Financial improvement planning in local governments in Southern Africa, with special reference to Zambia

Abstract

Continuing decentralisation in most developing countries increases pressure on local governments to manage more functions and services and larger budgets. In this context, financial improvement planning (FIP) is a strategy that can be used by local governments wishing to improve or ‘fine‐tune’ their financial performance, and especially by those facing serious financial difficulties. This article examines the application of FIP in the town of Kitwe, Zambia, which faces financial difficulties within a national decentralisation framework characterised by several policy and fiscal deficiencies. The article covers how an FIP framework was developed, undertaken and the resultant interventions structured. Implications regarding the role, design and techniques of FIP in local governments within a decentralisation policy framework are elaborated upon. Effective decentralisation in southern African countries requires local governments to undertake sound financial management. In turn, this requires local governments to embrace challenging local policy processes. Development of FIP techniques, and strengthening local capacity and policy to support them in local governments, should be ingredients of any country's decentralisation programme.

1 INTRODUCTION: DECENTRALISATION AND LOCAL FINANCIAL MANAGEMENT

Internationally, the trend towards the decentralisation of functions and responsibilities to local governments continues in most developing countries, ‘grudging at times, more forthcoming at others’ (World Bank, 2000: 45). To be effective, decentralised functions and responsibilities should be matched by adequate financial resources at local level to undertake them. Broadly, this requires both increased fiscal decentralisation (changing the forms and amounts of national or regional fiscal resources that are transferred to local governments) and an increase in the generation and management of own revenues by local governments.

Fiscal decentralisation poses interesting technical challenges to national and regional governments, being ‘a difficult trade‐off between maintaining central flexibility to carry out macroeconomic and equalization objectives, on the one hand, and improving the delivery of services in urban areas, on the other’ (Bahl & Linn, 1992: 470). The emerging trend is summarised by Peterson's (1995: 3) observation that:

… the most common solution to financing decentralisation has been to increase local government share in nationally collected taxes through automatic revenue sharing. This approach allows central governments to retain control of tax rates and tax administration, while ensuring local authorities a higher flow of revenue.

To this technical challenge, however, should be added the compounding effect of national and local political factors, which may often de facto run counter to the direction of fiscal decentralisation. The meshing of these technical challenges and political considerations frequently leads to mixed policies and results for decentralisation. The question becomes: do local governments have both the technical and the political capacity to participate in decentralisation?

Of particular concern in this article is the tremendous pressure that decentralisation in general places on local governments to undertake sound local financial management (see Wegelin, 1995, for a review of the institutional implications). This pressure is exacerbated by continuing urban growth. Local governments are faced by both an increase in the number of their service functions and responsibilities, and a growing population to provide these services to. The ‘central question’ for effective local public finance of ‘how to capture the benefits of urbanisation in order to increase the supply of services’ (Bahl & Linn, 1992: 1), becomes a particularly important challenge. If, in addition, a local government is faced by a contradictory policy environment and poor performance in its local economy, thus limiting the potential for own revenues, the situation becomes an even greater cause for concern.

In this context, financial improvement planning (FIP) in local governments is particularly important. FIP is most effective when it forms part of a wider programme of policy, organisational and financial management reform and development. Many local governments, however, arrive at FIP more reactively, in many instances when confronted by an immediate financial crisis. Various technical approaches to FIP in local government have been developed. These analytical frameworks typically shape the nature of financial analysis that is conducted, and influence the shape of the resulting recommendations. The framework for FIP set out some years ago by McMaster (1991) – mobilising revenues, managing expenditure, and increasing private sector participation – remains of particular use. At a technical level, his approach has been extended in subsequent FIP exercises in local governments. The work reported here illustrates further development of this framework at a technical level, and highlights also the political dimensions of the process.

FIP techniques were applied as part of a general support programme to local governments in Zambia through the SINPA (Support to the Implementation of National Plans of Action) programme. SINPA, a Netherlands government‐supported programme operating in Bangladesh, Bolivia and Zambia, aims to build sustainable local capacity for the effective management of urban development, with the initial focus on selected pilot cities in each of the countries. The particular city involved in the Zambian case, Kitwe, is located on the Copperbelt, which has experienced a substantial decline in its regional economy. The effect has been a substantial erosion of the local economies and financial bases of the cities and towns along the Copperbelt, including Kitwe. In addition, the decentralisation process in Zambia has witnessed several controversial policy decisions that have negatively impacted on the financial viability of all Zambian local governments. In Zambia, SINPA is assisting to build a partnership of support between the School of Built Environment at the Copperbelt University located in Kitwe, and the Kitwe City Council (KCC).

Not surprisingly, during a strategy exercise the KCC identified ‘enhancement of the Council's revenue base’ as its highest objective (KCC, 1998). A team of international and domestic professionals worked with KCC councillors and officials on this issue from early 1999. This report is based on these efforts (Ndeke et al., 1999) and provides several observations concerning the relevance and application of FIP techniques in local governments experiencing severe financial difficulties.

Section 2 of the article covers adaptations and extensions made to the analytical framework of FIP for application in Kitwe. In the third section, the results of the financial analysis of the KCC are summarised. In the fourth section, the package of reform measures is outlined. Observations regarding the implementation of FIP in local governments at both a technical and policy/political level are raised in the fifth section to assess the role of FIP, before the final conclusion.

2 ADAPTING THE FRAMEWORK OF FINANCIAL IMPROVEMENT PLANNING

A framework for FIP and a toolbox of techniques are set out usefully in McMaster's Urban financial management: a training manual (1991) that draws together significant work supported by the World Bank and the United Nations Centre for Human Settlements in this area. A more thorough general examination of local government revenue and, to a lesser extent, expenditure issues is found in Bahl & Linn's (1992) Urban public finance in developing countries. Regarding FIP, McMaster's framework is attractively logical, suggesting a threefold strategic focus on:

1.	Improved revenue mobilisation
2.	Greater expenditure planning
3.	Increasing private (including community) participation in the provision of urban services

This framework has been further developed in subsequent applications of FIP. One useful example is the framework used in the Asian Development Bank's support programme for municipalities in Karnataka State in India (ADB, 1998). This approach covers:

1.	Accounting reform
2.	Revenue improvement planning
3.	Operation and maintenance planning
4.	Asset management planning
5.	Debt management

In a more conventional situation, a financial analysis can be undertaken to identify trends and inform actions in each strategic focus area. This analysis would involve establishing and projecting the relationships between revenue generation, expenditure and the resulting financial balance. The financial analysis is fed with revenue and expenditure data over several years for the local government concerned, estimates of population size and inflation rates, additional relevant information that may be available and benchmark information on other (comparable) local governments in the country. While such basic data are often readily accessible in more developed countries, in developing country contexts this is not always the case. Simply assembling reliable financial data (and not even benchmark data) for the local government in question can be a major exercise in itself.

