# EUR-Lex - 52013DC0280 - EN

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# 52013DC0280

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Empowering Local Authorities in partner countries_for enhanced governance and more effective development outcomes /* COM/2013/0280 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

Empowering Local Authorities in partner
countries
for enhanced governance and more effective development outcomes

1.           BACKGROUND

Centrally-led, top-down development policies and programmes cannot
alone succeed in addressing the complexities of sustainable development and
fighting poverty. Public and private actors have their role to play especially
at local level. In the last two decades, many central governments in developing
countries have attributed responsibilities to Local Authorities[1] in country development
processes, with a view to allow for the definition of public policies and
service delivery on local realities.

However, this political recognition has not always been
accompanied by an adequate level of autonomy, capacity development and
financial resources, leaving their empowerment incomplete. In many EU partner
countries, funding directly channelled through Local Authorities still
represents a marginal part of national public sector expenditure and of international
development aid.

A certain
number of obstacles have to be overcome in order to unlock the development
potential of Local Authorities. It is with this purpose that the European
Commission reaffirms the importance of Local Authorities in partner countries, in
achieving development objectives and proposes a more
strategic engagement for their empowerment.[2]

This
Communication integrates the results of the Structured Dialogue on the
involvement of Civil Society Organisations and Local Authorities in EU
development cooperation,[3]
the EU renewed approach to poverty reduction and
sustainable development defined by the Communication Increasing
the Impact of the Development Policy: an Agenda for Change[4] and related Communications
and Council Conclusions,[5]
as well as the results of the stakeholder consultation carried out on the basis
of the Issue Paper Local Authorities in Development. Furthermore, the
Communication takes into account the international aid and development effectiveness
agenda, as lastly shaped by the Busan Outcome Document.[6]

The importance
of Local Authorities in development

The participation
of citizens in decision-making processes that affect their lives and access to
accountability mechanisms is fundamental to the promotion of sustainable development
and poverty reduction. This is particularly relevant at the local level, where
citizens live and work, where basic services are provided and where enterprises
are established. Citizens have, therefore, common interests at stake, to set objectives
and work together in identifying solutions particularly aiming at improved access
to services, a more balanced distribution of available resources, greater social cohesion and enhanced accountability and transparency of
public authorities, including to accountability mechanisms.

Being closer to
citizens than other public institutions, Local Authorities hold responsibility
in mobilising local societies’ opinions while acting as catalysts for change.
This is particularly true in terms of more efficient public administration,
more inclusive development processes, in cooperation with Civil Society
Organisations[7]
(CSOs), and solutions to urgent challenges faced by local communities. Such challenges
include social exclusion, migration, food security, limited infrastructures,
rapid urbanisation, depletion of resources, public
safety and violence, environmental and social impact of extractive activities, climate
adaptation and mitigation, rule of law and access to justice.

Good governance[8] at local level is necessary to achieve
sustainable development and equitable outcomes. It creates the conditions for
inclusive, responsive and effective development processes.

The quality of
local governance is primarily linked to the political willingness of central
governments to create a conducive environment at local level, through legal and regulatory instruments,[9] allowing Local Authorities to
benefit from a sufficient level of autonomy in exercising power and acquire
specific capabilities. Hence, the quality of local governance is also related to
the way Local Authorities manage and implement public policies and services on
the basis of local policy-making processes and interactions with other public
institutions, citizens and private sector and through the allocation of
available resources.

In natural
resource--rich countries, Local Authorities could give their advice on the ways
extractive industries operate and on how revenues from the extractive sector
are shared between local communities, central government and private operators.

In fragile, crisis and risk-prone
situations, Local Authorities have a key role to play to safeguard vulnerable
populations and communities, by steering the set-up of local resilience
strategies and by enabling the delivery of basic social services. In
disaster-prone areas, they can be crucial in prevention, mitigation and
preparedness, in addition to managing early responses and delivering basic
services to populations. Moreover, they often play an important part in early
warning and thus contribute to de-escalating the first stages of violence,
through local and traditional dispute resolution mechanisms.

The realisation
of Local Authorities' comparative advantage can nevertheless be undermined by negative
political factors, particularly related to a lack of effective leadership, high
levels of corruption and maladministration, clientelism, and illegal economy,
as well as by institutional weaknesses, such as dysfunctional institutional
arrangements, limited financial resources, low levels of administrative
capacity, inadequate planning procedures and public finance management.

