Abstract
The rationale for local fiscal autonomy suggests that local expenditure and local revenue generation should remain in close proximity. This is achieved through fiscal decentralisation to local government, to ensure efficient provision of local services that align with local needs, and to improve accountability to residents. Fiscal decentralisation has found resonance in developing countries through local government reforms, but in Africa fiscal decentralisation has been focussed mainly on revenue sharing, except in a few cases where some local fiscal autonomy has been achieved. Urbanisation in Africa is likely to continue (UN-Habitat, 2008), necessitating an increase in municipal service delivery which African cities must finance − hence the need for local fiscal autonomy. Local fiscal autonomy is arguably contentious for African cities, partly because provision of municipal services must be tempered with considerations of equity and redistribution to the poorer urban populations, and because inadequate welfare nets from national government do not subsidise the gap in municipal revenue. In the recent past, Kenya and South Africa adopted local government reforms in different forms that has yielded different forms of local fiscal autonomy. The paper conducts a comparative of local fiscal autonomy in municipal services provision in Nairobi and Johannesburg.
Highlights
As African cities increase in size and economic output, urban governments face the unenviable challenge of providing a vast array of services to a diverse population
This paper draws on a larger study that explores how two African cities with different revenue instruments leverage local revenue, to argue the need for local fiscal autonomy in African cities based on case studies of Nairobi and Johannesburg
The rest of this paper explores how, within the discourse of fiscal decentralisation, local fiscal autonomy is manifests in the provision of services by the water utilities in Nairobi and Johannesburg
Summary
As African cities increase in size and economic output, urban governments face the unenviable challenge of providing a vast array of services to a diverse population. While one sector of the urban population has high technological and economic capacity, coupled with an ability to pay and a sophisticated demand for municipal services, poorer sectors of the city population require consistent access to basic urban services as a human right. It is to this diverse group that African cities should strive to provide municipal services. The theoretical discussion on local fiscal autonomy is followed by an examination of user charges for water and sanitation services, as an example of a local revenue instrument, to argue for local political oversight and decentralised revenue management
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