Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized The Political Economy of Decentralization in Sub-Saharan Africa The Political Economy of Decentralization in Sub-Saharan Africa A New Implementation Model in Burkina Faso, Ghana, Kenya, and Senegal Bernard Dafflon and Thierry Madiès, Editors A copublication of the Agence Française de Développement and the World Bank © 2013 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 15 14 13 12 This work is a product of the staff of The World Bank with external contributions. Note that The World Bank and the Agence Française de Développement do not necessarily own each component of the content included in the work. 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The World Bank shall not be liable for any content or error in this translation. All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. ISBN (paper): 978-0-8213-9613-1 ISBN (electronic): 978-0-8213-9614-8 DOI: 10.1596/978-0-8213-9613-1 Cover image: Anonymous, D.R. Congo, 21st century Embroidered Cloth, Southern Savannah style, raffia World Bank Art Collection PN 206709a–d Cover design: Debra Naylor, Naylor Design, Inc. Translation: Gill Gladstone Library of Congress Cataloging-in-Publication Data Dafflon, Bernard. The political economy of decentralization in Sub-Saharan Africa : a new implementation model in Burkina Faso, Ghana, Kenya, and Senegal / Bernard Dafflon and Thierry Madiès. p. cm. Includes bibliographical references and index. ISBN 978-0-8213-9613-1— ISBN 978-0-8213-9614-8 (electronic) 1. Local finance—Africa, Sub-Saharan. 2. Decentralization in government—Economic aspects— Africa, Sub-Saharan. 3. Fiscal policy—Africa, Sub-Saharan. 4. Finance, Public—Africa, Sub-Saharan. 5. Intergovernmental fiscal relations—Africa, Sub-Saharan. I. Madiès, Thierry. II. Title. HJ9610.D34 2012 336.01467—dc23 2012029831 Africa Development Forum Series The Africa Development Forum Series was created in 2009 to focus on issues of significant relevance to Sub-Saharan Africa’s social and economic development. Its aim is both to record the state of the art on a specific topic and to contribute to ongoing local, regional, and global policy debates. It is designed specifically to provide practitioners, scholars, and students with the most up-to-date research results while highlighting the promise, challenges, and opportunities that exist on the continent. The series is sponsored by the Agence Française de Développement and the World Bank. The manuscripts chosen for publication represent the high- est quality in each institution and have been selected for their relevance to the development agenda. Working together with a shared sense of mission and interdisciplinary purpose, the two institutions are committed to a common search for new insights and new ways of analyzing the development realities of the Sub-Saharan Africa region. Advisory Committee Members Agence Française de Développement Rémi Genevey, Director of Strategy Robert Peccoud, Director of Research World Bank Shantayanan Devarajan, Chief Economist, Africa Region Célestin Monga, Senior Adviser, Development Economics and Africa Region Santiago Pombo-Bejarano, Editor-in-Chief, Office of the Publisher v Sub-Saharan Africa with featured countries CAPE MAURITANIA VERDE NIGER MALI SUDAN ERITREA SENEGAL CHAD THE GAMBIA BURKINA FASO GUINEA-BISSAU GUINEA BENIN NIGERIA ETHIOPIA CÔTE GHANA CENTRAL SOUTH SIERRA LEONE D’IVOIRE AFRICAN REPUBLIC SUDAN SOMALIA LIBERIA TOGO CAMEROON EQUATORIAL GUINEA UGANDA KENYA SÃO TOMÉ AND PRÍNCIPE GABON CONGO DEMOCRATIC RWANDA REPUBLIC OF CONGO BURUNDI TANZANIA SEYCHELLES COMOROS ANGOLA MALAWI Mayotte ZAMBIA (Fr.) MADAGASCAR MOZAMBIQUE ZIMBABWE