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Assessments Informing Performance Based Grant Systems (PBGS)
Jesper Steffensen & Henrik Fredborg Larsen
Source of the information:
The Performance Based Grant Systems (PBGS) are aimed at promoting a positive change in some aspects of the performance of local governments, which receive or try to access grants. In particular, they have the following specific objectives:
To promote strong incentives for local governments (as corporate bodies) to improve in key performance areas”
To adapt the size of the grants to the expenditure and performance capacity in the key functional areas of local government (planning, budgeting, financial management, fiscal capacity, budget release and programme execution, communication and transparency, monitoring and evaluation)
Supplement needs assessment and monitoring and evaluation systems
Improve management and organisational learning
Strengthen capacity development efforts (focus and incentives)
Improve accountability (up/down), participation and citizens’ access to information
Shown to be a good tool to bring funds onbudget and streamline/mainstream/coordinate donor support
Administrative data and information on population, budgets, procedures and audits related to the local government. Indicators may be both quantitative and qualitative. Data are supposed to be collected both at the central government level (e.g. accounts, ex-post audits, general inspections, etc.) and at the local government level (analysis of local governance performance through field-visits). Information is mostly objective.
The rationale underlying the PBGS rests on the idea that funds are only disbursed if the beneficiary local government performs well according to pre-established criteria. These criteria are called Minimum Conditions (MCs). MCs are the minimum safeguards for proper utilisation of public resources, identifying the basic absorption capacity and maintaining financial discipline. In addition, Performance Measures (PMs) are designed to create an incentive for local governments to improve their performance, especially with regards to enhancing transparency and accountability to citizens, and meeting the needs of marginalized and disadvantaged communities. The annual grant of local government usually increases or decreases subject to the scores achieved in PMs.
In order to allocate funds, a clear formula is often applied in order to define the amount of the transfer, which also takes into account some characteristics of local governments, such as population, size of the local government, number of people below the poverty line, human development index. Minimum Criteria and Performance Measures are assessed against the above criteria that are generally defined in country based manuals, providing the explanation of these indicators, the guidelines for their measurement, the scoring system and a detailed outline of the entire assessment process.With respect to the PMs, there exist two levels for each functional area, a minimum score that must be attained to attract a performance bonus and the minimum score below which a local government attracts a penalty for poor performance. To qualify for a bonus a council must score higher than the minimum mark for a performance bonus in all functional areas.
PBGS in Uganda – Examples of Minimum Conditions (MCs) and Performance Criteria (PCs)
1 Three year rolling development plan
2 Functional technical planning committee
3 Draft final accounts on time
4 Functional internal audit
5 No nominal decrease in own source revenues
6 Co-funding and special accounts
1 Evidence of clear strategies for exploiting the opportunities and resources to address the LG challenges and core problems (with emphasis on addressing poverty directly or indirectly and empowering the poor) including priority projects and key investments, noting the contribution from each sector
2 Evidence of a clear analysis of LG poverty and livelihood issues including poverty trends for past five years (cause-effect relationships), livelihood analysis for the different poverty categories/vulnerable groups (such as children, people living with HIV/AIDS, the elderly, people with disabilities, displaced persons, the urban poor) and geographical poverty pockets.
3 District Development Plan contains sound gender analysis including disaggregated data, gender impact analysis,.