Elton Stafa, NALAS Network of Associations of Local Authorities of South-East Europe
Relevance of the Practice
The territorial and administrative reform (TAR) adopted in July 2014 constitutes the most important and perhaps the most impactful of the reforms undertaken by the government of Albania in the sphere of decentralization and local governance in recent years. The reform consolidated 373 fragmented rural communes and urban municipalities into just 61 municipalities. This reform eliminated the previous urban-rural separation and, by unifying the local government units (LGUs) in terms of size, has created an opportunity to increase administrative efficiency and improve service delivery.
The reform was planned and adopted in a record time of 9 months only, and in the background of an extreme political polarization in Albania, with the opposition not participating in the planning and adoption of the reform.
The practice responds to the specific questions of report section 4 on local government structure related to analyzing the reasons behind amalgamations of local governments, how are these amalgamations planned and implemented etc. Given the multitude of implications of the territorial reorganizations for local government functions and finances, for intergovernmental relations and citizen and stakeholder participation, the described practice cuts across key questions in report section 2 on local responsibilities, section 3 on local finances, section 5 on intergovernmental relations and section 6 on people’s participation in local decision-making.
Description of the Practice
Since taking office in September 2013, the new Government of Albania initiated a Territorial and Administrative Reform (TAR) to reorganize Albania’s local governments. This was considered as the first step towards empowering local governments by giving them more functions and resources.
The TAR aimed at increasing the cost-efficiency of local governments, so that they can provide better services and make sure that citizens of these communities may enjoy more access to such services. The rationale behind the TAR was that the current territorial division in Albania does not reflect the social, economic, demographic and infrastructural developments since 1992, nor citizens’ expectations regarding public services to be delivered at the local level. In particular, the fragmentation of local governments has prevented service delivery and development.
Cost efficiency and reduction of administrative costs has been one of the dominating arguments in the development of the TAR. The government assessed that 70 per cent of the communes spent more than 80 per cent of their budgets on salaries and administrative services. The government declared that the TAR will reduce administrative costs for salaries by 30-60 million USD per year, which would have meant increased spending for improving local services and investments by up to 240 million USD in one governing mandate. It was developed in the framework of the Constitution of Albania, the European Charter of Local Self-Government and the 2000 Law on the Organization and Functioning of Local Government in Albania, which was repealed by the 2015 Law on Local Self-Government.
The Constitution of Albania (Article 108) stipulates that ‘the territorial and administrative division of local government units shall be established by law, on the basis of mutual economic needs and historical tradition. Their borders may not be changed without first hearing the opinion of their inhabitants’. The Law on the Organization and Functioning of Local Government provides additional details and regulates also the process of TAR.
The reform process was chaired by an ad hoc parliamentary committee and the Minister of State for Local Issues, which was supported by a Technical Secretariat, composed of 12 regional working groups and 12 regional technical coordinators – one for each of Albania’s 12 regions. The process was supported also with the technical expertise from research institutions, civil society organizations and Albania’s development partners.
The TAR was planned and adopted in a record time of 9 months only, between September 2013 and July 2014 when the Law on Administrative-Territorial Division of Local Government Units in the Republic of Albania was approved by Parliament, with a qualified majority of 3/5, with the votes of the members of parliament from the ruling coalition only. The new territorial division with 61 municipalities entered into force after the local elections held in June 2015.
Unfortunately, the TAR was undertaken in a framework of extreme political polarization in Albania. Despite several invitations, the opposition refused to take part in the deliberations of the parliamentary committee. The opposition recognized the importance and even necessity of territorial consolidation. However, they considered that the key challenges faced by both smaller and larger local governments were the unclear delineation of local government responsibilities and the lack of adequate fiscal resources.[1] From this perspective, the opposition argued that the TAR should take place after reforms in the areas of political and fiscal decentralization. Ultimately, and equally importantly, the opposition raised also the concerns that the reform was not being consulted properly with local governments, citizens and stakeholders in general and that it was mostly motivated by the political interest of the ruling coalition to delineate new administrative borders that would favor them during elections. Indeed, the short process of planning and adopting the reform, has created challenges for stakeholders to become part of the consultation process, although the government had developed several consultation roundtables at national and regional level. In fact, after the law was approved, the opposition challenged it at the Constitutional Court, on the ground of a lack of consultation with local communities. The Constitutional Court eventually ruled in favor of the constitutionality of the law but the controversy over the lack of consultation remained vivid in the statements of the opposition.
