Success Story - Building the Capacity of Municipalities to Deliver Responsive Urban Development

Sustainable Urban Economic Development Programme

Building the Capacity of Municipalities to Deliver Responsive Urban Economic Development

Figure 1: Municipal Staff and Board Members in Malindi participate in a breakout session during the financial management and revenue enhancement training

Empowering Municipalities to Sustain Urban Economic Development through Strong Institutional Systems and Technical Competencies Challenge In the recent past, there has been a significant increase towards more people living in urban areas than in rural areas. That upward trend is expected to continue into the foreseeable future. Cities in most countries including Kenya are the primary drivers of economic growth within their geographical zone, as such there is a pertinent need to ensure that they are economically sustainable to support the people who depend on the economic activities that they generate. Unfortunately, if urban growth is not properly managed it can cause urban areas to be susceptible to unplanned economic development. This is because they will not

be able to take advantage of the urban centre’s unique economic opportunities resulting in a decrease in the potential a centre has to contribute to the national economic output.

Despite well intentioned initiatives, urban centres of the future run the risk of not being able to develop in a sustainable manner. Even with access to resources and strong partnerships with the private sector, if urban centres do not have responsive urban governance systems that encourage accountability and build the capacity of staff to manage urban service delivery systems, the initiatives put in place will not be maintainable. There needs to be support towards increasing the self-reliance of these urban centres encouraging their leadership to improve their local revenue collection to aid in their long-term maintenance of social infrastructure to incentivise future investors.

In Kenya, the national government has decentralised urban functions. While this might have been primarily influenced by the country’s internal political process (regional economic imbalance leading to the 2007/2008 post-election violence), its merits in how efficiency and responsive policy come into play has highlighted its critical economic efficiency. The Country’s devolution process has enabled counties to take up transferred functions legally and reduce their reliance to the central government aside from national level policy and guidelines to allow the urban areas to prioritise their economic sectors independently.

While municipalities in Kenya existed prior to the promulgation of the constitution, their mandate was clarified after the enactment of the Urban Areas and Cities Act, No 13 of 2011 outlining a new way in which the municipalities would work within the county governance system. Despite the Act being enacted in 2011 and amended in 2019, municipalities continue to lack adequate institutional frameworks and supportive urban legislation to effectively increase their spatial, economic, and social interconnections between the urban and peri-urban areas that they serve. This is primarily attributable to the lack of strong institutional environments that can provide them with the power, capacity as well as the needed resources to effectively carry out their role. Municipalities still require technical and operational assistance to effectively increase and diversify their own-source revenue to augment budgetary allocations from county governments and funding from development partners to enable them to achieve sustainable financial autonomy.

Intervention To help municipalities strengthen their technical and institutional capacities to manage urbanisation by integrating urban economic planning and design, urban legislation and urban investment in climateresilient infrastructure and value chains, the UK Government is funding the Sustainable Urban Economic Development Programme (SUED) to work with 121 municipalities in Kenya. The five-year £70 million programme utilises a three-step approach in its implementation approach. At the onset, the programme works with municipal and county staff to design a responsive Urban Economic Plan (UEP) that integrates market-based approaches helping the municipalities to identify viable value chain projects and supporting climate-resilient infrastructure that will help actualise the economic potential of the municipality. Once the municipality has formally adopted the UEP, the programme provides additional technical assistance to ensure that the plan is investor-friendly and attracts investors. Additionally, the programme works with the municipalities to identify regulatory and policy inhibitors that dissuade investors. To ensure that the municipal and county team implement the recommendations of the UEP, the programme ensures that its support includes a strong capacity building component that aims at building good governance systems and technical competencies for effective management of urban services to sustain SUED’s initiatives beyond the programme’s life span.

