COVID-19 and Progresson Subnational Localisationof the SDGs

The United Nations University Institute for the Advanced Study of Sustainability (UNU-IAS) is aleading research and teaching institute based in Tokyo, Japan. Its mission is to advance efforts
towards a more sustainable future through policy-oriented research and capacity development
focused on sustainability and its social, economic and environmental dimensions. UNU-IAS
serves the international community through innovative contributions to high-level policymaking
and debates, addressing priority issues for the UN system.
ias.unu.edu
United Cities and Local Governments Asia-Pacific (UCLG ASPAC) is the largest regional section of
UCLG and serves as a key knowledge management hub on local government issues in the region.
UCLG ASPAC promotes the policies and experiences of local governments in key areas such as
poverty, sustainable development, and social inclusion. It engages in policy advocacy, capacity building
and training, institutional development, and information and best practices sharing and replication.
uclg-aspac.org

COVID-19 and Progress on Subnational Localisation of the SDGs

1

© United Nations University Institute for the Advanced Study of Sustainability 2021
© United Cities and Local Governments Asia-Pacific 2021

September 2021
Tokyo, Japan and Jakarta, Indonesia
The views expressed in this publication are those of the authors and do not necessarily reflect the viewsof the United Nations University or UCLG ASPAC.
COVID-19 and Progress on Subnational Localisation of the SDGs follows the United Nations practice inreferences to countries. Where there are space constraints, some country names have been abbreviated.
Mention of a commercial company or product in this publication does not imply endorsement by UNU-IAS
or UCLG ASPAC.
The use of information from this publication concerning proprietary products for publicity or advertising is
not permitted. Reproduction and dissemination of material in this publication for educational or other noncommercial purposes are authorised without prior written permission from the copyright holders, provided
the source is fully acknowledged.
Reproduction of material in this publication for sale or other commercial purposes, including publicity andadvertising, is prohibited without the permission of the copyright holders.

COVID-19 and Progress on Subnational Localisation of the SDGs

2

Contents

Foreword by UNU-IAS 									Foreword by UCLG ASPAC								Acknowledgements									

5
67Executive Summary 									

8

1.

Introduction									

10

2.

Subnational Governance and Progress on Localising the SDGs			
2.1. Impact of COVID-19 on Subnational Governments				2.2. Coordination Mechanisms for Managing the COVID-19				
2.3. Impact of COVID-19 on Subnational Localisation of the SDGs			

12
12
14
16

3.

Subnational Finance and Financing for the SDGs					3.1. Impact of COVID-19 on Subnational Finance					3.2. Impact of COVID-19 on Subnational Revenue, Debt Management, and Borrowing
3.3. Impact of COVID-19 on Subnational Expenditures				3.4. Impact of COVID-19 on Financing for the SDGs 				

18
18
21
23
25

4.

Subnational Strategies for Sustainable and Resilient Recovery 		
4.1. Economic Recovery Measures at the Subnational Level				4.2. Desired Policy Directions and Instruments at the National and Subnational Levels
4.3. Prioritised Tools for a Successful Exit and Recovery Strategy			
4.4. The SDGs in Post-pandemic Development Policies				

26
26
27
29
30

5.

Conclusion and Policy Recommendations						

32Annex											Data Overview										Questionnaire										Subnational Governance Context								

39
39
40
40

Glossary										

44COVID-19 and Progress on Subnational Localisation of the SDGs

3

Contents

FiguresFigure 2.1.
Figure 2.2.
Figure 2.3.
Figure 2.4.
Figure 2.5.
Figure 2.6.
Figure 2.7.
Figure 2.8.
Figure 2.9.
Figure 3.1.
Figure 3.2.
Figure 3.3.
Figure 3.4.
Figure 3.5.
Figure 3.6.
Figure 3.7.
Figure 3.8.
Figure 3.9.
Figure 3.10.
Figure 3.11.
Figure 3.12.
Figure 3.13.
Figure 4.1.
Figure 4.2.
Figure 4.3.
Figure 4.4.
Figure 4.5.
Figure 4.6.
Figure 4.7.
Figure 4.8.
Figure 4.9.

COVID-19 crisis overall impact		
COVID-19 crisis overall impact, by city type				Main challenges faced in managing the health crisis				Lack of financial resources as a challenge, by city type				Effectiveness of coordination mechanisms in managing the COVID-19 crisis
Effectiveness of specific coordination mechanisms, by city type			Impact of the COVID-19 crisis on the progress of SDG localisation		
Challenges to SDG localisation during the COVID-19 crisis			
Subnational progress in achieving the SDGs during the COVID-19 crisis		
Impact of the COVID-19 crisis on subnational finances				
Impact of the COVID-19 crisis on subnational finances over shortand medium-term, by city type
Differentiated impacts of the COVID-19 crisis in the short and medium-term,by extent of fiscal transfer
Differentiated impacts of the COVID-19 crisis in the short and medium-term,by type of primary economic activity
Impact of the COVID-19 crisis on subnational revenue			Impact of the COVID-19 crisis on subnational tax revenue, by city type		Impact of the COVID-19 crisis on subnational debt management and borrowing
Impact of the COVID-19 crisis on subnational debt management andaccess to borrowing, by city typeNew subnational borrowing to cope with the crisis, by type of loan		Impact of the COVID-19 crisis on subnational expenditures			
Pressure on subnational expenditure resulting from COVID-19 			
Impact of the COVID-19 crisis on subnational financing programmes
relevant to achieving the SDGs
Subnational governments’ financial challenges in localising the SDGs
during the COVID-19 crisis
Overall availability of economic recovery measures				
Policy directions desired by subnational governments				
National-level policy instruments desired by subnational governments		
Tools prioritised for a successful exit and recovery strategy, by policy area
Tools prioritised for a successful exit and recovery strategy			Utilisation of the SDGs as a roadmap to build back better			SDGs assigned high priority in post-pandemic development policies		
Utilisation of the SDGs towards local building back better strategies		
SDG-relevant approaches used in local building back better strategies		

COVID-19 and Progress on Subnational Localisation of the SDGs

12
12
13
14
15
15
16
17
17
18
19
20
21
21
21
22
22
23
23
24
25
25
26
27
28
29
29
29
30
31
31

4

Foreword by UNU-IAS

On 25 June 2020, the UN SecretaryGeneral launched the United Nations
Comprehensive Response to COVID-191 tosave lives, protect societies, and recover
better. As part of the response the SecretaryGeneral issued the policy brief COVID-19 in
an Urban World2, which called for intensified
commitment and action for cities to overcome
the impacts of the pandemic in three key areas:
tackling inequalities and development deficits,strengthening the capacities of local actors, andpursuing a resilient, inclusive, gender-equal, andgreen economic recovery. Since then the urgent
need for action has only increased.
Subnational governments have implemented
important measures to safeguard lives andlivelihoods and mitigate the devastating socioeconomic impacts of the pandemic. Yet, theircapacity to respond is under heavy pressure
as the COVID-19 crisis continues to unfold.
The response and recovery require multi-level
coordination, driven by solidarity and multistakeholder partnerships. Support for the mostvulnerable people and communities is essential.
Recovery is an opportunity to accelerate localisation of the SDGs, address the climate crisis,
and tackle inequality and gaps in our social
protection systems. We need to encourage
subnational governments to transition to a greener,
more sustainable and resilient future, andimprove preparedness for health emergencies
and multi-hazard risks. Lessons learned fromCOVID-19 need to be understood, shared, andapplied towards more resilient policymaking
and long-term preparedness. At all levels,

solidarity and effective partnership are not
only moral imperatives, they are practicalnecessities in an interconnected world, where
none of us is safe until all of us are safe.
Recognising the many dimensions and farreaching impacts of the crisis for subnational
governments, UNU-IAS and UCLG ASPAC
partnered to develop this publication. It highlights
some of the challenges and opportunities facing
subnational governments in overcoming the
COVID-19 crisis and sustaining their efforts toattain the SDGs. It seeks to understand how
the goals can help cities and regions shape andimplement COVID-19 recovery strategies andshare these lessons.
The universality, interdependence, indivisibility,
and transformative nature of the 2030 Agenda for
Sustainable Development provides a vision and acritical opportunity for national and subnational
governments to deliver a resilientand sustainable recovery fromthe deep impacts of thepandemic across society.
Shinobu (Yume)
Yamaguchi
Director,
UNU-IAS

United Nations. 2020a. “United Nations Comprehensive Response to COVID-19. Saving Lives, Protecting Societies, Recovering Better.” September
2020. https: www.un.org/pga/75/wp-content/uploads/sites/100/2020/10/un_comprehensive_response_to_covid.pdf.
2
United Nations. 2020b. “Policy Brief: COVID-19 in an Urban World.” July 2020. https://unsdg.un.org/sites/default/files/2020-07/sg_policy_brief
covid_urban world.pdf.
1

COVID-19 and Progress on Subnational Localisation of the SDGs

5

Foreword by UCLG ASPAC
Local and regional governments havebeen widely acknowledged as key players
in implementing the SDGs, which simultaneously
makes them the centre point in the battle against
the COVID-19 pandemic, as they are closest to
their citizens. The impacts of the pandemic
have raised various forms of challenges for local
governments, ranging from social, economic,
environment to various institutional concerns.
Lack of financial and human resources, data,
coordination and partnerships towards collab­
orative actions has been some of the mostfrequently cited issues and challenges raised in
the COVID-19 and SDGs forums that UCLG ASPAC
convened since the pandemic emerged in early2020. UCLG ASPAC, being the association of local
and regional governments, has grappled with thedilemma of balancing priorities of action towards
the pandemic and towards the broader economy,
including the measures and approaches to betaken in this time of crisis.
Observing the collective needs of the local andregional government members in the region,
UCLG ASPAC sees the significance of working
together with UNU-IAS to convert these debates
into sound assessments to guide policy-making.
An assessment can shed light for the local andregional governments to better understandtheir situation during the pandemic, especiallyon fi­nancing for the SDGs, to learn from otherlocal and regional governments on how they
optimise their coordination mechanisms toaddress the pandemic and thinking forward
towards rapid recovery.

the conditions have also triggered peer-to-peer
collaborative actions and solidarity among local
and regional governments. It has also generated
the rapid acceleration of ICTs due to the physicaland social distancing measures in place toprevent disease transmission. The effective pan­demic response and recovery measures takenby the local and regional governments havedemonstrated their continued commitment tosimul­taneously attaining the SDGs. It becomeseven more clear that the SDGs is not an “addi­
tional burden” for the local and regional govern­ments but is, in fact, a useful framework toshape their pandemic recovery plans towards
building forward better and stronger.
We thank the active members of local government
associations, particularly the League of Cities of
the Philippines (LCP), Associations of Indonesian
Municipalities (APEKSI) and Malaysian Asso­
ciation of Local Authorities (MALA), who helped
to encourage their members to respond to theassessments that resulted in this publication andmake this research happen. Taking our inspirationfrom SDG 11, we hope that this publication will
be of use to the local and regional governmentsin the Asia-Pacific region to become more
resilient, inclusive, safe andsustainable and can movetowards rapid recovery.
Bernadia
Irawati Tjandradewi
Secretary General,
UCLG ASPAC

Although it is widely understood that the pan­demic caused a number of drawbacks or evendeacceleration in meeting targets of the SDGs,

COVID-19 and Progress on Subnational Localisation of the SDGs

6

Acknowledgements

COVID-19 and Progress on Subnational Localisation of the SDGs (this publication) was preparedby the United Nations University Institute for the Advanced Study of Sustainability (UNU-IAS), in
collaboration with United Cities and Local Governments Asia-Pacific (UCLG ASPAC). From UNU-IAS,
this publication was prepared under the direction of Shinobu Yume Yamaguchi, Director of UNU-IAS,
and Akio Takemoto, Head of Programme and Administration. From UCLG ASPAC, it was prepared
under the direction of Bernadia Irawati Tjandradewi, Secretary General of UCLG ASPAC.
This publication has benefitted from the inputs from regional and local governments in Indonesia,
Malaysia, and the Philippines through their responses to the survey on “the state of progress on thelocalisation of the SDGs and local responses to COVID-19.”
The principal authors of the publication were Mahesti Okitasari, Richa Kandpal, Upalat Korwatanasakul(UNU-IAS).
Members of UNU-IAS, UCLG ASPAC and beyond reviewed parts of the publication and provided
technical inputs: Hiromi Masuda (UNU-IAS), Guzel Ishkineeva, Shengchi Ma (UNU), Aniessa DelimaSari, Vidya Kartika, Rona Ikram Putri (UCLG ASPAC).
Administrative support was provided by Jun Oshima and Mihoko Sakai (UNU-IAS), and Nicholas
Turner and Rachel Nunn (UNU-IAS) edited the manuscript. Publication design and layout was
prepared by ADHD Studio.
This publication and its research were supported by the Environmental Research and Technology
Development Fund (JPMEERF16S11612 and JPMEERF20181001) of the Environmental Restoration
and Conservation Agency of Japan, and the Ministry of the Environment, Japan.

