What is Urban governance ?

Local Government and Decentralization Unit Approach to Urban Governance

LGD Unit is considering what its forthcoming work around urban governance is going to be for the next biennium, including the development of pilot projects able to support Mayors and local government decision-makers in their efforts to ensure the governance of urban areas for better service delivery and increased local participation in decision-making. At the same time the Unit is planning to support United Cities and Local Governments in the production of the IV GOLD Report1 that will constitute the contribution of local government associations to the Habitat III process. The report is to be ready for 2016 and the index and contents are being defined in this moment. Urban governance has been identified as the first chapter of the Report. In the spirit to define possible areas of synergy between these processes, we would like to start describing UN-Habitat’s emerging approach to urban governance in an increasing urbanizing world. A world where 25% of the population will live in cities by 2050, and it is calculated that most of them will concentrate in only 600 cities, the same that will account for 60% of the world’s GDP. Nearly 3 of 4 cities will be in developing economies. Cities will be the scenarios where the game will take place, and the institutions need to get prepared quickly to face these emerging challenges. The emerging urbanization is being seriously considered by the actual international debate regarding the definition of the new priorities of the international agenda post-2015, with the definition of new Sustainable Development Goals (SDGs) and the negotiations leading to the III United Nations Conference on sustainable urban development (Habitat III). A new approach to urban governance should take part of both process, we hope that this work will be able to inform both process. Please consider this paper as a first draft for thought 1. DEFINING URBAN GOVERNANCE MAKING THE CITY WORK! Urban governance is today a core responsibility for local governments, to be implemented together with an increasingly series of actors, public and not, in a new multilevel scenario. Urban governance is fundamental for the success and development of cities. It is the 1

GOLD: Global Observatory on Local Democracy and Decentralization. More info on past editions at http://www.uclggold.org/home/world-section

software that enables the urban hardware to function. Governance prevents conflict, facilitates stability, helps cities to adapt to future challenges and is critical for their performance in an increasingly competitive world. Governance is the enabling environment that requires adequate legal frameworks, efficient political, managerial and administrative processes, as well as mechanism, guidelines and tools to enable the local government response to the needs of citizens. The size of cities and their growth, their social and spatial cleavages, their economic characteristics and institutional dimensions have brought unforeseen dimensions of governance. In such complex and expanding urban areas, all spheres of governments (municipalities, regions, central level) together with an increasing number of stakeholders must address urban issues and acknowledge that solutions are not unique. The complexity therein is that local governments are at the front line of the elaboration and implementation of urban policies and the provision of basic services and their implementation, but are situated within a complex network of relationships and jurisdictions. The term urban governance is an amorphous concept that is difficult to define. The norm around defining and measuring urban governance has been to develop a set of theoretically determined indicators or check lists. This top-down prescriptive approach has not yielded effective results due to difficulties in data collection, lack of sensitivity to diverse urban contexts, amongst others. One of the things that UN-Habitat has learnt from this process is that strong and capable institutions are critical for making the city work. We have not yet discovered an efficient city without a strong, enabled and capable municipality. The legislative and financial framework are, of course essential, but not always the only key for a successful and sustainable city. Many times there are hidden factors, personal relationships, reaction to past experiences that have had an important impact in the population´s common imaginarium… aspects difficult to define that we could call the “spirit of governance”, difficult to define and even more difficult to measure. UN-Habitat would like to propose a new approach to urban governance focusing in “mapping, understanding and defining governance” more than “measuring” it. We would like to identify a bottom up approach based in concrete city experiences, observing what worked and what did not. If successful, this exercise would be able to generate context-specific indicators and approaches in order to re-define and understand urban governance from a more holistic perspective.

2. MAPPING URBAN GOVERNANCE WHY CERTAIN CITIES DO NOT WORK? A key issue about governance involves understanding and improving the organization of actions, networks, relations and institutions. Many times, changes in governance have not been able to keep the pace with changes in society. Processes and procedures are not able to give response to accelerated spatial and economic development and the local governments have difficulties to include the demands of citizens, articulate their interests, meet their obligations and mediate their differences. Some first thoughts could be gathered around the following causes: -

The lack of a functioning, collaborative and multi-level governance system between central, territorial and local governments Urbanization is a multi-sectorial and multilevel process, both vertically (between cities and regions / national governments) but also horizontally between local government units, bridging the continuum between urban and rural, amongst urban agglomerations, etc. Local and territorial governments should be able to govern the city space and its extension with appropriate governance frameworks and responsive institutions; Lack of capacities, strategies and operational methodologies to address direct peoples’ needs and participation. Local governments are bounded to deliver services and tangible outcomes for their main constituency, with special focus on the marginalized groups. This brings us the special needs of informal settlements and how to include governance options in spaces without a formal governing system. Lack of policies and mechanisms at the local level to improve financial sustainability. Fiscal decentralization and taxation are a two-pronged approach of the question and the specific issue of endogenous resource worth stronger attention, directly conditioned by stronger accountability and transparency from local leaders and administration. Insufficient visibility, voice and representation of local government in international fora and decision-making processes, especially in their consideration as direct recipients of foreign aid and essential stakeholders for service delivery and poverty reduction.

