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What is public sector? What is public sector reform?

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The “public sector” is broadly synonymous with “government” also we can define the public sector is the part of the economy concerned with providing basic government services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the police, military, public roads, public transit, primary education and healthcare for the poor. The public sector might provide services that non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service (such as public education), and services that encourage equal opportunity. In this essay I have chosen local self-government sector due to existing problems there. Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population. Public sector reform is about strengthening the way that the public sector is managed. The public sector may be overextended – attempting to do too much with too few resources. It may be poorly organized; its decision-making processes may be irrational; staff may be mismanaged; accountability may be weak; public programs may be poorly designed and public services poorly delivered. Public sector reform is the attempt to fix these problems. As will be mentioned then, our problem in local self-government is relevant to the second scenario.


 Glance at local self-government in Azerbaijan-from past to now

According to one of the democracy principles-subsidiarity principle – local self-government bodies are recommended to be formed in all countries. Subsidiarity principle involves that decision making should be held in the lowest level, as closely as possible to people and people should be attracted to participation in decision making (Access to European Union law, 2015). Also according to Decentralization Theorem by Oates, which mentioned in Public Sector Governance and Accountability Series by World Bank, each public service should be provided by the jurisdiction having control over the minimum geographic area that would internalize benefits and costs of such provision, because local governments understand the concerns of local residents and local decision making is responsive to the people for whom the services are intended, thus encourages fiscal responsibility and efficiency (Shah, 2006). Authorities of central government agencies and local governments differ. Central government deals with the issues which belong to the state’s overall interest. These are national defence and security, internal and external politics, international economic relationships etc. Local government deals with local issues as sanitation, restoring, public services in the local level etc.

As the part of democracy, local self-government was established in Europe as the result of natural need of population and initiated by them. However Azerbaijan took the responsibility for formulation of local government after joining The Council of Europe which shows that the initiative did not come from the population but from the central government. Also, Azerbaijan has never experienced broad local self-government system although during different periods different elements of it were observed. Therefore although this system was established 16 years ago, still there are several problems existing. These are deficiency in legislative framework, the overlapping nature of the functions between local executive and local self-government bodies, the gap between legislation and executive, lack of local financial resources, lack of interconnections between local bodies, lack of relationship between local bodies and population etc. The major reason for the nowadays situation of municipalities is that the government has not carried out important decentralization reforms and limited them only to a few legislative and normative acts to regulate municipalities.

Azerbaijan’s system of governance can be called three-tiered. The top or highest tier of the government is the central executive branch headed by the president. The president appoints the Cabinet of Ministers and other high-ranking officials. The regional executive branch, the second tier of governance, is merely a continuation of the central executive. In June 2012, the president approved a new regulation, which granted additional powers to regional governments, strengthening their dominant position over Azerbaijan’s regions, which in turn narrowed the space for local self-government performance. The third nominal tier of governance is the municipality (Valiyev, 2015).

Although formulation of local bodies are reflected on the constitution which was accepted as the result of referendum in 1995, Azerbaijan mainly started to establish local self-government when joined The Council of Europe and as one of the countries signed European Charter of Local Self Government, has been trying to develop this local body since the ratification of this law (15 April 2002) (Council of Europe, 2012). The Azerbaijani Constitution reflects basic standards of local self-governance. The fourth section of it is totally dedicated to Local Self-Government. According to our constitution, local self-government is implemented by municipalities in Azerbaijan. Municipalities are formed based on elections. Procedure of elections to municipalities and status of municipalities are specified in laws. There are more than 20 laws dedicated to local self-government. These are The Law on Municipal Elections, Law on the Status of Municipalities, and Law on Municipal Property etc. Local councils are constituted through free, general, direct and equal elections. All citizens over the age of eighteen are eligible to vote, while those over the age of twenty-one are eligible to run for office. According to legislation, municipalities may adopt programs of public service delivery and create municipal entities to implement them in the following areas: education, health care, culture, municipal housing and other buildings, sanitation, water supply and sewerage, local transport and communication, cemeteries and funeral services, public catering and consumer services (Meriban Mamedova).

