Fiscal Decentralization in Practice: Jordan’s Nascent Experience

A Policy Paper by Al Quds Center for Political Studies

Made possible through funding from USAID

Author Dr. Rana K. El Akhal

Feb 2019

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Policy Paper: Towards Fiscal Decentralization in Jordan

Table of Contents LIST OF TABLES AND GRAPHS USED IN THE PAPER ...... 4 ACKNOWLEDGEMENT ...... 5 EXECUTIVE SUMMARY ...... 5 1 PREFACE:...... 12 2 METHODOLOGY USED TO DEVELOP THIS PAPER ...... 14 3 DECENTRALIZATION: BACKROUND AND FRAMEWORK ...... 15 3.1 Concept and framework ...... 15 3.2 Decentralization Globally ...... 18 3.3 Good or Bad: The Decentralization Debate...... 19 4 FISCAL DECENTRALIZATION ...... 20 5 DECENTRALIZATION: THE YOUNG EXPERIENCE OF JORDAN ...... 22

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5.1 ...... When it all began: overview of previous steps until current date ...... 22 5.2 Current Governmental Program for Fiscal Decentralization ...... 23 5.3 Formulated Structures and Roles to Serve Decentralization in Accordance to Law 49/2015 ...... 25 5.3.1 Structures and Roles as per Law 49/2015 ...... 25 5.3.2 A Lens on Authority-Responsibility Balance in Law 49/2015 ...... 28 5.3.3 Responsibility to Attain Decentralization in Jordan ...... 29 6 GOVERNORATE LEVEL FISCAL BUDGETING; how the governorate budgets were planned and executed ...... 31 6.1 Fiscal Decentralization Stakeholders and their Roles...... 31 6.2 Budget Planning ...... 34 6.3 Budget Execution ...... 41 6.4 Monitoring the Execution of Budgets ...... 41 7 CHALLENGES FACED BY GOVERNORATE COUNCILS ...... 43 7.1 Power, Accountability & Authority of GCs ...... 43 7.2 Legislative & Regulatory Issues ...... 44 7.3 Budget Planning Challenges ...... 45 7.4 Budget Execution Challenges ...... 47 7.5 Administrative Issues ...... 49 7.6 Capacity Issues...... 51 8 AN EYE ON GENDER PERSPECTIVE ...... 52 8.1 Representation of Women in the Subnational Bodies ...... 52 8.2 Gender Sensitive Budgeting ...... 53 8.3 Gender Equality Consideration in Public Consultation ...... 53 9 CONCLUSION & SUMMARY OF KEY ISSUES ...... 54 10 RECOMMENDED POLICIES & ACTIONS ...... 62 10.1 On the National Vision for Decentralization ...... 62 10.2 On Supportive Structure & Legislative Environment to Decentralization ...... 62 10.3 On Tracking Progress & Measuring Success & Impact of Decentralization ...... 63 10.4 GC’s Current Level of Authority ...... 66

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10.5 ...... Resources & Independency of GCs 67 10.6 Coordination between GCs & Central Government ...... 68 10.7 Capacities & Awareness ...... 69 Annex 1: List of desk review documents ...... 70 Annex 2: Global resources and references used ...... 71

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LIST OF TABLES AND GRAPHS USED IN THE PAPER

LIST OF GRAPHS

GRAPH Page Graph (1) highlights of the Ministry of Finance Program for 23 Fiscal Decentralization 2017 – 2019

Graph(2) Jordan Decentralization Committee Structure 30

Graph (3) Governorate Budget Planning Flow Chart 35

LIST OF TABLES

TABLE Page Table (1) Responsibilities of various stakeholders in the 31 governorate budgeting process

Table (2) Governorates’ Budgets FY 2018 36

Table (3) Draft Governorates Budgets FY 2019 37

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ACKNOWLEDGEMENT The production of this Policy Paper, would have not been possible without the generous candid input and commitment of the; governorates’ council members, governorates’ executive council members, local development departments and municipalities’ local councils in the twelve governorates of Jordan; Irbid, Jerash, Ajloun, Mafraq, Madaba, Salt, Amman, Zarqa, Karak, Tafileh, Maan and Aqaba. As well as the generous input from the fiscal decentralization unit, part of the Ministry of Finance (MoF), and the decentralization unit at the Ministry of Political and Parliamentary Affairs (MoPPA)

Special appreciation goes as well to the USAID Fiscal Reform and Public Financial Management (FRPFM) team who provided timely reviews and feedback throughout the process.

EXECUTIVE SUMMARY This policy paper was developed after 2 years (2017 & 2018) of implementing the decentralization law in Jordan (law 49/2015), in order to address a key question “to what extent the implementation of gradual fiscal decentralization policy in Jordan enabled the governorate councils to better distribute budget allocation in accordance to local needs and enhance public services at local level”. In order to arrive to a conclusion regarding the above key question, a group of 3 focus groups were conducted with subnational government representatives including: Governorate offices, Local Development Departments, Executive Councils, Governorate Councils, and Local Councils. The focus groups were followed with some validation and enrichment through one to one phone calls with some of the important subnational government representatives who either raised an incomplete point during the focus group, or were unable to attend. a couple of meetings were held as well with the decentralization units of both; the Ministry of Finance and the Ministry of Political and Parliamentary Affairs to get the lens of the units interacting most with the newly elected GCs at the capital.

More and more countries are heading to decentralization recently, mostly to attain better results for their public systems in terms of public service responsiveness to needs, effectiveness, efficiency and sustainability. Such results are aspired to impact countries positively, by increasing incomes, productivity, living standards, and other key human development goals such as heath, democracy, and education amongst others. Jordan is no exception, with efforts started ten years before the issuance of the law of decentralization in 2017.

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Decentralization is not implemented in all countries in the same way and even if the same principles were followed for couple of countries for examples, results are not necessarily the same. Jordan decided to walk the road towards decentralization its own way creating its own model that is build on the basic concept of careful nad gradual steps towards transfer of power from the center to local, and gradual steps as well in the formulation of the governorate councils with 15% of seats are nominated to ensure existence of capacities and previous knowledge in local planning and service delivery. The paper explains in details different types and levels of decentralization and how each type/level is reflected on decision authority transfer.

Although the varieties of fiscal decentralization may exist, corresponding to the degree of independent decision making exercised at the subnational level, the general description of the term fiscal decentralization encompasses the political, economic, and institutional underpinnings of intergovernmental fiscal relations. Therefore, a carefully designed fiscal decentralization policy should not only enhance local autonomy, but also promote political accountability, economic efficiency and transparency.

DECENTRALIZATION EXPERIENCE IN JORDAN WITH A FOCUS ON FISCAL DECENTRALIZATION ASPECTS

The foundation of the experience in Jordan is the decentralization law issued August 15, 2017 (Law No 49/2015) and supported by an inter-ministerial committee headed by the Ministry of Political and Parliamentary Affairs (MoPPA) and cascade down to seven executive committees. The fiscal aspect of decentralization is supported by the financial executive committee which operates through the technical support of the decentralization unit of the Ministry of Finance (MoF).

Prior to the issuance of the law, Ministry of Finance issued in 2016 a policy paper entitled “Fiscal Decentralization in Jordan: strengthening the role of governorates in improving public services”. The paper sets a proposed governmental program adopting a set of a three year road map (2017-2019) to guide the steps towards fiscal decentralization where the scope of fiscal decentralization expands every year as well as the governorate budget ceiling, reaching the setup of internal audit procedures at governorates level in 2019.

The application of fiscal decentralization in Jordan starts with the identification of the governorates’ annual budget ceiling. The total governorates budget ceiling is divided into 2 parts; Part one formulates (30%) of total ceiling to be distributed equally on all governorates. Part 2 formulates (70%) of total governorates budget ceiling is to

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be distributed on governorates based on set of criteria1. Each of the criterion used has a weight represented in percentage. The criteria and weights used so far for the distribution of the (70% of total governorates budget ceiling) are as following:-

# Criterion Weight of criteria 1 Population size in the governorate 35% 2 Poverty rate 25% 3 Unemployment rate 25% 4 Size of governorate 5% 5 Number of economic facilities 10% Total 100%

Once the annual budget per governorate is set, the annual plan preparation process takes place. Budget planning includes identification of local needs and priorities through an extensive consultative process with local community, conducted by LCs with the attendance of representatives of GCs. The annual budget is then prepared by the ECs, presented and discussed with GCs for approval. Once approved, the implementation proceeds through local directorates of line ministries accompanied with follow up and tracking by GC members.

The decentralized budget allocated for governorates for the FY 2018 summed up JOD 229,000,000. This ceiling exceeded to JOD 303,000,000 for the FY 2019.

This paper looked into the practical experience of the governorates in applying decentralization law starting from the preparation of the budget and plan of 2017 and ends with the last quarter of 2018 when budget implementation is near to closing for the fiscal year 2018. Highlighting challenges faced during the implementation and provide a group of proposed solutions as well as proposed actions to enhance the implementation of the experience in the short and medium and long term.

KEY CHALLENGES AND ISSUES FACING SUB-NATIONAL GOVERNMENTS IN IMPLEMENTING DECENTRALIZATION EXPERIENCE IN JORDAN:

As this paper is focusing on the newly elected Governorate Councils and appointed Executive Councils, the challenges affecting their performance were spotted and identified. Several challenges faced GCs while handling their mandate during 2017 and 2018. These were grouped according to their nature to six groups of challenges:-

1General Budget Directorate; Governorates Budget Procedure Guide for the year 2018

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1. Weakness of authority 2. Legislative and regulatory challenges 3. Budget planning challenges 4. Budget execution challenges 5. Administrative challenges 6. Weakness in some needed capacities

The report extensively addresses the above six categories of challenges, yet, they are summarized in nutshell in the following paragraph.

The weakness of authority transfer and coordination between center and local was a main challenge. The multilayer structure of local bodies; local councils, municipal councils, governorate councils and executive councils, is confusing. The unclear status and authority level of GC members is also confusing and negatively affecting the smoothness of the process. Some existing regulations are not supportive to the decentralization law and cause delays and confusion due to their interlinking nature “for example municipality and tendering regulations amongst others”.

In planning, executing and monitoring of annual budget; weakness and variances in capacities of ECs and GCs to plan well were noticed. Some governorates suffer more than others in this aspect, especially those who planned and approved many projects in their 2018 plan, require land allocation, where neither cost, nor time required for this step was considered. Limited ceiling of the local tendering (JOD 200,000) was also a key challenge hindering local authority to announce calls and process tendering. Variances in cost estimation of the same projects as well as handling budget reallocation were both noticed. While in regarding to follow up and monitoring of implementation a bulk of issues arise including the weakness of understanding authority to question and means available and eligible for follow up, the absence of a program for follow up was also noticed; follow up actions were made according to on spot decisions and not a follow up plan. Gender equity consideration was also noted as a weakness due to its focus on female GC and LC members only and being limited to gender sensitive budgeting training only.

On the aspect of administrative challenges, the weakness of authority transfer from center to local as well as the weakness of coordination between center and local were causing delays during implementation. On another aspect the absence of some administrative enablers for GCs to perform such as independent venue allocation and limitation of the budget allocated to sustain GCs work and the reimbursement bases were all noted as hindering challenges.

In terms of capacities, variance of competencies and skills was a clear challenge affecting the outputs and performance of GCs.

