Good financial governance in local government

Project description

Title: Good financial governance in local government
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Mozambique
Lead executing agency: Ministry of State Administration and Public Service
Overall term: 2015 to 2016

Mozambique. Illustration from exhibition „Mosambik 2030: Urbane Vorstellungen“, co-financed by GIZ and Cities Alliance (2016) © GIZ

Context

The people of Mozambique continue to have insufficient access to public services. The Mozambican Government is addressing this problem by ensuring that local authorities will be better able to meet the people’s needs in future. It has launched a decentralisation process to transfer responsibilities to the 145 districts and 53 self-governing municipalities. At the same time, the performance capacity of local government is to be improved.

Despite progress, local administrative bodies are still unable to provide the services for which they are now responsible to an acceptable standard. Due, among other factors, to inadequate capacity among administrative staff, the implementation of development and budget plans has proved only partially successful. The decentralised system of public finances required for this purpose is still being developed, as are control mechanisms. The basis for raising tax revenue has yet to be established.

Objective

Districts and municipalities are able to fulfil their administrative duties in a more effective and economically sustainable manner and meet the requirements for accountability. In doing so, they are guided by the principles of good financial governance.

Approach

The project advises the ministries responsible for public administration, finance and infrastructure as well as the court of auditors on establishing a framework for better financial governance in the districts and municipalities. In the three priority provinces for German development cooperation – Inhambane, Sofala and Manica – it provides advice and training to support local authorities in performing their tasks. In the process, it focuses on the following issues:

  • Improving efficiency in financial administration and procurement
  • Ensuring public transparency and accountability with regard to the use of funds
  • Increasing the funding available through the local authorities’ own sources of revenue and the allocation of funds from central government
  • Modernising the internal and external monitoring systems for the use of public funds
  • Performing municipal tasks, particularly in the areas of urban planning and land registration
  • Developing training concepts and expanding the in-service training system for public service workers.

Parts of the project are implemented by the IP Institut für Projektplanung GmbH/AMBERO/NIRAS consortium.

Results

The project only recently started to implement the planned measures. It builds on the key results of the predecessor project, which supported the decentralisation of functions to local administrative bodies:

  • The Government of Mozambique has now adopted its decentralisation strategy.
  • Mozambique’s court of auditors has aligned its monitoring procedures to international standards. The number of audits has increased considerably from 179 in 2006 to 450 in 2014. The court of auditors is now legally obliged to ensure greater transparency and must publish its audits in future.
  • Participatory bodies are largely up and running in the districts and municipalities and are meeting the requirements for women’s participation. The prerequisites for improving social control and participation have been met.
  • Procedures for urban planning and land registration have been tested in some municipalities and can now be introduced in others.
  • The electronic financial management system e-SISTAFE has already been rolled out in 25 of 33 districts.
  • A computerised system for monitoring indicators for governance and social development has been set up in the districts.
  • Studies have been conducted on potential tax revenue in municipalities. These findings can be used to develop strategies to enable local administrative bodies to increase their own revenue.
  • Internal monitoring bodies have been set up.