During the initial phases of the work in Zambia, the FIP analytical framework was both extended and focused to suit the specific circumstances and availability of data. An investigation of the potential for public–private partnerships in the various core functions of the KCC (McMaster's third focus area) was undertaken as a separate exercise. This was conducted in close coordination with the work on the Council's financial situation (with obvious overlaps), but allowed the financial work to focus more intensively on identifying more basic and immediate financial actions that could be undertaken to stabilise the KCC's financial situation. The FIP work followed a strategic approach built on four pillars: improving basic financial management systems and practices; increasing revenues; reducing expenditures; and building financial management capacity and policy support to undertake reforms.

Several issues underlie the adopted approach:

1.	First, after initial investigation it was clear that Kitwe needed to stabilise or put in place many of the basic financial management systems and practices (to ‘get the basics in place’). Without integrity in these systems, further improvement actions would not be effective.
2.	Second, if improvement measures were to be implemented, the financial management capacity of officers located in strategic delivery and spending departments of the Council would need to be increased.
3.	Third, improvement measures could not be introduced and would certainly not be sustained over time unless the financial management capacity of councillors was not raised. Providing capacity‐building support in such strategic areas has proved to be an important strategic intervention to support financial improvement.
4.	Fourth, as discussed later, the lack of reliable financial data or information systems required several adaptations of, and improvisations to the FIP techniques. The lack of recent and reliable financial information is a constant obstacle to managers and professionals in the cities of many developing countries.
5.	Fifth, the intention from the outset was to ensure that at least a core of the recommendations for financial improvement would be adopted by the KCC. The approach followed was to develop a fairly comprehensive strategy and programme of financial improvements, but then to focus on a limited number of key actions that would be politically feasible for the KCC to undertake in the short term. These key action areas were selected through strategy discussions within the team and with KCC councillors and officials, thereby increasing the likelihood of their application.
6.	Finally, financial issues in local governments are intrinsically politically sensitive. Internal financial flows, procedures and performance are a road map of the formal and informal power relationships within a local government. Numerous professional and political sensitivities become involved. Establishing a political framework within which improvement planning could be undertaken was, therefore, a critical factor. This involved national government endorsement through its participation in the overall SINPA programme but, more importantly, also the development of positive attitudes among KCC councillors and senior officers towards the programme. Systematic work was undertaken especially by the local counterparts and the local project leader to embed the programme within the local government. Throughout the process, close interaction was maintained with senior officials and councillors.

3 IMPROVEMENT PLANNING IN KITWE

An initial financial analysis of the KCC was conducted early in 1999. The results of the financial analysis are summarised below, beginning with the policy context for local government finances in Zambia and moving into a summary of the particular situation in Kitwe.

3.1 Policy context

The World Bank (2000: 46) recently included Zambia among several countries were decentralisation has not resulted in the centre relinquishing much control. Currently, the sharing of functions between central and local government in the country is not clearly defined, is poorly coordinated and fragmented (Saasa et al., 1999). Responsibilities are shared between central and local government in a number of areas, including areas of general administration, health, housing, community and economic services. Central government plays a proportionally greater role in education and health, while local governments have greater responsibility for community and economic services.

A number of policy decisions by the Government of the Republic of Zambia (GRZ), several in the period of a decentralisation programme, have adversely affected local government finances in Zambia. Reports prepared by the Local Government Association of Zambia (1997, 1998) review the evolution of local government finances in the country since 1960. (See also Saasa et al., 1999, for a recent review of local government finances in Zambia.) The period 1960–72 was one of the most successful for Zambian local governments. During this time, they received grants from national government based on a predetermined formula and were also responsible for electricity distribution.

The period 1973–80 saw the withdrawal of housing unit grants and a gradual reduction in all other grants. During this period, the GRZ as part of an overarching socialist policy, declared all land in the country as having no value. This single act fundamentally undermined the property tax system that was a vital component of local governments' own revenues. The full consequences of this act can be seen when it is compared with the emphasis given in other developing countries to property tax reform as a basis for local governments' financial viability (see Rosengard, 1998). The function of electricity distribution was also withdrawn from local governments in Zambia.

The period 1981–90 saw the introduction of the Local Administration Act (1980), which decentralised the system of local government. Many functions performed by the GRZ were assigned to local governments, but without the corresponding transfer of fiscal resources. In addition to these unfunded mandates, local governments themselves embarked on a number of loss‐making commercial ventures.

From 1991, several further measures were introduced by the GRZ that have had detrimental effects on the local government financial system. These include:

1.	The withdrawal of all GRZ grant funding to local governments after the 1992 Budget Speech
2.	The transfer of responsibilities for motor vehicle licensing from local governments to the Road Traffic Commission
3.	A large increase in the number of properties exempted from property taxation by the Rating Act of 1997
4.	A GRZ instruction prohibiting the eviction of rent or payment defaulters from local government‐owned houses
5.	The forced sale of local government‐owned houses by GRZ decree to sitting tenants at below‐market values, thus reducing both the assets and rental incomes that these represented to local governments

These measures have dramatically cut into local governments' own revenue bases and have had a catastrophic impact on their financial viability. In addition to the economic and social damage caused by undermining the effective delivery of municipal services, consequences may also be expected with regard to overall taxation levels (indeed, one response of the KCC has been to double local taxation rates). Such policy decisions constitute a list of ill‐advised actions if effective decentralisation is really sought, and raise questions about the political commitment and technical capacity around decentralisation in the country. Nevertheless, this is the policy context within which the KCC functions.

3.2 Financial position of Kitwe

The city of Kitwe has experienced deteriorating conditions in the local economy caused by the poor performance of the national economy and the slow process of privatisation of the Copperbelt mines, resulting in major impacts for local, principally upstream, industries. Along with the impact of the various GRZ decisions outlined above, the financial position of the KCC has been strongly affected by the decline in the local economy. This decline has resulted from the high dependence of the local economy on copper mining, an industry that has seen a decline in international demand and, locally, a major restructuring of the industry through privatisation.

The KCC prepares an incremental budget covering its January to December financial year. Budget variances are high: overall, budgeted figures are usually around 25 per cent over actuals, while budgeted revenues are as much as 50 per cent higher than actual revenues collected. The budget floats somewhat above financial reality and is of questionable use for financial management. While most conventional financial management and accounting systems are present in the KCC (KCC, undated), in reality the local government is managed primarily on a cash basis, with daily cash book management and chasing funds to meet monthly salary payments predominating.

