17.7 32.0 28.6 81.6 --24.6 35.8 ---- Source: Ministry of Finance and Economic Development; and Fund staff estimates. 82 Decentralization and service delivery in Ethiopia 1/ Beginning in 1997/98, data pertain to the period July 8-July 7; prior to that, data pertain to the period July 1-June 30. Data by disaggregated social sector represent preliminary estimates. 2/ Revenue from taxes, rents, and fees levied and collected by the regional governments Regional governments also deliver an increasing proportion of consolidated pro-poor spending. For instance, the regions provide over 80 percent of total recurrent spending in health and education. Further, the regions provide over a third of consolidated capital spending in the social development sectors. In line with the decentralization of expenditure commitments, the total regional government budget deficit has increased by about 2 percent of GDP since 1999/2000, largely as a result of weak own source revenue growth and higher expenditure commitments (see the following table). Table 19: Ethiopia: Regional Fiscal Operations as a Share of GDP, 1998/99-2003/04 Total revenue 2 Tax revenues Nontax revenue Total expenditure Current expenditure (of which) Social services Capital expenditure (of which) Social development Overall Balance /3 1998/ 1999/ 1999 2000 In %of GDP 3.2 3.3 2.2 2.3 0.9 1.0 9.3 8.0 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 3.4. 2.6 0.8 9.5 3.8 2.8 1.0 10.5 3.7 2.7 0.9 10.9 3.3 2.7 0.7 10.0 3.1 3.1 2.8 2.3 3.2 3.0 3.8 2.9 4.2 2.6 3.8 3.0 0.8 -6.1 0.5 -4.7 1.0 -6.1 0.8 -6.7 0.8 -7.2 1.3 -6.7 Sources: Ministry of Finance and Economic Development; and Fund staff estimates. 1/ Beginning in 1997/98, data pertain to the period July 8-July 7; prior to that, data pertain to the period July 1-June 30. 2/ Revenue from taxes, rents, and fees levied and collected by the regional governments. 3/ Deficit (-) covered by direct transfer from federal government of joint tax receipts and foreign assistance. Reve nue Raising Capacit ies For the estimation of the revenue capacities (revenue potentials), the sources (taxes) building the main regional revenue have been included. These taxes/fees are: • Personal income tax • Business profit tax • VAT • Agricultural income tax • Rural and land use fee • Sales tax (TOT) • Fees for medical supply and treatment Decentralization and service delivery in Ethiopia 83 The accumulation of these taxes accounts for 80 percent or more of the regional revenues on average. In order to calculate the potentials for these taxes, different approaches depending on the nature of the tax and data availability have been used. While data on Personal Income Tax is easily accessible, other data proved more difficult to be computed (for details see House of Federation 2009: 1322). After the potential revenues from the individual taxes were computed for each region, the revenues have been aggregated. As a next step, the aggregated potential revenue was compared to the actual revenue collected by the regions. For this calculation the average revenue of three years has been used. The comparison leads to a ratio between actual and potential revenue for each regional state. This ratio has been averaged across all regional states. The ratio is 48.53 percent and has been used as deflator to calculate the effective aggregate potential revenue used for the formula. The result of this operation is shown in the following table: Table 20: Effective Potential Revenues Region Effective potential revenue in Mio Birr Tigray 110.64 % of effective potential revenue of the national potential revenue 9.95 Afar 14.29 1.29 Amhara 245.29 22.07 Oromiya 455.33 40.96 Somali RS 27.84 2.50 Benishangul-Gumuz 17.24 1.55 SNNPR 201.62 18.14 Gambella 9.99 0.90 Harari 12.71 1.14 Dire Dawa 16.58 1.49 National Total 1,111.53 100.00 Source: (House of Federation 2009: 23) Expendit ur e Ne eds Similar to the calculation of the revenue potential, the expenditure needs have been calculated based on indicators accumulating to more than 90 percent of regional expenditures based on constitutional mandates and implementation of national policies. These indicators are: • General administration costs • Education • Public health • Agriculture and natural resources • Clean water supply • Rural road construction and maintenance • Micro and small scale enterprise development • Work and urban development The results of the calculations are shown in Table 21. 84 Decentralization and service delivery in Ethiopia Table 21: Expenditure Needs Region Total expenditure need, partially adjusted for spatial price variations in Mio Birr Tigray 2,313.82 Afar 999.70 Amhara 7,546.74 Oromiya 10,635.70 Somali RS 2,535.10 Benishangul-Gumuz 538.85 SNNPR 6,428.82 Gambella 464.86 Harari 291.46 Dire Dawa 332.98 National Total 32,088.04 Source: (House of Federation 2009: 42) The Emerging Regions. In the Ethiopian case special attention has been given to the Emerging Regions. Four out of the nine Ethiopian regional states, Afar, Benishangul-Gumuz, Gambella and Somali Regional State, have significantly lower revenue raising capacities and higher expenditure needs than the rest of the regions and are thus considered emerging regions. This is a function of policies of former Ethiopian regimes. Similar to equalization mechanisms in other solidaritybased federations or systems, like Germany or the European Union (Jacoby 2008; Jochimsen 2008), it is also assumed here, that the four emerging regions would not be able to catch up with the rest of the regions. In order to address this inequality, one percent out of the total grant is reserved for the four emerging regions. The share out of this reserved part of the total budget grant is again computed on the basis of weighted indicators relating to the particular situation of these four regional states. The indicators used are shown in the following table. Table 22: Indicators and Distribution of Special Funds to the Emerging Regions Indicator Area of cultivated land (in hectares) Population Tropical livestock unit Urban unemployment Spatial price index Tax raising effort Number of poor people Share among regions Weight 0.2 0.1 0.15 0.1 0.15 0.2 0.1 1 Afar Somali B.-G. Gambela 18.61 42.48 28.87 10.3 Source: (House of Federation 2009: 45) The above table also shows the distribution of the one percent share across the four emerging regions based on their distinct development situations. Vertical imbalances are defined as the gap between the revenue raising capacity of a government and the expenditures this government has to make in order to fulfill its constitutional mandates and duties and / or to implement policies Decentralization and service delivery in Ethiopia 85 of the federal level of government. These imbalances result from a usually lower capacity to raise revenue of the sub-national level. In order to reduce these imbalances, equalization mechanisms, i.e., fiscal transfers from the federal to regional level are applied. W hether this is done by addressing either expenditure needs or revenue needs only or by a combination of both factors, depends on the political choice and the socio-economic context of a given country. Discussion Measuring fisical imbalances has always been in the policy debate given the diversity of measurements see formulas in the earlier section of the chapter, and the simplification of the measurements used in Ethiopia, one would think that the issue of measurement could be resolved easily. However, consider an alternative definition for vertical fiscal imbalance: There is a vertical fiscal imbalance in a federation if the marginal cost of raising tax revenue varies between the levels of government. Central to this definition is the concept of the Marginal Cost of public Funds (MCF), which measures the loss that occurs when a government raises an additional dollar of revenue. Taxes usually distort consumption, savings, labor supply, and investment decisions, resulting in a less-efficient allocation of resources. This efficiency loss can be considered as a decline in the size of the economic pie — the value of goods and services produced and consumed in the economy, including the value of leisure time and the quality of the environment. It usually costs a society more than a dollar to raise an additional dollar of revenue because of the additional distortions in resource allocation that are caused by a tax rate increase, and therefore the MCF usually exceeds one. Generally speaking, the MCF will be higher the greater the tax sensitivity of a government’s tax bases. This definition provides a basis for determining whether taxes and expenditures are too high or too low across the various levels of government. Just as a multiplant firm minimizes the total cost of producing its output by allocating production across its plants until the marginal cost of production is the same in all plants, so a federation will minimize the total cost of raising any given amount of revenue by equalizing the MCF across the two levels of government. For example, if the MCF is Birr 1.20 for the federal government and Birr 1.40 for the provincial governments, then an increase in taxation at the federal level that finances a transfer to the provincial governments, allowing them to reduce their taxes by the same amount, would result in a net social gain of Birr 0.20 for every dollar transferred. Consequently, there is a vertical fiscal balance when the MCF is the same at both the federal and the provincial levels because this will minimize the cost of raising a given amount of tax revenues. This way of defining vertical fiscal balance has the attractive feature, at least for public finance theorists, of integrating the concept of vertical fiscal balance with the theory of optimal taxation, which is the backbone of normative public finance. An optimal tax system is one that minimizes the total deadweight cost of raising a given amount of tax revenue. This can be achieved if a government sets its tax rates so as to equalize the MCFs across its various taxes and this brings into play a new angle to the debate on measuring fiscal imbalances. De aling w it h Imbalances in Et hiopia If “Imbalance” is the problem, then “ balance” would seem to be the solution (Bird, 2004). In the Ethiopian case, given the existence of mismatch in aggregate revenue raising capacity and expenditure responsibility between levels of government, (similar to many other countries with decentralized government 86 Decentralization and service delivery in Ethiopia systems), the Ethiopian government has been addressing the problem by introducing a formula based grant system. A key underlying principle of these block grants is that they have to be allocated across regions or woredas in a manner that is fully objective and formula-based. A number of revisions have been made in terms of the content and methodology of the formula since its first inception in the year 1995. The Federal block grant transfer to the regions was initially based on a simple formula that took into account the population size (65 percent), poverty and development level (25 percent), and an index of revenue effort and sectoral performance (10 percent) of 7 each region. There were a number of problems with this formula, including : • It did not take into account the per capita expenditure requirement differences • It gave more emphasis on infrastructure gap among Regions and ignored the recurrent budget needs for the existing infrastructure • It did not fully consider the potential differences in revenue capacity • It did not objectively answer questions raised from Regional governments in relation to changes on selection of variables to estimate the expenditure need and assigning of weight to each variable. Particularly important is the first of these or a). With this initial block grant formula, to take the education sector as an example, two regions with similar populations would receive the same total block grant allocations even if one region had much higher student enrolments than the other (all else being equal). Regions thus had little incentive to encourage increased enrolments; higher enrolments would imply less funding available per student (all else being equal), and so if anything regions had an incentive to constrain increases in enrolment. As a result, a new formula is being gradually phased in, based on the “fiscal equalization” approach. Among other things, this new approach has the advantage of being much more results-oriented since recurrent funding—which accounts for the bulk of total funding—is allocated in higher quantities to regions with higher expected demand and provision levels of public services. Taking the education sector again as an example, all else being equal, the new formula provides larger per-capita block grant recurrent allocations to regions that have higher primary and secondary enrolment rates than others. The capital allocations of the block grants are based on equity, so regions with less school per capita receive larger percapita capital allocations, enabling them to “catch up” with other regions by building more schools. But the recurrent allocations dominate, and this is in keeping with the increased emphasis on a system of decentralized service delivery that is focused on results Aside from taking into account expenditure needs as outlined above, the new formula also makes adjustments in the allocations to each region to take into account differences in revenue raising capacity. All else being equal, regions with lower potential revenue raising capacity receive larger per-capita block grant allocations than other regions. Note that what matters here is the regions’ potential revenue raising capacity (which takes into account exogenous factors that affect the tax base, such as the amount of agricultural land) and not regions’ actual revenues raised. Regions are not penalized (by reductions in Federal block grant allocations) if they raise their actual own revenues, so there is no disincentive against regional own-revenue raising. Additional adjustments are made to the block grant allocations to regions to take into account some other factors as well. One of 7 See World Bank (2009): Project Appraisal Document federal democratic republic of Ethiopia For a Protection of basic services program Phase II Project. Report No. 45186 87 Decentralization and service delivery in Ethiopia these is economies of scale; all else being equal, smaller regions receive higher per-capita allocations under the new formula than larger regions. The new formula is being gradually introduced as it has an impact on the less populous Regions’ share from what they used to get under the old formula. Hence, the new formula was applied to 25% of the grant pool in 2007/08 (EFY 2000) and on 50% in 2008/09 (EFY 2001). Although more objective, transparent and resultsoriented, the new formula requires a lot of data and can be considered as an evolving system. The new formula will be fully phased in by 2010/11. 1 Table 23: Federal to Regional Government Block Grant Transfers from Treasury Regions Afar Amhara Benshang ul/ Gumuz Dire Dawa Gambella Harari Oromiya Somali SNNP Tigray Total 2004/2005 BudActget ual 25.1 143.6 19.2 23.6 141.5 17.7 1.1 6.7 0.8 48.7 360.0 26.6 48.7 359.9 26.1 1.2 9.1 0.7 47.7 395.1 25.6 1.1 9.4 0.6 Change 2008/ 09 over 2004/ 05 89.7 175.1 33.6 10.4 14.0 8.9 206.0 40.6 127.5 47.2 642.5 10.2 12.5 8.9 205.9 40.6 127.5 47.2 635.6 0.5 0.6 0.4 9.8 1.9 6.0 2.2 30.0 19.2 18.9 13.6 497.9 102.6 284.9 94.6 1,467 .0 19.2 18.9 13.6 497.9 100.7 285.0 94.6 1,464 .6 0.5 0.5 0.3 12.6 2.5 7.2 2.4 37.0 19.2 16.9 12.9 531.9 110.2 315.2 105.9 1,580 .5 0.5 0.4 0.3 12.6 2.6 7.5 2.5 37.5 84.3 20.8 44.9 158.2 171.1 147.3 124.5 146.0 Sha-1 re % 2007/2008 BudActget ual Sha1 re % 2008/2009 ShBud1 are get (%) % 2008/ 09 over 2007/ 08 -2.1 9.8 -3.7 0.0 -10.5 -5.1 6.8 7.4 10.6 12.0 7.7 Sources (including PBS), 2004/05 to 2008/09 (in millions of USD) 2004/05 2007/08 2 2008/09 Change (%) Notes: (1) Share of total Federal expenditure. (2) The disparity in percentage change figures in the two right hand columns among regions is largely due to the phasing in of the new block grant formula since 2007/08. Source: MoFED data. Having come up with an acceptable measure of fiscal imbalance, it is easier from the policy point of view to move forward. From a broader standpoint, the key objective in a Federation like Ethiopia is to answer the three questions: • What are the underlying causes of fiscal imbalance between the federal government and the regions? • What are the practical consequences of this imbalance? • What concrete solutions can be put forward to redress the imbalance? Conclusions This chapter has addressed the issue of measuring fiscal imbalances in transitional and developing economies and in particular in Ethiopia. Fiscal imbalance indicators are of special interest in transitional and developing economies, where peculiar developments question the validity of conventional indicators. 88 Decentralization and service delivery in Ethiopia As has been shown above, the new Federal Budget Grant Distribution Formula enables the regional states to carry out their constitutional mandates. The vertical imbalance emanating from the lower capacity of raising revenue of regional states in comparison to the federal government is addressed through the first two pillars of the formula: the equalization of the revenue raising capacities and the expenditure needs. In order to equalize these two elements, 99 percent of the overall Budget Distribution Grant is used. The horizontal imbalance between the four emerging regions, Benishangul-Gumuz, Afar, Gambela and Somali regional states and the rest of the regional states is equalized through a share of one percent of the overall Budget Grant which is divided among those four regions in addition to their share out of the 99 percent allocation. The combination of the two equalization steps, vertical and horizontal equalization addresses both, the equality and the solidarity principles. The equality principle is met because all regional states are enabled to provide the constitutionally granted services and access to resources on an equal base: the regions in higher need for more investments gain a higher share of the funds because they have higher expenditure needs. Table 24: Shares Vertical / Vertical and Horizontal Equalization Region Share of regions vertical equalization only in percent Share of regions after vertical and horizontal equalization in percent Tigray 7.11 7.04 Afar 3.18 3.34 Amhara 23.57 23.33 Oromiya 32.86 32.53 Somali RS 8.09 8.43 Benishangul-Gumuz 1.68 1.96 SNNPR 20.1 19.9 Gambella 1.47 1.57 Harari 0.9 0.89 Dire Dawa 1.02 1.01 National Total 100 100 Source: (House of Federation 2009: 47) The above table highlights the differences in the shares of the regional states with and without the application of the horizontal equalization. Reserving a one percent share for the emerging regions leads to a reduced share of all other regions and a higher share of the emerging regions in comparison to a purely vertical equalization. In federations, where the federal transfers are decided by federal institutions without involvement of the beneficiaries, the application of this formula would have come with only little surprise although it is common knowledge that any equalization formula is usually contested within the country it is applied. The situation in Ethiopian bears an additional feature. The formula has been prepared and decided upon by representatives of the beneficiaries. The decision to apply a model including both, horizontal and vertical equalization was taken unanimously after a series of consultation processes with representatives of all Decentralization and service delivery in Ethiopia 89 regions. This unanimous decision is quite remarkable and not self-evident, especially not in a situation, where even the relatively better-off regional states have nothing to spare. And still, these relatively stronger regions did agree to reduce the amount of funds distributed among them by one percent. Therefore it can be concluded that the New Budget Grant Distribution Formula not only addresses issues of vertical and horizontal imbalances in order to reduce the vertical balance, the new Ethiopian Budget Grant Distribution Formula considers both sides: the expenditure needs and the revenue raising capacities because of the heterogeneous composition of the regional states and their development needs. This approach enables the regional states to discharge their constitutional mandates and to meet the constitutional requirement of access to equal services across the country. These two steps, however, do not touch the relatively worse situation of the four emerging regions. Using the general distribution through the first two pillars of the formula would make it extremely difficult for these regions to provide the necessary services and to undertake the prescribed investments. Therefore, the formula applies a third step. Dividing the overall amount of the Budget Distribution Grant into a 99 percent share, which is divided according to the principles of vertical fiscal equalization, and a one percent share, which is reserved for the four emerging regional states, includes an element of horizontal equalization into the formula. 90 Decentralization and service delivery in Ethiopia Part V Sectoral Case Studies Housing Decentralization and Cooperative Housing in the Oromia Region Tilahun Fekade It has been long since most countries in the world adopted decentralization as a strategy aimed at ensuring sustainable development. As decentralization is a pervasive process that affects almost all sectors of an economy, it invariably affects the dynamics within the housing sector in general and the housing cooperative (HC) sub-sector in particular. Hence it will have a bearing on the sustainability of shelter provision that depends very much on the quality of support they obtain from government and other actors they interact with. This has a special meaning in view of “enabling shelter strategies” that are promoted by the UNCHS and embracing a multi-actor scenario that also underlines the importance of community-based initiatives. As a matter of fact, the link between decentralization and cooperatives is evident as the adoption of decentralization policies brings about changes in the way the various levels of government (both federal, regional and local) provide support to housing cooperatives as well as in the range of support available to them. This is in the major motivation for conducting the present study on “Decentralization and Cooperative Housing in Oromia Region” of Ethiopia. Modern HCs in Ethiopia have a short history, although they had a special place during the late 1970s and throughout the 1980s associated with the socialist ideology that gave unprecedented attention to cooperatives as non-corporate entities. The promotion of HC was concentrated in Addis Ababa and a few bigger urban centers in the country and hence that included those located in what later become the Oromia Region. The Region is the largest of the nine national regional states in Ethiopia, and it is divided into 17 Zones and 180 Woredas. According to the 2007 census (PCC, 2008), it is also the most populous region accounting for 36.7% of the country’s total. The level of urbanization in the Region (12.2 %) is apparently lower than the country’s average (16.1%) as the former excludes Addis Ababa City Administration that is located within and does have a pivotal role in the regional urbanization process. The spatial landscape of the Region is dominated by small urban centres and there were only nine towns with population above the 50,000 mark during the census year: Adama (222,035), Jimma (120,600), Shashemene (102,062), Bishoftu (100,114), Nekemt (76,817), Assela (67,250), Sebeta (56,131), Ambo (50,267) and Haromaya (50,986), of which only five surpassed the 100,000 threshold. Housing problem is reckoned to vary across urban centres, but there are no studies that precisely tell the magnitude of the deficit: this was missing in the housing strategy developed for Oromia Region (GTZ-IS, 2006), the Region’s Integrated Housing Development Program (IHDP) was launched with little attempt customize the federal program to the specific regional housing needs and demand, while the results of the recent housing census are not officially released. The dynamics of the cooperative sector exhibited a dramatic shift after 1991, as the new government adopted free-market economic policies as well as decentralization policies that had a combined bearing on the way HCs were to be established and promoted. As noted by W anyama et al (2008), the cooperativerelated literature on this era which is characterized by intense decentralization interventions is rather scanty and this is more so in the case of HCs. In the case of Decentralization and service delivery in Ethiopia 91 Ethiopia, there were very few studies on HCs like those of Dolicho (1993), which entirely focused on the experiences of the pre-1991 period. The few studies undertaken on the topic after 1991 like those of Melesse (2003), Dengushe (2008), Mulissa (2008) and Jijo (2009), are unpublished academic studies in which decentralization is only one of several factors considered. The present study on “Decentralization and HCs in Oromia Region” is aimed at reckoning how the HC sector performed in the context of the post-1991 decentralization related reforms. This study had basically relied on extensive, desk-based review of available theoretical and empirical literature (see reference list) on decentralization, housing cooperatives, housing and housing cooperatives with a focus on the study area. Additional information was also collected through interviews held with relevant resource persons. The findings, conclusions and recommendations of the study are organized in the following four additional sections: Section one provides the conceptual framework for the study based on the relevant literature on decentralization, its impact on the cooperative sector and the importance of HCs in the multi-actor shelter delivery strategies that are promoted by UNCHS and other international organization. Section two outlines the pre-1991 situation pertaining the cooperative sector in general the HC sector in particular as this was the starting point for the decentralization processes that commenced in 1991. Section Three focuses on the decentralization-related developments that have occurred after 1991 in both the housing and cooperative sectors that have a bearing on the dynamics of HCs. Section four, offers some conclusions that focus on interventions that will be relevant to come up with a more responsive HC-related policy and organizational support and highlights issues that should be taken up for further research if HCs are to play key roles in housing provision. Conce pt ual Fr amew or k on De cent r aliz at ion and Capacit y The Concept of Decent r aliz at ion Decentralization refers to the transfer of authority and responsibility for public functions from the central government to subordinate or quasi-independent government organizations and/ or the private sector (Sundaram, 1994 quoted in Kundishora, 2009). As it is also highlighted in the call of papers for this conference, decentralization takes four main forms; political, administrative, fiscal and market that should not be seen as mutually exclusive. Accordingly, (a) Political decentralization is about giving citizens or their elected representatives more power in public decision-making and hence attempts to devolve law making powers to democratically elected local governments; (b) Administrative decentralization refers to the redistribution of authority, responsibility and financial resources for providing public services among different levels of government and thus involves the transfer of policy making, planning, management as well as financial responsibilities for providing public services; (c) Fiscal decentralization broadly refers to efforts aimed at re-distributing the revenue raising powers of different tiers of government and inter-governmental fiscal transfers along with the redefinition of their service delivery mandates; and (d) Market/economic decentralization is aimed at creating space for the involvement of private businesses, community-based organizations (CBOs), cooperatives, private voluntary associations, and other non-governmental organizations (NGOs) as it involves measures that are aimed at removing policy and legal constraints for the participation of the private sector and other actors in the economy. Decentralization is a dynamic concept that may have different manifestations in different contexts. According to Cheema and Rondinelli (2007), its evolution over 92 Decentralization and service delivery in Ethiopia the past half a century can be discussed under three distinct waves. Essentially, the first wave of decentralization refers to the period after the World W ar-II up until the 1980s, which gave emphasis on de-concentrating government functions, the second one that started in the mid-1980s included devolution, democratization and market liberalization, while the third that started in the 1990s focuses on opening governance to wider public participation through civil society. It is interesting to note that the first was focusing on government, whereas the second and third are aimed at bringing on board the other actors (e.g., private and community sectors) in the decentralization arena. Dr iving For ce s and Rat ionales f or Dece nt r aliz at ion Decentralization received unprecedented attention by both national governments as well as international and bilateral organizations during the last few decades owing to several external and internal drivers of change (Ahmad et al, 2005; Caulfield, 2006; and Devas, 2005). These include: (a) the dissatisfaction of citizens with highly centralized systems that failed to effectively respond to local demands, (b) the potential role of decentralization to provide political solution to regional conflicts with invariably ethnic overtones; (c) the need to promote state reconstruction in situations where the local economy and public services were devastated by internal strife; and (d) the pressure from international institutions like the World Bank (WB). The unique combination of these factors in different contexts determine the scope and pace of decentralization subject to the diversity in the historical, political, economic and social milieu of individual countries (Devas, 2005). Yet, improving service delivery- whether explicit or implicit – is the major motivation behind most of these decentralization efforts (Ahmed et al, 2005). There are many justifications for promoting decentralization as it: (a) facilitates the participation of stakeholders including the public in local development efforts as decentralization helps “bring the government closer to the people;” (b) enhances the transparency and accountability of civil servants, elected representatives and political institutions to the public; (c) facilitates better division of labour among the different levels of government in the management of public affairs and hence checks and balances; (d) promotes the self-reliance and sense of ownership of stakeholders about local programs and projects and hence their relevance to local contexts and hence their feasibility; (e) facilitates the mobilization of local resources in support of decentralized development processes; and (f) promotes monitoring, evaluation and planning at the local level (Furtado, 2001 and Kundishora, 2009). Capacit y as a Missing Link f or t he Succe ss of Decent r aliz at ion Despite the perceived advantages, the performance of decentralization policies depends on contextual factors, including the presence of adequate institutional capacity at the sub-national level to discharge the newly assigned functions (Furtado, 2001; and Ahmed, 2005). The centre also needs to have sufficient capacity to manage the decentralization process as well as sufficient information that would allow it to properly monitor and evaluate the process and outcomes of decentralization (Devas, 2005, Caulfield, 2006 and Kundishora, 2009). This is very critical as decentralization – as a continuum – brings significant changes in the centre-local relationships and does not avoid it altogether. Decentralization and capacity development are complementary as both seek to improve participatory decision-making, reduce the need for external resources, and achieve long-term sustainability (Furtado, 2001). The United Nations Development Program (UNDP, 2006) defines capacity as “the ability of individuals, institutions, and societies to perform functions, solve problems, and set and achieve objectives Decentralization and service delivery in Ethiopia 93 in a sustainable manner, while capacity development is the process through which the abilities to do so are obtained, strengthened, adapted and maintained over time.” Polidano (1999) defines public sector capacity: “as the ability of the permanent administrative machinery of the state to implement policies, deliver services to the public, and provide policy advice to decision-makers” and identifies its two important elements, namely policy capacity (the ability to structure the decision-making process, coordinate it throughout government, feed informed analysis into it, and ensure that the analysis is taken seriously) and implementation capacity (the ability to carry out decisions and enforce rules, within the public sector itself and the wider society). Rat ionale of Cooper at ives and t he Cooper at ive Moveme nt in Af r ica Conce pt and Rat ionale of Cooper at ives The word “cooperative” is a generic term and different types of cooperatives could be organized for economic, social and societal purposes (ILO/ICA, 2003 and OCDC, 2007). As a matter of fact, “the diversity of cooperatives is kaleidoscopic and their variability is literally infinite” (Emelianoff quoted in Zeuli and Cropp, 2004). Definitions of cooperatives abound, but the most widely used definition is the one adopted by the International Cooperative Alliance (ICA), namely: “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise” (Ibid). Cooperatives are distinguished from other forms of organizations (such as government, private and other incorporated businesses) because of seven basic principles, known as Universal Cooperative Principles: voluntary and open membership, democratic member control, members' economic participation, autonomy and independence, education, training and information, cooperation among cooperatives and concern for community (OCDC, 2007; and Zeulli and Cropp, 2004). Three of the seven principles adopted by ICA in 1995 – userownership, user- control and proportional ownership of benefits and costs – are applicable to all types of cooperatives and hence seen as defining principles. Cooperative is an association to be established by like-minded people of limited means to achieve a common goal in a collective way. Likewise, the establishment of HCs is justified in a situation where individuals find it difficult to achieve their shelter needs on their own, but when joining forces with other individuals facing similar challenges provide comparative advantage to solve such problems (UNCHS, 1989). Thus, HCs can be used as instruments to increase the affordability of housing for low- and moderate- income families. They are a flexible form of housing that provides access to both rental accommodation and home ownership (OCDC, 2007). HCs in many developing countries are “construction cooperatives” (i.e., cooperatives which are established to facilitate the construction of housing units), whereas in most W estern nations they are of the “permanent kind” that primarily focus on continued ownership and operation of a group of housing units (Davis and Rabenhorst, 2005). As a matter of fact, one would miss many of the defining characteristics of cooperatives (Cf. ICA’s definition) in most of the housing cooperatives established in Oromia Region. Evolut ion of t he Cooper at ive Movement in Af r ica In most of the developing world, and notably in Africa, the cooperative movement has passed two main phases: the period up to the early 1990s and the post cold-war era which was characterized by liberalization and SAP (Birchall, 94 Decentralization and service delivery in Ethiopia 2004; OCDC, 2007; Vanhuynegem, 2008; and Wanyama et al, 2008). During the first phase that lasted up to the early 1990s, cooperatives established in these countries were regarded as mere extensions of the state sector as their operations were invariably dependent on the generous services of quasi-public agencies. The first few years following the end of the cold war were characterized by indifference to cooperatives sector and in some cases a tendency to privatize their properties. In many cases cooperatives disintegrated, as their assets were vandalized or they could not sustain the sever competition with enterprises from the cooperative sector (OCDC, 2007; Vanhuynegem, 2008; and W anyama et al, 2008). During the second phase cooperatives were to be established on voluntary and bottom up fashion and the state withdrew from its traditional supportive roles also facilitated by the WB-sponsored SAPs (Birchall, 2004; OCDC, 2007 and Wanayama et al, 2008). Thus, the work units and staff dedicated to cooperative issues were downsized and eventually the government sector retreated from providing organizational, supervisory, audit and management training to cooperatives. The Inclusive Enabling Housing St r at e gy SAPs promoted by W B during the 1980’s and 1990’s emphasized on enabling markets and they invariably excluded alternative modalities of housing provision from policy debates. As a matter of fact, there is a need to promote an inclusive enabling strategy that should not be confined to enabling the private housing market as it would be: “...a mistake to equate UNCHS and World Bank policies and ideology