As based on the articles 124 and 142 of the Azerbaijan Constitution, local government is carried out both through local bodies of the state administration and the municipal government (Azerbaijan.az). Local executives are appointed by the President while local self-government members are elected by population. These appointed executives in turn designate local administrations in the villages and settlements situated within their territory. Heads of local state administration carry out executive duties in regions, cities and city districts; ensure rights and freedoms of citizens; further the economic, social and cultural development of the given territory; and coordinate the activities of municipalities and territorial divisions of state administration (Meriban Mamedova). According to legislation, in principle, municipalities and local bodies of state administration should carry out their activities independent from each other, autonomously within their spheres of competence. However in reality local self-government is not totally independent from the central government. A Council of Local Self-Government in the administration of the president regulates the activity of municipalities. In addition, a Centre for Work with Municipalities at the Ministry of Justice maintains administrative control over the municipalities and the implementation of orders and regulations issued by the state bodies (M.Hasanov, 2009). This ministry is responsible for both providing that local self-governments acts legally and human rights are met.

According to the survey that held among Eastern Partnership countries in order to evaluate citizen participation in local self-government, Azerbaijan scored only 2.4 out of maximum 6 which is bad and Azerbaijan exceeds only Belarus with just 0.3 point. Also based on this survey, one problem in this sector is that, people have low awareness of their rights on local self-government (Citizen Participation in Local Self-Governance in the Eastern Partnership Countries: Comparative Analysis, 2012).

  Which reforms have been done in this sector?

During these 16 years since the establishment of local self-government, we cannot see deep, effective reforms directed to solve the problems in this sector. Only noticeable reforms were implemented to reduce the number of municipalities in order to make them more solvent. However the New Azerbaijan Party official Siyavush Novruzov states that as the time passes the number of youth and women that are represented in municipalities is increasing (New Azerbaijan Party, 2014) which can be considered as the success for local sector.

The first municipal elections were held on 12 December 1999. At the time of the municipal elections in December 1999, 52.6% of people who were eligible for voting participated and New Azerbaijan Party dominated among the elected local officials for the next 5 year term (Yeni Azərbaycan Partiyası). 2,667 municipalities were established countrywide, while at the time of the municipal elections in 2004 that number had risen to 2,735 (M.Hasanov, 2009).

In 2009 the reform was implemented in the direction of reducing the number of municipalities. 36% of municipalities were abolished which constituted 993. Since this reform 1718 municipalities perform in Azerbaijan. We cannot call this deep reform, but in the Programme for Reduction of Poverty and Economic Development of the Republic of Azerbaijan for 2008-2015 some aspects of municipalities were reflected. According to this programme main role of local authorities is provision decent public services and quality settlement management to population. However in reality, municipalities deal with collection of local taxes, approval of local budgets, making decisions on municipal property.

On December 23, 2014, Azerbaijan held another round of municipal elections, the fourth since independence. According to the final protocol of the Central Election Committee, around 1.8 million people participated in the voting, electing 15,963 members of municipal governments. Overall, more than 31,000 candidates competed in 1,718 municipalities (Valiyev, 2015). The elections had very low turnout, which reflected a lack of interest among the general population.

Thus several times steps were implemented in order to decrease the number of municipalities, they were limited to normative acts, did not cover comprehensive reform.

                         Now what is wrong with municipalities?

It is enough to start enumerating problems in municipalities with this fact that, in the survey of 2012 which done among Eastern Partnership countries within the comparative analysis none of the respondents in Azerbaijan answered the question positively, “Generally, do you consider the quality of citizens’ participation in the local decision-making satisfactory?”

As mentioned above local government in Azerbaijan is run by both local executives which are appointed by the President of the Republic and local self-governments which are elected by population. There are no exact standards for the division of authority between local executive and local self-government body in current legislation; the issue is not even mentioned in our constitution. Even in some cases, local executive body manages the areas that belong to municipal authority. According to legislation, advertising on municipal territories is a municipal responsibility. However, the already existing Department of Advertising and Information in the Baku local administration has illegally prevented the municipal budget from receiving advertising revenue (Meriban Mamedova). Thus, Azerbaijan ratified the European Charter of Local Self-Government in 2002 which means that it should meet all the requirements by this law in practice, still Azerbaijan stumbles in it. According to article 4, paragraph 4 of this law, powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law. Also The Council of Europe claims that the powers of Azerbaijani municipalities are too restricted and they connect it with uncertainties about the power divisions between municipalities and local executives (The State of European cities in transition 2013,Taking stock after 20 years of reform, 2013).

