In popular imagination today, ‘government’ invokes differing images: corridors of power and labyrinths of incompetence. There is, on the one hand, the wielding and misuse of power shaping our very consciousness. And on the other hand, there is ineptitude and arbitrariness. To explain patterns of local action and public services, Part II asks: How do local governments actually function? It turns to two interrelated dimensions of government functioning – how it takes and implements decisions (Chapter 3) and how it is organised (Chapter 4) – which together form local government ‘capacity’.

Local capacity has both a performance-orientation and a citizen-orientation. For Fiszbein (1997, 1031), it ‘involves the existence and adequate functioning of mechanisms through which the community can voice demands, channels by which authorities can translate those demands into actions and instruments for government accountability’. There are many nuts and bolts to effective practices that enhance capacity: decision-making and monitoring; organisational structure and distribution of responsibilities; skills and personnel policies (reward systems, career mobility, work planning and appraisal); leadership and management style; generating, managing and analysing information and creating feedback loops; managing relationships (with citizens’ organisations, other governments, suppliers, businesses, and so on); and managing equipment, materials and buildings.

Chapter 3, on government practices, explores how city government attends to matters. How are decisions taken? What administrative procedures are in place for planning and delivering services? These matters make up the everyday substance of local government. The chapter also discusses urban planning, a ‘meta’ capacity that can enable the city government to conceptualise space, integrate interventions and enhance equity in access to public services. Chapter 4, on organisation, explores the horizontal departmental and vertical hierarchical patterns inside the organisation of the city government and also goes into details of staffing. Administrative procedures, organisational form and staffing together constitute the capacity of the local government to undertake effective and just local action. Once capacity has been so mapped out, it provides an explanation of observed local action. This raises the further question of what makes capacity what it is, which is explored in Part III.