on the subject. While their policies overlap to a large degree with respect to enabling the formal private markets the UNCHS … has paid much greater attention to making the strategy more inclusive by including particularly the community and cooperative sectors. The Bank pays scant attention in this regard” (Keivani and Werna, 2001: 200). In view of resource limitations particularly in developing countries like Ethiopia, self-help schemes in which the poor can be encouraged to contribute at least a certain share of the total cost of housing provision are plausible options worth promoting. These would immensely ease the burden on the government and allow to better target subsidies as well as to capitalize on the agency of such beneficiaries. In this regard, the promotion of HCs is expected to result in better outreach and synergetic impact (UNCHS, 2006). Discussions about the potential role of cooperatives in the housing sector should not be limited to their contributions in the construction of new housing units, as HCs can also play strategic roles in the provision of neighbourhood level housing related facilities and services. As the establishment of HCs on voluntary basis would involve self-organization, it would provide members greater autonomy and leverage in determining their fates (Birchall, 2004). As a matter of fact, the lofty goals of decentralization are effectively realized provided cooperative-type of organizations are promoted to freely grow and flourish on their own. Evolut ion of Housing Cooper at ive s in Et hiopia Modern HCs have a more recent history in most of the developing world (UNCHS, 2006). In the case of Ethiopia, it was the Cooperative Societies Proclamation No. 241/1966 that laid ground for the formation of a wide range of cooperatives including HCs. The first 150 cooperative houses - Bole Homes - were constructed in Addis Ababa during the 1960s (Tefera and Tilahun, 2004) within the context of the then state-centred capitalist development strategy. During the 1960s and up until 1978, the mandate of organizing HCs was within the then Ministry of Agriculture (Tefera and Tilahun, 2004 and Veerakumaran, 2007). Decentralization and service delivery in Ethiopia 95 The period between the late 1970s and the early 1990s saw cooperatives flourishing under state-sponsorship, which followed a similar pattern like most of the then socialist countries (OCDC, 2007). The Ethiopian government issued the “Cooperative Societies Proclamation No. 138/1978” that envisaged the establishment of producer and services cooperatives as instruments in the socialization of the economy, as part of the state-centred socialist development strategy. The establishment of cooperatives was top-down and their operation was dependent on highly centralized and government managed import and export operations. Following the nationalization of urban land and all extra houses in 1975, earning rental income from private housing was banned and stringent regulations were instituted for housing transactions (Dolicho, 1993 and Fekade, 1997). HCs, which were regarded as one form of socialist ownership, were promoted especially after the failure of the government to keep its promise of directly delivering housing for urban residents (Assefa, 2004). After 1978, the mandate of promoting, supporting and regulating HCs was transferred to the Ministry of Urban Development and Housing (MUDH). HCs enjoyed preferential treatment in terms of access to land, construction finance and construction materials as well as provision of various types of technical and institutional supports that underwent two phases (Assefa, 2004, Dolicho, 1997, Fekade, 1997, and UNCHS, 1989). The first one (1975-1986) was directly managed by MUDH and its main focus was on Addis Ababa. The next phase (1986-1991) was characterized by a more systematic support to cooperatives channelled through its de-concentrated regional office. A revised policy on HCs was issued in 1986 that precipitated, among others, in the establishment of a specialized department for HCs under MUDH that had four divisions for technical-, training-, organizational- and financial- support that allowed it to provide comprehensive support free of charge, whereas in many other countries cooperatives are expected to pay fees for getting similar services (UNCHS, 1989). The new policy also provided for targeted support to be given to the three types of cooperatives, namely “normal”, “aided self-help” and “pure self-help” HCs (Dolicho, 1997; UNCHS, 1989; and Tefera and Tilahun, 2004). Accordingly, the normal cooperatives were to obtain all kinds of technical support except construction finance which they would get from banks at the ongoing fixed market rate; the aided self-help cooperatives were to be provided subsidized credit (at 4.5%); while the pure self-aided cooperatives were expected to mobilize their own finance and hence allowed to get support from NGOs or other organizations. The self-help housing cooperatives were the focus of the WB-financed housing programs implemented in Addis Ababa as part of Urban-I and later the Lafto Low Cost Housing Projects that were implemented during the late 1980s and the 1990s. This differentiated approach and the all rounded support provided to HCs gave impetus to their contribution to housing provision. It was estimated that about onethird of all houses newly constructed in urban areas of Ethiopia between 1986 and 1992 belonged to HCs (Dolicho, 1993). This was hailed as success as it was seen as demonstrating what could be achieved if governments supported cooperatives (UNCHS, 1989), whereas the policies adopted by the then government were also condemned for disrupting the housing market (UNCHS, 2007). Decentralization and Housing Cooperatives Policy and Legal Fr amew or k f or HCs The New Economic Policy of the Transitional Period (NEP) stipulated that the role of the state in the overall economy will be retracted to give way for the private 96 Decentralization and service delivery in Ethiopia sector (TGE, 1991). Although explicit about the desire to promote private sector participation in housing development, the policy was muted about the role of HCs. Following the adoption of decentralized policies, many of the supports provided to HCs were suspended. Trade liberalization outlined in the New Economic Policy (NEP) for the transitional period (TGE, 1991), opened up the production and selling of construction materials by the private sector, withdrew subsidies on housing finance and construction materials and introduced the urban land lease holding policy as a market-based land management system. The ensuing Structural Adjustment Program (SAP) – and hence decentralization – resulted in the re-organization of cooperative related institutions. Although referring to the former socialist countries in Eastern Europe, the following excerpt depicts the situation in the (housing) cooperative sector in Ethiopia that was subjected to decentralization interventions: “…cooperatives in the form of collectives or consumer or housing cooperatives were part of a highly politicized, state-controlled system within a centrally planned economy, in which the State had the monopoly in trading and banking. Support services for the communist collectives were part of this centrally planned system, and cooperatives were used to implement centrally made plans. With the introduction of elements of a market economy in the form of liberalization and privatization of economic activities, the main task has been to depoliticize and decentralize the cooperative system and to reorganize the entire structure …” (ILO, 2001: 90) Decentralization also brought about decentralized urban land management and building regulation systems as well as cooperative support structures. Accordingly, the Cooperative Societies Proclamation No. 147/1998 was issued, which was later amended in 2004 (FDRE, 1998; and FDRE, 2004). The Proclamation embraces the seven basic cooperative principles adopted by ICA and provides for the establishment of cooperatives on a voluntary basis, whereby the government is expected to create an enabling environment for their operation through decentralized support structures. City administrations started allocating land under a lease holding arrangement, while the public ownership of land was promulgated in the FDRE Constitution. This move was believed to better respond to local demands for residential land as well as to streamline building and building standards to local contexts. Yet, building and construction standards continued to be prescribed by federal or regional levels justifying it in terms of lack of capacity at the local level. Likewise, with the liberalization of land markets, certain built-in mechanisms aimed at pre-empting speculation were introduced at the regional level (e.g., cooperative members were expected to put 10-20% of the total estimated construction cost of standardized housing typologies in a blocked bank account to be released after members partially complete the construction of their housing). Although it sounds paradoxical, such requirements were put in place at a time when the then Housing and Savings Bank (HSB) was commercialized and renamed Construction and Business Bank (CBB). Members of HCs had thus nowhere to go to securing favourable loans to construct housing units. Inst it ut ionaliz at ion of Housing Deve lopment Until recently, urban housing issues were not adequately institutionalized at the national level as evidenced by its relegation to a department level within the Ministry of Federal Affairs (MoFA) that was in charge of urban affairs until 2005 (GTZ-IS, 2006). A somewhat heightened attention is now given to the housing sector as illustrated by the issuance of the National Urban Development Policy Decentralization and service delivery in Ethiopia 97 (NUDP) and the establishment of Land and Housing Development Coordinating Bureau under the newly established MWUD. However, despite the heightened emphasis accorded to the promotion of the housing sector, the Ministry at the moment does not give any attention to HCs as it is currently working “towards the implementation of the Integrated Housing Development Program and the Micro and Small Enterprise development programs” (MWUD, 2010). NUDP gives attention to housing-related issues, while a comprehensive housing development policy is still at the draft stage. A (draft) concept note prepared by the Ministry discusses the contribution of different actors in housing provision, while it appears to underline government-sponsored low cost housing program as central (MWUD, 2007). The current consensus seems for regions to come up with strategies that can allow them to implement the national urban development policy issued in the year 2005 in their respective regions. In this connection, the GTZ-IS has come up with a regional urban development strategy for Oromia and, even though reference is made to this document in several studies, it has not been officially adopted to be considered as the region’s urban development strategy. Moreover, the region is yet to come up with its own policy and strategy for the housing sector. Due to the lack of well articulated regional level policies and strategies for the urban development sector in general and the housing sector in particular, the picture at the federal level replicates itself at the Regional level in the Oromia Region. Although the institutional mandates of the relevant work units include the management of public housing; conducting housing-related research; developing housing standards and typologies; providing support to cooperatives; and facilitating the supply of land for housing development (GTZ-IS, 2006), their actual focus is on the administration of public housing and allocation of residential land and coordinating the implementation of IHDP (which refer to bigger towns). Inst it ut ionaliz at ion of HC Re lat ed Mandat es The Federal Cooperatives Commission (FCC) and Regional Cooperatives Promotion Bureaus were established following Proclamation 147/1998 that provided for the transfer of all cooperative related mandates to the newly established agency and its decentralized institutional counterparts at regional level. These new offices took over the responsibility of providing legal personality and registering all types of cooperatives including HCs. Yet, the urban wings of these offices were ill staffed to undertake any meaningful HC-related tasks. The Oromia Region has established offices for promoting, supporting and regulating cooperatives at all levels of the administrative hierarchy, but their HCrelated activities were not well coordinated with that of the FCC that is now under the purview of Ministry of Agriculture and Rural Development (Tefera and Tilahun, 2004). Likewise, a recent study undertaken by the Ministry of Works and Urban Development (MW UD) underlined the absence of institutional preparedness and capacity to provide institutional support for HCs (MW UD, 2007). The legislation is of significant importance to the institutionalization of the support to be provided to HCs is Proc. No. 87/2004 issued by the Oromia National Regional State (ONRS). As per Article 31 of this proclamation, the mandates of the Oromia Cooperatives Promotion Commission (OCPC) focuses on the promotion of cooperatives to be established in the rural areas such as multi-purpose-, marketing-, saving and credit- and irrigation-cooperatives. Article 18 of the proclamation states that the OWUDB shall have the powers and duties to confer legal personality and register HCs, undertake studies concerning low cost houses; undertake comprehensive studies on housing problems and forward recommendations. 98 Decentralization and service delivery in Ethiopia The registration and licensing of HCs, however, is not currently being undertaken by the OWUDB as there is no dedicated work unit for HCs. The Bureau has decentralized the functions related to cooperatives to city administrations which the same Bureau reckons is incapacitated to perform the delegated tasks. Yet, there are two regional level institutions dedicated to some aspects of housing, namely the Oromia Housing Development and Administration Enterprise (managing nationalized and government constructed rental houses) and the Oromia IHDP office (coordinating city-level IHDP offices). Moreover, in the context of IHDP, the relevant offices for transport, trade and industry were promoting construction material and service providing micro and small enterprise (MSEs). This again shows how political priorities determine the modalities to be adopted in institutionalizing cooperative-related assistance. In fact, one of the stark features of the current housing development related efforts is the absence of systematic initiatives to promote HCs. These are vivid examples for the situation in which the centre pushes mandates to lower levels without giving heed to the presence of adequate capacity to perform the tasks. In this connection, Jijo (2009) noted that the responsibility of organizing all types of cooperatives in Burayu town -one of the Grade-1 urban centres in ONRS- was given to the city’s Public Relations and Information Department, registration HCs is the responsibility of the Trade, Transport and Industry Department (which is currently active in organizing MSEs), the delivery of land for cooperatives continued with the Land Administration and Building Permit Department, while the City’s Code Enforcement Office is entrusted with the task of regulating cooperatives. In fact, a notable feature of the institutional arrangement for supporting HCs is the lack of institutional alignment that exists between sectoraly organized institutions responsible for housing and those entrusted with cooperative-related mandates. Suppor t Pr ovide d f or HCs The provision of residential land for housing cooperatives remained the single most important support the government was providing to HCs as land remained public property despite the adoption of free market policies that resulted in the withdrawal of various housing-related subsidies. The set of criteria to be fulfilled by applicants for getting access to residential land from a city administration included: the applicant has to be at least 18 years old, resident of the city where the application for residential land was to be submitted and should not own or hold an urban house or residential land elsewhere in the Region. The formalities that are required to be registered as a HC include: minutes of the cooperative founding meeting, the internal regulation (bylaw) of the cooperative, name list of founding members along with supporting letter from Kebeles, names of cooperative executive committee members and the amount of capital raised by members. Those who fulfil these criteria are temporary registered until they receive residential land and permanently after they acquire land. The support to be provided to newly established HCs ends here, as there is no follow-up to be made on their activities, achievements and the constraints they face due to the lack of required expertise. The provision of residential land to HCs had to be banned in the major towns in Oromia Region including those that are found near Addis Ababa associated with the incidence of land-related corruption (Tefera and Tilahun, 2004). A major factor is found to be the way in which members of a given HC were recruited as the kebele administration has no adequate means of checking the authenticity of background information regarding potential applicants. There are reported cases in which fake names have replaced others in older lists, which would open doors for corrupt practices in land management departments (Mulissa, 2008; and Zibagwe et Decentralization and service delivery in Ethiopia 99 al, 2009). In particular, the lack of a chain of command between cooperative departments and Kebele administrations made it difficult to avoid multiple allocations of residential plots. This was further complicated by a directive recently issued by the Council of ONRS which provides the right of the residents of Oromia Region to get residential land in any urban centre of their choice (Mullisa, 2008). Moreover, the absence of clarity on the transfer of rights to the cooperative and individual members is another factor that created loopholes for such corruptive practices. During the socialist era, both the land and the housing structures, including infrastructure and services linked to the housing units, were collective properties of the cooperatives until the entire group of members completed the repayment of the housing loans they had taken from the HSB. The Impor t ance of Cooper at ive- Re lat e d Tr aining One basic feature of the assistance given to cooperatives after 1991 is the near absence of orientation and training about cooperative principles and the special nature of HCs, which should normally be given during the pre-establishment stage as cooperative members are expected to undergo a self-selection process. This self-selection process is believed to result in the establishment of cooperatives with members who posses more or less the same potentials and face similar constraints. As noted by Davis and Rabenhorst, cooperatives: “....can only thrive if members have freely chosen to join, are interested in engaging and investing their time and money in a democratically-run housing organization. If cooperatives are formed from unwilling or unenthusiastic members, they will not have benefit of the strong internal leadership, mutual support, and financial responsibility to survive.” (Davis and Rabenhorst 2005: 43) The lack of concerted support provided to HCs can be seen as one of the reasons for the more or less similar internal and external constraints being faced by HCs that got the chance to be established in recent years in Amhara, Oromia, SNNP and Tigrai regions (Melesse, 2003; Dengushe, 2008; Mulissa, 2008; and Woldegeworges, 2009). The major internal problems include the absence of regular meetings as per cooperative bylaws; serious difficulties to mobilize joint savings associated with significant differences in the income level of members; and spontaneous withdrawal and replacement of members. Some of the major external constraints that are specific to cooperatives, on the other hand, refer to the sluggish cooperatives registration process and absence of follow-up support. Difficulties to get access to developed land, rigid building regulations, shortage and high price of building materials and unavailability of mortgage finance are additional external factors that also affect the non-cooperative actors. As some of these constraints are linked to the quality of support cooperatives could actually obtain from the institutions they are interfacing with, the support organizations are expected to streamline their efforts to assist HCs during establishment and beyond. One glaring gap in this connection is the sever shortage of trained manpower that can deal with the demanding tasks of promoting, supporting and regulating as well as self-management of HCs. Since the last few years, apart from the training programs that had been managed for quite a long time at the Ardaita Cooperative Training College under FCC, the universities of Alemaya, Debub, Jimma and Mekele have opened undergraduate and postgraduate programs in cooperatives (Veerakumaran, 2007). Although the combined output of these universities a few years ago was estimated at 500 per year, the graduate profile is biased toward rural-based cooperatives highlighting the importance of re-orienting existing cooperative related training and education programs. 100 Decentralization and service delivery in Ethiopia Suspension of Suppor t t o HCs Priority in receiving land-related support is among the privileges cooperatives are entitled to as per the Cooperative Societies Proclamation, but the allocation of residential land for HCs has been suspended since 2006. As a result, those cooperatives that are still waiting have their money tied for several years in blocked bank accounts (Tefera and Tilahun, 2004). Of the total of 478 cooperatives temporarily registered in Adama and Burayu towns during the period between 2001 and 2006, only 84 cooperatives (18%) were able to obtain land. The only exception in this regard was the establishment of HCs by Ethiopians living abroad as it was promoted as the preferred arrangement for residential land delivery for this group. This arrangement had received utmost attention during the celebration of the Ethiopian Millennium and a total of 263 cooperatives with 4,429 members were provided with residential land in 35 urban centres of the Region (OW UDB, 2008 quoted in Jijo, 2009). The modus operandi of these “Diaspora HCs” is similar to other cooperatives established by local residents as their main interest was to obtain residential land. The main reason for suspending the allocation of land to HCs appears to be the widespread incidence of scarcity-driven, speculative transactions in residential land allocated for cooperatives. This can be discussed under three points, firstly, the absence of municipal level strategic planning for land management and effective control systems invariably led to the squandering of scarce urban land. This again underlines the failure of decentralization programs to put in place the necessary capacity as well as monitoring and evaluation systems. Secondly, rigid building regulations motivate land holders to sell their right to use the land allocated to them. Construction has to start within six months and finish the within a maximum of two years; otherwise the allotee will forfeit the plot (Davis and Rabenhorst, 2005). Thirdly, most cooperative members self-finance their home construction from informal sources and hence prefer to operate on an individual basis (Davis and Rabenhorst, 2005; Mulissa, 2008; Jijo, 2009 and Zibagwe, 2009). Once parceled plots are allotted to cooperatives, members distribute it using a lottery system. Although this tends to reduce the interest of members toward the cooperatives, it becomes active whenever members individually or in groups put certain requests like support letters for extension of utility lines or for the release of the money kept in a blocked account after members partially complete their houses. Likewise, HCs need to notify the municipality about changes in membership when semi-constructed or completed houses change hands. In performing these tasks, however, HCs operate in a rather informal way (i.e., outside their bylaws) without getting support from institutions with the relevant mandates. Cur r ent At t ent ion t o HCs Another argument forwarded by the policy makers against the provision of residential land to HCs is that cooperative approaches does not ensure efficient use of urban land. Such a requirement, however, contradicts the very social objective that is built into the cooperative movement of providing shelter to citizens. Moreover, such a problem can be raised in connection with the single plot, single housing unit development by members of cooperatives, whereas HCs can also be promoted and assisted to adopt land-saving construction technologies including vertical development in those contexts where land is scarce. Housing cooperatives refer to associations to be formed by individual members for the purpose of jointly carrying out activities that would enable their members to meet their housing related needs. Condominiums refer to buildings that constitute multiple residential units that could either be arranged vertically or attached Decentralization and service delivery in Ethiopia 101 horizontally. Thus, the term condominium is neutral in terms of ownership as they can be built either by individuals forming cooperatives to meet their own shelter demands or private real estate developers (either individually or in groups) for rent and/or sale. The construction of multi-storey buildings by HCs is in fact covered in the condominium proclamation (FDRE, 2003). Part nine of this proclamation states, among others, the Cooperatives Societies Proclamation shall be applicable for the construction of cooperative condominiums, whereas the condominium proclamation shall be applicable when such a building is to be registered. A more recent regional level study on the housing sector conducted in Oromia Region (GIS-IS, 2006), identified a list of thirteen strategies that were in line with the multi-actor scenario. One of these strategies refers to the promotion of pro-poor cooperative housing schemes, although the current situation on the ground does not reflect this concern. As Davis and Rabenhorst (2005) note, the attention given to HCs seem to have exhibited some decline with the introduction of the concept of “condominiums” as an alternative means of group ownership of housing. The Integrated Housing Development Programme (IHDP) envisaged significant direct government involvement (50%) in housing provision, while the balance was to be covered by owner builders, HCs, real estate companies and other actors (MWUD, 2008). In the case of Oromia Region the share of government was put at 40% (Jijo, 2009), whereas the government sponsored condominium project was the entire focus of ONRS. The implementation of condominium projects in the Oromia Region started in 2006 in 11 larger urban centres and it was scaled-up later into a total of 16 urban centres (OHDPO, 2010). The original plan was to construct 66,748 units in a total of 29 urban centres during the four years period between 2006 and 2010, whereas only 22,850 units (34.2%) in 16 towns have actually be completed so far. There is also a serious challenge to transfer the completed condominium units to residents, which is in the main linked with the absence of rigorous demand analysis before the launching of the program and the non-participatory approach in which it was designed and implemented (Ayenew and Martin, 2009). This, together with a recent directive issued by MWUD to regional governments and that underlines the need to make a rigorous housing demand analysis before embarking on new condominium projects, may be considered suggestive of the need to make a reappraisal of the relevance of the cooperative modality. Conclusion and Recommendat ions Developing Policy Guide lines on HCs To date there is no detailed policy guidelines on HCs (Tefera and Tilahun, 2004). There is a need to come up with a clearly articulated policy direction on the provision of all rounded support to housing cooperatives that should in fact go beyond the allocation of residential land. Developing such a policy is believed to clarify, among others, the institutional arrangement for the promotion, support and regulation of HCs, the preferred tenure arrangements for residential land to be allocated to cooperatives, the types of cooperatives that can be established and the type of supports they are entitled, the resource mobilization modalities they can utilize, the roles NGOs can potentially play in the promotion and provision of support to cooperatives and basic data to be collected on cooperatives. Building Capacit y f or HC Deve lopment Even though the basic principles of cooperatives are the same, there is a need to create relevant capacity at all levels in order to be able to effectively respond to 102 Decentralization and service delivery in Ethiopia the specific nature and hence requirements of HCs in a decentralized governance regime. There is therefore a need to adopt a holistic approach to capacity building that would allow: (a) to clarify and/or redefine the HC-related mandates of government organizations; (b) design and institute organizational structures for such institutions that are appropriate/commensurate to their respective mandates; (c) hire an adequate number of staff with relevant training and experience, and regularly update their competence through relevant training and educational interventions; and (d) develop appropriate, transparent and accountable working systems and procedures for the various promotional, support and regulatory activities. Embr acing Inclusive Housing St r at egies The preparation and allocation of residential land in most of the larger towns in the Oromia Region during the last three to four years was in the main confined to condominium housing programs, whereas individuals including those organized in HCs have been relegated. It is therefore a high time to revisit the cooperative model as one of the housing provision modalities, particularly its relevance for low income groups and smaller towns that have somewhat special linkages with their hinterlands and where the private, profit oriented sector may not be a major player in housing provision. Cr eat ing Suf f icient Aw ar eness about Cooper at ive Pr inciples It appears that most cooperative members do not have sufficient awareness about cooperative principles as well as their rights and obligations. As the HC preestablishment process usually takes some time, the interim period should therefore be grabbed as an opportunity to provide awareness training to cooperative members about cooperative principles as well as basic cooperative management related training in topics such as cooperative leadership, construction project management, financial management, record keeping and conflict resolution. St r eamline Land Allocat ion Syst ems t o He lp HCs Land allocation systems for cooperatives should be systematized that could include among others stating explicitly the mix of government support that would be available for individuals who want and/or would be encouraged to be members of housing cooperatives so that such supports (e.g., pertaining land allocation) could be properly targeted. Clear and transparent eligibility criteria for getting access to land should be developed and clearly communicated. Moreover, local governments within the region should develop and maintain a systematic database on land allocation to members or cooperatives which they can exchange with a view to avoiding multiple allocation to individuals or even allocation to non-eligible persons. Developing Tailor ed Tr aining Pr ogr ams f or HCs Training is an important component of the support to be provided to cooperatives during their establishment and beyond so that they would be able to properly manage their activities. Yet, the training programs organized by the Regional cooperative promotion bureau and their decentralized offices focus on rural-based cooperatives. Likewise, trainings provided by the bureau of transport, trade and industry and their decentralized offices focus on Micro and Small Enterprise (MSEs). The institutions with the mandate to promote, support and regulate HCs should, therefore, deploy an adequate number of extension workers Decentralization and service delivery in Ethiopia 103 to provide the requisite support to these cooperatives during their establishment as well as monitor and evaluate their activities in cooperation with NGOs. Developing a Coope r at ive Dat abase There is no comprehensive and systematically organized data, at either national, regional or municipal levels, on activities undertaken, results achieved and constraints faced by the HC sector (Tefera and Tilahun, 2004). This has made it difficult to monitor and evaluate the actual performance of HCs and the relevant support providing institutions as well as to introduce appropriate improvements within the HC sector. There was very little city level data documented in the literature reviewed as part of the present study and there was no systematically collected data and information on the performance of the urban housing cooperative sector especially after the adoption of decentralization policies. In fact, the evolving organizational structures for housing cooperatives did not allow the systematic collection of data that can allow comparisons across cities and zones within the region and hence systematic monitoring and evaluation of the performance of cooperatives both at the national and regional levels. There is therefore a need to develop key performance indicators and institute an integrated information system that allows the gathering and exchange of information among the different stakeholders as well as to collect, collate and share relevant cooperative related information that can serve as a basis for decision making. Pr omot ing Secondar y HCs The establishment of secondary cooperatives is believed to contribute to the empowerment of cooperatives and their members to develop neighbourhood level services as well as advocate and lobby for better housing and operative related policies (UNCHS, 1989). In the present circumstances, for example, HCs could not properly manage green/open spaces that have been provided as part of their site plans and there are cases in which such plots are put for lease auction by municipalities as vacant lands (Tefera and Tilahun, 2004). It is therefore important to promote the establishment of secondary HCs as this would give them leverage in their lobbying or advocacy efforts. Conduct ing Fur t her St udies If a wider definition of housing is adopted as one that encompasses land, shelter and residential services (McCallum and Benjamin, 1985), home owners can retain their cooperatives or establish new ones for the purpose of tackling common issues such as construction and/or maintenance of access roads, ensuring neighbourhood security and sanitation, provision of utilities such as water, electricity and telephone the management of open spaces and green areas or establishing basic social service facilities such as day care and sporting centres. Further research would thus be necessary to identify: • The potential roles that can be played by HCs in facilitating the legalization and regularization of informal settlements; • The scope for involvement of cooperatives in inner city slum areas to improve the overall infrastructure and service situation; and • The potential roles that could be played by the NGO sector in the promotion and capacity building support for HCs. 104 Decentralization and service delivery in Ethiopia Incorporating Informal Settlements in Addis Ababa: From Centralized Urban Planning to Local Partnerships Jan Fransen and Samson Kassahun Int r oduct ion This chapter builds on previous research conducted by the authors: Kassahun (2010) offers an overview of housing problems in Addis Ababa; Fransen and van Dijk (2008) describe informality in Ethiopia; and Kassahun and Fransen (2010) offer a theory and first assessment on the state of incorporating informality in Ethiopia. Informal settlements have grown exponentially in Addis Ababa due to a combination of rapid urbanization and institutions failing to enable the provision of formal land and housing. Formalization processes are not keeping pace and are primarily focusing on the provision of title deeds, with limited attention to other aspects of formalization (infrastructure and service provision; housing improvements; community building; informal employment; Kassahun, 2010). This leads to two kinds of informal settlements: settlements of the middle class that adhere to building standards in the urban fringe and depilated informal squatters where the urban poor live. The present trend has two risks. First of all, investments in squatter settlements are likely to lag behind due to unsecure tenure, land use conflicts, limited support and rampant poverty, whereas outside these settlements skyscrapers and shopping malls emerge as mushrooms, and secondly if present trends continue, Addis Ababa may transform into a dual city, as so many other cities in Sub Saharan Africa have done. This creates a huge financial constraint for local governments, paying the bill for public infrastructure and services without capturing increases in land value. This chapter aims to assess if present practices in Addis Ababa offers an alternative development path. Incorporating informal settlements is the act of combining informality as an existing and valuable phenomenon into the urban fabric, accepting its