The institutional framework since the first fiscal and financial decentralization policy were adopted, rwanda. Impacts of fiscal decentralization and economic growth. Decentralized service delivery is handicapped when subnational governments lack skills and institutional capacity. Fiscal devolution some comparative examples 1 december 2014 1488 scherie nicol this briefing provides an overview of fiscal devolution in the following countries.
This paper explicitly considers the effect of fiscal decentralisation on economic growth 1 under the 1996 state budget law, which covered the period 1996 to 2001, and 2 under the 2002 state. The rwanda fiscal decentralization strategy fds has been developed to guide the implementation of the government of rwanda s fiscal and financial decentralization policy ffdp and is to be read and understood in collaboration with the decentralization policy dp and the rwanda decentralization strategic framework as amended to date. The question is answered by exploiting a panel with several different measures of fiscal decentralisation. Decentralization has been a key policy of the government of rwanda gor since. Decentralisation extends to the lowest level of the organisation. In this case, previously concentrated powers to tax and generate revenues are dispersed to other levels of government, e. More precisely, the system was based on several variants of hierarchical deconcentration, associated with an. Fiscal decentralization can also obstruct the redistribution role of the central government. This book documents mexicos decentralization experience as well as conceptualizing its main trends, policies, and options, and brings them into the light of international comparison. It incorporates the principles governing fiscal decentralization, i. Arrow, musgrave, samuelson, and others have done seminal work in this field. Fiscal decentralisation covers two interrelated issues. Rwanda first adopted the decentralisation policy in may 2000, formulated after a. Jul 11, 2014 the quick research by the committee revealed that the governments of kenya and south africa have been implementing fiscal decentralisation.
Minecofin ministry of economic development and finance rwanda. If local governments and private organizations are to carry out decentralized functions effectively, they must have an adequate level of revenues either raised locally or transferred from the central government as well as the authority to make. This paper entails both positive and negative effects of fiscal decentralization on economic growth. The argument for fiscal decentralisation is anchored in the socalled first generation theory of bringing government closer to the people. Fiscal decentralisation and inclusive growth en oecd. The rwanda fiscal decentralization strategy fds has been developed to guide the implementation of the government of rwandas fiscal and. In section 2, i provide a short overview of the main features of decentralisation in uganda, including political, administrative, and fiscal elements of the reform. Decentralization or decentralisation see spelling differences is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group. This can be illustrated by considering the use of a head tax. An important component of the reform is to increase the fiscal autonomy of local authorities. Distribution of conditional transfers contents acknowledgements 3 1. Decentralization is a complex phenomenon involving many geographic entities, societal actors and social sectors. Oecd ilibrary oecd working papers on fiscal federalism.
Local government is enshrined in chapter 1 of the constitution and the main governing legislation is the organic law of 2005. Oct 10, 2016 since the first fiscal and financial decentralization policy were adopted, rwanda has implemented the national tax decentralization policy in a forthright manner. Rwanda, especially the fiscal decentralization unit under the ministry of finance and. Belgium, australia, germany, spain, switzerland and canada. The fiscal decentralization strategy in fiscal year elucidates the landscape for the general and specific grant to different tiers of government. Apr 21, 2014 rwanda bucks the trend of many african countries that use decentralisation to create patronage opportunities. A study commissioned by the government and development partners showed that decentralization had improved economic growth averaging 10% since early 2000s, reduced region inequalities, increased community participation, improved service delivery and made local.
Decentralization has been a key policy of the government of rwanda since 2000 when the national decentralization policy was adopted. It is the most densely populated country in africa with a population density of 350. However, as a result of decentralisation, it is estimated that 60,000 community health workers including the person in charge of social affaires at cells and umudugudugu level in all will be needed to service all districts. Decentralisation of tax revenues tends to have a stronger impact than spending decentralisation, especially when government is small. Secondly, the trajectory of the rpf is crucially important. The major objective focused on strengthening local service delivery as well as improving citizen participation in governance processes. At the core of a fiscal and financial decentralization policy are some basic principles, including, matching funding to responsibilities, equity. The main drive of the policy is to ensure equitable political, economic, and social development throughout the country, and to be a cornerstone of the fight against poverty by increasing peoples participation. Meaning, advantages and disadvantages of decentralisation. Fiscal decentralization and the efficiency of public service. Oecd ilibrary fiscal decentralisation and economic growth. The basic view is that decentralisation of government will.
Fiscal decentralization involves shifting some responsibilities for expenditures andor revenues to lower levels of government. The rwanda fiscal decentralization strategy fds has been developed to guide the implementation of the government of rwandas fiscal and financial decentralization policy ffdp and is to be read and understood in collaboration with the decentralization policy dp and the rwanda decentralization strategic framework as amended to date. Decentralization system of governance in rwanda fortune of. Along with fiscal and financial resources and autonomy, a key issue facing local authorities is the access to an appropriate level of human resources. A study of the impact of decentralization on access to. The administrative reform process lays out the responsibilities devolved to the local governments and they have been accorded a greater role for service delivery across all sectors. Decentralization system of governance in rwanda fortune. However, local entities remained overwhelmingly relied on central transfers since local own revenues and in particular local tax. One important factor in determining the type of fiscal decentralization is the extent to which subnational entities are given autonomy to determine the allocation of their expenditures. Fiscal decentralization in ethiopia the movement for. These observations explain the necessity for the present revision of the fiscal and financial decentralization policy. Decentralisation is central to ugandas mode of governance as spelt out in the 1995 constitution and the 1997 local governments act confers. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies. Fiscal decentralisation and local public financial man agement pfm.
