IDG Policy Brief
Urban Institute Center on International Development and Governance
Providing basic public services at the door step of the people?
Estimating the size of the local public sector in Bangladesh
Jamie Boex
June 2012
While the Constitution of Bangladesh provides for a highly
decentralized public sector—stating that local governance
in every administrative unit of the Republic shall be
entrusted to elected councils—in practice, Bangladesh is
widely considered to be one of the most centralized
countries in the world.
Figure 1: The estimated size of the local public
sector in Bangladesh, 2011/12
In recent years, substantive reforms have taken place in
support of a more decentralized public sector, both during
the term of the last caretaker government (from 2006 to
2008) as well as during the first few years of the current
government led by Awami League.
On the legislative side, new ordinances and acts were
passed to enhance the powers and responsibilities of Union
Parishads (the lowest level of elected local governments) and for the re-introduction of Upazila Parishads (subdistrict elected councils). For urban areas, one integrated law was passed, replacing six earlier acts. In its election
manifesto—and in the recent national Sixth Five Year Plan (SFYP)—the current government has committed to
bringing “basic public services to people’s doorsteps.” Part of this strategy also includes greater access to fiscal
resources at local levels.
The government’s stated policy ambition leads to a simple question: what share of public resources is currently
used to fund public services “at the door step of the people”? In other words, what is the size of the local public
sector in Bangladesh? Although this is an obvious and important policy question to ask, answering this question is
surprisingly difficult.
The first obstacle—perhaps not unexpected—is the difficulty in obtaining the necessary fiscal data for the whole
public sector, which covers not only the central government, but also 64 districts (Zila), 489 sub-districts
(Upazila), 4,498 Union Councils, and 315 municipalities and City Corporations. The second (and more
fundamental) obstacle is that the metrics that are commonly used to measure decentralization are generally limited
to measuring the finances of “devolved” local government units, and therefore provide only a partial and
incomplete picture of the local public sector in Bangladesh. As a result, we apply a methodology that was recently
developed by the Local Public Sector Initiative in order to measure the complete size of the local public sector in
Bangladesh.
IDG Policy Brief—Estimating the Size of the Local Public Sector in Bangladesh
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What is the Local Public Sector?
Consistent with the notion that the government of
Bangladesh seeks to deliver public services “close to
the people” or “on people’s door steps”, the local
public sector could be defined as the part of the
public sector that regularly interacts with the people
in a localized manner.
The range of public services and activities that falls
within the realm of the Local Public Sector thus
include basic local services such as solid waste
management, street lighting, public markets, and
community development. In addition, important
sectoral services such as basic education, basic health
services, water provision, and agricultural extension
are part of the local public sector as well. By the
definition above, even local civil administration, fire
protection and police services could be considered
part of the local public sector.
In international practice, there are different
approaches by which national governments interact
with—and deliver services to—the people. These
approaches include the provision of public services
by elected local governments (devolution), but also
through other mechanisms, such as deconcentration,
delegation, and centralized public service delivery
(Figure 2). In contrast to devolution, deconcentration
takes place when decision-making authority and
resources are transferred from the central
government to subnational departments or
subnational jurisdictions which are a hierarchical part
of the national (state) administration.
As a starting point, the Local Public Sector Initiative
does not assume that any single type of institutional
arrangement at the local level is inherently better
than others. Instead, the initiative seeks to measure
and describe the size and nature of these different
institutional mechanisms and explores under which
conditions these different approaches might be
appropriate and efficient for the delivery of
government services to the people.
Measuring the Local Public Sector and Local
Public Sector Expenditures
A comprehensive metric of local public sector
finances ought to recognize that virtually no country
in the world is purely devolved or purely
deconcentrated, but rather, that central authorities in
each country simultaneously interact with residents,
civil society and the private sector through the
different mechanisms highlighted in Figure 2. As
such, the measure of local public sector expenditures
adopted by the Local Public Sector Initiative
measures three types of local expenditures:
1. Devolved
expenditures—made
by
local
governments;
2. Deconcentrated
expenditures—made
by
deconcentrated units of the national government;
and
3. Other local public sector expenditures—
expenditures that are made directly (or through
delegation) by the central government for “local”
public services.
A good measure of Local Public Sector finances
should not simply aggregate the different funding
streams into a single measure of local public sector
expenditures, since different types of political,
administrative and fiscal arrangements at the
subnational level are likely to result in different
levels and quality of public services.
As a result, the methodology developed by the Local
Public Sector Initiative provides a breakdown of the
different types of local public sector expenditures,
rather than simply aggregating them. Greater details
about the methodology used to measure local public
expenditures are contained in the Local Public Sector
Country Profile Handbook (draft, March 2012).