Establishing the precise financial situation of the KCC is a difficult exercise. In 1999, when the financial analysis was undertaken, the most recent audited figures for the KCC were for 1988 (KCC, 1999a), while unaudited accounts were available up to 1995 (KCC, 1990–8). Financial actuals were not readily available. Figures used for the analysis were assembled through frequent interactions with the finance and computer departments. In 1998, receipts and payments data for the KCC's five main funds (Table 1) indicated an overall deficit of 386 million kwatcha (K), or US$76 000. However, these figures include approximately K1,2 billion (US$235 000) from the sale of council houses and a surplus of US$75 000 on the water and sewage fund. The sale of housing assets represents a one‐off income and the water and sewage department is in the process of being separated into a stand‐alone utility company under a World Bank assistance programme. Much of the proceeds from the sale of housing assets were reportedly used to cover recurrent expenditures. Excluding exceptional receipts from the sale of assets and the water function that is soon to be corporatised, the KCC deficit was estimated to be approximately K1,9 billion (US$373 000), or 37 per cent.

Receipts and payments on the KCC's main funds, 1998 (K '000)

	Expected to remain with the KCC				Expected to be sold or corporatised
	General rate fund	Low‐cost housing	Subtotal	Taverns	Water and sewage	Sale of houses	Subtotal	Grand total
Receipts	1,533,400	470,300	2,003,700	1,350,900	2,417,600	1,198,000	4,966,500	6,970,200
Payments	(3,005,200)	0	(3,005,200)	(1,413,300)	(2,036,400)	(900,800)	(4,350,500)	(7,355,700)
Surplus/(deficit)	(1,471,800)	470,300	(1,001,500)	(62,400)	381,200	297,200	616,000	(385,500)
Source: KCC (1999b).

High inflation had allowed the KCC to clear various outstanding debts. However, when the analysis was undertaken, the KCC had overdraft facilities of around K234 million (US$46 000) being serviced at an interest rate of 55 per cent, which were being used for ‘rolling borrowing’. The KCC also has African Development Bank (ADB) and World Bank loans for restructuring and rehabilitating the water and sewage services. Servicing on these loans will commence in several years' time.

3.3 Revenue trends

Trends in the KCC's revenues were examined over recent years (KCC, 1995–9). The Council no longer receives special purpose and discretionary grants from the GRZ. In 1999, the KCC budgeted for an estimated income of K6,8 billion on its general rate fund from 34 sources. The nine largest sources contribute some 90 per cent of revenue, with property rates contributing almost 60 per cent of revenues (Table 2). Note also from Table 2 the considerable differences between budgeted revenue for 1999 and revised estimates for 1998 that are closer to the amounts actually collected, illustrating the extent of inflation of the budget.

Major sources of estimated revenue to the general rate fund, 1999 (K '000)

	Revised 1998 estimate	1999 estimate	Proportion of total estimated revenues (%)
Rates	1,356,645	3,985,246	58
House rents	455,735	630,679	9
Market levy	101,666	480,000	7
Shop rents	11,021	332,150	5
Licence fees	24,800	225,000	3
Personal levy	278,000	200,000	3
Interest receivable	216,000	140,000	2
Sundry receipts	392,312	112,000	2
Lease of council properties	0	90,000	1
25 other sources	557,853	637,050	9
Total	3,394,032	6,832,125	100
Source: KCC (1995–9).

There are several notable weaknesses to the property tax system in Kitwe. Until the 1998 supplementary roll, property valuations covered buildings only, as land had been considered to have ‘no value’ since the 1975 GRZ decree to this effect. Importantly, the new Rating Act of 1997 now provides for the valuation of both land and buildings. The Rating Act provides for an inordinately wide range of exemptions of property types from property taxation. Furthermore, a number of exemptions from the valuation roll were identified that do not conform to legislation. Of the K23,8 billion (US$4,6 million) of exemptions from property taxes, representing some 9 per cent of the total valuation roll, K1,2 billion (US$235 000) or 5 per cent of properties were questionable exemptions. In general, there appeared to be weaknesses in the integrity of the valuation roll. The ability to maintain the valuation roll is likely to have reduced further as only two employees, of whom one has experience in valuation, now staff the valuation section. Only 26 per cent of eligible property taxes are actually collected. The low collection of property taxes is part of a wider problem of revenue collection in the local government, which is discussed later. Finally, information is no longer transferred between the engineering and planning departments and the valuation section, where the main valuation roll is maintained, and connections no longer operate.

In 1998, property rates were 0,5 per cent per annum for residential and 1,5 per cent per annum for commercial and industrial properties. In 1999, the KCC increased all property taxes by 100 per cent to 1 and 3 per cent, respectively, in the face of an anticipated deficit of K3,3 billion (US$650 000) for the year. Given the large number of exemptions and the poor collection rate, it is not certain that the increased property rates will lead to a real increase in revenues. Most likely the local government will attempt to collect an increasingly higher rate of taxes from a shrinking proportion of potential taxpayers, with a possible net decline in revenues.

The performance of several of the other main revenue contributors in Kitwe was also found to be problematic. This was exacerbated by the use of a centralised and outdated computer system, with all data entry undertaken by a data‐entry staff pool and limited potential for cross‐checking by responsible divisions and departments. Rentals charged for housing owned by the local government were well below market rates (as little as K10 000 or US$4 per month). Moreover, a GRZ decree had prohibited the eviction of housing rental or purchase defaulters. Similarly, daily premiums at the public markets were low and it was unclear what portion of revenues collected from the market actually found its way to the KCC's accounts. Prior to 1999, rentals charged to taxi and bus operators for use of the bus stations in Kitwe had not been adjusted for many years.

Of the main revenue sources of the KCC, the personal levy had possibly the highest collection rate at around 50 per cent. The personal levy is a tax on employees, set by the GRZ and collected from employers by the KCC. However, this levy has a maximum annual cap of K15 000 (under US$3), again set by the GRZ. In addition, the base of the personal levy has been eroded due to retrenchments from the copper mines and the decline of employment in related industries in Kitwe.