3. UNDERSTANDING URBAN GOVERNANCE WHAT COULD MAKE IT WORK? Urban governance integrates different levels 1) community, 2) municipal, 3) metropolitan 4) territorial (city-region), 5) national and 6) global. It involves local governments’ adequate responsibilities and functions (multi-level governance), their capacity to implement and to control, community participation in the city decision-making process, and institutional accountability and transparency. Our initial proposal identifies three pillars for urban governance: political dialogue, sustainability and transparency. These pillars are necessary interconnected since in urban governance one piece cannot work without the other.

A) The need to develop multilevel political dialogue Local governments are placed in a network of relationships and jurisdictions. Reinforcing their role, in a decentralized framework, with a multi-sector vision and at different scales requires a strong multilevel governance approach. There is a need for a common vision on the political and conceptual approach of multilevel governance and to unpack and translate this concept into practical tools for the use of local leaders. There is also a need to communicate successful strategies applied for others, to learn from other contexts either about the political process as well as its implications for public services delivery and to establish new horizontal cooperation between local governments. Challenges such as urban mobility, employment and environmental sanitation, among others, extend beyond the realm of local governments and cover various legal-administrative divisions in the territory. To ensure effective measures and to achieve positive results for the citizens, tax-payers and economic agents, coordinated action is required. Soft governance modalities, such as inter-municipal cooperation and sound territorial management is also a way to go beyond the rural-urban divide and to address metropolitan governance B) The need to ensure transparency: building the accountable leadership The new complexities of the cities of today require a constant and fluid dialogue between institutions, on one side, and between people and institutions, on the other. The relations with non-state actors are increasingly important to ensure a real participatory process and stronger inclusion of all in the city decision-making process. There is a need to identify new approaches and tools to facilitate this communication current. Smart technologies are a lever and an opportunity to allow them to promote democratic public choice making. In return, there is a need to transform their contribution into better informed, more transparent and accountable local governments. In addition to e-governance, informal governance is another aspect to be explored. Informality is rarely considered as an asset and local governments often feel powerless when confronted to this multi dimension reality. A third dimension to be supported is the relationship of local governments with non-state actors and corporate interests, a relationship which is often misunderstood, implicit or unbalanced. The organization of public service delivery has changed substantially with the implementation of market-oriented and public private partnerships (PPPs). Legally, governments remain responsible for the realization of public service delivery and yet through PPPs and other such arrangements they no longer provide those services themselves. PPPs become a quasi-institution replete with regulatory frameworks, policies, organizational units, systems and other related features, without necessarily a strong foundation of democratic and governance principles driving their planning, management and accountability. An additional aspect is that often PPPs are ‘locked in’ for a 10-15 year time horizon – arrangements once sufficient can quickly become date, especially within a rapidly changing urban context. But viewed from another perspective, the design and implementation of a PPP arrangement can be an opportunity to strengthen local democracy. Broad based, equitable participation in the design of the PPP – including contractual arrangements vis-à-vis the private sector or community groups - combined with co-design of monitoring, transparency and accountability arrangements are viable avenues for building and strengthening of local democratic processes and institutions.

C) The need to ensure municipal financial sustainability Municipal finances are central to local governments, as their strategic management plays a critical role in ensuring long-term sustainability of local services. One key issue faced by local governments is how to expand their resource base beyond central-to-local transfers. Stakeholders are keen to integrate new ideas/tools on expenditure management, tax base identification, local tax collection, etc. In all cases, improved governance practices and enhanced accountability mechanisms (e.g., public transparency of budgets, customer service contracts for public utilities, adequate public asset management, clear monitoring of the performance of local governments) have become central to sound city government and municipal management. There is a well identified need to enhance knowledge and skills of local governments in the field of municipal finance, to allow them fulfill their responsibilities. Taxation requires both effective service delivery and transparent management to be sustainable and accepted by citizens. The development of tools to support municipalities in getting endogenous resources (local service taxation and integrating informality) goes in parallel with providing tools and how-to instruments to improve the management and transparency of local finances. This latter is a crucial need, as transparency and perception of local corruption is the necessary linkage between municipal sustainability and governance.

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