0w2010 01 RESUM EJECUTIVO 03 DEFcarta ang
26/10/10
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EXECUTIVE SUMMARY 24
United Cities and Local Governments
risks growing worse due in particular to the global economic crisis and the context of fiscal transition, which have created a tense atmosphere for public finance.
Lack of access to borrowing Access to borrowing is both very limited. The development of borrowing for local governments is confronted by three main constraints: (1) the regulations imposed by central States on local borrowing are very restrictive; (2) local government resources are limited; (3) the lack of adequate budgetary tools at the local level. In many African countries, financial intermediaries manage the funds earmarked for local governments (Development Bank of Southern Africa, Infrastructure Corporation Limited of South Africa, Municipal Development Fund in Rwanda, Fonds d’Equipement Communal in Marocco, Caisse de Prêts et de Soutien aux collectivités locales in Tunisia, etc). This has produced mixed results.
Weak local capacities and accountability
Policy recommendations (presented by UCLG Africa) Six main recommendations aimed at improving fiscal decentralization in Africa and fostering dialogue between the national associations of local governments and African States were proposed by UCLGA members in two workshops organized in May 2010: •
To ensure that this demand is met, it is necessary to supply information to and exert pressure on national stakeholders such as the central government, Parliament, and development partners. •
The lack of qualified staff, in particular in small local governments and rural areas, makes using even available resources difficult. Finally, local governments need to make important efforts to improve their accountability and transparency as well as to promote the participation of their citizens in local affairs.
Clarifying the division of responsibilities and tasks between the different levels of government and improving the estimations of the cost of decentralized responsibilities. The role and responsibilities of local governments must be recognized and ensured in the main national laws, and should harmonize with existing laws and rules, particularly with sectoral policies. The cost of decentralized responsibilities should be calculated in order to ensure a match of these new responsibilities with the financial means to execute them. A specific fund for the transfer of responsibilities managed jointly by the Ministry in charge for local governments and by the national local government association, could be establish to gather these resources.
The impact of the global economic and financial crisis The global crisis initiated in 2008 has had a direct negative impact on local revenues as it has reduced economic activity, notably in sectors that export goods and services. It has also reduced the amount of available liquidity due to a decrease in remittances from immigrant in developed countries and also a drop-off in public development aid, which has reduced investment at the local level.
Strengthening the role of local authorities in public expenditure in order to give decentralization more credibility: with a 10 to 15 year timeline towards local government in Africa reaching the global average of executing 25 percent of all public sector spending;
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Strengthening the resources and financial autonomy of local authorities, with special attention given to taxing economic