COVID-19 and Progress on Subnational Localisation of the SDGs

7

Executive Summary
According to the survey conducted by UNU-IAS and UCLG ASPAC in February 2021, the COVID-19
crisis has had adverse socioeconomic impacts on subnational governments (local and regional) andtheir progress on Sustainable Development Goals (SDGs) localisation in Indonesia, Malaysia, and thePhilippines. However, the impacts of the crisis on subnational governments are differentiated in termsof governance, finance, and actions towards attaining the SDGs. Simultaneously, the subnational
response and policy priorities to the crisis include two cross-cutting components: urgent measures
to respond to the emergency and their desired policy directions towards recovery and resilience.

Main Issues
The survey highlighted the following main issues for the attention of the national and subnational
governments and stakeholders working on overcoming the impact of the COVID-19 crisis, notlimited to the observed countries.
•

The emergency has raised and amplified various forms of challenges for subnational governments,
ranging from social and economic to institutional concerns. The top challenge in managing the
COVID-19 crisis is finance, such as the drop in public revenue and the expenditure surge. The
crisis has also brought other challenges to the fore, including the shortage of human resources,
weak public compliance with public health measures, and limited quality data.

•

The vertical and horizontal coordination mechanisms across levels and among sectors arerecognised by subnational governments to have a critical function in responding to the COVID-19
crisis. Subnational governments have indicated that multi-level coordination is necessary toensure that the available resources are effectively utilised, and all relevant stakeholders could
work together in a constructive manner.

•

While the socioeconomic crisis linked to COVID-19 has had adverse impacts on subnational
governments’ finances, its severity is perceived differently across different city types (i.e., small,medium, metropolitan) in their short and medium-term finances. Subnational governments also
expect the negative impact to continue to affect their long-term finances (beyond five years)
and financing programmes for SDGs implementation. Many possible factors contribute to
the differentiated subnational finance impact of the COVID-19 crisis, including the types andextent of the primary source of revenue, main economic activities, pre-pandemic economic
fundamentals and structural vulnerabilities.

•

The COVID-19 socioeconomic crisis imposes a significant strain on subnational governmenttransactions (i.e., expenditure, revenue, debt management), leading towards financial imbalance
and fiscal instability. Public health, social benefits, and food security are the top sectors underimmense pressure. Metropolitan areas are more likely to experience a decrease in their tax revenue
than smaller cities. Subnational governments perceived limited financial resources and technicalmeans to potentially harm subnational SDGs implementation progress and SDGs attainment.

COVID-19 and Progress on Subnational Localisation of the SDGs

8

Executive Summary•

The subnational governments have underlined shifting priorities in overcoming the healthcrisis as the main challenge of localising the SDGs during the COVID-19 crisis. Due to thecrisis, subnational governments prioritise strategies and policies and desired support from thenational government that directly respond to immediate health and wealth issues.

•

SDG 1 (No poverty), SDG 3 (Good health and well-being), and SDG 8 (Decent work and economic
growth) are identified as the highly prioritised areas for implementation. On the other hand,goals possibly perceived to deliver less tangible benefits during the emergency, such as genderand environmental goals, have received less priority.

Policy Recommendations
Based on findings from the survey, the following ten recommendations are of equal importance andproposed to national and local policymakers and stakeholders.
1.
•
•
•
•
2.
•
•
•

3.
•

•
•

Ensuring coherent policy and governance to build back better
Strengthen or reorient multi-level and cross-sector governance and coordination to manage
pandemic and post-pandemic impact while accelerating SDGs implementation.
Actively support and pursue horizontal cooperation among subnational governments and with
non-state actors to promote a coherent approach to response and recovery.
Deliver national recovery strategies with explicit context-specific and place-based considerations
to manage the differentiated impact of COVID-19.
Increase national to subnational support for key policy sectors to overcome the COVID-19 pandemic.
Pursuing resilient, inclusive, and green subnational finance
Explore and introduce financial management measures and fiscal tools to lessen subnational
financial imbalance and restore fiscal stability.
Improve expenditure and revenue effectiveness by increasing transparency and strengthening
accountability.
Establish a funding mechanism to promote multi-year green recovery and ensure finance for
SDGs implementation.
Accelerating SDGs localisation to achieve inclusive, sustainable, resilient recovery
Align the short-term emergency responses with long-term economic, social and environmental
objectives by internalising SDGs and other international frameworks (e.g., Paris Agreement,
New Urban Agenda).
Adopt SDG-related approaches to support subnational governments’ strategies to locallybuild back better.
Upscale the use of Information and Communication Technologies (ICT) to accelerate thedigitalisation of services and address digital divides.

COVID-19 and Progress on Subnational Localisation of the SDGs

9

05

01 Conclusion and Policy
Introduction
Recommendations
COVID-19 shows the importance of fast, effective subnational actions to respond to the impactof the pandemic. Subnational governments (regional and local) are at the forefront of COVID-19
response, recovery and rebuilding through healthcare and other essential services, and public
space management, engaging citizens, partners, and other levels of government.³ In addition tothis, their preparedness, infrastructure, human capital capabilities, access to emergency funds,
and coordination and communication flow with the national governments are among the criticalmeasures to contain the spread and ensure a faster recovery.4
COVID-19 measures at the subnational level have socioeconomic impacts far beyond administrative
boundaries. These multifaceted socioeconomic impacts threaten the social, economic, andgovernance structure and require cohesive responses to ensure alignment and synergies between
different level and sector interventions. Responses that are siloed and not well-planned could
worsen and exacerbate impacts from the pandemic.5 Medium and long-term policy choices at thenational and subnational level are critical to build resilience and strengthen the ability to achieve theSustainable Development Goals (SDGs). Subnational governments are uniquely positioned to shape,
adapt, and deliver a holistic response to the pandemic.
COVID-19 has severely impacted subnational efforts towards attaining the SDGs as the pandemic
continues to unfold. Subnational governments must “build back better,” but the question of how to doso remains. With only ten years remaining, understanding the pathways to build back better is criticalto mitigating possible COVID-19 imposed challenges to progress on the SDGs at the subnational
level, keeping cities and regions on track to accelerate implementation and attainment.
The SDGs provide an invaluable framework for recovery from the COVID-19 pandemic. The
transformative nature of the goals offers key opportunities for subnational governments to promotea new sustainable development paradigm and move towards a recovery that is greener, more
inclusive, and resilient. By aligning with the SDGs, cities and regions can leverage the full potentialof the SDGs as a policy tool to improve people’s lives, going beyond the efforts to overcome theimmediate pandemic’s impact. Yet, the necessary factors required for subnational governments todevelop practical and effective actions for recovery aligned with the SDGs are not well understood.
This will require taking stock of current progress in localising SDGs and charting short, medium, andlong-term recovery pathways based on the SDGs.
The United Nations University Institute for the Advanced Study of Sustainability (UNU-IAS) andUnited Cities and Local Governments Asia-Pacific (UCLG ASPAC) conducted a study on the impact of
COVID-19 on subnational governments to understand their post-pandemic development directions.
The findings will support subnational governments in their rebuilding phase and SDGs localisation³ Ibid, 2-10.
4 UNCDF. 2020. “COVID-19 Emergency Response. Local Government Finance. Guidance Note for Immediate Action.” Edition #4,
15 May. https://www.uncdf.org/article/5477/guidance-note-covid19-local-governments.
5 Ibid. United Nations, 2020b: 5.
COVID-19 and Progress on Subnational Localisation of the SDGs

10

Introduction

efforts. In February 2021, UNU-IAS and UCLG ASPAC launched an online survey to increase awarenessand gain a broad overview of subnational policies and current progress related to localising the SDGs
and strategies to overcome the impact of COVID-19. The survey targeted subnational governments inIndonesia, Malaysia, and the Philippines, gathering 52 responses (see Annex).6
The bulk of responding subnational governments came from Indonesia (33%) and the Philippines(61%). Only three responses (6%) were from Malaysia. The majority of respondents are frommunicipalities (81%), with the rest coming from regions7 (19%). Most of the responding subnational
governments have populations below 200,000 inhabitants (38%) and populations between 200,001
and 500,000 people (33%). Responses from metropolitan areas (above 500,001 inhabitants) form
29% of all responding subnational governments.
This publication summarises the main findings from the survey. First, this publication examines how
COVID-19 has affected subnational governments and their progress in localising the SDGs. Second, it
analyses the socioeconomic impact of the pandemic over subnational governments’ finances. Third,
it identifies subnational governments responses to the COVID-19 and their short, medium, and longterm priorities for action. Finally, it offers policy recommendations based on key opportunities andchallenges in developing practical and effective measures for recovery, taking into account the fullpotential of the SDGs. Whenever possible, case studies are offered to highlight best practices andlessons learnt. Charts are provided to illustrate the datasets and support the interpretation.

6 Subnational governments in Indonesia include provincial and regency/city governments; in Malaysia it is state and municipal
government, and; in the Philippines it covers provincial and municipal/city governments.
7 Regions refer to provincial or state governments.
COVID-19 and Progress on Subnational Localisation of the SDGs

11

02

Subnational Governance andProgress on Localising the SDGs
The COVID-19 pandemic has caused wide-ranging impacts on the subnational governments.8 It has
amplified many of the existing problems in the planning and management mechanisms and has
also brought forth new challenges. The process of SDGs localisation and the work done towards
the attainment of SDGs have also been facing impediments due to the evolving situation. This
chapter focuses on examining the extent of these impacts and analyses the nature of challenges
faced by subnational governments, and also elucidates the coordination mechanisms being usedin responding to the emergency.

2.1. Impact of COVID-19 on Subnational Governments
The overall impact of the COVID-19 crisis as
perceived by the surveyed subnational governments
is clarified foremost. The impact of the crisis
is classified as strong or moderate by nearly all(96%) of the subnational governments. Out ofthese, more than half (58%) have reported a strong
overall impact of the pandemic on their functioning(Figure 2.1). A very low number (4%) cite a low
impact faced due to the pandemic.

Figure 2.1. COVID-19 crisis overall impact.

StrongModerate

Low

The strength of the impact is perceived differently by different city types9. The result shows that
80% of metropolitan governments report a strong impact of the COVID-19 crisis (Figure 2.2). When
we consider the medium and small subnational governments, the percentages reporting a strong
impact are 47% and 50%, respectively.
Figure 2.2. COVID-19 crisis overall impact, by citya type.
Metropolitan

80%
47%

Medium

47%

50%

Small
0%

9

7%
6%

50%

20%

40%
Strong813%60%Moderate

80%

100%

Low

See Annex for explanation on subnational governance context of observed countries.
This study uses the OECD classification of urban areas as: small cities if their population is between 50,000 and 200,000; medium
sized cities if their population is between 200,000 and 500,000; and, metropolitan areas if their population is greater than 500,000.

