Feature: Local authorities still operate under old practices

By Ananda Amarawansa

Within the political system of Sri Lanka, the responsibility for local governance is vested in nine Provincial Councils (PCs) and 342 Local Authorities (LAs). The main functions of the Provincial Councils are to look after local health, education, rural development, social welfare, cooperative development, land development, and oversee the purview of LAs. At present, the responsibility of the LAs is mainly the provision of public health and utility services and the development of rural roads. The relevant laws and regulations do not provide a clear definition or provision for assigning responsibilities to those institutions regarding the economic development of the province. For example, there is no clarity on a process for adding value through self-governance or through engagement in income-generating and economic activities, either through engagement with external stakeholders. Therefore, even though the Constitution mentions the division of powers, the responsibility for local economic development still rests with the central government. That is a paradox.

Local government institutions in our country are still operating according to traditional administrative practices. These institutions, which should be established to provide services to the country and the people at the local level, should be organised from a more managerial perspective than they are now. In particular, infrastructure facilities should be developed on a priority basis with a forward-looking vision and mission increasing self-generated income, and efforts should be made to provide maximum benefits to the country and the people from limited resources through various means.  It is also necessary to organise the system from this perspective to increase productivity by making management systems and service procedures more efficient according to modern methods and procedures. That is, systems of asset management, revenue and expenditure management, financial management, and human resource management should be established in them.

Projects

The basic objective of many of the foreign loan projects implemented in the local government sector in recent times was to carry out organisational activities of local government institutions in parallel with the loan assistance provided to those institutions. When identifying sub-projects to be implemented with loan assistance, it was imperative that they be integrated with the reorganisation activities of the institutions. Unfortunately, the effectiveness of the restructuring measures has often been lost because the implementers have forgotten this interrelationship that should exist in the sub-projects. This has resulted in the ineffectiveness of the reorganisation of backward local government institutions, particularly in declaring them as developed areas and increasing revenue through them. This is due to the failure to consider the concept of obtaining assessed income by providing economic benefits to the people.

Organisational distances

The lack of communication between central government institutions and local government institutions (PCs and LAs), has also become a major problem facing local government institutions in achieving the goals of the reorganisation. It should be the responsibility of the local government institutions to provide public utilities to the public and ensure that they are provided, either independently or in association with other institutions, in accordance with the powers to be conferred by the Local Government Acts. For example, it should be considered that not only ensuring the provision of clean water supply to the people but also the provision of water for economic activities should also be its responsibility. Today, local government institutions are not compulsorily involved in this matter and it is understood that those institutions do not have any responsibility for it. This mistake should be corrected through organisational reforms.

It should be the responsibility of local government institutions to investigate whether the utility services of the people living within their local jurisdiction are being properly provided and to ensure that the people receive the services properly regardless of who provides them and, if not, to liaise with the relevant institutions.

It is no secret that many of the local government roads today have been developed through central government projects. Although there are conflicts over this, the local government institutions should have specific plans for their maintenance. There are also many undeveloped rural roads that still go unnoticed by the authorities. These should be listed and given priority in development. Loan assistance can be used for this, if needed. Identifying the needs of the people and addressing them through alternative means, including public participation, should be an          outcome of the reorganisation process.

Waste Management

The lack of land for waste disposal at the provincial level has slowed down their waste management plans in the provincial organisations. It is not a problem that can be solved by the provincial government institutions alone. The responsibility for establishing these facilities should be carried out with the support of institutions such as Provincial Councils, Ministries of Land and Environment, Provincial Secretariats and the Department of Wildlife, and there is a need for an integrated programme at the local level in solid waste management.

The programmes being organised under the theme of a clean Sri Lanka should not remove the official responsibility assigned to local government institutions in keeping their provinces and cities clean. The responsibility for implementing this should be delegated to local government institutions with the participation of the people of that area, and waste management should be made a service as well as a source of revenue for local government institutions.

Asset Management

It is clear that when the Pradheshiya Sabhas were established in 1987, assets and liabilities assigned were not properly identified or valued. A proper balance sheet was not available at the beginning. Some Pradheshiya Sabhas don’t know the limits, capacities or values ​​of the assets they own. Nor is it possible for them to find out the information on their own. A key task in the current reorganisation is to identify and value the assets (including land) owned by each institutions based on common policy decisions. It is not a quick solution to have assigning it to the local government institutions itself and it can be achieved through a centralised programme or through a service provision programme with a special permission.

Management Systems

A major weakness in local government institutions is the lack of procedures for obtaining timely management information and the lack of practice in making decisions, based on such information. This is largely due to the inherited governance style of countries like Sri Lanka, which have been subjected to colonial policies. However, one of the objectives of the reforms should be to establish governance on the basis of management principles, considering local government institutions as management units at the local level. This should be achieved through strategic planning, system design and human resource management to improve the provincial economy and manage it sustainably.

Source of financing

Many local government institutions also use budgets as a statutory requirement only. However, establishing financial control over them is a necessary managerial task. In addition to the annual budget, periodical and functional budgets should be prepared and the habit of managing financial resources and development plans should be instilled. Many local government institutions have the capacity to create a debt-based development in their province.

Development on credit can be achieved by actively participating in the Local Loan and Development Fund (LLDF), a lending institution specifically for local government institutions. Although a project was underway to provide an impetus for this, the concept is not being taken forward. Confidence in the ability to repay the loan has been shattered due to the lack of fundamental forecasts. The lending institution has also isolated the concept and is not interested in it. This mechanism can be used to create revenue-generating projects, especially in the local government sector, with the participation of the private sector too. After the management is established, it is possible to reorganise the LLDF into a specialised medium-level development bank specific for local government institutions to fulfill the function of financing through direct credit lines (DCL) as required.

Free from conservative control

There is currently little inclination in the local government sector to use advanced management tools and systems. Although efforts are being made to make improvements through development projects, they do not think of looking at it from a managerial perspective, instead giving priority to the usual practices. Local government is still being conducted based on models introduced decades ago. Developing software for outdated procedures and systems is an ineffective way of sustainable development. For that, the development of systems based on modern standards and their acceptance must first take place and thereafter they must be computerised.

Social Audit

There is a favourable environment within the provincial government to implement development that is carried out with the participation of government and non-government institutions, the private sector, and the public. It is necessary to allow all provincial development projects to be subjected to social audits and to establish a system to inform the management and governing councils of local government institutions through internal auditors in order to correct errors.

Outcomes

When proper political and economic progress is achieved through decentralisation of power, the burden of local development should be shifted from the central government, and the government's attention should be focused on achieving this through a unified programme of provincial councils and local authorities. For this, there must be a proactive programme to properly manage human and physical resources with structural changes, as well as strengthening local government institutions.

The introduction of an alternative system such as turnover tax, instead of imposing value-added tax, which is difficult to centrally administer and regulate, and the permission to establish self-revenue generation projects within the provincial and local  government sector are new ways to increase the revenue of this sector. Cooperative development, collective market process and public-private partnership development through local government and encourage to improve grassroots level entrepreneurship will be the key development strategies in this regard.

(The writer is a Financial and Economic Analyst and a Chartered Accountant)