November 2001 Insights Issue #38

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Making a difference: what can municipal government do?

Poverty reduction measures usually focus at the national level: primary health care, education, trade and fiscal policy are wholly or partly central government responsibilities. Should this be the whole story? Research by the University of Birmingham shows that there is room for manoeuvre at the local and municipal level to make a difference in reducing poverty.

Local government is often the main implementing agency for national programmes in primary education and health care. In principle, therefore, local government and politics should not make a difference. However, given the fungibility of funds - the ease with which funds are moved around - local politics and the state of local finance do have an impact. Further findings suggest that:

• Poor people suffer disproportionately from the non-delivery of basic services. Provision of water, power, roads, drains is usually the responsibility of municipal government. Non-provision of services forces the poor to use alternative sources - usually at considerable expense.
• Where the public sector or municipality fails to provide power and water, industry suffers. Production costs increase and less employment is created.
• Social capital helps households survive shocks and provides networks to support enterprise development. Threats and violence to property and people and a lack of law and order undermine and destroy social capital and deter investment.
• Paradoxically the most powerful lever available to municipal government is not to act negatively - forcing small firms to relocate, for example. Excessive harassment of the informal sector which destroys household livelihoods and forcing people to peripheral locations where they are unable to trade, is often carried out under the guise of 'planning'. This kind of negative action is mainly the responsibility of municipal government.

Policy implications include the need for municipal and local government to:

• provide the basic infrastructure for industrial development: failure to do so hits the poor the hardest
• recognise that law and order is not just a judicial issue but is crucial in facilitating economic and social activity
• focus as much on preventing 'bad governance' such as harassment of the informal sector which destroys jobs, livelihoods and communities, as on promoting 'good governance' at the city level
• provide the services they are mandated to provide: firstly get the system working properly and then focus upon giving it a pro poor bias.

Philip Amis
International Development Department
School of Public Policy
University of Birmingham
Birmingham B15 2TT
UK

T 44 (0)121 414 4971
p.amis@bham.ac.uk
www.bham.ac.uk/IDD/activities/urban/urbgov.htm

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