COVID-19 and Progress on Subnational Localisation of the SDGs

12

Subnational Governance and Progress on Localising the SDGs

The impacts of the pandemic have raised various forms of challenges for subnational governments,
ranging from socioeconomic to institutional concerns. The extent of severity of the challenges
is also perceived differently by the subnational governments. A majority of the subnational
governments categorised the challenges in managing the COVID-19 crisis as somewhat
challenging or a little bit challenging.
The biggest challenge in managing the pandemic has been a lack of financial resources, with 35%
of subnational governments citing it as ‘very challenging’ and 48% citing it as ‘somewhat challenging’(Figure 2.3). The second group of challenges faced at the subnational level are lack of humanresources and available staff, lack of technical means and equipment, lack of public compliance,
and a lack of quality data (e.g., population requiring support). It is notable from these resultsthat the pandemic has brought forth behavioural challenges such as compliance with preventive
health behaviour for reducing transmission. Finally, the least challenging factor for the subnational
governments is reported to be a lack of information or guidance, with 25% citing it as ‘not a challenge’.
This indicates adequate dissemination of required knowledge from the national and international
levels on the proper management of the pandemic. Another less challenging factor is the legal andregulatory capacity to take the initiative, with 23% of the bodies reporting it as ‘not a challenge’.
Figure 2.3. Main challenges faced in managing the health crisis.
Lack of public compliance
19%

48%

29%

4%

Lack of public outreach
37%

4%

42%

17%

Lack of quality data (e.g., data on population requiring support, socioeconomic data, etc.)
12%

37%

33%

19%

Lack of information/guidance
4%

29%

42%

25%

Lack of legal/regulatory capacity to take initiative
6%

35%

37%

23%

Lack of cooperation with other stakeholders (businesses, civil society organisations, community)
6%

38%

42%

13%

40%

13%

38%

13%

Lack of coordination with other/neighbouring subnational government
10%

37%

Lack of coordination with higher levels of government
8%40%Lack of internal/inter-department coordination
2%

48%

33%

17%

Lack of human resources/available staff
31%

44%

23%

2%

Lack of financial resources
35%

48%

12%

6%

Lack of technical means and equipment
27%

0%

52%

20%

40%

Very challenging

Somewhat challenging

COVID-19 and Progress on Subnational Localisation of the SDGs

15%

60%
A little bit challenging

80%

6%

100%

Not a challenge

13Subnational Governance and Progress on Localising the SDGs

The critical challenge of a lack of financial resources is finding an asymmetrical dimension to it as
there are differences in how it is perceived by different sizes of subnational governments. A larger
proportion of small and medium-sized cities report the lack of financial resources as very challenging,at 40% and 41%, respectively (Figure 2.4).
Figure 2.4. Lack of financial resources as a challenge, by city type.

> 61%
60%

60%

45%
41%

41%

40%

40%

20%

20%
13%

12%

7%
Metropolitan
Very challenging

6%
MediumSomewhat challenging

10%

5%

Small
A little bit challenging

0%

Not a challenge

2.2. Coordination Mechanisms for Managing COVID-19
In addressing the challenges posed by the COVID-19 health emergency, the coordination mechanisms
between government bodies on different levels and amongst sectors have a key role. Such mechanisms
have been identified as a critical function in responding to the health emergency. Coordination is essential
to ensure that the available resources are effectively utilised and various stakeholders, agencies andother sectors work together constructively. All the subnational governments participating in this survey
reported the presence of coordination mechanisms in their respective response to the pandemic.
Cooperation with the community is regarded as the overall most effective coordination mechanism
in dealing with the health crisis, with no subnational governments perceiving it as ineffective (Figure2.5). It was categorised as ‘very effective’ by 27% and ‘somewhat effective’ by 73% of those surveyed.
The top three coordination mechanisms in the ‘very effective’ category are found to be 1) verticalcoordination mechanisms between the different levels of subnational governments, 2) verticalcoordination mechanisms between the central and subnational governments, and 3) cooperation
with academia and the science community. It is also important to note that horizontal cooperation
among subnational governments is also an effective coordination mechanism, with only 2% of thesubnational governments surveyed reporting it as ineffective.

10

WHO. 2018. “Managing epidemics: key facts about major deadly diseases.” License: CC BY-NC-SA 3.0 IGO. https://apps.who.int/iris/handle/10665/272442.

COVID-19 and Progress on Subnational Localisation of the SDGs

14

Subnational Governance and Progress on Localising the SDGs

Figure 2.5. Effectiveness of coordination mechanisms in managing the COVID-19 crisis.
Vertical coordination mechanisms between the central
and subnational governments

38%

Vertical coordination mechanisms between the
different levels of subnational government(e.g., provincial and municipal government)

44%

Horizontal cooperation among subnational governments

23%

Cooperation with businesses and private sector

31%

65%

4%

Cooperation with civil society organisation(including minority groups)

31%

63%

6%

Cooperation with community

27%

73%

Cooperation with Academia and Science Community

4%

58%

4%

52%

2%

75%

38%
Somewhat effective
0%20%

Ineffective
40%

4%

58%
Non existent
60%

80%

100%

.
Very effective

Case Illustration
In Indonesia, the Provincial
Government of Central
Java implemented
a community-based
programme Jogo Tonggo to
identify vulnerable groups,
conduct COVID-19 track
and trace, and manage
COVID-19 quarantine. The
programme empowered
community units to forma task force consistingof youth, women,
midwives, integrated
health centre officials,
religious leaders, andother local organisations.
The government provided
essential equipment suchas gloves, masks, personal
protective equipment(PPE), and disinfectant.11

Somewhat effective

Not existent

By classifying these results based on the city sizes, specifictrends are observed, particularly for vertical coordination
mechanisms between central and subnational governments
and horizontal cooperation among subnational governments(Figure 2.6). Results show that metropolitan governments
fare better in coordinating with the central governments, withmore than half citing it as very effective. Comparatively, a larger
proportion of small cities (35%) report horizontal cooperation
between subnational governments as very effective.
Figure 2.6. Effectiveness of specific coordination
mechanisms, by city type.
5%

65%

6%

65%

40%

100%

5%

80%

60%
83%

87%

60%
40%

56%
30%

35%

Small

Medium35%

Metropolitan

Small

Vertical coordination mechanisms
between the central and subnational
governments
Very effective

11

Ineffective

Somewhat effective

20%

17%
Medium13%

0%Metropolitan

Horizontal cooperation
among subnational
governments
Ineffective

Not existent

SDGs Center UNDIP, UCLG ASPAC and APEKSI. 2021. “A Compilation of Best Practices.” Book 3. UCLG ASPAC & APEKSI.

COVID-19 and Progress on Subnational Localisation of the SDGs

15

Subnational Governance and Progress on Localising the SDGs

2.3. Impact of COVID-19 on Subnational Localisation of the SDGs
The ongoing pandemic has further increased the relevance of a sustainable future for humansettlements. It is necessary to analyse the effects of this health emergency on various aspects ofSDGs localisation. The subnational governments have overall reported moderate to little negative
impacts of the COVID-19 crisis on SDGs localisation progress in their respective jurisdictions.
Monitoring and data collection and financing programmes relevant to achieving specific SDGs
are the two most impacted aspects of SDGs localisation. A total of 90% and 88% of subnational
governments report a negative impact on them, respectively (Figure 2.7). 31% of the subnational
governments have reported a very negative impact on financing programmes, and 21% on themonitoring and data collection systems. The aspect of vision-making for SDGs localisation has
experienced a relatively lesser impact, with 27% of the responding bodies identifying a non-negative
effect on it. Cooperation with other stakeholders for SDGs localisation also fares better as it has
been one of the key mechanisms in managing this pandemic.
Figure 2.7. Impact of the COVID-19 crisis on the progress of SDG localisation.
10%

12%

21%

21%

17%

17%

17%

15%

27%

40%

33%

17%

31%
21%
19%

48%
Monitoring and datacollection

46%

37%
Financing programs
relevant to achieving
specific SDGs
Very negative27%

Mainstreaming the SDGs
into local development/
sectoral plans

Moderately negative

Cooperation with otherstakeholders

A little negative

23%

Vision making

Not negative

The main challenges to SDGs localisation as perceived by the subnational governments have also
been clarified in this study. The most challenging aspect of SDGs localisation by the subnational
governments during the COVID-19 emergency has been the shifting of priorities towards overcoming
the health crisis, with 58% perceiving it as ‘very challenging’ and 35% perceiving it as ‘somewhat
challenging’ (Figure 2.8). Lack of financial resources and a lack of technical means and equipment are
the next biggest challenges towards SDGs localisation as reported by the subnational governments inthe survey. These findings conform to the reported overall challenges faced in managing the COVID-19
situation.
The relatively lesser challenging factors in SDGs localisation during the pandemic have been reported
as internal and inter-departmental coordination, cooperation with non-governmental stakeholders, andthe availability of information and guidance. Less than half (48%) of the subnational governments regard
a lack of internal and inter-departmental coordination as very or somewhat challenging, and 13% do notconsider it to be a challenge at all. A little more than half (52%) reported the lack of information, guidance
and knowledge sharing to be very or somewhat challenging, and 12% did not perceive it to be a challenge.

COVID-19 and Progress on Subnational Localisation of the SDGs

16

Subnational Governance and Progress on Localising the SDGs

Figure 2.8. Challenges to SDGs localisation during the COVID-19 crisis.
Shifting priority(i.e., focused to overcoming the health crisis)58%

Lack of financial resources54%

Lack of technical means and equipment

35%

Lack of human resources/available staff andcapacity of human resources

31%

35%
33%

2%

Lack of legal/regulatory capacity to take initiative

8%

48%

Lack of information/guidance/knowledge sharing

8%

44%

Lack of cooperation with other stakeholders(businesses, CSOs, community)

10%

Lack of internal/inter-department coordination

6%

31%
37%

48%
42%

20%

Somewhat challenging

40%

A little bit challenging

SDG 17
SDG 16
SDG 15
SDG 14
SDG 13
SDG 12
SDG 11
SDG 10
SDG 9
SDG 8
SDG 7
SDG 6
SDG 5
SDG 4
SDG 3
SDG 2
SDG 1

Very negative-20%

Somewhat negative

0%

20%

40%

Somewhat positive

60%

80%

Very positive

60%

8%
8%

37%

12%

29%

13%

38%

Figure 2.9. Subnational progress in achieving the SDGs during
the COVID-19 crisis.

-40%

13%

54%

0%

-60%

13%

54%

8%

-80%

13%

52%

Lack of cooperation with the higher
levels of government

Very challenging

8%

13%

80%

100%

Not a challenge

In addition to the effect on SDGs
localisation, the COVID-19
situation has also impacted
the progress in the attainmentof SDGs. The surveyed sub­na­­­tional governments havein­dicated the nature (positiveor negative) and extent ofpro­­­­gress in achieving each of
the SDGs during the crisis. It
is noteworthy that many sub­national governments haveexperienced some positive
progress in their respective
efforts towards achieving theSDGs (Figure 2.9).

A higher proportion of negative effects is observed on achieving SDG 1 (No poverty), SDG 2 (Zerohunger), SDG 3 (Good health and well-being), SDG 4 (Quality education) and SDG 8 (Decent workand economic growth). The progress in achieving SDG 8 is the most negatively affected due to the
COVID-19 situation, with 29% of the subnational governments reporting a very negative impact andanother 29% reporting a somewhat negative impact. For SDG 1 and SDG 3, the proportion ofsubnational governments experiencing a negative impact on the work progress is 56% each. These
results correspond with the main perceived pressures of a pandemic situation on the socioeconomic
conditions. On the other hand, a more positive impact is noticed on SDG 5 (Gender equality), SDG 6(Clean water and sanitation), SDG 14 (Life below water), SDG 15 (Life on land), SDG 16 (Peace, justice,and strong institutions) and SDG 17 (Partnerships for the goals). It needs to be emphasised that a totalof 70% of the subnational governments have confirmed a positive trend in the achievement of SDG 17.

COVID-19 and Progress on Subnational Localisation of the SDGs

17

03

Subnational Finance and Financing
for the SDGs
Disruption of economic activities and social distancing measures related to the health emergency
led to a significant slowdown in the subnational economy. Stimulus packages and policy measures
are needed to boost subnational governments’ ability to sustain critical public services and raise
their own finances while also addressing the need to prevent additional financial pressure on
vulnerable groups. This chapter attempts to shed light on the subnational finance impact of the
COVID-19 crisis by examining short, medium and long-term finances, transaction pressures, andefforts to finance the SDGs localisation.