The KCC also operated a number of ‘commercial’ activities, primarily taverns involved in the sale of beer and traditional beer, but also a hotel and various guesthouses. While these commercial activities generated K1,3 billion (US$260 000) in revenues in 1998, they were nevertheless demonstrated to have systematically run deficits (Table 3). Interestingly, there was opposition initially from some parts of the KCC to recommendations that these commercial undertakings be disposed of by the KCC as rapidly as possible. Counterproposals included possible borrowing to refurbish taverns and increase the scale of commercial activities. Fortunately, the KCC has now embarked on a process to lease out or sell taverns and other commercial undertakings.

Income and expenditure of KCC commercial undertakings, 1990–5 and 1998 (K '000)

	1990	1991	1992	1993	1994*	1995	1998
Income	37,375	70,269	184,725	520,374	594,214	858,620	1,350,900
Expenditure	(49,185)	(72,499)	(211,242)	(609,826)	(406,859)	(931,176)	(1,413,300)
Surplus (deficit)	(11,809)	(2,230)	(26,516)	(89,451)	187,355	(72,555)	(62,400)
Note: *Possible anomaly due to record errors or disposal of commercial venture(s). Source: KCC (1990–8).

The remainder of the 34 revenue contributors were minor or ad hoc sources. Several were collected by line departments and again it was unclear what proportion of revenues collected was reflected in the KCC accounts. It is likely that the cost of collection is greater than the revenues generated from many of the smaller revenue sources.

Arrears on all revenue sources in the general rate fund were considerable, at around K4,6 billion (over US$900 000) by the end of 1998 (Table 4). The outstanding arrears are almost three times larger than the revenue actually collected from these sources in 1998. There are reports of undue interference from within and outside the KCC in the treatment of arrears. Arrears on the water and sewage accounts stand at K13,9 billion (US$2,7 million).

Arrears on the main revenue sources of the general rate fund, 1998 (K million)

	Arrears
Rates	2,022
House rents (self‐payers)	1,761
Standing charges	394
House rents (general)	371
Personal levy	81
Total	4,631
Source: KCC (1995–9).

The low collection rates and high arrears levels of the KCC are the result of a number of factors. The reduction in visible services provided by the local government has resulted in growing reluctance among the public to pay, which is made worse by the lack of consistent and effective action by the local government against defaulters. Poor integrity in revenue databases, and weaknesses in oversight and checking procedures for maintenance of these databases also limit the effectiveness of the local revenue net. Political interference underlies many of the problems being experienced.

3.4 Expenditure trends

The KCC is responsible for providing a range of services, including social services, housing, refuse collection, road maintenance, water and sewage and public health. As part of the support programme, specific work was undertaken to assist the KCC in identifying and focusing solely on conducting its core functions. While revenues had been falling in the KCC, little contraction of expenditure had taken place. The effect was to see administration and salary expenditure occupying a rapidly increasing proportion of overall expenditure (Table 5). By 1998, the salary bill was 92 per cent of revenue collected in that year.

Proportional expenditure by standard category, 1990–5 and 1998 (%)

	1990	1991	1992	1993	1994	1995	1998
Employees	45	67	41	31	37	40	77
Establishment	9	11	6	8	15	6	8
Premises	4	5	13	19	18	7	5
Total	58	84	60	59	69	53	90
Source: KCC (1990–8).

Not surprisingly, apart from the purchase of several KCC vehicles, there has not been significant capital expenditure by the KCC in recent years. The falling real revenue collection and growing salary costs as a proportion of expenditure will continue to squeeze capital spending. ‘Off‐budget’ capital expenditure occurs in the water and sewage section under the ADB and World Bank loans.

Left unchecked, the increase in salaries as a proportion of income places the KCC in a ‘catch‐22’ situation. Increasing amounts of income are used to pay salaries and to meet conditions of service agreements (KCC 1999c, 1999d), leaving increasingly less money for capital works and visible service delivery activities. This affects performance in the local economy and the overall ability of the KCC to collect revenues (with increasing default levels). Moreover, the KCC becomes trapped in a situation where it does not have sufficient funds, and possibly political commitment, to meet retrenchment expenses. A possible way of breaking the cycle is to develop a reserve fund for retrenchments, potentially sourced through proceeds from the disposal of commercial undertakings and from introducing various savings measures.

3.5 Financial management capacity

A final consideration concerned what human resource capacity existed within the KCC to remedy the situation. The general qualifications of finance department staff involved in financial management activities in the KCC were assessed. While general qualification levels were moderate and certainly not weak, staff turnover was high and staff was rotated frequently between the main finance sections (done partly as a control measure). While there appeared to be several skilled and capable staff in financial positions, most were demotivated by the overall problems experienced in the system and from frequent interference in financial management matters. Most councillors had little or no training or experience in municipal financial management, including those on the strategically important Finance and General Purpose Committee of the Council.

Assessing the financial management capacity of the KCC was important both to inform the nature of financial improvement measures that were to be proposed, and to structure capacity support interventions consistent with proposed measures of financial improvement.

3.6 General review

A number of conclusions were made regarding the financial position of the KCC, notably:

1.	Transparency and accountability in the financial management of the local government were inadequate, seen most clearly in the absence of both recent audited and unaudited accounts.
2.	The termination of GRZ transfers has fundamentally undermined the viability of the local government. This is consistent with international trends, suggesting that it is unlikely for a local government system to function without effective fiscal transfers from the national government.
3.	The poor conditions in the local economy are further undermining the KCC's financial viability, particularly affecting the overall ability of residents to pay for services and directly reflecting on employee‐based taxation.
4.	The KCC already had a large range of revenue sources (some 34), including taxes, levies and user fees. In most instances, these charges had not been adjusted to keep pace with inflation and were well below economic levels.
5.	The basic integrity of several of the taxation and user fee databases underlying the billing systems, was questionable.
6.	Collection performance on all revenue sources was very low and arrears were high. There was reportedly fairly frequent interference in the collection of revenues and action against arrears and defaulters.
7.	‘Commercial’ undertakings were loss‐makers and had systematically run deficits.

The basic conclusion was that the KCC was not effectively taxing its current revenue base. In this context, introduction of new taxes, levies or charges would lack credibility and would be unlikely to bring in more revenue than they would cost to administer. Raising taxation, levies or charges alone (as had been done in 1999) was likely to lead to fewer people being taxed increasingly higher amounts. Overall, this would likely reduce and not increase the revenue accruing to the KCC. In general, without a return of GRZ fiscal transfers and an improvement in the local economy, a question mark would hang over the basic viability of the local government, irrespective of what remedial measures are introduced.

On the expenditure side, the KCC had not been reducing expenditures – especially its salary bill – to reflect the decrease in revenues. The result was that salaries consumed a growing proportion of expenditure at the cost of capital expenditure and visible service delivery. Without significant downsizing, this expenditure pattern would be expected to continue. Considerable amounts are also spent on non‐core activities. Most of these are run at a loss, contributing further to the overall deficit position of the KCC.

