The governance of settlements has become a major issue over the last decade. The term "governance" means more than government or management for it refers to the relationship not only between governments and state agencies but also between government and communities and social groups. "Governance" is a broader and more inclusive term than "government", just as "local governance" is a more inclusive term than "local government", in that it encompasses the activities of a range of groups -- political, social and governmental -- as well as their interrelationships. "Local governance" thus subsumes the operations of local governments, their relationships with the societies within which they operate, and even the technical area of "urban management", the term that has come to connote the actual management of local government services and infrastructure.

Three factors have helped "local governance" emerge as a key issue in the discussion of policies for human settlements:

the elaboration and implementation of decentralization policies in many countries including the emergence of the concept of subsidiarity;

the introduction of or return to democratic principles of government in many countries during the 1980s and early 1990s, at both the national and local levels; and

the increased importance of citizen and community pressure - including urban social movements - combined with the growth worldwide of an environmental movement that have helped to place a greater emphasis on local control and involvement in decision making.

During the 1980s, concern grew about the inability of many governments to deliver development programmes to their people at the local level. In Africa, which was perhaps the most problematic region in terms of development over this decade, the World Bank stated that one of the continent's most urgent needs was to improve institutional capacity. This included a recommendation that local governments:

Another analysis put it more bluntly:

It was not until the 1980s that a wide debate began in many countries about the balance of power and distribution of functions between national and local governments. Decentralization policies of different kind have been or are being implemented in most countries - including countries in Europe, North America and Africa, Asia and Latin America - and also in countries with centralized and decentralized structures. Among the 75 countries in the South and in East and Central Europe that had 5 million or more inhabitants in the early 1990s, all but twelve were engaged in some form of transfer of power from national to local levels of government.

There is great variety in the forms that decentralization takes. Assuming that decentralization involves the delegation of authority from a higher, or more general level of the state to a lower, or more specialized unit (or area), four major variants have been identified:

Deconcentration, or the transfer of functions, but not power, from a central unit to a local administrative office. This is one of the "weakest" forms of decentralization and has become a common response by higher levels of government to deflect the blame for inadequate service provision from central to local authorities.

Delegation, which involves, in most cases, the transfer of certain powers to parastatal agencies of the central state. While the parastatals have a certain autonomy in day to day management, they are usually controlled ultimately by government;

Devolution, considered by some as "real decentralization", since power and functions are actually transferred to sub-national political entities, who, in turn, have real autonomy in many important respects; and

Privatization, which involves the transfer of power and responsibility for certain state functions to private groups or companies.

With so many cases of decentralization underway, and so many differences in the form that the decentralization takes, it is virtually impossible to generalize about either the reasons for any particular exercise, or the success or failure of the decentralization effort as a whole. However, a number of cogent arguments can be put forward to explain why so many countries have adopted decentralization strategies. The first is because of the diversity between localities i.e. that the demand for public services varies from place to place both in quantity and quality, so that only decentralization of the provision for these services can ensure an efficient response to this variation in demand. A second argument is based on efficiency, in that locally financed and provided services can be produced at a lower cost - and with local government also able to work more easily with local community-based or voluntary sector organizations in ways that allow significant cost reductions. While this may be counterbalanced by the argument for larger units of service provision that achieve greater efficiency than smaller units at the lower level, it is still prevalent. A third argument is based on accountability - i.e. that a decentralized institution should in principle be more accountable to its constituents, who are more likely to have easy access to service providers and a better understanding of how institutions operate if services and institutions operate at a lower level than if they operate at a national, or centralized level. Finally, there is the argument for coordination. Many local services are interdependent. Improved water supply needs provision for sanitation and drainage, otherwise there are serious problems of waste water - and combining the installation of sewers, drains and street paving can considerably reduce costs. Street cleaning and solid waste collection are needed to keep drains unblocked, especially where open drains are used - and solid waste collection is often difficult or impossible without paved roads. The cost-savings from coordination can more easily be attained when it operates over a smaller, more local area.

All these arguments have merit, but they have been given particular relevance by the severe financial constraints in which most central governments have found themselves in recent years. In many countries in Latin America and Africa, structural adjustment programmes have been in effect since the 1980s, with the result that resources from the centre to finance local services and public administrations have been progressively reduced. If locally-provided services are more likely to receive financial support from recipient populations (through taxes and fees) than if they were provided by the centre, this provides a good reason to decentralize the provision of such services. Even in wealthy Northern nations such as Canada and the United States, where an important range of functions are already in the hands of territorial and local authorities, there is a tendency to "download" national support programmes such as social assistance and even medical care to local jurisdictions in order to reduce demands on central budgets. While decentralization has until recently been justified by arguments relating to efficiency and accountability, these arguments have been particularly attractive to central governments in recent years.