The government declares that the proposal of the new administrative and territorial division was based on a set of technical criteria approved by the ad-hoc parliamentary committee on 28 April 2014. The criteria underwent a public consultation process across all the regions in Albania in the period March-April 2014 with representatives from the local government, associations of local elected officials and stakeholders.
After the approval of the technical criteria in April 2018, the government prepared and submitted for approval to the ad hoc parliamentary committee five versions for the new administrative and territorial division. The parliamentary committee approved the version with 39-47 local government units, on 22 May 2014. Afterwards the proposal was pushed for public consultation with stakeholders. The consultation process was conducted with three main stakeholder groups: (i) representatives of local government and the associations of local elected officials; (ii) community consultations with citizens through an opinion poll that interviewed 16,000 citizens; (iii) public hearings with stakeholders, civil society and businesses. After this consultation process, the final version proposed to Parliament for approval included 61 municipalities as first tier of local governments in Albania.
The government states that this division was based primarily on the technical criteria formerly approved by the parliamentary committee. The most important of these criteria is the one that stipulates that the newly created unit is a separate functional area. The concept of ‘functional area’ means a territorial space where there is a frequent and intense interaction between the inhabitants and institutions for economic, social, development and cultural purposes. The functional area is organized around the urban center with the highest population compared to other centers within the area, and has the capacity to provide a full range of public services that should be provided by a local government unit. Other important criteria include the distances to urban center, territorial continuity, a considerable number of inhabitants, historical tradition, preservation of the boundaries of merged communes etc.
In short, in order to establish 61 new municipalities, the existing municipalities and communes have been merged to form 1 functional area, composed of urban and rural areas. The existing communes and municipalities that were absorbed by the new local unit are regarded by law as sub-divisions of the municipality, called administrative units. All the 61 new municipalities include on average 5-6 existing municipalities and/or communes
Assessment of the Practice
This TAR constitutes a major milestone in the country’s effort to improve the effectiveness and efficiency of public administration and the quality of public services. The reduction in the number of local government units and the elimination of the extreme territorial fragmentation is expected to increase both the efficiency and effectiveness of service delivery at the local level. The government declared that it expected that at the end of the first mandate, 240 million dollars would be saved from the reduction in the administrative costs. Unfortunately, to date, administrative costs for salaries have not decreased. On the contrary, between 2016 and 2019, local government spending for salaries of municipal employees has increased by 38 per cent, while spending for investment has increased by only 25 per cent. The two main reasons for the increase in spending for salaries are related to an increase in the reference framework for the level of salaries for municipal employees and an increase in the number of municipal employees as a direct consequence of the choices of the local political leaders coming after the local elections of 2015 and 2019. It is important to highlight, though, that increased spending for salaries does not necessarily mean increase in inefficiency – to the contrary, the quality of services and access to services depend also on the people and human resources available at the municipal level. Nevertheless, a disproportionate focus has been put on the expected savings in administrative costs. Rather than savings, discussions could perhaps have been focused on how the TAR would have improved services. International practice also suggests that in the design of TARs there is in general a disproportionate focus on cost efficiency and that in practice the administrative costs usually increase in the first years of TARs.
Unfortunately, it is too early to assess whether the TAR has improved access to and quality of local services. Although it is a legal obligation to report on service delivery standards and performance, unfortunately there are no official reports measuring performance of local services in the aftermath of the TAR. However, a Local Government Perception Survey in 2020 by the United Nations Development Program Office in Albania shows that compared to 2016, there is a slight improvement in the local government scores for the criteria of effectiveness and efficiency and transparency and rule of law.
