BPD- Working with Municipalities to Ensure Local Ownership of Urban Economic Development

Sustainable Urban Economic Development Programme (SUED) Working with Municipalities to Ensure Local Ownership of Urban Economic Development Context Urbanisation has the potential to transform a nation’s economic growth. In countries such as Kenya, urban economic growth provides an opportunity to eradicate poverty, foster innovation and engage the population in building an inclusive economy. The promulgation of a new Kenyan constitution in 2010 led to the creation of a devolved governance system. The system was activated after the 2013 General Elections that resulted in one National Government and 47 County Governments. As such the Country strategically positioned itself to harness the rich potential that regional economic growth has for national prosperity. Devolution created a system through which the national government could transfer strategic functions and budgetary resources to the newly created counties. The new capabilities for counties enabled donors including the UK Government to provide technical assistance on how they could become regional economic growth hubs.

Despite the potential, county level urban authorities in Kenya have little capacity to take advantage of specific investment opportunities or to better position their urban areas into economic growth centers that can foster a viable long-term economic development trajectory. The critical challenges lie in the lack of economic diversification, poor internal resource allocation (both human capital and monetary funds), skills gaps on how to develop value-added and climate resilient industries, bureaucracy, and the lack of an information-sharing culture. This is further exacerbated by the counties’ heavy reliance on the national government and donor agencies for financial support due to the minimal economic activities that can be taxed for own-source revenue generation.

Interventions toward local economic development need to include development of strong rural-urban linkages, high quality value-added products that are exportable, investment in critical infrastructure and responsive legislation and policies that encourage private sector development. While donor programmes may design responsive programmes to support counties in these areas, there is need to ensure mutual accountability on the intended outcomes of the support.

In urban economic development programmes, the temptation remains for donors to “point-out” the right direction that local governments should take. However, a participatory and inclusive approach that enhances ownership of the key beneficiaries of the programme(s) is a demonstrably more successful approach.

Programme Intervention/Strategies Applied The UK Government has continued to work with the Kenyan Government through its transition from a centralised government to the current devolved one. Through its Sustainable Urban Economic Development Programme (SUED), the UK Government is strengthening the technical and institutional

capacities of 121 Kenyan municipalities to manage urbanisation by integrating urban economic planning and investment attraction into their development and governance processes. In doing so, the programme is helping to demonstrate the critical role that local authorities play in implementing sustainable urban economic growth.

The UK Government’s initiatives and programmes in Kenya have enjoyed strong political goodwill with their rich stakeholder engagement aimed at ensuring that successes are owned by both the implementers and beneficiaries. An example of this is SUED’s work with its supported municipalities to develop Urban Economic Plans (UEP). The programme combined local knowledge by gleaning from the County Integrated Development Plan (CIDP), which County governments use as a planning tool for development, to merge the collection of ideas from the county on how they can utilise their urban spaces to develop economically. The utilisation of the CIDP and other key county documents to formulate an advisory document that guides the counties to collate their varied ideas into one key economic strategy provides a base through which county leadership can commit to the implementation of the UEP and its vision.

In its programme design and implementation approach, the SUED team has taken critical steps towards ensuring that county/municipality staff and stakeholders are actively engaged in the programme’s work and are equally accountable for the intervention results. It has done so in the following ways: a) Defining our Relationship: Due to the nature of FCDO’s programmes, funds are time-bound and exhaustible influencing the way the programme engages with the county and municipality to ensure supported interventions are sustainable. In showing that by nature, the programme’s work is intended to be catalytic and relies on both SUED and the corresponding municipality identifying complementary roles, the programme has been able to get political commitment to the collaborative implementation of the UEP’s vision. When the programme started out its local engagement, its priority was to define the roles and responsibilities SUED, the county and municipality had. In doing so, SUED was demonstrating equal partnership with the municipality and county. The Participation Agreement that outlines roles is critical in helping the municipality and county see that SUED is keen to work with the local government entities as equals. Further providing independent roles between the county, municipality and the programme enables SUED to task the respective municipality and county to honor their commitment. b) Carrying out a Political Economy Analysis: To best understand the context in which SUED was going to operate and how best to work with the county and municipality, SUED carried out a PEA prior to kick starting its implementation activities. The PEA was key in helping the programme to learn more on each municipality’s political context, cultural orientation, diversity, and economic opportunities as well as what the enablers of economic development were. In doing so, the programme was able to better understand how the political dynamics and economic visioning interplayed. This understanding was key in ensuring that as the programme sequenced its interventions it was able to see how best to carry along the political class, the county and municipal technical team and the local-level key stakeholders ensuing that there was provision for them to propose locally – sustainable interventions that would lead to inclusive economic growth. c) Developing a Stakeholder Engagement Strategy: After carrying out the PEA, the programme developed a stakeholder engagement strategy that mapped its stakeholders into different categories i.e. strategic and development partners, national government and intergovernmental institutions, county government and municipal public sector, private sector and civil society organisations. This mapping helped the programme quickly identify its entry points into the counties and which stakeholders to work closely with. Further, it informed the programme’s relationship realignment which helped SUED commence its engagement with key stakeholders earlier in its support ensuring

