ImpactCDIE Evaluation United States Agency for International Development

DEMOCRATIC LOCAL GOVERNANCE IN

Honduras has made significant progress transferring power and responsibility to the local level. The political culture, however, is just beginning to incorporate the principles of democratic local governance. Bureaucratic resistance remains strong, and some worry that local governments lack the administrative capacity to manage finances and services.

SUMMARY

onduran municipalities have more autonomy, thanks to recent municipal legislation and changes in electoral law. And that has led to new development initiatives. The HMunicipal Reform Law of 1990 changed the legal framework for local governance, grant- ing autonomy to the nation’s 297 municipalities and permitting locally elected officials to dis- tribute national revenues. It also establishes municipal revenue CONTENTS sources not controlled by the central government. And elec- Summary ...... 1 toral reform now provides for direct election of mayors on an independent ballot. Introduction ...... 2 Background ...... 3 After assisting in the Municipal Reform Law’s passage, Structure of Local Government ... 5 USAID/Honduras launched its Municipal Development The Municipal Law of 1990...... 6 project to help municipalities implement it. The purpose is to USAID’s Role ...... 7 bring about “more responsive democratic processes with USAID’s Impact ...... 10 greater citizen participation” by promoting “more responsive Challenges ...... 10 and effective municipal government.” The project has built on Other Donor Programs ...... 14 Authors: Hal Lippman and Patrick Pranke Summing Up ...... 14 Team members: Jan Emmert (leader), Pat Isman, Jennie Lessons Learned ...... 15 Lincoln, and Russell Stout

PN–ACA–908 1998, Number 3 2 USAID/Honduras’s longstanding experience organizations, which have played a key role, is working to advance public involvement in local uncertain. In addition, bureaucratic and politi- government activities. And it has supported non- cal resistance will continue to be formidable governmental organizations that advocate for obstacles. mayors at the national level and provide techni- cal assistance to project-targeted municipalities.

However, major challenges remain to demo- INTRODUCTION cratic local governance’s continued evolution in Honduras. Advances in democratic local In the north–south corridor of Honduras—from governance, for example, have been most pro- the coast city of nounced in the larger, more populous munici- through , , and palities targeted by the USAID project. Outside to the capital, , and these municipalities little progress is apparent, south to the Fonseca Gulf towns of Nacaome largely because key nongovernmental organi- and Choluteca—citizens and mayors are show- zations do not have the capacity to deliver ing off public works and services that are now technical assistance to smaller, outlying juris- operated and maintained by local governments. dictions. The future of these nongovernmental Democratically elected mayors and councils are