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CONCLUSIONS & RECOMMENDATIONS

The decentralization setup in Jordan is unique to its own case, which entails own set of challenges and difficulties. In countries were democracy manifest through political parties representing societal issues and developmental needs of their voting circle, the decentralized government set up is formulated in a bottom up approach where society leaders “who mostly represent political views” run for local elections and move on to governorate and later to parliament elections. This is not the case in Jordan, where political participation through political parties is not mature, power of geographical regions and families embedded in the setup of citizens and participation of public in political parties is minor. Accordingly, in the pursuit of the central government to instill democratic representation of the public; several public representation elections and bodies were created over the past years including elections of local & municipal councils, governorate councils and parliament elections. All are of geographical area based voting. Reorganizing this setup so they are at least interrelated and smoothly linked with clear distinction in level of representation, roles and authority level, in a systematic simple flow is a challenge to the central government to start with.

The experience of Jordan thus far is still young, and faced overwhelming challenges in both years studied; for the FY 2017 the plans were prepared and the elected GCs didn’t get the chance to properly be involved in the selection of projects and in proper understanding and discussion of the annual plan prior to its approval. For the FY 2018, the whole nation as well as the government suffered from extraordinary financial challenges and budget deficit, tough situation in terms of economic well being due to external loan conditions and mandatory reforms requested by the world bank to approve re-scheduling of the country loan and issuance of a new one, translated into new tax law and increase in energy cost. Both were faced by public rejection and demonstrations affecting the normal wellbeing of the economy. All the previous, caused public budget deficit which was reflected in slow release of cash for committed projects at local levels and delays in approvals of other projects, contributing to the low progress in total budget expenses to around 40-45% as an initial estimate by the decentralization unit at MoF early 2019. The final precise progress is expected to be announced after the issuance of the audited budgets late March or early April.

At the end, the paper arrived to Seven Key Recommendations:-

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1. It is essential to work on clarifying the end vision aimed regarding level and form of decentralization. This vision to be divided into conditional stages and to be communicated with the public.

2. To conduct an independent review of the existing structure and legislative framework including all regulations influencing the decentralization experience, so as to arrive to various options of recommended amendments. The review to be anchored with well structured benchmarking exercise and best practices.

3. An extensive work need to be done in the area of tracking progress and measuring impact. Such work is advised to be result oriented based on set of indicators and in a form of an automated Development Management Information System with various levels of accessibility authorization. The paper provides recommended set of indicators in sub-section (14.3).

4. On the aspect of GCs authority level, a basic questioning authority should be given to GC members guided by clear guidelines and eligible process.

5. To set the foundations of an automated development database, resources and library at the local level and to conduct a cost analysis study regarding essential resources needed to support the functions of ECs and GCs are needed.

6. On the coordination between governorates and center and visa versa front; a proposed setup of a smaller body representing sub-national government at governorate level is proposed where each governorate are represented by governor, president of GC and head of EC, to meet quarterly with the inter- ministerial committee to share key issues that require high level support. Sub- section (14.6) in the paper, proposes two options for this coordination setup; one inclusive to all 12 governorates and the other is by region.

7. Final recommendation is regarding awareness and capacities; pressing the importance of continuing and expanding the scope of capacity building as well as awareness based on the assessment of the previously conducted awareness and capacity building programs and on the capacity building needs identified throughout the course of developing this policy paper.

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1 PREFACE: This Policy Paper is a policy analysis type, and it addresses a key question: To what extent the implementation of gradual fiscal decentralization policy in Jordan thus far enabled the governorate councils to better distribute budget allocation in accordance to local needs and enhance public services at local level?

In the journey to answer the policy paper question, rich and diverse input from the governorate councils was collected providing a sort of a rough assessment to the young fiscal decentralization experience thus far, with various guidance points towards how the decentralization policy can be enhanced in the future. In order to arrive to solid recommendations at the end of the paper, the paper is divided into 11 sections. SECTION 1 entitled “Methodology Used to Develop this Paper” describes the methodology followed to develop the paper. SECTION 2 entitled “Decentralization: Background and Framework” provides an overarching view of the decentralization framework, definition, types, approach and stages, existing debate on decentralization and some of the best practices. SECTION 3 entitled “Fiscal Decentralization” focuses on the fiscal aspect of decentralization; its definition, stages or levels of fiscal decentralization. SECTION 4 entitled “Decentralization: The Young Experience of Jordan” sheds the light on the Jordanian experience in decentralization, starting with the early efforts in this regards, then moving to the issuance of the current active law for decentralization law No 49/2015. This section also provides an intensified comprehensive understanding to the Jordanian Government program towards decentralization in gradual steps for the years 2017-2019, formulated structures and distribution of roles of sub-national governments, and it ends with the inter-ministerial committee created for the purpose of implementing the government’s program. SECTION 5 entitled “Governorate Level Fiscal Budgeting” present the framework used for fiscal decentralization, stakeholders involved and their various roles, explains how the budget planning, execution and monitoring processes are taking place at the governorate level. SECTION 6 entitled “Challenges Faced by the Governorate Councils” summarizes key challenges faced by governorate council members of the 12 governorates of Jordan based on the results of the in-depth discussions and focus groups with subnational governments. SECTION 7 entitled “An Eye on Gender Perspective” is a section allocated to highlight gender imbalances/inequalities that took place during the experience so far. SECTION 8 entitled “Conclusion and Summary of Key Issues” is allocated to provide solid conclusion on the key question of this policy paper “to what extent the implementation of gradual fiscal decentralization policy in Jordan enabled the governorate councils to better distribute

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budget allocation in accordance to local needs and enhance public services at local level”, and also highlight key issues to be addressed in the future to enhance the experience. SECTION 9 entitled “Commitment to Success: Towards Efficient Decentralization and Fiscal Decentralization” This Section proposes a matrix of proposed actions which would address the identified key issues and challenges faced by the Governorate Councils, designed in a timeline framework to include quick fixes, midterm and long term actions.

To this end, the author of the policy paper, as well as Al Quds Center, hope that this paper will be used by; the government, international donors community, and local advocates, as a guide on improvements required that would enhance and strengthen the fiscal decentralization experience in Jordan as well as the end results of decentralization in attaining fair distribution of public services and development enablers at local communities’ level in Jordan.

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2 METHODOLOGY USED TO DEVELOP THIS PAPER In order to develop this Policy Paper, the author with the support of administration and logistical team from Al Quds Center, conducted intensive desk review process to existing laws and regulations of relevance, issued papers and articles regarding the experience in Jordan, decentralization in other countries, previously issued Policy Papers of relevance.

Following to the desk review process, a set of three focus groups, one per region, were conducted with key stakeholders involved in the implementation of the decentralization law in Jordan at the governorate level. Results of the focus groups were documented, followed with several one to one phone calls with some of the vital invitees who couldn’t attend the focus groups, so as to complement the input gathered. At the end of each regional focus group, a simple documentation report was issued and submitted to USAID (FRPFM).

Later, couple of meetings were conducted with the fiscal decentralization unit, part of the MoF and the decentralization unit of the MoPPA to gain the perception of these two vital entities regarding challenges encountered thus far in the implementation of the decentralization law.

Finally, a thorough analysis of all input gathered was conducted to produce this Paper in its final shape, interrelated with internal reviews by Al Quds Center, and external review by USAID FRPFM team for enrichments and finalization.

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3 DECENTRALIZATION: BACKROUND AND FRAMEWORK

3.1 Concept and framework

Definition and Scope

Decentralization is the transfer of authority and responsibility of major government functions from central to sub-national governments, including local governments, civil society, and the private sector2.

Along with community-driven development and decentralization (CDD), communities are empowered to exert influence over local governance and services. The rationale for decentralization in the context of CDD includes economic efficiency, public accountability, and empowerment:- • It gives greater voice and choice to citizens to influence decisions that affect their lives. • It allows local governments to respond dynamically to communities. • It results Community/local level checks and balances ensure both community- based organizations and local governments can be held accountable to their respective constituencies. Decentralization also provides a powerful impetus for enhancing the scaling up potential of CDD operations. By incorporating local governments in the CDD approach from the outset, and by building strong partnerships between local governments and community-based organizations, CDD projects can achieve scale and sustainability, while improving systems of local governance by building downward accountability towards citizens.

2 World Bank http://www.worldbank.org/en/topic/communitydrivendevelopment/brief/Decentralization

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Dimensions of Decentralization and Aimed Impact:

There are distinct dimensions to decentralization. These can be categorized as the 1) political, 2) administrative and 3) fiscal dimensions. Each dimension has unique characteristics, objectives and conditions for success.

In general terms, the political component refers to the transfer of authority from central to local authorities, the administrative component speaks to the transfer of functional responsibilities from central to local authorities and the fiscal component addresses to the financial relationship between all levels of government. At the same time while it is useful to distinguish between the different components of decentralization for the purpose of highlighting its many facets, there is nonetheless considerable overlap between all the components. For instance, in order for economic gains from decentralization to be actualized, it is necessary to have had political decentralization in terms of decision-making authority. However, while it is possible that in one case all of these aspects of decentralization may operate simultaneously, in another case, it is equally possible that a country may be decentralized in one or two respects, while less so in others.

To serve the purpose of adequate yet not extensive clarity between the three facets of decentralization, clear distinctions between the three various concepts of decentralization is useful:

Political decentralization transfers policy and legislative powers from central governments to autonomous, lower level assemblies, and local councils that have been democratically elected by their constituencies. To be effective, it requires regular elections, clearly defined jurisdictions and powers, and the appropriate legal, political and functional space.

Administrative decentralization places planning and implementation responsibilities in the hands of locally situated civil servants and these local civil servants under the jurisdiction of elected local governments. To be effective, it requires ability to make independent staffing decisions and ability to negotiate conditions of service (though the center may retain a useful role in training)

Fiscal decentralization accords substantial revenue and expenditure autonomy to local governments, including the power to levy taxes and user charges. To be effective, it requires linking pleasure of spending with pain of revenue generation, increasing

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revenue autonomy, building capacity to analyze data for budget decisions and establishing proper fiduciary controls.

The below graph summarizes the outcomes and impact of the three facets of decentralization, which represent the justification of why many and more countries are heading towards decentralization.

Decentralization outcomes and impact3

3 Figure ref: World Bank Publication, Robert D. Ebel and Serdar Yilmaz, Concept of Fiscal Decentralization a worldwide View, 2002

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3.2 Decentralization Globally Governments’ interest in decentralization worldwide is increasing by both; developed and developing countries. Yet, drives to pursuit decentralization differ from one country to another. In post-welfare states, or in other words “most developed counties”, decentralization is considered an effective tool for reorganization of the government in order to provide public services cost effectively such as in the case of USA, Switzerland and Austria. Developing countries are turning to decentralization to escape from the traps of ineffective and inefficient governance, macroeconomic instability, and inadequate economic growth with wide differences amongst them as well. In Latin America, the origin of decentralization is the political pressure from the people for democratization. In Africa, decentralization has served as a path to national unity. In post communism countries, it is the pathway to democracy and open market economy.

Most of the established theoretical literature of fiscal decentralization has been based on issues that arose within developed countries; particularly the US and Canada, while the definition and implementation of fiscal decentralization differ greatly across countries, mainly developing ones such as Africa, Morocco and Tunisia due to differences in economic and political structures. Differences exist as well between Federal and Unitary Countries. This diversity creates challenges to measure and compare the degree of decentralization across countries and to make generalizations about it.

Comparing the degree of fiscal decentralization across countries is an extremely complex and multifaceted task that requires identification of sub-national autonomy and discretion on expenditure and revenue affairs. Although there has been an effort by the OECD4 to develop a methodology that would enable comparative analysis across countries, there is yet no standardized data set.

