THE POLITICAL ECONOMY OF LOCAL DEMOCRACY: DECENTRALIZATION AND PERFORMANCE IN MOZAMBIQUE SINCE 1998 By Beatrice Anne Reaud Submitted to the Faculty of the School of International Service of American University in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy In International Relations Chair: Professor Deborah Bräutigam, American University Assistant Professor Rachel Robinson, American University Dr. Barak Hoffman, Georgetown University Dean James Goldgeier © COPYRIGHT by Beatrice Anne Reaud 2012 PENDING 2 To my dear son. May your heart always be filled with wonder about the world around you and knowledge of how deeply you are loved. 3 THE POLITICAL ECONOMY OF LOCAL DEMOCRACY: DECENTRALIZATION AND PERFORMANCE IN MOZAMBIQUE SINCE 1998 By Beatrice Anne Reaud ABSTRACT Governments in weak states routinely fail to deliver services they promised to provide their citizens. In theory, decentralization is supposed to promote accountability at the local level and hence, improve municipal performance by encouraging public participation, building government capacity, and increasing political competition. Decentralization should improve performance because it gives civil society, voters, and fee payers an opportunity to hold local officials accountable by incentivizing them with political and revenue pressures. However, even in cases where decentralization has occurred, local municipalities vary in the extent to which they are effective suppliers of services. The literature on decentralization and performance suggests that participation, resources and voting are three accountability mechanisms that affect municipal performance (Crook and Manor 1998; Agrawal and Ribot 1999; Cheema and Rondinelli 2007). Mozambique, a post-conflict, low-income new democracy that implemented a major decentralization effort in 1998, provided a natural laboratory in which to investigate how these factors cause variation in municipal performance. I found that public participation was low and donor-dependent, municipalities still relied on central government transfers and donor funding, and a single party dominated state resources, which limited political competition and accountability. Whereas theory predicted that these conditions would not foster accountability and incubate municipal performance, I found that donors, unearned income, mayoral leadership and political competition improved municipal performance in three cases. First, donors provided resources that capacitated public participation and funded services. Second, decentralization provided authorities with 4 incentives for municipalities to double revenue collections in the face of high aid and central government transfers. Third, mayoral leadership was critical in using resources and authorities to improve performance. Lastly, decentralization provided the political opening in a de facto one-party state for an opposition mayor who performed well to win re-election and launch a new national party. These findings extend beyond international relations to the fields of development studies, public administration and political science. Even in the context of weak institutions and serious constraints, local governments are able to build revenue capacity, improve service delivery, and sustainable political independence in dominant-party states through decentralization reforms. 5 ACKNOWLEDGEMENTS This research would not have been possible without the intellectual guidance and support of my dissertation committee, Rachel Robinson at American University, Barak Hoffman at Georgetown University and my special thanks to my chair, Deborah Bräutigam, who provided the leadership throughout the project to help me bring it to its concluding phase. I would also like to especially acknowledge the mentorship of Peter Lewis at Johns Hopkins Paul H. Nitze School for Advanced International Studies who helped me procure initial funding, Bernhard Weimer and Jose Macuane at Eduardo Mondlane University in Maputo, Adriano Nuvunga at the Center for Public Integrity in Maputo and Ed Connerley. Their advice throughout the project helped shape my thinking and I am truly grateful for the experience, invaluable insights, and good humor. Funding from the National Security and Exchange Program and American University made fieldwork in Mozambique from April 2008 to April 2009 possible as well as follow-up support for the writing of the dissertation. Field work in Mozambique would not have been possible without the help of Ali Alwahti, Uri Raich, Aparna Kumar, Signe Fredericksen, and Paulo de Renzio and the support of Eduardo Mondlane University in Maputo, CEDECA at the Pedogogic University in Beira, and Catholic University of Beira. I especially thank the openness of the municipal staff in Maputo, Dondo, Beira, and Matola for their time in answering my questions and Mayors Comiche of Maputo, Simango of Beira, and Cambezo of Dondo for their time and assistance. A special debt of gratitude goes to my tireless and resourceful research colleagues Calisto Bila, Ricardo Muchanga, and Ascenção Machel. To my family, for instilling curiosity, desire, and aptitude to understand the world around me. To my loving husband for support, encouragement, patience, humor and companionship in our life¶V journey. And, to our son, for filling my heart with joy and contentment. 