Box 1. Local Governance on the Move

The mayor of Choluteca, a city of pollution of local water sources. The city 115,000 inhabitants in southern Honduras, plans to open a meat-processing plant, is proud of the recent democratic ad- abandoned by a prior administration, in vances in local governance in her coun- partnership with a private firm that will try. In remarks to a roomful of renovate and operate it for the benefit of men—engineers, accountants, and local business. In each case, the mayor administrators—she boldly states that notes, responsibility has been assumed another woman will be a candidate for locally and the central government was her post in the future. However, she is not not involved in design, negotiation, or final as confident that the woman will be agreements. nominated or elected, acknowledging, “this still is a macho society.” Nevertheless, The mayor of Puerto Cortés, a city of she insists, her experience exemplifies the 71,000 inhabitants, displays similar pride. His fact that progress has been made in municipality successfully took on responsi- opening up democratic opportunities for bility for the water supply. Service has everyone. greatly improved, and almost all residents now receive water from the city. What’s The mayor points to some of her more, local authorities have proven their administration’s accomplishments under ability to assume responsibility, while show- Honduras’s new local governance re- ing city residents higher fees can result in gime. A new wastewater treatment better service. facility has been constructed to reduce 3 eager to discuss the democratic transformation forts in Bolivia, India, Mali, the Philippines, and that has transferred responsibility and resources Ukraine. The team comprised a CDIE program from the central government analyst, a democracy officer to local governments. from USAID’s Center for Democracy and Gover- After years of domination by nance, and two senior con- the central government, lo- sultants with extensive cal governments are finally experience in . exercising democratic rights provided for in the new Mu- The team looked at nicipal Reform Law. Enacted “After years of municipalities that have in 1990, this law fundamen- domination by the strongly promoted demo- tally changed the legal cratic local governance, framework for local gover- central government, including , Cholu- nance by granting autonomy local governments teca, Comayagua, El Pro- to the nation’s 297 munici- are finally exercising greso, Nacaome, Potrerillos, palities and providing for democratic rights.” Puerto Cortés, Santa Cruz de locally elected officials to ad- Yojoa, Siguatepeque, and minister distribution of na- Villanueva. In these munici- tional revenues. In conjunction with the work palities, the team interviewed mayors, council of citizens’ organizations and USAID/Hondu- members, city government employees, and cen- ras, the law has brought about important ad- tral government officials, as well as members of vances in the development of democracy at the women’s groups, peasant organizations, and local level. nongovernmental organizations (NGOs). In Tegucigalpa, the capital, the team interviewed However, while the law set the stage for the government officials, members of Congress, rep- transformation now under way, it is really the resentatives of prominent organizations, journal- initiatives of local governments, coupled with ists, and others involved in or concerned about the assistance programs of USAID/Honduras the Municipal Reform Law’s implementation. and other donors, that have significantly altered the way local services are managed and deliv- ered. are now exercising full rights as citizens, voting in local and national elec- BACKGROUND tions. For the first time, there is strong local in- volvement in improving education and Through the 1970s and 1980s, infrastructure—areas controlled entirely by was torn by civil wars and rebellions. Nicara- planners in the capital just a few years ago. gua and El Salvador suffered from internal con- flicts that many outside observers viewed as an To learn about the significance and extent of extension of the Cold War and possible widen- these developments, a four-person team from ing of Cuban influence in the Americas. Guate- USAID’s Center for Development Information mala and Honduras were ruled by military and Evaluation (CDIE) conducted a study in governments that had seized power from civil- October 1996 of the Municipal Reform Law’s ian leaders. impact and the role of USAID and other do- nors in supporting democratic local governance Because of the conflict, U.S. military and eco- in Honduras. This study is part of a series that nomic assistance to Central America was exten- also looked at democratic local governance ef- sive. Honduras was a particular beneficiary 4 because it was a support base in the struggle ments lack the administrative capacity to man- against communist guerrillas in El Salvador and age public finances and services. Nicaragua. U.S. military presence in Honduras was significant, and the country remained rea- sonably peaceful, albeit under military rule. ‘Partyarchy’ and the Two-Party System In 1982, as a result of U.S. efforts to promote democracy in neighboring Latin American In Honduras, political power has been con- countries and increasing domestic and interna- trolled for 50 years—albeit on many occasions tional pressure, the Honduran military turned interrupted by military rule—by the National over state authority to civilian officials. Since and Liberal parties. This control of power by then, Honduras has had peaceful elections of parties, coupled with the virtual exclusion of civilian governments in 1985, 1989, 1993, and nonparty members from political life— 1997. This is the longest uninterrupted period ”partyarchy”1—is also a feature of the Venezu- of civilian rule in Honduran history, although elan and Salvadoran political systems. Like its the military continues to play a significant role counterparts, Honduran partyarchy allows in the country’s political and economic spheres. only those nominated by recognized political parties to run for office. The nomination pro- The country’s recent move toward greater lo- cess itself is conducted in closed party sessions. cal autonomy and enhanced democratic partici- pation was inaugurated in 1989 with the To open up the Honduran electoral process, leg- election of Rafael Leonardo Callejas as presi- islation was passed to permit split-ticket vot- dent. Callejas was in favor of “municipaliza- ing beginning with the general election of 1993. tion” of central government ministries before The new law meant that for the first time citi- he assumed office. In campaign speeches he as- zens could vote for a presidential candidate serted it is the central government’s duty to re- from one party, while picking mayoral and turn power to the municipalities. municipal council candidates from another. Although this is a major improvement in the Current president Carlos Roberto Reina and his electoral system, the National and Liberal par- government have sustained this commitment. ties retain nationwide control of the nomina- Municipal officials and members of Congress tion process and thus remain the final arbiters told CDIE they think it would be impossible of who appears on the ballot. for any future government to reverse the pro- cess of increasing municipal autonomy. The minister of the Honduran Social Investment Civil Society Fund (and possible presidential candidate for the election of 2001), Manuel Zelaya, stated, Honduras has an active civil society both na- “Municipalization is like a speeding train—it tionally and locally. Examples include unions, is almost impossible to stop.” cooperatives, peasant groups, women’s associa- tions, and patronatos (voluntary neighborhood This view, however, is by no means unanimous. civic groups). Some observers surmise that the Certain officials in other central ministries and extent of civil society organization in Hondu- some outside observers believe local govern- ras helped spare the country from the repres- sion other Latin American nations experienced during the 1980s. For example, a prominent 1␣ Michael Coppedge, Strong Parties and Lame Ducks: Presi- academic told CDIE that a plan to invite Ar- dential Partyarchy and Factionalism in Venezuela (Stanford: gentinian military advisers to train Honduran Stanford University Press, 1994), pp. 18–20. 5 security forces was apparently scrapped be- are a favorite topic on these shows (and print cause civil society organizations opposed it. media generally), the country’s political culture has yet to incorporate the principles of decen- The patronatos are perhaps the most significant tralization and democratic local governance. organized groups at the grass-roots level. Patronatos first appeared in the 1950s and took on their present character as neighborhood empowerment associations in the 1960s. They STRUCTURE OF were founded as housewives’ and women’s LOCAL GOVERNMENT associations and still seem to be dominated by these groups. Initially they organized around Honduras has a long tradition of municipal such issues as health and day care, but over time governance extending back to its Spanish colo- their activities expanded to include such issues nial period. However, legal recognition of the as land and property rights. Patronatos have municipality as a distinct level of government no governance function, but they do have legal was not granted until the Municipal Law of status. They help hold officials accountable for 1927. According to that law, municipalities are their actions and work to obtain basic munici- incorporated entities with elected mayors. pal services, such as water, sewage, and gar- Elected, as discussed above, meant the presi- bage collection, for their neighborhoods. Some dent and party that won the national elections patronatos have become militant and influen- appointed the mayors (as well as representa- tial locally, often affiliating with political par- tives in Congress). Hondurans only began to ties or local and congressional candidates at elect mayors individually with the reforms election time. implemented in the 1993 elections.