4 Organization for Economic Cooperation and Development (OECD)

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3.3 Good or Bad: The Decentralization Debate Decentralization, in general, and fiscal decentralization in particular, has been under debate by politicians, economists as well as researchers in the past decades. Major benefits of decentralization have been:

• Greater voice and choice of individual constituents to influence decisions which affect their lives and of sub-national and local governments to respond dynamically to constituency concerns. • Allocative efficiency — matching of local needs and preferences with patterns of local public expenditure (assumes substantial fiscal autonomy). • Empowerment of districts, villages, communities, and individual constituents.

The underlying assumptions on which these potential benefits of decentralization rest include: 1) the formulation of representative elected bodies with the mandate to articulate needs of their identified constituency and can be held accountable. 2) the ability to attain an inclusive local decisions where interests and needs of all parts of community are represented.

Yet, there are several potential dangers and concerns including:-

• The capture of the elite to decision making positions • Wider spectrum for corruption potential • Patronage politics of elected members to their patrons who supported • Higher risks on the macro-economy due to inconsistency in financial policies at the sub-national levels such as lending and taxation • Catalyst of further decentralization • Information challenge; incomplete information at the national level • Decision making challenges; vagueness, communicating decisions upwards and downwards… etc • Delay of reforms

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4 FISCAL DECENTRALIZATION Fiscal decentralization refers to the public finance dimension of intergovernmental relations. It specifically addresses the reform of the system of expenditure functions and revenue source transfers from the central to sub-national governments. It is a key element of any decentralization program. Without appropriate fiscal empowerment, the autonomy of sub-national governments cannot be substantiated and, in this way, the full potential of decentralization cannot be realized.

In the journey towards fiscal decentralization, an essential distinction between the various stages/statuses it involves and their implication on intergovernmental relations system is vital. Various stages of decentralization involves: deconcentration, delegation, and devolution.

• Deconcentration involves the shifting of responsibilities from central government agencies located in the capital city to regional offices. at this stage of deconcentration, all sub-ordinate levels of government within a country plays the role of agents of the central authority and are either appointed by it or are responsible directly to central government. Thus, deconcentration is this least extensive type of administrative decentralization.

• Delegation refers to the transfer of public policy making and administrative authority and/or responsibility for carefully spelled out tasks to institutions and organizations that are either independent or under central government's indirect control. Typically, delegation of functions is by the central ministries to semiautonomous organizations not wholly controlled by the central government but legally accountable to it, such as state owned enterprises, public utilities, and regional planning and economic development authorities.

• Devolution is the most extreme form of decentralization where independently established subnational governments are given the responsibility for delivery of a set of public services along with the authority to impose taxes and fees to finance services. In a devolved system, subnational governments have independent authority to raise their own revenues and to make investment decisions. It is devolution of administrative power that underlies decentralization of power on political fronts. Devolution is usually synonymous to fiscal decentralization where subnational governments have clear expenditure assignments, substantial budget autonomy, and legally recognized geographical boundaries within which they perform public functions.

Although the varieties of fiscal decentralization may exist, corresponding to the degree of independent decision making exercised at the subnational level, the general

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description of the term fiscal decentralization encompasses the political, economic, and institutional underpinnings of intergovernmental fiscal relations, and ranges from examining the efficiency of public institutions and developing sustainable infrastructure finance, to rationalizing fiscal transfer mechanisms and supporting the social safety net.

Therefore, a carefully designed fiscal decentralization policy should not only enhance local autonomy where subnational governments are allowed to act independently within their own sphere of competence in designing revenue and expenditure policies, but also promote political accountability, economic efficiency and transparency.

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5 DECENTRALIZATION: THE YOUNG EXPERIENCE OF JORDAN

5.1 When it all began: overview of previous steps until current date Royal messages advocating higher transparency by the government, better quality of public services to citizens, and a decentralized governmental decision where citizens can contribute to, paved the road during the past ten years in Jordan to start the discussion about decentralization. Early efforts manifested in the formulation of a higher level committee in response to the Royal Court request, so as to discuss and propose needed regulations for decentralization. Several governments later formulated ministerial committees to explore possibilities and potential for decentralized government in Jordan. Various concerns regarding readiness of governorates to hold power was one of many factors lead to a back and forth hesitation in issuing a regulation.

First blossoms of a decentralized government regulation, was in 2009 with the issuance of the regions’ law draft. The draft was discussed by the parliament. The draft law document was subjected to various changes and faced some solid public rejection which caused the production of a revised weak document5. King Abdullah II interfered and rejected the malformed law project at that time. This setback, didn’t affect the Country’s Royal leadership willingness to go for decentralized government in the near future as an approach to more efficient public services, higher accountability and transparency. With scares resources and heated location at the heart of highly problematic area, Jordan’s suffering multiplied in recent years impacted by the Arab Spring repercussions in 2011 followed by the Syrian Crises and floods of refugees, the disruption of the Egyptian natural gas pipeline which is the most reliable source for Jordan’s electric power. All mentioned factors adversely affected the tourism sector, worker remittances, and foreign direct investment (FDI), which collectively resulted in an economic slowdown, a sharp increase in the Government of Jordan (GOJ)’s deficit and a significant downturn in the country’s foreign currency reserves. The difficult economic climate was further compounded by a rise in Jordanian public calls for reforms mainly in regards to transparency and accountability. The public rise and demands, further supports the country’s journey towards decentralized government.

5 See news on the law on http://egyptianoasis.net/showthread.php?t=24641 and https://www.islamtoday.net/bohooth/artshow-14-111622.htm

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The law of decentralization in Jordan got approved by the parliament and issued in Aug 2017. The law consists of 47 articles. Articles 3 - 8 of the law set the structure and responsibilities of various sub-national government entities at the governorate level including; the governor, executive council and local council. The following articles set the legal framework for the procedural measures required such as; when, where and how EC and GC meetings are to be conducted, elections of sub-national bodies, secretariat, and other procedural issues. The last article of the law “article 47” identifies the responsibility of executing the law by the prime minister and ministers.

5.2 Current Governmental Program for Fiscal Decentralization

Following to the issuance of the decentralization law in Aug15, 2017, the Ministry of Finance in collaboration with FRPFM developed a program for the implementation of fiscal decentralization in Jordan. The program adopts a set of a three year road map. In order to widen the scope of fiscal decentralization smoothly and gradually, the program identifies required actions and changes for each fiscal year covering the period from 2017 to 2019

Graph (1) highlights of the Ministry of Finance Program for Fiscal Decentralization 2017 – 2019

•Establish and employe staff 2018 of the decentralization unit @ MoF highligts •Review and enhance •Adopt the criterea used to budget ceilings set budget ceilings equation • Issue Governorates' needs •Raise awareness of the gov. • Widen the scope of identification guides council members on decentralized activities •Identiry and adopt required budget planning and policies to support the fiscal implementation • Deploy internal audit decentralization actions •Review and enahcne procedures at governorates • Identify scope of activities budget ceiling equations to be decentralized •Widen the scope of •Train concl members and decentralized related parties to the actions/projects/budget items decentralization process 2019 •Dessiminate the government • Hire researchers and data financial management analysits for the collection highlight information system (GFMIS) of dev. data •Adopt comprehensive 2017 training plan for local gov highlights

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The Policy Paper (White Paper) issued by the Ministry of Finance and the Fiscal Reform and Public Financial Management Project of USAID, identifies 4 pillars for fiscal decentralization in Jordan and provided a proposed road map to fiscal decentralization journey shedding light on 3 years aimed changes to widen the scope of fiscal decentralization gradually.6

The four Building Blocks (Pillars) of Fiscal Decentralization adopted in the mentioned road map paper are:-

• Pillar 1: Expenditure Assignment, focuses on identification of public services and cost items which will be decentralized to governorate councils gradually over the coming years. • Pillar 2: Funding addresses sources of financing for governorates’ budgets and identifies the equation to be used to set budget ceiling and expenditure ceiling for governorates taking into consideration various socio-economic factors. • Pillar 3: Budget Planning provides the mechanism and procedures for priority needs identifications at the local and governorate levels, And finally, • Pillar 4: Budget Execution and Financial Audit, provides procedural guidance on implementation of governorate budget.

Fiscal Decentralization Building Blocks for Jordan

Budget Execuion Expenditure Funding Budget Planning and Financial Assignment Audit

During the gradual steps journey towards fiscal decentralization in the governorates, both; Ministry of Finance and the General Budget Department (GBD) will be playing vitals roles in identifying budget ceilings, build the capacities of governorate and local council, develop needed guidelines, instructions and systems, and as well closely supervise and asses the implementation of governorate councils.

Government’s Aspired Results of the Decentralization Program:

6 Note: the Title of the paper has been translated by the author for the purpose of this Policy Paper. Ref: Ministry of Finance and Fiscal Reform and Public Financial Management Activity Project (FRPFM), Fiscal Decentralization in Jordan: Supporting Governorates’ Role in Enhancing Public Services (Paper), 2017, Jordan

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The government of Jordan aims to attain 5 key outcomes as a result of the implementation of the decentralization law:-

1. Increased public participation 2. Better utilization of available resources 3. Justice in distribution of resources 4. Enhanced capacity of local administrations and elected bodies 5. Enhanced quality of public services caters to governorates and local areas.

5.3 Formulated Structures and Roles to Serve Decentralization in Accordance to Law 49/2015

5.3.1 Structures and Roles as per Law 49/2015 The Executive Part of Governorates in Jordan is linked with the Ministry of Interior represented by the Governor, and Ministerial Departments located in the Governorates representing National Government Ministries.

Governor

Governors are nominated by the Minister of Interior and should be approved by the Council of Ministries and get a Royal Decree. A Governor in a Governorate is the highest executive level in the governorate.

His responsibilities focus on keeping security, stability and citizens’ wellbeing. S/he also coordinates with all ministerial departments in the governorate for the delivery of public services, follow up and monitor implementation of governmental projects within the borders of the governorate he is serving.

Executive Council (EC)

The Executive Council is headed by the Governor and it includes in its membership all Directors of Ministerial Directorates, heads of sub-districts and couple from districts managers, Governor’s deputy for development in addition to heads of development and industrial areas, three executives from the municipalities and in the case of Aqaba, one of the commissioners of Aqaba will be included replaced by a commissioner from Petra Authority in the case of Ma’an Governorate.

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Executive Council of each governorate meets once a month to discuss governorate issues and coordinate with public entities. Key duties of the Executive Council are;

• The preparation of governorate strategic and executive plans to be aligned with the national and sectoral plans through coordination with various ministerial departments and entities • Preparation of the governorate’s annual needs guide • Prepare Governorate’s annual budget to be approved by the Gov. Council • Address issues of public services in the governorate and review local councils reports and make needed decisions/measures • Prepare monthly progress reports and submit them to the Gov. Council • Coordinate with implementing governmental departments and entities • Study issues raised by the Gov. council • Propose investment projects and submit to Gov. Council as recommendations • In situations of emergency, prepare needed plans and set needed measures

Governorate Council (GC)

Governorate Council is considered by the law (Article 6) a financial and administrative independent body. The duration of its duty is 4 years unless got resolved by the law.

The GC members are two segments:

• Elected by governorate citizens where number of seats allocated are based on criteria issued in a separate legal bylaw • Appointed by National Government where no more than 15% of total elected seats to be appointed by the Prime Minister based on nominations from Minister of Interior

Women who run for GC elections and win will be members of the elected GC regular seats. Yet, an additional quota for women of 10% of total elected seats is allocated to existing female nominees who got highest votes but didn’t win the election.

Another quota is allocated for women in the appointed seats by the Prime Minister, where 1/3 of appointed seats are allocated to women.