3.1. Impact of COVID-19 on Subnational Finance
The socioeconomic crisis linked to COVID-19 has negatively affected subnational governments’finances (Figure 3.1). A majority of subnational governments report a very negative and moderately
negative impact of the COVID-19 pandemic and resulting recession on their finance in the shortand medium term. In the short term (6-18 months), 35% of subnational governments estimate theimpact to be highly negative, while 46% foresee a moderately negative impact. The outlook is more
optimistic for the medium term (2-5 years), with the number of subnational governments expecting
very negative falls to 23% and a moderately negative impact increases to 54%.
Subnational governments also expect the negative impact to continue to affect their long-term
finances (beyond five years). The majority sees the severity of impact on their finances reducing
overtime, while 44% think the effect will not lessen or even get worse.
Figure 3.1. Impact of the COVID-19 crisis on subnational finances.
Long-term (more than 5 years)
17%

40%

Medium-term (2 - 5 years)
23%

38%

4%

54%

17%

6%

Short-term (6 - 18 months)
35%
0%

20%
Very negative

46%
40%
Moderately negative

COVID-19 and Progress on Subnational Localisation of the SDGs

60%
A little negative

15%
80%

4%
100%

Not negative18

Subnational Finance and Financing for the SDGs

The severity of the socioeconomic crisis is perceived differently across different city types in theirshort and medium-term finance (Figure 3.2). In the short term, most metropolitan areas perceivea very negative impact, while a majority of small cities foresee a moderately negative impact. The
way these cities perceive the change of severity from short to medium-term is also quite different.
Overall, metropolitan areas are more likely to expect a less severe impact on their finances in themedium term than short term. On the other hand, small and medium cities are forecasting less or
no change in the severity of the crisis over their finances.
Figure 3.2. Impact of the COVID-19 crisis on subnational finances over short and medium-term, by city type.
Short-term (6-18 months)
Small

19%

MediumMetropolitan

47%
53%

0%

14% 5%

57%
35%

Medium-term (2-5 years)

20%
Very negative

18%
27%

40%

19%

60%

13% 7%
80%

100%

Moderately negative

62%

35%
13%
0%

14%
47%

47%
20%

A little negative40%

12% 6%
27%

7%

80%

100%

60%
Not negative

The COVID-19 crisis creates differentiated impacts on subnational finances. Many possible factors
are affecting the degree of impact on subnational finances across different types of cities. The types andextent of the primary source of revenue (i.e., the extent of tax as the main revenue, dependency on fiscal
transfer from the national government) may partly explain how the COVID-19 crisis affects subnational
government finances. Subnational governments with moderate reliance on fiscal transfer from thenational governments are more likely to expect a very negative impact on their short- and medium-term
finances than those that receive large, small or no fiscal transfer. Moreover, the larger the share of tax
revenue as a primary source of revenue, the less very negative impact subnational governments
forecast over their short-term finances. A similar trend is also observed in medium-term finances.

COVID-19 and Progress on Subnational Localisation of the SDGs

19

Subnational Finance and Financing for the SDGs

Figure 3.3. Differentiated impacts of the COVID-19 crisis in the short and medium-term,by extent of fiscal transfer.

80%
60%

75%

40%
20%
0%

100%
15%
35%

23%

Moderate

Large

57%
45%

Very negative

7%

5%
20%

80%

80%

31%

38%

60%
40%

50%

20%
0%

100%
15%

60%
100%

100%

Impact on medium-term finances(classified by the extent
of tax revenue)

53%

40%
20%
0%

Moderately negative

Large

7%

Small or no tax revenue

17%

25%

13%

56%

54%

Impact on short-term finances(classified by the extent
of tax revenue)
3%

6%
18% 6%

Small or no transfer

50%

4%

20%

60%

Moderate

Moderate

Large

43%

100%

20%

A little negative

Small or no tax revenue

13%
38%

36%

13%

Large

13%

18%

Small or no transfer

4%

Impact on medium-term finances(classified by the extent
of fiscal transfer)

Moderate

Impact on short-term finances(classified by the extent
of fiscal transfer)

80%
60%
100%

40%
20%
0%

Not negative

The impact of the COVID-19 crisis on subnational finances is also differentiated according to the typesof primary economic activities. Pre-pandemic economic fundamentals and structural vulnerabilities
are among the main factors affecting subnational-level performance during the COVID-19 crisis.
Subnational governments with tourism or agriculture and forestry as their primary economic activities
report more negative short-term financial losses than those who are primarily industrial cities ordepend on goods and services. Tourism is a large sector in Indonesia and Malaysia.12 Their perception
over the medium-term is also less optimistic. This indicates that an economic structure with larger
contact-intensive and dependence on intensive labour sources with low wages might suffer moredisruption and be among the worst affected and slowest to recover. Small-scale farmers, migrants, andinformal workers who might be hindered from working on their land and, more importantly, accessing
markets to sell their products are among the most vulnerable groups.13 Thus, an essential feature of
approaches to emergency financing is to recognise diversity in subnational situations.

The ASEAN Secretariat. 2020. “ASEAN Rapid Assessment: The Impact of COVID-19 on Livelihoods across ASEAN.”https://asean.
org/storage/ASEAN-Rapid-Assessment_Final-23112020.pdf
13
FAO. 2020. “Addressing the impact of COVID-19 in food crises.” April-December 2020. http://www.fao.org/3/ca8497en/CA8497EN pdf
12

COVID-19 and Progress on Subnational Localisation of the SDGs

20

Subnational Finance and Financing for the SDGs

50%

Industry

Short-term (6-18 months)

Tourism

86%

14%

38%
12%

Agriculture & Forestry

20%
27%

53%

29%

37%

60%
40%

36%

23%
67%

33%

Goods & Services

Medium-term (2-5 years)

Industry

Not negative

Tourism

A little negative

50%

9%

Agriculture & Forestry

50%

71%

Moderately negative

80%

20%

Note:

0%

13%
Very negative

100%

9%
5%

Goods & Services

Figure 3.4.
Differentiatedimpacts of the
COVID-19 crisisin the shortand mediumterm, by typeof primaryeconomic
activity.

Industry
includesmining, oil andgas, energy,
manufacture,and foods andbeverages;
Goods &
Services
includesbusiness,commerce
and trade.

100%
80%
60%

45%

23%

40%
20%
0%

3.2. Impact of COVID-19 on Subnational Revenue, Debt
Management, and Borrowing
The COVID-19 crisis imposes a significant strain on subnational government revenue. This finding
is consistent with studies in other countries14 and regions.15 Our survey found 29% of subnational
governments report they are experiencing a very negative impact on their tax revenue, with 42%
saying the impact is moderately negative. The pandemic also affects subnational grant revenue,
with the respondents reporting 13% very negative impact and 37% moderately negative impact.
Only 8% of subnational governments whose tax revenue is not negatively affected by COVID-19(Figure 3.5). Metropolitan areas are most likely to forecast a very negative impact on their tax
collection than smaller cities (Figure 3.6).
Figure 3.5. Impact of the COVID-19 crisis on subnational revenue.
Tax revenue

29%

Grant revenue

42%

13%

37%

0%

20%

21%
19%

40%

60%

8%

31%
80%

100%

Figure 3.6. Impact of the COVID-19 crisis on subnational tax revenue, by city type.
Small

25%

Medium

45%

18%

15%

53%

Metropolitan

46%
0%

15%

20%
Very negative

28%
26%

40%
Moderately negative60%
A little negative

20%
80%

8%
100%

Not negative

Gordon, T., Dadayan, L., and Rueben, K. 2020. “State and Local Government Finances in the COVID-19 Era.” National Tax Journal,
National Tax Association, vol. 73(3), pp. 733-758, September. https://doi.org/10.17310/ntj.2020.3.05
15
UCLG. 2021. “The impact of the COVID-19 Pandemic on Subnational Finances. Emergency Governance for Cities and Regions.”
Analytics Note #3, January. https://www.uclg.org/sites/default/files/an03_-_the_impact_of_the_covid19_subnational_finances.pdf
14

COVID-19 and Progress on Subnational Localisation of the SDGs

21

Subnational Finance and Financing for the SDGs

The COVID-19 crisis is unequally affecting subnational government transactions (i.e., expenditure,
revenue, debt). Subnational governments perceive the less negative impact of the crisis over theirdebt management and access to borrowing than their revenue and expenditure. Concerning debt
management, 62% expect the pandemic to have a negative impact, while 38% estimate that it will not
result in greater indebtedness. A similar trend is observed on access to subnational borrowing; 52%
perceive a negative impact, and the other 48% see no impact (Figure 3.7).
Figure 3.7. Impact of the COVID-19 crisis on subnational debt management and borrowing.
Debt management

10%

Subnational borrowing

8%

33%

19%

29%

0%

15%

20%

Very negative

38%

40%

48%
60%

Moderately negative80%

A little negative

100%

Not negative

Overall, no significant differences were found among larger cities concerning debt management andaccess to borrowing. On the other hand, most small cities expect the crisis will result in a greater
negative impact on their debt management and access to borrowing (Figure 3.8).
Figure 3.8. Impact of the COVID-19 crisis on subnational debt management and accessto borrowing, by city type.
Subnational debt management
Small 10%Medium 6%

45%

35%

24%

Metropolitan 14% 13% 13%
0%

20%

20%

40%

Access to borrowing
Small 10%25%

Medium 6%

35%

Very negative

24%

20%

17%

Metropolitan 7% 20% 7%

60%
60%

40%

80%

100%

Moderately negative

COVID-19 and Progress on Subnational Localisation of the SDGs

0%

20%

A little negative

30%

53%

66%

40%

60%

80%

100%

Not negative22

Subnational Finance and Financing for the SDGs

Facing limited financial resources, subnational governments need to mobilise funding. One option
is by increasing their subnational new borrowing to cope with the COVID-19 crisis. However, our study
highlighted that only a fraction of respondents indicated they have received or are in the process ofreceiving new loans to cope with the COVID-19 (Figure 3.9). The majority of respondents statedthey have no plan to apply for new borrowing. Among subnational governments that have increased
borrowing, commonly received loans are long-term loans (25%), emergency loans (21%), and shortterm loans (19%). 9% of subnational governments have applied for multiple loans. Subnational
governments who expressed interest to apply for new borrowing are more likely to apply for mixedloans, medium (2-5 years) and long-term loans (beyond five years). Moreover, regardless of their
negative expectation towards access to borrowing, small cities are more likely to increase theirborrowing than medium-sized cities and metropolitan areas to cope with the socioeconomic crisis.
Figure 3.9. New subnational borrowing to cope with the crisis, by type of loan.
Emergency

21%

Short-term

19%

Medium-term

17%Long-term

17%
16%

65%
27%

25%

56%
27%

9%

Mixed

62%

48%

29%

0%

62%

20%

40%

80%

60%

Received/in the process

Planning to apply

100%

No plan

3.3. Impact of COVID-19 on Subnational Expenditures
The crisis is affecting subnational finance with a “scissor effect” of falling tax revenue and increasing
expenditure. Most respondents perceiving a very negative impact on tax revenue (29%) also expect a very
negative impact on their expenditure. A similar trend is also observed over those who forecast a moderate
impact. On average, 90% of subnational governments are facing negative pressures on their expenditure,
ranging from very negative (27%) to moderately negative (48%) to a little negative (15%) (Figure 3.10).
Metropolitan areas are more likely to expect a steep increase in their expenditure compared to smaller
cities. Around 10% of respondents consider the crisis has not negatively affected their expenditure.
Figure 3.10. Impact of the COVID-19 crisis on subnational expenditures.
Average

27%

Small

48%

20%

Medium50%
29%

Metropolitan

20%

40%
Moderately negative

10%

15%
29%

53%

Very negative

16

15%
42%

33%
0%

15%

60%
A little negative

13%
80%

100%

Not negative

A situation where governments suffer from higher spending and lower tax revenue. See Blöchliger H, Charbit, C., Campos, J. M. P., andVammalle, C. 2010. “Sub-central Governments and the Economic Crisis: Impact and Policy Responses.” OECD Economics
Department Working Papers No. 752. https://dx.doi.org/10.1787/5kml6xq5bgwc-en

COVID-19 and Progress on Subnational Localisation of the SDGs

23

05.