1

Lake Region Economic Bloc- Kisii and Bungoma, North Rift Economic Bloc – Eldoret and Iten, Frontier Counties Development Council- Mandera and Isiolo, Mt. Kenya and Aberdares Region Economic Bloc- Kathwana and Kerugoya/Kutus, South Eastern Economic Bloc- Kitui and Wote, Jumuiya Ya Kaunti Za Pwani- Malindi and Lamu

that they felt that they were partners and co-owners of the development process of the UEP and coimplementers of agreed decisions. d) Inclusive Decision Making: SUED’s work in the municipalities means that the programme operates in a diverse and increasingly complex environment. Each municipality has its own unique nuances and context that require the programme staff and its implementation approach to be adaptive and inclusive. Being prescriptive in SUED support with no flexibility or adaptability will not only create tensions with the local government but generate resistance to own the programme objectives and outputs. As such SUED has embedded within its programme inclusive decision making at every key phase. While developing the UEPs for the municipalities which transition into investment attraction, SUED has worked closely with the municipal and county leadership to ensure that all the key stakeholders are engaged from the onset. This has entailed having in-person workshops, follow on virtual meetings as well as feedback surveys to ensure that the voices of the beneficiaries are included in the final decision. By having inclusive processes during key decision-making, the municipal and county leadership as well as other key stakeholders can own the process. e) Embedding Programme Processes within the County and Municipality Team: In the development of the UEP and investment attraction work, the programme has worked closely with the municipal and county leadership to select technical representatives who constitute the Project Steering Group (PSG). The PSG serves as the technical unit that works closely with the SUED team to ensure that the programme aligns with the County/municipality leading to enhanced collaboration.

In investment attraction work, the PSG has been instrumental in identifying projects that are investor attractive and have worked closely with the SUED team to identify what had previously hindered investors. By doing so, the programme is able to develop a responsive strategy that will help both the municipality and the county to address them. f) Promoting Private Sector Engagement: The programme has emphasised to the county and municipal leadership the critical role that the private sector plays in economic development. Within its interventions, SUED has made the case for early private sector engagement in the selection of investor ready projects that both the municipality and the county can work with the private sector. By encouraging this early conversation with the private sector, the municipal and county leadership have better understood the varied business constraints that deter investors. This process has ensured that the county and municipal leadership lead the charge towards creating an investment friendly environment that aligns with the programmes wider objectives. This ownership of how they can put in place legislation and policies that outlive the programme shows their personal commitment to urban economic development .During the development of the UEPs, the programme ensures that the private sector is engaged early to capture their aspirations and share with the county and municipal team what challenges they faced. In Kisii, the development of the UEP elicited discussions on what was a deterrent to the private sector setting shop in the municipality, as such the county and municipal have drafted seven bills. The bills are geared towards making the business environment conducive to carry out business in the municipality effectively. g) Programme Sequencing: SUED’s first intervention in its supported municipalities is the development of the UEP. The process is iterative with active engagement between the programme and the county and municipal leadership. At the end of the development of the UEP, SUED has sessions with the county and municipal technical team, the municipal board, and the Governor to share with them the final output. The board ratifies the UEP by formally adopting it. This formal adoption leads to a public launch of the UEP with the Governor together with UK British High Commissioner or Deputy High Commissioner headlining the event. This adoption and public launch not only show the public commitment to the programme by the county and municipality, but it also shows ownership of the developed product and commitment to implement it in totality. That is why within its programme structure SUED has ensured that the transition between the UEP development process and the commencement of the Investment Attraction Process is seamless. Sequencing the programme in a manner that shows how SUED not only developed the UEP but will proactively work with the municipalities to bring it to life emphasises a partnership development process.

Best Practices to Replicate Carry out a PEA: It is critical for programmes to include a political economy analysis at the commencement of their interventions. It will help them improve their understanding of the political context and see how best to dialogue with the political class and key stakeholders who may be key in ensuring local ownership of the interventions that will be supported. Further it can potentially help programmes identify how they will work within the local context to ensure the sustainability of their programme support.