The Media Municipalities are the smallest government units recognized in Honduran law. As of Octo- ber 1996, there were 297. The country is divided Honduras has many radio stations, large and into 18 departments, its largest administrative small, throughout the country. Mayors regu- and geographic subdivisions. Departments are larly use them to communicate with their con- extensions of the central government, headed stituents. Newspapers are centered in the larger by presidentially appointed governors. De- cities, and although they cover local and na- pending on the department and region, munici- tional issues, they are less effective than radio palities generally consist of an urban center, in disseminating information in outlying areas. subdivided into barrios, or neighborhoods, and Radio talk and call-in shows have become very surrounding settlements, villages, or rural farm- popular recently with both urban and rural lis- lands.2 teners. While political issues and personalities Under the 1927 Municipal Law, municipal gov- ernment and services were centralized. Munici- 2 ␣ Municipalities vary considerably in size, and their gov- palities had no autonomy and were not ernments are constituted accordingly. Those with a popu- lation under 5,000 have four council members, those with accountable to their residents. The central gov- 10,000 have six, those with more than 10,000 have eight ernment developed and funded municipal bud- and a mayor, and those with more than 80,000 have 10 gets, and mayors had little fiscal authority. and a mayor. Municipalities also differ in the ratio of Expenditures above 100 lempiras (about $7), for urban to rural inhabitants. For example, in Santa Cruz example, had to be approved by the governor. de Yojoa, 42,000 of its 60,000 people live outside the ur- A few dynamic mayors used their national po- ban center, while in , 100,000 people live in its urban center and 55,000 in the surrounding rural area. litical connections to bring about infrastructure 6 development (carried out, of course, by central Provisions of the Municipal Law government agencies). However, most munici- palities were not considered capable of under- Callejas was elected president in 1989, and his taking significant development efforts or party won a landslide in Congress. Most of the managing services provided by the central gov- deputies were elected under his party banner ernment. and were selected by and loyal to him. He in- troduced the draft Municipal Reform Law, which embodied fundamental changes, and THE MUNICIPAL LAW OF 1990 Congress passed it in 1990 with little apparent controversy or public discussion.

Changes in the Honduran legal framework, and The new law contained several noteworthy in particular, enactment of the Municipal Re- changes: form Law, did not result from a groundswell of public interest or demand for change. Instead, ■ Municipalities (mayors and municipal they arose from political and social factors spe- councils) were given authority to set priorities cific to Honduras’s history and development. and determine their own budgets without de- This included president Callejas’ high degree partmental governors’ or central government of commitment to “municipalization,” and a agencies’ approval. confluence of national and international inter- ests favoring more democratic rule. ■ Municipalities could determine and levy fees for the services they provide and could as- A draft of the Municipal Reform Law had been sess several types of taxes (for example, prop- under discussion before 1985, and USAID staff erty tax). and Honduran counterparts who had worked with the Mission on municipal infrastructure ■ Municipalities as a group were “guaran- and finance were important partners in the teed” an annual transfer of funds from the cen- dialog. According to those CDIE interviewed, tral government of 5 percent of national then–presidential candidate Callejas strongly revenues, equivalent to about $32 million. supported the thrust of the new law. He saw increased municipal autonomy as a means to ■ Mayors and councils were required to hold bring about more dispersed development than at least five open town meetings a year, recog- was possible through the central government. nizing citizens’ right to participate in their mu- Callejas also understood that by promoting nicipal government’s planning, decision- municipal autonomy he might enhance making, and use of resources. Honduras’s access to international aid, because in the late 1980s foreign donors were showing increasing interest in this development ap- Related Electoral Reforms proach. Certain related changes in electoral law, also sup- ported by USAID/Honduras, took effect in 1993. These changes provided for greater municipal autonomy, accountability to residents, and local democratic participation. For example, Hondu- ran citizens can now vote separately and across 3 ␣ Councils are still selected on a party-list system. The party lines for mayoral, congressional, and presi- proportion of members of each party is determined by 3 the proportion of votes cast for mayoral candidates. dential candidates in the general election. Ad- 7 ditionally, as of the December 1997 elections, forts to other secondary cities and large munici- each office had a separate ballot, further palities. At the same time, it worked to bring disassociating the voting for president from that about a new legal framework for municipali- for mayor. To separate presidential and mayoral ties that would loosen central government con- elections even more, legislation is being consid- trol and establish municipalities as autonomous ered to hold municipal and national elections on government units accountable to their citizens. different dates. Finally, to reduce the chance that These efforts ultimately contributed to passage municipal resources will be misused in cam- of the Municipal Reform Law. paigns, the 1993 electoral law requires that may- ors running for reelection vacate their seats six months before the election date. The Municipal Development Project