Subnational Finance and Financing for the SDGs

Subnational governments are expecting an increase in their expenditure in their efforts to overcome
the COVID-19 pandemic. Expenditures in public health, social benefits and food security are the
top three sectors facing high pressures. 86% of Subnational governments report high pressures on
their public health expenditure (Figure 3.11). Key sectors in response to the COVID-19 emergency,such as social services (e.g., employment and training), education, and public order and safety (e.g.,
enforcing physical distancing), have also experienced high expenditure pressures. Only a small
number of subnational governments (19%) forecast high pressures on expenditure related to climate
adaptation and disaster resilience during the pandemic.
Figure 3.11. Pressure on subnational expenditure resulting from COVID-19.
2%

Public health

86%

10%

2%
2%

Social services

52%

38%

8%
2%

Social benefits

75%

17%

6%
0%

Food security

63%

27%

10%
2%

Education

44%

48%

6%
4%

Basic services

23%

56%

17%
4%

Infrastructure

29%

44%

23%
4%

Support for small and medium-sized enterprises

34%

52%

10%
2%

Information and communication technologies

31%

46%

21%
0%

Administrative services

21%

56%

23%
2%

Public order and safety

41%

42%

15%
2%

Climate adaptation and disaster resilience

19%

60%

19%
6%

Others

10%
0%

54%
20%

30%
40%

High

Moderate

COVID-19 and Progress on Subnational Localisation of the SDGs

60%
Low

80%

100%

No pressure

24

05.

Subnational Finance and Financing for the SDGs

3.4. Impact of COVID-19 on Financing for the SDGs
The COVID-19 crisis negatively affects subnational finance for the SDGs localisation process, with
31% of subnational governments reporting a very negative impact on their financing programmes
to achieve SDGs (Figure 3.12). Half of the metropolitan areas expect the socioeconomic crisis toseverely affect their financing programmes for the SDGs, while another half indicates moderate
and low negative impact. Overall, 33% of subnational governments offer more optimistic views,
reporting less damage (21%) and no impact (12%) on their SDGs programmes. Those who assume
no impact are small and medium-sized cities.
Figure 3.12. Impact of the COVID-19 crisis on subnational financing programmes
relevant to achieving the SDGs.
COVID-19 crisis impact to Subnational Financing programs relevant to achieving SDGs

30%
0%

36%
20%

40%

Very negative

Moderately negative

21%
60%

13%

80%

A little negative

100%

Not negative

The COVID-19 crisis amplifies problems of subnational finance on lack of resources. All subnational
governments perceive the lack of financial resources as challenging in localising the SDGs during
the pandemic. More than half of subnational governments (54%) identified it as ‘very challenging’(Figure 3.13). Among them, medium-sized cities are more likely to see their limited financing as very
challenging compared to small cities and metropolitan areas. Subnational governments dependent
on goods and services as their primary economic activities are also more likely to categorise lackof financing as their primary challenge in localising the SDGs.
Figure 3.13. Subnational governments’ financial challenges in localising the SDGs
during the COVID-19 crisis.
Subnational goverments’ perception towards lack of financial resources as a challenge in localising the SDGs during the COVID-19 crisis

54%
0%

33%

20%

40%

Very challenging

Somewhat challenging

COVID-19 and Progress on Subnational Localisation of the SDGs

60%
A little bit challenging

13%
80%

100%

Not a challenge25

04 05Subnational
Strategies for and Policy
Conclusion
Sustainable
and Resilient Recovery
Recommendations
This chapter examines the current situation of subnational governments’ policy responses and policy
expectations during the COVID-19 pandemic and how the pandemic affects subnational governments’prioritisation and utilisation of SDGs for local strategies aimed at building back better. As a result of
this crisis, the subnational governments prioritise strategies and policies that respond to immediate
issues, namely health and wealth. Wealth-related strategies and policies are ranked first in terms ofdesired policy directions and desired national-level policy instruments. These priorities also reflect
on the role of SDGs in post-pandemic development policies. SDG 3 (Good health and well-being),
SDG 1 (No poverty), and SDG 8 (Decent work and economic growth) are among the highly prioritisedareas. In contrast, the subnational governments pay less attention to the goals possibly perceived todeliver less obvious benefits, such as gender and environment. Thus, even though the subnational
governments, to some extent, consider the SDGs a path to recovery and future development, thecurrent crisis seems to threaten the advancement of SDGs.

4.1. Economic Recovery Measures at the Subnational Level
In general, economic recovery measures are available to the local governments to a moderate
extent (54% of the respondents). The survey results clearly show the need for more economic recovery
measures and more support from the central government. As illustrated in Figure 4.1, the mostcommonly available economic measures are technical assistance and support services. On the other
hand, stimulus packages and measures, direct support (e.g. loans, microfinance), and tax incentives
and relief are not available to 10%-12% of the respondents. Moreover, the measures regarding indirect
funding through intermediaries and banks do not exist in almost one-third of the sample governments.
Figure 4.1. Overall availability of economic recovery measures.
58%

52%

46%

36%
27%

29%
17%

Indirect funding

23%
12%

Tax incentives
and relief

To a large extent

8%4%Technical
assistance

To a moderate extent

COVID-19 and Progress on Subnational Localisation of the SDGs

17%
10%

12%

Direct support

To a small extent

Stimulus package/measures

Not at all

26

05.

Subnational Strategies for Sustainable and Resilient Recovery

4.2. Desired Policy Directions and Instruments at the
National and Subnational Levels
The survey results clearly demonstrate that desired policy directions and instruments at nationaland subnational levels identified by the subnational governments are highly consistent. Regarding
subnational level policy directions and instruments, the respondents highlight healthcare access,poverty reduction and employment creation, and food security as the top three desired policy areas(Figure 4.2). In contrast, environmental aspects, such as transforming to a sustainable and low
carbon economy and local climate adaptation, are among the least prioritised directions. Interestingly,
despite the acute needs for digital technology and the internet, e.g. teleworking, in the time of thepandemic, digitalisation policies, such as reduction of the digital divide and data production andmonitoring, are among the lowest priorities.
Figure 4.2. Policy directions desired by subnational governments.
Ensuring affordable and accessible healthcare for all

41

Poverty reduction and employment creation

41

Ensuring food security

38

Strengthening social security for vulnerable groups

37

Investing more on education

34

Developing new instruments to support businesses and small and medium enterprises
Reducing inequality

33
28

Investing in infrastructure

28

Ensuring affordable and accessible basic services and housing

27

Investing in data production and monitoring

26

Reducing digital divides

26
Ensuring local climate adaptation and resilience

22

Transitioning to a sustainable and low carbon economy

19

COVID-19 and Progress on Subnational Localisation of the SDGs

27

05.

Subnational Strategies for Sustainable and Resilient Recovery

Regarding national-level policy directions and instruments, support related to health and wealth is
the most desirable instrument among the subnational governments (Figure 4.3). The top three mostdesired national-level policy instruments are 1) policy instruments supporting the implementationof recovery measures with dedicated or adequate funding, 2) information sharing and guidanceon public health, and 3) policy instruments providing incentives for pilot policies or programmes inpriority sectors that have grown in importance due to COVID-19. On the other hand, policy instruments
allocating additional mandates to subnational governments to implement their recovery measures
receive the least attention among the subnational governments.
Figure 4.3. National-level policy instruments desired by subnational governments.
Recovery measures with funding

47

Information sharing & guidance on public health42

Incentives for pilot policies or programs

42
Recovery measure with technical support

40
Coordination in the design of subnational recovery measures

38
Communication of national recovery measures

37
Roles and responsibilities among levels of gevernments
Additional mandates

COVID-19 and Progress on Subnational Localisation of the SDGs

37
31

28

05.

Subnational Strategies for Sustainable and Resilient Recovery

4.3. Prioritised Tools for a Successful Exit and Recovery Strategy
The local governments equally prioritise policy coordination, additional resources and support,
and cooperation with other stakeholders as policy tools for a successful exit and recovery strategy(Figure 4.4). The most prioritised policy tools are cooperation with the community, linking to sustainability
agenda, coordination among all levels of government, and additional financial resources, respectively(Figure 4.5). The subnational governments generally provide positive responses regarding the SDGs andpost-pandemic development policies. According to Figure 4.6, half of the respondents utilise the SDGs asa roadmap to build back better to a large extent, thus confirming the importance of SDGs among the local
governments. The survey results highlight that, despite the pandemic, the subnational governments
still pay attention to SDGs and consider them a pathway to recovery and future development.
Figure 4.4. Tools prioritised for a successful
exit and recovery strategy, by policy area.
Policy coordination

2%

66%

32%

Cooperation with other stakeholders
63%

2%

50%

50%

35%

5%

Additional resources and supports
57%

High priority

Figure 4.6.
Utilisation of
the SDGs asa roadmap
to build backbetter.

38%

Moderate priority

Low priority

To a moderate extent

To a large extent

Figure 4.5. Tools prioritised for a successful exit and recovery strategy.
Cooperation with community

38
Linking to sustainability agenda

37
Additional financial resources

34
Coordination among all levels of government

34
Cooperation with academia

33
Cooperation with the private sector

33

Availability and accessbility of technology

32

Availability of regulatory capacity

32

Communication with the public

30

Capacity building for subnational government

30

Cooperation with civil society organisations

29
Additional human resources

COVID-19 and Progress on Subnational Localisation of the SDGs

23

29

05.

Subnational Strategies for Sustainable and Resilient Recovery

4.4. The SDGs in Post-pandemic Development Policies
Subnational governments’ attention is primarily on immediate needs, i.e. health and wealth, as the
pandemic has halted most economic activities and poses vital risks to people’s lives. The majorityof the subnational governments (92% of the respondents) agree that SDG 3 (Good health and wellbeing) should be highly prioritised for post-pandemic development policies (Figure 4.7). At the sametime, SDG 1 (No poverty) and SDG 8 (Decent work and economic growth) also receive significant
attention from the subnational governments, 88% and 81% of the respondents, respectively. The
survey results underscore the high consistency between highly prioritised SDGs and the desired
policy directions and instruments at national and subnational levels, as presented in Section 4.2.
On the other hand, the goals perceived to offer less obvious benefits, such as gender equality andenvironment-related goals, receive significantly less priority. Only 38% of the respondents highly
prioritise SDG 5 (Gender equality) and SDG 14 (Life below water) (Figure 4.7). Moreover, goals suchas SDG 7 (Affordable and clean energy), SDG 12 (Responsible consumption and production), SDG 15(Life on land), and SDG 16 (Peace, justice and strong institutions) are among the low priority areas towhich more than half of the subnational governments give only low-to-moderate priority. As a result,the pandemic jeopardises the overall advancement of SDGs.

Figure 4.7. SDGs assigned high priority in post-pandemic development policies.
SDG 3 Good health & well-being48

SDG 1 No poverty

46

SDG 8 Decent work & economic growth42

SDG 2 Zero hunger

41
SDG 11 Sustainable cities & communities

39

SDG 4 Quality education39

SDG 6 Clean water & sanitation

33

SDG 10 Reduced inequalities

29

SDG 9 Industry, innovation & infrastructure29

SDG 13 Climate action

27

SDG 17 Partnerships for the goals

26

SDG 16 Peace, justice & strong institutions

25

SDG 15 Life on land25

SDG 12 Responsible consumption & production
SDG 7 Affordable & clean energy
SDG 5 Gender equality
SDG 14 Life below water

COVID-19 and Progress on Subnational Localisation of the SDGs

24
21
20
20

30

05.

Subnational Strategies for Sustainable and Resilient Recovery

More than half of the sample subnational governments (57%) utilise to a large extent SDG-related
approaches in their strategies to locally build back better (Figure 4.8). The respondents highlightgood governance and accountability (77%), evidence-based decision making (73%), and stakeholder
engagement (71%) as the approaches incorporated in the strategies to locally build back better(Figure 4.9). In contrast, half of the respondents adopt the approaches such as sustainability
and resilience in actions and business models, valuing co-benefits in public investments, gendermainstreaming, and the human rights approach. Hence, the subnational governments are more
likely to adopt broader SDG-relevant approaches and less likely to utilise specific or thematic
approaches in their strategies to locally build back better.