Thus, depending on the country context, linking the public sector at local level to development processes
may imply efforts to increase the capacities of Local Authorities and to
strengthen local governance structures. It is fundamental to simultaneously
empower local public authorities and citizens, to ensure both that the latter
have the ability to demand transparency and accountability[10] and that Local Authorities have
the means and incentives to respond to citizen demands for effective, transparent
and accountable governance, an equitable allocation of resources and access to
services.

2.           UNLOCKING
THE DEVELOPMENT POTENTIAL OF LOCAL AUTHORITIES

Support to the public
sector in partner countries towards more effective and efficient design and
implementation of national development policies and plans should take into account
the important role of the local public sector. Assistance to Local Authorities
should aim at enhancing their capacities and means to execute their institutional
mandate as defined by law and consequently to exercise their power of
initiative as full-fledged policy-makers.

Adhering to the principle of subsidiarity,[11] the EU aims at promoting the
role of Local Authorities as policy and decision-makers, in favour of
transparent and accountable policy-making and service delivery at the local
level. This is likely to empower them, and to boost local development via
increased democratic participation, justice, human rights, active citizenship,
participation of women and youth in the public sphere, and multi-level
accountability.

Stakeholder
partnerships and dialogue mechanisms, made up of representatives of Local
Authorities, other actors operating locally and citizens, should be encouraged
at local level, as a way to engage in dialogue with
relevant central authorities to ensure their needs and concerns are known and
taken into account.

It is in this
framework that a territorial approach to development should be promoted. Tailored to territorial characteristics and needs, the territorial approach to development is characterised as a
dynamic bottom-up and long-term process based on a
multi-actor and multi-sector approach, in which different local institutions
and actors work together to define priorities, and plan and implement
development strategies. Through the guidance of Local Authorities and the mobilisation of additional private and community capacities and
resources, the territorial approach to development could
trigger a change in the quality of citizens’ life and wellbeing, ensuring a
balance between socio-economic growth, equity and environmental quality and
increasing the resilience of the most vulnerable. Furthermore, this approach
could reinforce local political processes, transparency and boost democratic
ownership of development, via a continuous monitoring of progress towards
sustainability.

3.           SHAPING EU SUPPORT FOR IMPROVED
GOVERNANCE AND MORE EFFECTIVE DEVELOPMENT OUTCOMES AT LOCAL LEVEL

The EU should work in favour of democratically
legitimate, accountable and representative Local Authorities and local leaders in
partner countries with a particular focus on municipal authorities in rural and
urban areas. The EU should also explore the opportunities for coordination with
regional authorities.

In situations of fragility, EU cooperation
with Local Authorities is particularly relevant in parallel to wider
state-building processes, which are essential to the path out from fragility towards
stability. As stated in the Agenda for Change, this is particularly relevant in
countries where gross human rights violations take place. In these cases the EU
may suspend cooperation with central governments and continue channelling
assistance through Local Authorities and CSOs.

Likewise, the EU should support the efforts
of governments to create a conducive environment, so that Local Authorities can
be empowered in the definition and implementation of local policies and plans
and fully participate in sustainable development processes. Together with
central governments, the EU should invest in capacity development activities to
ensure that Local Authorities, particularly in remote areas with limited
capabilities and resources, are able to lead the development of their
territories in cooperation with other local actors.

From an operational point of view, the new
EU approach would promote enhanced political, administrative and fiscal
autonomy of Local Authorities through decentralisation reforms, capacity and
institutional development.

3.1.        Decentralisation
processes

Decentralisation constitutes a particular
aspect of public sector reform. It involves the transfer of a range of political
authority and powers including revenue-raising, responsibilities in service
delivery and financial, human and administrative resources from higher levels
in the political system to public authorities at lower level.

Decentralisation is inherently a political
question that affects the overall organisation of a state. It aims at better
efficiency, equality and social cohesion and can only be decided by a sovereign
country. Hence, support to decentralisation from development partners should be
envisaged only where there is a political will to initiate and support decentralisation
or where decentralisation reforms have already been put in place. At the same
time, EU should adapt its sector operations to already decentralised
environments, where this is the case.

EU support to decentralisation processes will
be based primarily on the understanding of the political economy of the reforms
in relation to territorial assets. Moreover, EU support to decentralisation should
focus on the establishment of a conducive legal and policy environment for
decentralisation and on institutional and capacity development, in order Local
Authorities to enjoy a certain degree of autonomy to fulfil their functions as
mandated by law.