6 (exchange rate used was from Sept. 2008 (26.5 MTn: USD$1)) TABLE OF CONTENTS I. INTRODUCTION: IN THE DECENTRALIZED CONTEXT, WHAT CAUSES VARIATION IN MUNICIPAL PERFORMANCE? 11 Introduction 11 Significance and Contributions 14 Institutional Inheritance 20 Explanatory Variables 32 Dependent Variable: Municipal Performance 39 Plan for Dissertation 43 Figure 1.1 Hypothesis 45 Table 1.1 Factors used to select municipal cases 46 Table 1.2: Municipal Performance and Explanatory Variables for Selected Cases 47 II. GROUNDING EMPIRICS IN THEORY 48 Introduction 48 The Hypothesis 49 Decentralization and Performance 50 Civil Society: External to and Extension of the State 51 Revenue: Earned and Unearned Income (Rents) 58 Elections: Democratic Performance versus the Performance of Democracy 62 Conclusion 67 Table 2.1. Hypothesis and Findings 69 Table 2.2. Theoretical Launching Point, by Municipality, Service and Variables 70 7 III. USING EXPERIMENTAL APPROACHES: DEMONSTRATING VARIATION ON THE DEPENDENT VARIABLE 71 Introduction 71 Initial Evidence: Summary of Independent Variables by Case 72 Ambulatory Vendor Experiment 77 Summary of Ambulatory Vendor License Experiment 81 Trash Observation Experiment 83 Conclusion 94 Table 3.1. Expected versus Actual Performance 95 Table 3.2. Ambulatory License Process 96 IV: ESTAB/,6+,1*&,9,&3$57,&,3$7,21¶6EFFECTS ON MUNICIPAL PERFORMANCE 97 Mozambican Civil Society: Current State and Departure Point 100 Analysis by Case 106 Maputo 106 Beira 117 Dondo 129 Matola 135 Conclusion 139 Table 4.1. Hypothesis and Finding 143 Table 4.2. Expected versus Actual Findings 144 V: REVENUE EFFECTS ON SERVICE DELIVERY 145 Introduction 145 Overall Trends: Revenue Flows 149 Across time, within case 157 Table 5.1. Maputo 157 8 Table 5.2. Beira 158 Table 5.3. Dondo 160 Table 5.4. Matola 162 Performance Analysis 163 Conclusion 174 Table 5.5. Expected v. Actual Outcomes 177 Table 5.6. Across Case Averages: 2004-2007 178 Table 5.7. Selected aid projects, 2004 to 2007 179 Table 5.8. Conclusion 181 VI: VOTING EFFECTS ON SERVICE DELIVERY 182 Introduction 182 2003 Mayoral Elections 185 Performance from 2003 to 2008 190 2008 Mayoral Elections 199 Conclusion 206 Table 6.1. Hypothesis and Findings 211 Table 6.2. Expected versus Actual Findings 212 Table 6.3. Electoral Turnout 213 Table 6.4. 2003 Municipal Elections 214 Table 6.5. 2008 Municipal Elections 215 VII. CONCLUSION: INSIGHTS AND PATHS OF INQUIRY 216 Introduction 216 The Hypothesis, Revisited 218 Civil Society and Municipal Performance: Strategic Influence 219 Revenue and Municipal Performance 224 9 Elections and Municipal Performance: Contracting and Expanding Spaces 228 Leadership and Citizenship on Municipal Performance: Factors to Consider 233 Conclusion 237 Table 7.1. Hypothesis and Findings 240 Table 7.2. Expected v. Actual Findings 241 Bibliography 242 10 I. INTRODUCTION: IN THE DECENTRALIZED CONTEXT, WHAT CAUSES VARIATION IN MUNICIPAL PERFORMANCE? 'HFHQWUDOL]DWLRQUHIRUPV«ZLWKWKHSURFHVVRISROLWLFDOWUDQVLWLRQLQWKHV«EHFDPH DVVRFLDWHGZLWK«DQHPHUJHQFHRIQHZDFWRUVPRELOL]DWLRQRIµFLYLOVRFLHW\¶FRQVWUXFWLRQRID local political playing field and a renewal of participatory practices. Nevertheless « LPSOHPHQWDWLRQ«has still not had a significant impact LQWKH«capacity to respond through local government to the necessities of residents and improve the conditions of their lives (Forquilha 2007, 1-2).1 Salvador Cadete Forquilha, Institute of Social and Economic Studies, Maputo, Mozambique (emphasis added, September 19 , 2007). In 1998, we died like ants. Due to the Mayor, now we see streets paved and things are starting to look normal. Although we may not have trash collection where I am, it is clear that this mayor is working and that things have gotten better. Focus group participant, Beira, Mozambique, March 14, 2009. Introduction In the euphoria created by the democratization wave in the 1990s in developing and transition FRXQWULHVVFKRODUVKHUDOGHGWKH³HQGRIKLVWRU\´DVGHPRFUDWLFJRYHUQPHQWVSUHDGWRLPSURYHWKH quality of life for residents all over the world (Huntington 1991; Fukuyama 1993). Decentralization has been embraced by donors and recipient governments alike as a way to, in theory, strengthen nascent democratic