Abstract
It is generally assumed by advocates of democratic decentralisation that maximising locally-raised revenue sources will help to enhance accountability through a closer and more legitimate relationship between the local government authority and citizens. Research on Ghana and other African countries shows, however, that the dominance of clientelist forms of politics undermines the legitimacy of local taxation; where voters expect their representatives to provide specific pay-backs to themselves or their communities in return for support and payment of tax, it is extremely difficult to establish a ‘collective interest’ for the local government area. Citizens tend to interpret allocation decisions over expenditure of revenues as products of patronage relations rather than as a collective public good. This problem is especially acute where resources are very scarce and the revenue base limited. Central government transfers are, therefore, likely to remain the fairest and most effective way of financing local government in such contexts.
Highlights
Interrogating Decentralisation in AfricaShandana Khan Mohmand and Miguel LoureiroDemocratic Decentralisation, Clientelism and Local Taxation in Ghana Richard C
4 Conclusions The issues emerging from the experiences of decentralised government in Ghana, Côte d’Ivoire and Uganda, as well as Africa more generally, suggest that representative local democracy does not necessarily lead to improved local revenue mobilisation, where it involves any form of direct or individual taxation
Competitive party competition at local level could perhaps help to aggregate a broader sense of collective interest, but can lead to an even stronger sense of exclusion and resentment if resources are denied to communities which voted for the losing party, as happens in many countries
Summary
Since 1994, the majority of funding for the DAs (currently around 82 per cent overall) has come from central government transfers (Gilbert, Hugounenq and Vaillancourt 2013); this represents a continuing trend towards increases in both the absolute amounts and the proportion of funding coming from central government or external sources, which, as will be argued, is linked to the political imperatives of democratic decentralisation. The main funding source is the District Assemblies Common Fund (DACF), a distributable pool account which is allocated 7.5 per cent of national government revenues; other elements come from the District Development Fund (DDF) (a channel for donor funds), Highly Indebted Poor Countries (HIPC) funds, royalties from natural resources and customary land rents, and government payment of some district staff salaries. The largest source of local revenues is ‘fees and charges’ which includes local business taxes, followed by licences and property tax (Table 1)
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