Local government capacity

Ideally, real good social science research offers a good combination of theory and empirical evidence. Theory needs to guide the empirical part of research and in turn gets moulded by the evidence in the form of a feedback loop.

However, in reality, there is some social science research that is strong in theory and others that excels in empiricism. There is often overlap of the two in research with their own varying distinct strengths.

Ali Cheema of LUMS (one of his many hats) is an empiricist par excellence. He works with different teams of researchers and gets to the heart of the matter with his solid empirical research on a broad range of social science and economics subjects.

Today we are going to refer in this article a 2019 research paper that Ali Cheema has co-authored along with other academics: ‘State capacity in Punjab’s local governments: Benchmarking existing deficits’, International Growth Centre, S-37433-PAK-2.

There is a need for better service delivery due to the increasing urbanisation that can only materialise with the effective capacity of the bureaucracy. This has a direct impact not only on service delivery but also on the ability to raise revenue for the government and the ensuring better quality of regulation.

The upshot of the paper is that there is lots of generalised discussion on the lack of local governments’ capacity in Pakistan but not much has been done to probe it empirically. Provincial governments often do not want to pass on the powers to the local governments under democratic dispensations citing lack of capacity as one of the reasons.

This research delves deeper into the issue of examining the urban local governments capacity, particularly their ability to utilise funds with the help of primary data collection through financial accounts data of all urban and rural local governments of Punjab for FY 2017-18 and FY 2018-19 and a management survey of only urban local governments of Punjab. The paper finds that there is considerable variation in the ability of various local governments to utilise budgets for developmental work.

Another important contribution of the research is that it does not see local government’s capacity to utilise budgets as a standalone quality; rather it links it to the human resource capacity, legal and enforcement capacity, and application of automated systems capacity.

Unless local governments have good human resources and digital literacy, they will find it hard to utilise financial resources given to them in an optimal manner. In other words, there is a positive correlation between the budget utilisation capacity of the local governments and the human resources capacity and adoption of managerial incentives.

The paper presents a detailed analysis and comparison of the Punjab Local Government Act (PLGA) 2013 of the PML-N with the PLGA of 2019 by the PTI government. Punjab has 36 districts, and these districts were divided into 144 tehsils or sub-districts.

Under PLGA 2013, there were 35 zila councils in the rural areas and 194 urban local governments. The mayors of these local governments were indirectly elected and they were dubbed as “weak-mayor form of government” in the literature as the mayors lacked many powers to run the local governments.

Under PLGA 2019, the local governments numbers have proliferated. Now there are 221 urban local governments and 139 rural local governments in Punjab and the mayor and council is directly elected.

Another distinguishing feature of the PLGA 2019 is that it requires the Punjab provincial government to devolve at least 26 percent of its revenue to elected local governments that would have increased eight times more the amount available to the local governments compared to 2017-18 under PLGA 2013.

The Public Finance Award has recommended much more resources to be given to the local governments from 2018 onwards. If fully implemented, it would mean local governments would have more funds to utilise than in the past; their ability to utilise budgets is crucial.

In a way this research goes beyond the common parlance that there are not enough funds for the local governments. It examines whether the funds that are being provided are being well used.

Results of research showed that there is a low-performing cluster of local governments that could not even utilise half of their funds and there is another “decent” cluster of local governments that were able to utilise from 80-100 percent of their allocated funds. So, there is variance in terms of the ability of local governments to utilise funds.

Average rural local government only utilized 33 percent of its budget, while an average urban local government utilised 71 percent of its funds. This has huge implications for PLGA 2019 that has increased rural local governments three-fold.

A management survey of urban local government officials on institutional development aspects was conducted to map the capacities of human resources, automation of systems, legal and enforcement capacity, planning, financial management, and delivery of services.

There were severe human resource deficits in capacity that had an adverse impact on the ability to utilise budgets in the local governments. There is a need for strong organisational capacity for better performance, which has been found lacking. The research also found an abundance of political interference in the running of local governments.

The paper concludes by stating, “Given the failure of the internal audit system and given excessive political interference, this will also involve balancing adequate protection of local government managers with appropriate responsiveness and accountability to the elected politicians and ultimately the citizens. This may involve establishing objective standards for assessing the performance of local government managers and establishing third-party audits to complement”.

Locally grounded research can offer vistas for objective analysis based on evidence and can open possibilities for corrective policy direction and actions.

The writer is an Islamabad-based social scientist.

Email: fskcolumns@gmail.com