positive and negative contributions to urban life. It differs from formalization, which according to Kappel and Ishengoma (2006) requires total compliance with regulations laid down by the government. Incorporation instead involves trade-offs based on equity and governance approaches (Chabalengula, 2009). This chapter assesses if informal settlements are or can be incorporated into the urban fabric of Addis Ababa by answering two questions: Does urban planning in Addis Ababa offer an enabling environment for local governments to incorporate informal settlements? Do present experiences offer opportunities to incorporate informal settlements? The study has practical and theoretical relevance. Practically, it aims to offer recommendations in order to reverse the trend towards dualism by creating incentives to invest in informal settlements and to capture land value increases. These recommendations are targeted at the macro (national policies and regulations), meso (revised master plan of Addis Ababa) and micro level (kebele level upgrading projects). Theoretically, it is relevant as hardly any definition, theory and research methodology exist on incorporating informality. Theor et ical Fr amew or k Incor por at ing inf or malit y Incorporating informal settlements is the act of combining informality as an existing and valuable phenomenon into the urban fabric and accepting its positive and negative contributions to urban life. It differs from formalization, which Decentralization and service delivery in Ethiopia 105 according to Kappel and Ishengoma (2006) requires total compliance with regulations laid down by the government. Incorporation instead involves trade-offs between governments and those in informality based on equity and governance approaches (Chabalengula, 2009). For instance: allowing lower standards of infrastructure in exchange for formalization of a settlement. In relation to urban planning, Kusakabe (2006) refers to incorporation as the accommodation of the informal activities in urban space and issues of right to buy and sell. Incorporating informality hinges on four notions. The first notion is that full formalization involves high entry and operating costs, which are unaffordable for most. For example: building standards increase the construction costs of housing to a level unaffordable to the urban poor. These costs are reduced by deregulation, as advocated by Hernando de Soto. The second notion builds on Morrison’s assertion (2005) that it is preferable if those in informality meet part of their social obligations instead of not complying with all. This requires the government to accept partial formalization, while informal settlers still do not comply with other rules and regulations. While governments often ignore informality, accepting the violation of rules is another ballgame altogether. Third, incorporation combines informal land development processes (occupy, build, plan and own) and the opposite formal processes. As many cities in developing countries develop informally, it aims to develop an optimal solution. Fourth, and most controversial, incorporation hinges on the notion of governance, as local governments should meaningfully negotiate where and how informal settlements can be incorporated into the urban fabric. This requires decentralization to local governments and including other aspects of good governance which also need to be in place (transparency, accountability, etc). The outcome of such a negotiation process is a concrete action plan to incorporate an informal settlement. This is controversial as local governments have to enter into dialogue with informal and sometimes illegal institutions to discuss partial (non)compliance with laws and regulations in the field of taxation, building standards, zoning, title deeds and/or service and infrastructure provision. Crucially, the agreed plan to incorporate the informal settlement should stimulate all actors to invest in upgrading the settlement, thus capturing increases in land value. Heterogeneous informal sector Chen et al. (2002) asserts that informal sector policies demand understanding of the heterogeneity of the informal sector. Much has been written about heterogeneity of the informal sector and many ‘subsectors’ have been identified. We will apply a basic subdivision into two, as proposed by van Dijk and Fransen (2008): “Exclusionary informality: the urban poor, driven to informality by poverty and social; exclusion. They lack capital to build houses up to standards and acquire fully developed land. In many countries, informal land and housing is their only affordable option.” According to Kassahun (2010) these houses are easily recognizable, as they are below building standards. Competitive informality: the middle class and speculators are driven to informality as it offers more benefits than costs. They end up buying and developing informal land with the expectation of increased land values. These houses tend to adhere to building standards and new housing development also to land zoning requirement. Dilemmas Both government officials and informal settlers have incentives for and against the incorporation of informality. Chabalengula (2009) reports vividly how these dilemmas stalled the development of an informal market right in the city centre of 106 Decentralization and service delivery in Ethiopia Kitwe, Zambia. The government had reserved the plot of land for a Central Business District and had attracted a potential developer. Yet, they could not evict the traders, as this would cause social upheaval. The result: the process stalled. Formalization of the informal market would legitimize its existence, which was considered unwelcome at least, but demolition was politically impossible. For the past decade nothing has happened and everybody lost. This case hints to possibly the biggest obstacle of incorporating informality, one that is often ignored in literature: the notion of a modern city, which is competitive in the global economy. New York, Shanghai and Tokyo are seen as best practices. A modern competitive city is seen to be equivalent to skyscrapers and shopping malls. An informal market is the city centre or an informal settlement will downgrade this image. A second serious obstacle is the opportunity of corrupt deals for government officials, speculators, land developers and settlers in fluid informal land and housing markets. It is well known that profits in real estate benefit many. This creates a cycle of informality, where informality itself initiates corruption and visaversa. A third major obstacle is the administrative and management cost involved in incorporating informality. Taxing informal settlers adheres to the famous 20-80 rule: collecting 20% of the tax takes 80% of the administration costs. In a similar vein, negotiating how to incorporate informal settlements is very time consuming; a luxury for many understaffed local governments. Roever (2005: 8) tables incentives for and against formalization of the government and vendors for markets. The following table translates these to informal settlements and adds the obstacles mentioned above. A look at the table clarifies why formalization and incorporating informal settlements is easier said than done. Resear ch De sign The research methodology that was employed for the study was qualitative in nature. A desktop research of contemporary literature on informal settlements with a key focus on Addis Ababa was the first phase of the research process. The desktop research was followed by interviews with key informants from Addis Ababa administration officials and professionals to crystallise the findings of the desktop research and source additional information. Representatives from City Planning Institute, Department of Land Development and Department of Land Administration, Sub-City Officials and other stakeholders in informal settlements formed part of the interviewees. The interviews with the key informants were mainly geared at understanding whether the regulation and laws at national and city level (master plan) are enabling local dialogue to incorporate informal settlements. The interviews were conducted on a face-to-face basis. Key informant interviews were followed by site scans of the two informal settlements that were selected as focal areas for the research. Research team members physically visited the selected sites on several occasions where the practices of incorporation issues were observed. In addition, interviews were conducted with key informants from members of the selected community in the informal settlements during the site scan phase. The interviews with members of the community were also conducted on a face-to-face basis. The selection of interviewees during this phase was random in nature and a total of 30 interviews were conducted. Moreover, a third additional case was included in the analysis from the work published by Frew (2010). 107 Decentralization and service delivery in Ethiopia Table 25: Incentives For and Against Formalization Government Dimensions Incentives Relevant for all dimensions Settlers Disincentives 1 Legitimises settlers claim of rights 2 Opposed to modern city image 3 Generates administrative costs Incentives 1 Legitimises claims of rights Disincentives 1 Imposes monetary costs Taxation 1 Creates revenues 2 Legitimises expulsions of those who fail to pay. 4 Constraints ability to expel those who pay 2 Constraints to expel those who pay 2 Does not guarantee rights Licensing, authorization 3 Facilitates clientalism, vote buying 4 Facilitates enforcement of regulations 5 Constraints to expel those recognized 3 Constraints to expel those recognition 3 Can impose bureaucratic costs 4 Implies requirement to comply with regulations Inducements and concessions 5 Facilitates cooperation, enforcement of agreements 6 Fosters stability 6 Constraints policy See 2 and 4 4 Potential for better policy 5 Channel for voicing demands 5 Limits autonomy for association Source: adapted from Roever (2005:8) 108 Decentralization and service delivery in Ethiopia Figure 9: Summary of indicators National, regional Level • Low level of regulation & laws City Level • Master Plan • Formalization policies Case study Level • Dimension of informality • Governance practices • Process of formalization A case study approach was applied to assess how actors incorporate informal settlements into the urban fabric and how informal settlements have been incorporated in Addis Ababa and what have been the lessons learned. Two case studies were analyzed: one with exclusionary informality and one with competitive informality. It was assessed how, when and where each dimension of informality is taken on board in the process towards incorporation. More particularly an assessment of how actors negotiated this process based on governance theory has been conducted. The reliability of the data was tested through triangulation: open interviews with all stakeholders based on checklists were combined with observation of the settlements and key informant interviews. Decent r aliz at ion and Ur ban Planning in Et hiopia According to Beard et al (2008, 3-4), decentralization in planning traces its heritage to participatory and advocacy models of the 1960s that sought deeper, democratic community involvement in development. A later wave of decentralization arrived with neoliberal reforms in the 1980s and 1990s, under which governments encouraged cost recovery, efficiency of service delivery, and an ethos of entrepreneurship (Beard et al, 2008). This type of decentralization could bring about empowerment through encouraging participation in local social and political institutions. Decentralization also signals a departure from statecentric models of planning to more alternative involvement of actors, such as civil society groups, NGOs, and the private sector. Ethiopia like many developing countries, since 1991, has been engaged in the process of decentralization by transferring responsibilities of the state to lower tiers of government to bring not only political stability and contribute to democratic governance, but also improve service delivery and attain equity. According to Tegegne (1998), the first wave of decentralization (1991-2001) which was centred on creating and empowering National/Regional Governments, has changed the local and central government system. The National/Regional Governments were entrusted with legislative, executive and judicial powers in respect of all matters within their areas. The second wave involved charters for cities and decentralization to city level. In this era, the capacity of cities and space for participation increased. The third wave followed the 2005 elections, in which Decentralization and service delivery in Ethiopia 109 opposition parties won the elections in major cities and towns. In this period, decentralization stalled, government control increased and as a result, the space for participation decreased once again. Addis Ababa is a chartered city having its own administration led by a mayor and which is accounted to the prime minister has a decentralized system to administer the city. Currently, the city has 10 sub-cities, which are sub-divided into 110 Woredas (which used to be called “Kebeles”), which are the lowest levels of city administration. Land and housing supply are executed at city and sub-city level depending on its category. The decentralization approach was motivated by the reform of the administrative structure in 2003, which also emphasizes public participation. Addis Ababa being chartered and because of its location has assumed a multiple identity. First, it was declared the capital city of the Federal Government of Ethiopia in 1995. Second, it serves as the seat of government of the Oromia Regional State. Third, it is also an autonomous local government authority in the Ethiopian federal system of government with an elected councils and the Mayor are accountable to the city inhabitants. When reviewing the countries urban planning and development policies and regulations, it shows a decentralized system that, at national level, the Federal Ministry of Works and Urban Development (MWUD) has the responsibility to define strategies, policies, and guidelines concerning the urban development and construction sector 8. The ministry also gives professional support and plays a capacity building role to regional bureaus of works and urban development as well as to municipal administrations. In Addis Ababa, the city administration and the sub-cities are responsible for handling the urban planning and development process. Nevertheless, except a relationship at the working level, there is no functional link with the Federal Ministry. According to the city proclamation No. 17/2004, the city government is responsible to develop the city development framework, structural plans, the long and medium term city development plans and the local development plans. The city planning department and agencies within in the city administration are responsible to undertake supervision of performances and to provide various technical supports to sub-cities. However, the lower tiers of administrations such as sub-cities and Kebeles were not mandated to prepare the plans, as per the proclamation (No. 41/1991). The Mast er Plan of Addis Ababa The most recent exercise to revise the master plan of the city displayed numerous platforms for stakeholder participation that were organized during the planning process, including discussions held with various groups. The master plan envisioned more intensive stakeholder participation in the preparation and implementation of local development plans (LDPs). Local Development Plans in the city are designed to be prepared and elaborated within the perspective of the city’s structural plan and in consideration of local socio-economic conditions as well as feedback from the stakeholders via participatory approaches. Nevertheless, these planning exercises remained expert driven and subsequent measures lacked the flexibility required in actual operation. Moreover, the urban planning efforts in Addis Ababa as well as the settlement patterns both formal and informal have been expansion orientated, with limited attention given to redevelopment of inner-city informal areas. In fact, policies that favour inward development that have come of late are prompted by the ever increasing challenge faced in transforming rural land to urban use and the need to adhere to the rule of law in a democratizing society. 8 Proclamation 41/1991 110 Decentralization and service delivery in Ethiopia The Master Plan identifies three kinds of informal settlements: settlements earmarked for urban renewal based on Local development Plans; settlements earmarked for upgrading; and rapidly emerging settlements in the outskirts of town on which no decision has been made yet. Detail on these settlements and on the urban renewal (condominium) and upgrading programme is needed here. The decision to demolish and construct condominiums (i.e. to renew), or to upgrade a settlement are made by Addis Ababa city administration. As mentioned, these decisions were expert-driven and primarily reflect whether the settlements is consolidated (resulting in upgrading) or not (renewal). The revised master plan of Addis Ababa envisioned the need for partnerships between the government, the private sector and civil societies to address the challenge of infrastructure. With the exception of the newly developed expansion areas the master plan has earmarked the rest of the city for upgrading and renewal. The majority of the city’s built up areas were assigned for upgrading while only the precarious areas at the centre of the city were earmarked for renewal. Ar eas f or Ur ban Re new al The renewing mechanism was through redevelopment of the inner-city informal settlements and privatization of kebele houses. The scheme also incorporates better infrastructure and habitable environments through the provision of improved water, electricity, drainage and sanitation facilities and access roads. However, most of the dwellers, especially very poor could not afford the cost of the condominium houses built through the redevelopment. In the case of urban renewal, informal settlements are not incorporated but a full formalization process takes place. Though residents are informed and are able to complain, these participatory processes are not encouraged. For those who are resettled, the question is whether they move to informal settlements that will be incorporated or not. This has been investigated in the following section. Ar eas f or Upgr ading With regard to the inner-city informal settlements there are currently several types of initiatives being undertaken. Woreda upgrading programmes are being actively pursued by both government and non-government actors. Actors like NGOs and CBOs in collaboration with the city administration have been increasingly involved in the maintenance and rehabilitation of public housing in the inner-city informal settlements. In addition to the partnership approach with different participants, the Addis Ababa City Administration has focused on regularization of informal settlements and redevelopment of strategic areas in the inner city. Ext ension Ar eas Moreover, with regards to the informal settlement at the periphery areas the city government is following full formalization. From the late 1980s onward, when large numbers of squatter units began to appear, the main government response was none other than bulldozing them. Nonetheless, due to the utter disruption of the formal land and housing markets, squatter units continued to spread on a rather large scale all around the city, especially in the expansion areas. During the 1995/1996 fiscal year, municipal authorities issued what they referred to as Directive No. 1, confirming that it had recognized all the squatter units built prior to that specific year. In fact, the municipal authorities decided to give title deeds to the squatters based on GIS data compiled from air photographs taken that same year. This considerate gesture apparently gave the wrong signal to potential Decentralization and service delivery in Ethiopia 111 squatters as it led to an even stronger invasion of land by such people during the subsequent years. Although the expansion of squatter units is still continuing, apparently none of the households that had built such units baeteween the fiscal years 1995/1998 have received a title deed to date. Even a large proportion of those who had built their own units prior to 1996 seem to be without title deeds. All those without legal evidence of rightful use of the land that they occupy are understandably living in perpetual fear of eviction. However, according to the senior expert from the city planning office, currently the city administration is preparing a regularization plan for the peripheral informal settlements to formalize them as per the land use prescription of the master plan. This regularization approach give the settlers legal acceptance, strengthen their tenure security and ownership rights of their occupation and is then free from threat of eviction Redevelopment and formalization will be effective only if there is good governance: transparency and participation. People should aquire access to all kinds of information which has an impact on their lives. The existing institutional arrangements have not been responsive enough to deal with land allocation. A weak monitoring and evaluation system at the city administration and sub-cities level is another significant institutional constraint. Local governments lack adequate capacity to suggest timely corrective actions to ensure access to land by all. Bureaucratic tendencies, shortage of manpower, corruption by some officials, alleged nepotism and the absence of an adequate information system are other factors that have rendered efforts by local governments in the process of incorporating the informality both through redevelopment and regularization. Case 1 : Ur ban Rene w al in Lidet a Backgr ound Lideta is located in the central part of Addis Ababa. It is one of ten sub cities in Addis Ababa, the capital of Ethiopia with more than three million inhabitants. In Lideta Sub-City most of the housing units belong to the Kebele Administration. Lideta is also home to the city's largest open market, Merkato, and many of the local population live from day to day on the meagre income of petty trading and small business activities. Unemployment is high, especially amongst the young. Living conditions, in terms of the quality in the area is very poor due to the inadequate services and dilapidated housing conditions. The most stringent problem is housing, both of quantity and quality. Environmental hazards represent another dimension of the risk faced by inhabitants. Like other areas the social diversity of the Lideta area is characterized by a mixture of both better offs and poor living together without segregation. Despite the variations among inhabitants, having lived in the area for many years, inhabitants have developed a strong network in terms of membership in the same local associations. Moreover, there is a mixture of tenure status of the inhabitants within the Lideta area, owners and renters. Though, according sub-city documents about 80% the inhabitants are living in public housing which are normally precarious. A broad assortment of people are members of the neighbourhood exhibiting a huge variation in terms of gender, length of residence, income and activities . In this locality, most urban upgrading and renewal schemes are still state-driven and orchestrated by municipal planners. Hence, to improve this underdeveloped informal settlement, the Addis Ababa City Administration is currently working on a redevelopment project. The project as per the description of a senior administration official is "building a city within a city." The redevelopment plan has a participatory approach where by community and private developers both participate. According 112 Decentralization and service delivery in Ethiopia to the key informant from the project office, the city administration is prepared to put a total of 236 million Birr towards the redevelopment project. The project is designed to have close to 2,044 units of condos designed to accommodate middle class families. According to an official of the project office, the City Administration has planned to raise 20 million Birr from leasing shops to businesses; however, the huge proportion of the finance, which is about 800 million Birr, is expected to be raised from the lease of 85,000 Sqm of plots for private developers. However, the city administration has planned to make the project more accommodative to the existing inhabitants. Pr ocess and Pr ospe ct s of Par t icipat ion After the decision that the settlement would be renewed, city officials claim that they have offered the following options to the residents who will be relocated from the area: they could be moved into kebelle owned houses in other neighbourhoods; they can receive housing in one of the low cost condominium houses built by the city; or they could stay in temporary shelters up until the middle income group condos are built sif they arer able to afford to buy flats in them. This message has been conveyed to residents through a series of public meetings with the city administration officials, after the local development plan was officially launched. However, key informants in the redevelopment site have a different perception. One key informant claimed that he attended a few of the meetings held inside his kebelle and he was not clear of the options that the city claims to have offered these residents. He was concerned with the rumours that they will be relocated to another place where they will be disconnected with their social fabric. On the other hand, the data obtained from the project office at the city administration indicated that more than 47 percent of the residents in the kebelle have made a choice to be sheltered elsewhere in other kebele houses, and to come back to the two bedrooms condominium flats to be built in the redevelopment site by paying 25 percent of the down payment. W hat remains unnoticed, however, is that thousands of low-income households have been displaced and adversely affected by the process of urban development. The process of relocating people from the inner city to new resettlement sites in the outskirts have engendered some disruption in their social fabric and business connection. Case 2 : Kolf e- Ker anio’ s Per ipher al Inf or mal Set t lement s Backgr ound Kolfe-Keranio is located at the peripheral side of Addis Ababa. Illegal settlements are typically found at the periphery of the city, in expansion areas, where large tracts of vacant farm land are available. The ‘illegal’ or squatter settlement in the inner-city constitutes a small proportion of the squatter settlements. However, the informal settlements at the periphery are primarily a result of land invasions. Many of the residents in the peripheries claim to have “purchased” land from farmers who subdivided and sold the residential plots and farmland allocated to them by the government. In the study area most households can be classified as poor and they additionally rely on irregular incomes from informal sector employment due to their low educational background. As a coping strategy some of the inhabitants have opened up small shops on their own compound in order to diversify their household Income. Some of them also run small businesses (Especially the women who sell domestic products such as Injera and/or Tella). Other means of income Decentralization and service delivery in Ethiopia 113 diversification include urban agricultural activities, which are carried out by many informal settlers. As the city authorities are the sole suppliers of land and the government retains a high degree of control over land use and design, all the informal settlers are considers and illegal by the city administration. However, regarding the tenure status, despite the fact that all of them are considered by the city administration as ‘illegal’ settlers, there are different statuses as per the inhabitants’ perception. Those who own the land, construct the house and renting and those renters. Renting out small rooms in attached or detached houses of the informal settlement also serve as another major source of income, especially for the owner-occupier of the households is without any income from occupation. According to the survey result conducted in 2007, out of 250 sample 61% of the households owned the house they were living in, while 35% were regular tenants. The remaining 4% lived for free in a house that belonged to their relatives. Thus, there are three types of tenure: exclusively owner-occupied compounds, owner-occupied compounds with additional tenants and compounds belonging to absentee landlords, solely inhabited by renters. Most of the inhabitants claim that they are predominantly an accumulated product of structural constraints a the city level, because policy failure has resulted in land scarcity, exorbitant prices for private rented dwellings and a lack of legal, affordable alternatives for the majority. In Ethiopia it is perceived that land ownership is a high status symbol. Pr ocess of Par t icipat ion In the case of incorporating informal settlements in the peripheral areas, some key informants revealed that citizens’ participation in key development issues and decision making was very low or even absent. The city administration is currently working on a regularization project to address the issue of the informal settlements at the periphery. The first stage of the regularization of the informal settlements is that of giving land tenure to the occupants in the periphery area. The city administration undertake the survey and identification of the potential beneficiaries. They prepared a site plan using the land records for the purpose of issuing a land clearance/alienation order, and issue tenure certificates of land holding/possession to the identified beneficiaries. Case 3 : Wor ku Sef er : An Ur ban Set t le ment t hat Pe asant s He lped t o Est ablish Worku Sefer is an informal settlement established in the early 1980s. Currently it is a secured settlement with approximately 1,000 households. The first settlers were mostly from the lower income groups of society, which through time has transformed into a settlement with a large group of middle income groups. The houses are well constructed using standard and modern construction materials and 2. some of the plot sizes are more than 500m The settlement has encounted much to arrive at its current state. The settlement had a strong social cohesion which has been used for development. The settlers had established development committees which played a significant role in mobilizing human and financial resources to build roads and to get access to water and electric power. The fundraising endeavour covered different actors ranging from private businesses, government, para-statal and NGOs. As a result, electricity and piped water services were provided for the settlement in the period 1987 to 1989. The community paid for all of these services through contribution and loans obtained from the better off residents within the settlement. 114 Decentralization and service delivery in Ethiopia Following the government change in 1991, the settlement has been integrated into the city administration system with a Kebele status. This phenomenon has engendered two trajectories. First, the pervious practice of plot allocation by the Peasant Association was stopped and the modality of land transaction has been changed to selling land by sub-dividing own plots. Since selling land is not allowed by the law of the country, the transactions were carried out under the pretext of selling an existing housing unit. As a result of such a transaction, the value of land augmented from four Eth. Birr per square metre to about ten Eth. Birr by the year 2000 and over a thousand Birr per square metre by 2007. Second, new squatters came to grabbed land on marginalized sites around the settlement. Regarding titling there was a frequent demand from the settlers to get land holding certificates since the settlement was incorporated as urban kebele in 1991. Hence, residents who were able to produce supporting documents, including a receipt for payments made in respect of land tax and services (water and electric power consumption bills) and a kebele identification card were given a title. An estimated number of 250 households had received their title certificates in 2006. Issuing a title has now stopped and for those who have not received a title, it is a huge concern. Pr ocess of Par t icipat ion An active citizenship implies not only a citizen with rights and duties, but a creator of rights in the process of construction of new spaces for political participation. According to Anthony Giddens (1995), this notion is related to the concept of reflexive citizenry, referring to a self-conscious civil society actively engaged in the democratization of political and economic realities. Within this conception, the first settlers in W orku Sefere acquired a new meaning, affirming as a compulsory condition citizens' participation and a radical transformation of the existing relationship between the state and civil society. The settlers were well organized and demonstrated a collective action. Their cooperative endeavours were demonstrated in the provision of infrastructure and facilities; they contributed their labour, finance, organizational skills and knowledge and established a neighbourhood policing to maintain security. They collectively addressed their demand for the establishment of a kebele administration and later silently protested against he relocation of the kebele office. Their bonding and bridging social capital at the locality helped them in pulling skills and resources from different governmental, civil society groups and individuals. W ith small size the community had benefited from social cohesion and the settlers were able to address problems rising from members. Dilemmas in Incor por at ing Inf or malit y Considering the magnitude and scale of the housing deficit and the lack of concerted action or inadequate response of government agencies, there is no doubt of the positive role that squatter housing plays in housing the millions of poor families. However, the three cases have illustrated that the government opts for a policy direction of formalization and does not value informality, since all informal settlements (settlements allocated for urban renewal and upgrading based on local development plans and squatter settlements in the outskirts of the city) will be either demolished or regularized as per the city regulations. The city government has two approaches to the dilemma of informality. These are settlement upgrading and regularization. Both cases have been an object of criticism. First, the approaches support standards that do not reflect the realities of the majority of the population (the urban poor) thus becoming an instrument of exclusion. Second, it inadequately fulfils the needs of the city and the society as a Decentralization and service delivery in Ethiopia 115 whole, thereby being bypassed by the poor who invade the land or the middle income group who purchase informal subdivisions and occupy land against the recommendations of the master plan. The other important challenge, in implementing formalization through renewal and regularization, is to put regulatory mechanisms into place to make land available through, for example, forced land extractions from destitute inner-city areas and from illegal settlers, and land readjustment procedures. This requires a strong political commitment and institutional capacity, as it directly impacts the interests of all citizens since land is a public property. In this regard, public participation in all steps of development planning and implementation is vital. Consultation is a form of participation, which means very different things to different people. Some may insist that consultation is a form of co-determination in decision-making and a special way of negotiating and compromising. Those who share this argument find themselves opposed by those who insist that final decision-making is a legitimate business only for governments. Therefore, the right to consultation is only a right to speak and to be heard and, for that reason, it does not come along with any obligations for governments to consider proposals. In this regards, it is not possible to discuses community participation without acknowledging the role played by inhabitants’ their symbolic and physical place where everyday life takes place. The existence of different social relationship and perspectives on the territory makes participation particularly relevant in urban planning and development. From another angle, it could be argued that consultation can only be a legitimate process, if participation is open in the widest possible sense, while others would see no harm in limiting consultation to a narrow group. This can be achieved as a result of the growing convergence of actors involved in the management of public affairs and the increased awareness among citizens of their rights, duties, and capacity to make decisions that can affect the citizen situation (Rojas, 2010). Of course, one could argue here that ‘community participation’, in all kinds of development and planning endeavour, is a complex activity. It is not politically neutral and it demands the consideration of perception and interests of the different actors involved. If all the stakeholders are thoroughly informed at an early stage of the proceedings this may give additional space for preparing their debate and in accessing expertise or in consulting their constituencies. Releasing information too late or keeping “the other side” unaware up to the last moment are tempting strategies for governments, if