ABSTRACT
Advocates of decentralisation often assert that, through an efficient division of labour, decentralisation can improve governance, especially the delivery of goods and services. However, arguments for decentralisation typically focus on the formal provision of services by sub-national government agencies that do not cater to the poor, particularly in developing countries, since the poor often do not have access to formal land and services. When national and local governments fail to provide urban services to the poor, other ‘intermediaries’ (quasi-formal and informal institutions) step in to provide and mediate access to these services. These intermediaries have been found to offer more accessible, but often, less affordable and/or reliable services. This paper draws on new empirical and analytical insights to understand the role that local governments play in bridging the formal–informal service delivery gap, focusing, in particular, on whether stronger policies for decentralisation lead to more innovation and/or involvement of the local government in the provision of services to informal communities. This question is critical to discussions on decentralisation, since local governments are often assumed to be best positioned to provide more equitable access to services and/or regulate provision by intermediaries. The findings suggest that decentralisation, combined with pro-poor national policies, provide a basis for greater innovation by local governments to address the needs of the poor. However, the sustainability and replication of these efforts may be limited.