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Measuring Devolved Expenditures in Bangladesh
The first component of local public sector
expenditures in Bangladesh is the spending of elected
local governments. All local government spending
can safely be assumed to be part of local public
sector expenditures.
A local government can be defined as a local body
that (1) is a corporate body; (2) that has its own
political leadership; (3) engages in some type of
governance activity; and (4) prepares and adopts its
own budget. By this definition, Union Parishads
(UPs), municipalities (Pourashavas) and City
Corporations are local government entities.
Unfortunately, there is no accurate measure of
devolved local expenditures in Bangladesh, as no
central government agency currently tabulates the
expenditures of UPs or of urban local bodies. This is
regrettable, since the absence of such basic data
undermines the credibility of the local government
system and does not permit the analysis of basic
questions about local public finances and local
services.
Instead, we can approximate the total amount of local
government expenditures as the sum of the total
amount of intergovernmental fiscal transfers
provided to local governments, plus the total amount
of expenditures funded by own source revenue
collections.
The 2011/12 budget for the Local Government
Division (LGD) contains Taka 29.6 billion in
intergovernmental fiscal transfers and allocations to
autonomous bodies and other institutions. This
amount is expected to translate into the same amount
of devolved expenditures.
Measuring Deconcentrated Expenditures and
Other Local Public Sector Expenditures in
Bangladesh
For the purpose of determining the level of
deconcentrated expenditures and other local public
sector expenditures in Bangladesh, we reviewed the
ministerial budget plans (2011/12) for thirteen line
ministries:
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Ministry of Home Affairs
Ministry of Primary and Mass Education
Ministry of Education
Ministry of Health
Ministry of Social Welfare
Local Government Division
Rural Development and Cooperatives Division
Ministry of Agriculture
Ministry of Fishery and Animal Resources
Ministry of Environment and Forest
Ministry of Water Resources
Food Division
Disaster Management and Relief Division
These are the ministries expected to be active at the
local level in terms of providing public services to
the people in a localized manner.
For each ministry or division, the budget for 2011/12
(downloaded from the Ministry of Finance website)
presents the breakdown of planned expenditures by
economic classification. In addition, the budget plan
presents planned expenditures by budget program.
While it would be helpful to have more details on
each budget program within each line ministry, such
details were unfortunately not available for the
purpose of estimating the size of the local public
sector.
Deconcentrated Expenditures
In addition, based on the most recent analysis of
local government revenues in Bangladesh (Fox and
Menon, 2008), we roughly estimate each local
government to collect US$ 2 (or Taka 160) in own
source revenues per person. While this is an
unsatisfactory rough estimate (and probably quite
generous, given the limited revenues collected by
UPs), this estimate will suffice for the time being for
the purpose of obtaining a rough estimate of the
overall size of the local public sector in Bangladesh.
For each of the line ministries, whenever the name of
a budget program indicated spending on a localized
activity by a deconcentrated administrative unit (e.g.,
District Offices or Upazila Offices), these program
expenditures were counted as deconcentrated
expenditures. For instance, under the Ministry of
Health, spending on Upazila Health Complex and
Sub-centres was counted as deconcentrated
expenditures. Similarly, in the education sector,
budget programs such as Upazila Education Offices,
Government
Primary
Schools,
Government
IDG Policy Brief—Estimating the Size of the Local Public Sector in Bangladesh
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Secondary
Schools
and
Non-Government
[Education] Institutions were also assumed to be
spent in a deconcentrated fashion. According to the
methodology being followed, even District Police
Forces under the Ministry of Home Affairs were
considered to be deconcentrated expenditures.
In addition, for each of the relevant line ministry, the
budgets were reviewed for indications of direct or
delegated line ministry spending in support of local
public services. For instance, a line ministry’s
allocations for “autonomous bodies and other
institutions” were generally considered to form part
of the local public sector. This may overestimate the
size of the local public sector, since it is typically
unclear whether these resources are in fact provided
to local governments, to parastatal organizations, or
to national institutions.
Other expenditures that were expected to benefit the
delivery of front-line public services were counted as
part of the local public sector as well. For example,
procurements made by the Food Division—while
made by a central government agency—were
assumed to ultimately benefit the local community.
As such, these expenditures were counted towards
other (direct and delegated) local public sector
expenditures.
In contrast, budget programs that appeared to fund
central administrative departments (e.g., the
“Department of Fisheries”) were generally not
considered to be part of the local public sector. Of
course this does not mean that central administrative
departments are unimportant in the delivery of local
public services. It is rare, however, that spending by
central administrative departments produces an
immediate and direct benefit in terms of improved
public services “on people’s door steps.”
What is the Size of the Local Public Sector in
Bangladesh?