they want to head towards low-impact consultation. For most cases, it may be correct to state that the quality of consultation correlates positively with the amount of time made available before a final decision is taken. It is not only the amount of time, but also the phasing of decision-making which matters. Conclusion Decentralization signals a departure from state-centric models of planning and implementation to a more citizen participation based model. Through the decentralization process of Ethiopia and given the crucial position of the W oredas in the service delivery chain, the functional relationships between the W oredas and the regional and Federal governments have to be strengthened and more clearly defined. For decentralization to materialize and achieve the expected outcomes, woredas need to obtain greater assistance from the regional and Federal governments in terms of funding and capacity building. But the benefits of decentralization will not be maximized unless other crucial groups namely;citizens, the community and the users of the services, are pulled into the accountability 116 Decentralization and service delivery in Ethiopia mechanisms. Ethiopia’s development framework PASDEP and the planning policies have emphasized discourse regarding the spirit of citizen participation. Citizens are acknowledged as playing a crucial role in mobilizing their communities, holding local governments accountable, and accelerating the process of democratization. One of the rationales for decentralization was to strengthen the role of citizens. Within the decentralized system, the kebele council is the forum where citizens are able to play a role in enforcing accountability of service delivery. However, the research for this chapter revealed that the system is still evolving and initiatives to further strengthen this formal channel of citizens’ participation should be welcomed. When considering the informal settlements in Addis Ababa and the ways that the city administration is following to address the problem, decentralization in urban planning hasn’t brought any significant change. Addis Ababa’s land management process has not been immune to the growing phenomenon of urban informality. Empirical data has shown that urban informality in both inner-city and peripheral areas of the city is characterized by their significance. As discussed previously, the Addis Ababa City Administration has focused on upgrading and regularization in addressing the issue of informality. When the two modalities are working together, they are complementary. Informal settlers have been granted access to a serviced lot that is reasonably connected to the city, environment for the dwellers to have an opportunity to supplement their income, improve skills, and develop cooperatives. Such collaborative endeavour can be considered as exemplary with respect to the managing urban regularization and land tenure processes, as it bond the inhabitants with opportunities available in their locality. Hence, the best way of responding to informality has been identified as a negotiation or co-optation process as this would result in forging cooperation and partnerships that are ideal for dealing with associated challenges. The city administration is undertaking redevelopment projects with the objective of developing the inner-city which has also an objective of incorporating the dwellers in the project. Thus regularization has been taken as a good option by the city administration to incorporate the informal settlements at periphery. Decentralization and service delivery in Ethiopia 117 Environment Role Pluralism and Performance of Local Governments on Solid Waste Collection Service Delivery: The Case of Addis Ababa City Mesfine Tilaye Int r oduct ion The scale and severity of environmental problems which are currently observed in developing country’s cities mainly reflect the failure of governance. As every urban centre has its particular mix of environmental problems, cities need to develop strategies and local action plans for urban environmental management. Different programs and methodologies 9 have been and are being developed to assist cities to identify their worst problems and develop local means to address them (WRI, 1996, UN-Habitat, 2002). In the search for efficient and effective ways of running the state, and in response to demands from civil society and changes in the international arena, governments and international aid agencies have experimented over the past few decades with a number of administrative and political arrangements. One which has been given much importance since the 1960s is decentralization. Although the term has unfortunately been given different meanings in different contexts, over the past decade or so the most widely accepted and frequently used interpretation of decentralization has come from a public administration angle (University College London, 2002). Decentralization is defined as the transfer of authority (power by law), transfer of responsibility (roles and tasks), for specified public functions, and transfer of resources from higher level of (central) government to a lower level or from higher level of government to a subordinate or quasi-independent government organizations or private sector (Rondinelli, 1999, Rondinelli et al., 1989). The theory behind decentralization is that people will solve problems better at the local level, if they are allowed to do so. Indeed decentralization may help to improve the level of environmental services; however, it is also possible that it may deteriorate the level if the proper institutional reforms are not implemented and the direct link between improvements in the service delivery and decentralization is not established (Klugman, 1994). Among many urban challenges, the poor solid waste management system in Addis Ababa is the main problem. According to a study by Mesfin (1996), solid waste is ranked top of environmental problems in Addis Ababa. This had initiated various transformations to overcome the service delivery problem. The reasons for reform are both administrative and economic: they range from accommodation of local demands for greater autonomy, to the desire to increase private sector participation, in the improvement process of urban service delivery. This study evaluates whether the existing reform (institutional pluralism strategy) created conducive environment for local governments and improved accountability per se within the public sector domain (from the supply side). Studies underwent so far concerning accountability of urban service delivery focused: from 9 The Urban Management Program (W orld Bank/UNDP/Habitat), The Sustainable City Program (Habitat/UNEP), The Metropolitan Environmental Improvement Program (UNDP/W orld Bank), Healthy City Project (W HO), Manual for Urban Environmental Management (GTZ), Numerous NGOs are also forming information exchange networks. 118 Decentralization and service delivery in Ethiopia participatory perspective, Goetz and Gaventa (2001), Boaden (1982), Plummer and Slater (2001); attention is paid to the relationship between service providers and users by Cavill and Sohail (2004); accountability for urban services that focuses on users’ decision-making by Paul (1992), W orld Bank (2004a). The objective of this study is to assess the performance accountability level of local government, driven by decentralization reform in the Addis Ababa city solid waste collection system. Given the above objectives to SWC function, various stakeholders have prevailed in the sector; roles are also becoming many in type and functions have been distributed among the emerging stakeholders accordingly. This redistribution of roles and functions to the various stakeholders was necessarily urged the reorientation of institutional set up to effectively achieve the desired objectives. Institutional pluralism as a decentralization strategy was taken as a framework of analysis. The research was intended to shed light on the accountability level of local governments as it is theoretically argued that institutional pluralism enhances accountability levels, using the various underlining indicators within the realm of central-local relations: task specificity and the task environment. Thus, this research presents findings from such a test, based on the results of surveys conducted at local government level. These findings are supplemented by a review of relevant legal and policy documents, key informant interviews in the field, and review of other studies and data. The study tried to test theoretical hypotheses; the effects of decentralization on accountability of the local governments, taking the impact of selected institutional factors on solid waste collection service. The hypotheses tested in this research are: 1. Reform process (decentralization) took place in Addis Ababa improved task specificity of local governments in solid waste collection service delivery; 2. Administrative decentralization under institutional pluralism improved the task environment of local government in Addis Ababa solid waste collection service function. Lit er at ur e Review Decentralization is defined as the transfer of authority (power by law), transfer of responsibility (roles and tasks), for specified public functions, and transfer of resources from higher level of (central) government to a lower level or from higher level of government to a subordinate or quasi-independent government organizations or private sector (Rondinelli, 1999, Rondinelli et al., 1989). The theory behind decentralization is that people will solve problems better at the local level, if they are allowed to do so. Decentralization can also be defined from a public choice perspective. The general basic definition is that decentralization can be regarded as a situation in which public goods and services are provided primarily through the revealed preferences of individuals by market mechanisms (Rondinelli, 1989). Decentralization can be either horizontal or vertical. Horizontal decentralization disperses power among institutions at the same level while vertical decentralization, which is more useful, allows some of the powers of a government to be delegated downwards to lower tiers of authority (UNDP, 1993). According to Wettenhall (2003) there is a sense of a serious split between two types of decentralization arrangements. In the first, the relationships between the participating parties are essentially horizontal (non-hierarchical), with consensual decision-making, all parties are directly involved in the action, and there is no single superior capable of invoking closure rules. In the second, the relationships are essentially vertical (hierarchical), with one party superior to all others in a controlling sense, acting through the others rather than as a direct participant in the Decentralization and service delivery in Ethiopia 119 action, and able to close unilaterally. The implication is that the true decentralization will involve horizontal relationships (W ettenhall, 2003). Basta (1999) briefly categorized decentralization, in to two separable but closely linked themes: (i) intergovernmental process, i.e. decentralization of governance between levels of government from central to local (ii) deregulation, i.e. decentralization from government to market, quasi-market, and non-governmental organizations. Memon et al. (2006) note that, reforms to improve urban environmental management can be identified in two categories. The first category covers broadbased reforms to bring improvements in governance at the local level. Reforms on decentralization are targeted to improve accountability and effectiveness of local governments in all sectors. The second category includes sector specific reforms for water, solid waste, and air. Decentralization at this level is specifically targeted to improve the quality and coverage of the services and level of environmental protection. Therefore, decentralization clarifies the role of service provider, regulator, and consumer. Since the 1950s, a large body of academic, professional, and conference generated literature has emerged that seeks to address the various forms, types, and strategies of developmental decentralization. Unfortunately, many of those contributions have shown outright indifference to building agreed-upon, comparative frameworks and concepts. As a result, both written publications and conference discussions on decentralization are marred by conflicting conceptual definitions, careless application of principles, and unsystematic presentations (Cohen and Peterson, 1997). Because it has several dimensions, appropriate extent and the forms vary across countries and its implementation takes considerable time, decentralization is a difficult phenomenon both to design and to study. This problem is compounded by the tendency of disciplinary specialists to compartmentalize decentralization. Economists focus on fiscal and economic development, political scientists focus on intergovernmental relations, local elections and accountability mechanisms, and public administration experts work on institutional structures, processes and procedures (Ibid). Despite the great attention paid to decentralization in the past two decades, we still know too little about the impact various decentralizing reforms have had on the service outcomes in the social and urban sectors (Gershberg, 1998). Decentralization is therefore commonly regarded as providing an opportunity for improved coordination between closely related areas of administrative responsibility to ensure consistency among the policies of different agencies, to prevent wastage and duplication of effort and to ensure integration when a programme requires inputs from a number of agencies as is often the case in urban development activities (Smith, 1993). One of the strategies of decentralization as noted by Smoke (2003), it is not necessary to turn over all constitutionally or legally mandated responsibilities to all local governments immediately. Reforms with the greatest possibility of working effectively in a relatively short time frame could be undertaken first. This requires prioritisation of simple sectors, tasks and revenues that don’t immediately threaten in a significant way the tolerance of the central power base or overwhelm local capacity. Andrews and Schroeder (2003) state that a service sector is more prone to be decentralization if: • Local demands for a service differ across localities; • There are no substantial economies of scale associated with the service; • There are no substantial spill over of costs or benefits from the service; • The service is amenable to at least partial local financing through taxes or charges; 120 • • Decentralization and service delivery in Ethiopia Local governments have the capacity to deliver the service; The service is not meant to provide substantial redistribution of income or wealth. Van Dijk (2006) notes in order to establish to what extent functions and responsibilities have been decentralized within the organization, it is imperative to examine the decisions that are likely to be taken within the local governments. The same author argues that, “The formulation and implementation of policies with respect to the urban environment” is one of the issues to be placed at the level of urban manager. Decentralization in different countries could have different levels of execution. Van Dijk (2006) also described that for decentralization in the case of Indonesia the results were not yet clear. In India, decentralization provides a lot of opportunities for urban managers, while urban management in Thailand has to work with very limited responsibilities. The successes of decentralization for urban management depends on a number of factors these include: • The historical background and the history of decentralization processes; • The type of functions and responsibilities that have been transferred; • The extent and to what level of government these responsibilities have been transferred; • The fact whether implementing legislations are provided; • Whether financial means are available to make decentralization a success. Local governments play a significant role in environmental management through their activities such as waste collection, disposal and recycling, development control, sewage treatment, drainage management and community education. This means that since they are closer to the problem, to use them as institutional decision unit serves as a well focused strategy without running the risk of a heterogeneous policy structure with many horizontally organised planning agencies (and related competence questions), may enhance the institutional effectiveness of environmental governance (Finco and Nijkamp, 2001). Decentralizing services do not have to be uniform across all local governments in a country. There may be different service requirements in different locations. Likewise, perceived differences in the technical and administrative capacities of local governments can result in differential assignments of service responsibilities (Andrews and Schroeder, 2003). Intra-municipal decentralization of big cities aims to meet the problem of the decline in involvement and efficiency. Public services and facilities are tailored to local needs by bringing them within easy reach of people and by competently taking local situations and conditions into account. The involvement of citizens means a more legitimate administration, since this involvement in the policy-making process can turn in to participation and result in integration (Basta, 1999). The design administration and governance of solid waste service delivery have crucial implications for efficiency, effectiveness and sustainability. This suggests the real goal of reform efforts called ‘decentralization’ leading to improved outcomes in service provision (Gershberg, 1998). Cohen and Peterson (1997), describe the key to breaking the monopoly of central design lies in the sharing of roles related to the execution of specific public sector tasks, such as the provision of refuse collection and disposal in urban areas. It is the sharing of roles at central and non-central levels that is the hallmark of a transition toward the more devolutionary forms of Distributed Institutional Monopoly and Institutional Pluralism. Theor et ical Per spect ives Analytical framework for decentralization reform is crucial in analyzing various decentralization strategies. In the past and even now the approach used by Cheema, Nellis, and Rondinelli (1983), has been asserted and the most widely Decentralization and service delivery in Ethiopia 121 accepted analytical framework is generally known as the Type-Function Framework. This Framework is particularly important because it contains basic definitions of the forms of decentralization (political, administrative and economic) and the three types of administrative decentralization: deconcentration, delegation and devolution. However, during the 1990s it became increasingly clear that the Type-Function Framework failed to fully address important reform design issues. Among several of its shortcomings are Cohen and Peterson (1997): the Framework considers the administrative decentralization as end-states and to give inadequate attention to process, institutional and organizational linkages and collaboration is largely neglected, failure to stimulate a focus on roles, linkages, coordination, and resources . “The new Framework”, which is advocated by Cohen and Peterson (1997) labelled as the “Administrative Design Framework”. This Framework is based on: • The growing trend to find ways to reinvent or re-engineer the public sector; • Principles drawn from the background of various theoretical literatures; and • Promoting economic growth, addressing financial incapacity of the state, reducing the spatial concentration of development, and promoting bureaucratic reform. Further “Administrative Design Framework,” seeks to assist decision-makers to (Ibid): • Strengthen local-level governance, increase transparency and accountability, and improve governmental performance; and • Break the “monopoly of central control” and find innovative ways to allow local level associations and firms to produce and deliver public goods and services. The Framework examines administrative design in terms of the concentration of organizational and institutional roles that implement public sector tasks. At the heart of this new approach identifies three administrative design strategies, which are defined by how concentrated roles are: Institutional Monopoly, Distributed Institutional Monopoly, and Institutional Pluralism. Of these three types the most innovative is Institutional Pluralism(Cohen and Peterson, 1997). • Institutional Monopoly, or centralization, is where roles are concentrated at the spatial centre in an organization or institution; • Distributed Institutional Monopoly, or administrative decentralization to local-level governmental institutions or private sector firms and organization through deconcentration, devolution, and/or delegation, but where roles are distributed spatially and concentrated in one organization or institution; and • Institutional Pluralism, or administrative decentralization through deconcentration, devolution, and/or delegation, but where roles are shared by two or more organizations or institutions, which can be at the spatial centre, distributed, or a combination of both. Institutional pluralism strategy allows for a mix of central, non-central, and private sector relationships for implementing a given public sector task. As such, it addresses major failings of past decentralization efforts and meets the new economic and political problems of the 1990s and beyond (Cohen and Peterson, 1997). It does this by: • Identifying and focusing on the roles required to effectively and efficiently carry out a particular public sector task; 122 • Decentralization and service delivery in Ethiopia Allocating those roles among an appropriate and changing mix of central, non-central, and private sector institutions and organizations so as to maximize the complementarities among these levels, in most cases increasing the amount of delegation and strengthening trends toward devolution; • Recognizing that devolution, deconcentration, and delegation can occur at the centre as well as in the periphery; and • Raising the level of accountability through increasing the means and the number of actors operating at similar and different levels and carrying out roles relative to the task. It is difficult to promote “improved SWM” in Addis Ababa city marked by more than 30% of the population is in absolute poverty, inadequate recurrent budget resources for equipment supplies, and passive, frequently poor and un-empowered urban populations. Based on the 2000 W elfare Monitoring Survey (WMS), 36.2% households in Addis Ababa were found to be living under the poverty line. Under such adverse conditions, government decision-makers should consider the administrative strategy of Institutional Pluralism, largely because it provides innovative ways to maximize the actors and means required to generate accountability. Taking this reality in to account, therefore, institutional pluralism adopted as analytical framework for this research. Table 26: Addis Ababa Solid Waste Collection and its Pluralistic Nature Function Major roles/responsibilities Financed by Regulated by Operated/Implemented by Primary solid User; local government ; Micro-enterprises; waste collection Public city government; Community; service delivery sector; CBOs ; Community. Individuals; NGOs. Small enterprises; Local government. Inst it ut ional plur alism and Per f or mance Account abilit y As noted by Cohen and Peterson (1997) accountability is promoted by task specificity and the task environment /resources in terms of means. The key means for promoting accountability are: political and legal oversight, institutional competition, and administrative mechanisms. Significantly, these means vary in robustness. The most robust and important sources of accountability are external, particularly political oversight and laws. Administrative mechanisms and institutional collaboration are the least robust means of promoting accountability. This is because they are relatively complex and managerial intensive. The level of accountability required is a major factor in determining whether the administrative strategy selected will be based on monopoly, pluralism, or a combination of the two. The higher the accountability the more institutional pluralism strategy is expected to be implemented (Ibid). We highlighted the situation of decentralization that took place in the study area with the suggested criteria of the framework from service provider (supply side) perspective. In this case maximum accountability is the desired objective of good governance. So, assessing the accountability level of local governments from the supply side is the concern of this study. 123 Decentralization and service delivery in Ethiopia Conce pt ual Fr amew or k Laws Institutional Cooperation Level of Resource The Task Environment Level of Accountability Administrative Mechanisms Political System Task Specificity Figure 10: Analytical Framework for Administrative Decentralization. The indicators build on Cohen and Peterson and VanSant 10 and other literatures are used. Thus the indicators addressing the task specificity and the task environment and the corresponding detail factors considered for this research to evaluate the accountability level of local government are put as follow: Table 27: Features of Indicators Features/Criteria Indicators Task specificity Task environment (Means) Factor Role distribution Role clarity Existence of effective institutional collaboration Role vs. available resource Clarity of role, power and right Coordination of Local Parties Distribution of Functions and Authority Institutional Capacity of Local Government Availability of proper administrative mechanism Degree of Transparency Incentive Compliance with Rules Stakeholder Participation Monitoring System Regulatory Law Enabling Legislations Enforcement Mechanisms Commitment of Leaders Effective Local Political System Availability of the required laws and regulations Availability of supportive political system St r at egies on t he Ref or m pr ocess of Solid Wast e Management Decentralization as emerging view of public sector reform either delegating all aspects of specific tasks or playing a reduced range of roles in regard to their execution has been especially endorsed by neo-classical economists in such aid agencies as the W orld Bank and the International Monetary Fund. The thrust of 10 According to the Stewardship Principles advocated by VanSant (1996) within the system of traditional approach local leaderships are tuned for competition where as under stewardship approach they are supposed to function with the essence of strategic alliance/ cooperation. Performance measure principles treated under traditional approach with the concept of professionalism and standards under stewardship approach treated as Stakeholder participation. 124 Decentralization and service delivery in Ethiopia their position is that the objectives of the public sector should be transformed from producing and providing all aspects of collective goods and services to more limited objectives such as: (1) carrying out only the most essential public sector tasks; (2) leveraging private sector firms and organizations to carry out role components of non essential tasks; and (3) protecting the public by monitoring the performance by private sector firms and organizations charged with carrying out all aspects of a particular public sector task or particular roles related to a given task. In poorer developing countries this prescription is increasingly being given teeth through conditions in structural adjustment programs. Recognizing the importance of decentralization African states through Africa Local Government Action Forum (ALGAF) in which Ethiopia is a member declared st on “Challenges Facing Local Government in Africa in the 21 Century”, resulting from the international conference held in Victoria Falls, Zimbabwe, during September 20-24, 1999. 11 Key parts of this Declaration are Decentralization should be to local government structures; which are representative of and accountable to all sectors of the local population, which enable effective community participation, provide services for the local population efficiently and effectively, develop and manage local resources in a sustainable manner, and enhance provision of access to the resources needed to execute the allocated powers and functions efficiently and effectively with the ultimate objective of improving the quality of life of the people In line with the above notions, the city Administration of Addis Ababa, which was mandated to administer the city from January 2003 until September 2005, as an interim arrangement until the 2005 election, had launched an administrative decentralization immediately after embarked on power. This in turn led to the formation of 10 new sub-cities or locally identified as kifle-ketema and the subcities further divided into 99 Kebeles aiming at effecting and empowering the urban management system at grassroots. Consequently, the reforms encompassed the reorganization of the existed administration structures of public institutions, taken for grant in order to lubricate the institutional fabrics on the way to sectoral decentralization. The outcomes of the reform included reorganizing of the existing institutions and the creation of new ones. The structural reorganization process, like in the other service sectors, entailed the decentralization of waste management services. This, in turn, paved a way for a move from centralized to a relatively participatory waste management activity. This situation, therefore, allowed an increased participation of the local governments, private formal sector, informal sectors, community based organizations (CBOs) and non-governmental organizations (NGOs) than they used to be. There are three ways decentralization of Addis Ababa solid waste collection function underway: Vertical decentralization 2) Horizontal decentralization and 3) Quasi-deregulation • Vertical decentralization took place devolution of powers and authorities from the city level government to the sub-city and kebele level of local government bodies. • Horizontal decentralization is the delegation of various responsibilities to the public servant offices to advance participatory approach. • Quasi-deregulation is the transfer of some tasks to be governed based on market like principles. 11 Endorsed by the Ministers and Heads of delegations from Botswana, Ethiopia, Gambia, Ghana, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. Decentralization and service delivery in Ethiopia 125 Resear ch St r at egy Test ing t he Hypot heses The study on decentralization set out to test two hypotheses. The first is that decentralization reform process took place in Addis Ababa improved task specificity of local governments in solid waste collection service delivery. The second hypothesis is: Decentralization under institutional pluralism improved the task environment of local government in Addis Ababa solid waste collection service function. These hypotheses are tested, taken the background and process of the decentralization process in the city and the urban governance strategy set by the city government. Currently solid waste collection system in the city has the orientation of institutional pluralism. Def init ion of Indicat or s We propose several indicators related to the research issues and variables to test the hypotheses. The indicators build on Cohen and Peterson (1999) and VanSant (1996) works. Indicators are proposed in two sets. The first set relates to the role distribution and task specificity in central-local relation. The second set of indicators relate to criteria to evaluate the task environment of local governments, given the available means (political system, administrative mechanism, institutional cooperation and regulatory issues). Resear ch Met hods We obtained data for the study both from secondary and primary sources. Primary data collection involved both quantitative and qualitative techniques. The combination of different approaches and techniques enable clear insights into the delivery of basic services (Van Dijk, 2004) stated in Adjei (2007). Secondar y Dat a Collect ion Data were collected between October 2008 and July 2009. Secondary methods of data collection consisted of review of research reports, government official records, project documents, operational manuals, reports of different kinds. Monthly, bi-annual, and annual publications of the aligned institutions are taken as sources. Secondary data provided us with a basis to review and re-consider the whole research process. Pr imar y Dat a Collect ion Key informant interviews using open ended questionnaires were the source of data. Focus group discussion with household group, NGOs, and the private sector was held. The interviews and focus group discussion were preceded by a reconnaissance visit. We used survey questionnaire to obtain primary data from local government bodies. Quant it at ive Dat a Analysis Before, starting the research, decision was made on the measurement scale to be used in quantifying the responses. Responses were gathered and given a score, which varied from 1 to 6. A statistical analysis was performed on the complete set of 36 items. The appropriate statistical methods for analyzing the data depend on the measurements scale were chosen. An ordinal scale of measurements was 126 Decentralization and service delivery in Ethiopia used. An ordinal scale is one in which the values used are interpretable only in terms of their arrangement in a given order. Descriptive analysis was made for some variables. For categorical variables the frequency distribution together with the study of correlation in each category was made. Result and Discussion The level of accountability required is a major normative criterion in determining the type of administrative strategy in function. In the case of Addis Ababa urban development policy pluralism is explicitly the alleged package of the government strategy with the theoretical assumption of high accountability. So, assessing the accountability level of local governments to prove as said whether institutional pluralism improved the accountability level at the local government level is the concern of this study. The research evaluates accountability of solid waste collection function at local government level from service provider perspective (from supply side). The level of accountability as per the essence of the framework is determined by: (1) the degree of specificity of the task; and (2) the level of resources, in terms of means, that characterize the task environment. Task Specif icit y Empirically to assess the task specificity at local government level in this part the following issues were considered: • Roles vs. allocated resources; • Clarity of role, power and right of the local government. During the interview with Solid waste management business process owners at local government level, whether the roles and responsibilities allocated to them in line with adequate resource; partially they believe that there is a tendency for local government to make self decision on resource, however resource inadequacy and inability of local government to act in mobilizing resources constrained them. Significant amount of the local government units in the city are reluctant to accept the presence of adequate resources. Figure 11: Role vs. Available Resource Compatibility for Local Governments as Expressed by Local Governments Role and resource of local government 20 Frequency 15 10 5 0 Disagree Neutral Agree Strongly agree Role and resource of local government Indeed tasks are decentralized and much of the works have come down and people are assigned according to their educational capacity which was not there earlier. Eight professionals and twenty one street cleaners were assigned, to each local government/Kebele unit which used to be carried out by one person earlier. Decentralization and service delivery in Ethiopia 127 The survey revealed (see above figure) that though there are some improvements in role distribution there still remains a lot in allocating and mobilizing of the required resources to have independent decision at local government level. Regarding Clarity of role, Power, and right of the local government there is a real shift in Power, right and duties from the city government to the local government level as can be seen from (the following figure). Interview result from local governments indicates that role sharing has improved although respecting of roles to one another shows less effect under practical conditions. Figure 12: Clarity of Power, Role and Duty as expressed by local Governments. Clarity of power, role and duty 25 Frequency 20 15 10 5 0 Disagree Neutral Agree Strongly agree Clarity of power, role and duty The Task Envir onment Institutional pluralism as a strategy to improve the task environment is an imperative situation to overcome the inadequacy of financial resources and the limited capacity in terms of means and actors especially at local government level. The key means taken for promoting accountability are: political and legal oversight, institutional collaborations, and administrative mechanisms. As described in the theoretical framework section, to get more insight about the means influencing accountability level of local government detailed indicators and factors are considered under each means of resource. Inst it ut ional collabor at ion and Coor dinat ion of Local Par t ie s The underlying factors considered to explore the issue of Institutional collaboration for this research are: coordination of local parties, distribution of functions and authorities to local parties and the institutional capacities of local governments. The solid waste collection service delivery was facilitated through collaboration of government offices found at different levels. According to the solid waste management policy, the city integrated solid waste collection is performed with various responsible institutions both horizontally and vertically assigned to work in a collaborative manner. The city government delegates various agencies to work on the technical aspect of solid waste management. The agencies further deconcentrate technical issues down to sub-cities and kebele levels based on the assumption and expectation that those deconcentrated activities could be well managed by their line teams and coordinators in collaboration with their respective local government. Moreover the city government administratively devolved its authority vertically to local governments; the sub-city and kebele level. The Kebele 128 Decentralization and service delivery in Ethiopia administration is the lowest administrative unit of government structure. Local governments are mandated to collect waste from households and small business institutions through organized waste collectors (micro-enterprises) in the locality. Table 28: Correlation Co-Efficient of each of the Scale Items with Summated Score Factor Item Correlation coefficient Coordination of Link of formal local government with other key local 0.62 actors Local Parties Collaboration among different levels of government 0.48 offices Involvement of informal and private sectors 0.71 Distribution of Autonomy of local government to define and execute 0.56 its program Functions and Authority Autonomy to set priorities, operational practices and 0.71 procedures Flexibility to local adaptation 0.60 Institutional Enabling structures to local government staffs 0.47 Capacity of Local Working relationship within local government offices 0.61 Government Capacity of local governments to manage SWC 0.55 As can be seen from the above table, the vertical relationship between the agency and local government is weak although there are some ties. It was indicated that there is a loose relationship between the agency and the sub-city, the agency designs format for sub-cities to be used but never monitors the way it is applied, and also there is no permanent reported relationship between them. The local government (Kebeles) relate with the Sub-city and the Agency indirectly through the local government administration. Dist r ibut ion of Funct ions and Aut hor it ies There are number of cases that have agency based decisions. The Kebeles have the authority to buy things that requires few budget lines. Indeed, there is variation among local governments. Although local governments are in a better position in setting their priority and operational practices they cannot act as required. They are not in a position to plan and prioritize their operation as per their wishes as they do not have determinant resources. Local governments lack flexibility and confidence in implementing their powers based on local situations. Their expectation is still from top down. Inst it ut ional Capacit y of Local Gover nment in Managing Solid Wast e Collect ion With interviews from local officials, they revealed that they do not have enough waste bins, trucks to transport the bins, office facilities. Some local governments to minimize these problems correspond with NGOs who provide material support so as to build the capacity of small and micro enterprises. Local government staff are less empowered and inspired by organizational structures and procedures set at local government level as can be seen from the above table. Moreover, there is not sufficient manpower assigned to take the rules and the guidelines forward that are in place. There are inherent problems related with solid waste management, problems like the stigma surrounding the job and the people who are working on it. This situation still exists within the percept of the local government officials to provide sufficient attention for the sector. 