Key duties and responsibilities of the GC according to the law are:

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• Approve governorate strategies and plans delivered by the EC • Approve Governorate’s annual budget according to set ceilings • View expenditure and implementation of budget • Approve annual governorate’s development needs guide and identify priorities • Approve public service and investment projects suggested by EC • Approve development projects of general public benefit and submit them to the governor so s/he can make required procedures and actions about them. While approving these projects, the GC should consider proposed projects by municipal councils and ministerial directorates • Discuss progress reports on implementation of projects by public departments, in a way that do not contradict with Governmental monitoring bodies • Propose investment projects and establish intra-governorate projects with other governorates upon consent of related entities • Submit proposals and suggestions to related bodies regarding improvements of public sector performance • Identification of priority areas within the governorates and suggest solutions with related entities and approve emergency plans of the Governorate • Discuss with any of the EC members issues related to his/her scope of performance • Address issues raised by the Governor

GC meetings are conducted upon request from its President “Head of the Council”

The GC can formulate committees of its members to execute its duties.

A budget sufficient to sustain the work of the GC is to be allocated as part of the Governorate’s annual budget. Spending from this allocation is to be approved by the GC president where expenses of GC are subjected to governmental audit.

Article 9 of the law states that the President and Members of the GC are to receive financial allocation “reward”, the amount of this “reward” to be suggested by the minister of Interior and approved by the Prime Minister

Local Development Department (LDD)

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The LDD in each governorate serves as the secretariat for the GC as well as the EC, and the Governor nominates two of LDD staff to hold the responsibility of the secretariat for GC and EC.

GC and EC secretaries are assigned to document minutes of meetings and handle the bookkeeping for the decisions of meetings.

Minutes of meetings for both the EC and the GC are to be published on the official website of GC for each governorate.

5.3.2 A Lens on Authority-Responsibility Balance in Law 49/2015 A general analytical view of Law 49/2015 from the lens of authority level, dependencies and scope of mandate, shows vagueness in mandate of the GCs as well as dependencies in its formulation and decisions. The concept of decentralization is barely present in the current law. The linkages and dependencies between the GC (governing body representing voice of citizens) and Executive levels in governorates, makes independent opinions of the GC almost impossible. That is particularly clear when the financial rewards of GC members are to be suggested by the Minister of Interior.

Being aware of the Government’s decision to walk careful and slow gradual steps towards decentralization, doesn’t erase the fact that the first experience always matters, just like first impression effect. Careful steps don’t mean producing crimpled GC with no clear power as it is in the first round of this experience. Such malformed first step, may fire back strongly by; weaker citizen’s trust in government and its seriousness in decentralizing its power, holding back by community natural leaders to run for the next elections, and accordingly stronger accumulation of frustration at local levels especially in underprivileged areas and sub-districts where public service have not been enhanced after decentralization law came to action.

Nevertheless, the aspired outcomes of decentralization may still be attained at the end of the first round of GC elections. Yet, these results can’t be purely claimed results of decentralization as decisions of the decentralized GC body created are highly dependent on national government arms in the governorate and such outcomes can be attained with and without the GC.

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5.3.3 Responsibility to Attain Decentralization in Jordan At the national level, a structure of committees was formulated in order to oversee and support the decentralization experience. The structure is made of an Inter- Ministerial Committee chaired by Ministry of Parliamentary and Political Affairs, and seven thematic sub committees.

The Inter-Ministerial Committee for Decentralization:

1. Minister of Parliamentary and Political Affairs (Chair) 2. Minister of Communication and Information Technology 3. Minister of Finance 4. Minister of Interior 5. Minister of planning and International Cooperation 6. Minister of Municipal Affairs 7. Minister of Public Sector Development

The Seven Thematic Committees:

1. Legislative 2. Organization Structure and Manuals 3. Capacity Building 4. Financial 5. Local Development and Services 6. Public Awareness 7. Information Technology

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Graph(2) Jordan Decentralization Committee Structure

In regards to fiscal decentralization, the duties of the Financial Committee are:

1. Develop manuals for needs assessment and prioritization 2. Develop manuals for preparing draft budgets at the governorate level 3. Identify the basis for determining budget ceilings for each governorate 4. Develop governorates’ annual budgets, spending, monitoring, and control mechanism 5. Any other matters deemed relevant by the committee

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6 GOVERNORATE LEVEL FISCAL BUDGETING; how the governorate budgets were planned and executed

6.1 Fiscal Decentralization Stakeholders and their Roles Governorates Budget Planning Key Stakeholders:

1. Ministry of Finance 2. General Budget Department (GBD) 3. Fiscal Decentralization Unit at the Ministry of Finance 4. Local Development Directorate (LDD) in each Governorate 5. Governorate Executive Councils 6. Local Councils 7. Directorates of Line Ministries 8. Governorate Councils

Table (1)

Responsibilities of various stakeholders in the governorate budgeting process

# Stakeholder Responsibilities 1 Ministry of Finance Prepare the midterm financial framework (3 years) in collaboration with GBD which includes estimate of local revenues, external grants, deficit, and annual expenditures. This framework is the base of the governorate budget ceiling formula 2 General Budget Dept. Calculate the overall budget ceiling for all governorates and identify the ceiling for each governorate based on set of criteria approved by the Prime Ministry. Provide technical support to governorates in preparing their annual budget Include governorates’’ budgets in the general budget Follow up on the collaboration between governorates and line ministries to ensure that the identified investment capital projects are in alignment with the Result Oriented Budgeting approach Monitor and assess the execution of public budget including governorates’ budgets, to ensure attainment of aimed results

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Review budget ceiling criteria and formula used for the allocation of governorates’ budget

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3 Fiscal Develop the fiscal decentralization experience Decentralization Unit and disseminate the concept to national at Ministry of Finance ministries, public departments and governorates Follow up on the progress of the execution of fiscal decentralization in the governorates Contribute to the institutional capacity building relevant to fiscal decentralization 4 Local Development Prepare governorate strategy and identify Directorate in each governorate development and service needs based Governorate on the manual on how to develop governorate (LDD)/Municipal annual plan needs guides Council Select investment capital projects those will be included in governorate annual development plan according to priorities Develop governorate annual budget draft as per annual identified ceiling Present governorate’s annual budget to Governorate’s Executive Council and GC for discussion and approval 5 Governorate Executive Discuss Governorate Strategy and Annual Plan and Council suggest new projects Identify priority capital investment projects responding to sartorial and national goals Discuss governorate annual budget draft and amend it as needed in coordination with LDD 6 Governorate Council Approve Governorate Strategy, Annual Plan and set (GC) of priorities Approve governorate annual budget as per set ceiling 7 Local Council (LC) Prepare and implement pubic consultation sessions in collaboration with LDD Support LDD in developing Governorate Annual Development Needs and Priorities for(بطاقات وصف المشاريع) Directorates of Line Develop Project info cards 8 Ministries in identified projects in the annual plan in Governorate collaboration with LDD using MoF form Ensure that identified projects in Governorate Annual Plan are aligned with Strategies of Ministries and the Results Oriented Budgeting Approach

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6.2 Budget Planning

The budget planning for governorates starts with the identification of the budget ceilings for governorates issued by the Prime Minister in September for the coming Fiscal Year. During the past couple of years, GBD issued the “Governorates Budget Procedures Manual (GBPM)”7. In the GBPM, the whole process of budget planning starting from the identification of the ceiling for the overall Governorate Budget, criteria for budget distribution on governorates and responsibilities of all related entities at the national and governorate levels are also identified. Nonetheless, the issuance of the GBPM is a guiding not a legal formal document and it might not be issued in future years.

It is worth mentioning that the annual governorates’ budgets at this stage include expenditures only, both capital and operational, and they don’t include revenues.

Governorates Budget Planning Process

Step 1: Setting Budget Ceilings for Governorates

The annual ceilings of governorates budgets under decentralization are set in accordance to the midterm planning framework for 3 years; allocation for current year and estimate for the following 2 years.

The total governorates budget ceiling is divided into 2 parts; Part one which consists of (30%) of total ceiling to be distributed equally on all governorates. Part 2 which consists of (70%) of total governorates budget ceiling is to be distributed on governorates based on set of criteria8. Each of the criterion used has a weight represented in percentage. The criteria and weights used so far for the distribution of the (70% of total governorates budget ceiling) are as following:-

# Criterion Weight of criteria 1 Population size in the governorate 35% 2 Poverty rate 25%

7 Example can be found on http://www.gbd.gov.jo/en/Page/Index/budgets-preparation-procedures- manual

8General Budget Directorate; Governorates Budget Procedure Guide for the year 2018

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3 Unemployment rate 25% 4 Size of governorate 5% 5 Number of economic facilities 10% Total 100%

Step 2: Preparation and Approval of Annual Governorate Developmental Priority Needs Manual

Priority needed projects at local and Governorate levels are identified and listed in annual manual entitled “Governorate Priority Needs Manuals”.

It is important to highlight in this context that governorate level projects to be covered from the governorate decentralized annual budgets need to meet 2 conditions as set by GBD:

1. The project serves the specified governorate citizens 2. The location of the project is within the administrative boarders of the governorate.

All intra-governorates projects and projects of public benefit beyond the inhabitants of a specific governorate cannot be considered in the governorate’s annual budget but should be included in Ministerial budgets.

The identification of a governorate annual priorities process is governed by the دليل “ procedures Manual issued by the Ministry of Interior back in 2017 entitled which can be اجراءات تطوير أدلة االحتياجات والخطة التنموية السنوية للمحافظة ضمن اطار الالمركزية" translated to Procedure Manual for the Development of Governorate Annual Development Priorities and Plans Guides”.

At the end of each fiscal year, governorates identify annual priorities using the mentioned manual and issue the annual governorate’s development priorities guide which formulates the base of the distribution of the annual budget.

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Step 3: Classification of Priority Projects and Preparation and endorsement of Annual plan In 2017 first governorate council and budget. members were elected in Aug15, and their first meeting was held The governorate council discusses and approves on Sept 10. The deadline to governorate development annual plan which was submit the annual budgets for the developed based on governorate’s priorities governorates was on Sep 15th identified and is within the budget ceiling identified by the GBD for the specific year. Projects were already identified, budget distributed and the council members didn’t get any chance to digest or debate.

Graph (3) Governorate Budget Planning Flow Chart

1

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Prime Minister Issue Budget Ceilings for Governorates

2 3

Preparation and approval Issuance of the of annual governorate Governorate Annual Plan development priority needs manual

Between steps 2 and 3: Guided by the needs and priorities manual, local

councils in presence of GC members, consult public and prioritize projects, later plan is presented by EC for the approval of the GC

The decentralized budget allocated for governorates for the FY 2018 summed up JOD 229,000,000. This ceiling got exceeded to JOD 303,000,000 for the FY 2019 according to the draft budget awaiting approval from parliament soon.

The below tables show the total ceiling and the distribution ceilings for the governorates budgets for 2018 and 2019.

Table (2) Governorates’ Budgets FY 20189

9 GBD, Law No (1) General Budget Law, Governorate Budgets Section

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Table (3) Draft Governorates Budgets FY 201910

Governorate Expenditures of Capital Total Sustaining the Expenditures Work of the Governorates Councils Irbid 380,000 30,000,000 30,380,000 Mafraq 335,000 25,500,000 25,835,000

10 GBD, Draft Law No (1) General Budget for the Year 2019

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Jerash 185,000 20,000,000 20,185,000 Ajoun 195,000 21,000,000 21,195,000 The Capital 480,000 46,000,000 46,480,000 Balqa’ 225,000 22,500,000 22.725,000 Zarqa 290,000 27,500,000 27,790,000 Ma’daba 170,000 20,000,000 20,170,000 Karak 240,000 22,000,000 22,240,000 Ma’an 170,000 26,000,000 26,170,000 Tafileh 165,000 20,500,000 20,665,000 Aqaba 165,000 19,000,000 19,165,000 Total 3,000,000 300,000,000 303,000,000

ISSUES RAISED REGARDING GOVERNORATE’S BUDGET PLANNING.