Case illustration
The agriculture office of Iriga City in the Philippines
implemented a circular economy approach in the formof ‘vegetable on wheels’ to sell basic goods to villagers
and keep them at home during the enhanced community
quarantine. With the closure of all borders in Camarines
Sur’s Rinconada area, vegetables and basic commodities
were sourced from local farmers and sold at a lower
price to ease the plight of low-income households. The
government also distributed free vegetable seeds toencourage backyard gardening. The programme helped
ensure food security (relevant to SDG 2) and contributeto the circular economy (relevant to SDG 12).

Figure 4.8. Utilisation of theSDGs towards local buildingback better strategies.
6% 2%

35%
57%

To a large extent

To a moderate extent

To a small extent

Not at all

Figure 4.9. SDG-relevant approaches used in local building back better strategies.
Good governance and accountability

40

Evidence-based decision making

38
Stakeholder engagement

37

Sustainability and resilience

36
SDGs interlinkages for policy development

32
Stakeholder engagement in reviewing progress towards SDGs attainment

28
Partnerships to finance the SDGs implementation

28
Mainstreaming SDGs into budgetary process

28

Policy coherence28
Human rights approach

27
Gender mainstreaming

26
Valuing co-benefits in public investments

26
Sustainability and resilience in actions/business models

26

COVID-19 and Progress on Subnational Localisation of the SDGs

31

05 05Conclusion
and Policy
Conclusion
and Policy
Recommendations
Recommendations
Subnational governments in Indonesia, Malaysia, and the Philippines have indicated how COVID-19
differentially affected their governance, finance, and actions towards localising and the attainmentof the SDGs. It is extremely difficult to quantify the impact of the COVID-19 crisis as there aremany uncertainties surrounding its variability across countries and regions and the effectivenessof the response mechanisms introduced by national and subnational governments. For example,
subnational governments’ asymmetric socioeconomic impacts might depend on the severity of thepandemic and their resiliency. Also, the role of subnational governments has been defined in partby the constitutional organisation of a country, which could impact the autonomy and flexibility indetermining subnational response to the pandemic. These differentiated impacts call for a contextspecific and place-based approach to policy responses.
At the onset, the COVID-19 pandemic offers an opportunity to build a greener, more sustainable, more
resilient, and more inclusive future, with the 2030 Agenda and the SDGs as a collective compass.
Governments and other stakeholders must ensure that every policy and financial decision fully
considers environmental, social and economic impacts. There is a need for governance and financial
systems to undergo a transition to a more sustainable, inclusive, and resilient future. Relevant tothis issue, the observed subnational governments highlighted their most prioritised policy tools ascooperation with the community, linking to sustainability agenda, coordination among all levels ofgovernment, and additional financial resources.
Below are policy recommendations on managing COVID-19’s subnational impact, its implications
for multi-level governance, subnational development policies and finance, as well as takeaways fornational and subnational policymakers to consider as they build more green and resilient recovery
necessary to overcome the pandemic, accelerate SDGs implementation, and attain the SDGs.

COVID-19 and Progress on Subnational Localisation of the SDGs

32

05.

Conclusion and Policy Recommendations

1. Ensuring coherent policy and governance to build back better•

Strengthen or reorient multi-level and cross-sector governance and coordination to manage
pandemic and post-pandemic impact while accelerating SDGs implementation

Developing robust multi-level governance mechanisms that enable the government to address wideranging strategies and cross-agency issues is critical in efforts to build back better.17 The COVID-19
crisis has required subnational governments to follow multiple courses of action for managing andrecovering from the crisis. From the results of this survey, the significant role of a coordinated responseto the pandemic is highlighted. It is important to maintain a balance between the centralised leadershipsetting up policies and guidelines and the subnational governments’ capacity to act accordingly. The
legal and regulatory capacity to take the initiative is not deemed as a very critical challenge by mostof the responding subnational governments. Flexibility in administrative procedures can further help inallowing these subnational governments in developing context-specific responses.
Coordinating multiple sectors and stakeholders in an effective manner requires a combination ofstrategies. Foremost, developing a framework for coordinated responses that can provide guidelines
for subnational governments with a clear assignment of roles, responsibilities, and authority in case ofsuch an emergency. Setting up special coordination platforms or bodies will aid in successful verticalcoordination between different levels of government. Guidelines for the utilisation of strategic resourcesfrom government support programmes should also be laid down. Measures to ensure information
dissemination across levels and facilitating access to support programmes should be implemented.
The SDGs framework could also be referred to ensure an integrated approach, as various
adjustments carried out in the pandemic situation are contributing to SDGs attainment, which isreflected in goals such as SDG 1 (No poverty), SDG 2 (Zero hunger), and SDG 3 (Good health andwell-being), as well as economic-related goals such as SDG 8 (Decent work and economic growth)and SDG 10 (Reduced inequalities).18•

Actively support and pursue horizontal cooperation among subnational governments and with
non-state actors to promote a coherent response recovery approach

Horizontal cooperation among subnational governments is necessary for alleviating the differentiatedimpacts of COVID-19. Encouraging operational coordination will be a step towards this, which can bedone either by institutionalising it or by developing measures for coordination in the event of a crisis.
Support from the national government to create more inclusive platforms that reflect local needs shouldreach all cities, especially through technical peer-to-peer networks or community of practice.19 Training
programmes specifically designed for boosting horizontal cooperation should be promoted. Horizontal
cooperation requires the creation of trust and a working relationship between bodies. Measures toimprove the technical capacity and human resources capacity of the subnational governments shouldbe implemented. Collaboration with academic institutions and other such bodies should be promoted
for capacity building and devising improved crisis response mechanisms. Specific platforms forknowledge transfer should be set up for regular communication with the public and other stakeholders.

Okitasari, M., Sunam, R., Mishra, R., Masuda, H., Morita, K., Takemoto, K., and Kanie, N. 2019. “Governance and National
Implementation of the 2030 Agenda: Lessons from Voluntary National Review.” UNU-IAS Policy Brief No. 18. 2019. https://collections.unu.edu/eserv/UNU:7386/UNU-IAS-PB-No18-2019.pdf
18
Jaweng, R. N. A., Ramda, E.E., Suparman, N., Hasibuan, S. N., Mangiri, D., and Tambunan, M. 2020. “Realokasi Anggaran dan
Penyesuaian (Refocusing) Program: Tantangan dan Respons Pemerintah Daerah Hadapi Pandemi,” LOCALISE SDGs Cross Sectoral
Research. UCLG ASPAC & APEKSI. https://localisesdgs-indonesia.org/asset/file/newsletter/publikasi/Research-3-WEB.pdf
19
Katramiz, T., Okitasari, M., Masuda, H., Kanie, N., Takemoto, K., and Suzuki, M. 2020. “Local Implementation of the 2030 Agenda in
the Arab World: Addressing Constraints and Maximising Opportunities.” UNU-IAS Policy Brief No. 19, 2020. https://collections.unu.
edu/eserv/UNU:7577/UNU-IAS-PB-No19-2020.pdf
17

COVID-19 and Progress on Subnational Localisation of the SDGs

33

05.

Conclusion and Policy Recommendations•

Deliver national recovery strategies with explicit context-specific and place-based
considerations to manage the differentiated impact of COVID-19

Implementation of national recovery strategies, including green recovery packages, shouldhave explicit considerations on context-specific and place-based dimensions to address thedifferentiated subnational impact of COVID-19. For this to take place, national governments should
involve subnational governments in their development and implementation of recovery plans earlyon. National recovery strategies and their fund allocation criteria should be guided by strategic
national and subnational priorities. Policymakers at the national and subnational level should takemeasures to avoid fragmentation of strategies and fund allocation into small projects in order tospend funding rapidly at the expense of quality investment and long-term priorities such assustainability, building resilience, and addressing inequality.
Successfully managing the differentiated impacts of COVID-19 rests with differentiated policy responses
that focus on the potential advantages and strong partnerships between national and subnational
governments as well as with the private sector, civil society, and citizens. Differentiated policy
responses also require a degree of flexibility to allow subnational responses that are adapted to the mostpressing needs. This may require necessary regulations to ensure a sufficient level of decentralisation
for subnational governments in delivering specific measures relevant to their circumstances.
•

Increase national to subnational support for key policy sectors to overcome
the COVID-19 pandemic

Effective policy and quality investment are critical to overcoming the COVID-19 crisis. Our study
highlights that more support is needed from the national government in terms of healthcare access,poverty reduction and employment creation, and food security. This means national economic
recovery packages need to prioritise these areas in addition to providing technical assistance andguidelines to help subnational governments invest in a smarter way.
At the offset, governments at all levels should be encouraged to ease the administrative burden on
services that ensure the continuity of core subnational services. Provision of incentives for pilot
policies or programmes in key policy sectors to overcome COVID-19 impact is also recommended
to national governments. Co-financing possibilities can also be offered for the implementation ofprogrammes, particularly in the impacted sectors of health and finance.
A framework for assistance and oversight from the national level is required, which could be carriedout to support subnational governments.20 The framework should consider the characteristics
of problems and similarities of challenges so that the budget reallocation and public financerestructuring can be made more effective.

20

Ibid, Jaweng et al., 2020: 7

COVID-19 and Progress on Subnational Localisation of the SDGs

34

05.

Conclusion and Policy Recommendations

2. Pursuing resilient, inclusive, and green subnational finance•

Explore and introduce financial management measures and fiscal tools to lessen
subnational financial imbalance and restore fiscal stability

The COVID-19 socioeconomic crisis is creating significant pressure on subnational revenues andexpenditure, and subnational governments are expecting this impact to be long-lasting. To address
the subnational financial imbalance, national and subnational governments should foster multi-leveland multi-sector dialogues and fiscal coordination to address the pandemic impact on subnational
finance, using shared data and evidence. Dialogue at the national level should involve associations ofsubnational governments and other consultative bodies. National governments also need to support
subnational governments to reduce the gap between decreasing revenues and increasing expenditures
to avoid underfunded and unfunded mandates and possible cuts in subnational operating expenditures.
This might include introducing special grant schemes to help close fiscal gaps and provide subnational
debt restructuring or delays. Possible fiscal tools and measures to explore and introduce to subnational
governments include tax arrangements, easing fiscal rules, and improving access to external financing.
Some of these measures can be temporary or more permanent. To begin, national governments mayneed to undertake a comprehensive review of subnational government finance to improve fiscal
resilience and flexibility of revenue sources and spending assignments.
It is necessary to promote financial support to subnational governments in the event of such a crisis,
particularly for the small and medium-sized cities that do not have a large revenue base of their own.
Since many observed subnational governments depend on fiscal transfer, national governments canconsider increasing such transfer to support subnational investment that can be used for projects
on key social policy areas affected by COVID-19, such as health care, education, employment
support, and food security. In the medium and long-term, multi-year subnational budgeting should bepromoted to enable agile fiscal systems when facing changes in revenues and evolving expenditures.

COVID-19 and Progress on Subnational Localisation of the SDGs

35

05.

Conclusion and Policy Recommendations•

Improve expenditure and revenue effectiveness by increasing transparency andstrengthening accountability

Increasing the transparency in finance flow and accountability of stakeholders are crucial steps toimprove subnational finance. Governments at all levels should improve their collection, dissemination,and exchange of reliable and transparent data on subnational finance. The involvement of independent
auditors should be sought. However, flexibility and efficiency in bureaucracy need to be considered toreduce the subnational reporting burden, which often leads to subnational hesitance to spend.
Subnational governments, with support from the national government, should undertake a reviewof their finances focusing on the degree of asymmetry on expenditure and revenue to align with theasymmetric impact of COVID-19. Distribution of fund allocation should be done in a transparent manner.
For the national governments, consider providing greater weight to subnational governments facing
the severe impact of the pandemic and those with higher shares of vulnerable populations to accountfor the higher costs of service delivery during the crisis and reduce regional and local disparities.
Case illustration
Subang Jaya City Council in Malaysia conducted restructuring of its future expenditure in
operationalisation and development. After reviewing its finance, the city managed to reduce
its expenditure by 15% from May to December 2020, with shortfalls covered by reserves.
Restructuring of expense was managed by reducing administrative costs (e.g., overtime,
no purchase or replacement of vehicles, etc.) and retaining development costs to ensure
continuous public services and well-functioning public facilities.