129 Decentralization and service delivery in Ethiopia Administ r at ive Me chanisms Administrative mechanism is one of the four means taken as vital by the framework in bringing the required accountability level of local governments. Various factors are seen under this resource such as: incentive systems; compliance with rules and regulations; stakeholder participation; and monitoring system. Incent ive Availability of the right skills mix as an incentive encourage doing things in the right way and to do them correctly, as can be seen from the following table, this has made less contribution in Addis Ababa solid waste collection system at local level. There has been an argument that in some local governments there were not enough skill mix as required but there is good initiation and capacity among the workers. In some cases it was observed that, although the workers assigned have high initiation and enthusiasm local integration and enabling environment that is in place are poor. Table 29: Correlation Co-efficient of each of the Scale Items with Summated Score Factor Item Incentive Integration of local government institutions to create enabling environment Availability of the right skill, mix, as incentive Motivation level of local government To exercise and act in the spirit of policies Participation of the community User assessment Incorporation of user perspectives in planning Existence of check and balance mechanisms Application of performance measurement to local governments Utilization of output indicators Availability of binding contract for managers performance Compliance with Rules Stakeholder Participation Monitoring System Correlation coefficient 0.59 0.47 0.67 0.69 0.64 0.66 0.58 0.73 0.64 0.65 0.52 Compliance w it h Rule s and Regulat ions Local governments are mandated to implement various policies and strategies that are coming from the centre. These include health policy, environmental policy, urban policy, land and housing policy, poverty reduction strategy etc. But they do lack in-depth knowledge and directions of different policies, strategies and guidelines stipulated by various agencies in discharging their responsibilities according to the policy spirit/framework of respective body. Line bureaus neither consult local government during the development of their respective policies and strategies nor request their views before the approval/ finalization of the rules and regulation. They focus on meeting their mainstream objectives irrespective of problems encountered during the implementation of the process at local government level, under such circumstance local government workers loss their focus in due course of time. All interested parties attempt to influence the process of decentralization according to their own mainstream target which in turn could have significant impact on maintaining the equilibrium of the system (Bennett et al. 1999). 130 Decentralization and service delivery in Ethiopia St ake holder Par t icipat ion There are cases at local administrations level that made the community participate towards commercially oriented service provision systems. Like the participation of private micro-enterprises in the solid waste collection system. This happened in different forms; i.e., the community or neighbourhood operates its own primary collection scheme by using unemployed and/or street people from within or outside of the community, and/or the population will have to partly carry out the work itself. This means that those who cannot afford to pay in cash for microenterprises can be provided with municipal skips within their reach in order to facilitate free access to dump their household wastes by themselves. Based on interviews there is a minimum participation among the poor in priority setting. People who live with a low standard of living in the community are approached through the representatives of community based organizations (housing association, Idir,) and NGOs. During the focus group discussion there were signals of civil society participation in alleviating local constraints with regard to Solid W aste Collection service delivery. There are many formally organized institutions that facilitate and support civil society participation. A resident council committee is represented in the kebele. This committee has permanent members representing the communities to reflect the interests of the community (users) indeed this made problem of direct community participation. Moreover Local Governments use various methods to consider the opinion of the service users. Though the application as feedback is questionable, in every public service offices customers are invited to give their suggestions and drop them in the suggestion box. Monit or ing Syst em Monitoring has been undertaken both from supply and demand side. Service users’ deviant behaviours are monitored by local governments. There are structures such as the code enforcement office that takes measures against violators/abusers; Different levels of punishments for various target groups are set i.e. households, commercial centres, industries and service centres etc. Regarding the supply side local governments measure the performance based on plans versus accomplishment through check and balance mechanism. Appraisal charter format is developed for each work process at the local level based on each process to be appraised on daily, weekly, and monthly basis. The outcomes are measured depending on the preset plans, indicators, goals and objectives. Although the public managers’ specific task is not explicitly stated in relation to accountability, they are evaluated by resident council of the kebele who are elected by the community to represent the community in the kebele. Legislat ive Mechanisms To address legislative mechanism different factors are considered, such as: availability of sufficient regulatory laws at local government level, enabling legislation, and the existence of enforcement mechanisms. 131 Decentralization and service delivery in Ethiopia Table 30: Correlation Co-Efficient of each of the Scale Items with Summated Score Factor Item Regulatory Law Guideline availability Correlation coefficient 0.59 Application of rules and regulations 0.66 Enabling Legislations Enforcement Mechanisms Legislative domain and institutional interaction of LGs 0.62 Level of independency in terms of legislation and regulation Non conflict environment between objectives of LG and regulations Enforcement capacity of LG on laws and regulations 0.65 0.62 Penalizing capacity of violators 0.60 Authority to develop enacting complementary regulation 0.48 0.67 Regulat or y Law Legislation in Addis Ababa typically decentralizes some components of solid waste management service provision while centralizing others. Addis Ababa’s 2004 solid waste management regulation makes sub-cities and Kebeles responsible for planning, implementation and management of primary solid waste collection. Other components relevant to solid waste management tend to be centralised because they are considered critical to attaining central goals. These components include secondary collection; final disposal and land fill management. The AASBPD Agency was assigned at the city level to ‘oversee’ local government until local capacity was developed. However in some cases discrepancy between formal and actual decentralizations is observed in Addis Ababa solid waste collection. W hile legislation reserves significant service provision components for local governments, the city government at the central level still enjoys an influential role overseeing sub-cities and Kebeles. Thus, while legislation specifies a high level of decentralization in planning, operating and maintaining solid waste collection service facilities, the activities are often actually quite centralized. To what extent is a function devolved? A purely de jure answer to these queries, based on applicable legal and policy documents, will not suffice. Formal arrangements only partly determine practice; hence other factors must be examined in order to judge the extent of de facto devolution. Differences between normative, institutional and de facto models emerge because of a variety of influences related to decentralization structure and public sector reform. It is these other factors that have great influence over the nature of de facto service assignment within key sectors. The bulk of these factors are ‘institutional’ in character, reflecting decentralization tensions in established governance structures. These include bureaucratic politics and capacity constraints (Andrews and Schroeder, 2003). Technical manuals for solid waste management in Addis Ababa city were developed by the agency and these technical manuals are supported by BPR principles to be converted in to working manuals. These synchronized technical documents are not well supported by updated guidelines that facilitate the working process to be effective, this means that although the business process reengineering is underway the guidelines are not in line with the new BPR approach. 132 Decentralization and service delivery in Ethiopia The guidelines are not flexibile and simple. The guidelines give emphasis for main stream activities while coordination and collaborations left as de-facto as their implementation at local government level is hard as the system needs coordination. Enabling Legislat ion Legislative domain of Local Governments and the extent to which they interact institutionally with the other stakeholders is less stated and lacks clarity. The developed manuals by the agency say nothing about the relations that could exist between the integrated solid waste management work process and the kebele executives. The Kebele executives are the decision making body of local government. Although the developed manuals overlooked the relationship that should exist with the kebele executives, the reformed work process by BPR has now created a conducive working environment in such a way that the solid waste management work process works in collaboration with the health office, code enforcement service, and liquid waste department of local offices. There are structural stressors to implement a legislative domain of LGs as structures are not supportive to ease implementation of stipulated rules and regulations. Harmonizing these different regulations for local government is a difficult task, because they do not have enough resource to compromise and handle all these issues that are within their capacity. Given the mandate the trade and industry bureau is responsible to organize and provide licenses to the micro enterprises, it does not communicate on the formation of the MEs and makes the control mechanism difficult. Furthermore there are no plans in relation to secondary waste disposal sites, dumping site (it is only Repi site for the whole city), transport routes, transfer stations, and bin sites in the city, which negatively impacted institutions to fulfil their roles and responsibilities according to the stipulated laws and regulations. In addition there is a problem with the working process of local government. Although efforts are made to avoid potential conflict between the objectives of the local government and legislation that regulates its activities, it is difficult for local governments to create a conflict free environment, due to on one hand legislations are coming from different sources and on the other there is a charter developed by the agency to serve as a framework for local government to develop complementary local legislations. The problem here is that the principles of local government and upper stream government do not reconcile. Enf or cement Me chanism Enactment and even application of Solid W aste Management (SWM) regulations are not in a position to ensure that all appropriate steps are taken to minimize the impact of SWM on the environment and public health in Addis Ababa city. Good practices and standards are yet to be promoted to play supportive roles for the enforcement of rules in the guidelines. In essence, they are less incorporated in the action and interplay of the basic system components. The Kebeles are still in line with the spirit of all written laws and regulations despite their low implementation level as local contexts are not properly addressed. Further more local leaders are reluctant to implement the regulation effectively, especially at punishment level. Local governments have the authority to enforce laws and regulations but they have capacity problems. Local officials want to bypass things by giving temporary solutions or pretexts and they actually do this by discussing with the violators. The thoughts behind this are: 1). The fine if realized will be beyond the capacity of the violator, 2). If they take the right measures, they fear loss of social ground in the community; this has encouraged the violation to be repeated at times. Moreover the fine collectors are not available in place when the 133 Decentralization and service delivery in Ethiopia violation is committed to instantly fine the violator and execute the process. The violator may not necessarily be a dweller in the local area, which provides him with an opportunity to escape. More over the procedure of taking the violator to a code enforcement body is lengthy. The delay discourages the workers as others did not learn from their actions in the shortest time possible. Though responsibility of enforcing the regulation is imposed on the sanitarian and sanitary guards within the solid waste management main work process, the punishment is undertake by the code enforcement bureau which has a different work process. The enforcing mechanism is likely to be stronger with the new reforms application of neighbourhood guards and establishment of courts for urban affairs. People who have violated rules and regulations are punished by the social court at the local government level, however, the social court doesn’t give good sentences as per the law, this in turn makes people who are in charge and presented with the case uncomfortable. Some local governments argue that given the conditions and realities on the ground, it is unfair to use legal measures where they are not in a position to fulfil the necessary and required conditions for the people like availability of waste bins within a certain distance to users. In developing enacting complementary laws at local level, dependency on upper government body was high for such matters in earlier times. There is a new structure formed in the local government offices to deal with such matters. The speaker of the house of the local government and Federation Council are recently established systems to facilitate such things at local government level. This is currently considered and highly promoted in the manual that local governments are responsible to handle such cases. However, as seen from athe pevious table, there is not enough potential at local government level to do so. Polit ical Syst em Effective political system is one of the resources used to enhance better accountability of local government units. The factors used to assess the accountability level are: availability of committed leaders and the existence of effective local political system. Commit t ed and Capable Le ader s and Ef f ect ive Local Polit ical Syst em There are committed and capable leaders whose capacity is enriched through experience sharing among local governments although there are some that lack awareness and readiness to be consulted on the issue of solid waste management in Addis Ababa city. The local governments try to respond according to the needs and preferences of the local community. Although the readiness is there the responsiveness is not as expected. Table 31: Correlation Co-efficient of each of the Scale Items with Summated Score Factor Item Committed Leader Availability of committed and capable leader Correlation coefficient 0.80 Effective Local Political System Understand and act on the need of local people 0.78 Inclusiveness in local processes 0.82 Local constraints on central power 0.52 The inclusiveness of the poor is relatively good on solid waste as there is a beginning but it is not dealt in depth. However, there is potential as new civil society organizational entities taking place in the city of Addis Ababa expected to 134 Decentralization and service delivery in Ethiopia create opportunities to validate the interests of this segment of the society (W omen and Youth Federations, Forums, Leagues are emerging). As resources are managed and allocated from the centre, local governments are not in a position to put pressure on authorities at the centre (see above table). They would rather opt to compromise and negotiate to get the necessary resources. The experience in place was that the flow of the work from top to bottom, and also the human capacity is not yet sufficiently addressed at the local level, thus it is less likely to influence upward. Moreover internalization of previous work procedures and lack of capacity prohibit local governments to fix the participatory approach. Discussion Decentralization is seen as representing the critical means through which the changing role of the public sector, within the context of power devolution to local governments, can be most effectively realized. Decentralizing state power and resources is therefore a logical continuation of the many recent efforts to bring government closer to the people. It offers the chance to match public services more closely with local demands and preferences and to build more responsive and accountable governments from below (W orld Bank 1997). This chapter has analyzed the accountability level of local governments in terms of task specificity and the task environment. The chapter has addressed two research questions: Does decentralization reform process improved task specificity at local government level? Is decentralization reform improved the task environment at local governments’ level? Task Specif icit y Empirically to assess the task specificity at local government level the following issues were considered: • Role vs. allocated resource; • Clarity of role, power and right. The analytical results show that, local governments’ roles distributed to them and the required resources allocated are less compatible. As seen in the second figure of this chapter, half of the local governments are not comfortable with allocated resource to accomplish their tasks accordingly. Institutional Pluralism resonates with many of the current proposed “peopleoriented” solutions to inadequate public sector performance. This is because it offers the greatest probability of maximizing the means and the actors required to promote the accountability needed for the production and provision of selected public sector tasks (Cohen and Peterson, 1997). Under the existing situation both ‘business approach’ and ‘people oriented ‘approaches are in place. There are problems to local governments related with resource mobilization. Public sectors at the local level are less familiar in mobilizing resource. They perceived working on resource mobilization through stakeholder participation and other people oriented approaches as temporary phenomenon. While these resources are critically considered as potential resources (as pluralism strategy) in improving urban service delivery for the time to come, civil servants at the local level have less experience in maximizing them. Moreover, problems related to decentralization include limited budget allocation while LGs take many responsibilities with a small number of trained and skilled staff. Therefore, LGs are overwhelmed by many sectoral activities and unable to adequately manage SWM holistically. Decentralization is therefore commonly regarded as providing an opportunity for improved coordination between closely related areas of Decentralization and service delivery in Ethiopia 135 administrative responsibility to ensure consistency among the policies of different agencies, to prevent wastage and duplication of effort and to ensure integration when a programme requires inputs from a number of agencies as is often the case in urban development activities (Smith, 1993). Clarity of role, power and right was one of the issues seen whether to improve the task specificity of local governments. Role clarity of local government is improved in the public sector at local level due to the reform process as seen in the third figure in this chapter. Local governments as they are working with different stakeholders (vertically and horizontally), the roles to these different stakeholders are not explicitly stated. Local governments have the initiation and wish to implement policies but they do not have in-depth knowledge about different policies and the guidelines and their directions. This has created problems in implementing policies and guidelines at the local level. Manuals are prepared to support and facilitate the reform process at the centre. These manuals lack clarity in specifying roles and responsibilities to both the central and local governments. The success of solid waste collection decentralization is determined by devolving power not only by the local government but also to the community as well. Power is devolved to a certain extent to the local government but it is still not yet sufficiently devolved to the community. Community power as a resource for local government is still small to shoulder responsibilities. Accountability of local government is improving if local government position as enabler is increasing. As community enabler under the auspice of institutional pluralism principle, local government role is tremendous. W ithin the local government circumstance of Addis Ababa, only the solid waste collection part has been devolved to the kebele level. All other functions are still in the hands of the City Administration centrally. For the local governments to be accountable fully, some of the tasks are not within the realm of their power and jurisdictions. This situation contributed for the diffusion of role and power between the city government and local bodies. The Agency and the sub-city have both control of financial and human resources thus not providing full authority to the local governments. Local governments/kebeles are not in a position to deal with all issues. Some of their problems are still solved at agency and sub-city level. There exists the gap as there are cases that require the interference of the sub-city. There are issues getting decision through the Agency. For instance, if local governments want to deal with anything about MSEs the kebele administrations need to do it through the agency. Some materials and equipment that are more expensive, like waste bins and wheel barrows, have to be bought through the Agency. The local governments, so far, have only the authority to buy things that require a small budget. However, in certain local governments it was argued that they should be authorized to independently function and manage their own budget and even recruit and assign workers. It was indicated that there is a loose relationship between the agency and the sub-city. The sub city authorities are directly accountable for the sub-city officials administratively, where as the agency is accountable for the city government through municipal function. This has further complicated the outlook of local government in decisions as to which way to follow and act. Task Envir onment Institutional Pluralism resonates with many of the current proposed “peopleoriented” solutions to inadequate public sector performance. This is because it offers the greatest probability of maximizing the means and the actors required to promote the accountability needed for the production and provision of selected public sector tasks (Cohen and Peterson, 1997). According to Cohen and Peterson, 136 Decentralization and service delivery in Ethiopia (1997), empirically to assess the task environment, the key elements to be explored are: political and legal oversight, institutional competition, and administrative mechanisms (Ibid). Helmsing, (2002) claimed the importance of plurality as; decentralization has ceased to be a local-government affair and has turned into a local-governance issue. Due to the recently launched reform program and the pluralistic approach employed, improvements in accountability of local government are expected to happen through means (administrative, institutional, legislative and political) improvement. Given this is the general understanding, this research was initiated to answer the following research question; has decentralization reform in Addis Ababa city improved the task environment at local governments’ level? Van Dijk (2006) notes in order to establish to what extent functions and responsibilities have been decentralized within the organization, it is imperative to examine the decisions that are likely to be taken within the local governments. We can notice from the survey result that the leader’s commitment is high. There is also an effort to include the marginalized in the service provision process. Institutional collaboration is in a poor state of condition where as the contribution of administrative mechanisms to the task environment is in good condition, though incorporation of user perspectives in planning, application of performance measurement to local governments and availability of binding contract for manager’s performance are in a poor state of condition. Rules and regulations are stipulated sectorally although they suffer from a smooth and workable environment and progressive institutional interactions at LGs level. Local governments totally failed to implement enforcement mechanisms. The importance of this research, besides dealing with the accountability level from the supply side, it shades some light on decentralization from role and institutional perspective. The research has also looked at the functional relations of stakeholders and their implications in promoting accountability level of local governments. As noted by Cohen and Peterson (1997), the most robust and important sources of accountability are external, particularly political oversight and laws. Administrative mechanisms and institutional collaboration are the least robust means of promoting accountability. This is because they are relatively complex and managerial intensive. Given the above argument by Cohen and Peterson about the robustness of the means, though there is a general trend of accepting this argument, it is unreasonable to predetermine some of the factors which have the same trend. From the result of the analysis, it is indicated that there is high political commitment by leaders and good regulatory frameworks at the local government level. But when we see the factors separately, local government influence to the centre (as an effective political system) and enforcement capacity of local government (as an effective legislative mechanism) are nearly absent. As a pluralism approach the contribution of these factors is assumed to be substantial in achieving the intended objective of improved solid waste collection service through enhanced governance at the local level. Conclusion This study began with the premise that through decentralization of urban service delivery to local government level, it is possible to achieve efficient and effective ways of running the state, and in response to demands from civil society. The theory behind decentralization is that people will solve problems better at the local level, if they are allowed to do so. To improve the city situation, decentralization processes took place in the city of Addis Ababa by the year 2003. Solid waste collection service was the case in point as a sector, had various transformations to overcome the existing overwhelming city sanitation problems. Decentralization and service delivery in Ethiopia 137 This research tried to answer whether the decentralization in Addis Ababa solid waste collection function to local government improved the task specificity and the task environment (means) in the urban service delivery. In the case of task specificity there is improvement despite resource constraints. In the case of the task environment although there are differences among the factors, improvements were experienced at local government level. Indeed all means were not in equal position. Overall the system in function, which is oriented towards pluralism, was not sufficiently promoted accountability of local governments. The implication of the research results, given Institutional pluralism as a strategy to improve the solid waste collection service delivery of Addis Ababa city through accountability improvement, suggested that the following situations need to be addressed; mainstreaming the participation of the community, compromising political-administration relationship (to create win-win situations), pay attention in developing and introduction of new regulations (looking them from different perspectives as they are minimizing conflict and facilitate working conditions), and promoting further unbundling and economic decentralization (privatization) of the rest of the solid waste functions (like; transfer station management, transportation and dumping). 