UNDP BMCPI - Building Municipal Capacity for Project Implementation

Municipal Development Index (MDI): The MDI model has been improved through a series of iterations, where the required input data needs were adjusted based on their availability, accessibility, and capacity of municipalities. To address the data collection difficulties the Project facilitated the simplification of the MDI model (e.g., starting with initial ~200 indicators, the next two iterations of MDI used ~80 and ~50 indicators respectively). The refinement of the model was carried out through participation of different stakeholders at national and local levels. Some of the refinements of the original MDI model included: - Reduction in the number of indicators to reflect the operational and other capacities of municipalities. - Reassessment of data availability and data quality and improvement the robustness of the index. - Validation of MDI data collected for the City of Skopje and its municipalities where the division of competencies results in inconsistencies of data allocation of creates challenges in calculating the indices. - Provision of insights into improved data collection and generation by establishing platform for standardized reporting. In December 2022, the updating of the MDI based on the 2021 North Macedonia census was also completed. While the ultimate purpose of MDI is to serve as a tool for trend analysis of local government development and performance, the Project successfully piloted its application in the prioritization of municipalities considered for support under the Technical Documentation Fund (TDF). The MDI has the potential to become a valuable instrument for future equalization funding to support less developed municipalities, devise targeted support for priority areas and monitor policy impact. In relation to the results framework submitted in the project document, Sida assesses that the targets have been mostly achieved - the index has been codified and institutionalized, and it has led to a broader policy discussion towards more equitable municipal development. In the next phase under the Framework Programme, the main focus will be on full transfer of ownership over the index to the MLSG. Functional Analysis (FA): The Project supported a Functional Analysis of the Ministry of Local Self-Government, providing guidance on functional reorganization of MLSG in line with the higher-level public administration reform (PAR) objectives. This document provided the foundation for the subsequent Policy paper on decentralization reform which in turn was used for the preparation of the amendment to the Law on Financing of the Local Self-Government and the introduction of two funds (performance-based and equalization fund) for improved local financing. It also provided recommendations for the transfer of additional competencies from the central to the local level as part of the activities foreseen in the Programme on Sustainable Local Development and Decentralization (2021-2026). Beside this national level application of the FA, the Project supported the pilot application of FA at regional and local levels in line with existing organization of the countrys local self-government system. For this purpose, BMCPI partnered with four municipalities (Vevcani, Veles, Gostivar and Berovo) and two regions (Southeast and Northeast Planning regions). To promote the recommendations, the Project organized a special event that brought together the key stakeholders, facilitating discussion on follow-up actions. In relation to the results framework submitted in the project document, activities related to developing the functional analysis 2.1 and 2.2 were fully realized, however, - 2.3, the actual implementation of recommendations is less clear. Technical Documentation Fund (TDF): The TDF has been prototyped as financial instrument providing targeted support to municipalities in the creation of comprehensive technical documentation for their highest priority infrastructure projects. Its methodology is designed in order to ensure meeting of quality standards that will make the projects supplied with technical documentation eligible for funding by different financing institutions. The TDF was implemented during two country-wide public calls. The total number of all projects supported under both calls is 56, most of which target Environmental and Water Infrastructure (21 projects), followed by Social Infrastructure (18 projects) and Communal, Transport and Business Infrastructure (17 projects). Capacity-building for municipalities was also provided through the mechanism of the TDF, in order to increase their abilities to identify funding sources and fundraise for the successful implementation of their newly developed projects. Based on the latest information, 14 of the projects supplied with technical documentation are already being implemented, 25 are in a fundraising process and 17 are still in the process of identifying possible funding sources. In relation to the results framework submitted in the project document, the targeted number of technical documentation projects (40) has been exceeded (56). Sida assesses that this component has been fully completed by UNDP - the Technical Documentation Fund has been fully developed and piloted and in the next phase UNDP's focus will be on achieving full national ownership over this mechanism by the Bureau for Regional Development. Overall Sida assesses BMCPI as a highly relevant and successful project, through which UNDP competently demonstrated a proof-of-concept for overcoming at least two specific bottlenecks in the system for local self-government in the country. In the following phase, UNDP has committed to managing the transfer of ownership over the policy tools and institutional frameworks that they've piloted to national authorities. Sida assesses this to be a logical next step for this project, of high relevance to national development priorities, and a significant contribution to improving the Macedonian system for local self-government. Implementation experience shows that there is substantial appetite among municipalities for this type of support, and that once the technical documentation is generated, a significant number of municipalities are in fact able to mobilize the funding needed to implement their projects. Sida notes that UNDP has invested efforts at matchmaking between funding sources and municipalities during project implementation, however in the second phase, more substantial capacity-building for municipalities will follow, and the success of this process will define the success of the Fund itself. It is important also to closely monitor how UNDP handles the gradual transfer of ownership over the TDF to the Bureau for Regional Development, as well as to what extent they themselves will be able to prepare municipalities to indepently fundraise for projects that they have received technical documentation for. Quality assurance of the technical documentation is a key output of the first phase, something that has practically guaranteed that the doucmentation will pass the revision phase. This mechanism of quality assurance (previously carried out by an expert pool administrated by UNDP) will need to be key a point of discussion.

The problems that the project seeks to address constitute three key difficulties in capitalizing on local development opportunities; i) lack of reliable and comparable municipal level development data, ii) ill-equipped and inadequately structured municipal administrations, failing to effectively plan, design and implement development policies and optimise available scarce funding; iii) inability of municipal administrations to make use of available donor/national investment funding, due to deficient preparatory work. The response will focus on the following three complementary activities/outputs: 1) Create a Municipal Sustainable Development Index in partnership with the Ministry of Local Self-Government and the Association of LSGUs (ZELS), allowing for an objective and comparative view on development progress in all municipalities. 2) Carry out a simple functional analysis of the local governance system, focusing on the ability to deliver development progress at local level, and proposing realistic structural changes that should be piloted in entities expressing interest to do so. 3) Establish a Technical Documentation Fund, which would provide resources to less-developed municipalities for undertaking long-term investment projects. Support should be provided during the whole investment cycle (planning, prioritization, application, implementation). The theory of change for the Project is formulated as: Better informed local/national institutions will be better equipped to create realistic and relevant evidence-based local development policies and plan expenditures, especially on local infrastructure. Improved technical capacity of municipalities and better coordination between relevant institutions will be prompted by initial funding and development of technical documentation and progress in data collection and dissemination of information leading to municipalities that are better prepared to use structural funds from funding institutions and effectively satisfy their community needs. The UNDAF outcome that the project contributes to is: "By 2020, national and local institutions are better able to design and deliver high-quality services for all users, in a transparent, cost-effective, non-discriminatory and gender-sensitive manner." The project can contribute to improving the quality of life for local inhabitants and to improve the country's readiness for EU membership.