Project - Decentralisation in Peru
POWER FOR THE LOCAL AUTHORITIES AT LAST
Today it is quite normal for Peru´s local authorities to have a say on local issues, in this case regional planning in Los Aquijes. Source: Fondo Contrvalor Peru-Alemania
They hold vocal debates, weigh up the costs of the various options and decide what is most urgently needed: the extension for the school, the bridge over the Ucayali or a new road to the neighbouring village? Debates like this are now taking place throughout Peru, in Sullana in the north, in the districts of the capital, Lima, and in Capazo high up in the Andes. Now that the 1,800 local and city councils of Peru are no longer under the reins of central government, voiceless and devoid of influence, but have budgets and extensive powers, the Peruvians have embraced democracy.
Not only do they elect their representatives, they also debate in the town halls - as civic participation, Peru-style, goes even further than local co-determination in Germany, for example. Even the investment plans of all the municipalities and cities are drawn up with the involvement of the residents, who help decide what will be built first and what, with the aid of German Financial Cooperation, is achievable. "And often, it tends to be schools, an important connecting road or a marketplace for farmers rather than prestigious town halls and other showy buildings," says Markus Rühling, an expert in urban development at KfW Entwicklungsbank.
Almost a Revolution
The newly-elected Toledo government´s decision, in 2001, to decentralise the country and hand over numerous tasks such as building primary schools, village roads, health centres and water supplies entirely to the local authorities was the most fundamental reform of Peruvian state structure of recent decades. In a country which, since the Spanish occupation in the 16th century, had been organised along more centralised lines than any other South American state, this is practically a revolution. Today, the 1,630 municipios distritales, the 180 provinces and 25 regional governments have set tasks, receive financial allocations from the State and enjoy democratic legitimacy.
Decentralisation in Peru is the key to more good governance and better state services for the population - a task at which the central authorities in the capital Lima had failed for decades. In fact, there were no clear rules on competences and various authorities would block each other's actions – to the general detriment of the population. Over the past five years poverty has been pushed back significantly, thanks to robust economic growth. Even in 2009, the year of the global economic and financial crisis, economic growth slowed by only about two per cent as compared to 2008. Nevertheless one-third of Peruvians continue to live in poverty, and one-seventh of the population has to survive on less than one US dollar a day. The scale of poverty is shocking, particularly in rural areas and among the Indian population.
Signs of a Positive Trend
The decentralisation of key tasks such as education, health care provision and the development of the local infrastructure and economy should help improve this situation in the long run, and there are already signs of a change for the better. To achieve this the World Bank and KfW Entwicklungsbank have made a joint commitment. Between 2005 and 2009, 45 million euros were made available to Peru from budget funds of the German Federal Ministry for Economic Cooperation and Development and from KfW funds through KfW Entwicklungsbank, within the framework of three programme-based joint financing initiatives, which build one on the other. Social and economic infrastructure in particularly poor rural municipalities is also being financed directly through debt swap schemes and additional budget funds of the Federal Ministry for Economic Cooperation and Development.
Peru has enacted a law setting an upper limit on debt, to ensure that the local authorities operate economically. The country's decentralisation process is also proving effective at countering corruption. Even the smallest local authorities must draw up their budgets within the framework of a uniform, national system and put commissions involving larger investments to public tender. These projects are making an important contribution to further reducing poverty in Peru.
FURTHER INFORMATION
Last updated: July 2011