The expected results should be the
allocation of sufficient financial resources to Local Authorities according to
national legal frameworks, improved public financial management and mobilisation
of revenues at the local level. In parallel, EU assistance should aim at
enhancing the capacities of central authorities, deconcentrated public services
as well as local political and administrative staff, together with the
establishment of mechanisms of political accountability, transparency and
mechanisms for monitoring municipal policies.

Example of EU support to decentralisation process: the case of Cambodia The EU co-funded Programme “Strengthening Democratic and Decentralised Local Government" was implemented in partnership with UNDP from 2006 until December 2011, in support to the Cambodian Government's "Deconcentration and Decentralisation Strategy". At commune level, the Programme has built horizontal cooperation amongst communes, while improving citizens' perceptions of Local Authorities and citizens’ well-being. At provincial level, the Programme has encouraged the establishment of 24 legally independent Associations of Local Authorities. At national level, the action has aimed at improving intergovernmental financial transfers. Local Authorities have started using financial resources in an autonomous way.

In this
context, the EU should consider fiscal decentralisation as a strategic entry
point to progressively build an accountability culture, as it defines the
generation and distribution of resources that are used to fulfil citizens'
demands. Particular attention should be paid to mechanisms that allow combining
of external and domestic resources into fiscal transfer facilities, to support local
tax revenue and development planning, budgeting and spending processes of Local
Authorities.

3.2.        Capacity
development of Local Authorities

In order to enhance Local Authorities’
ability to contribute to good governance and consequently to achieve development
goals at local level, local elected officials and administrative staff have to overcome
capacity constraints, such as managing and mobilising public sector resources, leadership
skills, public financial management, revenue raising and expenditure, transparency,
participation and interaction with other actors.

Capacity for local good governance is
affected by factors that operate at three levels: individual, institutional and
organisational. At the individual level, local capacity is affected by the skills,
training and attitude of local politicians and administrative staff. At the
institutional level, capacity depends on structures, operating procedures,
which frame and govern the activities of the personnel. At the organisational
level, capacity is affected by the policy and legal environment, and by the
rules and practices that govern the relations with other actors.

Support to capacity development of Local
Authorities will be defined on the basis of a long-term and demand-driven approach,
with emphasis on leadership building, inclusive service delivery and sound financial
management. This approach will entail the promotion of country-led Local
Authorities capacity development within the sectors in which they operate,
particularly through the involvement of national Associations of Local
Authorities and schools of administration, horizontal cooperation among Local
Authorities consisting for example in big municipalities offering technical
assistance to smaller ones, and the inclusion of more adequate central-local
authorities linkages.

3.3.        Sustainable
Urbanisation

Because of the
rapid growth in urban population, urban governance has become another
important aspect of good local governance. Local Authorities in urban areas
have a decisive role to address the challenges related to urbanisation, such as
the needs of citizens living in unauthorised settlements without adequate
services and facilities, impoverished quality of life, criminality and social
dysfunction.

By the year
2025, approximately two-thirds of the world’s population will live in urban
areas, with 95 per cent of the urban population growth taking place in partner
countries and concentrated in the lowest income groups. Urbanisation has
different causes including the migration of people from small towns and rural
areas to major metropolitan areas and the rural-to-urban migration to the
intermediate towns, as well as the natural increase of existing populations in
metropolitan cities.

In its
cooperation with partner countries, the EU will seek to promote sustainable
strategies to promote non-discrimination and break down the barriers that
exclude various groups from access to resources and opportunities offered by
urban development, with the view to promote social inclusion, territorial
cohesion and environmental protection.

Special
attention should be paid to land access as a pre-requisite to sustainable urban
development. Urbanisation has a profound effect on land values, so it is
important to ensure that municipal finance can benefit from the increased
values of land in order to be able to finance services and facilities.

In particular,
the EU should encourage the definition of city policies for slum upgrading, to
gradually improve, formalise and incorporate slums into the city itself by
extending land, services and citizenship to slum dwellers. Furthermore, the EU should
seek to improve the administrative ability of Local Authorities to register
land rights and interests, to the effective and efficient management of urban
land (cadastres, urban property registers). Improving urban land will open
property markets. Property and transactions will become more transparent and
fiscally taxable, increasing fiscal capacities of Local Authorities, which is a
prerequisite for developing urban infrastructure and improving overall quality
of life.