Despite these advances in the electoral process, The third and current stage began with USAID’s the intraparty primaries for selecting the offi- Municipal Development project, launched in cial candidates of a party remain closed. Indi- 1991. Designed to help municipalities imple- viduals cannot run separately or independently ment the recently passed Municipal Reform for mayor outside a recognized party. Electoral Law, the goal is to bring about “more respon- law does not regulate how parties select their sive democratic processes with greater citizen candidates, further protecting party influence. participation” by encouraging “more respon- sive and effective municipal government.” To this end, and in keeping with the principles of decentralization embodied in the new law, the USAID’S ROLE project provides technical assistance and on-site training to municipalities through private sec- USAID/Honduras’s municipal development tor intermediaries rather than central govern- strategy can be described in three stages. Each ment agencies. The assistance seeks to help had its own emphasis and each built on the ac- build municipalities’ administrative compe- complishments of preceding efforts. tence and establish or improve management of municipal services and utilities. It also aims to improve municipalities’ ability to communicate Early Development Programs with residents and enhance citizen awareness of and participation in municipal government. During the first stage (1968–85), USAID/Hon- duras emphasized working with municipalities Funding for project-supported municipal devel- through the Autonomous Municipal Bank opment comes from the Housing Guarantee (BANMA), a domestic bank focused in part on pro- Loan Program and counterpart contributions viding services to municipalities. Assistance from the Honduran government. Funding at the was aimed at strengthening BANMA and support- time of CDIE’s visit was $25 million ($12 mil- ing the development of urban infrastructure, lion from USAID and $13 million in local cur- particularly in the two largest cities, rency from the Honduran government). The Tegucigalpa and San Pedro Sula. This effort was project also provides loans to municipalities to led by the Regional Housing and Urban Devel- build infrastructure through the Honduran So- opment Office (RHUDO) in and by cial Investment Fund. The project completion housing officers in USAID/Honduras. date is June 30, 1999.

During the second stage—the mid-1980s until From the beginning, the Municipal Develop- shortly after the Municipal Reform Law was ment project has provided assistance to larger, enacted—USAID/Honduras extended its ef- more populous municipalities, in the belief that 8 they have the greatest potential for develop- gramming is the support it lends to domestic ment under the 1990 reform law. The project NGOs whose purpose is to represent munici- initially targeted 14 municipalities and gradu- pal interests at the national level. The project ally increased that to 33, which together include also delivers training and technical assistance roughly half the country’s population.4 The to municipal administrations. project also includes mutually agreed upon standards of compliance. For example, assis- AMHON tance is withdrawn or immediately suspended if a municipality does not meet the require- One of the most notable successes of the project ments of the municipal law, is engaged in obvi- has been its strengthening of the Honduran ous financial mismanagement, or is not holding Association of Municipalities (AMHON). A pri- regular, meaningful town meetings. USAID/ vate association of mayors, AMHON promotes Honduras enforces minimum standards for as- collaboration among municipalities, analyzes sistance and has dropped 15 of the original 33 issues affecting local governments, and lobbies municipalities because of such failures to com- in behalf of municipal autonomy at the national ply with project requirements. level. Founded in 1962, but inactive for three decades, AMHON emerged in the early 1990s as The overall success of the project owes much the single most effective organization to press to the human resources, experience, and cred- for full implementation of the Municipal Re- ibility built up over the nearly 30 years of form Law. Key to AMHON’s new vitality as a na- USAID involvement in Honduran develop- tional organization was the management ment. This approach ensured that a cadre of training and funding the Municipal Develop- talented and trained Hondurans were available ment project provided. Now organized into a to be incorporated into the municipalization general assembly of mayors with a board of program and assume responsibility for demo- directors, AMHON has sought to become self- cratic management once the opportunity was sufficient by collecting a percentage of the na- legislated nationally. Building on this legacy of tional revenues the central government trans- past assistance efforts, the municipal reforms fers to member municipalities.5 of 1990 had momentum from the outset, pro- ducing early successes that became the basis for AMHON’s lobbying influence in the National future democratic advances. Congress is growing. It has used civic educa- tion and media exposure to increase public sup- port for the continued autonomy of The Role of municipalities. AMHON has a program on na- Nongovernmental Organizations tional radio, and mayors publicize their devel- opment projects on local stations. AMHON has Central to the Municipal Development project’s become so well known that indigenous minori- approach to democratic local governance pro- ties have requested its assistance. The public support it receives has been important in de- fending local governance against rear-guard 4␣ The pool of 33 larger municipalities did not include the actions by central agencies attempting to retain two major cities, Tegucigalpa and San Pedro Sula. or reassert control.