•

Establish a funding mechanism to promote multi-year green recovery and ensure financefor SDGs implementation

Going forward, building back better will depend on the depth and longevity of the crisis, availabilityof accessible funding, and the fiscal capacity of subnational governments to access new borrowing.
Smaller cities are already having difficulties accessing external funding due to low creditworthiness.
Our study highlighted that subnational governments have an appetite to pursue medium andlong-term funding. This requires support from national governments to strengthen subnational
capacity and improve access to funding. Subnational governments should be encouraged to apply
for available international funding through their national governments, such as the Green Climate
Fund (GCF). Moreover, it is recommended to integrate the SDGs into local budgetary processes21
and establish funding mechanisms to support SDGs implementation. Such a mechanism could
be provided through subnational grants and should place particular emphasis on financing green
and resilience investments. For example, allocating resources from the national to subnational
governments destined for infrastructure development in support of energy efficiency, environmental
protection, improvement of basic services, circular economy, mobility and public transportation,and sustainable urban-rural development.

21

Ibid, Katramiz et al., 2020: 3.

COVID-19 and Progress on Subnational Localisation of the SDGs

36

05.

Conclusion and Policy Recommendations

To increase funding for SDGs, partnerships for SDGs investment can also be explored. An importantpart of achieving the SDGs under Agenda 2030 is measuring the data and monitoring. Capacity
building for data collection and monitoring by public and private stakeholders will allow better
management and recovery from the pandemic. It will help in prioritising the investments geared
towards various SDGs. Policies targeting job and income support to the vulnerable population,
especially the workers in the informal economy, should be emphasised to mitigate the negative
impacts of the pandemic on the progress towards SDG 8 (Decent work and economic growth).

3. Accelerating SDGs localisation to achieve inclusive,
sustainable, resilient recovery•

Align the short-term emergency responses with long-term economic, social andenvironmental objectives by internalising SDGs and other international frameworks (e.g.,
Paris Agreement, New Urban Agenda)

Options for subnational governments to bridge their short-term emergency responses and long-term
development objectives include: ensuring recovery measures built-in objectives of medium-termsustainability and inclusivity, aligning subnational budgets with the SDGs, and developing or updating
subnational disaster risk reduction strategies. All stakeholders at the national and subnational levelshould work together to ensure SDGs and international obligations (e.g., NDCs) are mainstreamed
into the short-term subnational emergency responses. These options require support from national
governments, which may entail designing or updating the national roadmap or framework for SDGs
implementation, and enhancing Nationally Determined Contributions (NDCs) to reflect this ambitionin their recovery plans. Technical capacity building for subnational governments is needed to allow
them to develop and implement coherent subnational recovery plans.
The COVID-19 crisis creates a differentiated impact on the attainment of SDGs as subnational
governments focus on overcoming socioeconomic challenges. To mitigate SDGs from going further
off-track, subnational governments are encouraged to develop or update their SDGs implementation
plan to balance the advancement of SDGs more equally. However, the plan should also tailor to eachsubnational government’s needs. Moreover, all stakeholders should raise awareness of the benefits ofother SDGs, particularly gender and environment.
•

Adopt SDG-related approaches to support subnational governments’ strategies to locallybuild back better and ensure financial inclusion

Our study encourages more utilisation of SDG-related approaches for decision-making, suchas evidence-based and SDG interlinkages in developing subnational recovery plans or updating
subnational development plans to overcome the COVID-19 crisis. Strengthening interlinkages
between SDGs and targets and with other international agendas can facilitate the managementof trade-offs and allow an informed decision-making process.22 The broader approaches deal with
fundamental architecture and efficiency of the subnational governments while engaging relevant
stakeholders to create a build-back-better strategy. Thus, the broader approaches promote theSDGs and the development of subnational communities in a comprehensive manner.

22

Ibid, Katramiz et al., 2020: 3.

COVID-19 and Progress on Subnational Localisation of the SDGs

37

05.

Conclusion and Policy Recommendations

Nevertheless, specific or thematic approaches, such as sustainability and resilience in actions
and business models, valuing co-benefits in public investments, gender mainstreaming, and thehuman rights approach, are also recommended in developing subnational strategies to locallybuild back better. The specific or thematic approaches help subnational governments accelerate
the advancement of individual SDGs that lost their momentum due to the COVID-19 pandemic.
Subnational governments can strategically utilise specific or thematic approaches to matchwith their needs and progress on the SDGs. The optimal combination of broader and thematic
approaches tailored to each subnational government can fully enhance the progress of subnational
communities’ build-back-better development and SDGs.
Financial inclusion is also important to be ensured in the planning and implementation of strategies
as it is related to equitable distribution of social safety net and incentives investment for small andmedium enterprises and informal sector. Some challenges may include inconsistent and limited
availability of data, as well as an insufficient level of financial literacy of the affected communities,
which hampered them from receiving assistance.23 Therefore, the local government’s role in facilitating
the stages of financial inclusion will be essential.
•

Upscale the use of Information and Communication Technologies (ICT) to accelerate thedigitalisation of services and address digital divides

Our study finds that despite the importance of digital connectivity, the issue of the digital divide
seems to be neglected. National governments should encourage subnational governments toinvest in digital infrastructure and consider digital acceleration as one of the priority areas to locallybuild back better. All stakeholders at the national and subnational levels should ensure adequate
weight is given to digital inclusion. This means providing necessary measures to evaluate potential
solutions, their impact or cost-effectiveness through research and working with communities toaddress issues of opportunity, access, and skill to using technology.
Policymakers’ support to make connectivity affordable and accessible is critical, especially for low
incomes. Solutions beyond short-term fixes might include subsidies and providing connectivity incommunity spaces. Collaboration with the private sector and other stakeholders should be sought tomake such solutions possible, including through coordinating funding for organisations doing similar
work in the community to meet immediate demand and reach more people in the longer term. At thenational level, this effort should be supported by necessary regulatory frameworks to facilitate digitalsolutions while protecting citizens’ rights and security online and addressing inequality.

Case illustration
The city of Bogor in Indonesia launched a programme to connect donors and recipientsby developing an ICT for crowdfunding. The Bogor City Foster Family Network Programme
targeted low-income populations not registered as aid recipients in the government’s
database and set a minimum donation of one million Rupiah (USD 70). Donors and recipients
must register on the government’s websites with their data verified by subdistrict staff.24

23
24

Ibid, Jaweng et al., 2020: 9.
Ibid. SDGs Center, UNDIP, UCLG ASPAC and APEKSI, 2021: 49.

COVID-19 and Progress on Subnational Localisation of the SDGs

38

Annex
Data Overview
This publication describes and analyses the responses of 52 subnational government respondents
that include regional (provincial and state) and local (municipality, local government unit, regency)
government entities in Indonesia, Malaysia, and the Philippines. An online questionnaire was sharedin February 2021 with focal persons of the subnational government who are aware of the process of
localising the SDGs and implementation of policies and strategies relevant to addressing COVID-19
crisis. The data collection involved Local Government Associations within UCLG ASPAC network.
Most respondents are from municipalities (81%) or from regions (19%). Most of these subnational
governments have populations below 200,000 inhabitants (38%) and populations between 200,001
and 500,000 people (33%). Responses from metropolitan areas (above 500,001 inhabitants) form 29%of all responding subnational governments. Taking into account the average municipal population inIndonesia (500,894 inhabitants), Malaysia (200,671 inhabitants), and the Philippines (2,359 inhabitants),
the sample is representative of the structure of responding countries’ municipalities.25
In parts of the analysis, three background variables were used:
1. Population size: small cities (up to 200,000), medium-sized cities (between 200,000 and 500,000)
and metropolitan areas (greater than 500,000);
2. Primary economic activity: tourism, industry (includes mining, oil and gas, energy, manufacture),
foods and beverages, goods and services (includes business, commerce and trade); and3. Source of revenue: tax, fiscal transfer from the national governments, grants, and borrowing.
These background variables permit identifying whether the impact of the COVID-19 crisis is differentiatedacross responding subnational governments.

25

OECD. 2016. “Country profile.” Indonesia (https://www.oecd.org/regional/regional-policy/profile-Indonesia.pdf), Malaysia (https://www.oecd.org/regional/regional policy/profile-Malaysia.pdf), and the Philippines (https://www.oecd.org/regional/regional-policy/
profile-Philippines.pdf).

COVID-19 and Progress on Subnational Localisation of the SDGs

39

AnnexQuestionnaire
An online questionnaire was developed to gain awareness and a broad overview of subnational policies
and current progress related to localising the SDGs and strategies to overcoming the impact of the
COVID-19 crisis. The questionnaire covered 22 questions and was organised into six topic areas:
•
•
•
•
•
•

General information on subnational governments;
Impact of COVID-19 on subnational governments;
Impact of COVID-19 on subnational finance;
Subnational exit strategies and recovery plans;
Impact of COVID-19 crisis on subnational progress of localising the SDGs; andThe role of SDGs as a framework to build back better.

The questionnaire offered four qualitative scales (e.g., strong to no impact, high to no pressure, very
challenging to not a challenge) to respondents to reflect their perceptions on each question.
Subnational Governance Context
The institutional setting of subnational governance differs across countries. The degree of fiscal,
political, and administrative decentralisation also varies. Institutional setting and degree ofdecentralisation do not permit establishing causality between governance and decentralisationand the dimensions of subnational responses to COVID-19. Rather they provide context among
subnational governments across observed countries.
Indonesia
Indonesia is a unitary republic and is divided into three layers of governments: central and subnational
governments (provinces, regencies and municipalities). Under regencies and municipalities, there
are districts and sub-districts/villages. Heads of subnational governments and villages are directly
elected, while heads of districts and sub-districts are appointed by mayors. The concurrent affairs, ofwhich the responsibilities are divided between governments, consist of two types: 1) obligatory affairs
and 2) non-obligatory affairs. The obligatory affairs include education, health, general construction
and spatial management, public housing, social affairs, and local security. The provision of publichealth service is a provincial responsibility.26
Subnational governments have the responsibilities and authority to determine the size and structureof budget expenditure. Following the decentralisation law in 2014, provinces received supervisory
powers and a stronger role as representatives of the central government, particularly in the area ofplanning and budgeting as well as public service delivery. However, subnational governments’ power
to collect taxes and borrow remains very limited. The central government collects major taxes, whileregencies and municipalities are only given the right to collect minor taxes such as taxes on land andbuilding, motor vehicles, hotels, restaurants, entertainment, base metal and mineral extraction, andwater. Assessment and tax rates are uniform for the whole country, and subnational governments do
not have control over the rate structure for their major sources of revenue.

26

Sevindik, I., Tosun, M. S., and Yilmaz, S. 2021. “Local Response to the COVID-19 Pandemic: The Case of Indonesia.” Sustainability, 13,5620. https://doi.org/10.3390/su13105620

COVID-19 and Progress on Subnational Localisation of the SDGs

40

AnnexSubnational governments are allowed to borrow from domestic and foreign markets. However, theyrequire permission from the Ministry of Finance for issuing local debts. The law adopts the fiscal anddebt rules of the European Union by limiting the budget deficits of central and local governments to
3% of their respective annual GDP or regional GDP. The ratio of debt to GDP or regional GDP is set at a
maximum of 60%.27 On average, subnational expenditure in Indonesia is mainly allocated for generalpublic services, education and housing.
In the pandemic situation, fiscal pressure on the revenue side has stalled investment spending and thecarrying out of infrastructure projects. With the bureaucratic machine not operating in full force, theavailable local government’s budget cannot function optimally, resulting in many local governments’negative balance sheets, with some going through a recession. In Indonesia, there are three focusesof government’s programmes to respond to the pandemic: 1) healthcare, 2) social safety nets, and 3)
adjustments in programmes to countermeasures against economic impacts.28 Such adjustments are
consistent with the agenda of SDGs and reflected in goals such as SDG 1 (No poverty), SDG 2 (Zero hunger),and SDG 3 (Good health and well-being), as well as economic-related goals such as SDG 8 (Decent
work and economic growth) and SDG 10 (Reduced inequalities). To support these goals, the Indonesian
government has been implementing four central themes for the Local Government Work Plan (Rencana
Kerja Pemerintah Daerah/RKPD) of 2021: 1) the recovery of the industry, tourism, and investment sector, 2)
healthcare system reform, 3) social protection system reform, and 4) disaster resilience system reform.
In the context of SDG localisation, the commitment to adopting and implementing SDGs at the
local level is based on the Presidential Decree No 59 of 2017, which is followed by several enabling
environments at the national level. The Ministry of Development and Planning Regulation No 7 of 2018
on the implementation of SDGs gave a mandate to Provincial Governments to prepare SDGs Local
Action Plan (Kajian Lingkungan Hidup Strategis or KLHS), whereas city or regency municipalities are only
required to submit their data and plans to their respective provincial governments. Although subnational
governments below provinces are not mandated to prepare the SDGs Local Action Plans, many haveincorporated SDGs in their Local Mid-Term Development Plans.29 The Ministry of Home Affairs Regulation
No 7 of 2018 called for all subnational governments to prepare Environmental Strategic Assessment for
the Local Mid-Term Development Plan, which includes their progress and plans for the SDG attainment.30
In handling COVID-19, the main power is within the purview of the central government, including public
mobility restriction and fiscal response packages. The implementation of Government Regulation
No. 21 of 2020 concerning the Large-Scale Social Restrictions (PSBB) in the Context of Accelerating
Handling of COVID-19 positions the Ministry of Health as a party that will approve the submission of
the local government for the determination of the PSBB status. However, different regional capacities
in fulfilling various requirements and the formal administrative process for submitting PSBB may
cause delays in its application.31 As of July 2021, the emergency public activity restriction (PPKM) isin place in 15 provinces based on the Ministry of Interior Instruction No. 15 of 2021.

