Dynamics of Local Government Finance in Cameroon: An Assessment of Local Councils in the Fako Division

Abstract

Local councils in every part of Cameroon are playing an extremely significant role in the provision of essential public services. However, the local development authorities face tremendous challenges to adequately generate finances to meet community needs. The aim of this paper is to find out whether the councils in the Fako Division have access to all the sources of finance as stipulated by statute and to determine the difficulties they face in exploiting the sources to finance their developmental plans. The exploratory and descriptive designs were adopted for the study. 4 out of the 6 councils in the Fako Division were conveniently selected. The Finance and General Affaires Officers were purposely designated as the respondents for the study. Data were collected with the aid of semi-structured questionnaires and a checklist. The collected data were descriptively analysed with the use of tables and bar charts. Mean and the Relative Important index were used to rank in terms of importance the challenges faced by the councils in the revenue generation process and the options available to them to exploit. The findings reveal that the councils have access to internal sources such as; local taxes; fees, fines, and penalties; service charges, patents and business licenses; Gifts and donations. The external sources were mostly Intergovernmental transfers and Council Development Funds from FEICOM and PNDP. The study equally found out that the most exploited options of finance by the councils are INTERCOM (M =4.25, RII = 0.85, ranked 1st) and service charge adjustment (M = 4.13, RII = 0.82, ranked 2nd) while the least utilized options were tax adjustment (Mean = 1.00, RII = 0.02, ranked 10th) and the usage of saved up profit from investments and businesses (M = 1.75, RII = 0.35, ranked 9th). The study further uncovered that the challenges with the highest mean scores are infringement by the central government on means of internal revenue generation of the municipality (M = 3.85, SD = 1.214) and lack of power to make finance bi laws (M = 3.85, SD = 1.214), while inadequate sources of revenue (M = 3.42, SD = 1.306) and narrow local tax base (M = 3.42, SD = 1.306) had the least mean scores. The study recommends among others that the framework in place needs clarification to clear off conflicting and confusing goals. It should include legislative clarification of the responsibilities of each level of government and the identification of the appropriate funding resources. These will reduce vertical imbalances and increase fiscal responsibility. Also, a transfer system should be defined that encourages local governments to collect own revenue and manage their roles efficiently, while imposing strict budget constraints to foster fiscal discipline. This will minimize conflicting responsibilities and enable the local governments to discharge their functions.