The other problem is that, Azerbaijan is the only Council of Europe member state whose capital- Baku- is not governed by an integrated local self-government institution such as an elected council. Baku’s status problem has not been solved yet; however Georgia and Armenia share similar history with Azerbaijan as Post-Soviet countries, their capitals are single municipality and run by elected officials.

Also, most of the governmental agencies and officials blame municipalities for the country’s many existing problems, especially with informal housing. Thus, in February 2011, Azerbaijan’s Parliament held a special hearing dedicated to the activities of municipalities. It was revealed that in 2010 alone, 80 hectares of lands were sold to private citizens illegally, while 3,210 hectares of land were illegally leased to private citizens (Valiyev, 2015). Overall, heads of 27 municipalities were brought to court and charged with corruption (Valiyev, 2015). All these issues lead to the low level of trust in municipalities. In the survey that was held over Caucasus in 2013, trust of population in municipalities was evaluated (CaucasusBarometer.org, 2013). According to this survey 16% of people revealed that they truly trust in local self-government, 24% somehow trust. 32% of people distrust and 24% neither trusts nor distrusts. This evaluation shows that municipalities’ so far acts could not get the people’s trust in them. Only 40 per cent of the respondents claim that they trust in this body, which is not so good indicator.

Actually this mistrust is not only rooted due to illegal activities of municipalities. Rafail Hasanov claims that unpleased performance of municipalities is not only the guilt of their administration, but also the lack of social capital, civic engagement in Azerbaijan. He defines social capital as a certain set of informal values, tolerance, social trust, norms and networks of voluntary associations that permit people to coordinate and cooperate for mutual benefit. Today in Azerbaijan the most widespread social type has become an individual who is actually disconnected from the control of their own environment, with its partially destroyed traditions and norms, and is instead focused on their own aspirations and their own family. In Azerbaijan, which differs insignificantly from other post-Soviet republics, from the rest of the world public mistrust is widespread. The previous experience with a totalitarian regime and “a socialist way of life” has left many people upset and contributes, in any measure, to a high level of interpersonal mistrust in Azerbaijan society (M.Hasanov, 2009). He also concludes that due to mistrust especially in cities, municipalities in regions perform better due to stronger social ties than the ones in urban areas, particularly in Baku. In the capital people even do not know where their district municipality is situated. However in a district centre and villages people know each other better, because they have lived closely together for a long period of time, and knowledge of the events occurring in their municipality significantly improves the situation, increases the satisfaction from the municipalities. Again the survey among the Eastern Partnership countries verifies the fact that in regional municipalities actually positive elements are observed.

The financial capacity of our municipalities is not reasonable. Municipalities get financial resources through three main ways:

  • Subsidies by the central government on legal basis
  • Local taxes and revenues that municipalities get via economic activities
  • Financial activities by the municipalities in bond markets

As mentioned above sometimes problems can occur in local taxes, also tax culture of our people is underdeveloped. Therefore we can confidently say that most of the municipalities’ financial resources are formulated with the subsidies by the central government. As internal financial market is not well developed I can recommend municipalities to participate in the international market.

As we know from organizational management theory, networking is more useful rather than traditional hierarchical structure in implementing duties. Therefore the other current problem in local government is lack of interconnection between municipalities, municipalities and NGOs. Amy Guttmann notes: “Without access to an association we have a very limited ability to be heard by many other people or to influence the political process.” There is a great need for municipality participation in NGO projects. NGOs devise projects and municipalities implement them. Cooperation between NGOs and municipalities also includes the training both of people among the population as well as municipal employees.

The other problem is that there is gap between legislation and practice. For example, according to legislation agencies should publish public information through the media, web-pages, in official publications, libraries, and public information centres. It means that nowadays municipalities should have web-pages, social media accounts. But when I searced the internet I could not find web-pages for municipalities, although there was exception as Nizami district municipality. However I met with more web-pages, social media accounts of local executive bodies rather than local self-governments.

Unlike the other governmental agencies as tax bodies and The State Social Protection Fund which are free from paying duties while applying the court, municipalities should pay this fee. For example if the municipality files 10 taxpayers to the court, it should pay 200,000 manats regardless the court result (Yerel yönetimler desentralizasyon ve Azerbaycan belediyeleri, 2004). It does not coincide with the Article 146 of Azerbaijan Constitution which gives municipalities immunities and claims that municipalities shall be ensured protection by the court, and ensured reimbursement of additional expenses caused by decisions of the state bodies.

