Linking Decentralisation and Sector Reform

In the majority of cases, development cooperation is involved in sectors which include significant service delivery responsibilities for governments, such as health, education, water, agriculture, and roads. In order to reach the target population, services need to be geographically dispersed. This often involves sector ministries of the central governments as well as local governments. The distribution of responsibilities between different levels of government is a key factor of any sector approach. Current arrangements distributing competences between national and local governments as well as ongoing processes of decentralization must be taken into account when designing, funding and implementing sector reform programmes. According to the EC 2008 Guidelines for Support to Sector Programmes it is important to tailor sector reform to fit local institutions. The support to the sector should not inadvertently undermine the role and capacity of the decentralized bodies responsible for service delivery. This affects all areas of the programme, not least its budget: If budgetary responsibilities for the sector are decentralized, there will not be one sector budget but many at different levels.

Decentralization and sector reform are both complex processes which are highly demanding of managerial and administrative capacity. Practical problems in coordinating such parallel reform processes include the fact that normally, different ministries are involved, with different objectives and priorities for reform. The sector ministry is likely to give more attention to technical efficiency in delivering services, whereas the Ministry of local government usually looks at institutional aspects of the reform and issues of governance and participation. Transitional problems of local governance (such as weak technical or managerial capacity, non-consolidated local accountability structures) will cause some frustration for sector reform focusing on efficient service delivery, sometimes even creating political pressure to stop the decentralization process. However, the appropriate response in most cases is to slow down the pace of sector reform, invest in capacity building at local and/or central level and to support in policy dialogue.

Useful links and documents:

· EuropeAid, Support to Sector Programmes, Tools and Methods Series, Guidelines No.2, Chapter 3.4 on Sector approaches and Decentralization,

· SDC, Health sector reforms and decentralization,