SUED’s aim in its capacity building work is to ensure that municipalities have robust structures, efficient processes, sufficient skills, and competencies with supportive regulations that enable them to properly manage their urban areas in a sustainable manner that promotes equitable development. It is against this 1

Bungoma, Eldoret, Isiolo, Iten, Kathwana, Kerugoya-Kutus, Kisii, Kitui, Lamu, Malindi, Mandera and Wote

background that the programme undertook a Capacity Needs Assessment in the first 10 municipalities – Kitui, Malindi, Isiolo, Kisii, Iten, Kathwana, Eldoret, Kerugoya, Mandera and Lamu to identify the gaps, challenges, and opportunities to inform capacity development interventions.

The assessment covered three thematic areas: a) urban governance and organisational effectiveness; b) business environment reform and investor readiness; and c) knowledge management. The CNA entailed multi-stakeholder engagements with national, county, and municipal stakeholders to determine how to best develop internal capacity beyond the existing efforts by county governments, municipalities, and development partners such as World Bank through the Kenya Urban Support Programme (KUSP).

By assessing the municipality’s urban governance and organisational effectiveness, the programme was able to learn the governance structures and management systems that they had in place. Knowledge of this is critical in how the programme works with the municipalities to put in place frameworks and internal systems and operating models to strengthen their capacity to implement the urban economic plans, advocate for conducive reforms and policy for investors as well as determine the priority that should be placed on different value chain and infrastructure projects that would spur economic growth in the municipality.

The assessment further helped the programme to determine the capacity of the municipalities to implement policies that wouldn’t hinder businesses in their locality. Learning the capacity of the municipalities in this regard has brought to the front the areas in which there is an overlap in functions between the national government and the county government. In doing so, the programme will be able to advocate to the county government the need to resource some of the sectors to enable the municipalities to effectively manage them.

The programme was keen to see the level of willingness of municipalities to improve learning within their internal system as a result of implementing programmes that had successful outcomes. By knowing how municipalities captured, organised, shared, used knowledge, and adapted the learning into their subsequent planning, SUED would be able see how best to work with the municipalities to incorporate lessons they learned as they implemented SUED that they would use to strengthen their knowledge on how to best manage urban services in a way that is sustainable and draws in investors.

The assessment adopted a holistic approach to capacity development which helped the programme determine what support the municipalities would need from SUED at institutional, organisational, and individual level. At institutional level, municipalities remained heavily reliant on the counties primarily because they lacked structures that would enable them to effectively carry out their role. In addition, key strategic functions such as urban planning, revenue collection, trade and development among others remain domiciled at the county departments. These functions if delegated to municipalities would help them implement key SUED intervention areas and achieve the visions of the UEPs. At organisational level municipalities did not have strong management practices in planning, fit for purpose structures, responsive culture, and relevant policies which are critical areas in SUED’s work towards supporting a conducive investment climate for new investors in the municipalities. In addition, municipalities did not have in place resource mobilisation or revenue enhancement strategies which greatly hindered their capacity to achieve financial autonomy and enable them to be financially sustainable.

At individual level board members and staff require capacity building to gain knowledge and skills in; urban economic planning and management, investment attraction process, knowledge management, mainstreaming of climate resilience and GeSI in municipal planning, budgeting, and implementation among other areas. Specifically, under urban governance, board members and staff require training in leadership and corporate governance, evidence based urban planning, revenue mobilisation, budgeting, procurement, contract management and value for money.

As a response to the findings, SUED prioritised an initial training for three 2 municipalities on financial management and revenue enhancement. The objective of the training was to expose the municipal boards and staff to the financial management and governance aspects in the Public Finance Management Act, 20123, Public Procurement and Asset Disposal Act, 2015 4 and the linkages to Urban Areas and Cities Act, 2011 (amended in 2019) 5. Additionally, the training aimed at strengthening the capacity of the boards and staff in planning, budgeting, procurement, contract management and revenue enhancement. With the acquired knowledge, the municipalities would be able to manage financial resources prudently and mobilise resources to fund the economic opportunities in the UEPs and municipal plans.