Based on the methodology described above, what is
the estimated size of the local public sector in
Bangladesh for the year 2011/12?
The total share of public expenditures that takes
place within the local public sector in Bangladesh is
reflected in Figure 1, and consists of three
components. First, the estimated amount of devolved
local government expenditures in Bangladesh equals
approximately Taka 60 billion, or about 2.6 percent
of the total budgeted expenditures for 2011/12.
Based on the low level of devolved expenditures,
Bangladesh is often cited as being among the most
centralized countries in the world. However, this
estimate fails to account for non-devolved funding
flows to the local level.
In addition to devolved local government
expenditures, deconcentrated expenditures account
for approximately 7.1 percent of public expenditures,
while other (direct or delegated) centralized
expenditures in support of the local public sector
account for another 6.4 percent. When adding these
different funding streams, the total size of local
public sector expenditures in Bangladesh (expressed
as a percentage of total public expenditures) is
approximately 16.2 percent.
It should be noted that while this estimate likely
gives a reasonable approximation of the size of the
local public sector in Bangladesh, this is certainly not
highly precise. On one hand, it is likely that this
estimate still excludes some local public sector
expenditures, while on the other hand, it is likely that
some expenditures assigned to the local public sector
are overestimates.
Is the Size of the Local Public Sector Big Enough?
A Comparison With Other Countries
Given that the government of Bangladesh has
committed to bringing basic public services at
people’s doorsteps, is the current size of the local
public sector big enough?
The most likely answer is “probably not”. After all,
for every Taka 100 that is being spent by the public
sector, only Taka 16 is being spent on public services
that are delivered more or less “at the people’s door
steps.”
In contrast, the majority of public spending (Taka 84)
remains largely invisible to the people by being spent
at the central administration level or by being spent
on public services that are less visible to the people.
While central public expenditures finance national
debt repayment, national defense, and other
important national government services, it is difficult
to escape the notion that the 84 percent of public
expenditures that is spent at the central government
level likely includes a considerable amount of central
IDG Policy Brief—Estimating the Size of the Local Public Sector in Bangladesh
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administrative expenditures that are not necessarily a
high priority to the people.
Another way of analyzing whether local public sector
spending in Bangladesh is high enough is by
comparing local public sector expenditures in
Bangladesh with a number of countries that are
roughly comparable in terms of governance structure
and economic development. This is done in figure 3.
The table clearly demonstrates that the total size of
the local public sector in Bangladesh continues to be
among the smallest in the world, even when
deconcentrated expenditures and other local public
Figure 3: A Comparison of the Local Public Sector
in Selected Countries
different stakeholders, including policy analysts,
representatives from different line ministries as well
as local government officials from all different
levels.
Such a policy analysis exercise should inform a
wider policy dialogue and specifically provide facts
and evidence for three key policy questions:
First, is the government comfortable with the share
of public spending that is currently being devoted to
the local public sector in terms of bringing public
services to the door steps of the people? If not, what
share of public expenditures should be directed
towards the local public sector? What reforms in
budget processes are needed to achieve a greater
degree of vertical fiscal balance?
Second, are public resources distributed across the
national territory in a way that is consistent with
national policy objectives? For instance, are urban
and rural areas each getting their “fair share” of
public resources, or are certain parts of the country
receiving a disproportionately greater share of public
resources? If public resources are distributed in an
inequitable manner, what reforms in budget
processes are needed to achieve a greater degree of
horizontal fiscal balance?
sector spending is taken into account. It is interesting
to note that the next lowest country (in terms of local
public sector expenditures) is Egypt, where public
dissatisfaction with the unresponsiveness of the
public sector led to the ouster of the regime of
President Mubarak in the spring of 2011.
Concluding Thoughts and Next Steps
What should be next for Bangladesh, in terms of its
decentralization reforms, and with regard to its desire
to move the public sector and public services closer
to the people?
Perhaps the most immediate next step would be to
engage in a more inclusive, more detailed and more
accurate analysis of the size and composition of the
local public sector in Bangladesh. While such an
analysis would most likely be jointly led by the Local
Government Division and the Ministry of Finance,
such an analysis should bring together a variety of
Finally, are local jurisdictions able to transform
the available financial and human resources into
public service delivery outcomes in a way that is
responsive to the needs of the community? If
not, what concrete (and politically acceptable)
steps can be taken to enhance the effectiveness
of the local public sector in Bangladesh in order
to ensure improved public service delivery and
greater empowerment of the people over the
public sector?
This IDG Policy Brief was prepared by Dr. Jamie Boex in
June 2012 with support from the Swiss Agency for
Development and Cooperation (SDC). The Local Public
Sector Initiative is further supported by a research grant
provided by USAID under Cooperative Agreement AIDOAA-A-12-00008 .
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