5␣ It was agreed that AMHON would receive one fifth of the FUNDEMUN amount transferred to the municipalities by the central government for operating expenses. According to provi- sions of the Municipal Reform Law, this would equal ap- USAID/Honduras has taken a similar approach proximately 1 percent of national revenues (as of 1996, with providers of technical assistance. Initially, about $6 million). the Mission contracted with an international 9 organization, the International City/County graduate 537 trainees in the next six years. Management Association, to deliver technical UNITEC is a private institution and recovers costs assistance to municipalities and establish a do- through tuition and charges for services ren- mestic counterpart, the Foundation for Munici- dered. pal Development (FUNDEMUN). Since its inception in 1993, FUNDEMUN has successfully provided technical assistance, training, and Service Sector Transfer civic education materials to municipalities. The Municipal Reform Law of 1990 notes that FUNDEMUN has worked effectively with munici- the planning, organization, and administra- palities to regularize their taxes and revenues, tion of local public services is the right and budgeting, planning, and internal auditing. In responsibility of the municipality. However, the these areas the objective is capacity-building law does not transfer authority for all local gov- and municipal finance. In a more limited way, ernment services. To date, municipalities have FUNDEMUN has also been involved in public been able to assume responsibility principally works and establishing councils for community for water and sanitation services, although the development as mechanisms for citizen partici- law leaves the door open for local governments pation. As it has matured, FUNDEMUN has moved to manage additional services. Some local gov- away from relying completely on project fund- ernments, for example, are negotiating with the ing to recovering costs from clients for assis- Transportation Ministry to manage their own tance provided. roads, if the ministry will transfer the resources as allowed by law. Municipal Development FUNDEMUN also has ably carried out its additional project strategy is for municipalities to consoli- Municipal Development project responsibility date management of water, sanitation, and gar- of monitoring the performance of the munici- bage before proceeding to other tasks. palities it serves. FUNDEMUN requires transpar- ency in municipalities’ resource management. USAID/Honduras has other service develop- If it detects mismanagement or corruption, it ment programs aimed at smaller communities brings the issue to the attention of the city coun- below the municipal level, which parallel the cil and suggests measures to correct the prob- work of the Municipal Development project. lem. If the municipal government does not One of these, the Rural Water Supply project, cooperate, FUNDEMUN withdraws its technical works with urban, suburban, and rural residen- assistance. tial clusters not serviced by their municipali- ties’ urban center because of distance or terrain. UNITEC These communities have no formal government of their own but can assume control of certain The other private technical assistance provider services. working with the Municipal Development project is the Central American Technical Uni- In the Rural Water Supply project, residents are versity (UNITEC). UNITEC offers short courses in helping to legally establish a local water board management and entrepreneurship to mayors, responsible for constructing, operating, and municipal employees, and NGO members. It is maintaining local water systems. These systems pioneering outreach and distance-learning are generally small, varying from springs and methods to improve municipal governance wells to small reservoirs. They sometimes in- throughout the country. According to its direc- clude water chlorination and simple aqueducts. tor, UNITEC has reached 178 (or 61 percent) of Local water boards receive no operating subsi- the country’s 297 municipalities. The organiza- dies and must generate revenue to cover costs. tion has just signed a contract with AMHON to The systems are under local control, but the 10 National Water Board, a central government mayor, who oversee local infrastructure agency, checks system functioning twice a year projects.6 and provides technical assistance if needed. A reflection of the project’s impact, municipali- ties and the services they provide are much more responsive to community needs than they USAID’S IMPACT were before the 1990 legisla- tion. Choloma, for example, USAID/Honduras’s Munici- a municipality of 125,000 in- pal Development project has habitants, has significantly significantly advanced pub- expanded its water supply lic involvement in local gov- system under local manage- ernance. The team witnessed ment in the last few years. town meetings where may- The next priorities, accord- ors, councils, and citizens “Municipalities and ing to the mayor, are to im- were actively engaged in dis- prove sewer lines and storm cussing common goals. In the services they drainage and then to address Puerto Cortés, for example, provide are much road repair. the mayor will consider de- more responsive to velopment proposals only community needs The taxing authority granted after public discussion in than they were to the municipality by the open meetings. Interestingly, before the 1990 new law has also improved because of this policy, there legislation.” its revenue base. Eighty per- has been little negative re- cent of Choloma’s residents sponse when improved pub- are paying taxes where, pre- lic services resulting from viously, none had. One ben- development activities also boosted user fees. efit has been that the city recovered 9 million lempiras ($63,000) in back taxes. In other com- Both AMHON and FUNDEMUN stress transparency munities, such as , citizens in local governance. They emphasize such mat- thought the central government was not allo- ters as holding regular open town meetings and cating enough money for education, so the lo- posting municipal budgets and town meeting cal government subsidized the education minutes publicly. CDIE found that of the mu- payroll. nicipalities that receive FUNDEMUN assistance, Santa Cruz de Yojoa had the most participatory local governance. Encompassing 280 square miles, its 60,000 residents are, for the most part, CHALLENGES dispersed throughout 80 villages. Santa Cruz de Yojoa has tried to recruit representatives from While significant progress has been made ad- all sectors, including churches, sports associa- vancing democratic local governance in Hon- tions, and community groups. Each village duras, major challenges to its continued elects its own community council and auxiliary evolution remain. Among these challenges are the need for further electoral reform, broader implementation of the Municipal Reform Law, 6␣ A similar participatory strategy has been used to bureaucratic and political resistance, and the manage United Nations Development Program–spon- sustainability of key NGOs. sored activity in San Pedro Sula, which is not part of the Municipal Development project. 11 Limitations of Electoral Reform In addition, in the more than 250 smaller mu- nicipalities the Municipal Development project The electoral system, although a major im- did not target, there has been little or no exter- provement over its predecessor, still leaves se- nal support to make municipal governance lection of mayoral candidates to the national more democratic or effective. Smaller munici- political parties and their presidential nomi- palities are also more likely to be served by nees. As a result, unless mayors carry signifi- poorly educated mayors and councils unaware cant weight in the party—which did not seem of the possibilities and requirements of the new to be the case for most mayors CDIE inter- reform law. Moreover, many mayors reportedly viewed—they enjoy little or no advantage from continue to operate autocratically, indicating incumbency in future elections. This holds true there is little independent grass-roots pressure even if they are successful and popular with for democratic local governance as of yet. This their constituents. suggests that without continued input from organizations such as AMHON and FUNDEMUN, it To get on the ballot in the general election, a will be difficult to stimulate greater public un- mayoral candidate must be allied with whoever derstanding of or enthusiasm for democratic wins the nomination for president in party pri- principles. maries held every four years (presidents can- not succeed themselves). Should a mayor Resistance to Democratic choose an unsuccessful candidate, his name is dropped from the ballot. This not only reduces Local Governance the significance of performance and popular- ity to near irrelevancy, it also introduces an Recent Honduran history indicates the 1990 unnecessary element of randomness in munici- Municipal Reform Law has stimulated signifi- pal leadership that makes long-term planning cant political and bureaucratic opposition. Bu- and policy implementation difficult. reaucracies with a vested interest in the system have put up considerable resistance, fearful of the implications of the transfer of authority and Uneven Implementation resources to municipal governments. Politi- Of the Municipal Reform Law cians, such as governors or national legislators, have likewise resisted, believing they stand to In the Municipal Development project, USAID/ lose power and influence when administrative Honduras has consistently directed assistance authority is transferred to the local level. toward enhancing democratic local governance. But there is considerable variation in how may- Bureaucratic Resistance ors function. In most cases, town meetings are open and participatory, serving a vital demo- When the Municipal Reform Law was first cratic function. However, interviewees told implemented, the Ministry of Government con- CDIE that in some cases town meetings are sim- trolled the distribution of funds. According to ply ceremonial events held to meet the legal re- various informants, some municipalities were quirement. favored on a political basis. This compelled municipalities to apply to the ministry for

