Investment Climate Map in the Municipalities

The map of the investment climate in the municipalities presents data on the business environment and the conditions for investment in the 27 municipalities – regional centers in Bulgaria. It is a new analytical product of Transparency International Bulgaria, which builds on the comprehensive analytical model for evaluation of institutions at local level – “Local Integrity System”.

The investment climate map is based on research and analysis of information in 5 categories (including 49 indicators) that are relevant to the environment for conducting business and attracting investments in municipalities:

1) availability of publicly available and adequately structured information on the rules for economic activity and administrative services in municipalities;

2) policies and measures to promote innovative technology startups and relaxed conditions for emerging businesses;

3) policies and measures to attract investment;

4) key indicators from the LISI project survey on municipal councils, mayors and municipal administrations, police structures and courts, which determine the conditions for economic activity in municipalities;

5) key indicators from the LISI study on civil society structures (media, civil society organizations, business and political parties), which reflect the ability to monitor and control public institutions, respectively to create an environment conducive to investment and fair competition between economic actors.

The scale for assessing the performance of municipalities is as follows:

5very good performance – an indicator of a very good level of the investment climate and very favorable conditions of the environment for conducting business
4Good performance – an indicator of a good level of investment climate and a favorable environment for conducting business
3Average performance – an indicator of partial measures taken to create an environment to attract investments and relatively good conditions for conducting business
2Unsatisfactory performance – an indicator of lack of targeted efforts to create an environment to attract investment and an unfavorable environment for conducting business
1Poor performance – an indicator of lack of efforts to create an environment to attract investment and an unfavorable environment for conducting business

Critically Low Levels of Transparency and Accountability in the Work of Municipal Level Institutions

The Local Integrity System Index – 2015 registers critically low levels of transparency and accountability in the work of municipal level institutions in the majority of district centers. Kardjali, Varna, Vidin and Haskovo are at the bottom of the Index with the lowest results for accountability and transparency.


In only one municipal council there is a real functioning mechanism for the declaration of conflict of interest in the work of the municipal councils. The level of transparency and accountability in the practice of inspections of the municipal control units is critically low. Not one of the municipal administrations has a functioning system for the protection of employees that report misdoings in the municipality.

Тransparent and effective oversight over the work of the local executive authority is assessed as the most pressing issue in the activities of Municipal Councils. Practically the work of 4/5 of municipal councils in the district centers does not comply with transparency standards and in 2/3 of them municipal council members function in almost full anonymity. Control over the execution of Municipal Councils’ decisions is almost formal in more than half of the studied municipalities. In only 1/5 of the studies municipalities the members of the council have a major impact in the discussion of the annual budget. There is lack of public information in the results of inspections of municipal property and municipal companies.


In terms of the work of the mayors’ team the indicator that registers the lowest scores remains integrity. Ethical rules guiding the work of the mayors’ team as part of the municipal administration are present in less than 1/5 of the municipalities in the regional centers. The indicators of accountability also register low scores. A problem for 2/3 of the mayors is the application of standards of public accountability over the implemented strategies and governance programs.


The issues in detail


Are Municipal Councils Effectively Representative?


The Municipal Councils’ capacity for effective accountability mechanisms to scrutinize the performance of the mayor and the administration receives a score of 3.78 points. Here the practices are diverse. Half of the municipalities studied implement only perfunctorily the statutory requirement to scrutinize reports on the implementation of the municipal council’s enactments. The reports they receive are too brief and contain no specific information on the municipal councils’ core strands of activity or main categories of decisions. On the negative pole of the scale are the practices of the municipal councils in Vidin, Pernik, and Sliven.


The effectiveness of representation of local citizen interests, which is a main function of all municipal councils, was found to be at an alarmingly low level. The country’s average score for this indicator was 3.09 points on a 5-point scale. Problems remain with establishing sustainable practices of setting up public reception offices (the point score for this sub-indicator was 3.26); institutionalizing durable forms of collaboration with civil society organizations (a score of 2.85); and carrying out consultations with civil society organizations in the process of designing local policies (a score of 3.15).


Sustainable practices of openness and citizen participation in the meetings of the municipal councils and their committees are best achieved through good regulation enshrined in the municipal councils’ Rules of Procedure and implemented effectively. In assessing this sub-indicator, the study identified two approaches to municipal council work – a conservative one and a proactive one. Local authorities using the conservative approach reproduced blanketly the principle of council and committee meeting openness described in the provisions of their Rules of Procedure. The outcome was weak interest or inefficient participation of citizens and civil society organizations in the work of the councils and their specialized bodies. The proactive approach implies Rules of Procedure that stimulate the active contribution of citizens and CSOs. The benchmark in this regard has been set by the Municipal Council in Pazardzhik, with an express provision allowing citizens to speak on any agenda item before the Council decision is put to the vote.


The specific score for the public access to information about municipal council members sub-indicator was based on the availability of publicly accessible information on the municipalities’ official websites. In the absence of a statutory standard, the existing practices in the municipalities under study ranged from total anonymity of municipal council members – with just the list of councilor names provided, but no biographical details, no office email address, and no information on political group affiliation (as was the case in Blagoevgrad, Vidin, Kardzhali, and elsewhere) – to a model of optimal publicity about all councilors’ activities with up-to-date information both about their contribution to the work of the standing committees and about the steps taken to exert control over the functioning of the municipal administration (e.g., in Burgas).


The Local Executives – In Need of a Stronger Policy of Integrity


What the mayoral institution’s contribution to the Local Integrity System lacks most are initiatives to enhance integrity in its own work. This indicator earned the lowest average score among all the indicators studied – just 2.74 points. The study found that the management teams had little interest and commitment in promoting focused policies aimed at preventing corruption. The mayoral team members’ personal commitment does not end with publicizing their Conflicts of Interest and Asset Declarations. A systematic policy approach to promoting integrity aimed at increasing confidence in the functioning of the mayoral institution should comprise a broader range of initiatives.Very few mayor’s teams have launched integrity initiatives of their own in the studied period.


Another issue of critical importance is the local executive control over public service providers. The indicator receives only 2.87 points. Thus, it ranked among the mayor-related indicators whose country average scores were the lowest. Its level was studied by assessing the following two sub-indicators: 1) publicity of information on contracts with external service providers and 2) media and press publications about the municipalities’ failure to exercise control over public service providers. An undesirable practice that seemed to have taken root in the municipalities like Kardzhali, Blagoevgrad, Vidin, Vratsa, Montana, Pernik, Silistra, Sliven, and Targovishte was their continued failure to make any information on service provision contracts publicly accessible in the studied period.


With regard to the role of municipal administrations and their contribution to the Local Integrity System, again the problematic issue is the lack of initiatives to enhance integrity. Strict compliance with ethical standards in the work of municipal employees has not yet become a sustainable practice, even though all municipalities under study have formal codes of ethics in place.


Bulgaria has been consistently ranked last in the European Union according to Transparency International’s annual Corruption Perception Index, and the country’s institutions suffer from the lack of trust among citizens. The solution to this problem is not unambiguous and requires active and complex interaction between the various participants in the political process, the civil society, the business, and the media. The LISI – 2015 data shows consistently that the lack of initiative at local level to establish functioning public partnerships between the key institutional and civic stakeholders in the process results in insufficient level of integrity in the activities of local level authorities and harms public trust in local self-governance.