Decentralized Governance

Galang specializes in and advocates good governance. This article was published in the Opinion Section, Yellow Pad Column of BusinessWorld, October 30, 2006 edition, page S1/5.

There was nothing like it in the whole of Asia then: power and authority held thus far by central government getting rolled down to local jurisdictions—with people, funds and resources moving massively to match.

Decentralization was what the learned called the process, and the policy that set it in motion was  the Local Government Code of 1991.  The measure  was signed into law in 1991, 15 years ago this October.

From that time on, local government units have assumed primary responsibility for delivering basic ( health, agriculture, social welfare, etc.) services  to communities, including the discharge of certain regulatory functions.

But why decentralize, in the first place?

There is an ever-burgeoning literature on decentralization that allows you to build a long list of answers to the question. My own list assumes that decentralization promotes responsiveness, efficiency, innovation, and participation in governance.

Admittedly, that’s on paper; and I can think of dozens of items to qualify the point.  My hypothesized benefits actually rest on nested assumptions.

For example: Service delivery power and resources are only as good as the systems in place to manage them. A rigid system imposed from without with a halo of immutability (you yourself cannot change them) tends to suffocate responsiveness and innovation, while condoning waste and inefficiency.

On this point, the Code plays host to a self-defeating irony.  While providing for the transfer of responsibility for delivering basic services from central government to local government units (LGUs), it retains within central government agencies the authority to prescribe the necessary systems and procedures for the purpose. Or worse, some detailed procedures have been etched in the Code itself.

Case: Procurement of medicine and medical supplies is one function devolved to local government units, consistent with the transfer of responsibility to deliver health services.  But along with this comes the instant increase in the volume of transactions.  Can the procurement system carry the additional load without pushing inefficiency to worse levels?

The Code  spelled out the procurement procedures (until these were replaced by the new law on government procurement), while other more detailed procedures were left to the Commission on Audit (COA) to prescribe.  Unfortunately, these were basically the jurassic procedures cut from the old law and pasted onto the Code. More unfortunately, if you want these changed, you are hereby encouraged to go to both houses of the Congress, then wait for COA to issue the new implementing rules and regulations.

Case: Practically all critical local systems and procedures are centrally prescribed: budget, accounting, revenue, fund management, HR (human resources).  All these systems form part of one local mega-system – meaning one is connected to the other.

If by some flash of innovative genius you thought of reengineering the system or decided to follow the public sector equivalent of the “Toyota way,” think of the formal hurdles.

Again, take procurement. Running its process is not the exclusive domain of the procurement office.  The process cuts across offices, each of which follows the prescribed procedures in dealing with the segment of the process.

So, if you want to computerize, for example, the procurement system, you need to also get other offices into the picture. If the initiative requires changing the rules, you need to go to the right central offices that prescribe them.

But why put so much importance on systems?  Remember Joseph Juran’s 85/15 rule—that 85% of the time, improvement problems stem from system failure, and 15% from people. Before you believe him, listen to another quality guru, Edward Deming, go further:  “I should estimate that in my experience most troubles and most possibilities for improvement add up to proportions something like this: 94% belong to the system; 6% special causes.”

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