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Financial Relations Between Provinces and Decentralized Territorial Entities

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Financial Relations Between Provinces and Decentralized Territorial Entities Report No. 68553-ZR Democratic Republic of Congo An Analysis of Administrative Financial, and Public Service Delivery Status in Decentralized Public Disclosure Authorized Territorial Entities (ETDs) Case Study : the Bandundu, Katanga and Orientale Provinces February 28, 2011 Public Disclosure Authorized Public Disclosure Authorized World Bank - USAID-European Union Public Disclosure Authorized Currency Equivalents (Exchange rate – effective June 10, 2010) Currency Unit = US$ 1= CDF 900 Fiscal Year January 1 – December 31 Acronyms and Abbreviations AFIA Women Nursing Assistance Association (Association de Femmes Infirmières pour Aider) ANR National Intelligence Agency (Agence Nationale des Renseignements) BTC Belgian Technical Cooperation CDF Congolese Franc CISP International Committee for Popular Development (Comitato Internazionale per lo Sviluppo dei Popoli) DAI Development Alternatives Inc. EPSP Primary, Secondary and Professional Education (Enseignement primaire, secondaire et professionnel ) ETD Decentralized Territorial Entities (Entités Territoriales Décentralisées) INS National Statistical Institute (Institut National de la Statistique) IPM Minimum Personal Tax (Impôt Personnel Minimum) M&E Monitoring and Evaluation MONUSCO United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (Mission des Nations Unies pour la Stabilisation du Congo) NGO Non-governmental Organization NGDO Non-governmental Development Organization PAIDECO Community Development Initiative Support Program (Programme d’Appui aux Initiatives de Développement Communautaire) PSR Special Traffic Police (Police Spéciale de Roulage) TSRC Special Road Traffic Tax (Taxe Spéciale de Circulation Routière) UNICEF United Nations Children's Fund USAID United States Agency for International Development USD United States Dollar Vice President : Obiageli Ezekwesili Country Director : Marie Francoise Marie-Nelly Sector Director : Marcelo Giugale Sector Manager : Anand Rajaram Task Manager : Tony Verheijen i Table of Contents GENERAL INTRODUCTION ........................................................................................................................ 1 II. OBJECTIVES OF THE STUDY ........................................................................................................ 2 III. METHODOLOGICAL APPROACH .................................................................................................. 3 IV. CONDUCT OF THE STUDY ........................................................................................................... 3 V. STUDY DESIGN ........................................................................................................................ 4 CHAPTER I: ETD ACTIVITIES AND PUBLIC SERVICE DELIVERY ............................................................ 5 1.1 PRINCIPAL ECONOMIC ACTIVITIES OF URBAN ETDS........................................................................ 5 1.2 PRINCIPAL ECONOMIC ACTIVITIES IN RURAL ETDS .......................................................................... 5 1.3 SERVICES PROVIDED BY ETDS .................................................................................................... 6 1.4 MAJOR CONSTRAINTS ON PUBLIC SERVICE DELIVERY IN ETDS .......................................................... 8 1.5 DEVELOPMENT PARTNERSHIPS IN ETDS ....................................................................................... 9 1.6 DEVELOPMENT PROSPECTS FOR ETDS ....................................................................................... 11 CHAPTER II: ADMINISTRATIVE ASPECTS ......................................................................................... 12 2.1 FORMAL ORGANIC FRAMEWORK .............................................................................................. 12 2.2 ADMINISTRATIVE ORGANIZATION OF ETDS ................................................................................ 13 2.3 HUMAN RESOURCES IN ETDS .................................................................................................. 16 2.4 EQUIPMENT AND INFRASTRUCTURE IN ETDS ............................................................................... 18 2.5 ADMINISTRATION WITHIN ETDS ............................................................................................... 19 CHAPTER III: FINANCIAL RELATIONS BETWEEN PROVINCES AND DECENTRALIZED TERRITORIAL ENTITIES ...................................................................................................................... 22 3.1 ETD RESOURCES (REVENUE) .................................................................................................... 22 3.2 ETD EXPENDITURES .............................................................................................................. 35 3.3 CONTROLS AND ACCOUNTABILITY ............................................................................................. 39 CHAPTER IV: RECOMMENDATIONS .................................................................................................. 40 4.1 GENERAL RECOMMENDATIONS ................................................................................................ 40 4.2 ADMINISTRATIVE RECOMMENDATIONS ...................................................................................... 41 4.3 FINANCIAL RECOMMENDATIONS .............................................................................................. 42 CONCLUSION ................................................................................................................................................ 44 ROADMAP ................................................................................................................................................... 45 BIBLIOGRAPHY ......................................................................................................................................... 47 ANNEXES Annex 1 : Institutions and Persons Consulted in Bandundu and Orientale Provinces ............................ 50 Annex 2 : Competencies devolved to ETDs ............................................................................................. 55 Annex 3 : Table 9: Urban ETD Activities and Public Service Delivery ...................................................... 59 Annex 4 : Table 10: Rural ETD Activities and Public Service Delivery ...................................................... 60 Annex 5 : Table 11: Summary of projected and generated revenue in ETDs from 2008 to 2010 (in Congolese francs) .................................................................................................................... 61 Annex 6: Table 12 Status of transfers made by Bandundu, Orientale, and Katanga Provinces to ETDs from 2008 to 2010 (September) ............................................................................................. 62 Annex 7: Information Specific to the Cities of Likasi and Kolwezi in Katanga Province .......................... 63 Annex 8 : Photos of KWANGO-KASAI and KWILU NTOBER Sectors in Bandundu Province .................... 65 TABLES Table 1: Formal organic framework for the administration of ETDs ....................................................... 12 Table 2: Organizational composition of ETDs ......................................................................................... 14 Table 3: Personnel, by age group ............................................................................................................ 17 ii Table 4: Distribution of personnel by educational level ......................................................................... 17 Table 5: Central government transfers to Bandundu, Katanga, and Orientale provinces, 2008-2009 ... 26 Table 6: Transfers due and awarded to ETDs by Bandundu, Katanga, and Orientale provinces, 2008- 2009 ........................................................................................................................................ 26 Table 7: Per capita transfers to ETDs ...................................................................................................... 33 Table 8: Structure of ETD expenditures .................................................................................................. 37 iii GENERAL INTRODUCTION I. Context 1. Decentralization was enshrined in the February 18, 2006 Constitution as the new system of governance in the Democratic Republic of the Congo. Some of the implementation measures that followed include Bill No. 08/012 of July 31, 2008 on the basic principles of administrative autonomy in the provinces and Organic Law No. 08/016 of October 7, 2008 on the composition, organization, and operation of Decentralized Territorial Entities (ETDs) and their relations with the government and the provinces. 2. The decentralization process offers a real opportunity to improve the quality of provincial and local public services by bringing the government closer to the people they govern. Since the decentralization policy aims at making basic public services accessible and reducing poverty throughout the country, it has the potential to meet the needs of communities in a prompt and more efficient manner. 3. The new governance system involves transferring competencies and responsibilities to decentralized entities, which will result in provinces and ETDs taking on responsibilities previously assumed by the central government. 4. However, successful decentralization is subject to a number of conditions. First, ETDs, which include cities, municipalities,
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