The involvement as well as the understanding of the GCs in the budget planning process for the FY 2018 was barely an experience. GCs were elected in August15, 2017 and held their first meeting on Sept 10. The deadline to submit the annual budgets for the governorates was on Sep 15th which left no room for GC members to intervene. Projects were already identified, budget distributed and the council members didn’t get any chance to digest or debate.

Most of the GC members mentioned that they were new to the experience, their expected role was not as clear at it is in the planning for 2019 draft budget. And still have no relation with various stakeholders at the local and national level yet.

The budget planning for FY 2019 differs. By mid 2018, the GC members have had some experience, received several related trainings on budget planning, identification of priorities and needs, orientation on the law of decentralization and their mandate, and observed how governorate budget for 2018 is been implemented. Supported with the Guide on identification local needs and priority projects, sub- national governments were able to identify needed projects for 2019 and prioritize them considering the estimated low level of implementation of 2018 plan by end of the third quarter of the current year.

Several lessons were learnt useful for FY 2019 planning such as the importance of ensuring that lands are allocated for the conduction of projects prior to consider projects that require land allocation such as schools, health centers and similar.

Nevertheless, the variances in budgeting for same items across governorates and in the same governorate was considered an issue to point by the center. Several

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examples were given in that aspect one of which is the budgeting of addition of classrooms to public schools with the same space and capacity size, yet, cost was planned differently with wide variance (double or triple) for the same governorate. The need to include some sort of review/audit at early planning arise as a result.

In general budget planning for FY 2019 characterized by common feeling of frustration due to weak implementation of 2018 budget which was a natural result of government defects faced during the year.

The national government issued an order to cut governorate budgets for 2018 by 35% which was withdrawn later.

Development priorities in each governorate were identified by consultation sessions with citizens conducted by local councils. GC members added their views as well in the identification of needed projects based on their visits to districts and sub-districts in the governorate. Debates in the meetings of the GCs took place to identify and approve projects and by this time, GC members became aware of the accountability burden to citizens who elected them on one side, and the struggle with the national government to get more allocation to meet those needs.

Several factors were present in the scene of planning the budget of FY 2019. Some of these factors are related to budget execution and they are mentioned here due to their impact in budget planning for FY 2019

• Needs at local levels cost more than what the budget allows • Pressing needs “Priorities” are also so many, when looking at sub-district and district levels, most of which are related to basic needs such as drinking water, schools and roads • Low level of actual execution of 2018 budget, left GC members in a paradox; whether to focus the planning of 2019 budget on previously planned projects in 2018 but not implemented, or to add new projects (Please see level of budget execution estimated by ECs in the following section).

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6.3 Budget Execution The Role of GC in budget execution is limited to follow up and provide suggestions. Capital investment part of a governorate budget, is the responsibility of the executing bodies in a governorate represented by directorates of ministries supervised by the Governor in his capacity as the governorate’s highest executive post.

On another aspect, GCs receive operational budget to sustain their work. The operational GC budget does not cover most of the needs of the GCs to operate such as attending meetings and follow up, …etc. the limitation of budget was expressed by all GC members and confirmed by EC members interviewed as well. On the other side, the problem of using the operational budget allocated for the GCs to cover ineligible costs such as renting cars and purchase of furniture was pointed by the center as a problematic issue. In review of Governorates’ budget execution for FY 2018. Executive Councils were asked to provide an estimate for their progress against planned budget. GCs and ECs members’ estimations varied between 13% to 60% with no clear bases for that estimation or records. When the wide variances in estimation was discussed with subnational government representatives, it shows differences in handling the budget between governorates as some were able to re-allocate unspent amounts to easier and quicker performed projects while others didn’t do the same.

Several governorates indicated that the key 2 hinders facing the governorate in their budget execution were; inability to allocate land and the wide gap between the estimate of project cost in the plan and the cost estimated at the time of execution. Both hinders will be addressed in details with examples in the following section addressing challenges faced by Governorates.

6.4 Monitoring the Execution of Budgets According to the decentralization law 49/2015 the role of monitoring budget executions at governorate level, was humbly and unclearly articulated.

Monitoring and Accountability related duties of the GC according to law 49 are listed in Article 8 Section A:-

• Point 3: View expenditure and implementation of budget (in Arabic it states: ( االطالع على كيفية تنفيذ الموازنات السنوية لجميع بلديات المحافظة • Point 7: Discuss progress reports of implemented projects and plans by governmental directorates located in the governorate in a way not to contradict with specialized governmental audit and assessment agencies, and

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to follow up and evaluate the implementation of developmental projects. In Arabic, the مناقشة تقارير عمليات تنفيذ المشاريع والخطط ) legal language of the law this point reads والبرامج التي تتولى الدوائر الحكومية في المحافظة تنفيذها بما ال يتعارض مع مل أجهزة الرقابة الحكومية ( المختصة ومتابعة سير العمل بالمشاريع التنموية وتقييمها • Point 8: Set recommendations and suggestions to related bodies which ensure the enhancement of the performance of governmental entities and public institutions operating in the governorate so as to ensure best services وضع التوصيات والمقترحات للجهات المختصة بما ) are offered. In Arabic this point reads (يكفل تحسين أداء الدوائر الحكومية والمؤسسات العامة العاملة ضمن المحافظة لضمان تقديم أفضل الخدمات

To this end, the law does and doesn’t at the same time give the power to GCs in relation to Monitoring progress and hold underperformed public entities accountable, keeping in mind the complex interrelations between governmental audit and assessment bodies as well as the Governor office authority. When CG members were asked about their role in supervising the execution of budget, answers were around the same answer that their monitoring and questioning is not clear and the law didn’t give them clearly that role. Further elaboration on this aspect is presented in the following Section; Section 6: Challenges Faced by Governorate Councils.

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7 CHALLENGES FACED BY GOVERNORATE COUNCILS

7.1 Power, Accountability & Authority of GCs “We worked hard to place the Elected Governorate Council members were elected needs and priorities of citizens we by the citizens of their governorates following a represent on the public agenda. promotional media campaign promoting Yet, we stand helpless with no authority in hand to enforce decentralization and its law as the promising approvals required to release democracy tool to achieve fair distribution of allocated and approved budget revenues and place decisions related to development items… at the end, we are to be of local areas at the hands of local citizens blamed by those who elected us. represented by the GCs, in a beautiful form of Later, if our efforts yield, a democracy. parliamentarian would jump in With no power at the GCs to monitor and hold and claim the credit. We feel we’ve been tricked by the malfunctioning local authorities accountable, they government’s advertisement of have little to do to enforce plans execution and assess the Decentralization experience. end results attainment. There is a huge resistance by Ministries, directorates of central government and Parliamentarians Authority to Question & Enforce Change from same geographical area representing same citizens we GC members have no solid authority to question represent.” public executives when projects are not implemented correctly or delays happen. Several cases were shared A common remark expressed in when GC members asked to meet Ministers to push a all 12 governorates, sometimes delayed procedure and they were unable to. more aggressively and sometimes with negative emblems and The key issue is that GCs were not given the power by different wording but yet, same the law to question and hold any public official message. accountable in case of weak implementation, corruption or any other violation. “We are an elected body with accountabilities to our areas and governorate, yet, we hold no real authority”

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7.2 Legislative & Regulatory Issues

“A Minister will respond to an Ambiguity of the decentralization law in addition to inquiry from a parliamentarian, inconsistencies of the law 49/2015 with other existing laws, such as Municipalities law, bylaws of the this is for sure, at end, a government and other laws, were both identified as parliamentarian has the power of key challenges by GC members. The power of authority his vote to entrust the to GC members versus Parliament members elected in government at its formulation… the same governorate was another regulatory aspect we have no power or authority that needs to be carefully inspected and enhanced so that would encourage any central as not to abort the Decentralization young experience government official to hear us!” in Jordan. The main role of the parliament is legislative and monitoring of implementation of legislations. Yet, A repeated message from several in the bylaws of the Parliament there is some local GC members service role assigned; Point (h) of article 19 in the Parliament bylaws states one of the duties of the Parliament member is to receive complaints and demands from citizens and to take needed measures regarding these complaints and demands. Stating this point without clearly clarifying which demands and what types of complaints are to be addressed by a parliament member, lead to overlaps between service and executive roles and legislative roles. On another aspect, observing actual practices of parliamentarians, the tendency to lean for services offered to their voting pool is common. It is a commonly observed practice that citizens of local area request projects and services from the parliament member they voted for. On the other hand, parliamentarians have power over executive bodies such as ministries and public departments as they have the right to question them at any time and they are the ones “the parliamentarians” who give trust in the government and legalize its formulation. While on the other aspect, GC members has no authority whatsoever and can’t question executive bodies. GC members fully understand and appreciate the concern of the national government in implementing full-fledged decentralization and its decision to go for gradual decentralization. One of the reflections of the gradual steps towards decentralization is the 15% proportion of GC members nominated by national government. Yet, several GC members expressed challenges in dealing with some of nominated members due to weak background and capacity in local development issues.

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7.3 Budget Planning Challenges All interviewed and consulted governorate council members, mentioned that the budget planning process in the first round for FY 2018 missed their role and contribution, as they were newly elected and still have not received training and support and still has no relations with various stakeholders they need to interact with at the local and central levels. On the other hand, they all cherished the rich experience they passed through in planning for FY2019 in collaboration with local councils and municipal councils. GC members mentioned that they received several training on budget planning and they believe that they still need more extended trainings as well in this area.

Projects identified in both plans FY 2018 and FY 2019 were based on governorate needs and priority guides. Yet, some challenges were faced during budget planning:

Sectoral budget distribution over local areas in governorates:

Another issue that was raised by several governorates is the distribution of budget over sectors and later over districts and sub-districts, weakened the budget. Such distribution of budget, scatter the budget over districts to an extent that affect applicability. One example is from Mafraq Governorate where the allocation for one of the rural schools of 6 classrooms was budgeted JOD 150,000 which was not a realistic budget. The underestimation is due to distribution of education sector budget on various districts which ended up scattering the governorate budget of 2018 to many similar projects of unrealistic values of projects. Another example on planning a scattered budget was from Irbid, where the allocation for agriculture sector was divided on sub-districts level equally which left each sub-district with a planned budget for agriculture equals JOD 50,000 in some sub-districts and JOD 34,000 in other sub-districts. According to Director of agriculture in Irbid, such budget is not proper for any of the identified agricultural projects needed in any of the sub-districts.

This challenge was stressed by both; Mafraq and Karak governorates who mentioned that the wide space and scattered inhibited local communities all over the governorate space added to the challenge during budget planning due to increased difficulty to spot needs of distanced scattered communities and budget for.

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Governorate budget ceiling formula:

This challenge was raised by Karak governorate regarding budget planning based on the set of 5 criteria. The formula was criticized by Karak subnational government representatives, and considered unfair to their governorate because it doesn’t consider topography hardship as one of the criteria considered in the formula to identify the ceiling for each governorate. The rationale is basically that cost of several projects such as construction of schools, housing, and agriculture projects cost more in hard topography locations “rocky land” than it is in regular or semi-hard topography.

Weakness of development data at local level:

Weakness of governorate and local level development date, was raised as a challenge for planning by some EC and GC members highlighting that general data such as population, poverty and other data gathered in the census is not sufficient to raise the benefits of the development in the governorate. Information regarding available local skills, local SMEs, and similar are missing and are essential to plan for economic development at the local level.