When SUED carried outs its PEA it utilised a qualitative approach to engage with the political class, county officials, the private sector and civil society. The PEA identified both positive and negative influencers in the county. In creating a “safe space” for conversations the programme was able to see how to align the priorities of the county and municipal leadership with the private sector and develop a responsive implementation plan that would help facilitate that through vibrant stakeholder engagement.

Determine Incentives for Government Commitment: As a programme, it’s important to determine what role you intend to play to the local government counterpart, it needs to go beyond the donor role to one of mutual partnership. Programmes need to determine how they can work together with the supported local governments to ensure that they have shared goals with specific outputs. SUED’s early work clearly defined the roles that the county, municipality and the programme would play. The Participation Agreement shared SUED’s intent and outlined its asks of the county governments. Their co-signing onto the agreement meant that they now were as keen as the programme to see the objectives met. This is because not only would it make the programme successful it would cause their municipality to emerge as a preferable investment hub that has a well-thought-out and world-standard urban economic strategy that guides its economic development.

Make your Stakeholder Engagement and Management Versatile: There must be appreciation that different stakeholders have varied roles in a programme. Further all stakeholders may not appreciate the same methods of engagement. As such, when identifying who your key stakeholders are there is need to determine what role they will play over the course of the programme. In SUED, at the onset it was necessary for the programme to engage extensively at the national level with Cabinet Secretaries and various agencies to generate interest in the programme and create awareness on its offerings. Once SUED had selected municipalities, it had to pivot its engagement towards the county and municipal leadership. In addition, across its intervention areas, the programme knows who at the county and municipal level will provide the most critical information to help both SUED and the local government to reach a consensus on an intervention approach. The programme also utilises a plethora of methods to engage with its stakeholders: there are those with a strong preference for in-person meetings, those who prefer virtual meetings and email updates or phone calls. To accommodate that, the programme uses the method that best suits the stakeholders.

Provide platforms for Mutual Engagement and Learning: When working in programmes that have a large geographical reach and include different stakeholders there is need to bring them together to share their experiences on the programme. The platform enables them to see their challenges are not unique but experienced elsewhere and together they will be able to collectively determine a workable solution.

SUED has a Consultative Forum that brings all its supported municipalities together to share experiences in urban economic development and how the programme is working with them to become economic growth hubs. In addition, the forum provides a platform through which the municipalities share their best practices and lessons learned helping each other see how best to position themselves to benefit from the programme. This forum creates a sense of togetherness among the supported beneficiaries and enables them to own the processes that they come up with in the forum and implement them effectively.

Be Adaptive in your Programming: To encourage co-creation and collaboration that will ensure ownership of the programme’s support, there needs to be room to be adaptive to the wishes of local stakeholders. For example, when SUED started carrying out its in-person engagements at the municipal

level, the programme had not incorporated within its budget transport reimbursement for meeting participants. However, when the municipal and county leadership shared that by not catering for transport reimbursement the programme was at risk of not having all the critical stakeholders participate, the programme sought approval from the donor to incorporate transport reimbursement for in-person meetings. Most recently with the pivoting of in-person meetings to virtual ones to accommodate COVID19 protocols, the county and municipal leadership shared that the stakeholders needed reimbursement for their communication costs to cater for the data expenses incurred. SUED adapted to this request and provided the reimbursement. By being adaptive in how it engages with the stakeholders the programme has shown that it is open to use emerging approaches to ensure that the local stakeholders are at the decision-making table.

Conclusion Traditionally, local ownership of development processes has not been given the priority that it needs to ensure sustainability of programme interventions. SUED is keen to ensure that the work it does in the municipalities outlives the programme. Therefore, priority is given to the integration of programme processes into the wider county and municipal governance process. Further, SUED’s interventions are aimed at helping the county and municipal staff bolster their understanding on what critical practices they need to have in place to promote investment attraction into their urban centers. Most importantly, the programme endeavours to be less transactional in its relationships with the municipal and county leadership and move towards a partnership-based approach on mutual goals and objectives. In doing so, SUED promotes a shared sense of ownership of the UEP and programme outcomes and achievements.

Further there is a collective sense of responsibility and accountability between the programme and the benefiting county and municipality on the areas that need strengthening to ensure the successful attainment of objectives. When both the programme and the municipality are in concurrence and operate in harmony with supportive institutions and policy, their urban centres will thrive.