7␣ AMHON has protested and lobbied Congress for fair and funds, thereby subjecting them to potential bud- equitable redistribution of funds. In part because of this get controls and making distribution uncertain.7 pressure, authority to distribute funds was transferred from the Ministry of Government to the Ministry of Fi- The Ministry of Government has resisted nance. This arrangement appears to be more agreeable change in other ways as well. The new munici- to the municipalities. 12 pal law increased the power of mayors and tems once they come under the control of local municipal councils at the expense of depart- governments. mental governors. In response, both governors and the Ministry of Govern- Political Resistance ment tried unsuccessfully to assert the right to approve The Municipal Reform Law certain types of municipal appears to have stimulated expenditures. Through the competition between levels ministry’s Administrative of the elected government as Improvement Program, this well, including the national resistance is apparently con- legislature and municipali- tinuing. “Many members of ties. The municipal reforms Congress view the of 1990 require that Congress Central government agen- newly empowered devolve much of its control cies have been equally mayors as rivals, of municipal finance, includ- unenthusiastic about decen- ing budget setting and rev- tralizing municipal services both individually enue generation. Before this, and transferring authority to and collectively.” mayors had to follow all the municipalities. At least part directives of the legislature of this resistance is rooted in in managing municipal af- the lack of clarity about the ramifications of the fairs, such as providing jobs for people recom- decentralization policy.8 Many of the issues mended by their congressional representatives. raised by the National Water Board, for ex- ample, have made decentralizing the water sup- All this ended abruptly with the reform law. ply difficult. Typical of the disagreements Many members of Congress began to view the between the water board and local governments newly empowered mayors as rivals, both indi- is the persistent question of who will provide vidually, because they are a source of largesse severance and retirement pay for central gov- for their constituents, and collectively, as up- ernment employees laid off or transferred to a starts capable of usurping their prerogatives municipality. In the technical domain, there is and prestige. The potential for friction was ac- the issue of what control (or responsibility) the centuated by the recent electoral reforms, which board retains over the operation of water sys- put mayors and members of Congress on sepa- rate ballots, no longer requiring them to be members of the same party. 8␣ ␣ The Ministry of Finance does not support credit for mu- nicipal infrastructure development because municipal gov- Congressional resistance is evident in its mem- ernments are unwilling to repay outstanding loans made years ago by the central government or now-defunct Au- bers’ continued unwillingness to transfer more tonomous Municipal Bank. The mayors assert these loans than 1.5 percent (in 1996, $9.5 million) of the na- were made when their municipalities were not representa- tional budget to municipalities, although the law tive governments and they were not responsible for obtain- provides for 5 percent.9 Resistance is also evi- ing them in the first place. USAID/Honduras officials said dent in what some observers have characterized the ministry seems to have no procedures to identify and as an attempt to exploit public dissatisfaction track more recent loans municipalities are repaying. with recent municipal tax increases—members 9␣ In response to this shortfall, and in an apparent com- of Congress have proposed waiving back taxes promise, AMHON bargained for added funding from the owed municipalities and prohibiting property Ministry of Finance, with the proviso that the funds be taxes on the poor. This would seriously damage set aside for members of Congress to use for special the revenue base of most local governments and projects in the municipalities. 13 make them more dependent on central govern- and executive board will likely turn over after ment funding. the next election, given the electoral law’s strong bias toward new mayoral candidates. But perhaps the most dramatic example of Congress’s resistance lies in what some see as a These considerations raise a series of questions concerted effort to undermine the institution of about AMHON’s future: mayor by charging mayors with criminal acts. In the last three years, members of Congress and ■ Will it continue to be nonpartisan and act local political opponents have charged 34 may- as a national voice for municipalities? ors with criminal acts, including alleged abuse of authority in land titling and tenure, misuse ■ Will a new national government under a of per diem funds, and sexual harassment. new president accept AMHON as a legitimate ac- However, the attorney general’s office has de- tor or attempt to reduce or eliminate its finan- termined that most cases are baseless or inap- cial support? propriate for criminal prosecution, and no mayor has been convicted. ■ Will municipalities continue to pay dues voluntarily as a percentage of the funds redis- Nevertheless, the central government did re- tributed by the national government? move two mayors, even though no proof of guilt was presented in court. This action is al- ■ Will funds that pass through AMHON to mu- most certainly unconstitutional, and AMHON is nicipalities be a target for misuse or corruption? considering bringing suit. In another widely publicized recent incident, a popular mayor Similarly, the future of FUNDEMUN and UNITEC as with a reputation for honesty was detained by providers of technical assistance and training police after being criminally charged by politi- to municipalities is also uncertain. FUNDEMUN has cal opponents in a land dispute. His constitu- a dynamic and dedicated leadership and de- ents were reportedly outraged and mobilized livers services for a fee that its clients value. immediately to demand his release. Although he However, with decreasing financial support was later cleared, this wave of politically moti- from USAID and other international donors, it vated accusations prompted AMHON and others may not be able to sustain its program at cur- to support legislation that will afford sitting rent levels. Given that FUNDEMUN now provides mayors some legal protection from such charges. services almost exclusively to the 18 municipali- ties in the Municipal Development project, it is unlikely that any of Honduras’s more than 250 Sustainability of AMHON, smaller and poorer municipalities will be able FUNDEMUN, and UNITEC to afford its assistance without considerable subsidization. To compound the problem, AMHON has become influential and well known, FUNDEMUN competes with other donor-spon- but for a number of reasons its viability and the sored technical assistance providers, many of sustainability of its agenda are not entirely se- which still deliver their services free. cure. AMHON’s leadership embraces a nonparti- san philosophy and strategy that are new to UNITEC’s long-term role in building municipal ca- Honduras. This nonpartisan approach will not pacity is even more problematic. Although it is become part of the political tradition until more a technical university, UNITEC chiefly provides municipal elections are held and AMHON’s lead- administrative and financial training. In some ership has gone through several more changes. respects this duplicates FUNDEMUN’s core services, In addition, AMHON’s entire general assembly even though UNITEC’s programs are aimed at in- 14 dividuals rather than institutions. For UNITEC to lated electoral reforms that took effect in 1993. continue to play an important role in decentrali- Pushed through Congress by then-president zation-related municipal development efforts, it Callejas and sustained by current president may have to concentrate on training in water, Reina and his administration, the reform law solid waste management, and other areas that outlined the procedures for the transfer of au- contribute directly to building technical thority, responsibility, and revenues for munici- capacity. pal operations and planning to local governments. Since its enactment, the law has served as the legal foundation for all subsequent democratic local governance efforts. OTHER DONOR PROGRAMS