In general, however, the generally weak financial position of the KCC is probably the dominant impression. It is questionable to what extent the KCC will be able to effect viability without resumption of national and external support and a dramatic improvement in local economic conditions. Moreover, underlying most of the financial problems experienced in Kitwe were failures in policy, both at the national and local levels. While arguably Kitwe, like all Zambian local governments, was doomed to financial crisis by ill‐advised national policies, the lack of clear and consistent political will at local level to stabilise the town's finances further exacerbated the situation. To this extent, the proposed financial improvement measures take on more of the nature of crisis management interventions with the hope that there will be improvements to the general policy environment for the KCC in coming years.

4 RECOMMENDED IMPROVEMENT MEASURES IN KITWE

The financial improvement measures required for a local government facing a situation such as in Kitwe go further than introducing modest technical improvements or refocusing any existing strategic direction. Instead, the measures required are of a more fundamental nature, and need to be seen as part of introducing a substantive strategic focus to the local government's financial management activities.

In the case of the KCC, the strategic logic was to introduce selected changes to financial management practices and systems to provide a more effective management base for further measures for increasing revenues and reducing expenditures. Substantively, the essence of the proposed revenue and expenditure measures was a dual focus on increasing revenue collection from the existing revenue base, while simultaneously reducing expenditures in several areas to create room financially for further financial and organisational reforms. A programme of capacity support was designed to dovetail with the introduction of the various improvement measures, thereby assisting to build a strategic core of trained financial management personnel who would potentially drive financial change.

The financial improvement measures were therefore structured into the four main areas of the FIP framework developed as follows:

1.	Measures to improve general financial management practices and to establish a credible information base for strategic financial management
2.	Measures to increase revenue collection
3.	Measures to reduce expenditure
4.	Measures to build general financial management capacity within the KCC to undertake financial improvement measures and to embark on a more strategic approach to financial management

The package of recommended FIP measures made to the KCC followed a focus area and action steps format. Key focus areas were identified in each of the four strategic FIP areas. In the case of each key focus area identified, a programme of practical actions (action steps) was developed. The detailed financial improvement recommendations made to the KCC (Ndeke et al., 1999) will not be repeated here. Rather, the focus will be on the strategic basis and thrust underlying the recommended FIP package.

4.1 Financial management systems

One of the most significant difficulties faced by the KCC in addressing its financial situation was the lack of credible information and information systems on which to base its financial management. Without accurate and readily available financial information, it is difficult for councillors to exert their oversight responsibilities on council activities and spending, and for the KCC's senior officers to realistically plan and manage their activities. This was seen both in the difficulties experienced by the team in assembling an accurate picture of the financial situation of the Council, and in the substantial budget variances and the generally unrealistic nature of the budget. In particular, many years of incremental budgeting and a preference to focus on speculated revenues rather than on real revenue collection, had reduced the value of the KCC budget as a financial management tool. Similarly, effective internal control over the use of funds was needed to ensure that spending takes place responsibly and within approved limits. It is critical for these basic systems of financial planning, management and control to operate effectively. The essence of the FIP recommendations relating to financial management systems were threefold, namely:

1.	Rehabilitation of the budget as a financial management tool. A more accurate and realistic budget would be fundamental to better financial management within the KCC, serving to inform financial management decisions and to track reform progress and general financial performance over time. The programme of basic action steps focused first on bringing the budget process timing and format in line with the existing standing orders. Second, a zero‐based budget exercise was recommended for the following financial year to bring the budget more in line with reality and to establish a budget baseline for further financial management. Finally, simple three‐year projections were recommended to introduce strategic direction into budget thinking.
2.	Strengthening of financial control systems. While several expenditure control systems were in place in the KCC, several strengthening actions were designed. The purpose of these measures was to enhance visible expenditure control in several key areas. The action programme included elevation of the internal audit function and changes to reporting relationships; a fast‐track process for outstanding audit years and an emphasis on completing accounts for the most recent financial year; and several changes in procurement system arrangements.
3.	Modernisation of financial information systems. The third strategic focus area was of great importance for building more effective financial management. Many of the local government's difficulties with financial management related to the lack of readily accessible and reliable financial information. The centralised and dated computer system resulted in significant integrity problems in recording financial information, and great difficulties in obtaining reliable structured financial outputs. Most of the problems would be readily resolved through the introduction of an integrated financial information system and related technology. However, given the poor financial situation of the local government, based on internal funds alone this would be an impossibility. The essence of the action programme therefore related to determining the system needs of the KCC and acquiring external support for obtaining and operationalising an integrated financial management system.

Strategically, this component of the FIP was designed to establish a more realistic baseline and basic budgetary system for financial management. Upstream, this would be strengthened through modernisation of the information system and improvements to the entry of financial information into the system. Downstream, it would be strengthened by more visible systems and actions around expenditure control. This component is fairly fundamental to the introduction of a more strategic orientation to financial management. While many subsequent FIP measures dealing with revenue improvement and expenditure reduction are possible to undertake, irrespective of the financial management framework, they become of real value when incorporated into a more systematic and strategically oriented approach to financial management.

4.2 Increasing revenues

At the time of the financial analysis in 1999, Kitwe faced a difficult situation with regard to its revenue position. In essence, the KCC's main options were to increase revenues by expanding the revenue base (i.e. by taxing more people and companies or by introducing new forms of taxes), or improving collection from the existing revenue base (i.e. by making sure that everyone who is supposed to pay taxes does so). As noted previously, with 34 taxes, levies and charges used already and with the local economy declining, there is little realistic potential for introducing new taxes. Many of the existing smaller sources of revenue may in fact cost more to collect than the money they bring in. The financial analysis indicated, however, that there are many people who are not paying the taxes they are meant to and that the KCC is collecting only a relatively small portion of what is due to it from existing tax payers. The fundamental strategy for revenue improvement was, therefore, to focus on improving the collection of revenues in the major revenue source areas, such as property rates, personal levies, and standing charges.

