Highlights

There has been limited support to address the factors that constrain local government capacity to deliver essential services as a result of the incomplete decentralization agenda, including the lack of clarity on the division of responsibilities among levels of government and sustainable access to resources.

The World Bank’s approach of relying on the Community Development and Investment Agency as the implementing agency missed an opportunity to build local government capacity. Projects focused on enhancing local government capacity for participatory planning, but the institutional capacity of local self-governments to provide or upgrade services outside a donor-financed project has not improved.

The World Bank–supported projects approached the water supply sector in a holistic way (supporting institutional reform of the sector at the local and national levels) and increased access to and quality of the water supply. While there were issues with the capacity and mandate of the national-level agency and financial sustainability of rural water user unions, efforts are progressing in the right direction and have enabled other development partners to increase their activities.

In contrast, other local public infrastructure was supported through community-driven development modalities that, while providing inputs valued by communities, did not improve quality of services. Moreover, access to and the quality of essential local services were not monitored.

Focus group discussions held in five ayil okmotus found that there has been little to no improvement over the past 10 years in access to and quality of local public services in all five ayil okmotus and that the link between investments from the Community Development and Investment Agency–administered, World Bank–funded projects and the improvement of local service provision in these ayil okmotus was weak.

At the start of the evaluation period, provision of essential local public services was insufficient:

• Water supply. In 2014, residents in urban and rural areas experienced insufficient and low-quality water supply and wastewater disposal (Government of the Kyrgyz Republic 2014c). A 2011 United Nations Development Programme study found that less than 25 percent of rural populations had access to sewerage. In the country’s 25 largest cities, drinking water coverage ranged from 60 to 90 percent (UNDP 2011).
• Sanitation. Less than 40 percent of the population in the 25 largest cities had access to improved sanitation (UNDP 2011). World Health Organization and United Nations Children’s Fund data indicate that in 2006, only 51 percent of residents of rural areas had access to improved sanitation (World Bank 2009). In 2014, only 2.7 percent of the rural population had access to indoor plumbing (National Statistical Committee of the Kyrgyz Republic and UNICEF 2014).
• Solid waste collection. In 2011, less than 40 percent of the urban population had access to solid waste collection. Between 25 and 50 percent of the population in smaller towns received regular solid waste collection, compared with approximately 96 percent of the population in Bishkek and 60 percent in Osh (UNDP 2011). Waste collection equipment was outdated and inefficient, with lengthy downtime for repairs. Conditions at communal collection sites were unsanitary.
• Key issues in towns and villages. According to a 2013 national opinion poll by the International Republican Institute (IRI 2014), the most important issues faced by residents in towns and villages were the low quality of roads (36 percent of respondents stating that this was among their top three problems), followed by lack of drinking water or water supply (28 percent), jobs and unemployment (25 percent), inadequate preschools and schools (8 percent), insufficient public services generally (8 percent), and unsatisfactory waste disposal (7 percent).
• Patronage networks. In the absence of systems that deliver quality local public services, patronage networks have been used to channel resources to localities and improve service delivery.

The World Bank supported improvements in essential local public services through a targeted approach in the rural water supply sector and a more scattered, mostly demand-driven approach to improving other public infrastructure. Per the focus of the Bank Group strategies and the mandates of local governments, “essential” local public services are thus defined as water supply and sanitation, solid waste, and education and health buildings. The CPS objectives of improving the efficiency and quality of essential public services and ensuring sustainable urban development and communal services were relevant to the country context. The first objective focused on education, health and social protection, and rural water supply and sanitation, whereas the second focused on water supply and sanitation, solid waste management, and other social infrastructure. Attention to local public services diminished in the CPF, with only two relevant objectives—human capital (objective 7) and infrastructure that would support regional development (objective 8)—even though the active portfolio was supporting a broad range of investments in local infrastructure. Several projects supported multiple types of infrastructure, and all projects active during the evaluation period used the same implementing agency.

A core part of the World Bank’s approach from FY04 through the present to improving local-level infrastructure in villages and rural areas was through a series of three Village Investment Projects (VIPs 1–3). This has become a flagship CDD program. The first VIP (before the evaluation period) was designed in 2003, when the decentralization agenda was gaining momentum and there was a dearth of local public services. VIP 2 was implemented between FY07 and FY15, and VIP 3 began in FY15 and is expected to run through FY25. The VIPs have two fundamental objectives: to improve governance and capacity at the local level and to strengthen access to essential infrastructure services.1 The first objective focuses on increasing capacity for participatory planning. Infrastructure investments are identified through rural community development plans agreed to through a participatory process supported by the project and with participation of the local governments (World Bank 2018f). The types of infrastructure are not specified in advance, and the Project Appraisal Documents illustrate a wide range of types of infrastructure.