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7.4 Budget Execution Challenges

Lands acquisition:

The lack of planning properly of projects that require land acquisition caused challenges in execution. One of the examples on this aspect is from Irbid governorate, where 7 million JOD were planned for projects in education and health sectors which require land acquisition and cost of lands were not considered and thus the governorate was unable to spend this amount.

Unpermitted variance in project cost projection, and cost estimation at time of tendering, and the limited ceiling allowed for local tendering:

At the phase of planning, estimation of projects’ costs is made by Directorates of line Ministries located in the governorate, each estimate projects within its mandate. That estimation get listed in the planned budget of governorates. Once the governorate budget is approved and the time for implementation is due, projects “mostly construction ones” of higher tendering value than JOD 200,00011 are immediately diverted to the “During a meeting in Nov 2018, responsibility of the Ministry of Public Work and between the GCs and the Prime Housing (MPWH), to follow central tendering Minister Omar Al Razzaz, GCs process. requested the increase of local tendering ceiling “JOD 200K”. MPWH deliver the initial project idea to one of the accredited offices registered in its network of Several discussions in this aspect approved vendors to do the detailed study for the followed leading to the issuance of a decision from the Prime project cost and bills of quantities required in Minister to increase the ceiling of preparation for implementation tendering local tendering to 2 million. announcement.

Certified and accredited engineering studies offices conduct the detailed project cost calculation which is usually higher than the initial projection. A gap ceiling of 35% variance between the initial cost estimation and the cost study for tendering purposes is acceptable according to regulations. In most of the cases, the gap exceeds the ceiling of 35% acceptable variance. In such case, the project can’t be implemented unless an

11 JOD 200,000 is the set approved ceiling for local tendering committees as per regulations

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exception was granted from the Prime Minister. This challenge was raised by all 12 governorates. Various assumptions regarding the root reasons of the wide variances were around higher cost of engineering offices located in Amman than their peers in other governorates which add to the cost of the study. Other assumptions were around bad budget management by MPWH, yet, none of the assumptions or explanations raised in the focus groups is credible without an in-depth study of this issue.

This issue needs a standalone in-depth study to investigate Government tendering regulations, initial projection and at time of implementation estimation processes, regulations related to engineering offices responsible for the conduction of the cost estimation studies located in Amman, and the exploration of availability of cost estimation offices outside Amman that can be accredited, in order to get deep insights on the matter and suggest solutions.

Zero budgets at end of fiscal year:

The requirement to return all unspent budget to the central government at the end of the fiscal year on one hand, and, the governmental instructions giving mid November as the deadline to issue tender requests on the other hand, are considered a challenge by local government.

Random and fast circulation of local directors:

In some governorates, Directors of basic public “We started to think that the service ministerial directorates were transferred change of Directors is intentional more than once in one year. This is causing a break by the central government to in communication and coordination between GC hold us back and delay release of required funding for planned members and Ministerial Departments; where projects!” follow up on certain cases need to re-launched again with the new appointed director. The Mentioned by Several GC instability and constant changes of Directors in Members key ministerial directorates such as health and education are causing inefficiency and waste of efforts at the local level. At Karak, sub-national government members including GC

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members mentioned that the governor of Karak was changed three times in 2018 and noted it is so difficult to communicate in such situation.

Procedural procrastination by national Government and its directorates:

Several examples were given to delays in getting approvals required to implement projects. A serious evaluation to delayed projects and the reasons of delay with a process mapping for required approvals are needed to enhance the decentralization experience in the near future.

One of the examples mentioned on procrastination was from Ajloun governorate, where an approved project in 2018 plan to establish a females’ youth center, the project is listed, the land were the project will be established is available and allocated, but the municipality keeps delaying the approval document from its end the construction can start.

7.5 Administrative Issues

Many entities for GCs to refer to, instead of one focal point:

Several metaphors were used by GC members to express the lack of one clearly identified focal point to address their challenges and facilitate their journey in implementing decentralized local development; Ministry of Finance, Ministry of Interior, Jordan Investment Commission. Other GC members were also pointing the difficulty to coordinate and communicate with various entities mentioning Ministries of Planning, Interior and Municipalities.

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Operational resources: “We use our personal cell phones GCs operate with limited resources at hand including and cars to operate and in many budget. Having no specific independent venue for cases when we have to conduct a them to operate, GCs tend to seek venue at entities meeting, we purchase the they feel most harmony with, this differs from one refreshments from our own governorate to another. Municipalities were found to pockets. Later we submit the be a generous host to random meetings of GC in some invoices to be reimbursed which such as Karak, while others leaned on the is not supportive to our operation Governorate Office such as Irbid. at all and not all of us have the financial capacity to do that” These dependencies, even in their simplest forms such as getting a venue to host a follow up meeting, Mentioned by Several GC use a car of another entity from the executive layer of Members local government utilizing kinship or personal good relations, would defiantly pollute the independency of GCs and give them the sense of owing others favors which is not a healthy situation and affects transparency and accountability in the long run.

The allocated budget for GCs to maintain their operations is perceived as not adequate in their view.

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7.6 Capacity Issues The decentralization practical experience is still young in Jordan. Huge appreciation expressed by new GCs to all given training and support thus far. Yet, challenges were around the insufficiency of training provided as some workshops were conducted in rush and didn’t allow deep skills building, other challenges were around the wide variances in capacities exist within sub-national government bodies and GC members. Final challenge was regarding additional capacity building issues needed such as local and central tendering procedures, strategic planning for governorates, and monitoring of development progress.

The issue of weak awareness at other parties interact with GCs was also raised as a challenge and noted through various expressions such as; “we understand our role but others such as Parliament members, municipalities and some line ministries’ directorates do not, which makes our work harder”

Sufficiency of capacity building provided:

Almost all consulted mentioned that there is still a “We attended workshops need to have more trainings to increase their explaining the decentralization capacities and to repeat some of the trainings and law, we now understand our orientations especially the orientation about the responsibilities and decentralization law which was conducted at early accountabilities, but that is not stage after their elections when they had no enough if the entities which their experience to build on and ask details. Training on collaboration is essential to our budgeting provided by GBD also was considered success do not have the same vital to repeat and ensure its outreach to all GC understanding!” members and other local government bodies as well. Mentioned several times in different wordings The law decentralization should be disseminated to other than GC members, mainly those interrelate to GC functions and collaborate with.

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Quality of training:

Training and orientation sessions were rushed and “We are young in decentralization concentrated at the beginning of the experience experience; we need to receive when GC members were new to the role which advice and training from those didn’t allow proper digestion of the law. who have experience in decentralization application in Also many mentioned that the quality of training other countries. We also would varies; some were of poor quality in terms of ability benefit from understanding how it to clarify the content or to send clear messages. The is done elsewhere!” training delivered to GC members need to be assessed to ensure good quality. Several GC members.

8 AN EYE ON GENDER PERSPECTIVE

8.1 Representation of Women in the Subnational Bodies “When it is optional, men The current 10% allocated for women of total dominate the meetings & events which require travel outside our elected seats and the1/3 of appointed, is a good but local area; they say “speaking on extremely humble start and need to be expanded to behalf of their kind”: We don’t ensure at least 1/3 of all GC members are women. want you to bare the hardship of The quota percentage need to be increased so as to travel; it is hectic for you!” ensure female voices are heard at local and “One of the northern region local governorate levels, which will be reflected in the council members” richness of diversity in selection of annual projects as well as in distribution of annual budgets. Nonetheless, gap in confidence, knowledge and skills were noticed in the consultation meetings with the council members, an issue that should be considered in the case of increasing the percentage through capacity building and special training programs to lift women’s self esteem to speak up and debate when in male dominant setting and action.

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8.2 Gender All female members who Sensitive Budgeting participated in the focus groups Gender sensitive budgeting was one of the training got the chance to attend specific courses conducted for female members of local training on gender equality and governorate councils discarding the budgeting while their male peers importance of educating male members on the didn’t have the same chance! issue. Gender sensitive budgeting is an approach to be followed when planning budgets, the approach Gender sensitive budgeting is an has no sex and it should be equality provided to approach to be followed when council members regardless to their gender planning budgets, the approach orientation. has no sex and it should be equality provided to council members regardless to their gender orientation. 8.3 Gender Equality Consideration in Public Consultation

When asked how they take gender equality into consideration during the identification of local needs, council members were noting that they conduct consultation meetings with females held by their female peers in each location. Yet, there are no measurements to; neither the coverage, nor the quality of females conducted consultation meetings. The same is true in regards to young groups.

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9 CONCLUSION & SUMMARY OF KEY ISSUES

Have the experience attained its aims? A general vibe of pessimism and Going back to the main question of this Policy frustration regarding the Paper: “To what extent the implementation of decentralization experience was gradual fiscal decentralization policy in Jordan dominant in the three regions. enabled the governorate councils to better When asked if they would run distribute budget allocation in accordance to again for GC election, majority local needs and enhance public services at local said NO! level?”, The answer to the first part of the question “budget that meets local needs and priorities”, the existence of GCs and the exercise they implemented in planning for FY 2019 supported by the “development needs and priorities identification guide” enabled addressing local needs, which in its turn suppose to enhance public services. Yet, it is an incomplete one year experience in terms of planning and one year full of turbulences for the execution of 2018 budget.

While regarding to weather decentralization actually enhanced public services at local level, a set of efficiency, effectiveness, sustainability and impact indicators need to be formulated, discussed and agreed upon centrally and locally, so as to measure enhancements level/degree made possible through decentralization compared to the earlier centralized public budget distribution approach, which was also serving governorates and allocating budgets for governorate level projects.

The experience of two fiscal years is not adequate to judge the whole approach; especially with the force majeure conditions faced the government finances and economy of the country. Nonetheless, a lot of learning is gained thus far which will be useful to build on. To elaborate; the implementation of governorates’ plans of 2018 was challenged with many beyond control factors, mainly; the defect in the overall public budget, slow down of the market, the rise of public rejections to tax law and other measures that would enable the government to fill in the national wallet in order to cover costs of governorates development through the execution of their 2018 plans.

It was noted by several GC and EC members that the availability of cash to finance implementation, was an issue for 2018; this, made the experience a challenging one to assess comprehensively. Yet, some quick measures and few courageous changes

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by the central government can be made to lift the spirit, and regain trust of local governments. Such measures and changes at the legislative level and enforcement of decentralized level, expect to pay off positively by end of 2019.

Blurriness of vision & the over cautious roadmap to decentralization:

The long term vision of the central government regarding decentralization in Jordan “what the country aims to attain at the end? Which level of decentralization we seek to reach?” is vague and not clear. The caution in this aspect is well understood, as it is unwise to raise the expectations and not being able to attain them and it is also risky to share an optimistic vision when capacities required are weak and when the socio- cultural setup is highly based on region and family name. Nevertheless, conditional aimed status with clear measures for boundaries, and alternative scenarios can be developed based on risks assessment and shared with the public.

The road to decentralization adopted by central government was too cautious in terms of power/authority given to local government, to a limit that it created a crimpled body instead of an active one through the GCs. The whole structure and distribution of responsibilities and authorities towards healthy decentralization need to be reviewed in light of best practices. The advantage of a fresh eye is vital to ensure neutral suggestions at this stage. The structure, regulations and procedure of; 1) Municipalities, 2) Local Councils, 3)Municipal Councils, 4) Local Ministerial Departments, 5) Ministry of Interior and its representation in Governorates, 6) Governorate Councils, all need to be mapped in a bottom-up approach from the perspective of local government: 1) responsibilities, 2) authorities and 3)coordination

Coordination and communication between the center and governorates:

Despite the fact that the government formulated a ministerial committee to support decentralization with 7 sub-committees, none of the GC members mentioned this committee or its sub-committees when they raised the challenge of multi-channels for coordination. Ministries of; finance, planning, municipalities, and interior, on the other hand were considered the entities which GCs constantly coordinate and communicate with.