 Rare is better than never

Fortunately not only bad things happened during these 16 years in municipalities. Although they are rarely observed, some good things occur. The positive example is Khanarab village of Barda, which as a municipality participated in the elaboration of the village development strategic plan in 2009. The village has a number of social-economic problems, which have not been solved for a long time due to insufficient finances. In order to solve these problems in 2009 municipal council developed strategic plan covering 2010-2015 and created association involving different interest groups NGO experts, representatives of the village elderly, females and youth, representatives of farmers and business circles. Different meetings were held; residents were informed beforehand, so who were willing to participate in them could achieve it. Discussions lasted four months and nearly 350 people took part in them. After the discussions, the draft plan was submitted to the municipal Council for approval. Residents of the village submitted about 45 suggestions and recommendations on the first stage of the development of the plan and 17 recommendations during general discussions of the draft. 37 of those were reflected in the strategic plan of the village development for 2010-2015, which was approved by Khanarab municipal Council session in September 2009 (Citizen Participation in Local Self-Governance in the Eastern Partnership Countries: Comparative Analysis, 2012). It is shameful that due to lack of information sharing by municipalities among population, I got this, one of the rare positive examples from the foreign source.

The other positive attempt was creating sister cities between Turkey and Azerbaijan cities. As Turkey is very good example and a long way ahead from us, it gives us chance to absorb their developed practice. For example, Zeytinburnu municipality of Turkey and Nizami district municipality of Azerbaijan are twin municipalities (Zeytinburnu belediyesi, 2005). Also establishment of The Union of Turkish World Municipalities can be considered worthy. One of its main objectives is conducting, exercising, and supporting the search and development activities of new models regarding the city administration and culture. 327 municipalities of Azerbaijan are the members of this union (Union of Turkish Municipalities).

             What can be done to avoid problems in this sector?

In order to achieve success in the reform on local self- government, these three basic principles should be met:

  • Responsiveness- this principle aims that local self-government should deliver the services which are consistent with people’s preferences
  • Responsibility- this principle means that the local self-government should use resources prudently. Government should work better by improving the quality and quantity of and access to public services
  • Accountability- this principle entails that local self-government should be accountable to its electorate (Shah, 2006). A local government that involves these three principles are called citizen-centred government.

There are the ways recommended by literature to avoid the problems in local self-government:

Abolishing of regional governors – transfer their powers to local municipalities. But still regional official can perform within the two-tier system local self-government context; however they will be elected instead of appointment by the central government.

Encouraging Municipalities to Cooperate municipalities in Azerbaijan, and especially in Baku, do not have a culture of cooperation with each other. Each of them prefers to solve their problems alone. The government should encourage coordination among the municipalities in order to approach the existing problems from a more comprehensive view (Valiyev, 2015). It would increase their capacity in order to solve problems in terms of skilful human resources and finance. We can show Turkey as the closest and the best example for us whose experience can be applicable to our country. There is Union of Municipalities of Turkey which claims its mission as: to support the empowerment of local governments and their effective service provision, to safeguard their rights and interests, to strive for the strengthening of local democracy, to introduce them to recent developments and innovations at the global level, and to represent them in national and international platforms (Union of Municipalities of Turkey). Their main tasks are: Carrying out effective lobbying activities directed to the Parliament and central administration institutions, organizing seminars, panels, conferences, workshops, technical study visits internally and abroad, publishing periodicals and various publications on municipals issues, providing consultancy services on legal, technical and other related municipal issues, collaborating with world organizations and national local authority associations abroad to improve municipal international cooperation, organizing trainings for mayors, municipal elected officials and paid personnel. As we see the tasks of such union, to some extent we can also solve the problem of provision of local bodies with skilful personnel.

Solving the problem of Baku’s status- create single municipality over Baku and make it to be ruled by elected official, not appointed mayor. The reasons are not so obvious, but in 2007, Head-of-Staff of the President’s Executive Power-Ramiz Mehdiyev, stated that Baku city municipality will not be established (Trend News Agency, 2007). At least we can say that for now this issue is not seemed among the priorities of the government. Although via its resolutions European Council tries to make the central government to solve the problem of Baku’s status which is our responsibility according to European Charter of Local Self-Government (Council of Europe, 2012).

Provisions of local bodies with competent, skilful personnel – In Azerbaijan, municipalities are composed of elected members and paid personnel staff who deliver services. In order to increase effectiveness and efficiency of municipalities, these paid staff should be taught via sharing best internal and international experiences, practices. Train employees and ensure realization of correct personnel selection.