Only two VIPs aimed to expand access to essential local public services during the evaluation period. The Bishkek and Osh Urban Infrastructure Project aimed to increase the availability of basic services in semiformal settlements in the cities of Bishkek and Osh (which was later expanded to small towns across the country) and the availability of social infrastructure (World Bank 2017a). The project funded improvements in water supply and roads and also included a “community investment” component that took a CDD approach similar to that described for the VIPs, without targeting specific types of infrastructure. The Urban Development Project aimed to improve the quality of municipal services in four participating towns around the country (World Bank 2016f). It funded improvements in water supply, solid waste management, and street lighting, as well as energy efficiency and seismic resilience retrofits of buildings and primarily schools.

All the World Bank–supported projects related to essential local public services implemented during the evaluation period used the same third-party implementing agency—the Community Development and Investment Agency (ARIS),2 which was established in 2003 to implement VIP 1. Subsequent locally focused World Bank–funded projects used ARIS as a project implementing unit because it was considered more efficient at project management and less vulnerable to government interference than line ministries or other central government entities. Over time, ARIS built up an expansive network across the country that allows World Bank–supported projects to reach remote rural villages; in some villages, ARIS-implemented projects have been the only source of public investment.

Water Supply and Sanitation

The World Bank–supported projects in water supply and sanitation aimed to improve access to potable water and strengthen the institutional framework and capacity for the rural drinking water supply and in the sanitation sector. Both the infrastructure and institutional aspects of this objective were relevant to the country context given the breakdown in local public services, including water and sanitation after the fall of the Soviet Union. The World Bank has supported rural water supply and sanitation through three projects since FY02: the Rural Water Supply and Sanitation Project (RWSSP; FY02–09, outside the evaluation period); the Second RWSSP (RWSSP 2; FY09–15); and the Sustainable RWSSP (FY17–25).

Projects succeeded in expanding the water supply in villages, towns, and cities around the country, reaching 420,000 people. In the areas supported by the RWSSP 2, 83 percent of households surveyed reported having water supply for more than 12 hours per day, compared with 63 percent in 2011 (World Bank 2015c), and 90 percent of water quality tests in the service area of the rehabilitated programs met national standards for drinking water. The Bishkek and Osh Urban Infrastructure Project met or exceeded its access targets in nearly all of the areas where it worked, providing water supply to slightly more than 230,000 people (greater than its 181,000 target). All beneficiaries in Bishkek received 24-hour supply, and other areas received at least 12-hour supply. The Urban Development Project improved access to water supply for 52,000 people and provided them with water for 8–10 hours per day, meeting its targets.

However, there are efficiency and sustainability concerns regarding water supply services:

• Twenty-eight water supply systems rehabilitated under the first RWSSP required rectification because of weak technical design of the water sources overseen by the project’s implementing agency. An additional three systems had not been finished. The scale of the RWSSP 2 had to be reduced so that the project could fund rectifications and finish this work. The 38 water supply programs rehabilitated by the RWSSP 2 included these 28 systems; two-thirds of the expenditure was on fixing the RWSSP 1 subprojects.
• Significant risks to sustaining development outcomes achieved under the RWSSP 2, Bishkek and Osh Urban Infrastructure Project, and Urban Development Project were identified in IEG validations (World Bank 2015b, 2017a, World Bank 2022j). Financial sustainability was in question, with inadequate technical capacity among the Community Drinking Water Users Unions (CDWUUs) and water utilities, lack of financial viability of water utilities, and lack of budgets for maintenance, replacement, or upgrading of distribution infrastructure.
• Regarding the Sustainable Rural Water Supply and Sanitation Project, World Bank staff have raised concerns about financial viability (downward revision of tariffs in some commissioned subprojects) and technical quality (wastewater discharge risks and weak wastewater management capacity in five subprojects). As of the end of September 2022, ARIS had not yet contracted the international firm for design review and supervision.
• IEG validation of the RWSSP 2 noted that sidelining government rural water supply institutions by transferring implementation responsibility to ARIS denied the government the opportunity to benefit from institutional capacity building for design and implementation of investment projects and subprojects (World Bank 2015b).