ADBI. 2016. “Government Decentralization Program in Indonesia.” ADBI Working Paper Series, No. 601, October 2016.
https://www.adb.org/sites/default/files/publication/201116/adbi-wp601.pdf
28
Ibid, Jaweng et al., 2020: 3.
29
APEKSI, APPSI, ADEKSI, UCLG ASPAC, and ITB SDGs Network. 2021. “Voluntary Subnational Review Report for Indonesia 2021.”
UCLG ASPAC & UCLG. https://gold.uclg.org/sites/default/files/indonesia_2021_0.pdf
30
LOCALISE SDGs and SDGs Hub UI. 2021. “Laporan Evaluasi Adopsi Indikator Tujuan Pembangunan Berkelanjutan pada
Pembangunan Daerah Berdasarkan Permendagri 7/2018 (Report on the evaluation of SDG indicators adoption at the local levelbased on MOHA Regulation 7/2018).” UCLG ASPAC & APEKSI.
31
Ayuningtyas, D., Ul Haq, H., Utami, R. R. M., and Susilia, S. 2021. “Requestioning the Indonesia Government’s Public Policy Responseto the COVID-19 Pandemic: Black Box Analysis for the Period of January-July 2020.” Front. Public Health, 10 May 2021. https://doi.
org/10.3389/fpubh.2021.612994
27

COVID-19 and Progress on Subnational Localisation of the SDGs

41

Annex

Malaysia
Malaysia is a parliamentary democracy and constitutional monarchy. The country has three tiersof government (federal, state and local), with regular elections held at the central and state levels.
There are three types of local authorities in Malaysia: 1) city councils, 2) municipal councils,and 3) district councils. While the local authorities are under the purview of the respective state
governments, the Ministry of Housing and Local Government (MHLG) is responsible for formulating,executing and monitoring all laws pertaining to local government while local authorities in theFederal Territories are subject to the purview of the Ministry of Federal Territories and Urban WellBeing. All three types of local authorities must provide basic infrastructure and public utilities,
whilst municipalities and cities additionally provide for urban planning, public health and waste
management, and city councils further provide revenue collection activity and law enforcement.
The largest part of subnational income is spent on staff expenditures, charges and utilities.
The Federal government is given all major public functions, unlimited taxation and borrowing powers,
and considerable authorities, which include wide-ranging emergency powers. They also undertakenational development planning in the national interest. The main revenue sources assigned to
the States are receipts from land sales, revenue from lands, mines and forests, entertainment
duty and Islamic religious revenue. A State Reserve Fund was established to assist the States inbalancing their budget. Federal grants are distributed among the States on the basis of the originof collections, population, State Gross Domestic Product and other social and economic indicatorsand the actual cost of projects.
The State government can borrow only from the Federal government or from a bank or other financial
sources approved by the Federal government for a period not exceeding five years. States’ borrowing
consisted of loans from the Federal government and market borrowing from the domestic financial
market. The State governments can only borrow for capital spending.32
The Federal Government, through Malaysian National Security Council, is in charge of deciding
the nationwide full movement control order (FMCO). The Ministry of Health assesses when to
progress to each phase of the FMCO based on daily COVID-19 numbers and hospital capacity.
Local authorities are responsible for enforcing the national regulations, ensure seamless public
service delivery, and oversee the safety guidelines.

32

Anuar, A. H. 2000. “Fiscal Decentralization in Malaysia.” Hitotsubashi Journal of Economics, 41, pp. 85-95. http://hermes-ir.lib.hit-u.
ac.jp/hermes/ir/re/7710/HJeco0410200850.pdf

COVID-19 and Progress on Subnational Localisation of the SDGs

42

AnnexThe Philippines
The Philippines has a unitary government system. The administrative subdivisions are divided into
four layers: provinces, cities, municipalities, and barangays. They are collectively referred to as local
government units (LGU). The barangay is the lowest tier of local governance. A group of barangays
comprise a municipality. The more urbanised and developed barangays comprise a city. There are
two types of cities: 1) highly urbanised, which is independent of the province, and 2) component cities(smaller cities). A cluster of municipalities or municipalities and component cities comprise a province.
The 1991 Local Government Code (Republic Act 7160) provided local government units with powers
to tax and levy various fees and charges and to borrow from the financial markets in order to raise
revenues for financing local development. The main sources of locally generated revenues are property
tax, business tax, and service and business income from various local economic enterprises. Local
governments set some tax rates but can make changes only every three years. Central government
influences local government spending. The majority of subnational expenditure is dedicated forgeneral public services, including administration costs, public order, and safety spending.
A key element of fiscal decentralisation is the intergovernmental fiscal transfer called the internal
revenue allotment (IRA), which is a block grant to local government units based on a formula designedby the Philippine Congress.33 Performance incentives are explicitly used limited to the employment oftransfer intercept in cases of non-repayment loans.
The National Guiding Principles of COVID-19 response assigned LGUs as the steward of local healthsystems and primary responders to the public health emergency, including enforcing the enhanced
community quarantine (ECQ) and maintaining the uninterrupted flow of essential personnel, goods, andservices. LGUs have the mandate to institute their own intensified enforcement measures to ensure thatminimum health standards are maintained. However, the current National Disaster Risk Reduction andManagement Plan does not mention pandemics, and many LGUs do not have a working Community
Response Strategy to deal with COVID-19. On finance, to address inequality in financial resourcesamong LGUs and improving their capacity, the central government has started to implement the
Mandanas Ruling (i.e., IRA is programmed to increase by 55 percent in the 2022 budget) by identifying
spending responsibilities for select devolved mandates to be transferred back to LGUs.

33

UN-Habitat. 2011. “Fiscal Decentralization in the Philippines.” The Global Urban Economic Dialogue Series. https://unhabitat.org/
sites/default/files/download-manager-files/1403266078wpdm_Fiscal%20Decentralisation%20in%20Philippines.pdf

COVID-19 and Progress on Subnational Localisation of the SDGs

43

Glossary
Building back better (BBB) is an approach to post-disaster recovery that reduces vulnerability tofuture disasters and builds community resilience to address physical, social, environmental, andeconomic vulnerabilities and shocks. Recovery within a BBB framework gives impacted communities
the chance to reduce risk from the immediate hazard and threatening hazards and conditions.34
Co-benefits are the positive effects that a policy or measure aimed at one objective might have onother objectives, increasing the total benefits for society or the environment. Co-benefits are often
subject to uncertainty and depend on local circumstances and implementation practices, among
other factors. Co-benefits are also referred to as ancillary benefits.35
Green or sustainable finance refers to the process of taking environmental, social and governance(ESG) considerations into account when making investment decisions in the financial sector, leading
to more long-term investments in sustainable economic activities and projects.36
Green recovery is recovery measures in the form of economic stimulus packages and plans that havethe potentials to create opportunities for income, jobs and growth, and at the same time accelerateaction on medium and long-term environmental goals.37
Horizontal cooperation refers to the collaboration among governments at the same level andbetween government and non-State actors, including the private sector, civil society organisations,academia, and other actors.
Multi-stakeholder partnerships (MSPs) are voluntary and collaborative relationships between
stakeholders across different sectors that enable sharing common interests and approaches,leveraging responsibilities, risks, resources and benefits towards achieving sustainable development.38
Resilience is the ability of a system, community or society exposed to hazards to resist, absorb,
accommodate to, and recover from the effects of a hazard in a timely and efficient manner, including
preserving and restoring its essential basic structures and functions.39

GFDRR. 2020. “Building Back Better in Post-Disaster Recovery.” https://www.recoveryplatform.org/assets/tools_guidelines/GFDRR/
Disaster%20Recovery%20Guidance%20Series-%20Building%20Back%20Better%20in%20Post-Disaster%20Recovery.pdf
35
IPCC. 2018. “Special Report: Global Warming of 1.5 °C.” https://www.ipcc.ch/sr15/36European Commission. nd. https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/
overview-sustainable-finance_en#:~:text=Related%20links-,What%20is%20sustainable%20finance%3F,sustainable%20economic%20
activities%20and%20projects.
37
OECD. 2020. “Making the Green Recovery work for jobs, income and growth.” https://read.oecd-ilibrary.org/view/?ref=136_136201ctwt8p7qs5&title=Making-the-Green-Recovery-Work-for-Jobs-Income-and-Growth_&_ga=2.186680168.1587330556.1627359732140200233.1611717297
38
UNU-IAS and UNESCAP. 2018. “Partnering for Sustainable Development: Guidelines for Multi-stakeholder Partnerships to Implement
the 2030 Agenda in Asia and the Pacific.” http://collections.unu.edu/eserv/UNU:6459/MSP_Guidelines.pdf
39
United Nations. 2012. “UN System Task Team on the Post-2015 UN Development Agenda: Disaster Risk and Resilience.” Thematic
Think Piece. UNISDR, WMO. https://www.un.org/en/development/desa/policy/untaskteam_undf/thinkpieces/3_disaster_risk_resilience.pdf
34

COVID-19 and Progress on Subnational Localisation of the SDGs

44

Glossary

SDGs localisation is the process of taking into account the subnational contexts in the achievementof the 2030 Agenda, from the setting of goals and targets to determining the means of implementation
and using indicators to measure and monitor progress. Localisation relates both to how the SDGs
can provide a framework for local development policy and how local and regional governments can
support the achievement of the SDGs through action from the bottom up and how the SDGs canprovide a framework for local development policy.
Vertical coordination is concerned with linking national and subnational levels to guarantee joinedup and sustainable implementation and management of inclusive policies.
Vulnerable populations include populations that live in poverty without access to safe housing,water, sanitation and nutrition and those who are stigmatised, discriminated against, marginalised
by society and even criminalised in law, policy and practice. These populations may struggle to fulfil
their human rights, including their rights to access health and social services.40

40

UNDP. nd. https://www.undp-capacitydevelopment-health.org/en/legal-and-policy/key-populations/

COVID-19 and Progress on Subnational Localisation of the SDGs

45

UNU-IASCONTACT INFORMATION
ias.unu.edu
United Nations University
Institute for the Advanced Study of Sustainability
5-53-70 Jingumae,
Shibuya-ku, Tokyo 150-8925
Japan
Tel: +81 3 5467 1212
Fax: +81 3 3499 2828

UCGL ASPACCONTACT INFORMATION
uclg-aspac.org
United Cities and Local Governments Asia-Pacific
Jakarta Capital City Government Office (City Hall of Jakarta)
Building H, 21st Floor
Jl. Medan Merdeka Selatan No. 8-9
Central Jakarta 10110
Indonesia
Tel: +62 21 389 01 801 / +62 811 804 7002

COVID-19 and Progress on Subnational Localisation of the SDGs

46