Creating two-tier system in local self-government- It is recommended to have two-tier system instead of one tier system in municipalities. Many developed countries have this experience as United Kingdom, South Africa. Two-tier system in local self-government means having municipalities in two levels: both in regional or metropolitan and district level. In one of the publications of Localis which is UK think-tank, authors support two-tier system by claiming that in one-tier system larger body serves people and larger bodies are far more difficult to penetrate as the elected member is faced by a large bureaucracy. Ironically this can mean that elected members on larger councils do not have a strategic overview and find themselves only able to concentrate on small-scale ward level problems (Matthew Groves, 2009). Also in two-tier system only one body would not be overloaded with all duties, services can be divided between two tiers which in turn can increase effectiveness and efficiency.

Arrange frequent meetings with population of municipality- It can be realized either by virtual or face-to-face meetings. The most important aim is that people’s needs should be reflected in decision making. Also people should be periodically informed about the activities of their municipalities.

Developing legislation- via accepting new laws or making amendments in current legislation in order to fill the gaps mentioned above.

              Increasing social capital as the long term solution

After doing deep research I found that there are ways for improving local self-government sector. I am sure that all ways that mentioned above are known by all policy analysts but political or other invisible factors can hinder their implementation. There is a notion in organizational management-incremental decision making process, which means that sometimes it is difficult to see your decision’s results in short term. Sometimes it is hard to get sudden results; our goal can be achieved incrementally. My next recommendation is such type.

Unlike the most Azerbaijanis I am not always expecting solution from the top, from the central government. I always try to find exactly the ways in which I can be the part of the solution. Therefore I am recommending unusual way to make “reform” in local sector via which probably we can see the results in the long term. But I am sure that this solution can not only solve problems in this sector, via achieving elements of democracy, this can lead to solving of several other problems as well. According to Rafail Hasanov, low social capital leads to low performance of local self-government. Therefore I am claiming that increasing social capital can be long-term solution for all problems in local self-government.

Firstly what is social capital? Social capital focuses on the social networks that exist between us and the character of those networks, the strength of the ties, and the extent to which those networks foster trust and reciprocity (Thomas Sander, 2006). It is hard to say exactly how trust can be established but we know that, being honest in communications and follow commitments can lead to trust. Social capital can be formal, informal; strong, weak; bridging and bonding. All social relationships happen in groups: as one-on-one, in small and in large groups. Small group is composed by 3-12 people and it is easier to create trust in this group, because in small groups people can know each other better. If you want to turn small group into large one, you still should know each member’s need, interest correctly. As recommended by Harvard University, there are ways to put up social capital and all of them have advantages and disadvantages. These are:

  • Create joint activity around common interest or hobby– This activity can be one time or continuous. If it is a one-time one, it would be hard to create trust. For example, movie lovers can assemble and go to the cinema once, in it the chance for knowing all people closely is low. But also movie lovers can create a club and consistently go to the cinema, for example once a week which increases the probability of creating trust and strong relationships. At our university-ADA, students have a lot of clubs which gather people according to their interests, that’s why students know each other well and as future professionals build networks. But it is bad that these clubs are only within the university, does not cover the other universities. Only different universities can meet in competitions. Interconnection between such clubs in different universities carries the rivalry aim.
  • Doing a favour for another– In large scale it can be well organized, reliable charity association. For example, nowadays in Azerbaijan we lack such kind of association. That’s why people apply the TV channels in order to get help, money for cure etc. Because only when these issues are lightened on the TV people somehow believe that this person really needs help. Otherwise most people think that the person, who asks for help, misleads people, which is also due to the lack of trust.
  • Discussion of community issues– These issues can start from the small scale as pollution in neighbourhood and can last to global climate change. In large scale it can be town forum. These discussions can lead to formulation of creative ideas even by unprofessional people.


Thus there are problems in local self-government regardless the implemented steps. In order to avoid these problems as mentioned above activities towards the increasing social capital should be accompanied with relevant steps by central government for improving local self-government. When we compare developed countries we see significant gaps. But we should not forget that it is just 24 years that Azerbaijan gained independence and only 16 years that municipalities were established in Azerbaijan. Therefore we should never lose our hope and should always keep going.


By: Leyla Abbasli



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About Leyla Abbasli