The FIP recommendations relating to revenue generation covered the following:

1.	Creating an institutional focus for revenue improvement. Creating an overall strategic focus in revenue activities can be difficult when various components of revenue (database maintenance, billing systems, collection, legal processing of defaulters, etc.) are spread across several divisions and departments. It was recommended that a revenue improvement task team be established, supported by representatives from relevant revenue divisions, to build coordination across revenue functions; to introduce strategic direction; and to streamline and ensure rapid support for revenue improvement measures to be introduced. The revenue task team would report also to the relevant financial subcommittee of the Council, to establish a closer relationship between the responsibilities of the appointed councillors and the revenue position of the Council. The revenue improvement team would act as a driving force and support centre for other revenue improvement measures to be introduced.
2.	Streamlining existing revenue sources. It is probable that many of the smaller revenue sources cost more to collect than the value of the revenues that they bring in. A systematic analysis of the cost of collection versus revenues collected of the 34 revenue sources was recommended to encourage the local government to focus on major sources of revenue and to terminate marginal sources. This will allow the KCC to focus its human and financial resources on those revenue sources that have potential to make a real impact on the financial position. Termination of several minor revenue sources could also have positive impacts for public perceptions of the local government.
3.	Restoring integrity to the main revenue databases. A number of measures were encouraged to improve the integrity of the databases on which the main property and employee taxation and fees systems of the local government are based. This included particular attention to the property taxation system and the integrity of the property valuation roll. Measures included improved cross‐checking and the use of alternative information sources to establish tax liability.
4.	Strengthening debtor management. The financial analysis had indicated that the situation regarding arrears and outstanding debtors of the local government was poor. It had worsened due to the lack of perceived and effective action against defaulters. The introduction of a more rational and systematic protocol for arrears and defaulters to be coordinated across several divisions by the revenue team was recommended. Clear and systematic action against defaulters was required to restore credibility to the taxation systems.
5.	Revision of taxation levels and charges. Further increases to taxation levels were not recommended, given the poor economic conditions prevailing in the area. However, fees charged for the rental of various council properties were below market and had not been increased for several years. Increases to market rates and the use of annual inflation indexing were recommended. Water tariffs were being raised closer to cost recovery levels as part of the corporatisation of the water and sewage department.
6.	Disposal of non‐core functions and assets. The disposal of non‐core functions and assets, especially the various commercial ventures of the local government, were recommended to provide additional one‐off revenues. This should form part of an overall improved system of asset management.

The strategic focus of the revenue recommendations therefore related primarily to improving the collection of revenues from the existing revenue base of the local government. A final consideration related to the increasing gap that had grown in Kitwe between the collection of revenue and the visible delivery of quality infrastructure and services by the local government. This situation led to increasing reticence and resentment of the public to pay taxes and charges due to the KCC. A recent review of international lessons in property tax reform strongly emphasises the importance of media campaigns and the management of public perceptions when changing taxation systems (Rosengard, 1998). Revenue potential and visible delivery are very closely linked. Timing proposals were made to sequence the revenue improvement to coincide with a major road resurfacing programme being undertaken with support from the World Bank. This programme offered a strategic opportunity for the local government to begin to re‐establish integrity with the public, and to motivate revenue collection alongside the visible delivery of services.

4.3 Reducing expenditure

In the context of reducing revenues, the need to manage and reduce expenditure becomes critical. As noted previously, the increasing proportion of expenditure being taken up by salaries was systematically squeezing the KCC, leading to a decline in visible delivery of services and hence greater difficulties in collecting further revenues. At the same time, the local government lacked available funds to finance the level of downsizing that would be required. So trapped, the recommendations for expenditure reduction focused primarily on cutting expenditure in ‘soft’ areas to create more financial room for more fundamental actions to reduce expenditure.

The measures to address expenditure involved:

1.	Improved cash flow and debt management. The use of overdraft facilities as a ‘rolling’ borrowing mechanism at a high interest rate was resulting in significant additional expenses. It was recommended that the current overdraft be renegotiated into a loan and that stricter controls on the use of overdraft facilities be enforced.
2.	Disposal of non‐core functions and commercial ventures. The financial analysis had indicated that non‐core functions, and particularly the loss‐making commercial ventures, were incurring considerable expenditure. Termination of these activities would eliminate expenditure areas while also generating some revenues through the disposal of related assets.
3.	Increased outsourcing. Where possible and appropriate, outsourcing of core functions and services that would remain the responsibility of the local government was recommended. If conducted effectively, this could increase value for money of the local government's expenditure by introducing innovation and efficiencies. Solid waste management and the maintenance and management of the public markets were identified as particular opportunity areas.
4.	Reduction of personnel expenditures. In particular it is necessary for the local government to get out of the salary expenditure trap in which it finds itself. The KCC was advised to review various provisions under the conditions of service and to undertake a staged and strategic downsizing of staff. Staff downsizing, primarily through retrenchment, would initially be in areas related to non‐core functions that are to be disposed of, and functions where outsourcing is possible. In the medium term, further downsizing would be informed by a more thorough organisational evaluation exercise. Staff downsizing should be phased to enable the local government to gradually increase its financial position to embark on further retrenchment. It was also recommended that proceeds from the disposal of non‐core functions and related assets should be established as a restructuring fund to cover initial retrenchments until more budget space was cleared to fund downsizing from operational expenditure.

The essence of the FIP recommendations on the expenditure side related to reducing expenditure in non‐core function areas and creating financial space to embark on a strategic downsizing exercise. In many respects, this restructuring of the functional and personnel size of the Council would make the organisation more consistent in size and function with the reduced circumstances of the area as a result of economic decline. It would be unrealistic to expect the local government to continue to operate in the fashion that it had during more favourable economic times.

4.4 Building financial management capacity and policy support

In order to address its financial situation meaningfully, the KCC needed to build a sustainable foundation of policy support and financial management capacity involving councillors, senior officials and staff. New skills are also needed for new roles. For example, outsourcing implies a different role for the Council. Capacity building will be required in setting performance requirements, contracting out, contract management, and so on.

