Transparency of Local Municipalities

The global Covid–19 pandemic affects governments at all levels, municipalities as well as the business sector. The transparency of local governments, particularly in cooperation with the private sector and the citizens, is and will be crucial for the success of surviving the pandemic and, more importantly, for recovery. Therefore, this is an opportunity for local governments to already start creating a more open environment for cooperation with entrepreneurs based on the practice of integral local government and business activities. 

In many parts of the world as well as in Latvia local governments have proven to be the places where innovation occurs, and modernization is being successfully introduced in areas such as transparency and good governance. However, there is a problem: a lack of transparency and fair competition is an important problem at the local government level. For example, there is corruption and shadow economy in the process of construction procurement by local governments. 

Local governments have significant budgetary resources, of which a significant part is spent on public procurement processes. And public procurement in local governments is an area where the interests of the private and public sectors collide. In Latvia, public procurement amounts to more than 13% (approx. EUR 5.3 billion in 2018) of GDP, in Norway- around 16% of GDP, compared to the OECD average of 12% of GDP. In Norway, procurement by local governments amounts to approximately NOK 193 billion (EUR 20.2 billion) per year. 

According to the 2019 report by the Corruption Prevention and Combating Bureau (KNAB), the largest number of cases sent for criminal proceedings was related to local governments, their establishments and businesses. In a study on the construction sector and local governments conducted by Delna (Transparency International Latvia) in 2017, entrepreneurs identified the key issues which lead to corruption and tax evasion in local government procurement, including a lack of competence of procurement personnel, unreasonable qualification requirements and errors in technical specifications, offers were generally assessed on a price-only basis. These results showed another part of the problem: a lack of knowledge and resources in local governments for the implementation of good governance, transparency and fair competition. 

In order to raise the entrepreneurs’ awareness of the principles of fair business and transparency, in 2018 Delna (Transparency International Latvia) launched the long-term initiative Alliance Against Corruption in Latvia. As part of this initiative, in 2020 Delna (Transparency International Latvia) launched an initiative called “Promotion of integrity and transparency in municipalities and in their cooperation with entrepreneurs”. It aims to strengthen integrity and transparency by means of cooperation between local governments and citizens as well as businesses in Latvia and Norway. 

The initiative “Promotion of integrity and transparency in municipalities and in their cooperation with entrepreneurs” is carried out by Delna (Transparency International Latvia),  the Latvian branch of the international anti-corruption organization Transparency International, in cooperation with the Norwegian branch of Transparency International. In both branches of TI, the initiative will provide an opportunity to create a platform for dialogue between Norwegian and Latvian entrepreneurs, municipalities, decision-makers on ways to improve and stimulate integral business activities and the transparency of local governments. 

As part of the initiative, Delna will contribute to reducing the risks of corruption and fraud in local governments and in their cooperation with businesses: 

– by promoting transparency in the work of local governments, we will develop a Transparency Index of Local Authorities, which will be published in autumn of 2021; 

– by strengthening the integral work of local governments, Delna will develop guidelines for municipal representatives and decision-makers with solutions and good practices that can contribute to a more efficient, open and fair cooperation with the private sector as well as with the citizens; the guidelines will be published at the beginning of 2022; 

– we will encourage regulatory changes and/or instruments to increase governmental support for the transparency of municipalities, the increase of standards of fair business activities in the private sector, at the beginning of 2022. 

All initiative materials will be available online on this website, printed materials will be available and distributed free of charge.