The M&CC does not have the institutional capacity to adequately perform its task

Dear Editor,

Recognising the decrepit state into which the general social infrastructure had fallen, as soon as Desmond Hoyte had made peace with the international financial institutions, he initiated a range of projects. Most of us are well aware of some of the larger ones, like the US$57M Agriculture Sector Hybrid Loan, the US$51M Primary Education Improvement Project and the US$31M Health Care 11 Project. But there were many smaller ones, such as the US$2M Urban Development and Housing Project, intended as a feasibility study of the sector. Understanding the objective and process by which the resultant US$25M Urban Development Project was devised and implemented will provide an interesting insight into the present condition of the Georgetown City Council.

The condition of the city administration could be no different from that of the country as a whole, so the programme was intended to: “(a) support reforms to address the institutional constraints affecting Guyana’s capacity to finance, operate, maintain and expand urban infrastructure and services on a sustainable basis, and (b) finance the rehabilitation of infrastructure and the reestablishment of municipal services in the country’s six urban municipalities.”  US$4.4M was to be spent on the institutional strengthening of the management of the 6 municipalities and the relevant central government department, US$19M on municipal infrastructure development and the remainder as financial expenses.

Drafting the project began in 1993 and was completed in 1995. However, “In early 1995, further work was suspended until January 1998, when Government gave the project its highest priority.”  The first disbursement was made in August 2000 and the last in June 2007, which included a two year extension, six months of which resulted from sloth in implementing the reform component of the project.

The 2008 Project Completion Report (PCR) stated that at the time the project was being designed the following risk factors were identified: weak institutional structures; lack of development in the private sector; lack of capacity of municipalities to effectively operate and maintain rehabilitated infrastructure; political sensitivity towards/rejection of any increase in taxes and lack of willingness of the central government to transfer resources to municipalities. More importantly, it claimed that; “All of these risks were present during the project implementation and created barriers for implementation according to the original plans. The limited capacity of the private sector delayed infrastructure works while the recognition of the limited capacity of the MLGRD (Ministry of Local Government and Regional Development) resulted in the decision to engage an international firm to manage the project. Generally the Government of Guyana’s response was untimely and resulted in additional delays to the project. This is evident in that it took more than 2 years to carry out a transparent transfer of resources to the municipalities and this process is still incomplete.”

Some project objectives were met, but with regard to the institutional strengthening aspect of the project, the report stated that the plan for strengthening the Valuation Office was designed but not implemented. The appointment of an international consultant as the chief valuation officer to coordinate reforms in the office did not gain the approval of cabinet. The bill to introduce a transfer mechanism for the release of funds by government to the municipalities was still in the drafting stage. The reduction of tax delinquency to the degree planned and greater increase in tax revenues did not occur and one reason for the poor results was the non-implementation of the modernised tax system, which had not been completed at the close of the project because it took six rather than the planned two years to modernise the system. The improvement in the operations of the rehabilitated markets did not happen because FCM (Federation of Canadian Municipalities) did not complete the restructuring and improvement plans early enough to allow for implementation.

The 2009 “Commission of Inquiry into the Operations of the Mayor and City Council of Georgetown” (the Burrowes Report) observed that while the UNDP programme was intended to focus on infrastructure development and institutional strengthening, “the programme focused almost exclusively on infrastructure development.”  However, according to the report, FCM was contracted in 2006 to complete the job and there were other attempts at institutional strengthening but the anticipated results did not materalise for several reasons:

“The Terms of Reference… were not sufficiently clear in some cases.

In many instances there was uncertainty whether approval was given by the Council to implement the recommendations reflected in these reports.

In cases where approval was given, there were no adequate systems in place to manage the implementation of the recommendations made.

No assessment/analysis was done indicating the financial implications of implementing the recommendations.”

In relation to finance, there is an intricate dialectic between poor conditions and notions of competence that is many times overlooked. In terms of city finances the Completion Report gave an independent indication that in real terms the city’s revenue had deteriorated significantly over time and such reductions usually result in falls in the quantity and quality of services. The numbers I have obtained from the council show revenue: $1.1B in 2000; $1.6B in 2002; $1.5B in 2004; $1.3B in 2006 and $1.5B in 2008. Thus, even in nominal terms, 2008 revenue was less that it had been seven years previously, and the problem becomes even more complex if your report (SN, 23.9.09) is correct.

You reported that in presenting the city’s budget for 2009, “Deputy Mayor Williams said that it is the intention of the municipality to collect over 95% of property taxes due in comparison with 84% collected last year.” I take it that he was speaking of current taxes (of which about $840M was collected in 2008) and not arrears. The 1998 UNDP Project Document stated that collection rates in the municipalities were between 50% and 60% and that the intention of the project was to improve collection rates by about 50%. We know that local property rates are prized largely because property visibility allows for high level of compliance. Nonetheless, if the above report is true, the council’s current rate of collection represents a substantial improvement but also tells its own tale.

Using simple accumulated inflation rates, which were 54% and 45% between 2008 and 2000 and 2002 respectively, the council would have had to acquire revenues of about $1.6B and $2.3B to maintain real term spending at the level of those respective years. Indeed (due consideration given to the fact that revenue consists of more than rates) it appears that even if in 2008 the council had collected 100% of its current rates, which it places at about $1.5B, it would still not have been able to maintain spending at real 2002 levels! All of this is simply to indicate that the council faces a real financial problem.

In relation to the debate about the establishment of an IMC, I believe the point is moot. Elected local officers effectively operate much larger and more sophisticated arrangements than the municipality of Georgetown and democratic management of this sort always carries an efficiency deficit, and the poorer the conditions are, the larger that deficit is likely to be.  Look no further than our own National Assembly, the operation of which is made even worse by the fractiousness of our political relations. This is the trade-off citizens accept when they proclaim “no taxation without representation.”

The question under discourse is extremely complex but it does not take much to see that the council still does not have the institutional capacity to adequately perform its task. The many attempts at institutional strengthening were too half-hearted and haphazard. What is required today is a modern, business-like local government and this itself demands a genuine, focused commitment to strengthening municipal management.

Yours faithfully,
Henry B Jeffrey

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