When a part of the work is entrusted to others, it is known as delegation. It is intended primarily for policymakers, in this case meaning civil servants and their. In terms of governance it is a kingdom with a vibrant democracy at all levels. The role of taxation on resilient economy and development. Various development institutions and western governments have held up decentralization in rwanda as fairly successful. Fiscal decentralization financial responsibility is a core component of decentralization. Fiscal and financial decentralization consists in the devolution of the financial resources and decisionmaking powers to subnational governments that will. Financial responsibility is a core component of decentralization. This fiscal decentralisation paper forms part of a series of introductory guides on key topics in public. Achievements and challenges of fiscal decentralization.
Information is provided on devolved tax powers, subcentral borrowing powers and fiscal transfer arrangements. Assessment of the impact of decentralization policy. Fiscal decentralization and options for donor harmonisation. Combinations of rulesbased approaches for local debt control are likely to have to be supplementary arrangements based on administrative controls or statutory limits set up in a rolling basis, and in more advanced cases possibly for the more advanced regions and municipalities with a blend of. Practices and challenges of fiscal decentralisation in africa. This scenario was even more profound for rwanda during the reconstruction process since the need for resources was much greater than ever before. The views expressed in this publication are those of the authors and do. Fiscal decentralization and local public financial management pfm citizenstate relations project name decentralisation and good governance in rwanda dgg commisioned by german federal ministry for economic cooperation and development bmz project region rwanda lead executing agency giz duration 012019 122021. The main drive of the policy is to ensure equitable political, economic, and social development throughout the country, and to be a cornerstone of the fight against poverty by increasing peoples participation in the planning and management of the development. As a rebel group formed by the sons and daughters of tutsi refugees who fled ethnic violence since 1959, survival has always been at the heart of the rpfs dna.
Fiscal decentralization is among the highest priorities of the government of rwanda. Rwanda cg central government dpwglgd development partners working group on local governance and decentralization. Taking stock of rwandas decentralisation lse research online. A study of the impact of decentralization on access to service delivery a dissertation presented to the academic faculty by pablo a. Saavedracostas in partial fulfillment of the requirements for the degree of doctor in philosophy in the andrew young school of policy studies and the school of public policy. As with many topics on the rwandan postgenocide trajectory, the outcomes of. Enacting the policy requires legal and institutional reform. Using a novel empirical approach, the analysis suggests that decentralisation tends to be supportive of economic growth. Fiscal decentralization over the past few years remains as a central agenda when it comes to regional development around the world and economic growth. Decentralisation can be viewed as an extension of delegation. Decentralization or decentralisation see spelling differences is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group concepts of decentralization have been applied to group dynamics and management science in private businesses and organizations. Decentralisation has been lesothoslongterm program to.
First, there is a generation gap to switch form manual to electronic. Rwanda national health insurance policy kigali, april 2010. Lessons from decentralization in rwanda the movement for. International experience shows that often in decentralization reform, political and. Data and research on public governance including budgeting, public expenditure, publicprivate partnerships ppps, public sector innovation, public employment and public finances. Fiscal decentralisation in uganda draft strategy paper 204 5 1 introduction 1. The first is the division of spending responsibilities and revenue sources between levels of government national, regional, local etc. Republic of rwanda national community health policy. Decentralisation and good governance in rwanda the challenge the government of rwanda began its ambitious decentralization reform in may 2000. Identifying and disentangling the impact of fiscal. To guarantee a minimum level of public service and basic needs or standard of living for the entire population regardless of their geographical location, the central government often. Fiscal decentralisation concerns all the various financial relationships between the state and local authorities.
Decentralized tax system and public expenditures in rwanda. Two critical indicators of the performance of fiscal decentralization are the proportion of lg budget funded from own sources. Decentralisation and good governance in rwanda giz. It has been called the kingdom in the sky and other similar names in admiration of its unique natural beauty. Decentralisation and policy advocacy in rwanda democracy in. It becomes easier to understand the popularity of decentralization in africa when we return to the point of departure. However, local entities remained overwhelmingly relied on central transfers since local own revenues and in particular local tax collection has not increased as expected and hinders. In section 2, i provide a short overview of the main features of decentralisation in uganda, including political, administrative. The ministry of local government minaloc oversees the local authorities, which are structured in four tiers. Repubulika yu rwanda ministry of finance and economic. Integrated financial management information system. Workshop on fiscal decentralisation in rwanda january 2005 to december 2005 support for the government of rwanda in understanding the experience and key lessons of fiscal decentralization in uganda, as a basis for developing their own priorities and institutional arrangements for further developments and donor support for fiscal.
Abstract tanzania is currently implementing a local government reform aimed at improving public service delivery. Rwanda united nations economic commission for africa. In a unitary state, the head tax does not distort economic decisions. The achievements made as a result of the implementation of the policy in the two countries and indeed various literature, point to the fact that fiscal decentralisation enhanced the knowledge of local needs and preferences,which were specific to a locality. Fiscal decentralisation overseas development institute. The role of taxation on resilient economy and development of rwanda. The conclusion is that the new local government structures will enable rwanda to do so. The first is the division of spending responsibilities and revenue sources between levels of. Decentralization implementation plan 20112015 rutsiro. Decentralisation and policy advocacy in rwanda democracy. This paper adopts the following world bank definition of fiscal decentralisation. Government privatizes or deregulates private functions.
Workshop on fiscal decentralisation in rwanda overseas. This chapter deals with the relationship between fiscal decentralisation and economic growth. Rwanda is a landlocked country with an area of 26,338 km2 and a population of 10. The adoption of decentralisation in rwanda was materialised by the adoption of the. For the problem of decentralizing government activities, mobility across regions is a critical factor. Rwanda is a democratic republic with two spheres of government, national and local.
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