Other international donors are pursuing goals USAID Accomplishments in Honduras similar to those of USAID. The United Nations Development Program is pro- USAID/Honduras has been involved at every moting community problem-solving initiatives stage of Honduras’s move toward democratic in San Pedro Sula. A Spanish aid agency, local governance. Working with Honduran mu- FUNDEMUCA, is providing administrative and nicipal development professionals it helped technical training in support of local gover- train, the Mission helped bring about the Mu- nance in Choluteca. The Inter-American Devel- nicipal Reform Law. When the law passed, the opment Bank is trying to help decentralize the Mission launched the Municipal Development health and education sectors. Japan and the project, which has helped to significantly ad- European Union are also actively supporting vance public involvement in local governance. decentralized development initiatives. For example, in Santa Cruz de Yojoa, a munici- pality with a widely dispersed population, the city government authorized creation of elected village councils headed by auxiliary mayors to SUMMING UP oversee development projects in outlying communities. In the last six years, Honduras has experienced significant advances in democratic local gover- The project has also supported FUNDEMUN and nance. While the central government used to UNITEC, NGOs whose technical assistance has control all aspects of local government, today helped increase local officials’ capacity to per- many municipalities are successfully managing form essential administrative tasks and provide city services, setting their agendas, and increas- improved public services. Equally important, ing their resource bases. And, for the first time, the project has been instrumental in reviving citizens are able to elect their mayors directly and recasting AMHON as the single most effec- and participate in local government by voicing tive organization promoting the interests of mu- their opinions and advancing proposals in open nicipalities at the national level. AMHON has town meetings. successfully thwarted persistent attempts by government ministries, the national legislature, and departmental governors to reimpose con- Enabling Environment trol over municipal resources and service de- livery. Without its activism, the Municipal This transformation was initiated by the Mu- Reform Law would likely never have been nicipal Reform Law of 1990, supported by re- implemented meaningfully. 15 Challenges LESSONS LEARNED