4.4.1 Strengthening financial management capacity

A programme of financial management capacity building was recommended, focusing as much as possible on targeted on‐the‐job training, short seminars, workshops and courses. Strategically, the provision of training to a core of financial management personnel would provide external support and guidance for the FIP measures to be implemented. In particular, it was intended that strategic capacity‐building interventions would build capacity in strategic locations within the local government to undertake FIP. As such, while the training is intended to cover financial management in an ideal situation, it is also oriented towards financial management in a less‐than‐optimal organisational, political and economic setting. Technical areas to be dealt with include:

1.	General local government financial management practices
2.	Current financial management practices and procedures and alternative options (drawing on international experience, in particular)
3.	Analytical tools for assessing the current financial situation and identifying key problem areas
4.	Practical tools and strategies for addressing key problem areas
5.	Key financial areas where problems and weaknesses are currently experienced in Zambian local governments

An initial framework for financial management capacity support, targeting various levels and functional areas of the organisation, was developed and prioritised through discussion with the local government. From this, a two‐part programme for financial management capacity support was developed. The first part involved providing a series of short training modules (less than one week in duration) targeted at specific staff and following the prioritisation of FIP measures to be implemented. Initial training is to be provided in debtor management, budgeting techniques and consumer relations. The second part of the support programme involves developing a ‘hands‐on’ financial management manual tailored to the specific conditions and needs of local governments in Zambia, and the KCC in particular. The manual is developed in conjunction with the delivery of the training modules and includes material fed back through these training sessions. It has the following goals:

1.	To capacitate Zambian local government personnel to engage in improved financial management of local governments
2.	To provide comprehensive understanding of financial management in Zambian local governments
3.	To provide key financial management analytical tools, techniques and procedures
4.	To build a strategic core ‘financial management team’ with skills for more effective general financial management and for undertaking FIP

The development of such a financial management manual therefore provides both longer‐term support for training to the KCC, and also enables similar training to be extended to other local governments in the country and region. Capacity support in FIP can, therefore, play an important strategic role. It can increase the penetration and application of improvement measures, help to introduce and support overall strategic direction for FIP under the curatorship of a strategic core of financial management personnel, and build the general capacity of the local government to remedy its financial situation over time.

4.4.2 Building a supportive policy environment

Improvement to Kitwe's financial situation was always going to be difficult given the national policy environment and regional economic conditions. Without adequate policy support at the local level it would be impossible. Building a local policy process required a number of interlinked activities:

1.	First, financial improvement planning was not undertaken alone, but as part of a wider series of support and reform activities. Importantly, other activities included improving the KCC's image and relationship with its communities (which is necessary for improved revenue collection, but also important to political office bearers). General organisation reforms were also supported to improve internal efficiencies.
2.	Second, councillor and senior management support was continually nurtured. Ongoing involvement in the process and targeted education (for senior management and councillors) would build a greater understanding of the need for financial improvement and the nature of hard decisions that were required.
3.	A third measure to build policy support was to elevate those working on improvements to a special status position. This was not made easy by the frequent staff rotation characteristic of many local governments; however, the opportunity to work with external consultants and to gain a more prominent profile within the Council was attractive to many officials.
4.	Fourth, motivation among officials of the KCC was extremely low (most often attributed to political interventions) and the organisational culture did not encourage proaction. The external consultants in effect coached officials and used their positions as experts outside of the control of local political dynamics to open paths within the organisation for officials to raise concerns and ideas that would otherwise not have been viewed.
5.	Finally, continual capacity building at all levels of the KCC (through coaching, interactions, workshops and training courses) was extremely important. This not only raised the internal capacity of the KCC to deal with the local policy process, but also acted as an incentive for continued participation of both councillors and officials.

5 THE ROLE OF FIP IN LOCAL GOVERNMENTS

A recent review of the financial situation of a sample of local governments in Zambia (Saasa et al., 1999) suggests that Kitwe in many respects is representative of the experiences of other local governments in the country. Similarly, local governments in countries in the region and in other developing countries experiencing comparative developmental circumstances are likely to face similar financial difficulties and dynamics, albeit possibly at different scales or manifest in different ways. Based on the application of FIP in this local government, which is experiencing significant financial problems resulting from economic conditions, national policy factors and inadequate local policy leadership, several observations can be made regarding FIP practices and their relationship to decentralisation. These perspectives reflect both the experience of the particular case of applied FIP and also reinforce several general trends and observations regarding decentralisation and local government finances.

(i) FIP in local governments should be an active technical and political component of a country's decentralisation policy

FIP within local governments takes on greater importance within the context of decentralisation. The 1999/2000 World Development Report (World Bank, 2000) emphasises the need to develop effective and efficient local institutions of governance in countries undertaking decentralisation. The two main lessons regarding financial resource allocation and management by local governments are well made (World Bank, 2000: 117):

First, subnational governments need resources commensurate with their responsibilities. Second, subnational authorities must operate under firm budget constraints, so that they do not spend or borrow excessively in the expectation of a central government bail‐out.

The implication that responsibility for effective financial management must be vested within local governments themselves is clear. As the Zambian case shows, however, many local governments may lack both the technical and policy/political capacity to assume this role effectively. The need for FIP will therefore increase during decentralisation. The implication is that national programmes for supporting local governments to undertake FIP need to be built into decentralisation programmes from the start (see Suselo et al., 1995). What the Zambian case further suggests, however, is that local governments will require support in FIP both at a technical level and a local policy/political level. National governments undertaking decentralisation should therefore also provide political support for local governments to reach the tough decisions usually resulting from FIP.

(ii) Poor design, execution and political support of decentralisation policies fundamentally compromise the financial viability of local governments

The impact on local government viability of the various unwise policy interventions by central government in the Zambian case emphasises the importance of a stable and effective policy framework for effective decentralisation. Interventions from central government affected the financial viability of local governments by removing or disrupting several of their sources of revenue, including effectively terminating fiscal transfers from central government. These interventions created considerable uncertainty for local governments regarding their basic autonomy, the security of their revenues and the possibility of further interventions. One effect was to reduce the perceived responsibility of local governments to deal with their own affairs, and to replace it with a seemingly close dependency on direction from central government in an unpredictable environment.

It may be debated whether the interventions of central government in Zambia have been the result of poor policy capacity at central government level, or rather have been more intentional acts underlying a more fundamental lack of political commitment to decentralisation. Nevertheless, the lesson is that establishing sound financial management of a viable local government is extremely difficult in the absence of a stable and cohesive policy environment for decentralisation.

(iii) FIP should form part of an overall organisational reform and development process of a local government

FIP can be an important process for a local government to undertake. Many of the measures likely to result from an FIP exercise will relate to organisational structure and personnel issues. To have maximum benefit, FIP should be conducted as part of a wider organisational reform and development process. This implies both a wider and a longer‐term perspective – wider in that it draws in a broader range of organisational and strategic issues of the local government, and longer in that it requires considering the nature of support and intervention required over a longer period of time.

In the case of Kitwe, the FIP exercise formed part of such a wider organisational reform process, drawing in core functional evaluations, development of a broad developmental strategy, and examination of the wider strategic role and potential role of the local government within local economic development. So, for example, the work being conducted on opportunities for private sector involvement in core functional areas of the local government has resulted in proposals with significant organisational consequences and financial prospects, particularly with regard to the efficiency of expenditure. The strongly interlinked nature of financial, operational and personnel aspects of a local government suggests that, while these issues should all be addressed within an overall organisational reform and development process, the work being undertaken to explore possible improvements in each area should be carefully coordinated and sequenced.

