Since the revolution of January 2011, Tunisia has been determined to bring government closer to its citizens. In pursuing this goal, the Tunisians decided on a major policy shift away from the highly centralized system of the previous regime. The 2014 Constitution embodies the commitment to create fully independent communes (local governments/LGs) within sound local governance structures that would lead to credible and enduring social contracts between councilors and their electorates. The Government considers such reforms to be a key element of state building, contributing to political stability and equitable development
Empower local governments
As around 70 percent of Tunisia’s population live in towns and cities, the government recognized that to achieve effective citizen engagement requires more than consultation. In a major break with the past (the highly centralized “command-and-control” structure), the government is setting up a system whereby LGs are independent of central control for local decisions, particularly as they affect the selection of investments in local services – an essential element to establish accountability of LGs to their citizens. Effective LG empowerment in the use and implementation of their decision-making authority is to be assured through predictable fiscal transfers of investment resources annually from the state, within an indicative but dependable 5-year envelope, to allow reliable investment programming and the ability for the council to trade off priority investments between years. In addition, the government directed that a system for allocating the grant funds be developed that is transparent and objective to avoid political manipulation of allocations and to provide a sense of objectivity, fairness and equity.
To foster transparency, the government wanted to evaluate LG’s performance against detailed, pre-determined indicators broadly covering three key areas: governance, sustainability, and management, and that performance would be measured and assessed annually by an independent audit. The government’s intentions are: first to make the outcome of the annual; performance assessments (PA) public in real time, so citizens can see how well their LG has performed per se and compared to other LGs; and second to incentivize good LG performance by linking each LG’s score under the PA to the amount of their annual grant entitlement.
D for Decentralization and P for Results
The government sought the assistance of the Bank to create the Urban Development and Local Governance Program, the first Program for Results funded by the Bank in Tunisia. The Program intends to reform the existing system of ex-ante checks and controls into an ex-post system of LG’s performance monitoring and assessment. Key features include:
- introducing a formula-based grant allocation system that comprises objective, measurable criteria which assures a transparent process and allows for predictable resource flows;
- incentivizing LGs to perform well by linking their access to grant funds to their PA score and by ensuring that their performance scores as well as the impact of their scores on the grants they receive are published on the e-Portal in real time (including performance compared to other LGs);
- informing LGs of their indicative five-year grant allocation so that they can plan more effectively and respond more realistically to citizen priorities
- introducing a demand-based capacity building system that focuses on providing technical assistance just-in-time for on-the-job support to enable LGs to address their performance in key targeted areas.
The Program’s first year was devoted to establishing the requisite institutional and fiscal reforms and related legal and regulatory provisions, essential to the functioning of the system described above. This included the development and operationalization of three decrees - the first replaced the old decree governing the allocation of capital grants to LGs; the second established the grant allocation formula, and the third adopted a detailed PA manual.
LGs adhesion and Government’s trust
The Program is at its second year midpoint, and has seen significant progress. The new performance-based grant system was launched, and is progressing highly satisfactorily. Against the target of 70% of LGs to meet the Minimum Mandatory Conditions (MMCs) to be eligible to receive grant funds, over 90% have satisfied the MMCs, including undertaking sound citizen consultative procedures, and preparing timely budgets comprising detailed 2016 investment plans. This prompted the Ministry of Finance to release the 2016 grant funds to LGs to allow for on-schedule implementation of LGs’ investment plans.
At this stage two of the legs of the triangle are in place: the institutional and fiscal regulatory framework, and the performance assessment system. The third leg is still in progress: the public release of LG performance, measured by the MMCs and the PA, against the LG’s own commitments and compared to other LGs. The primary tool, the e-Portal, is ready, and the process for ensuring that it is being populated with key data in real time is expected to be functioning in time for the 2017 budget planning cycle, which includes the release of the pilot PA findings.