The World Bank remained engaged with institutional reform of the water sector even when the shifting of institutional structure of the sector and low capacity at the central government level made it difficult to maintain dialogue. Currently, the Sustainable RWSSP is providing capacity building to the Department of Drinking Water Supply and Wastewater Disposal (DDWSWD) and is supporting the drafting of a new water supply and sanitation law and sector standards, assessment of the sector’s institutional arrangements, professional development in the sector, and capacity building of water supply service providers. Capacity building to DDWSWD is being coordinated with assistance from the Asian Development Bank. With assistance from the project, an institutional support plan for DDWSWD was developed and approved in October 2022. The World Bank’s efforts to engage at the national government level in the water supply sector appear to be slowly making headway. This was confirmed by a lead nongovernmental organization working on local-level issues.

Water service providers remain weak financially. An operational performance analysis of CDWUUs carried out during preparation of the sector strategy found that only 25 percent of the 633 CDWUUs were operating on a financially sustainable basis in 2015. Key issues included limited technical guidance; insufficient service and financial regulation at the local and central levels; and inadequate equipment, human capital, and funding for maintenance and expansion of services (which in effect made it difficult for CDWUUs and local authorities to sustain and increase access to quality services). As of 2022, there is still concern about cost recovery levels in rural water service providers (World Bank 2022h). According to a 2019 presentation by DDWSWD, fees collected by CDWUUs are insufficient to cover the modernization and rehabilitation of water supply systems (Kyrgyz Republic, DDWSWD 2019). The World Bank–supported projects are supporting improved billing and collections, and a main challenge is that water tariffs remain low.

The World Bank–supported projects also increased access to sanitation, but sustainability is a concern. These projects improved sanitation facilities in approximately 62 schools. The RWSSP 2 rehabilitated sanitation facilities at schools in 18 villages. The Urban Development Project improved sanitation at 6 schools. The Bishkek and Osh Urban Infrastructure Project worked to improve sanitation but did not track sanitation-specific outputs. The IEG validation of the RWSSP 2 noted that the risk to development outcome was significant, including because of concerns about inadequate maintenance of school sanitation facilities as a result of low spending by school administrations, with data indicating that such spending may meet as little as 10 percent of needs (World Bank 2015b).

Community-Driven Development Approaches and Essential Local Public Infrastructure

VIP 2, VIP 3, and the community investment component of the Bishkek and Osh Urban Infrastructure Project supported investments in local infrastructure; however, they did not target improvements in service delivery. Communities decided their own priorities for infrastructure improvements financed through the VIP. There was no targeting of the type of infrastructure to be improved. ARIS reports that each subproject had its own arrangements for operations and maintenance and typically depended on the existing institution (for example, school) or the local community (for example, water users) to maintain the infrastructure funded by the projects. This evaluation found no systematic documentation of such arrangements or agreements supporting them. Sustainability is a concern given local government budgets.

Outputs related to public services were not monitored by the World Bank, and outcomes were not monitored at all. World Bank systems did not capture the level of detail to identify what type of infrastructure the subprojects supported; this level of disaggregation was available only directly from ARIS. Regarding outcomes, neither the World Bank nor ARIS monitored the outcomes of these subprojects in terms of access (for example, how many households received access to piped water or solid waste collection, and where these were; whether school enrollment increased) or quality (for example, hours of water supply, water quality, and frequency of solid waste collection). Correspondingly, no targets were set regarding these outputs or service improvements.

The Urban Development Project took a more targeted approach in its efforts to improve solid waste collection service in four towns. It provided nine specialized solid waste trucks, and associated training, across the four towns, and monitored outcomes. The project enabled 41,200 people to receive regular solid waste collection service at least twice a week, exceeding the project target of 40,600 (World Bank 2022j).

Implementation Arrangements

Implementation arrangements for these projects did not contribute to building local government capacity. Implementation of subprojects (including procurement, oversight of contractors, and financial management) was the responsibility of ARIS. Reliance on ARIS missed an opportunity to build capacity in local governments through learning by doing in implementing these projects.

This weakness was known to the World Bank: IEG’s validation of the RWSSP 2 noted that “sidelining the government rural water supply institutions by transferring implementation responsibility to ARIS denied the government the opportunity to benefit from institutional capacity building for design and implementation of investment projects [and subprojects]. This was even more egregious given the lack of engineers and technicians who are adequately trained and can fully understand the application of international technical standards, including chlorination” (World Bank 2015b, 8). Consistent with this, IEG put forth the following lesson: “Ensure that expediency does not displace capacity building in government institutions. In this project expediency led to [bypassing] the line agency and outsourcing project management to an NGO [nongovernmental organization], and this approach turned out to be a successful arrangement for getting implementation up to speed and back on track. However, care has to be taken at restructuring that the NGO managers have the skills and capacity to work alongside their government counterparts, transfer knowledge[,] and build capacity” (World Bank 2015b, 12).

