By Katrina Manson

FREETOWN, July 8 (Reuters) - Local elections held in Sierra Leone for only the second time in over three decades are being hailed as a yardstick of the West African nation's recovery from a 1991-2002 civil war that was a byword for brutality.

United Nations officials praised Saturday's local government polls as peaceful and orderly despite reports of violent protests and intimidation in the runup to the voting to elect 475 councillors in 394 wards in the former British colony.

Full voting results are not expected until next week but early indications point to President Ernest Bai Koroma's All People's Congress (APC) party, which won presidential and legislative elections last year, making a strong showing.

U.N. and government officials say the local council elections are an indicator of just how far the small West African state, which was left traumatised and devastated by its civil war, has advanced politically in the last six years.

"That the elections went off so well is a sign of a maturity of the institutions," Michael Schulenburg, the top U.N. official in Sierra Leone, told Reuters.

"Local elections are much more complicated than general elections and it shows the integrity of the system has not been compromised at all. Where else do you have such well-organised elections in the region?" he added.

He said it was also remarkable that six years after one of the most brutal wars in Africa -- in which more than 50,000 people were killed and drugged child soldiers hacked off the limbs of civilians -- the U.N. peacekeeping presence had been reduced from 17,000 soldiers to less than 300 personnel.

This was expected to be trimmed further at the end of September to a U.N. team of around 60 to 70.

Administration officials said the local councils appointed through the polls would be the best tool to bring tangible development to a country that last year dropped to the bottom of the U.N.'s human development ranking.

Economic growth has averaged over 7 percent for the past five years in the diamond-producing country of 5.7 million.

But more than 70 percent of Sierra Leone's people live below the poverty line and the country has the worst maternal and child mortality rates in the world.

An estimated two thirds of youths are out of work, creating a reservoir of potential frustration.

"Sierra Leone's administration has been over-centralised for three decades and this caused the under-development of the rural areas. People felt abandoned and neglected and this is believed to be one of the root causes of our civil strife," Director of Local Government Joseph Lebbie told Reuters.

CHALLENGE OF CLEAN GOVERNMENT

The ward councils will be called upon to deliver sorely needed services and representation at local level in a country where the war displaced hundreds of thousands of people and left infrastructure in ruins.

But many observers see huge challenges to achieve credible local government in a nation where corruption remains a major problem. They also point to the fact that 39 local council seats went uncontested in Saturday's polls, largely due, opposition politicians say, to political intimidation by APC supporters.

"Politics in Sierra Leone is just a money-making business ... We can see that from the ministers to the parliamentarians, and this will now trickle down to the councils," said Valnora Edwin, director of local NGO Campaign for Good Governance, which said it was concerned about the reports of intimidation.

Her group found that two-thirds of the election candidates surveyed did not understand the job of a councillor.

Lebbie said it remained to be seen how the new councillors would work with the surviving system of traditional paramount chiefs, created in 1896 by former colonial ruler Britain.

These traditional rulers compete with local government for tax revenue. There could also be potential conflicts over land, some of which is held in trust by the 149 chieftaincies.

"Some legislation still dates back to colonial times ... we are working on a review to identify the inadequacies and harmonise them," Lebbie said.

But on the streets of the dilapidated capital Freetown, local people saw advantages in having elected representatives.

"The chief is there forever until he's dead, whether he is good or bad," said mechanic Salu Koroma, 28. "But in politics, they work for us. After five years if you don't work, we will change you. I want my country to develop," he said. (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/) (Editing by Pascal Fletcher)

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