Launch of the World Observatory on Subnational Government Finance and Investment

Launch of the World Observatory on Subnational Government Finance and Investment

The World Observatory on Sub National Government Finance and Investment, the first of its kind, is a joint initiative of the OECD and UCLG. It provides systematised information on decentralisation processes, territorial reforms, the powers and responsibilities of local authorities, and the nature and weight of their income, expenditure and investment in over 120 countries, including 23 LDCs thanks to the decisive contribution of UNCDF.

It offers an open-access database from which first-hand information on local government finances can be extracted and compared between countries. The launch conference of the World Observatory on Sub National Finance and Investment, held in Paris on 17 June, brought together more than 150 participants, coming from 35 countries.

In presenting the Observatory's 2019 Report - a compendium of 122 country profiles with an analysis of key findings - Angel Gurria, OECD Secretary-General, stressed that cities and regions are major actors in public action. The World Observatory is the largest international database on the structure and finances of sub-national governments ever produced. Beyond data and knowledge, it also aims to strengthen our collective capacity to act for improved multi-level governance.

Emilia Saiz, Secretary General of UCLG, stressed that the information gathered by the World Observatory is crucial in that it provides a basis for dialogue with all relevant stakeholders. It is a major tool to inform the learning, advocacy and policy work that is at the heart of UCLG's mandate.

A high-level debate was held around the presentation of the main findings of the report, involving the Minister of Local Government and Rural Development of Ghana, the President of the EU Committee of the Regions, the Governor of the Council of Europe Development Bank and the City of Tunis.

Three round tables were held throughout the day. The first, "Making decentralization work to achieve global agendas", was an opportunity to recall the diversity of decentralization contexts around the world, both in terms of processes between countries but also in terms of access to resources and capacities within countries. The objectives of the global agendas can only be achieved by fully recognizing this diversity and developing a territorial approach. In the same vein, panellists stressed the importance of designing decentralization policies adapted to each context and matching the responsibilities and resources of local authorities to deliver on their mandate.

The second roundtable focused on how to "Make the most of public investment across levels of government". All panellists agreed that a major challenge was to strengthen the fiscal power of local authorities. This is one of the key conditions for their access to capital markets - access that is essential if the public investment capacity of local authorities is to be strengthened. In this respect, it was pointed out that the problem today is not so much a financial gap as a revenue/investment gap for local authorities. Increasing local government access to finance naturally requires both transparency of financial systems and flexibility in access arrangements to financial markets. It also requires all relevant actors to agree to "take risks" and invest in the long-term, for the communities.

The third and final round table focused on the issue of "Data collection and management on sub national government finance". The Observatory had to face three main problems in this respect. The first was the availability of data: in many emerging economies and least developed countries, information is often non-existent, at best partial, at the national level.  The Observatory must certainly set itself the objective of supporting the least developed countries in their efforts to build accurate information systems. A second problem is the lack of comparable data resulting from a high diversity of situations, definitions and nomenclatures between countries, which has sometimes led to difficulties in consolidating information. The interpretation of the data was the last major challenge, requiring going beyond quantitative data and using qualitative information to put the figures in perspective.

"Decentralization is not a zero-sum game in which the state loses what local and regional authorities gain," said Ulrik Vestergaard, Deputy Secretary-General of the OECD, in concluding the conference. It is a win-win situation for all, national and local governments.  Increasing the share of local authorities in public investment is a major challenge, particularly in the least developed countries. The Observatory provides a unique set of keys to open the debate and move forward on this. It now needs to be consolidated and sustained.





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