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The coordination and communication between governorates and central government has been arranged in other countries by creating a new body to handle the needs and requirements of the elected GCs such as in the case of Morocco which has Local Governance Ministry. This solution might not be the best option for Jordan considering the financial burden caused by adding a new public body to the already existing ones.

The importance of studying regional and international best practices where coordination in a decentralized government worked very well is so much needed so as to identify a benchmark that can be used to solve raised challenges by GCs. Best practices and benchmarking studies are advised to focus on countries that succeeded in achieving impact of decentralization at local level through more efficient services and better distribution of revenues..

Parliamentarians’ role at local levels:

Considering the fact that both; parliament members and GC members are elected based on administrative boarders of governorates, both have the same pool of voters and thus both are accountable to the same pool.

The constitution defines the role of the parliament as a regulatory and monitoring authority with the vast majority of its mandate focuses on enhancing regulations and monitor the implementation of the issued ones “rule of law” at national level. Ideally, the minute a candidate for parliament is elected, s/he does no longer serve narrow local interests as much as the macro national level interests of the country. Yet, this is the ideal situation that does not exist purely, even in the most developed countries.

Being in a tribal based country of a monarchy system, where its leadership represented by King Abdullah II is hinting to constitutional monarchy system where parliament elections is based on political views and local governments represent interests of the local areas12, the challenge is tremendous in the trip towards that new aimed system. The steps were made towards decentralization and GCs were elected but the parliament is still based on tribal/ethnicity and geographical representation with strong service role to the favor of their voters who are geographically based by governorates as well.

12 His Majesty’s Public Speech June 12, 2011

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Imagining a scale of two arms where one arm represents the responsibilities and the second arm represents the authorities given, and imagine the center of the balance scale being the box of process and resources available; parliament members have a clear cut set of responsibilities as well as power balanced by a center of steel rich in resources and systematic clear cut procedures.

On the other hand, the GCs balance scale is leaning heavily towards responsibilities with feather-light unspecified power, held by an inflated tin center with many lines of reporting and coordination and scarce resources to operate, and the whole scale is held by the powerful arm of the Governor “Ministry of Interior”.

Despite how awkward the metaphor and comparison may sound; stepping on the foot of GCs claimed by all 12 GCs makes it an important aspect to investigate and fix.

Clear segregation in responsibilities at the local level between GC and Parliament members, need to be made and quickly. Such segregation should highlight vitality of collaborative relation and will definitely entail some power and authority to be given to GCs in the aspect of monitoring progress.

Independency issue of the GCs is vital to be addressed and resolved:

Decentralized subnational bodies need to have some sort of independence and some sort of power to be able to enforce efficient local development. How such independence is possible when some GCs are hosted and sometimes slightly funded by municipalities and governors.

GC members should not be placed in a position to feel pitied by, or to have to ask for favors from neither the governorate office, nor the municipality. In decentralization, elected local bodies represent the watchdog on the executive level which is not the case in Jordan within the current setup. What is important to pay special attention to, is that the experience engraves its marks in the memory of those who pass through it, and reflects in their behavior long after changes are made; a clear example of that is the reluctance of citizens to involve in political parties nowadays due to unpleasant past experiences in this aspect engraved in the memories and reflect their effect on behavior. If the experience of decentralization in Jordan got labeled as a superficial uncommitted and unbeneficial one, it will become harder to encourage citizens to run for coming elections

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At the front of capacities and gender balance:

Further training, orientations and investment in building the capacities of both males and females of the current GC members as well as potential new ones especially the females. Topics of capacity building need to be widened to cover tendering, gender sensitive budgeting for sexes, public consultation, prioritization, public speaking, and other issues spotted in other studies and or meetings with GC members. A special capacity building program tailored for female GC members and community leaders in governorates is advised with a wide spectrum of topics starting from interpersonal skills to technical topics such as public budgeting and local tendering procedure. A strong and generous capacity building program will facilitate smooth transfer of power from the center to the local level in the long run.

Criteria and indicators at local level:

Criteria and indicators need to be identified to measure the success of decentralization experience over years and to measure the impact of decentralization on enhancing public service. An organized consultative effort with GCs and LCs members is advised to set general performance indicators for all governorates and specific indicators per governorate; for example general public service indicators such as Patient : bed ratio, students per class, X m2 : student and similar can be identified as common indicators for comparison purposes between governorates. A set of specific criteria per governorate is also needed depending on the pressing development issues and needs in each governorate. For example, if in Ajloun, clean water in public facilities such as schools and health centers is a pressing issue, while in Karak safe roads to schools is a pressing priority, then such public services of high priority will have their own specific to governorate indicators to measure progress against.

Information and data at local level:

Availability of local level development databases and information, are vital to ensure accurate planning. Despite the fact that this issue was barely mentioned by GC members and other local government members, based on the hands on experience of the consultant (author of this paper) in other countries which implement decentralization, an extremely vital resource. The establishment of local level

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development data centers in the long run is crucial and extremely supportive to both central as well as local governments

Decentralization of local income:

The decentralization of revenues is essential for the maturity of the experience in the long run. Yet, with limited local resources at most governorates, this aspect of fiscal decentralization is a challenge in terms of enabling fair and risk-controlled options. This approach can be implemented on one of income aspects such as tax generated within the boundaries of the governorate for example “careful formula need to be considered to ensure fairness especially in governorates of high investments with subsidized taxes”.

The proportion of this source of local income can be increased gradually until full autonomy in its utilization depending on the results of the experience and the assessment results of how this amount was utilized. Similar practice can be followed in other income aspects to support autonomous decentralized efficient government gradually.

Decentralization structure and the multi-layers of local representation bodies:

If one would explain the structure of current decentralization in Jordan, various local bodies and their roles and how they are linked together reaching the channel with the center, it would consume hours. The resulted decentralized local bodies in Jordan so far are confusing, not only to the same various local bodies exist, but also to externals who may try to understand how the decentralized representation and coordination works.

So far, decentralized elected local bodies include: Municipal Councils, Local Councils, Governorates’ Councils. Nominated local bodies include; part of the Governorate Councils and Executive Councils. These are too many interrelated layers with no clear easy to digest and process smooth picture. From an external view it looks like several incomplete experiments were none was excluded and replaced by the other, and all are kept incomplete and complicated to understand. At minimum, one of the three layers at local level needs to be combined with another one; for example, municipal and local councils.

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It is globally agreed that there is no one perfect solution for decentralization, what works for a specific country may not work for another. And what works for a specific country in a certain stage may not work for the same country in a different stage. Yet, the need to have a clear decision on a modified, simple and efficiently functioning structure for Jordan, is clearly obvious as a pressing need. Simplicity is genius; in most cases a meal of tens of ingredients is a bad one, a meal of few is tasteful, easily grasped and always end up taste differently based on the cook’s spirit.

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10 RECOMMENDED POLICIES & ACTIONS

10.1 On the National Vision for Decentralization It is suggested to draw a road map with clear end vision and clear stages/phases for decentralization in Jordan. Stages are advised to be conditional with a period of 5-10 years each, to allow maturity of each stage.

The starting phase would mostly be administrative decentralization with partial fiscal decentralization through decentralizing budget planning. Authority level and responsibilities of elected local bodies are naturally to increase as phases goes by.

Each phase need to have clear results and indicators measuring impact on local development. Each stage also requires extensive risk assessment with alternative scenarios. And, each phase should be transparently communicated with the public and elected representatives of governorates to ensure understanding and avoid higher expectations.

10.2 On Supportive Structure & Legislative Environment to Decentralization The existence of supporting legislations to decentralization is an essential component and a requirement for success. This aspect need to be addressed in two parts:

PART ONE: STRUCTURE

This part to include:-

• A well designed and structured benchmarking exercise should be prepared identifying which aspects to examine in other regional and global models. • Conduct the benchmarking based on the designed structure • Provide suitable-to-Jordan options in a form of end structure aimed and proposed stages to arrive to that structure ensuring slow changes to the existing one • Alternatives to the proposed end structure with analysis of benefits and risks for each • Best practices in approaches followed to measure impact of decentralization

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PART TWO: LEGISLATIVE FRAMEWORK AND ENVIRONMENT

This part to include:

• Review of the existing decentralization law, and recommend enhancements in 2 options: • Option one: amendments to existing law, and • Option two: issuance of interpretation to the existing law and supportive instructions • Identification and review of conflicting legislations and propose required amendments and/or clarifying instructions

It is advised that above tasks are to be conducted by an independent body/consultant in consultation with international experts who proved beneficial contribution to decentralization experiences in other countries. Report of the independent body to be presented to the legislative committee, one of the seven thematic committees created to support decentralization experience in Jordan, which will take approved recommendations to the implementation stage.

10.3 On Tracking Progress & Measuring Success & Impact of Decentralization A set of: success, effectiveness and efficiency indicators, need to be phrased, defined and equations used to measure each of the selected indicators need to be clear and widely shared and presented and explained to local Government as well as public.

Indicators need to be shared with local governments so they know how their performance and the experience are going to be assessed. Some of the indicators might not have a baseline value at the start date; in such cases the first value measured will be used as the baseline value.

Examples of indicators which can be used

To measure effectiveness

• % of implemented projects in a fiscal year that are classified as top priority by citizens during the consultation meetings (Number) • % of annual budget spent on top priority projects as identified by citizens

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• % of executed budget at end of year

To measure efficiency

• % of projects accomplished on time as per planned • % of projects accomplished without deviation or variance from allocated cost • % of re-allocated budget out of total allocated • Deviation from planned budget by end of fiscal year (+ or - ) in (%)

To measure impact

• % of Population of the governorate who are poor • % of population who are under poverty line • % of families who own their apartments/homes • Average income of citizens of the governorate • Time required for students to reach nearest school • % of paved roads • # of road accidents in the governorate • # of crimes and security violation incidents in the governorates • Mortality rate • Unemployment rates • Size of investments located in the governorate (measured by total working capital of investments) • Gender equality indicators (cross cutting all sectors) • Pollution rates • % of served spaces with drinking water and sewage system out of total size of inhibited area • Public transportations (# of buses for each 100 citizen) • % of green spaces • Size of public free service spaces i.e. public gardens, libraries, museums ..etc measured as a ratio sq meter for each thousand citizen

Quality of public service indicators

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• Responsiveness rate to citizens complaints (segregated by service) • Citizens’ satisfaction rate on public services • # of innovations benefiting communities of the governorate driven by public service offices • Frequency of malfunctions in offered basic services; water, sewage, electricity • # of mistakes made by public servants (segregated by service type) • School dropout rate (by gender, age and area) • Average ranking of public educational institutions in the governorate • Ranking of health institutions in the governorate • % of public entities located in the governorate who passed quality audit or assessment (ISO, Excellence, …etc)

The above are some of the key impact indicators, other indicators may be added to cover all key public services influenced by better need-oriented planning and budget execution at the local level. Some of key development indicators are linked to central legislations such as % of health insured citizens and similar.

The ability to measure these indicators and set a baseline will enable tracking the benefits of decentralization in the long run. The usefulness of these indicators will be maximized if a comparison conducted between values of these indicators before and after decentralization.