138 Decentralization and service delivery in Ethiopia Reflections on Women Participation in Solid Waste Collection in Bole Sub City, Addis Ababa, Ethiopia Emaculate Ingwani Int r oduct ion For many years management of solid waste in African countries, Ethiopia inclusive has been a burden to governments and local authorities who are often overwhelmed by other service provision obligations. Both traditional and innovative modes of service delivery have clearly indicated that there is no single solution to service delivery (World Bank Report 2004). As such, the issue of solid waste management remains an integral component of city administration; and requires concerted efforts from different actors ranging from public, private, and Non Governmental Organizations. Thus, decentralization of service delivery in solid waste management has been one of the major agendas of developing countries as an opportunity for reform. It strengthens different parts of the service delivery chain (World Bank Report 2004). The objectives of decentralization in Ethiopia are to improve the quality of service delivery and to empower local communities to take responsibility for determining their priorities (Millennium Development Goals needs Assessment Report 2005). In Ethiopia, decentralization in solid waste management was driven by the desire to move administration of service delivery to the people (Assefa and Gebre-Egziabher, 2007); due to the magnitude of the waste generated. An estimated 170,000 tons to 47,000 tons have been produced in 2003 alone; and this is expected to increase by 30% in 2010 (W oldeyes et al 2008). The rationale of this paper is to highlight the significance of the decentralization initiatives in Ethiopia with regards to the participation of women in solid waste collection, in Bole Sub City of Addis Ababa, Ethiopia; reflecting on the fundamental principles of the Women In Development (WID) approaches to gender. This research acknowledges that the decentralized structures are capable of generating participation of women, empower them at grass roots level; and the output from such participation pays back national development initiatives in solid waste management. Aim of t he Rese ar ch The purpose of this research was to highlight the significance of the decentralization initiatives in Ethiopia with regards to the participation of women in solid waste collection. The focus was to identify priority areas of action, and highlight the benefits accrued by women as they participated in solid waste collection. Met hodology This descriptive case study made use of both primary and secondary methods of data collection. A total of 35 women engaged in solid waste collection were snow-balled and interviewed. The Delphi technique (serious brainstorming) was employed with 3 purposively selected City Administrators. On-site observations were conducted regarding the process and practice of solid waste collection in Bole Sub City, Kebele 14/15 were also carried out by the researcher to triangulate and authenticate data collected through literature, interviews and the Delphi technique. Generally, qualitative data was generated by the research. The W ID approaches to gender were adopted as the conceptual framework for this research to reflect on women’s participation in solid waste collection. Decentralization and service delivery in Ethiopia 139 Decent r aliz at ion Init iat ives in Et hiopia After the 1974 revolution, the Ethiopian Government embarked on a progression of policy initiatives in order to democratize the system of governance. Decentralization of service delivery was one of the initiatives adopted by the Ethiopian government. Decentralization in Ethiopia looked forward to bringing harmony and cooperation among different groups of people through devolving powers and responsibilities to district administration levels (Assefa and GebreEgziabher, 2007). Numerous policy initiatives were initiated to guide this vision. Concurrent national development policy programmes, for instance, the Millennium Development Goals (Millennium Development Goals Needs Assessment Report 2005) and PASDEP (2006) have also witnessed the government strengthen its position in decentralization of service provision at the local level by making women participate in development issues. Policies and strategies were formulated to integrate and mainstream the gender dimensions in economic, social, and political decisions (UNDP, 2008). W ith reference to the Millennium Development Goal number three that seeks to, “Promote gender equality and empower women”, gender equality and mainstreaming in sectoral strategies has been recognized as integral in this foci. Women in Ethiopia are playing significant roles in service provision such as solid waste collection. The Ethiopian Government has placed strong emphasis on the participation of women in the development process. Participation is one of the major components of the three dimensions of decentralization, which are, political, fiscal and administrative (Pallai 2001). Through decentralization initiatives, Bole Sub City of Addis Ababa Ethiopia has been engaging a variety of performers ranging from public, private and Small and Medium Enterprises in collection of solid waste. This research focused on primary solid waste collection of household waste in Kebele 14/15 of Bole Sub City by women. Thus, using the WID approaches as a framework of analysis, this research explored the role of women in solid waste collection. The Solid Wast e Colle ct ion Pr ocess The process of solid waste management involves the collection, transfer, treatment, recycling, resource recovery and disposal of municipal solid waste (Schubeler et al 1996). The primary goal of solid waste management is to protect the health of the population (ibid). Solid waste collection involves collection of solid waste from different sources such as households, commercial, hospitals and industries to temporary storage sites and final disposal (Tessema 2010). Collection of solid waste is characterized by primary and secondary collection (ibid). Solid waste collection carried out by Small and Micro Enterprises in Addis Ababa has been highly localized through decentralization of service provision in Ethiopia (Tessema 2010). In most cities of Ethiopia the municipalities are responsible for solid waste management. Municipal solid waste is defined as refuse from households, non hazardous waste from industrial, commercial and institutional establishments (including hospitals), market waste, yard waste and street sweepings (Schubeler, et al 1996). This research established that solid waste collection in Bole Sub City, Kebele 14/15 is being done by Small and Micro Enterprises commonly referred to as ‘Associations’. The role of these Associations is to collect waste from residents using a door-to-door method. The Sub City Administration licenses all Associations engaged in solid waste collection (W oldeyes, et al 2008). Thus, solid waste management action plans are designed and implemented at the lowest administrative units of urban administrations to ensure community participation (Solid W aste Management Proclamation Number 513/2007 p3524). The decentralization of solid waste collection to Small and Medium Enterprises has 140 Decentralization and service delivery in Ethiopia witnessed an increase in competition for household solid waste collection (Woldeyes, et al 2008). This can also explain the limitations in data extraction as interviewers were viewed with suspicion despite assurance of confidentiality and data being used for research purposes. This research established that the practice of solid waste collection in Bole Sub City, Kebele 14/15 is moderately mechanized. It is more of manual labour. W omen use sacks and wheelbarrows to collect solid waste from houses to the temporary storage sites. Observations revealed that the wheelbarrows and carts used in solid waste collection were old, rusty and obsolete. This often made the job tougher for women. In some cases, women were observed carrying sacks with solid waste to the temporary storage sites on their backs. There were 5 temporary storage sites in the neighbourhood which were approximately 1.5km apart. Men were observed complementing women in these activities using donkey driven carts to collect solid waste from houses to the main temporary storage. Frequency of solid waste collection in the neighbourhood was three times a week on average (Tuesdays, Thursdays and Saturdays); mornings only. Women who collected solid waste were very consistent in their practice. This proved to be very efficient and was surpassing some international standards on solid waste collection, such as, the City of Phoenix, USA, where solid waste is collected twice a week on a door-todoor basis. Observations revealed that the system of solid waste collection in Bole Sub City, Kebele 14/15 was very significant in keeping the neighbourhood environment clean. Evolut ion of t he WID Appr oach The evolution of the W ID approaches can be traced way back to the 1950s, however, the W ID approaches in gender emerged as a powerful force in the 1970s. These approaches seek to put women in the spotlight in development issues and reflect on the benefits of inclusion of women in the development process (Miller and Razavi (1995). According to Moser (1993:63), the W ID approaches recognize, ‘women as active participants in the development process, who through both their productive and reproductive roles provide a critical, if often unacknowledged, contribution to economic growth.’ Consequently, the advent of W ID approaches provides recognition of women’s effort in societal activities as women seek livelihood. The productive role of women takes centre stage in this research as women participate in solid waste collection. An interesting underlying rationale of W ID approaches is that women are an untapped resource that can provide an economic contribution to development (Moser, 1993). This research reflects on the need to bring women into the development process as they access employment through participating in solid waste collection. W omen have been regarded as second-class citizens and victims of systemic and multidimensional discrimination in society through religion, sex and social class (Benhadid, 2005). The decentralization initiatives by the Ethiopian Government enabled women to participate in activities that can enable women earn a living. The W ID’s approach to gender issues has been chosen as a framework for this research because the approaches are very popular in gender and development debates globally. These approaches can easily translate gender discussions into practice; for example, extracting evidence on women participation in solid waste collection in Bole Sub City. The following figure provides an illustration on how the W ID’s approach to gender issues has evolved over time. The shift in emphasis of this framework remains significant in making analyzes on the role of women in development in current situations. According to ILO (1998), the WID approaches evolved from the Welfare approach (1950-1970), the Equity approach (1976-1985), the Anti-poverty Decentralization and service delivery in Ethiopia 141 approach (1970s), the Efficiency approach (1980s) and the Empowerment approach (after the 1980s). This evolution lays a foundation on which policy initiatives on women’s participation in development issues can be established. Figure 13: Evolution of WID’s Approach to Gender Issues Empowerment approach after 1980s, the current approach Welfare approach 1950 -1970 Efficiency approach 1980s Equity approach 1976 - 1985 Anti-poverty approach 1970s Source: researcher’s perception of the evolution of WID’s approach over time to gender issues Discussion and Findings The WID’s approach to gender issues discussed below, continue to inform and to provide opportunities for women participation in development initiatives. The analysis tried to reflect on the significance of women’s participation in solid waste collection as an outcome of decentralization initiatives in service provision by the Ethiopian Government. We lf ar e Appr oach The earliest WID approaches between the 1950s - 1970s focused mostly on women’s welfare in trying to bring women into development as better mothers (ILO 1998). At this stage, women were regarded as passive beneficiaries of development. The W elfare approach only focused on a women’s reproductive role. The W elfare approach remains critical in current debates as the reproductive role of women still remains vital in perpetuating life. Apart from performing their reproductive role women in Bole Sub City, Kebele 14/15 participated in service provision, for example, solid waste collection. The decentralization initiatives in Ethiopia redefine the role of women in welfare provision; and make a shift in emphasis from the traditional conceptions of women as better mothers to women service providers. 142 Decentralization and service delivery in Ethiopia Equit y Appr oach The equity approach was developed between 1976 - 1985 and the period was dubbed UN W omen’s Decade, in an attempt to accord equity for women as active partners in development (ILO 1998). The Equity dimension recognized women’s triple role and seeks to reduce inequality for women. In this research both women and men were observed participating in solid waste collection activities; but women made the bulk of the workforce. The solid waste collection process in Bole Sub City, Kebele 14/15 regards women and men as equal partners in service provision, for example, solid waste collection. There were 156 Associations involved in solid waste collection in Bole Sub City. From these Associations, 96 (61.5%) were men’s Associations; while 60 (38.5%) were women’s Associations. Although the number of men’s Associations that participated in solid waste collection was significant; women’s Associations that participated in solid waste collection constituted more than the 30% benchmark; the standard yardstick on gender representation in any service sector in Ethiopia (The National Policy on Ethiopian W omen 2004). The national constitution of Ethiopia has also given attention to equity through emphasizing participation of women in economic, political, social and cultural activities of the country. Women used to collect money for solid waste collection services from residents on a door to door basis. However, the Municipality has since improved the system. Money is now being charged on water bills to all residents on a monthly basis for accountability purposes. It is important for community based collection systems to be carefully linked with the Municipality system for ease of coordination (Schubeler, et al 1996). Adding solid waste collection on utility charges such as water bills increases finance operation and accountability of such in solid waste collection (ibid). However, according to the KOICA-W orld Bank report (2007) it could be difficult to extract service charges for solid waste collection from water bills which also carry other user charges. This exposition may explain why women were paid quarterly wages by the Municipality for solid waste collection. Ant i- pover t y Appr oach The Antipoverty approach sought to ensure that poor women increase their productivity and work in order to earn a living particularly through income generating projects (ILO 1998). This research established that, both men and women were directly benefiting from carrying out solid waste collection activities as they earned a regular income (quarterly wages). On average women earned 300 birr per month through the Municipality. Women stated that with the money earned they were able to; buy food, buy clothes, pay rent (in some instances), make their Idir contributions (an indication towards savings), and generally look after the family. Through participating in solid waste collection, women were further expanding their productive role. In addition, women participation in solid waste collection was viewed as imperative in fighting poverty. This research also revealed that women participating in solid waste management in Kebele 14/15 of Bole Sub City were doing a tremendous job, that is, apart from contributing to family income; they were also ensuring a clean environment within the neighbourhood as they collected solid waste from door to door to the various collection points. As such, the neighbourhood environment and the residents at large were and are still among the beneficiaries of women participation in solid waste collection. Schubeler et al (1996) reiterate that, the other goals of solid waste management include promotion of environmental sustainability, support of economic productivity and employment generation. The research found out that women benefited from recyclable discarded materials as they collected solid waste from the different houses, for example, Decentralization and service delivery in Ethiopia 143 discarded empty containers, boxes, clothes and shoes. These items were traded for an extra income. This method of reuse of solid waste has been regarded as environmentally friendly. It fulfils one of the major principles of sustainable waste management by maximizing reuse and recycling solid waste. Ef f icie ncy Appr oach This Efficiency approach was adopted in the 1980s. The purpose of this approach was to ensure efficient and effective development through women’s economic contribution, and participation was equated with equity (ILO 1998). Through the Efficiency approach, women were viewed as having the capacity to contribute positively towards declining social services. As women in Bole Sub City, Kebele 14/15 participated in service provision such as solid waste collection; they were determined to earn a living through a reliable wage. However, the outcome of the women’s efforts could further be perceived through achievement of the national Solid W aste Management goals of Ethiopia; and the achievement of the government’s goals on decentralization of service provision at large. Community participation in solid waste collection has been considered an integral component in the prevention of adverse effects; and in enhancing benefits resulting from solid waste (Solid W aste Management Proclamation Number 513/2007 p3524) Empow er ment Appr oach The Empowerment approach is the most recent and its focus is on empowering women through self-reliance. The approach recognizes the significance of the triple role of women. Women empowerment entails opportunity and equity between different genders, social classes, age groups; and it enhances human potential at individual and social level of expression (Sahay, 1998). Lucy (1995) in Sahay (1998) further states that empowerment is the improvement of women’s status, their decision making capacity, and to make them full partners in the development process. This research established that the decentralization process in Ethiopia is recognizing women as agents of development. Women waste collectors dominate primary solid waste collection. W omen of different age groups were observed collecting solid waste in Bole Sub City, Kebele 14/15. The age range of these women was from 20 years and above. The educational background also ranged from primary school, secondary school, diploma and first degree. Women with Diplomas, and First Degree qualifications had been elevated to officers, but were relatively few. Only 2 (5.71%) of the interviewed women had a diploma or a first degree; the rest 33 (94.29%) had primary or secondary education. This research also established that as women participated in solid waste collection, they continued to perform their household duties and community service obligations. The process of primary solid waste collection on a door-to-door basis has provided a platform for women to meet, discuss and prioritize their needs. It was realized that the success of the decentralization initiatives in solid waste collection in Bole Sub City, Kebele14/15 could contribute to changing society’s attitude towards solid waste collection as a profession. The solid waste collection profession is regarded as meant for the ‘not educated women’ (Schubeler et al, 1996). As much as the solid waste collection profession may not be attractive to many people, in Bole Sub City, Kebele 14/15 the profession could be valued in terms of income generation and employment opportunities for many women. Women had been empowered through the government decentralization initiatives as they worked side by side with their male counterparts, as such, women were viewed as significant partners in the solid waste collection process, and also contributed to national decentralization goals. 144 Decentralization and service delivery in Ethiopia Challenge s Observations in this research established that households were either unwilling or unknowledgeable about segregating waste as a way of assisting women in recycling solid waste, and for ease of carrying. Many households placed different forms and kinds of solid wastes in the same container or bin. Women transferred the solid waste into sacks. Schubeler et al (1996) warns that dangerous items pose risk of injury or poisoning to people who collect or sort waste. The research established that most of the women who participated in solid waste collection belonged to the low-income category earning on average 300 birr per month. This has resulted in the profession being despised and as such women being looked down upon by the residents and society. Schubeler et al (1996) states that, people who work as solid waste collectors were driven by poverty, absence of more attractive employment possibilities; and solid waste collection is associated with filth trends. However, revelations from this research demonstrate that, as much as women who collect solid waste were despised, their line of work is indispensable and remains critical in reducing negative impacts of solid waste on health of residents; and in maintaining the environmental aesthetics of neighbourhoods. Kebele 14/15 of Bole Sub City enjoys a clean neighbourhood. Way For w ar d Educat ion and Tr aining Women engaged in solid waste collection often lacked protective clothing as they participate in their their work. According to Schubeler et al (1996) such women worked under extremely hazardous conditions to health, as protective clothing is imperative in any kind of profession involving hazards. Observations revealed that women participating in solid waste collection lacked training and education with regard solid waste collection. Solid waste collection is still one of the despised professions; and yet it is one of the most vital activities in the urban areas. There is need to provide education and training through short courses and demonstrations to women who participate in solid waste collection. This will increase efficiency and motivate women as they provide services to residents in Bole Sub City, Kebele 14/15. Access t o Equipment Scaling up opportunities in women’s participation through access to equipment is a prerequisite for sustainability of decentralization initiatives in solid waste collection at local level. There is need for assisting Associations to secure bank loans for purchasing equipment and vehicles for use in solid waste collection for efficiency of solid waste collection in the neighbourhood. Conclusion The WID approaches illustrated that, women’s participation in solid waste collection remains an integral component for sustainable decentralization efforts in urban Ethiopia. Decentralization of service provision in Ethiopia seems to pay off (Millennium Development Goals needs Assessment Report 2005). W omen’s role in solid waste collection remains significant. Efficient solid waste collection in Bole Sub City however depends on scaling up education and training efforts; and access to equipment for sustainable service provision where activities have been decentralized. Decentralization and service delivery in Ethiopia 145 Education The Effects of Administrative Decentralization on Education Provision in Addis Ababa Tesfaye Teshome, Ranavijai Bahadur Singh, and Sudhir Kumar Singh Int r oduct ion Decentralization is defined as the transfer of decision-making authority closer to the consumer or beneficiary. This can take the form of transferring powers to lower levels of an organization, which is called deconcentration or administrative decentralization. A popular form of deconcentration in education is to give additional responsibilities to schools. This is often called school autonomy or school-based management and may take the form of creating elected or appointed school councils and giving those budgets and the authority to make important educational decisions. Deconcentration may also take the form of empowering school directors or directors and teaching faculty to make decisions within the school. Many recent studies, most countries of the developing regions are currently trying out new forms of decentralization or are planning to do so. These countries, ruled by their own specific political traditions, are often faced with competition from different political legitimacies, in particular those linked to policies of more or less "socio-democratic" inspiration and those bound up with the resulting budgetary adjustment and restriction policies advocated over the past many years. The lastmentioned policies, tending towards greater decentralization, are usually underpinned by ideas of efficiency, participatory democracy or governance (McGinn et al., 1999). Ethiopia is also not an exception to this state of affairs. Currently, the Ethiopian government has firmly decided to achieve the Millennium Development Goals (MDGs) by 2015. Education can play a very important and effective role towards the achievement of the goals. But low educational quality, relevance, efficiency, equity, and low coverage were the features of the Ethiopia education sector before 1991/92, but it still needs improving. To change or to improve the situation the government decided to shift more effectively towards the decentralization of education provision and its service delivery. In the line of this, the Ethiopian government launched the National Education and Training Policy in 1994. To implement this policy, the Education Sector Strategy was designed in 1994/95.The general objectives of the policy was to produce skilled man power with the necessary quality and quantity to meet the national socio economic development requirements, to bring up citizens who understand, respect and defend the constitution, a citizen who respects democratic values and human rights moreover with good work culture and ethics. The policy emphasizes on changing curriculum, preparation of learning material, giving due attention for career development of teachers and changing the organizational structure. The Ethiopian Education Sector Development Programme (ESDP) is in its third phase of implementation, spanning for the years from 2005/06 to 2009/10. The major objective of the Programme is to provide demand driven skilled human labour to the economy through improving the quality of education, increasing access to educational opportunities with enhanced equity, equality and relevance. Access to 146 Decentralization and service delivery in Ethiopia primary education, as measured by enrolment in grades 1-8, has increased in 2007/08 by promoting universal primary education and community control over schools and resources. During 2007/08, total primary enrolment reached 15,341,121 pupils, which brought up the Gross Enrolment Ratio (GER) to 96.7% (i.e. girls 91.0%, boys 102.4%) from its level of 91.6% in 2006/07. Apparently, the change in net enrolment ratio (NER) for primary education (1-8) followed a parallel trend with that of gross enrolment ratio. The NER increased by 5.8 percentage points pushing it up to a level of 84.4% in 2007/08 from 78.6% in 2006/07, which indicates an encouraging trend in the age structure of primary school students. With substantial success in raising the level of enrolment ratio, educational quality appears to be the main challenge of Ethiopia’s ESDP. To overcome this challenge, programs have been designed and implemented during the year under review, including upgrading teacher’s quality and increasing the number of teachers through on the job training and summer training. Accordingly, pupilteacher ratio for grades 1-4 has improved to 61:1 in 2007/08 from 65:1 in 2006/07. The availability of text books for core subjects contributes significantly for the quality of education. During the year under review, student text book ratio stood at 1.25:1. All the educational development plans are structured within the frame of decentralization policy which is promoted by the Ethiopian Federal government. Theor et ical Backgr ound Def init ions There is currently a global trend of decentralizing education systems. Most countries are experiencing or contemplating some form of education decentralization. The process transfers decision –making powers from central Ministries of Education to intermediate governments, local governments, communities and schools. The extent of the transfer varies, however, from administrative de-concentration to much broader transfer of financial control to the regional or local level. Rondinelli et al (1984) defines decentralization in terms of four degrees of transfer of authority: de-concentration, delegation, devolution and privatization. Deconcentration reforms shift authority for implementation of rules, but not for making them. Delegation refers to the appointment of representatives of the Minister, located in each of the state or provincial capitals. The term devolution implies that something is given back to an organization from which it had been taken. The term is often used by those calling for transfer of authority to more local units of government, for example, provinces or municipalities. Decentralization is also defined by W inkler et al (2000) as the transfer of decision-making authority closer to the consumer or beneficiary. This can take the form of transferring powers to lower levels of an organization, which is called deconcentration or administrative decentralization. A popular form of de-concentration in education is to give additional responsibilities to schools. This is often called school autonomy or school-based management and may take the form of creating elected or appointed school councils and giving budgets to them and the authority to make important educational decisions. De-concentration may also take the form of empowering school directors or directors and teaching faculties to make decisions within the school. In a world where most governments have experienced the pitfalls of centralized education service provision, mainly: opaque decision-making, administrative and fiscal inefficiency, and poor quality and access to services, the theoretical advantages of decentralization have become extremely appealing. In general, the Decentralization and service delivery in Ethiopia 147 process of decentralization can substantially improve efficiency, transparency, accountability, and responsiveness of service provision compared with centralized systems. As McGinn and W elsh (1999) indicated decentralized education provision promises to be more efficient, better reflect local priorities, encourage participation, and eventually improves coverage and quality. In particular, governments with severe fiscal constraints are enticed by the potential of decentralization to increase efficiency. Beneficiary cost recovery schemes such as community financing have emerged as means for central governments to off-load some of the fiscal burden of education service provision. The ways in which public primary and secondary education is financed and delivered varies greatly throughout the world. In France, education is highly centralized at the level of the national government, whereas in Canada the national government does not even have an education ministry, and in the United States education is mainly the responsibility of local school districts. Many developing countries and countries in transition to market economies have highly centralized government administration of education and other public services. During the 1990s and early twenty-first century, many of these countries began to decentralize education. This phenomenon proceeded fastest in Latin America and Eastern Europe, but several countries in Asia and Africa also began initiating decentralization policies (Fiszbein, A, 2001). Reasons f or De cent r aliz at ion The rationale for education decentralization tends to be associated with four distinct objectives: democratization, regional and/or ethnic pressures, improved efficiency, and enhanced quality of schooling. Several countries with a history of authoritarian government have decentralized government in the name of democratization. More specifically, decentralization in these countries is designed to increase the voice of the local citizen and to empower the citizen to more fully participate in decision-making at the local level. Democratization has been the rationale for transferring education responsibilities to local governments in countries as diverse as Poland and Brazil. McGinn and W elsh (1999), indicate three major factors that account for the upsurge of interest in decentralization beginning around 1970. First, the politicaleconomic debates of the 1970s and 1980s resulted in the disintegration of the western ‘Keynesian consensus’ that had favoured strong, centralized governments. A similar repositioning happened in Russia and Eastern Europe. The outcome was a reformulation and reduction of the role of central government and an increasing role for the market. Second, economic and financial globalization has further weakened central government. On the one hand, supranational organizations have reduced national sovereignty. On the other hand, a shift towards market-based decision making has strengthened local groups. This makes it more difficult for governments to capture funds for social programmes. Decentralization advocates included roles for privatization and the encouragement of non-government organizations (NGOs). In essence a new political-economic paradigm emerged. At the same time, education systems around the world had doubled and tripled enrolments. The increases in teachers and students strained the capacity of centralized bureaucracies to maintain quality. Increasing public dissatisfaction has resulted in pressures to shift decision-making to local groups. Finally, the emergence of new information and communication technologies has made it possible to achieve high levels of control over systems, with decentralized management. A new paradigm of management emphasizing attention to output 148 Decentralization and service delivery in Ethiopia rather than inputs gave increased importance to strengthen local capacity for decision-making. Educat ion Financing The financing of decentralized education can be very complicated in systems where two or three levels of government share financing responsibilities. As Gabor (1996) indicates the choices for financing education in such systems can be framed as follows: (1) central versus local funding, (2) conditional versus unconditional grants, and (3) negotiated versus formula-driven grants. The choices made concerning education finance are extremely important as they determine both the degree of effective control local governments have as well as the implications for efficiency and equity. Countries where local governments finance education from their own source revenues (e.g., Brazil, the United States) have adopted intergovernmental grants to help even out spending inequalities. In the case of Brazil, the central government provides additional financing to ensure each jurisdiction spends a minimum amount per student. In the case of the United States, school finance policies vary by state, but in general they, too, ensure a minimum level of spending and, in some cases, put a cap on the maximum amount a local school district can spend (W inkler, 2000). Most countries have made the choice to fund a large portion of primary and secondary education spending from either the regional or national government budgets. This funding can be provided in one of two ways. Money can be transferred from the central government to either the general fund of the local (or regional) government or to a special education fund of the local (or regional) government. In the former case, the local or regional government receives funding sufficient to cover a large portion of expected education expenditures, but the local or regional government makes the decision of how much to spend on education. In the latter case, the local or regional government is required to spend the grant money on education only. Requiring grant money to be spent on education ensures adequate education spending but reduces the expenditure autonomy of the local (or regional) government. Ef f ect s of Decent r aliz at ion It is extremely difficult to disentangle the effects of education decentralization policies from other variables simultaneously affecting educational outcomes, and there have been few rigorous attempts to do so. Two studies that did attempt to isolate the effects of devolution in Central America concluded that it increased parental participation, reduced teacher and student absenteeism, and increased student learning by a significant amount (Winkler, 2000). Obj e ct ives of t he St udy • • • • To identify the distribution of schools by level and ownership so as to compare the roles of different actors. Assess the extent of improvement in education provision as a result of decentralization of education in the city. To disclose the need to decentralize education and identify which decisions are decentralized. Assess the regulatory role of the City’s Education Bureau. Decentralization and service delivery in Ethiopia 149 Dat a and Met hodology In context to the above background information, the overall aim of the present paper is to asses the extent of improvement in education provision as a result of decentralization of education in Addis Ababa. Federal government is highly committed and devoted itself to empower all four tiers of the government through shifting power and responsibilities. However, the present study focuses key attention on the degree of decentralization in the management of education sector in Addis Ababa. The following approaches were used during the process of the study: Documents and literature were reviewed at Addis Ababa City Administration Education Bureau, Sub City Education Offices and Kebeles (lowest administrative structure in the city) education offices. Individual discussions were organized with concerned authority of Education Bureau at city and sub-city level. Moreover, data was obtained for both government and nongovernmental schools from the Educational Management Information System. In addition, research undertaken by the different researchers was critically analyzed from the Ministry of Education, Addis Ababa University and Ethiopian Civil Service College library. The primar y and secondar y data were systematically organized and analyzed by using qualitative analysis after which findings regarding the degree of decentralization in education sector in Addis Ababa were made. Typology of Schools in Addis Ababa The typology of schools in the city is the direct reflection of the owners. Therefore, based on ownership the following are identified: • Government schools: these are fully administered, managed and financed by the City’s Education Bureau. • Public/Local community schools: this refers to those private schools which were made public property in accordance with proclamation number 54/75 as well as those schools which have been established subsequently by the public, with the structure of the City government of Addis Ababa. The financial sources of these schools are mainly internal i.e. received from day school students, extension division students, and the selling of products, handicrafts or other similar sources. They are managed by a board responsible to for administration and management. The main difference between Public/Local community schools and Private schools is that they are not privately owned. Currently the City’s Education Bureau partially provides them with government employed teachers and facilitating conditions to fully transform them in the government schools. • Private schools: the establishment of private schools is the outcome of the new Education Policy endorsed by the current (EPRDF) government based on the decentralized political system (FDRE, 1994). The current education policy encourages the participation of the private sector in education service provision. As a result these schools are fully administered and managed by their respective owners. The sources of finance are mainly internal i.e. from day school and extension division students. • Donor NGO’s: these schools are established by philanthropic organizations. Their main objective is to provide education service for orphans and children from poor families. The sources of finance for these schools are largely from external donors. • Church, Mission and Mosque schools: These are schools established and managed by their affiliate religious organizations i.e. the Orthodox Church, Mission (Catholic, Protestant and Islamic). The sources of finance are day school and extension division students. The administration and 150 Decentralization and service delivery in Ethiopia • management of all non-government schools is being carried out by their respective owners and affiliate organizations signifying the extent of decentralization of education in the city. Foreign Community schools: As their name indicates these schools are limited to children of the international community who reside in Addis Ababa. According to the Education Policy of the country, Ethiopians are not allowed to enrol in these schools because they do not adhere to the Ethiopian curriculum and system. Therefore the study does not include these schools. Table 32: Distribution of Schools in Addis Ababa by Ownerships and Levels, (2007/08) Levels Ownership KGs No % Primary No Secondary % Government 6 0.65 111 16.94 Public/Community 84 8.97 119 18.17 Private 737 78.66 355 54.20 Donor/ NGO’s 59 6.30 19 2.90 Church 22 2.34 19 2.90 Mission 23 2.45 24 3.66 Mosque 4 0.42 2 0.31 Foreign Com. 2 0.21 6 0.92 Total 937 100.0 655 100.0 Source: Education Statistics Annual Abstract (2007/08). No 42 10 63 4 4 14 2 6 145 % 28.97 6.90 43.45 2.76 2.76 9.65 1.38 4.14 100.0 The table above shows distribution of schools in Addis Ababa by ownerships and levels in 2007-08. It is evident from the above table that the leading role is taken by the private sector which accounts for over 78% of the KGs, 54% of the Primary and 43% of the Secondary schools. The role of the government in accessing KGs is found quite insignificant (0.65%) whereas, occupies the third and second positions with respect to primary and secondary schools (16.94% and 28.97%) respectively. Based on the above table, the Private sector, Public/Community, Donor NGOs and Missions are playing significant role in accessing education service in the City. Dist r ibut ion of Schools by Sub- cit y The distribution of kindergardens, primary and secondary schools signifies the role played by non-government actors in accessing education in all sub-cities. • Kindergarden: From among the non-government actors particularly the private sector surpasses all in the number of Kindergardens in every subcity. Next to the private sector Donor organizations, local community/Public, Orthodox Church and Missions are found playing significant role. Regarding the distribution of Kindergardens government owned are found only in five sub-cities in addition to their insignificant number. Therefore, the gap with respect to the distribution of Kindergardens is filled by non-government actors (the third table in this chapter). 