While there are good, or at least locally persuasive arguments for decentralization in the current economic climate - whether this decentralization involves privatization of services or localization of functions and responsibility - any shift of responsibility and financial power from one level of government to another level or agency brings both benefits and costs. Since arguments for central government provision of services include the presumption that they can be more equally distributed among the population as a whole, that they can be more effectively related to macroeconomic policy, and that they may benefit from higher levels of technology and information support, there can be costs when certain services are decentralized. One of these costs is the growth of disparities between local governments in terms of services provided, since some local governments have a greater ability to finance these services than others. The disparities can become very large, where many services are provided by local authorities from resources they raise within their own jurisdiction as local authorities in high income districts or municipalities have a much larger revenue base and capacity to pay among their populations than local authorities in low income districts. In many large cities, there are large disparities between neighbouring municipalities - for instance between the middle and upper income suburbs and the peripheral municipalities with high concentrations of illegal and informal settlements.

Another potential disadvantage of decentralization is central government's loss of control over fiscal policy, when some local and territorial governments spend or borrow disproportionately for their own needs and so contribute to inflation or increasing the debt service costs for the country as a whole. Finally, there is a question as to whether certain services - such as waste disposal, trunk sewers, public transportation, and secondary education - can and should be managed effectively by very local units, or whether they should not be managed by intermediate levels of government.

There are also the potential disadvantages related to privatization. One is the reduced transparency and accountability of infrastructure and service provision, when what was previously a government responsibility is privatized. Here, one particular worry is with the privatization of those forms of infrastructure and services that are 'natural monopolies'; once a piped-water system or electricity distribution network or sewage and storm drainage system is built and becomes the responsibility of one company, it is virtually impossible for another company to compete by building another water, sewage or electricity distribution system. Customers cannot turn to another supplier for water, drains or electricity, if the quality is poor and/or prices are too high. A second potential disadvantage of privatization is the loss of public assets if these are sold at below their real value. A third is the difficulty of ensuring that lower-income households and areas receive basic infrastructure and services. Privatization actually reinforces the need for competent, effective and accountable local government to act on behalf of the inhabitants in its jurisdiction to ensure that private companies maintain quality and coverage in infrastructure and service provision and do not abuse any natural monopoly position by raising prices. This is a point to which Chapter 10 will return in discussing public-private partnerships.

The increased importance given to local governance is also related to a worldwide "wave" of democratization from the late 1970s through the early 1990s. A "democracy" in the 20th century may be understood as a system in which the

Thus, democracy implies the concurrent existence of freedoms to speak, publish, assemble and organize. It also implies the active functioning of more than one major political party in order to give voters a choice of alternative leadership groups. Beginning in 1974 in Portugal, and eventually spreading outward, a wave of democratization engulfed more than 30 countries in both the North and the South. Important changes in regime from authoritarian structures to democratic systems took place in 11 one-party systems, 7 regimes based on personal rulers, 16 regimes which had been under military control, and 1 regime (South Africa) which had been dominated by a racial oligarchy. The years from 1973 to 1990 saw an increase in what could be classified as "democratic states" from 30 to 59, and a decrease in "non-democratic states" from 92 to 71. While a few states slipped from democratic to non-democratic rule during this period, the overall democratic trend was particularly marked during the 1970s and 1980s in Latin America (with democratic transitions in such countries as Brazil, Peru, Ecuador, Chile, Argentina, Guatemala and Bolivia), and in the late 1980s and early 1990s in the former Soviet Union and in East and Central Europe.

In Africa, the overall direction of movement was more complex than in most major regions, perhaps because of the large number of countries, and the great variety of linguistic, cultural and historical traditions they represent. From a situation in the 1970s in which almost all regimes on the continent could have been considered "authoritarian" by current standards, changes began to take place in party systems, electoral structures, and the application of the rule of law. By 1991, it was estimated that, of 54 countries for which reliable data was available to outside observers, 8 countries could be considered clearly "democratic", 8 clearly "authoritarian", and 3 more governed by a system which could best be described as "directed democracy". Apart from these, 35 countries were in various stages of "transition" to more democratic government. A little more than 3 years later, based on the same criteria, 14 countries (including, by this time, South Africa) could be considered "democratic", 3 "authoritarian", and 3 governed by "directed democracy". At this time, 7 countries were so unstable they could not be classified. Thus, while more countries became thoroughly "democratic" in this period, a number of countries became highly destabilized, and the level of commitment to democracy of many more was lower than it had been three years earlier. The consolidation of democracy on the continent, in spite of some hopeful trends over the last decade, is still an open-ended process in many countries.

