Fiscal Decentralisation and Sub- National Government Finance in Relation to Infrastructure and Service Provision in Zimbabwe By Dennys Pasipanodya Jesper Steffensen Svend Trollegaard Richard Martin Clever Khumalo Victor Chando Daniel Ncube FINAL REPORT A collaborative study between The National Association of Local Authorities in Denmark (NALAD), People & Systems Inclusive, Management Cousultants, Zimbabwe One of the series of: Fiscal Decentralisation and Subnational Finance in Africa Directed by the World Bank Financed by United States Agency for International Development with support from Danida, Denmark March 2000 Fiscal Decentralisation and Sub-National Government Finance in Relation to Infrastructure and Service Provision in Zimbabwe March 2000 ____________________________________________________________________________________________________________ “Copyright by the International Bank for reconstruction and development/the world bank, 2000. The findings, interpretations, and conclusions expressed in this paper are entirely those of the co- editors and contributors and should not be attributed in any manner to the World Bank, to its affiliated organisations, or to members of its board of executive directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colours, denominations, and other information shown on any map in this volume do not imply on the part of the world bank group any judgement on the legal status of any territory or the endorsement or acceptance of such boundaries.” 2 Fiscal Decentralisation and Sub-National Government Finance in Relation to Infrastructure and Service Provision in Zimbabwe March 2000 ____________________________________________________________________________________________________________ Table of Contents Table of Contents ....................................................................................................................... 3 ACKNOWLEDGEMENTS........................................................................................................ 8 CHAPTER ONE ...................................................................................................................... 10 FISCAL DECENTRALISATION AND SUB-NATIONAL FINANCE IN SUB-SAHARAN AFRICA................................................................................................................................... 10 1.1 Introduction..................................................................................................................... 10 1.2 The African Context........................................................................................................ 12 1.3 The Regional Approach and the Methods of Work .......................................................... 15 1.4 Indicators of Decentralisation .......................................................................................... 16 1.5 Finance and Organisation ................................................................................................ 17 1.6 Executive Summary (Main Findings and Recommendations) .......................................... 18 CHAPTER TWO...................................................................................................................... 31 DECENTRALISATION OF THE PUBLIC SECTOR – OBJECTIVES, METHODS AND EXPERIENCES ....................................................................................................................... 31 2.1 Introduction..................................................................................................................... 31 2.2 The Global Trend of Growth of the Public Sector, Financial Constraints and Conditions for Decentralisation .................................................................................................................... 34 2.3 Indicators of the Decentralisation of the Public Sector..................................................... 37 2.3.1 Delegation, Responsibility and Autonomy................................................................. 37 2.3.2 The Operational Capacity Reflected in the Structure of Government Related to Number of Levels and Sizes of Local Authorities ............................................................................ 43 2.3.3 Infrastructure and Service Provision and the Issues of Accountability........................ 46 2.3.4 Regulatory Framework.............................................................................................. 48 2.3.5 Fiscal Decentralisation .............................................................................................. 50 2.4 Concluding Remarks ....................................................................................................... 61 CHAPTER THREE.................................................................................................................. 65 THE CONTEXT OF SUB-NATIONAL GOVERNANCE IN ZIMBABWE............................. 65 3.0 General introduction to Zimbabwe .................................................................................. 65 3.1 Government structure...................................................................................................... 69 3.1.1 Central Government .................................................................................................. 70 3.1.2 Provincial councils .................................................................................................... 71 3.1.3 Urban local governments........................................................................................... 72 3.1.4 Rural local governments............................................................................................ 76 3.2 The government’s policy, objectives and strategies on sub-national government finance and development of local authority governments................................................................... 77 3.2.1 Background............................................................................................................... 77 3.2.2 Present Situation ................................................................................................... 82 3.3 Concrete reform initiatives within the field of decentralisation including fiscal decentralisation ..................................................................................................................... 84 3 Fiscal Decentralisation and Sub-National Government Finance in Relation to Infrastructure and Service Provision in Zimbabwe March 2000 ____________________________________________________________________________________________________________ 3.4 Division of tasks and responsibilities between central government and sub- national government ........................................................................................................................... 87 3.4.1 Division of tasks........................................................................................................ 88 3.5 The Sample Sub-National Governments .......................................................................... 90 3.5.1 Harare City Council................................................................................................... 91 3.5.2 Kwekwe City Council ............................................................................................... 93 3.5.3 Gwanda Municipal Council....................................................................................... 95 3.5.4 Rusape Town Council ............................................................................................... 96 3.5.5 Ruwa Local Board..................................................................................................... 97 3.5.6 Gutu Rural District Council....................................................................................... 98 3.5.7 Pfura Rural District Council .................................................................................... 100 CHAPTER FOUR.................................................................................................................. 102 THE PUBLIC SECTOR AND SUB-NATIONAL FINANCES IN ZIMBABWE ................... 102 4.0 Introduction................................................................................................................... 102 4.1 Central Government .................................................................................................. 102 4.2 General Overview sub-national governments................................................................. 106 4.2.2 Sub-national Recurrent Expenditures....................................................................... 110 4.2.3 Sub-national capital expenditure.............................................................................. 116 4.2.4 Sub-national revenues ............................................................................................. 120 4.2.5 Transfers from other government levels to the sub-national governments ................ 127 4.2.6 External finance of the sub-national sector .............................................................. 128 4.2.7 Sources of finance for selected types of infrastructure ......................................... 132 4.2.8 Expenditure of tax assignment and administration of taxes ...................................... 132 4.2.9 Estimation of the sub-national revenue potential.................................................