(iv) Process design is critical for FIP implementation

FIP should be viewed as both a political and a technical process. It is also a process that by its very nature deals with issues that are often sensitive to an organisation. While much of the information required to inform and develop strategic options can be assembled at a technical level, typically FIP recommendations have considerable organisational implications and would require significant political support to be adopted. A strong process orientation, both before, during and after an FIP exercise is therefore important. In the case of Zambia, this involved systematically building political and process support among councillors and senior officials. Having local consultants on the team was also important for solidifying acceptance and buy‐in of the process.

While the process orientation may slow down technical work, it is essential for maximising the penetration of proposed measures. Prior to the exercise, efforts should be made to ensure that there is an adequate base of support for the exercise within the organisation, especially at decision‐making level. During the exercise, the process should focus on involving the personnel concerned, especially those who are likely to be involved in the implementation of recommendations. After the exercise, a consistent process is required to ensure that the recommendations are effectively considered, prioritised and adopted by the organisation. Attention should also be given to the longer‐term support for the personnel involved in implementation, which is where ongoing capacity support and development activities are especially important.

(v) Capacity building can be used strategically to increase FIP support both technically and politically

Capacity development around financial management within a local government should be seen as one of the main tools available for FIP. In particular, if providing ongoing capacity support is viewed as a strategic opportunity for FIP, it has the potential to:

1.	Provide a platform for developing and maintaining a strategic focus around financial improvement within the local government, especially among a strategic core of councillors and officers who may become part of an ongoing capacity development programme.
2.	Transfer the necessary skills to enable key councillors and officers to implement the required improvement measures. Important in this regard is a focus on transferring actual FIP skills so that further measures for improvement might be identified and developed by the local government itself.
3.	Create a network of support for councillors and officers involved in FIP within the local government. This is especially important in cases where councillors and officers might expect little, if any, real support for the improvement measures they are attempting to implement, either from the mainstream local government organisation itself or from central government. A regular capacity‐building network can elevate the perceived importance of their activities and provide a support network.

The Zambian experience proved that capacity building could be one of the most effective instruments in local reform processes, particularly if strategically incorporated into the process. Given the frequent lack of financial management capacity in local governments of developing countries, capacity building is especially important for FIP. This should be oriented to improving both the capacity to undertake FIP technically, and the policy/political capacity to understand and take tough decisions.

(vi) The fundamental relationship between local governments and their constituencies needs to be rebuilt

There were many causes underlying the financial weaknesses of the KCC. These contributed to a breakdown in the fundamental relationship between the Council and its constituency. This relationship is based on the exchange of taxes and charges by the community in return for visible service delivery and the promotion of the public interest by the local government. In Kitwe, a vicious circle of decline was under way, worsened by the inactivity and late response of the local government. Declining local government income (due in large part to national government actions) and rising proportional spending on operational categories (principally salaries) meant less spending on visible service delivery. Less visible delivery by the local government caused growing disillusionment among the public. The resultant rise in non‐payment reduced income further and service delivery problems worsened. Trust and the fundamental transaction between the community and the local government collapsed.

Breaking this vicious circle requires joint action on the revenue side (i.e. improved collection efficiency, and consistent action on defaulters) and the expenditure side (i.e. maximising visible delivery of services with existing revenues). Here FIP is of special importance in determining the technical measures that the Council might introduce to restructure its income and expenditure relationship. While FIP is important, however, it will not alone rebuild the relationship and respect between the local government and its community that are required. Here the strength of local political leadership to make informed and often unpopular decisions, and to persevere in their execution, is key. It requires that local leaders have the skills and maturity to proactively re‐establish healthy connections with their constituencies, based on realistic commitments of practical delivery that are met in practice. The Kitwe case suggests, therefore, that FIP should be embedded in a local process examining the overall functioning of the local government and involving capacity support at both the technical and political levels.

6 CONCLUSION

The use of FIP by local governments is likely to increase as decentralisation in developing countries continues. Moreover, the effectiveness of financial management by local governments will affect the overall effectiveness of a country's decentralisation policy. Application of FIP techniques under the SINPA programme illustrated some dimensions of this link between decentralisation and FIP in local governments. Several considerations have also been raised regarding the application of FIP techniques themselves. The work suggests ways in which the framework for FIP as applied in local governments can be further developed. From a practitioner perspective, this is particularly important as the framework that is adopted has significant implications for the nature of the recommendation package that is developed. Moreover, the importance of linking FIP to an overall framework of organisational improvement and development of local governments was emphasised. Countries undertaking decentralisation should promote policy or political capacity to undertake FIP within their local governments, as well as the further development of FIP techniques and practices.

Additional information

Notes on contributors

Rolf PA Dauskardt 1

Head of Housing Department and Senior Expert in Management and Finance, Institute for Housing and Urban Development Studies, Rotterdam, The Netherlands. This report is based on initial work undertaken together with Mr Feliaty Ndeke, then of Copperbelt University, Kitwe, and now based at the University of Botswana, Gaborone and Andrew Chitembo of Bowanda Consultancy Services, Lusaka. The full products of this work are to be found in Ndeke at al. (1999). I would like to thank them specifically for their contributions. Many of the reflections and observations contained in this report, however, are those of the author and as such I take responsibility for any inaccuracies. The Netherlands government has supported the SINPA (Support to the Implementation of National Plans of Action) programme operating in Bangladesh, Bolivia and Zambia. The importance of this programme is appreciated both as a direct support to these countries and cities in their efforts to deal effectively with the challenges of urban development, and as an important incubator for generating and disseminating lessons and experiences in urban management.

Notes

Head of Housing Department and Senior Expert in Management and Finance, Institute for Housing and Urban Development Studies, Rotterdam, The Netherlands. This report is based on initial work undertaken together with Mr Feliaty Ndeke, then of Copperbelt University, Kitwe, and now based at the University of Botswana, Gaborone and Andrew Chitembo of Bowanda Consultancy Services, Lusaka. The full products of this work are to be found in Ndeke at al. (1999). I would like to thank them specifically for their contributions. Many of the reflections and observations contained in this report, however, are those of the author and as such I take responsibility for any inaccuracies. The Netherlands government has supported the SINPA (Support to the Implementation of National Plans of Action) programme operating in Bangladesh, Bolivia and Zambia. The importance of this programme is appreciated both as a direct support to these countries and cities in their efforts to deal effectively with the challenges of urban development, and as an important incubator for generating and disseminating lessons and experiences in urban management.