The reform was adopted primarily through a top-down approach and was completed in just nine months since the establishment of the ad hoc parliamentary committee in charge for the reform. The criteria utilized for the revision of the territorial division were defined only two months before the approval of the final version of the territorial and administrative division. Also, the 5 different versions put forward to the parliamentary committee, local governments, citizens and stakeholders in general, were prepared just a couple of months before the final approval of the new map. In short, the process, while necessary and long overdue, was completed in a rush, and many of the stakeholders perceive that they were in front of a fait accompli.
The reform has formally eliminated the urban-rural categorization of local governments. At the territorial level little has changed, however. A Local Government Perception Survey in 2020 commissioned by the United Nations Development Program Office in Albania shows that there continue to be strong differences in terms of availability and access of public services in the urban vs rural areas. The survey shows that comparing to 2016, there is no significant improvement in this dimension. From this perspective, there a long way ahead before the TAR can produce the desired effects of eliminating the urban-rural divide in terms of access and quality of services. The newly developed policies for regional development and cohesion can play an important role in reducing territorial development disparities and encouraging inter-municipal cooperation and help municipalities address the challenges they face in their urban and rural areas.
Ultimately, and perhaps even more importantly, this reform was undertaken in a framework of extreme political polarization in Albania. Unfortunately, it was approved unilaterally by only the ruling coalition, with the opposition challenging the approved law at the Constitutional Court, on the ground of a lack of consultation with local communities. The opposition has also since the approval of the TAR, raised the concern that the new territorial division is based on the political interest of the ruling coalition. All these elements raise concerns over the longevity of such an important reform and potentially may lead to other unilateral changes by the incoming government.
References to Scientific and Non-Scientific Publications
Legal Documents:
Decision of the Parliament no 1/2014
Order of the Prime Minister no 36/2014
Law no 8652/2000 on the Organization and Functioning of the Local Government in Albania
Law no 115/2014 on Administrative-Territorial Division of Local Government Units in the Republic of Albania
Law no 139/2015 on Local Self-Government
Scientific and Non-Scientific Publications:
Agolli I, ‘Territorial Reform and the Opposition’ (Voice of America, 2 July 2014): <https://www.zeriamerikes.com/a/lulzim-basha-reforma-territoriale/1949373.html >
Congress of Local and Regional Authorities, ‘Information Note on the Congress’s Fact Finding Mission to Albania (24 to 26 February 2016)’ (30th Session, March 2016) <https://rm.coe.int/168071939a>
Co-PLAN – Institute for Habitat Development, ‘Status Report on Local Public Finances 2019’ (2019) <http://financatvendore.al/pub/raporte>
—— ‘An Analysis on the Number of Employees and Spending for Salaries in the 61 Municipalities’ (2020) <http://financatvendore.al/pub/raporte>
Deutsche Welle, Interview with the Minister of State for Local Issues (7 July 2014) <https://www.dw.com/sq/ministri-i-shtetit-bledar-%C3%A7u%C3%A7i-reforma-synon-v%C3%ABnien-e-pushtetit-lokal-n%C3%AB-sh%C3%ABrbim-t%C3%AB-komunitetit/a-17767097>
Erebara G, ‘Municipalities Increase no. of Employees by Hundreds, Tirana the Highest’ (Reporter.al published by Balkan Investigative Reporting Network (BIRN), 29 September 2020) <https://www.reporter.al/bashkite-shtojne-me-qindra-punetore-kryeson-tirana/ >
Government of Albania, Minister of State for Local Issues, ‘Administrative and Territorial Reform. Analysis of the Local Government Situation in Albania (Executive Summary)’ (General Report to the Parliamentary Committee on Administrative and Territorial Reform, April 2014)
Minister of State for Local Issues, ‘Report on the Draft-Law on the Territorial and Administrative Division of Local Government Units in the Republic of Albania’ (Government of Albania 2014) United Nations Development Program (UNDP) Office in Albania, ‘Governance Perception in a Reforming Albania: Nationwide Local Governance Mapping in Albania 2020’ (Survey conducted by IDRA Research & Consulting and Human Development Promotion Center (HDPC) 2020)
[1] Ilirian Agolli, ‘Opozita dhe reforma territoriale’ (Voice of America, 2 July 2014) <https://www.zeriamerikes.com/a/lulzim-basha-reforma-territoriale/1949373.html>.