Issues and Problems in LGU’s

Decentralization was seen as a major mechanism that would hasten the process of democratization and development. In fact, former President Ramos referred to the five Ds of decentralization as deregulation, devolution, decentralization, democratization, and development. Hence, among the fundamental attributes of decentralization is its direct contribution to good governance by providing the context for citizen participation in governance and bringing the Government closer to the ninety Million people, making institutions more accountable and transparent. Based on experience over the past decade, the following are among the major decentralization issues and concerns that must be addressed.

Issue One. Lack of financial decentralization. During the years immediately after the enactment of the 1991 Local Government Code, close to 65,000 personnel were devolved. The transfer of personnel to LGUs mandated them to pay their salaries.

(i) Support the amendments to the 1992 Local Government Code that will increase IRA shares of LGUs to enable them to cover the costs of devolved functions. Additionally, this means looking into various modalities of restructuring the IRA sharing formula; modifying the traditional land area-population equal sharing formula; and including other variables, such as a poverty index, to enable more focused targeting of the transfers to LGUs that need the money more.

(ii) Continue exploring options to generate alternative sources of revenue to finance local development. These may range from BOT options to joint ventures with the private sector to floating bonds. Examples of other LGUs that were successful should be studied and lessons learned extracted.62

Issue Two. Because of the massive devolution of powers to local governments, capacity building should be a high priority in the agenda for local governance.

(i) Training program designs for LGUs should be made with their participation. This means that they should be intensively consulted about their training needs.

Issue Three. LGUs have become more assertive and effective in articulating their concerns over the past 10 years. They have successfully organized themselves into leagues at various levels, under umbrella organizations, such as the Union of Local Authorities of the Philippines.

(i) Institutionalize and strengthen the capacities of the leagues at various levels. This means studying various options of professionalized league staff members, looking into the possibility of having full-time staff members paid for by LGUs, and guaranteeing the tenure of staff members to survive regime and political changes.

(ii) Strengthen the policy analysis capabilities of league staff members, to enable them to respond to problem-oriented issues and concerns. When the member LGUs see the value of leagues in providing needed information and technical assistance, financial support from LGUs in paying regular dues will follow.

Issue Four. LGUs in the Philippines have recognized the value of interlocal cooperation and collaboration, as provided for in the code. Many have recognized that challenges met at the local level can be met only if they cooperate or collaborate with LGUs next to them.

(i) Encourage LGUs to enter collaborative arrangements with neighboring localities to discuss a common purpose, such as those already mentioned. Again, this can be done by studying and examining the experiences of others

Issue Five. LGUs have begun to increasingly enter into partnerships and collaboration with civil society. Largely because of the code, the context for local government, civil society, private sector, and NGO partnerships has been laid out. Examples of successful partnerships abound, making the Philippines a leading model in government-civil society collaboration. It is within this context that many have referred to the Philippine experience as one that has redefined governance at the local level. The following are some of the action points that can be considered.

(i) Governments should make efforts to work in close partnership with civil society through their coalitions and name programs and projects that can be conducted together. This can also include giving the responsibility to check and test the implementation of projects to civil society.

Issue Six. The field of governance in general and local governance in particular is an area that

has generated high interest among international development agencies operating in the Philippines.

(i) Local governance initiatives in the country should be supported by continuing to harness the support of international institutions. Thus, a master plan for parceling out various aspects of capacity building for local governance may be formulated. This will enable development partners to buy into certain aspects of the plan, minimizing overlap in the work of other development agencies. This will also urge closer cooperation, coordination, and complementarity among various initiatives of these international institutions.

(ii) Regular meetings similar to the development agency forum convened in the early 1990s are good venues for linking and networking.

Issue Seven. Awards programs have been instruments in successfully disseminating and encouraging good and best practices at the local level.

Issue Eight. Urbanization is development that should be increasingly addressed at the local level. Estimates indicate that over 50% of the Philippine population will have lived in urban areas by 2002. Thus, the problems of urbanization, including pollution, traffic, and environment degradation, will have to be confronted. It must be noted though, that consultations with LGUs have shown relatively high environmental consciousness among them. The action points that may be considered are the following.

(i) Prepare LGUs to address increasing challenges brought about by rapid urbanization.

(ii) Examine and learn from the experiences (successes and failures) of other LGUs as they confronted problems brought about by urbanization, including environment degradation, pollution, congestion, and others.

Issue Nine. Globalization issues and concerns are being increasingly addressed by LGUs. Many LGUs in the Philippines participated in international forums and were invited to present their initiatives and innovations and have adopted the relevant paradigm of thinking globally yet acting locally. Autonomy is processes and cannot be fast tracked.


The role of LGUs as frontline units in the battle for good governance must always be recognized. This will affect various strategic directions that the Asian Development Bank (ADB) might design and adopt. ADB will likewise recognize that devolution and autonomy are processes and cannot be fast-tracked. The key therefore is to build upon the hard-earned gains of the past decade. Finally, learning from the LGUs themselves, as shown by the emergence of many good and best practices should gird the strategy, if these are practices that have been designed by LGUs themselves and have actually worked. National government agencies and development institutions can therefore give to the overall capacity building of local institutions by creating partnerships with them and abandoning the conventional top-down approach of presuming to teach them. Instead, these agencies and institutions should be willing to work with LGUs and at times be taught by them.


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