The causes of this worldwide trend towards greater democracy are complex. But one of its important consequences is the strengthening of a "political culture" in many countries which reinforces a closer relationship between, on the one hand, political leaders and governmental institutions, and on the other, major social and economic groups. Democratic governments, however competent or incompetent, are more likely to operate in response to public opinion, and - given the necessity of periodic and open elections - are less likely to take arbitrary and self-serving decisions than non-democratic governments. Governments which are democratic at the national level are also more likely to be democratic at the local level. Thus, a movement towards regular, open municipal elections instead of the selection of mayors and councillors by higher levels of government has paralleled the overall democratic trajectory in almost all cases. This has sharpened the debate in many countries on the appropriate division of powers between local and national governments, particularly as local politicians attempt to achieve more control over their jurisdictions. Given the economic stagnation and uncertainty which has faced many regions of the world over the last ten to fifteen years, combined with the growth of urban populations, it is not a foregone conclusion that recently elected municipal governments will be able effectively to cope with their new responsibilities and challenges. The debate on the appropriate role and functions for municipal governments will be a continuous one in all parts of the world.

Starting in the 1970s, the larger and the more prosperous cities in most countries in the South became the focus of an increasingly intense conflict between the public authorities and large numbers of the urban poor. The conflict centred on the fact that a large part of each city's population had incomes that were too low to be able to afford the cost of shelter in areas that were planned and provided with basic infrastructure and services - including paved roads, piped water, drainage and provision for sanitation and electricity. Partly as a result, so-called "squatter" or "popular" settlements (variously named in different countries) developed on urban land that was unserviced, and where the land was occupied illegally - or if not illegally, at least without the approval of the urban authorities. However, the massive increase in the number of people living in the "popular" settlements was not a challenge to the system of authority; they are much more an attempt by people with limited income or assets to gain a foothold in the urban economy which could serve as a first step toward integration into the labour market and integration within the institutions of the larger society. This helps explain why there have been so few radical challenges by these people to the established political order, despite this very large and usually growing number of people who are very poorly housed and serviced.

Following this logic, a number of policy innovations -- such as sites and services schemes, and "squatter upgrading" programmes -- were developed in order to capitalize on the need for the urban poor to gain entry, at minimal cost, to the urban economy. As Chapter 11 will describe in more detail, these innovations, promoted by such multilateral agencies as the World Bank, and a number of bilateral donor agencies, were the focus of urban policy innovation throughout the South during the 1970s and 1980s. Certain government institutions were also set up primarily to address the needs and priorities of those in illegal or informal settlements.

The attempts by the urban poor to gain access to urban land and services were conceptualized - at least in Latin America - as an important component of what were called "urban social movements". A social movement was considered to reflects broad-based, often multi-class, coordinated activity at the local level; at the same time, while demands are made on the state, political parties and other specialized institutions are not the primary vehicles through which pressure is brought to bear. Informal and illegal settlements developed where the inhabitants felt confident that they could bring sufficient pressure on the authorities to let them stay - or at least to receive an alternative land site, after negotiations with the authorities. Decisions about which site to occupy and when to do so often reflected careful planning, good timing and well-informed trade-offs between the best locations and the best possibilities of being allowed to stay there and avoid eviction. And when political circumstances permitted, intense pressure was brought to bear on the public authorities either for infrastructure and services or for legal tenure or both. In many cities, large sections of the middle-class were also active in such lobbying as they too had to develop their homes in illegal settlements, as inefficient land markets and cumbersome government regulations pushed land prices for legal plots beyond their means. However as Chapters 6 and 7 describe in more detail, these were generally in illegal sub-divisions where the purchase of the land was legal but no approval for its use for housing and its subdivision had been obtained from the relevant public authorities. Although the form of this "building cities from the bottom up" took many forms, each much influenced by a great range of local factors such as political and economic circumstances, land-owning structures, income distribution and official rules and regulations governing land use and building, it was responsible for a high proportion of all the housing that exists in most cities in the South today.