MAURITIUS NAMIBIA BOTSWANA Réunion (Fr.) SWAZILAND LESOTHO SOUTH AFRICA IBRD 39497 October 2012 Titles in the Africa Development Forum Series Africa’s Infrastructure: A Time for Transformation (2010) edited by Vivien Foster and Cecilia Briceño-Garmendia Gender Disparities in Africa’s Labor Market (2010) edited by Jorge Saba Arbache, Alexandre Kolev, and Ewa Filipiak Challenges for African Agriculture (2010) edited by Jean-Claude Deveze Contemporary Migration to South Africa: A Regional Development Issue (2011) edited by Aurelia Segatti and Loren Landau Light Manufacturing in Africa: Targeted Policies to Enhance Private Investment and Create Jobs (2012) by Hinh T. Dinh, Vincent Palmade, Vandana Chandra, and Frances Cossar The Informal Sector in Francophone Africa: Firm Size, Productivity, and Institutions (2012) by Nancy Benjamin and Ahmadou Aly Mbaye Financing Africa’s Cities: The Imperative of Local Investment(2012) by Thierry Paulais Structural Transformation and Rural Change Revisited: Challenges for Late Developing Countries in a Globalizing World (2012) by Bruno Losch, Sandrine Fréguin-Gresh, and Eric Thomas White Empowering Women: Legal Rights and Economic Opportunities in Africa (2013) by Mary Hallward-Driemeier and Tazeen Hasan vii Contents Acknowledgments xvii About the Authors xxi Abbreviations xxv Introduction 1 Bernard Dafflon, Réjane Hugounenq, and Thierry Madiès A Focus on Sub-Saharan Africa 1 Analytical Approach 3 Methodology 4 Contributions of This Volume 5 Notes 6 References 6 1 Institutional and Fiscal Decentralization: Blueprint for an Analytical Guide 9 Bernard Dafflon The Institutional Approach to Decentralization 11 Decentralized Budgets 18 Assignment of Responsibilities between Tiers of Government 24 Revenue Structures and Systems 30 Financial Transfers 36 Statistical Data 39 Conclusion 42 Notes 43 References 43 ix x CONTENTS 2 Local Public Finance of Territorial Collectivities in Burkina Faso 47 Bernard Dafflon and Thierry Madiès, in collaboration with Abraham Ky History of Decentralization in Burkina Faso, 1991–2011 47 Organization of Decentralized Local Government and Deconcentration in 2011 49 The Decentralized Budget 61 Assignment of Responsibilities 65 Local Taxation 77 Intergovernmental Transfers 88 Revenue and Expenditure Statistics 98 Notes 102 References 105 3 Local Public Finances in Ghana 107 Guy Gilbert, Réjane Hugounenq, and François Vaillancourt History of Decentralization in Ghana: From Independence to 2010 107 Organization of Decentralized Local Government and Deconcentration in 2010 113 The Decentralized Budget 125 Assignment of Responsibilities 132 Local Taxation 137 Intergovernmental Transfers 142 Revenue and Expenditure Statistics 153 Notes 156 References 159 4 Public Finances of Local Government in Kenya 161 Yvon Rocaboy, François Vaillancourt, and Réjane Hugounenq History of “Centralization” in Kenya, 1963–2010 161 Organization of Decentralized Local Government and Deconcentration in 2009–10 166 The Decentralized Budget 173 Assignment of Responsibilities 177 Local Taxation 181 Intergovernmental Grants 185 CONTENTS xi Revenue and Expenditure Statistics 189 Decentralization, the 2010 Constitution, and the Proposed LGA Reforms: Some Remarks 198 Notes 203 References 205 5 The Local Government Financing System in Senegal 207 Guy Gilbert and Emmanuelle Taugourdeau History of Decentralization in Senegal 207 Organization of Decentralized Local Government and Deconcentration in 2009 209 The Decentralized Budget 218 Assignment of Responsibilities 222 Local Taxation 235 Intergovernmental Transfers 245 Balancing Local Budgets and Debt 252 Revenue and Expenditure Statistics 257 Notes 262