Lessons for Effective Fiscal Decentralization in Sub-Saharan Africa

Departmental Papers, July 6, 2018

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Lessons for Effective Fiscal Decentralization in Sub-Saharan Africa

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Bibliographic details

• Authors: Niko A Hobdari, Vina Nguyen, Salvatore Dell'Erba, Edgardo Ruggiero
• Published: July 6, 2018
• Series: Departmental Papers
• DOI: https://doi.org/10.5089/9781484358269.087

Summary

• Fiscal decentralization is a pressing issue in a number of countries in sub-Saharan Africa, reflecting demands for a greater local voice in spending decisions and efforts to strengthen social cohesion.
• The paper distills lessons for effective fiscal decentralization reform, focusing on macroeconomic aspects, based on an empirical analysis and four case studies: Kenya, Nigeria, South Africa, Uganda.

Determinants and effectiveness

• Empirical results:
  • The major driving forces behind fiscal decentralization in sub-Saharan Africa include efforts to defuse ethnic conflicts, the initial level of income, and the urban-ization rate.
  • Strength of democracy is not an important determinant for decentralization.
  • Decentralization in sub-Saharan Africa is associated with higher growth in the presence of stronger institutions.

Spending assignments

• Findings from the four case studies:
  • The allocation of spending across levels of government is broadly consistent with best practice.
  • Uganda differs from the other three case studies: subnational governments have little flexibility to make spending decisions because of a deconcentrated rather than a devolved system of government.

Own revenue

• Taxing powers and revenue composition:
  • The assignment of taxing powers is broadly in line with best practice in the four case studies.
  • The bulk of subnational revenue comes from property taxes and from fees for local services.
• Constraints:
  • Own revenues are a very small fraction of subnational spending, reflecting weak cadaster systems and a high level of informality in the economy.

Publication and metadata

• Authors: Niko A Hobdari, Vina Nguyen, Salvatore Dell'Erba, Edgardo Ruggiero
• Date: July 6, 2018
• Pages: 63
• Volume: 2018
• Issue: 009
• Series: Departmental Paper No. 2018/009
• DOI: https://doi.org/10.5089/9781484358269.087
• ISBN: 9781484358269
• ISSN: 2616-5333
• Subjects: Expenditure, Fiscal federalism, Fiscal policy, Income distribution, International organization, National accounts, Political economy, Revenue administration
• Keywords: Africa, authorities in South Africa, decentralization reform, effectiveness indicator, Fiscal federalism, IMF government finance statistics database, Income distribution, national government, Sub-Saharan Africa

Lessons for Effective Fiscal Decentralization in Sub-Saharan Africa, Niko A Hobdari et al., Departmental Paper No. 2018/009, July 6, 2018.

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