Since in most countries, national and local government agencies were either unable or unwilling to supply basic urban services to these burgeoning popular settlements - at least not at the pace and quality that the people were demanding - various patterns of community organization and self-help activities developed almost everywhere. There also developed a diverse range of NGOs who worked with them. The role and scope of community action and of NGO support for this was usually restricted and often repressed under non-democratic regimes. For instance, during the 1960s and 1970s, NGOs in Latin America occupied the narrow political space between local communities and formal institutions in the domain of social services and the promotion of local development. When many northern countries and foundations did not want to give assistance to authoritarian governments or government-dominated political parties, they were prepared to support local NGOs, which often worked with community groups. In some countries, NGOs helped to maintain political pluralism; in others, they helped keep authoritarianism at bay. But the political importance of community organization and of the NGO work associated with them increased considerably with democratic rule. As Albert Hirschman suggests, such developments may be part of a worldwide trend in which basic economic (and therefore political) rights are being demanded by all citizens. For example, in Brazil, beginning in the late 1970s:

The emergence of urban social movements in Mexico and Peru, involving particularly the mobilization and organization of low-income communities predated the Brazilian awakening. But the 1985 earthquake in Mexico City, and a growing concern over urban environmental risk -- especially as a result of high levels of air pollution in the capital -- led to a diverse range of protests and popular activity in the area of human settlements. As most Latin American countries became predominantly urban, the link between protests and organizational activity to secure land and improved urban services, and demands for the reduction and control of air and water pollution in the cities became more pronounced. Both, in any case, were central to the democratization process in Latin America:

Eventually, with the return of democracy in much of South America in the 1980s, the activity of social movements was considerably reduced - but community organization linked to particular sites or more widespread citizen mobilization against particular projects still remained. So too did the role of NGOs whose role often expanded, as governments or international agencies channelled funding through them.

In the countries in the North, the development of an environmental movement had important roots in local communities - very often as they mobilized against a new road, power plant, waste-site or some other development that they felt would threaten their environment. Well publicized environmental disasters such as the accidental release of methyl iso-cyanate in Bhopal in 1985 or the fire and release of radioactive material from the Chernobyl nuclear power plant in 1986 or the release of oil by the Exxon Valdez in 1989 helped to create and maintain a high level of public apprehension over environmental risk. These concerns were nourished -- both in Europe and North America -- by the increasing prominence among the public at large of what may be called "postmaterialist" values. In the affluent societies of the postwar period, in which basic human needs such as employment security, housing and material possessions were satisfied to a relatively high degree, a shift to non-material needs such as self-expression, esteem and aesthetic satisfaction became much more prominent. Surveys in nine major European countries showed, for a large group of respondents, a strong clustering of five nonmaterialist goals: "more say on the job", "a less impersonal society", "more say in government", "ideas count", and "freedom of speech". In seven of the nine countries (showing most strongly in West Germany), the goal of "more beautiful cities" was also strongly associated with the first five items. On the other hand, materialist goals such as "strong defence forces", "fighting rising prices", "achieving a stable economy", "fighting against crime", "economic growth" and "maintaining order" were strongly clustered for another group of respondents.

Postmaterialist values have proved to be a strong support for environmentalism. Thus, in 1985, among "materialists" in an opinion survey of the countries of the European community, 37% "strongly approved" of the ecology movement, while among "postmaterialists" the approval level was 53%. While 0.5% of the "materialists" claimed to be members of an environmental group, 3.3% of the "postmaterialists" -- or almost seven times the proportion -- did so. In both Europe and North America, belief in environmental values are strongly correlated with education, and with youth. As one writer puts it in commenting on the situation in North America, "[e]volving environmental values were closely associated with rising standards of living and levels of education."

Support for the environmental movement has been strongest in the more affluent regions of Canada and the United States, and weakest in the less developed regions. Overall, support for environmental groups increased considerably during the 1970s and 1980s. In Canada, for example, in 1973, the government listed 344 "citizens' environmental organizations". By the late 1980s, the number had risen to some 1,800, with a membership exceeding 1 million, or about 4% of Canada's total population. In the United States, a poll found that 7% of the whole population considered themselves "environmentally active", while another 55% said they were sympathetic with the aims of the environmental movement. In 1990, a Gallup poll found that 76% of Americans "called themselves environmentalists, and half contributed to environmental organizations." By 1991, it was estimated that the larger national environmental organizations had a membership of no less than 14 million individuals, or about one in every seven adults in the country!

Although membership and contribution figures in the large environmental organizations were falling by the mid 1990s (largely, observers suggested, because of the parlous state of the economy which reduced the marginal propensity for donations), the environmental movement had already had a major impact on local activism. This was particularly evident in the area of solid waste management -- whether the concern was toxic industrial wastes, or the siting of a refuse dumpsite at the neighbourhood level. This grassroots activism which was often focused on the municipalities that were responsible for the land-use and effluent-control regulations affecting the communities in which people lived and raised their children, was much more heavily influenced by the participation of women than were the large national organizations. One of the most lasting legacies of the environmental movement -- at least in the North -- has been a greater involvement of a wide range of local groups in the local governance process.

5.2 Changes in urban governance in Latin America