151 Decentralization and service delivery in Ethiopia 2 24 2 37 Akaki-Kaliti 8 1 5 73 2 89 Mission Total Private 1 Foreign community Donor organization 8 Mosque Church Addis Ketema Sub-city Government Local community Table 33: Distribution of Kindergardens by Ownership and Sub-city Arada 1 16 3 6 25 3 54 Bole 1 4 2 4 119 2 132 Gullele 2 9 2 6 41 4 64 Kirkos 1 10 2 4 45 Kolfe-Keraneo 5 5 13 114 1 Lideta Nefas Selk Lafto 13 2 4 28 1 Yeka Total 1 63 2 140 48 4 2 6 133 1 4 150 1 7 2 8 130 1 3 152 6 84 22 58 732 4 22 1 929 Source: Compiled from Education Statistics Annual Abstract (2007/08) • Primary Schools: Likewise in the case of Kindergardens the nongovernment actors take the lion’s share particularly the private sector. The private sector (the leading), Local community/public, Missions, the Orthodox Church and Donor organizations are playing an irreplaceable role in accessing primary education in all sub-cities (See the fouth table in this chapter). Local community Churches Donor organization Private schools Mission Foreign community Total Addis Ketema 9 15 3 1 5 1 1 35 Akaki-Kaliti 12 7 1 2 23 2 Arada 9 20 2 2 12 8 Bole 11 3 3 1 65 1 84 Gullele 12 9 2 1 18 4 46 Kirkos 10 78 1 Kolfe-Keraneo 17 9 4 Lideta 7 18 Nefas Selk Lafto 10 10 Yeka 14 Total 111 Mosque Sub-City Government Table 34: Distribution of Primary Schools by Ownership and Sub-city 47 4 30 5 47 1 13 1 1 70 10 1 4 70 179 18 18 353 57 119 1 1 2 1 84 1 40 2 95 3 102 23 5 709 Source: Compiled from Education Statistics Annual Abstract (2007/08) • Secondary Schools: As indicated in the table below the private sector surpasses all including government in the number of secondary schools. 152 Decentralization and service delivery in Ethiopia Moreover, the private sector has a greater number of secondary schools in five sub-cities than all and in the other five sub-cities the privately owned secondary schools are close in number to government owned secondary schools. Bole 3 1 Gullele 5 Kirkos 4 Kolfe-Keraneo 4 Lideta 3 Nefas Selk Lafto 4 Yeka 5 Total 41 2 1 1 2 Total 4 Foreign community 5 Mission Arada 1 2 1 1 8 3 1 1 4 15 1 20 4 2 12 11 1 7 Mosque 5 1 Private schools Akaki-Kaliti Donor organization 3 Churches Addis Ketema Local community Sub-City Government Table 35: Distribution of Secondary Schools by Ownership and Sub-City 1 2 1 1 10 4 1 10 13 4 1 6 4 63 18 16 1 4 20 4 23 12 2 13 6 143 Source: Compiled from Education Statistics Annual Abstract (2007/08) According to the Education Statistics Annual Abstract (2007/08) for the City, the total Gross Enrolment Rate in Kindergardens is 50.1% for both male and female whereas it is 51.1% & 49.2% for male and female respectively. The total Gross Enrolment Rate at primary level (Grade 1 – 8) is 135.9%. The Gross enrolment Rate for boys, 124.0% and girls 147.5%. The total Gross Enrolment Rate at st secondary 1 cycle (Grade 9-10) in the above mentioned academic year i.e. 2007/08 is 111.8% or 120.2% and 104.3% for boys and girls respectively. On the nd other hand the total enrolment at secondary 2 cycle (Grade 11-12) increased by 83.2% between the years 2003 and 2007. Table 36: Student Enrolment at Different Levels in Addis Ababa Level Type No Kindergarden Primary Secondary Government Non-government Total Government Non-government Total Government Non-government Total 627 93365 93992 181,848 207,258 390,106 84,763 31,673 116,436 % 0.7 99.3 100.0 46.9 53.1 100.0 72.8 27.2 100.0 Source: Education Statistics Annual Abstract (2007/08). Decentralization enabled and increased the participation of non-government stakeholders as indicated in the first and second tables in this chapter. In addition Decentralization and service delivery in Ethiopia 153 to the number of schools at all levels student enrolment figures show the same trend. For instance with regard to Kindergarden enrolment 99.3% of the total Kindergarden population attend non-government establishments. The proportion of students enrolled in non-government primary schools is over 53% further signifying the growing participation of different actors in education service provision. With regard to enrolment in secondary schools despite the number of government owned schools are less than non-government the percentages of enrolment show over 72% (seen in the second table in this chapter) of the student population belongs to government owned secondary schools. There are two possible reasons for this. • Education is free in the first cycle of the secondary schools (Grades 9 – 10). In second cycle of the secondary schools i.e. Grades 11 & 12 the amount of payment is less than all non-government secondary schools. • Comparatively all government owned secondary schools have large compound and more number of rooms/sections. According to Education Statistics annual Abstract of (2007/08) in all secondary schools there are 2,074 classrooms. Out of these 1,395 or (67.26%) belong to government owned secondary schools. Despite their number is at least three times greater than government owned secondary schools, the non-government secondary schools together share the remaining 32.74% of the student population. Educat ion Finance Education is free in all Government schools both primary (Grades 1- 8) and secondary (9-10) levels. Currently the main source of education finance is the government in both primary and secondary education, though it is found difficult to provide the service for all and government expects and encourages the support of the public to expand education. Objectives of education finance: • • Decentralize the financial management and administration to the lowest level i.e. school based and • Broaden the sources of education finance • Sources of education finance: In countries like Ethiopia the main source of education finance is government budget. But the community also supports in terms of finance materials and labour. The private sector and NGO’s also are important sources. The main sources are: Government, internal sources (within schools), community support, private investors and NGO’s Ef f ect of Decent r aliz at ion in Educat ion Pr ovision To analysis the effects of decentralization policy on education sector in Addis Ababa city, a survey was conducted. The target population was Addis Ababa education bureau official, sub-cities education officials, directors of the schools, teachers of the schools and representatives of parent-teacher associations. To understand the perception of the respondents towards the decentralization for education provision question was asked; “Are you aware about decentralization in education sector and is decentralization has improved the conditions of education provision and its service delivery in the city”. It is interesting to note that all the respondents replied that they are aware about decentralization in the education sector and certainly decentralization in the education sector has improved the education provision and its service delivery in the city. Further, in which component 154 Decentralization and service delivery in Ethiopia of education provision improvement is visible? this question was also asked regarding this issue. Table 37: Responses to the Question “How Decentralization has improved the Conditions of Education Provision and its Service Delivery in Addis Ababa City” Responses (in numbers) Respondents Addis Ababa Education Bureau 12 Official (1) Sub-city Education Officials (3) Directors of the Schools (3) Teachers of the Schools (6) Representativ es of ParentsTeachers Association (3) Total (16) Increase in no. of schools Qualit y of education has improved No. and qualit y of teachers has improved Accessibility to educational material has improved Teachers and students absenteeism has reduced Participation and commitment of stakeholders has enhanced Yes No Yes No Yes No Yes No Yes No Yes No 1 0 0 1 1 0 1 0 0 1 1 0 3 0 0 3 3 0 3 0 3 0 3 0 3 0 0 3 3 0 3 0 3 0 3 0 6 0 3 3 1 5 5 1 0 6 4 2 3 0 2 1 2 1 2 1 3 0 3 0 16 0 5 11 10 6 14 2 9 7 14 2 Source: Field Survey, 2010 The above table shows the responses to the question “how has decentralization improved the conditions of education provision and its service delivery in Addis Ababa city”. It is evident from the table above, that majority of the respondents replied that education provision and its service delivery has improved with respect to; increase in the number of schools, improvement in the number and quality of teachers, increase in the accessibility to educational material, reduction of teachers and students absenteeism and enhancement of participation and commitment of stakeholders. Interestingly it is observed that all respondents agreed that the number of schools increased in the city. But in the case of componentimprovement in the quality of education, the majority of respondents still view that the quality of education has not improved in the schools. Decision Making and Leve ls of Aut hor it y The Addis Ababa City Administration structure is comprised of 10 sub-cities and 99 Kebeles. The City’s education sector is organized hierarchically i.e. the Education Bureau at the top, Sub-city and Kebele education offices in descending order occupy the intermediate and the lowest level respectively. The study attempted to disclose the type and aspects of decision-making or extent of decentralization at the four levels meaning the role of the Education Bureau, Subcity and Kebele education offices and school based management. 12 Figures in the brackets are the total number/s of respondents in that specific category Decentralization and service delivery in Ethiopia 155 The appropriate focus of decision-making within the education sector remains unresolved because the process requires the rationalization and harmonization of a complex set of complementary functions mainly: curriculum design, teaching methods, student evaluation, text book production and distribution, teacher recruitment and pay, school construction and rehabilitation, education financing, and parent-teacher linkages. Following the introduction of decentralized administration and the Business Process Reengineering (BPR) reform decisionmaking in education service provision by the above stated structures is presented as follows. Educat ion Bur eau The Addis Ababa City Education Bureau controls or makes decision on the following functions: • • • • • • • Curriculum designing Setting standards Student evaluation procedures Text books preparation, production and distribution Supervise Teachers Training Colleges and grant certificate of competence. Issuance of professional license and renewal, assess the portfolio of teachers in secondary schools, teachers training institutes and teachers training colleges. Give written (test) and unwritten (non-test) exams at every terminal level, compile basic information and asses to promote city-wide admission capacity and disclose the results to all stake holders. Sub- Cit y Educat ion Of f ice: The following functions are entrusted to sub-city education offices. • • • Supervise secondary schools and teacher training institutes as per the standards and grant accreditation and licenses. Audit the quality of education in secondary schools and teacher training institutes and grant certificates of competence. Assess the portfolio of kindergarden and primary school teachers, issuance renewal professional licenses. Kebele Educat ion Of f ices The following functions of Kebele education offices: • Supervise kindergardens and primary schools as per the standard and grant accreditation. • Audit the quality of education in kindergardens and primary schools and grant certificates of competence. School Based management: is a concept based on the fundamental principle that individuals who are affected by the decision, possess expertise regarding the decision, and are responsible for implementing the decision, should be involved in making the decision. This concept often is attached to the broader school-system reform efforts of decentralization and school-based management (SBM), where decision-making authority is shifted to the local school level. There are two main bodies at school based management- Education & Training Board and ParentTeacher Association. As indicated above the arrangement is most often referred to as deconcentration and involves very limited transfer of authority. It involves the transfer 156 Decentralization and service delivery in Ethiopia of authority for specific decision-making, financial and management functions by administrative means to different levels under the same jurisdictional authority i.e. the City Government and Addis Ababa city Education Bureau. According to UNDP (1999) this is the least extensive type of administrative decentralization and the most common found in developing countries. De-concentration occurs to the extent a variety of tasks are de-concentrated to a hierarchically organized administrative system that includes the City’s Education Bureau, sub-city education offices, Kebele education offices and school based management. In a nut shell it is deconcentration that entails a shift of authority for implementation of rules, but not for making them. Conclusion and Recommendat ions Conclusion Finally we can conclude that this study was an attempt to perceive the level and the effects of administrative decentralization on education provision particularly on efficiency, reflection of local priorities, participation and improving coverage and quality in Addis Ababa. No doubt, Federal government has taken various steps to decentralize power and authority to the next level in education sector and some extent visible achievements can be seen particularly on quality aspects through effective and prompt decision making and service delivery. Still focus should be given on to the rationalization and harmonization processes in the area of curriculum designing, teaching methods, student evaluation, text book production and distribution, teacher recruitment and pay, school construction and rehabilitation, education financing, and parent-teacher linkages. The new structures i.e. levels of decision are definitely the manifestations of the transformation of Ethiopia’s as well as the city’s education policy from centralized administration to decentralized administration. Decentralization of education systems demands harmonization of a complex set of functions at all levels. Issues such as, how far to devolve decision making and to whom, continue to be debated. There are a number of on-going experiments worldwide, ranging from devolution of limited functions to intermediate governments and local governments, to community- based management and financing of schools. The current consensus is that tertiary education, and specific functions such as curriculum design and standards setting are best retained by the centre; secondary and primary education should be devolved to as far as possible; local participation in school management improves accountability and responsiveness and fosters resource mobilization. The education policy of the country in general and that of the Addis Ababa city government in particular appears to be successful in enabling different stakeholders’ participation in education service provision. The distribution of schools by ownership and sub-city indicate a growing interest particularly of the private sector which meets the definition of Rondinelli et al (1984), privatization as one of the four degrees of transfer of authority. The advantages of decentralized education service provision in the city includes kindergarden education service is almost totally provided by the private sector and other non-government organizations. Government expenditure or budget for kindergarden education service is very minimal or insignificant. This indirectly assists to reduce public expenditure on the part of the City’s government, the participation of non-government stakeholders enabled the availability of education service of all types in all sub-cities raising the opportunity of enrolment to all and increased the participation of local community in school management improving accountability, responsiveness and fosters resource mobilization particularly finance. Decentralization and service delivery in Ethiopia 157 Recommendat ions Based on the above findings, the following recommendations have been forwarded to the respective authorities of education bureau and sub city education departments of Addis Ababa: • Decentralization of education should not be limited to de-concentration, a shift of authority but also include devolution which implies transfer of authority to local unit such as sub-cities and Kebeles. Devolution entails the making of rules and regulations. • The majority of non-government and private schools suffer from small size compounds, thus extra-curricular activities are limited and expansion works are largely unthinkable. Therefore, considering their role in accessing education in all sub-cities the city government should facilitate conditions to provide sufficient land. • Addis Ababa city’s situation is changing day by day, in this context decentralization indicators particularly administrative should redevelop and rearrange across varying degrees of devolution, de-concentration and delegation that are related to quality education service delivery in the city. Institutions, actors, laws and policies should given due attention in indicator development. • Authority should provide due attention on multi-stakeholders participation as their different role and responsibility in harmony with the existing school based management committee. • Addis Ababa’s education bureau should create a conducive environment for the participation and involvement of all concerned stakeholders in the improvement of education system in the city. • Mass and electronic media are one of the strong actors to reach mass populous particularly in awareness creation and sensitization activities. Appropriate place and platform should be in place for media people to come forward and participate to ensure effective service delivery system in education sector. • Parent teacher association should have more power and authority to make decisions on school development and management. • Appropriate indicators should be developed to monitor and evaluate the education development and management in the city. 158 Decentralization and service delivery in Ethiopia Part VI Support of International Development Agencies Decentralization and the Support Role of International Development Agencies in Ethiopia’s Urban Development Abuye Anleye Int r oduct ion Under the highly centralized Derg regime (1975 to 1991), Ethiopia’s municipalities were marginalized and did not function as autonomous local authorities. After the fall of the Derg, the incumbent Federal Government adopted decentralization and democratization as the cornerstones for building a multi-ethnic and market friendly democratic country. Since 2000, as part of a large-scale reform of government, different proclamations providing the institutional and legal frameworks for efficiently and effectively running the various affairs and geared towards the establishment of autonomous city governments have been enacted and put into full force. Coupled with a commitment to fiscal decentralization, the legislative of several macro-scale federal governments reforms-touching upon a host of issues- signified the government’s political will to grant local governments more direct and transparent power over the management of their resources. In a nut shell, the overriding objective orientated toward the creation and strengthening of urban local governments in a manner that ensures public participation and democratization, while enhancing decentralized service delivery. Under the decentralized system, Addis Ababa and DireDawa are federal chartered cities (whose city councils report directly to the Federal government). Addis Ababa is the primate city with a population of over 3 million (about 25% of the country’s urban population) and is said to be ten times larger than Dire Dawa, the second largest city. There are nine Regional States, all of which have adopted “City” Proclamations creating autonomous urban local governments which are entrusted with the authority and mandate to raise revenues, deliver services and be accountable to their own respective representative councils (which duly report to the regional government). These Urban Local Governments (ULGs) have a governance model that includes an elected council, an elected mayor, a Mayor’s Committee and city manager system. Most of the regional capital and secondary cities have been granted this legal status, although this number increases regularly as more urban local governments are brought under the proclamations. Addis Ababa, Dire Dawa and the ULGs in Ethiopia comprise over 60% of the total urban population. In addition, there are about 1000 settlements classified as urban. These settlements have populations of less than 20,000 (about 500 have populations of less than 5,000). They are reporting to Woreda (rural district) councils. In most regional sates, the Bureaus of Works and Urban Development are responsible for providing technical leadership in the sphere of regional urban management and development issues, supported by different bureaus (business processes) in the Ministry of W orks and Urban Development (MW UD). Urban Local Governments in Ethiopia have been assigned dual responsibilities—provision of “sectoral services” such as education, health, justice and security; as well as “municipal services” such as urban roads, drainage, solid waste collection and sanitation. State functions are financed mainly through regional to local block grant transfers, which are often not enough to cover the recurrent needs for competently manage the sectors. All municipal functions are expected to be funded from own local revenues-for both recurrent and capital expenditures. Moreover there is an intergovernmental fiscal transfer framework Decentralization and service delivery in Ethiopia 159 from the Federal Government earmarked to complement the shortfall to finance urban infrastructure development programs and services. At times, urban local governments do also receive financial assistance from specific donor/NGO projects, and selected cash transfers and asset transfers from the federal and regional governments. However, these fund flows more than being not sufficient enough-as much as required- are not predictable to rely on. Thus, the purpose of this chapter is aimed at providing a brief reflection on the decentralization process taking place in urban Ethiopia by pulling together the current sate of knowledge and practices along with the support of international development agencies in actively assisting the decentralization effort of the country..To that effect, official report of the government, World Bank and other relevant publications have been briefly consulted as much as the scope of the paper and time frame allowed. Accordingly, the chapter is divided in to five sections. Section one deals with the introduction,highlighting the decentralization process in Ethiopia, the purpose and structure of the chapter. Section two dwells upon the basic concepts and definition of decentralization from the perspective of the current state of knowledge and practices. The third section grapples with the relevance of decentralization to the wider international development agenda; the fourth section summarizes the support that the international development agencies are rendering in bolstering up the decentralization and local government development endeavors. In this section emphasis is put on the urban sector; and the fifth and last section is a summary and recommendation pertaining to the process and practices of decentralization. Basic Conce pt s and Def init ion Until recently, most local governments had fewer powers to weld when compared with their respective national governments at the centre. More often they used to enjoy limited powers to raise and appropriate local taxes on their own. Conversely of these powers were exercised by higher levels of government’s legislations. Similar to the experiences of some other countries local governments had been partly or wholly funded by subventions from central government offers or through intergovernmental transfers. The institutions of local government vary greatly among countries, and even where similar arrangements exist, the terminology often varies (Misuraca, 2007). According to Misuraca, local governments are defined as ‘‘administration offices of an area smaller than a state”. The term is used to contrast with offices at nationstate level, which are referred to as “central governments, national governments or (where appropriate) federal governments’’. In Ethiopian context, the lower tiers of government are constitutionally established where by the regional states (that involves nine ‘‘national regional states’’ as well as two ‘‘city administrations’’ that is Addis Ababa and Diredawa), are entrusted with the power to collect and utilize a substantial amount of resources that commensurate with a part of the devolved responsibilities. Below the regional level, we find the district level (in rural context) and urban local governments (in urban context). In Addis Ababa alone there are ten districts (known as Kifle Ketema) and Diredawa there are 9 kebele level administrations (UN-HABITAT, 2002). Linking local government and local governance is the strategic goal of the decentralization policy. Conceptually, decentralization relates to the role of, and the relationship between, central and sub-national institutions, whether they are public, private or civic (ibid).The concept and definition of decentralization has evolved over time and has acquired several shades of meaning. The classic definition by Mawhood and Davey cited in Misuraca, (2007) is based on the following five principles: 160 Decentralization and service delivery in Ethiopia ‘‘Local authorities should be institutionally separated from central government and assume responsibility for a significant range of local services; these authorities should have their own funds and budgets and should raise a substantial part of their revenue through local district taxation; local authorities should employ their own staff…; councils predominantly composed of popularly elected representatives, would govern the authorities internally; and government administrators would withdraw from an executive to advisory role in relation to local governance’’. According to the Fifth African Governance Forum (2002), decentralization is defined as: ‘‘a global process expected to enhance the opportunities for participation by placing more power and resources at a closer, more familiar, more easily influenced level of government. In an environment with poor traditions of citizens’ participation, therefore, decentralization is perceived to be an important first step in creating opportunities for citizen-state interaction’’. Organizationally, decentralization, or decentralized governance, refers to the restructuring of authority so the there is a system of co-responsibility between institutions of governance at central, regional and local levels according to the ‘‘principle of subsidiarity’’, thus increasing the overall quality and effectiveness of governance system, while increasing the authority and capacities of sub-national levels. According to UNCHS (2001), decentralization of infrastructure and services are considered in a similar fashion with the application of the concept of subsidiarity and described as ‘‘…decisions regarding services should rest with the entity of governance closest to the community that is able to deliver these services in a cost-effective way while minimizing the externalization of environmental and social costs’’. In the context of Ethiopia, decentralization is a recent phenomenon with limited experience, but on the rise. The culture and experience of local government has been applied to W oredas (district) and municipalities. Since the 1950s Woredas have existed as the lower tier of government or basic unit of administration. In those earlier times, they were entrusted with a range of responsibilities over matters such as education, health, law and security within urban areas and their surrounding rural settlements. On the other hand with the further urbanization of the country, municipalities of various categories have been entrusted with the responsibilities of providing a range of services and carrying out the proper planning and development of urban areas. Nevertheless, in order to build a wellcoordinated modern administration, as well as empowered, committed and competent local authorities, informed and organized citizens and civil society groups have to be nurtured. To that end, it is in the belief of the Federal Government that a lot has to be done in the sphere of the capacity building, while many of the bilateral and multilateral agreements focus on some other vital areas of urban concern. Re levance of De cent r aliz at ion t o t he Wider Int er nat ional Development Agenda Since governments provide an enabling environment in which decision making and service delivery can be brought closer to the people especially to the poor, decentralization and local governance are increasingly recognized as basic components of democratic governance. Decentralization is instrumental in the overall attempts of re-inventing government and is essential to achieving the lofty targets of the Millennium Development Goals (MDGs). Under the combined thrust of accelerated globalization and persistent demands for deeper and expanded Decentralization and service delivery in Ethiopia 161 democratization, central governments are seeing their traditional roles being progressively squeezed. Re-inventing government would then require revisiting the nature and role of the state itself and sharing of political power and administrative responsibilities (UNDP, 2002). In the global context, it is believed that decentralization increases popular participation in decision making because it brings government closer to people, making it more accessible and knowledgeable about local conditions and more responsive to peoples’ demand (Misuraca: 43). Central/Federal governments located far away and preoccupied mostly with national and regional issues, fall short of adequately and efficiently providing services essentially local in nature. The case for decentralization can, in fact, be made on a number of grounds such as the following: • Local authorities tend to act more in line with local preference s and conditions, and their response to local needs is more expeditious; • Because decentralization tends to enhance transparency and accountability, the amount of money wrongfully diverted away from development often declines; • Decentralization makes development projects more sustainable and cost effective because local people are more likely to be involved in the design, execution, and monitoring. • Decentralization encourages communities to find solutions to their everyday problems, yielding innovative ideas, which are more attuned to local conditions; and • Decentralization provides opportunities for more people, including the under-represented groups to participate in decision that affect their life. But, for the process of decentralization to be sustainably successful there are preconditions which may not exist in full circle in a country at a given time. According to UNDP (2003), these prerequisites include: (i) Effective state capacity, in which decentralization requires co-ordination between levels of government and more regulation –not less-to ensure basic transparency, accountability and representation and the state has to raise adequate fiscal resources to support decentralization; (ii) Empowered, committed and competent local authorities; and (iii) Engaged, informed and organized citizens and civil society. Suppor t of Int er nat ional Deve lopment Agencies in t he Decent r aliz at ion Pr ocess Int r oduct ion The urban sector is increasingly receiving significant attention from the government as well as the donor community in Ethiopia. Cities and towns are growing rapidly and struggling to cope with the new challenges and problems. At the same time, the huge potential of the urbanization process in enhancing economic and social development in the country are now being recognized and tapped. To that end, the basic legislation for municipal self-government is in place, and the Federal Government has accorded a political priority by establishing the Ministry of W orks and Urban Development (MWUD) and the endorsement of the Urban Sector Component of the first five-year (2004/5-2009/10) plan for Accelerated and Sustained Development to End Poverty (PASDEP). In addition, the outputs of World Bank assisted Deepening Decentralization Technical Assistance (DD-TA) as part of the Capacity Building for Decentralized Service Delivery Program (CBDSD), Public Sector Capacity Building Program (PSCAP) and the German development cooperation (GTZ, now GIZ) support for Urban Governance 162 Decentralization and service delivery in Ethiopia and Decentralization Program are concrete living testimonies to the very critical need for translating the various strategies into a comprehensive and structured action plan with defined millstones. In fact, the significant role of donors and development partners has been underscored by a higher official of MW UD during a joint workshop held in 2006 the above mentioned that donor commitments are believed to enormously contribute toward aggressively as well as uplifting and promoting the urban agenda; deepening the discourse around the vital components of PASDEP and the on-going urban packages; integrating existing and future programs into the PASDEP framework. In the regard, joint effort is suggested essential to improve the coordination among donors and development partners. Finally since the need for more resource is becoming evident, it is now proposed to scale-up government efforts to mobilize more resources such as financing urban infrastructure. In light of the above new development, a brief assessment of the multi-faceted supports being rendered by international development agencies in the spheres of deepening decentralization effort of the Federal Democratic Republic of Ethiopia (FDRE) government in tune with the direction set in the Urban Policy and goals specified in the Urban Development and Urban Good Governance Packages is discovered vital and timely worth conducting. Wor ld Bank and ot her Donor s Suppor t f or Decent r aliz at ion Ef f or t in Et hiopia The Bank has been involved in a long process of capacity building to improve service delivery by the Ethiopian local governments. From the bank perspective, this process began in 1999 when the bank unit (AFTU1) and Urban Development Support Service (UDSS) (now UDCBO/UGGCBO) undertook a thorough review of the Bank’s historic support to local governments and agreed on a phased work program. Until 1999, W orld Bank support was provided through specific investment projects –although physical achievements were made, success was limited because of inadequate attention to fundamental capacity, financial and institutional issues. The first steps in the phased program were, CBDSD (2003-2007); PISCAP (2005-2009); and broadly support by Local Investment Grant (LIG) and the very recent Urban Local Government Development Project (ULGDP) which started in 2008. The vision of these programs were to start by creating conditions for autonomous urban local government with rights and responsibilities for service delivery; to build the capacity of federal and regional governments to support the decentralization process through policies, systems and enabling environments; to build the capacity of local governments to deliver services; and to provide financing to local government through transparent, predictable intergovernmental fiscal systems to address the capital investment backlog and enable cities to expand and sustain the delivery of services and thereby fulfil their responsibilities as well as generate more revenue (through LIG and ULGDP). The final steps in this phased work program will be to support a sustainable urban development finance system whereby cities will ultimately become creditworthy and have access to financial markets to finance their infrastructure and other capital investment needs (though future urban development operations). A) CBDSD According to the W orld Bank (2009), the World Bank’s involvement in the project was valuable for several reasons. First, the Bank’s global experience with the public sector capacity building and decentralized service delivery helped to inform the overall design of the project. Second, the Bank’s knowledge of countryspecific issues gained through the preparation of several important pieces of Decentralization and service delivery in Ethiopia 163 analytical work-the 1999 regionalization study, the 2000 review of the Civil Service Reform Program, the 2000 public expenditure review, the 2001 rapid assessment of municipal decentralization, and the 2001 woreda study-assisted in ensuring that the project suited to Ethiopian circumstance. Third, the Bank’s experience in Ethiopia with demand-driven models for providing assistance, particularly at the local level, helped in persuading the authorities to include funds to be made available to municipalities upon presentation of an acceptable proposal. Fourth, the Bank’s involvement helped to leverage assistance for government’s program from other development partners. The project comprised of three components: (a) implementing civil service reforms, (b) restructuring and empowering local governments, and (c) strengthening the Ministry of Capacity Building. According the approved Project Development Objectives (PAD), the second component (Restructuring and Empowering Local Government) was to finance activities to build the capacity of local governments to improve delivery of services. Assistance was targeted to local governments that were already financially sound and that had some capacity to deliver services. Strengthened municipalities could then serve as models for others. The subcomponents included in this specific component were designed to the over all support of deepening decentralization initiative of the FDRE by strengthening the capacity of different levels of governments and focused mainly on federal and regional policy and analysis, regional technical assistance for deepening decentralization, local government restructuring and capacity building, and pilot investment for infrastructure rehabilitation. The outputs of this component are rated satisfactory by the Bank and includes among others the following main outputs. (Page 30, 31 and 32 of ICR Report): • • • • The Bank has supported the Federal and Regional Policy and analysis that help for the development of many of the legislations including urban development policy, urban land, urban planning and compensation laws; and many of the operational manuals and standards applying in urban development and management including the Urban Management master’s program in the Ethiopian Civil Service College. The Regional technical assistances for deepening decentralization in which urban development and housing strategies, and operational manuals and specific technical support on digital map preparation for Addis Ababa, and cadastre for Mekele city are prepared. In Local government restructuring and capacity building component the preparation of the guidelines and the implementation of restructuring and performance improvement plans, revenue enhancement plans and financial management for 18 cities aimed at enabling them to improve their local service delivery were established. This is also applying as a performance measure under the ongoing Urban Local Government Development Project. The Pilot investment for infrastructure rehabilitation finally leads to the current ULGDP was designed and implemented in 17 participating cities for urban rehabilitation of infrastructure projects. Cities have gained experience through learning-by-doing in planning, prioritizing options with public participation, and appraisal of proposed projects. All participating cities are addressing sustainability through the preparation of the asset management plans and budgets that provide the operation and maintenance (this is an access criteria and performance measure under the Urban Local Government Development project). 