Decentralization: Can It Help the Poor?

Across diverse economic and policy sectors, from health care and education to parks and wildlife management, decentralization is one of the most frequently pursued institutional reforms in developing countries today.

Decentralization is a process by which a central government transfers some of its powers or functions to a lower level of government or to a local leader or institution. In the naturalresource sector, an example of decentralization might be transferring from central to local government the responsibility for managing a tract of forest land, including the right to collect some of the income from sales of timber harvests in that forest.Or the central government might give a farmers group responsibility for managing an irrigation system, or grant a village council the right to manage wildlife and run a commercial tourism operation in a national park (WRI et al. 2003:97).

Decentralization is being driven by powerful economic, political, and technological forces. International development agencies such as the World Bank have placed decentralization in a prominent position on their agendas, and nongovernmental organizations (NGOs) and governments alike have promoted the concept, although often for different reasons. Advocates of decentralization cite the potential for greater efficiency, equity, and accountability when decision-making is brought “closer to the people” (Ribot 2004:7; WRI et al. 2003:92-97). In theory, devolving power from central government means empowering local institutions that can better discern how to manage resources and deliver services to meet the needs of local people. Modern communication options like the Internet, television, and mobile phones help make local people and organizations more aware of their rights, more able to communicate and organize, and therefore more capable of asserting their rights.

But are central governments really so eager to give up some of the powers they have traditionally wielded? In the 1980s and early 1990s, decentralization emerged as a priority in an era of economic and budget crises. Shifting responsibility for health care, education, parks, and other planning and service functions to local governments offered opportunities to reduce central government budget deficits. Central governments are all too willing to pass on to local and community institutions the responsibility for managing resources and delivering services without providing them with necessary financial or technical support. They tend to be much more reluctant, however, to give up their powers to collect and allocate user fees, fines, or other revenues (WRI et al. 2003:98).

Areas with rich natural resource endowments tend to be geographically isolated and far from centers of political power where the most momentous development decisions are made. Furthermore, central governments are often run by and for elites, and people from poor rural communities or ethnic minority groups seldom occupy senior positions in the decision-making levels of bureaucracies (Sibanda 2000:3). (See Table 3.1 Decentralization: Will It Help The Poor?)

Not All Decentralization Is Created Equal

Some decentralization advocates—governments, donors, and NGOs—view the poor as particular beneficiaries of decentralization. They envision reforms that make policies more useful to the poor, and processes that encourage the involvement of the most socially disenfranchised people in natural resource decision making— those people who have the greatest stake in the outcome of management decisions (Asante and Ayee 2004:3-6,21-22). These advocates point out that effectively implementing poverty reduction strategies often requires specific local knowledge that is best found in local institutions, and that strengthening local delivery capacity for services requires genuine devolution of authority to these institutions (Asante and Ayee 2004:5).

Some countries have responded positively to these arguments. Bolivia, for example, made decentralization across several sectors part of a package of anti-poverty reforms in the 1990s (Pacheco 2004:85, 90). Most West African countries have also declared local development a prime goal of their decentralization efforts (Ribot 2002:8).

Despite its theoretical potential, the record of decentralization has been decidedly mixed. This is true both in general and with respect to poverty reduction. In some instances, efforts to decentralize management of forests, land, water, and fisheries have shown positive outcomes: rural citizens conserving their natural resources; local councils that are increasing revenues from resource use; the poor more involved in local governance institutions and reaping more monetary benefits from local resources; and local governments providing better basic services. One of the longest-standing cases of decentralized environmental management with evident benefits to livelihoods is in Kumaon, India. Since the 1930s, elected forest councils, called van panchayats, have had the right to manage forest use, raising revenue from the sale of fodder and dead trees and enforcing regulations on forest use (Ribot 2004:22).

Similarly, some wildlife co-management schemes in Africa have yielded improved local infrastructure such as roads and schools, while community forest management in Mexico that has come about through decentralization has enabled communities to build water networks, schools, and clinics (Shyamsundar et al. 2004:9). In Ghana, devolution of power to district assemblies has improved provision of basic services and infrastructure in rural areas through construction of more feeder roads, clinics, public toilets, classrooms, and the like (Asante and Ayee 2004:8).

Yet in most decentralization efforts to date, the intended benefits for local democracy and for the poor remain largely unrealized, due to flawed implementation of the reforms. The choice of which institutions to empower with new management or decision-making responsibilities, and the ways in which those institutions are held accountable to the people, have profound implications for the effectiveness of decentralization—and whether the benefits reach the poor (Ribot 2004:25).