Abstract

Many developing countries have embraced fiscal decentralisation as a reform agenda. This study evaluates Cameroon’s experience of fiscal decentralisation; difficulties encountered and suggest how to ameliorate the process. The study covered a five year period 2009 to 2013. Data was obtained through key informant interviews and desktop review of related published and unpublished works. A total of 14 key informant interviews were conducted with council staff, mayors and government officials involved in the decentralisation process.

The study found out that fiscal decentralisation is fraught with difficulties such as ambiguities in the legal framework, inadequate revenues for local governments, budgeting and accounting constraints, and poor fiscal coordination from the central government. On the bases of the findings, the study made some recommendations, among which was the setting up of a well monitored framework for tracking fiscal operations in council and training of the personnel concerned.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

According to White (2011), decentralisation in its multi-facets, is a major feature of the global geopolitical landscape. According to the author, this widely lauded and often complicated process has been at the fore of political and academic discourse as far back as the 1950s in the developed world. Initiatives involving the transfer of responsibilities from central to local government with the objective of improving efficiency and accountability in public sector management, large-scale decentralisation only took centre stage in developing countries in the 1980s following the Structural Adjustment Programmes (Ribot, 2002).

This neoliberal construct was marketed by its proponent, particularly the Bretton Woods Institution as a panacea for ineffective and inefficient governance, macroeconomic instability, and inadequate economic growth (Bird et al. 2002; Kee, 2003; White, 2011). By conviction or coercion, many African countries embarked on the decentralisation bandwagon as a means to reinforce the role of regional and local government in development (World Bank, 1996). These hitherto centralized governments have initiated to varying degree some reform agenda with the aim of transferring some powers, responsibilities and resources to regional governments and local authorities (Cheka, 2007). Cameroon is one of those countries.

Evidence of decentralisation dates as far back as 1922 with the British Cameroon and 1955 in the French Cameroon (Cheka, 2007; Edou, undated). However, large scale sweeping reforms took place in the 1980s and 1990s. The ongoing process of decentralisation draws its powers from Law No. 96/06 of 18 January 1996. Specifically, Article 55 postulates that the decentralized local entities of the Republic shall be Regions and the Councils. The Law recognizes the councils as legal entities that should enjoy administrative and financial autonomy, and be freely administered for the interest of the people by their elected representatives.

The trio decentralisation laws of 2004 marked another turning point by mapping more financial horizons for the councils in Cameroon. It allowed for the gradual promulgation of an autonomous financial regime and fiscal system for collectivities. This became a reality after five years of progressive implementation of decentralisation machinery in Cameroon. However, World Bank (2012) notes that, to date, devolution of central power to departmental units of line ministries (i.e., de – concentration) has dominated over decentralisation from the line ministries to councils. Much of the benefits associated with fiscal decentralisation are yet to be realised.

The standard objectives for operations include; better representation of local preferences, tailoring service delivery to local conditions, and development of democratic institutions and oversight bodies at the grass root. These should generate better governance and eliminate corruption, and at the same time attract external support from multilateral agencies and bilateral donors (World Bank, 2003).

Financial responsibility is a core component of decentralisation. If local governments are to carry out functions properly, they must have sufficient level of revenues ( raised locally or transferred from the central government), as well as the authority to make decisions about expenditures. To that end, fiscal decentralisation in Cameroon was concretized in 2009 and 2010 with an autonomous financial regime and a taxation system for councils, preceded by the first generation of resources transferred to councils in Cameroon. This commenced five years ago, yet councils’ activities are still constrained by inadequate funds. Hence the need to evaluate how, fiscal decentralisation is contributing to effective local governance. The fundamental question here is whether the ongoing decentralisation is helping or hurting local council management, and how the process of fiscal decentralisation can be improved towards this.

1.2.Statement of the Problem

Financial constraints on local authorities and limited abilities of the performers and beneficiaries of devolved powers impede the decentralisation process. World Bank (2012) indicates that councils face challenges with implementing decentralisation. The biggest challenges include low internally generated revenue (IGR) and self-financing, and slow transfer of competencies. Additionally, the legal framework specifying objectives, strategy and implementation rules are poorly defined, and the required capacity (human and material) to effectively manage the resources are limited.

These problems are compounded by weak capacity for budgeting and timely rendering of accounts. Besides, the councils still lack clearly defined expenditure responsibilities, a significant amount of taxing powers, budget making autonomy, and the capacity to implement resources transparently and realistically.

The system is still unable to make the local councils live within their means, and the citizens to hold the elected council officials accountable for hard choices that they make. The activities of councils are still directed by the central government in a manner that may compromise the goals of decentralisation, and the fiscal resources transferred to the councils remains questionable with regards to their autonomy over financial issues

This suggests a number of questions as to how the process can be rendered more satisfactory: what challenges constrain the ongoing fiscal decentralisation process in Cameroon? How can the process be made more result oriented, such that the goal of making the councils become the foundation for grass root development is achieved with economy of effort and time.

This and similar questions remain largely unanswered in the current literature on fiscal decentralisation in Cameroon. This paucity of answers is even more acute in the South West region. This study, therefore, is an attempt to respond to these questions.

1.3.Objectives of the Study

1.3.1.Main Objective

The study has as main objective to evaluate the implementation of fiscal decentralisation for local Councils in Cameroon.

1.3.2. Specific Objectives

1. To examine the fiscal assignments, intergovernmental transfers and the legislations relating to decentralisation process in Cameroon.
2. To determine the internal revenue generation capacity of the local councils.
3. To evaluate the budgeting and accounting for fiscal transfers to council.

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