The SUED supported training was aimed at ensuring that municipal staff gained the necessary skills needed to manage revenue and demonstrate to their counties their capability to effectively and in an accountable way put in place transparent financial management procedures that would help them improve revenue collection increasing the municipality’s appeal and access to private investment.

In its training, SUED shared with the municipal board and staff the linkages between financial management and governance aspect with the Public Finance Management Act, 2012, Public Procurement and Asset Disposal Act, 2015, and the Urban Areas and Cities (Amended in 2019) Act. The training was conducted in-person while adhering to the COVID-19 regulations6. To ensure that the county and municipal team were actively engaged in the training, SUED used three broad training delivery methods: a) lecture style delivery – the programme utilised this approach when sharing legislative and framework based information as it helped the training participants quickly reference some of the regulations that were being cited, b) participant engagement approach – SUED incorporated breakout sessions in the training to encourage peer learning and to elicit open feedback on areas that required clarity from the trainees and c) case studies – the utilisation of real-life scenarios helped the staff see how best to apply the knowledge gained. Both local and global case studies were used to expose trainees to best practices which can be replicated in their municipalities.

The facilitators embedded Problem Driven Iterative Adaptation (PDIA) framework in breakout sessions.

This is a step-by-step approach that helps participants to break down a problem into its root causes, identify entry points, search for possible solutions, take action, reflect upon what has been learned, adapt, and then act again. This approach enhanced the conversations and helped the participants to develop SMART action plans to apply the acquired knowledge in their day-to-day activities and urban problemsolving initiatives.

Result The CNA enabled the programme to determine its intervention areas and design the approach that it would utilise to address the gaps identified. By knowing the context in which the programme’s capacity development initiatives would be rolled out to, SUED has been able to adopt different types of competency models for capacity building that go beyond training and include on-site mentorship, incorporation of workshops during interventions and weaving in continuous staff development and knowledge sessions during implementation. By having recommendations within the CNA that highlight how the interventions should be carried out at institutional, organisational, and individual level, SUED has been able to develop a well-thought out and responsive implementation plan. The programme is now better placed to work with municipalities to harmonise their urban services standards as well as ensure the effective delivery of their 2

Kitui, Isiolo and Malindi

3

http://kenyalaw.org:8181/exist/kenyalex/actview.xql?actid=No.%2018%20of%202012

4

http://ppra.go.ke/ppda/

5

http://kenyalaw.org/kl/fileadmin/pdfdownloads/bills/2017/UrbanAreasandCities_Amendment_Bill_2017.pdf

6

The programme ensured that there was safe distancing within the meeting rooms, that all participants correctly donned their masks throughout the training and sanitisers were provided with hand washing encouraged.

strategic functions. Osman Halake Municipal Manager Isiolo shared “Having SUED carry out a capacity needs assessment within the urban sector will not only inform the programme’s interventions but will also help the municipalities prioritise areas that need strengthening and make us effective in our work.”

As a result of the CNA, which informed the training that municipalities received on financial management and revenue enhancement, 60 municipal staff and board members learnt how to improve municipal level public financial management practices, integrate municipal plans including the UEPs into the broader county planning framework and budgeting as well as linking the plans to the available resources.

Additionally, the training exposed them to various revenue streams that municipalities can tap into to enhance their own source revenue, how they can leverage technology to automate revenue streams and increase efficiency.

During the training the programme utilised pre- and post-assessment tools to determine the level of knowledge before the training and effectiveness of the training. 98% of the trainees felt that their knowledge on financial management and revenue enhancement had increased with 95% sharing that they would use the knowledge gained to execute their duties. The initial training of three municipalities demonstrated to SUED how critical it is to empower individuals with knowledge and skills to carry out their roles effectively.

“We are now going back informed and equipped to carry out our role effectively.” Shared Geoffrey Katsole – the Interim Board Chair – Malindi Municipality, soon after the training.