Regulation for local governments' investments in business activities

[nicolettaferuglio]

Dear PFM Board members,
In Rwanda according to Art 61 of the Law n. 59 of 31/12/2011 establishing the Sources of Revenue and Property of Decentralized Entities and Governing their Management : "A decentralized entity can invest in companies and financial institutions. An Order of the Minister in charge of finance shall determine the amount of investments and other matters relating to investment. The authorization to invest in companies, commercial banks and other autonomous companies and establishments, shall be granted by the Minister in charge of finance".
I am looking for samples of legislation elaborated for regulating local government’s investment.
Thank you in advance for your help.

Regards,
Nicoletta Feruglio

[John Short]

http://www.assembly-kosova.org/common/docs/ligjet/2008_03-L048_en.pdf
might give some guidance

and
http://www.assembly-kosova.org/common/docs/ligjet/2008_03-L087_en.pdf
on publically owned enterprises

[harnett]

Nicoletta

Are you looking for regulations that are more lax or more strict than that in Rwanda?

Also, have any SNGs been allowed by MOF to invest? 

[STONE]

It is worth bearing in mind that this sort of legislation is written to stop local entities investing in companies of whatever sort, unless there is some overriding reason for the investment that would be deemed in the national interest or at least not against it.  It also means that the Minister of Finance is aware of the investment and can take account of it in fiscal risk assessments/contingent liability assessments and perhaps make such investments more transparent

[pfmkaro]

This seems the right thread to pose a question that is not about business activities but about small value public projects.

Here is the question that I received from a colleague  - can anyone suggest some good practice examples of PIM guidelines for small infrastructure projects (such as a few miles of a paved road) selected and implemented by municipal governments?

Does anybody have good practice examples from local governments ?  Examples might emphasize citizen engagement and input into selection and monitoring or offer simple methods for contract management or any other method to avoid corruption and waste. 

[petagny]

pfmkaro, here are a few resources to get the ball rolling:

The World Bank developed the RED (Roads Economic Decision) model for economic assessment of low volume roads. See:

http://www.worldbank.org/transport/roads/tools.htm

Also attached are a couple of notes on thresholds for justifying works on unpaved roads and on upgrading to paved standard. There should be some useful rules of thumb in these.

The Bank has also published a Guidebook on Capital Investment Planning for Local Governments which includes something on participatory approaches (attached).

Also attached are some UN guidelines on municipal wastewater treatment projects. Some of the ideas should be transferable to other sectors.