Concerns have also been voiced that ARIS has become too big and there is a need for closer oversight from the World Bank. There is a need to ensure that ARIS does not influence project design in a way that would impede progress toward eventually shrinking its role as local government capacity is increased. Following the death of its long-serving chief executive officer, in 2017–18 ARIS experienced a change in leadership that led to political interference and allegations of corruption, culminating in the resignation of some project implementation unit staff in protest. Following the World Bank’s threat of suspension of the International Development Association program, leadership was changed, and project implementation oversight improved.

Findings

Focus group discussions held in five ayil okmotus in the Chui and Issyk-Kul provinces found that there had been little to no improvement over the past 10 years in access to and quality of local public services (see appendix A for information on focus group methodology). Some participants considered that the provision of certain local services had actually deteriorated compared with the early 2000s. All the selected ayil okmotus struggled with financial sustainability over the past 10 years and were underfunded, understaffed, and overburdened with work. The link between investments from ARIS-administered, World Bank–funded projects and the improvement of local service provision in these ayil okmotus was weak. The maintenance of infrastructure funded by ARIS-administered projects remains a significant problem in all of the ayil okmotus visited. ARIS transferred the task of maintenance and repairs to local governments, which lacked funds to maintain the infrastructure buildings. As a result, the burden of maintenance is falling on the shoulders of the staff working in these buildings.

The only service for which the World Bank took a targeted and holistic approach to improving service provision was water supply. While institutional and financial capacity for sustainable water supply is still lacking, slow progress in access, quality, and the institutional structure supporting service delivery has been made over time. World Bank engagement in the sector contributed to the return of other development partners.

A main reason for the lack of service improvements is that the projects supported by the World Bank through a CDD approach did not target essential local public infrastructure or improvements in service delivery. These projects had a much broader scope than the CPS and CPF focus on essential services, such as water supply and sanitation, solid waste management, education, and health. The lack of targeting, engagement on service provision modalities, and inadequate monitoring meant that the projects did not improve service delivery. Interviews conducted during this evaluation found no coordination between the CDD-type projects funding local-level infrastructure and projects in education, health, and water supply and sanitation sectors. Despite this, and apart from increasing the amount of funding for subprojects in VIP 3, the CDD model has remained virtually unchanged since FY02.

More fundamentally, World Bank–supported projects did not address the main constraints driving the low quality of service provision by local governments, other than in the water supply sector. Those prevailing constraints and the respective gaps in the World Bank’s program are the following:

• Lack of resources. Local governments still lack adequate and predictable resources for service delivery. While this problem was identified long ago, the World Bank began to provide technical assistance on it only in 2017. Despite this support, there are few tangible results or improvements to the system.
• Unclear delineation of responsibilities. The World Bank’s 2014 Public Expenditure Review concluded that the lack of clarity in responsibilities among different tiers of government had resulted in a lack of accountability in the system (World Bank 2014). In 2021, the World Bank developed Analysis of Local Governments Capacity for Better Service Delivery in Kyrgyz Republic (World Bank 2021a), which included a background note on intergovernmental fiscal relations and administrative-territorial reform that again raised this issue (World Bank 2022b). It found that the lack of clear expenditure assignments “is a significant issue that impacts the sustainability of World Bank–supported projects as well as the development of a service delivery system more broadly” (World Bank 2022a). However, this constraint does not appear to have been systematically acknowledged in World Bank–supported investment in local public infrastructure outside the water sector.
• Capacity of local governments. The World Bank supported capacity building for participatory planning but, outside the water sector, did not address the range of needs required to improve the delivery of essential local public services.
  • Local governments lack the human resources and technical and institutional capacity to deliver quality local public services (World Bank 2022b). Outside the water sector, the World Bank projects that invested in local infrastructure did not focus on building the capacity or institutions needed to operate, maintain, and deliver improved services in a sustainable way. The projects did not build capacity for project planning, management, or maintenance of financed infrastructure.
  • VIPs did strengthen local-level participatory planning processes, reflecting their objective to strengthen local-level governance. VIP 2 contributed to increased community engagement and influence of community groups in decision-making and planning (World Bank 2018f). However, this did not address capacity needs for improved service provision.
  • The World Bank helped establish a community of practice on PFM for local government officials. The community of practice initiative laid the foundation for a capacity-building platform, with training on budget literacy and information transparency provided by the World Bank–supported activities, and was appreciated by participants and other donors working on local-level issues (Saetova, Uulu, and Kisunko 2018). However, it was not sustained after the grant supporting the project was exhausted.