3.4.        Associations
of Local Authorities

Associations of
Local Authorities[12]
can be instrumental in achieving good governance and development outcomes at
local level. Their main functions include (i) advocacy of members' interests in
national policy dialogues with central governments and other national stakeholders
as well as in international fora; (ii) lobby for decentralisation policies leading
to more autonomous and empowered Local Authorities; (iii) coordination and platform for
discussion among members; (iv) experience and knowledge sharing with the view to
enhance Local Authorities’ capacities; (v) quality supervision of Local
Authorities performance in matters of local policy-making processes and service
delivery; (vi) promotion and coordination of participative local development
plans.

In many partner
countries, Associations of Local Authorities are still weak. In some other
countries national Associations of Local Authorities do not exist.

In the last two
decades, international Associations of Local Authorities have started
advocating for their participation in the formulation of development policies
and in the delivery of international aid at local level. International Associations
of Local Authorities have also reaffirmed the importance of local governance
and decentralisation reforms in the creation of a conducive environment to play
an effective role in local development.

Supporting Associations of Local Authorities in the ACP
Countries

Since 2010, in the framework of the Cotonou Agreement,
the EU-funded Regional Programme “Supporting and strengthening Local Government
Associations at ACP national and regional levels” (ARIAL) has aimed to enable
Associations of Local Authorities to take part in the definition and
implementation of development policies, through capacity and institutional
development activities. During its three-year implementation period, ARIAL has
worked towards the strengthening of Associations of Local Authorities at
national, sub-continental and continental level. Key outcomes have been: (i)
the support of five national associations, namely in Gabon, Chad, Swaziland,
Kiribati and Vanuatu, through the Emerging Local Government Association
Facility; (ii) the production of a series of capacity development toolkits,
tailored on the demand of Associations of Local Authorities, in order to
identify funding opportunities, to survey Local Authorities on their needs, to
manage projects, to draft communication, advocacy and lobby plans.

The EU should seek
to involve Associations of Local Authorities in the programming of national and
local priorities as well as in the implementation of related EU-funded
programmes, particularly those related to decentralisation. Furthermore, the EU
should facilitate the establishment of partnerships between Associations of Local
Authorities in partner countries and the EU.

4.           A
WAY FORWARD: MORE EFFICIENT AND FLEXIBLE MODALITIES OF SUPPORT

The EU should adapt its support to the growing
role, potential, and needs of Local Authorities and Associations of Local
Authorities in partner countries.

The use of innovative funding modalities
facilitating flexible, transparent and cost-effective access to resources at
local level should be explored. In the context of support to decentralisation
processes this could include performance-based grants for local service delivery
based on the results of annual assessment of Local Authorities institutional
performance. The EU should also support initiatives allowing
citizens to identify, discuss and prioritise public spending projects (e.g.
participatory budgeting).

The EU uses budget support operations, particularly
Sector Reform Contracts, to support improved service delivery. These could to
be decentralised in order to better reach the target population or
institutions, for example in health, education, water, sanitation, agriculture,
or the process of decentralisation itself.[13]
In the design and implementation of budget support, the EU should take into
account both central and sub-national government levels. During the
implementation, the EU should support systems to monitor the extent to which
funding is transferred through government treasury to the most appropriate
level of local administration. This may contribute to the improvement of
intergovernmental fiscal transfers, strengthening of Local Authorities
institutional capacity, procedures and systems in the areas such as planning
and financial management, and consequently contribute to the quality of service
delivery.

The EU should moreover pay special
attention to policy coordination, complementarity and coherence between
national and sub-national and sector policies targeted for budget support and
to the complementarity with decentralisation reforms and devolution of powers,
raising possible concerns in policy dialogues with central authorities.

The EU should continue to support and
coordinate decentralised and cross-border cooperation between Local Authorities
from Europe and partner countries based on long-term and equal institutional
partnerships. Decentralised cooperation between EU Local Authorities and their
counterparts in third countries can bring added value to the implementation of
development actions, through continuous peer-to-peer learning, transfer of
know-how and enhancement of local actors’ participation in the public space at
local level.

Recognising that many European Local
Authorities have started acting as donors, the EU calls on these actors to
bring together their expertise to engage in more systematic cooperation
activities, in order to enhance the impact of this cooperation at local level,
in respect of the principles of aid and development effectiveness. The
Committee of Regions, which provides European Local Authorities with a
political space for exchanging experiences and good practices as well as for
establishing inter-regional relations, could play a key role in this respect. Likewise,
European Local Authorities also have an important role to play in promoting Development
Education and Awareness Raising (DEAR) among citizens.

