Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Delivery inUlaanbaatar,Mongolia Toward InclusiveUrbanService 2017 © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Examples of components can include, but are not limited to, tables, figures, or images. ii TABLE OF CONTENTS ACKNOWLEDGEMENTS v ABBREVIATIONS AND ACRONYMS vi GLOSSARY vii EXECUTIVE SUMMARY viii 1.0 INTRODUCTION 1 1.1. Urban Service Delivery and Inclusive Development 1 1.2. Objectives and Methodology 2 2.0 BACKGROUND AND CONTEXT 4 2.1. Recent Economic Trends 5 2.2. Urban Poverty 6 2.3. Urban Expansion and Built Form 9 3.0 THE STATE OF SERVICE DELIVERY 11 3.1. The Current Situation 12 3.2. Quality of Services Provided 15 4.0 GOVERNANCE FRAMEWORK AND CONSTRAINTS TO SERVICE DELIVERY 35 4.1. Governance of Service Delivery in UB 37 4.2. Constraints to Service Delivery 42 iii 5.0 FINANCING MUNICIPAL SERVICES 49 5.1. Intergovernmental Fiscal Relations 49 5.2. Expenditure Responsibilities and Arrangements 52 5.3. Allocative Efficiency and Equity 56 6.0 POLICY IMPLICATIONS AND RECOMMENDATIONS 60 6.1. Enhancing Urban Planning and Management 60 6.2. Improving Governance and Finance 61 REFERENCES 66 Annex 1: Intergovernmental Fiscal Relations in Mongolia 68 Annex 2: Maps of Service Accessibility 70 Annex 3: Services provided through UB and District administrations 74 iv Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia ACKNOWLEDGEMENTS his report was prepared by a team comprised and Arailym Murat provided administrative T of Judy Baker (Task Team Leader), Huong assistance. Mai Nguyen, and David Ryan Mason and is based on a work program developed by a broader team Peer reviewers of the concept note and the draft also including Meskerem Brhane (former Task report included Meskerem Brhane, Arturo Ardila Team Leader), and the authors of background Gomez, Rama Krishnan Venkateswaran, Peter papers, Hernando Garzón (municipal finance), Blunt, Matt Glasser, Lili Liu, and Ritu Nayar- David Ryan Mason (municipal services) Huong Stone. Helpful comments were also received by Mai Nguyen (governance), Gayatri Singh (urban Tae Hyun Lee, Davaadalai Batsuuri, Altantseteg poverty and social welfare services) and Jean Paul Shiilegmaa, Pagma Genden, Rabia Ali, Tungalag Velez (transportation). Gayatri Singh also led the Chuluun, Aparnaa Somanathan, and Junko Onishi. surveys team, consisting of Huong Mai Nguyen and Battuya Dash, to build the evidence base for The work was carried out under the guidance of this report. The Mongolia Marketing Consulting Abhas Jha (Practice Manager), Coralie Gevers Group carried out the household survey and (former Country Manager for Mongolia), Mark focus group discussions, and MAD carried out Lundell (former Sector Manager for Sustainable field work on service usage. Lydia Yu Liu and Development for Mongolia and China), James Battuya Dash provided data analysis and research Anderson (Country Manager, Mongolia) and Bert support. Additional graphics were prepared by Hofman (Country Director, China, Mongolia and Joseph Muhlhausen and Gayatri Singh. Erdene Korea). Ochir Bardach, Chandan Deuskar and Artessa Saldivar-Sali provided valuable inputs to the The activity was made possible through the conceptualization of the report. Rumana Huque, generous support of the Swiss Agency for Toyoko Kodama and Gauri Gadgil also provided Development and Cooperation. helpful inputs to the team. Isabel Duarte A. Junior v ABBREVIATIONS AND ACRONYMS BL Budget Law CBD Central Business District CCLSL Law on the Legal Status of the Capital City CIT Corporate Income Tax CPM Citizens Public Meeting FGD Focus Group Discussion FY Fiscal Year GDP Gross Domestic Product GIS Geographic Information System GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit ICT Information and Communication Technology LATUG Law on Administrative and Territorial Units and their Governance LDF Local Development Fund LPD Law on Persons with Disability LSPSC Law on Social Protection for Senior Citizens MNT Mongolian Currency Unit MOE Municipal Owned Enterprises MUB Municipality of Ulaanbaatar NGO Non-Governmental Organization NSO National Statistics Office OPTA Open Trip Planner Analyst OSS One-Stop-Shop OSNAAG Housing and Public Service Authority PPP Public-Private Partnership PSMFL Public Sector Management and Finance Law PUMA Platform for Urban Management and Analysis SWL Social Welfare Law UB Ulaanbaatar UNFPA United Nations Population Fund USUG Ulaanbaatar Water Supply & Sewerage Authority vi Toward Inclusive Urban Service Delivery in Ulaanbaatar, Mongolia GLOSSARY Aimag: An administrative district equivalent to a wooden frame that is covered with felt and heated province. There are 21aimags in Mongolia. by a small stove. District: The report discusses municipal districts Khashaa: A parcel of land allocated for private (duureg), which are a second-level administrative residential use. In Ulaaanbatar, the plot may be no unit that is separate from rural districts (soum). larger than 700 m2. There are 9 districts in UB, six of which are contiguous. Khoroo: An administrative unit below the municipal district. There are 152 khoroos in UB. Ger: A portable tent structure traditionally used by herders for shelter. A ger has a collapsible circular Soum: A rural administrative subdivision of an aimag. There are 331 soums in Mongolia. vii EXECUTIVE SUMMARY Introduction Urbanization has provided opportunities for iii. identifies institutional and financing issues economic growth and poverty reduction in that may be compromising the efficiency, countries all over the world. Cities are well quality, reliability, and equity of municipal positioned to provide services due to the service delivery; and economies of scale that the density and spatial iv. proposes policy options and management concentration of people and firms allow. That strategies based on international best being said, if not carefully managed and planned practice, and identifies areas that UB can for, the benefits of urbanization are not equally undertake to enhance service delivery. realized by all and urban growth can aggravate inequalities in access to services, employment Chapter 1 of the study provides and introduction; and housing. This is particularly true in rapidly Chapter 2 covers background and context; Chapter growing cities where services are not able to keep 3 examines challenges to service delivery for a up with demand and land located near jobs is often few key municipal services including education, constrained. health, transport and street lighting using map, satellite and the khoroo-level data, Chapter 4 Ulaanbaatar, the capital and largest city in discusses issues of governance related to service Mongolia, has grown rapidly with a population of delivery and Chapter 5 analyzes financing