164 Decentralization and service delivery in Ethiopia B. Public Sect or Capacit y Building Pr ogr am ( PSCAP) The objectives of this program is to improve the scale, efficiency and responsiveness of public service delivery at the federal, regional and local levels; to empower citizens to participate more effectively in shaping their own development; and to promote good governance and accountability. This objective was to be achieved by scaling-up Ethiopia’s ongoing capacity building and institutional transformation efforts in six priority areas: (i) Civil Service Reform; (ii) District-Level Decentralization; (iii)Urban Management Capacity Building; (iv)Tax Systems Reform; (v) Justice Systems Reform; and (vi) Information and Communications Technology. According to the Result Analysis of the program (2009), the support projects have made significant progress in achieving the development objectives, as well as one of the major strategy pillars of the plan for Accelerated and Sustained Development to end poverty (PASDEP) by building allinclusive implementation capacity across sectors in its four and half years implementation of the first phase. The project uses a sector-wide approach and pooled funding mechanism with contributions from the government of Ethiopia, the Canada International Development Agency (CIDA), the United Kingdom’s Department for International Development (DFID), European Commission, International Development Association (of the World Bank), and the Irish Aid. Total funds earmarked for the program were about USD 100 million from IDA and more than 200 million dollar from the government and other donors. Two out of six PSCAP programs supported urban and local government development. This allowed for follow through on recommendations raised by the CBDSD-DD-TA as well as other aspects of capacity building particularly at local and regional levels. The second phase of the program started this year and focuses mainly on scaling up the best practices of the first phase and further improves the capacity the public sector at all levels. According to the same report, PSCAP relating to its development objectives is served as one of the primary tools that supported federalism in Ethiopia by (i) concentrating most of the funding (over 80%) on capacity building at regional level and below; (ii) granting fiscal and administrative autonomy to the regions that allows for bottom-up regional planning, prioritization and implementation of capacity building activities within the assigned resource envelopes and agreed menu of activities. The regional PSCAP was the bulk of the program. It empowered regions to adapt and implementation national reforms and capacity building priorities envisaged under PSCAP’s six sub-programs in a manner that is efficient, accountable and sustainable. This was complemented by the support provided by Federal Directors such as development of prototypes for major reforms, quality assurance and technical assistance. The results achieved in PSCAP clearly show that regions have enhanced their capacity to manage major government-wide programs and, in some cases, were found to be the pioneers in efficiently organizing themselves to implement major programs such as Business Process Reengineering, Good Governance Package, the Result-Oriented Performance Appraisal Systems (ROPAS), etc. C. Local Invest ment Gr ant ( LIG) Currently under implementation and is designed to provide grants for capital investment to local governments through the intergovernmental fiscal transfer system-paying special attention to bringing ULGAs into the system. Key features are access criteria to be eligible for funding, to ensure implementation, sustainable operations and maintenance, and participatory selection of investment priorities. This is also designed to build on capacity (and create demand for capacity) for service delivery through CBDSD and PSCAP. Decentralization and service delivery in Ethiopia 165 D. The Ongoing Ur ban Local Gover nme nt Deve lopment Pr oj ect ( ULGDP) This project based on priorities identified through projects like CBDSD (e.g. municipal infrastructure plans) and consistent with PASDEP priorities and used as an instrument to simulate Good Governance and Urban Infrastructure Development program in the cities. The following are the rationale for the Bank’s involvement as described in the Project Appraisal Document (PAD) of the Urban Local Government Development Project (ULGDP). This project aims to build on and consolidate the Bank’s previous support for urban development. While a lot of progress has been made through the capacity building efforts under CBDSD and PSCAP, it is known that for capacity building to "take hold" it must be done in the context of real performance improvements with real outputs-learning-by-doing. Now that the legal and institutional systems and structures are in place (or in the process of being implemented), the provision of predictable resource flows tied to improved performance in the delivery and operation of services is the anticipated next phase in the Bank’s support for urban development. The project is focused on the 19 cities that have been supported through CBDSD (including Addis Ababa). The Bank has also been instrumental in working with the government to establish an intergovernmental fiscal architecture as part of its decentralization strategy. The elements of this architecture which are already in place, all of which have been supported by the Bank, include the following: • The Regional Block Grant. This formula-driven “equity” grant provides block transfers to regions from the federal treasury, and has been enhanced through the Protection of Basic Services (PBS) project. • The Regional PSCAP Specific Purpose Grant. This is a formula based, conditional grant (performance driven) that provides programmatic support for capacity building (initiated through the Bank’s PSCAP project as described above). • The Pilot Local Investment Grant. This provides support for capital investments in rural woredas, and is being initiated as a pilot with Bankfunding under the PBS project. If successful, it will be scaled up to become a programmatic, formula based conditional grant (performance driven) to finance capital investments to all rural local governments in Ethiopia. The only remaining piece of the fiscal decentralization architecture as originally conceived that has not yet been implemented is a programmatic, formula-based, conditional performance grant that would support the country’s urban local governments’ ability to expand and sustain the full range of municipal infrastructure and services. This project will support establishment of this grant mechanism as a Specific Purpose Grant (SPG) for urban local governments that is incentive-driven and supports enhanced performance by urban local governments in implementing the government’s urban reform agenda. The Bank’s history in working with Government of Ethiopia to set up the fiscal architecture for decentralized local government provides a clear rationale for the Bank’s involvement in this project. In addition to its historical involvement in urban development and the fiscal decentralization architecture, the Bank has been providing support for conditional grant transfers to local government through a number of projects in Africa (including Uganda, Tanzania, and Swaziland) as well as in other regions of the world. It therefore has a comparative advantage in supporting Government of Ethiopia’s efforts in this arena by bringing in the experiences and lessons learned from different countries. Put differently, the project is definite to contribute to the successful execution of the government policies, goals and programs in their respective pursuit of 166 Decentralization and service delivery in Ethiopia achieving the Millennium Development Goals (MDGs) and PASDEP targets as follows: • Improved management of urban centers and improved performance in sustained provision of services and infrastructure are expected to promote local economic development, improve the investment climate, generate employment and contribute to economic growth and poverty alleviation. • Implementation of the Urban Good Governance Program (UGGP) is expected to lead to improved management of cities, participation of citizens in, particularly, the investment planning process, and improved downward accountability. ULGDP will enhance Ethiopia’s commitment to decentralization as it has been designed to bring decision making closer to local levels and to citizens. • Improvements in municipal performance in providing sustainable, priority services and infrastructure are expected to improve the environmental conditions in cities, and lead to better health outcomes. Ger man Bi- lat er al Cooper at ion ( GTZ and Kf w ) The other development partners providing support for urban development in Ethiopia currently include German bi-lateral cooperation, through GTZ and KfW (the German financial aid) which have both been actively involved in capacity building and investment projects for urban development in Ethiopia. The Urban Governance and Decentralization Program (UGDP) as part of the bilateral support agreement between the two governments designed the challenges of Ethiopia’s fast urbanization. It contributes to Ethiopia’s comprehensive process of decentralization, including the transfer of power to regional and local governments. The program is jointly implemented by the Ministry of Works and Urban Development (MWUD), together with four regional states, a total of 18 secondary cities and Ethiopia’s capital Addis Ababa. They are supported by GTZ, KfW and CIM on behalf of the German Ministry of Development cooperation (BMZ). Based on the recent Ethio-German negotiation, the program support extended to eight new cities including the capital cities of the four emerging regions. The program aims to improve urban service and infrastructure for citizens, and to enhance good governance. It includes local efforts as well as regional and national policy advice to improve the participation of citizens in urban development; ensure the city governments’ transparency and accountability; increase the city governments’ capacities for financial management and revenue generation; and improve urban service and infrastructure delivery. To improve urban governance and municipal financial management the program supports capacity building in municipalities. During the Urban Local Government Development Program (ULGDP) design the program has contributed in the capacity building of the 18 cities to access a performance grant for local service delivery cofinanced by the W orld Bank. The program is also well placed within the Ethiopia’s national ‘‘plan for accelerated and sustainable development to end poverty’’ (PASDEP) and the urban governance reform. Conclusion and Recommendat ions In conclusion, capacity development-in a manner that enables participation of stakeholders and international development agencies-is crucial to achieving decentralized all round local governance. Experience has shown that there is still gap between existing capacities and demand for services and accountability at the local level. This situation calls for the creation of awareness, clear articulation of roles and responsibilities, and harnessing of the potentials of the different actors involved including the experience of international development agencies. Decentralization and service delivery in Ethiopia 167 Hence, based on the previous experiences and lessons learned in the area by the federal government, experts and practitioners and the involvement of different development partners, the key message and recommendations for strengthening local governance-decentralization efforts can be summarized as follows: • Realizing that decentralized governance for local development and poverty reduction is a long-term learning and development process requiring a sustained commitment, coordination of efforts, and strengthened capacities of all stakeholders at various levels is an urgently needed endeavour worth expediting; • Moreover, at the national/federal and regional levels, an enabling environment to ensure that devolution of authority/power to the local level shall be determinedly facilitated so that the drive toward community empowerment could be rendered successful; • For decentralization to contribute toward the attainment of local development and poverty reduction goals, it is essential to give due attention to the continuous deepening of the administrative, fiscal and political decentralization. • For decentralization to be effective, adequate emphasis should be given to participatory monitoring and evolution at all levels; and • Although the role of international development agencies and development partners in transferring knowledge of good practices and support the implementation of these practices are very crucial and has significant impact, decentralization initiative should not be regarded as venture entirely dependent on external assistance. Neither shall be assumed as a sole panacea to mitigate the challenges that urban Ethiopia is currently encountering. Nor shall it indulge into extending wholesale prescription. Instead it shall seriously take into account the specific contexts. Moreover, a specific incentives focused-framework able to motivate local people shall be established and put in effect. 168 Decentralization and service delivery in Ethiopia Part VII Conclusions Conclusions and Future Research A. Bongwa and S. Kasahun This book describes decentralization and service delivery in urban Ethiopia. Decentralization has become a buzz word within development discourses. However, there is still an ongoing debate and disagreements on the different types of decentralization and the extent of the success of decentralization on imposing service delivery. Decentralization is a huge concept which describes, on one hand, the transfer of authority and responsibility from the central government to the lower levels. And on the other hand the concept includes political, fiscal, administrative and market issues. The chapters in this book reveal how far decentralization has been implemented in Ethiopia and how it affects urban areas in service delivery. The book illustrates the outcomes of decentralization among local governments and the challenges of decentralized planning, decision making, public participation, and gives guidelines as to what should be considered by the policy makers. This book could be regarded as a contribution to the debate on the decentralization with a focus to what the extent decentralization enhances service delivery for urban people. Decent r aliz at ion in Et hiopia The book covers different types of decentralization. The first part is about political decentralization (chapter 2) and explains how power has been decentralized to local level governments and how the governance structure has been restructured with the objective of establishing a broad based community awareness of the participation in the reform process and promote principles of democracy, transparency and accountability. Ethiopia's ongoing political and economic reforms demand effective decentralization in which, the involvement of the people directly or through their democratically elected representatives are given paramount importance. since 1991 Ethiopia is engaged in the process of decentralization, by transferring responsibilities of the state to lower tiers of government to bring not only political stability and contribute to democratic governance, but also improve service delivery and attain equity. According to Tegegne (1998), the first phase of decentralization (1991-2001) concentrated on creating and empowering Regional Governments. This has changed the local and central government systems whereby the Regional Governments have been entrusted with legislative, executive and judicial powers with respect to all matters concerning their areas. The second phase of decentralization, which was initiated, in 2002-03, has been focusing on a series of legal, fiscal, and administrative reforms beginning with four of the largest regions (Amhara, Oromiya, SNNPR, and Tigray). During the second phase, some devolution to the Woreda level was undertaken. In urban areas, urban administrations with Woreda status and responsibilities were created. Moreover, the second phase of decentralization has worked towards empowering communities to actively participate in development activities, improve local democratic governance, and strengthen the capacity of delivering basic services. By and large in both phases of decentralization a new governance framework has been established which serves to strengthen accountability for better service delivery. Local governments have been delegated with responsibilities regarding service delivery. However, clarification of these responsibilities has to be worked out within all government levels. The decentralization process in Ethiopia has Decentralization and service delivery in Ethiopia 169 created framework, whereby control over resources has been devolved substantially and a platform for citizen participation has been developed. As the result of the decentralization process the structure of the Ethiopian government currently has four tiers. The highest tier is the ‘Federal’ then ‘Regional’ then ‘Woreda’ and the lowest ties are ‘Kebele’. All regional states have developed their own constitutions, which are more or less a copied version of the federal constitution. The country has introduced a vivid transformation in the governance system underpinned by the legal framework allowing more participation of the regional states regarding matters that concern them. With the objective of creating and strengthening urban local government that will ensure public participation, democratization; and enhance decentralized service delivery through institutional reforms, capacity building, systems development and training, the government has been engaged in a large scale government reform resulting in the creation of institutional and legal frameworks for urban local government authorities. This endeavor is consistent with the Habitat Agenda which emphasizes the role of local governments in governance for sustainable development that at the local level needs to be enhanced and promoted by further strengthening local authorities. Empowering local authorities can play a more effective role in local sustainable human settlements development through appropriate decentralization of responsibilities and resources, and increasing local participation, in conformity with the legal framework and policies of each country (UN-HABITAT, 2001:8). The decentralized governance in Ethiopia has provided the legal, administrative and fiscal frameworks for the empowerment of people and their institutions at woreda levels. However, capacity building of various levels of government is the key factor in achieving successful decentralization. When addressing the issue of capacity the government has carried out a Civil Service Reform Program (CSRP), which focused on capacity building and adjusting to decentralization. Administ r at ive De cent r aliz at ion Administrative decentralization has an objective to enhance the effectiveness of local government authorities in the delivery of quality services in a sustainable manner. Chapter 3 showed how administrative decentralization has played a role in planning, budgeting, staffing, program and project implementation, information management and operation and maintenance. This has been also further elucidated by taking the case of education service in Addis Ababa (chapter 12), as to how the administrative decentralization improves the availability of resources to local government authorities and improving the management of those resources. De ce nt r aliz at ion and Civil Se r vice Re f or m The Civil Service Reform Program (CSRP) in Ethiopia has been used as a supporting strategy for more decentralization in government operations and improving service delivery. CSRP, besides supporting decentralization, has helped to bring a better service delivery and efficient resource management. CSRP in Ethiopia, is the process of capacity building by altering limitating rules and regulations to obtain a more efficient dedicated and ethically performing civil servants in the newly decentralized environment. There is national accord in Ethiopia that capacity-building at all levels of government warrants a serious intervention and is indispensable in implementing decentralization. The intervention starts with training and education especially in addressing the human resource demand of regions to be able to implement the new responsibilities. In this regards, the Ethiopian government has established the Ethiopian Civil Service College with the objective of building the capacity of the 170 Decentralization and service delivery in Ethiopia civil service through education, research, training and consultancy work. This capacity building on one hand addresses the need of human resource to regions and local government and on the other hand changes the working system: - rules and regulations, and structure and procedures have played a significant role in implementing the decentralization program and improving the service delivery. Fiscal Decent r aliz at ion Financial responsibility is a core component of decentralization. If local governments and private organizations are to carry out decentralized functions effectively, they must have adequate revenues—raised locally or transferred from the central government—as well as the authority to make expenditure decisions. Fiscal decentralization can take many forms, including: 1. Self-financing or cost recovery through user charges 2. Cofinancing or coproduction, in which users participate in providing services and infrastructure through monetary or labor contributions 3. Expansion of local revenues through property or sales taxes or indirect charges 4. Intergovernmental transfers of general revenues from taxes collected by the central government to local governments for general or specific uses Authorization of municipal borrowing and mobilization of national or local governme resources through loan guarantees. In Chapters 4 and 5 we take this a step further and look into detailed aspects of institutionalizing fisacal decentralization. Financial decentralization has increased the resources available to local government authorities and improved the efficiency of their use. Decentralization has encouraged the expansion of local revenues through property, sales, local taxes and indirect charges. As a result of decentralization the source of public revenue is being revised in order to develop a fairer sharing of revenue and revenue sources between federal, regional and Woreda level governments. Mar ket ( Economic) Decent r aliz at ion 13 The most complete forms of decentralization from a government’s perspective are privatization and deregulation; they shift responsibility for functions from the public to the private sector. They allow functions that had been primarily or exclusively the responsibility of government to be carried out by businesses, community groups, cooperatives, private voluntary associations, and other nongovernmental organizations. Privatization and deregulation are usually accompanied by economic liberalization and market development policies.  13 Privatization—Privatization can range in scope from the provision of goods and services based entirely on the free operation of the market to public-private partnerships in which government and the private sector cooperate to provide services or infrastructure. Privatization can mean allowing private enterprises to perform functions that had previously been monopolized by government. It can also mean contracting out the provision or management of public services or facilities to commercial enterprises. There is a wide range of public-private institutional forms and of ways in which such functions can be organized, particularly in infrastructure. Privatization can also include financing public sector programs through the capital market, with adequate regulation or measures to ensure that the central government does not bear the risk for this borrowing, and allowing private organizations to participate. And finally, it can mean transferring responsibility for providing services See Litvack et al. (2001?? ) Decentralization briefing notes Decentralization and service delivery in Ethiopia 171 from the public to the private sector through the divestiture of state-owned enterprises.  Deregulation—Deregulation reduces the legal constraints on private participation in service provision or allows competition among private suppliers for services previously provided by the government or by regulated monopolies. In recent years privatization and deregulation have become more attractive alternatives to government provision in developing countries. Local governments are also privatizing by contracting out service provision or administration. This is an area where more still needs to done in terms of research as regards Ethiopia. Inf or mat ion and Monit or ing Accountability is a prerequisite for improved public sector performance, and information is the key to accountability. The systematic collection, analysis, and reporting of information are critical elements in decentralization programs because that information can be used to verify compliance with policy goals, analyze alternative outcomes, and guide future decisions. Information on financial flows (i.e., budgeting and expenditure reporting) as well as other inputs, outputs and, where possible, outcomes, is essential at the local level, to encourage public participation. Public participation in a decentralized system is vital in improving service delivery and the access to services. It also supports tailoring government actions to public necessities and in increasing the opportunities for state-society interactions. Unless the local public is aware of what public goods and services are provided, how well they are provided, who the beneficiaries are, how much the goods and services cost, and who paid for them, the public will not encourage an effective government. Central monitoring and evaluation of local performance, has much the same effect, except that national interests replace particular local interests. The monitoring aspect has to be combined at both the centraland local levels. Without some central monitoring, there can be no assurance that functions of national importance are adequately performed once they have been decentralized. There must be an understanding as to the implication of the macro economy on decentralization. In this regard, Ethiopia has made great strides in implementing the decentralization of power to lower-level governments. As a result, regions appear to have a large amount of autonomy and decision-making power, which also includes monitoring at local level. Regions are allowed to determine what formula to use to distribute block grant resources across W oredas. The task of monitoring and assessing Woredas finances can be strengthened considerably through improvements in financial accounting and reporting, and the establishment of analytical capabilities for monitoring and evaluation. But the need for careful monitoring goes beyond finance. Depending on the service delivery objectives, the need for monitoring differs, for example, different aspects of decentralization may have different effects on the construction and maintenance of various types of infrastructure, or health care programs, or education. If the objective is for safety nets to reach the poor, information is required regarding who the poor are and where they are located, and how much of the benefits from the program are reaching this target group. Hence, to improve monitoring and reporting, data should be regularly collected and reported the respected level of government and to the public. The data should be collected and processed on a regular and timely basis. Otherwise, it is difficult to consistently monitor decentralization. 172 Decentralization and service delivery in Ethiopia Capacit y of Local Gover nment s There is an ongoing debate regarding decentralization and the capacity of local governments to assume new roles and responsibilities as a result of decentralization. Decentralization proposes that local governments’ proximity to their constituents will force them to be better than central governments at managing resources and matching the public preferences. However, it is not at all clear that local governments and communities have the capacity to translate this information advantage into an efficiency advantage. Local governments may not have the technical capacity to implement and maintain projects effectively. For instance in Ethiopia, regional and city governments have been taking measures to improve the delivery and management of urban land. The development and delivery of land in industrial zones for private investment in the major cities has, in particular, been encouraging, although a comprehensive evaluation of their impact remains to be done. Many cities have also been delivering land for private housing construction. Yet land development and management remains one of the areas where significant improvement in terms of governance is required. Hence, Improve local government capacity is still an area warranting a huge intervention by federal, regional and local governments. The Way For w ar d The chapters in this book have vividly elucidated that Local capacity can be built by the process of decentralization, particularly when appropriate programsthat increase interaction with the private sector are included the decentralization design. However, a large up-front investment is essential in local capacity building. It has been observed in the case of Ethiopian decentralization capacity is one of the most important factors creating a well-functioning decentralization. The decartelization has been implemented with existing local institutions. The remaining challenge will be to reinforce these institutions. In its democratic political aspect, decentralization, as currently conceived and increasingly practiced in the international development community, has two principal components:- participation and accountability. There are of course key questions that have not been addressed in this book and should be the platform for future research: ( and in this case we focus on service delivery) 14 Questions on decentralized services include :         14 Where has decentralization been associated with improved service delivery and how can these improvements be explained? What mix of institutional arrangements increases the efficiency of service delivery? What roles do competition and accountability play in improving services? Through what mechanisms can service delivery institutions—whether central states, local governments, NGOs or private institutions—be held downwardly accountable to the populations they serve? What are the best means for also holding them accountable to central government standards? What are the best arrangements for financing service provision? Which decisions concerning service provision should be retained by the central government? Which require local decision making and participation? How can the transaction costs of participatory approaches be weighed in this balance? See Ribot (2002) African Decentralization: Local Actors Powers and Accountability Decentralization and service delivery in Ethiopia  173 Service provision is an important aspect of decentralization, and it has recently been at centre stage. There is a need to better understand the sequencing of service provision with respect to other aspects of decentralization such as the establishment of democratic local authorities, the establishment of revenue mechanisms and so forth. Comparative research on sequencing is very important. Indeed, the question could be posed: Are decentralizations that place service delivery too early in the process running into problems, or is service provision a good lead activity? We can also look at other cross cutting as participation and accountability. Participation is chiefly concerned with increasing the role of citizens in choosing their local leaders and in telling those leaders what to do, thus, providing inputs into local governance. Accountability constitutes the other side of the process whereby local governments have to explain or justify what they have done or failed to do for the public. Accountability can be seen as the validation of participation, in that the test of whether attempts to increase participation prove successful is the extent to which people can use participation to hold a local government responsible for its actions. Improved information about local needs and preferences is one of the theoretical advantages of decentralization. Therefore, there must be a continuous effort in improving public participation and accountability at all levels of government structures in Ethiopia. Moreover, given the crucial position of the Woredas in the service delivery chain, the functional relationships between the Woredas and the regional and Federal governments have to be consolidated and more clearly articulated. Otherwise, the benefits of decentralization will not be maximized without the involvement of citizens, the community, and services users. The democratic local governance currently under way in Ethiopia holds much promise for developing effective systems of public accountability that will ensure that civil servants are responsible to elected officials, and that the latter are in turn responsible to the public that elected them. In the process these systems of accountability should increase the pressure for more transparent local governance, in which corruption will be easier to bring to light and thus to curtail. Moreover, Ethiopia’s policies and strategies for a development framework emphasises the need of public participation. Citizens are acknowledged as playing a crucial role in mobilizing their communities, holding local governments accountable, and accelerating the process of democratization. Official pronouncements are matched by numerous local organizations, including community level organizations, in the education, health, and water sectors. 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