A proposed tool that is extremely supportive to track and measure impact in a timely manner with minimal human influence is the Development Management Information System (DMIS). The DMIS automates monitoring by building the system at the governorate level, where data of all projects in the decentralized budget, are entered in the system along with their budget allocation and planned timeline for execution. The system should be linked with a detailed process mapping bound to timeframes, where involved and responsible entities “i.e. departments of line ministries, governor office, …etc” are all included with their involvement clear and time bounded. The system can serve better if designed as a portal where all public departments can insert related data and update their progress.

The portal can be linked with the inter-ministerial committee who will have full authority to access all data and dashboards when needed. GCs can also have the authority to

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monitor progress in executing the budget and also be alarmed of delays when they happen, spotting the step and responsible entity where the delay took place and thus conduct oriented follow up meetings with entities causing delays or variations in budget.

The system can be translated into a mobile application with various levels of access authority. Having such system in place will minimize many unnecessary meetings and will enable timely tracking of projects. The proposed system can be an extension of the GFMIS system and linked to it to show technical aspect of projects in addition to the financial ones.

Final note regarding the proposed system is that it should be smart “simple and functional” complicated multi-levels systems prove inefficient in terms of consistency of data-entry and quality of data entered. An example on complicated multi-levels system is the Iraq Development Management System (IDMS) and the Kurdistan Development Management System (KDMS) where both still suffer from fluctuation of data entry and weakness in linking to governorate level, ending up with a system that is rich with donors’ funded projects and weak in local level projects. Other examples need to be studied before designing the proposed system in case this proposed action was adopted, to ensure the system is simple, user friendly, functional with minimal jamming and SMART.

10.4 GC’s Current Level of Authority It is advised that a basic sort of questioning authority should be given clearly to GCs. Part A of Article 8 in the decentralization law need to be interpreted into clear instructions and guidelines addressing the question of “How these responsibilities should be carried?”. The instructions should provide as well the range of eligible tools to use and the acceptable process to follow to activate these responsibilities.

Article 8 Section A: Points that require elaborative instructions with a mapped process and set of eligible tools:-

• Point 3: View expenditure and implementation of budget (in Arabic it states: ( االطالع على كيفية تنفيذ الموازنات السنوية لجميع بلديات المحافظة • Point 7: Discuss progress reports of implemented projects and plans by governmental directorates located in the governorate in a way not to contradict with specialized governmental audit and assessment agencies, and to follow up and evaluate the implementation of developmental projects. In مناقشة تقارير عمليات تنفيذ ) Arabic, the legal language of the law this point reads

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المشاريع والخطط والبرامج التي تتولى الدوائر الحكومية في المحافظة تنفيذها بما ال يتعارض مع مل أجهزة الرقابة الحكومية ( المختصة ومتابعة سير العمل بالمشاريع التنموية وتقييمها • Point 8: Set recommendations and suggestions to related bodies which ensure the enhancement of the performance of governmental entities and public institutions operating in the governorate so as to ensure best services وضع التوصيات والمقترحات للجهات المختصة بما ) are offered. In Arabic this point reads (يكفل تحسين أداء الدوائر الحكومية والمؤسسات العامة العاملة ضمن المحافظة لضمان تقديم أفضل الخدمات

A note to raise is that the DMIS tool mentioned in the above recommended policy, contributes to enhancing transparency and to facilitating the authority of GCs to follow up progress if they were granted access to the portal for the purpose of follow up and tracking.

10.5 Resources & Independency of GCs Setting the foundation for an automated development database and resources library will extremely support all levels of sub-national government to plan effectively and later to track results on the socio-economic development of the governorate.

The issue of the limitation of financial resources allocated to cover operational cost “budget to sustain the work of the GCs”, need to be carefully studied in terms of impact on general budget. consulting other experiences will be useful and this should be a standalone assignment in the coming period. The challenge facing the government in increasing the operational budget is very much related to the size of GCs “total number of GC members”.

Regarding non-financial materialistic resources such as Venue, cars ..etc.

It is advised to have a separate financial study for the requested aspects considering the current and potential growth in size of GC members as well as functions of GCs that require a venue considering space for EC members as well. Until the study is concluded, it is advised to go for low or no additional cost fair solutions that offer independence of GCs.

Venues for GCs meetings can be identified from available public buildings or an existing un-used venue, or an old discarded venue that requires minimal cost for renovation and maintenance to become operating. Another option is to build an

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extension to an existing public entity such as a new floor or an adjacent room. The important aspect in the venue is that it should reflect the financial and administrative independence of the GCs to avoid conflict of interest between GCs and hosting entities in follow up progress of budget and later in questioning public servants.

One of the existing vehicles with a driver owned by the government, can be allocated and registered for GC members and if that is not possible at current time, estimate cost of transportation and revisit operational cost allocation to ensure this cost is covered. A distinguished cell phone numbers was proposed by GC members during the focus groups. Yet, this can be furnished “simcard numbers not cell phones” once the coordination between the central government and Governorates is set so as to identify to which positions the special simcard numbers will be furnished.

Another important aspect of independency of GCs is the conflict between the law articles;

(Article 6) states that Governorate Council is a financial and administrative independent body.

While Article 9 states that the President and Members of the GC are to receive financial allocation “reward”, the amount of this “reward” to be suggested by the minister of Interior and approved by the Prime Minister

Rewards of GC president and members should not be proposed by any of the ministers of the service providing ministries to avoid any possible conflict of interests. It is advised that the rewards of GCs to be determined by the prime minister instead.

10.6 Coordination between GCs & Central Government The absence of “ONE” focal point for the central government to coordinate, communicate and respond to inquiries of GC members was stated by sub-national government representatives and as well by decentralization units of both MoPPA and MoF.

The existence of the inter-ministerial committee for decentralization does not replace the need to have a coordination mechanism; the existing committee is a high level committee holding the responsibility of guiding and supporting the experience at a macro and decision making level. Still, there is a need to have a clear setup for coordination and communication between the central government and governorates.

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This setup does not necessarily require the establishment of a new body “i.e. Ministry for local government or similar”. This option is not advised as it doesn’t contribute to the Royal Vision of a slimmer and more efficient public sector, and could be resolved in other creative ways.

One Option is the Council of Governorates or the Coordination Governorates Committee.

The proposed Council of Governorates/Governorates Coordination Committee, is to be formed from Governors “heads of EC councils”, and presidents of GCs, a total of 36 members (2*12=24). The council of governorates to meet on a quarterly bases and when there is a pressing need, with the inter-ministerial committee. The inter- ministerial committee can agree on measures and actions and direct the thematic committees of relevance to act upon them

Another Option is to divide coordination mechanism based on region, to have three governorates coordination committees; one per region with the same members as the above option but the total per committee will be 8 (2*4 = 8) instead of 24

10.7 Capacities & Awareness It is advised to review and evaluate the previously implemented capacity building and awareness programs, using an independent entity/consultant who was neither a provider, nor a recipient or supporter of the previously conducted awareness and training. The results of the independent evaluation should provide advice regarding next cycle of awareness raising and capacity building programs.

Continuing the capacity building efforts provided to sub-national government entities on one hand, and awareness raising sessions to parties involved as well as citizens on the other hand, is vital for the success of the experience, and is a long term process.

The new cycle of capacity building topics should focus on:

• Identified new needs listed in this report and those resulted from the evaluation • Cross cutting aspects integration, such as citizens at risk and gender equality

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Annex 1: List of desk review documents 1. Decentralization law No 49/2015 2. Municipalities Law No 41/2015 3. Amended Municipalities Law No 14/2017 4. Ministry of Finance, GBD: Governorates Budget Planning Guide for the year 2018 دليل إجراءات إعداد موازنات المحافظات لعام 2018، وزارة المالية، دائرة الموازنة العامة 5. Procedure Guide for the Development of Governorate Needs and Annual Plan in the scope of Decentralization, Ministry of Interior, 2017 وزارة الداخلية، دليل إجراءات تطويرأدلة االحتياجات والخطة التنموية السنوية للمحافظة ضمن اطار الالمركزية، 2017 6. Ministry of Finance, GBD: Governorates Budget Planning Guide for the year 2018 دليل إجراءات إعداد موازنات المحافظات لعام 2018، وزارة المالية، دائرة الموازنة العامة 7. Ministry of Finance, GBD: Governorates Budget Planning Guide for the year 2019 دليل إجراءات إعداد موازنات المحافظات لعام 2019، وزارة المالية، دائرة الموازنة العامة 8. Governorate Councils Bylaw النظام الداخلي لمجالس المحافظات 9. Instructions of Public Tendering تعليمات العطاءات الحكومية: تعليمات مناقصات األشغال الحكومية صدرت باالستناد الى المادة 16 من نظام األشغال الحكومية رقم )71( لسنة 1986 ونشرت فيالجريدة الرسمية عدد 3642 بتاريخ 1987/3/1 10. Financial System for Governorate Councils: System No 30 for the year 2017 نظام رقم )30( لسنة 2017، النظام المالي لمجالس المحافظات صادر بمقتضى المادة )46( من قانون لالمركزية رقم )49( لسنة 2015 11. Parliament Bylaw for the year 2013 النظم الداخلي لمجلس النواب لسنة 2013 12. Practical instructions for financial matters of Governorate Councils, instructions No (1) for the Year 2018, issued in accordance to article (14) of the financial system of Governorate Councils No (30) for the year 2017, published in official gadget No 5768 التعليمات التطبيقية للشؤون المالية لمجالس المحافظات رقم )1( لسنة 2018/ الصادرة بموجب أحكام المادة رقم )14( من النظام المالي لمجالس المحافظات رقم )30( لسنة 2017 13. Ministry of Finance, Fiscal Decentralization in Jordan, Strengthening the role of Governorates in improving public services, 2017 14. General Budget Law No (1) for the Year 2018 قانون الموازنة العامة. قانون رقم )1( لسنة 2018 15. Draft General Budget Law No (1) for the year 2019 مشروع قانون الموازنة العامة، قانون رقم )1( لعام 2019

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Annex 2: Global resources and references used

1. Ebel, Robert D. and Yilmaz, Serdar. World Bank Institute; “Concept of Fiscal Decentralization and Worldwide Overview”; 2002

2. Kaiser, Kai. World Bank Group; “Roles and Expenditures across Levels of Government”, Presentation, 2006.

3. Hobdari, Niko; Nguyen, Vina. Dell’Erba, Salvatore. Ruggiero, Edgardo. International Monetary Fund (IMF); “Lessons for Effective Fiscal Decentralization in Sub-Saharan Africa”; ISBN 9 781 48435 8 269; 2018.

4. Vinuela, Lorena. World Bank; “Decentralization Indicators”; (Paper: Database), 2013

5. Bird, Richard. Vaillancourt, Francois.; Cambridge University Press; “Fiscal Decentralization in Developing Countries”; ISBN: 0 521 64143 8;1999

6. Blochliger, Hansjorg. Bartolini, David. Stossberg, Sibylle; “Does Fiscal Decentralisation Foster Regional Convergence”; Series: OECD Economic Policy Papers; ISSN 2226583X; Sep 2016.

7. Shah, Anwar. “Local Governance in Developing Countries”; Public Sector Governance Accountability Series: The World Bank, Washington DC; Library of Congress; ISBN-10:0-8213-6565-7; 2006.

8. Web sites 8.1. http://www1.worldbank.org/publicsector/decentralization/fiscal.htm 8.2. http://gtd.gov.jo/ar/legislation 8.3. http://193.188.65.159/ltu/mainpage.aspx 8.4. http://www.jordantimes.com/news/local/ministerial-committee-reviews- decentralisation-plan-2018 8.5. http://www.worldbank.org/en/topic/communitydrivendevelopment/brief /Decentralization 8.6. http://www.ammonnews.net/article/89825

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