Upstream support to public sector reforms should
be coordinated with downstream support, to reinforce Local Authorities’ roles
in policy dialogue and decision-making at national level. The EU should also
ensure sufficient flexibility to support Local Authorities’ and Associations of
Local Authorities’ own initiatives.

It is proposed to implement the principles
outlined in this Communication to support Local Authorities in partner
countries and their Associations at country, continental and international
levels. The EU should particularly engage in favour of the empowerment of these
actors, to enable them to better respond to citizens’ demands and in
redistributing more equitably socio-economic benefits at local level. These
ambitions should be accompanied by the promotion of a conducive environment at
national and local levels and efforts to reinforce the capacities of Local
Authorities.

At the international level, the EU should
continue to support the role that Local Authorities and Associations of Local
Authorities play in raising awareness about local and urban development issues
and in shaping the international development agenda with a focus on the
interests of local communities. In view of the definition of the Post-2015
Development Agenda and the preparation of Habitat III, the international community
should better recognise the responsibilities and solutions that different
governmental tiers could bring in addressing global and local challenges.

[1]               In this Communication, the term «Local Authorities»
will refer to public institutions with legal personality, component of the
State structure, below the level of central government and accountable to
citizens. Local Authorities are usually composed of a deliberative or
policy-making body (council or assembly) and an executive body (the Mayor or
other executive officer), directly or indirectly elected or selected at local
level. The term encompasses different tiers of government, e.g. villages,
municipalities, districts, counties, provinces, regions, etc. Within this wide
context, the focus of this Communication is however put on the municipal level,
which is generally the lowest government tier of the public institutional
system and the closest to citizens.

[2]               In continuity and complementarity with the Commission
Communication Local Authorities: actors of development COM(2008) 626
final (8.10.2008).   
URL: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0626:FIN:EN:PDF,
with the annexed European Charter on development cooperation in support of
Local Governance
URL: https://webgate.ec.europa.eu/fpfis/mwikis/aidco/index.php/European_charter_on_development_cooperation_in_support_of_local_governance_paper_P65.

[3]               URL: http://ec.europa.eu/europeaid/who/partners/civil-society/structured-dialogue_en.htm.

[4]               COM(2011) 637 final (13.10.2011).

[5]               COM(2011) 638 final (13.10.2011), COM(2011) 865 final
(7.12.2011), COM(2012) 446 final (20.8.2012), COM(2012) 492 final (12.09.2012)
and Council Conclusions (15.10.2012), COM(2012) 586 final (3.10.2012),
JOIN(2012) 27 final (3.10.2012), COM(2013) 92 (27.2.2013).

[6]               URL:
www.aideffectiveness.org/busanhlf4/images/stories/hlf4/OUTCOME_DOCUMENT_-_FINAL_EN.pdf

[7]               “The EU considers CSOs to
include all non-State, not-for-profit structures (include community-based
organisations, non-governmental organisations, faith-based organisations,
foundations, research institutions, trade unions, women's organisations,
cooperatives, professional and business associations, and the media) through
which people organise to pursue shared objectives and ideals”. COM(2012) 492 final.
URL:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0492:FIN:EN:PDF.

[8]               Governance is related to
rules, processes, and behaviours by which interests are articulated, resources
are managed, power is exercised in society by the institutions in charge of
public affairs and participation of all relevant actors is allowed for. COM(2003) 615 final (20.10.2003).

[9]               E.g. institutional arrangements, separation of
powers, electoral and party systems, appropriate decentralisation policies,
intergovernmental fiscal systems, respect of the rule of law.

[10]                    Local CSOs may play an important role in keeping local politicians
and officials accountable for the responsive and efficient delivery of public
services at local level. Furthermore, the interaction between LAs and CSOs
contributes to the creation of a local polity where political and developmental
processes take place.

[11]             According to the principle of subsidiarity, public
responsibilities, regulatory functions and spending are transferred to the
lowest institutional or social level, closest to citizens, that is able and
entrusted to complete them.

[12]             The
term «Associations of Local Authorities» is to be understood as umbrella
organisations based on membership and representativeness at sub-national,
national, sub-continental, continental and international level. They may be
organised as an autonomous entity in accordance with the legislation in force
in the country of registration. Associations of Local Authorities may be
composed of a representative body elected by its LA members and a permanent secretariat.

[13]             EuropeAid’s Budget Support Guidelines (2012). URL:
http://ec.europa.eu/europeaid/how/delivering-aid/budget-support/documents/bs_guidelines-part_ii-programming,design_management_en.pdf.