Continued progress in advancing democratic CDIE’s study of efforts to promote democratic local governance will depend on the degree to local governance in Honduras leads to the fol- which a number of major challenges can be lowing lessons learned. overcome. For example, bureaucratic and po- litical resistance to decentralization activities 1. Establish the necessary legal framework. promise to continue to be significant problems. The Municipal Reform Law of 1990 and related In addition, despite the successes achieved in changes in electoral law that took effect in 1993 the Municipal Development project and related have served as the legal foundation for all sub- donor programs, the principles of democratic sequent democratic local governance activities decentralization are not yet part of the political in Honduras. Without them, little if any signifi- culture. And the country’s newspapers, radio cant progress could have been realized in trans- stations, and civil society organizations have yet ferring authority to local governments and to participate in ways that will help bring this opening the door to increased citizen partici- about. This vacuum has been partially filled by pation in municipal affairs. Such enabling laws the strong support provided by presidents lie at the heart of any successful democratic de- Callejas and Reina, but there is no guarantee centralization endeavor and, as was the case this will continue under their successors. with USAID’s support of them in Honduras, should be an essential focal point for donors. There are also questions about the long-term roles of the key NGOs that have been involved 2. Build on prior development experience. in democratic local governance programming. Prior development experience can play a ma- AMHON, for example, may not be able to sustain jor role in democratic local governance efforts. its support, because its leaders and members In Honduras, as a result of USAID’s more than are likely to change every four years. FUNDEMUN 20 years of involvement in municipal develop- and UNITEC are far from being financially inde- ment, a cadre of trained professionals was avail- pendent—a situation that is even more critical able to be incorporated into the Municipal since the Municipal Development project is Development project when it was launched in scheduled to expire in 1999. 1991. The project’s success is due in part to the caliber of these people, many of whom are now Lastly, while advances in democratic local gov- working with AMHON, FUNDEMUN, and UNITEC. ernance have taken place in the larger, more Over the long term, their ongoing involvement populous municipalities where technical assis- and cumulative expertise promise to be an im- tance has been available, little progress is ap- portant factor in the continued expansion of parent elsewhere. For example, in many of the democratic local governance in Honduras. more than 250 smaller municipalities the Mu- nicipal Development project did not target, 3. Continuously emphasize popular under- there has been little or no external support to standing and involvement. The Municipal make local governance more democratic or ef- Development project has successfully empha- fective. When and how to involve these smaller, sized the need for citizen understanding and outlying jurisdictions are major unanswered involvement in promoting democratic local questions. governance. But despite this success, the prin- ciples of democratic local governance are far from being incorporated fully into the political culture. A major reason is the two primary 16 forces that could help bring this about—civil Honduras. However, the long-term viability society organizations and the media—have yet and sustainability of these organizations remain to participate meaningfully. For donors, this uncertain. For example, while all three have suggests the need to strive continuously to in- made progress toward financial self-sufficiency, volve such entities in promoting citizen under- they are still dependent on outside financial standing of basic democratic tenets and support that is also uncertain (the Municipal participation in local government affairs. Development project is scheduled to end in 1999). Since advances in democratic local gov- 4. Obtain and sustain support among key po- ernance will require these NGOs’ involvement litical leaders. President Callejas inaugurated well into the future, everything possible needs decentralization and democratic local gover- to be done to help ensure their continued nance, pushing the Municipal Reform Law participation. through the legislature in 1990. The current president, Carlos Roberto Reina, and his gov- 6. Targeting assistance involves difficult ernment support the law, providing the conti- choices. Determining how to target assistance nuity critical for its implementation. However, to best utilize scarce resources and maximize future presidents might not be as supportive, results typically means making difficult underscoring the point that for democratic lo- choices. The Municipal Development project cal governance to continue to evolve, sustained selected municipalities with the greatest po- political will at the top is essential. tential for success, imposing rigorous compli- ance standards for continued assistance. This 5. Strengthen the sustainability of project- strategy has yielded some significant suc- affiliated NGOs. The NGOs supported by the cesses. But it has also raised the question of Municipal Development project—AMHON, how to make democratic local governance a FUNDEMUN, and UNITEC—have proven critical to reality countrywide in smaller, poorer, more the success of democratic local governance in isolated municipalities.

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