UNIT 1: INTRODUCTION
(DEFINING THE CONTEXT OF
DEVELOPMENT FINANCING)
Decentralization, Decentralized
Planning & Fiscal Decentralization
What do You Understand by Decentralization?
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Decentralization, Decentralized Planning
& Fiscal Decentralization
What is the Purpose of Decentralization?
Failure of centralized systems to deliver efficiently
Decentralization has the potential to ensure a more
equitable distribution of resources
It is part of the good governance/democratisation
agenda
It is supposed to engender popular participation in
decision-making
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Decentralization, Decentralized Planning
& Fiscal Decentralization
What are the Various Types of Decentralization?
1.
Administrative Decentralisation
• Transfer of public service delivery functions from
central government to local governments, field
offices of MDAs, etc
• Two main types:
– Delegation
– Deconcentration
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Decentralization, Decentralized Planning
& Fiscal Decentralization
What are the Various Types of Decentralization?
2. Economic Decentralization (Divestment)
• Transfer of economic planning, production, distribution
or other economic functions from government to
voluntary, private or non-governmental institutions.
• Examples:
‾ Privatisation (a.k.a. Market Decentralisation)
‾ Deregulation:
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Decentralization, Decentralized Planning
& Fiscal Decentralization
What are the Various Types of Decentralization?
3. Political Decentralisation:
Transfer of political power from central
government to lower-tier authorities.
Devolution is the ultimate form of political
decentralization
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Decentralization, Decentralized Planning
& Fiscal Decentralization
3. Political Decentralisation (cont.):
Devolution:
Full transfer of resource mobilization and allocation
responsibilities from central government to an quasiautonomous, sub-national public authority that is
fully independent of the devolving authority
Usually culminates in the establishment and
empowerment of local governments that is
accountable to the local population.
Usually involves the establishment of a legal and
regulatory framework
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Decentralization, Decentralized Planning
& Fiscal Decentralization
What are the Various Types of Decentralization?
4. Decentralized Development Planning
It is the transfer of development planning (and
implementation) functions and powers from central
government to local governments, communities and
other sub-national entities.
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Decentralization, Decentralized Planning
& Fiscal Decentralization
What are the Various Types of Decentralization?
5. Fiscal Decentralisation:
The restructuring of existing systems of resource
mobilization and allocation with the aim of
empowering local government authorities to perform
their decentralized functions
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Decentralization, Decentralized Planning
& Fiscal Decentralization
What are the Various Types of Decentralization?
5. Fiscal Decentralisation (cont.):
Fiscal Decentralisation may include:
Formulas for transferring revenue to local govts;
Legally empowering local govts to collect and retain
some taxes, fees, etc;
Legally empowering local govts to prepare their own
budgets and disburse funds
It is a key ingredient for successful devolution.
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Overview of Ghana’s
Decentralization Policy
Some Key Features:
Re-demarcation of administrative jurisdictions
(metropolitan areas, municipalities and districts)
Establishment of Metropolitan, Municipal and District
Assemblies
Establishment of sub-district structures: Town/Area
Councils, Unit Committees, etc
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Overview of Ghana’s
Decentralization Policy
Some Key Features (cont.):
Restructuring of resource allocation and resource
sharing b/n central and local govts
E.g. District Assemblies Common Fund, land rates
and minerals royalties, grants, transfers, and
external credits to local governments
Designating MLGRD as the agency responsible for
implementation of the decentralisation policy
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Overview of Ghana’s
Decentralization Policy
Some Key Features (cont.):
Establishment of NDPC to co-ordinate decentralised
development planning
Establishment of structures and mechanisms to
enhance probity, accountability and transparency in
public administration at all levels of government
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Overview of Ghana’s
Decentralization Policy
Main Components of Ghana’s Decentralization Policy
Political decentralisation
Administrative Decentralisation
Decentralized Development Planning
Fiscal decentralization
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Overview of Ghana’s
Decentralization Policy
Main Components of Ghana’s Decentralization Policy
A. Political decentralisation
Re-demarcation of the country into districts
Establishment and empowerment of the RCCs, MMDAs &
the Sub-District Structures to perform various functions
Establishment of the MMDAs as legislative,
administrative, planning, service delivery, budgeting and
rating authorities
Sub-district structures to facilitate resource mobilization
and popular participation
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Overview of Ghana’s
Decentralization Policy
Main Components of Ghana’s Decentralization Policy
B. Administrative Decentralisation
Restructuring of ministerial institutions and transferring
defined functions, powers and resources to local govts
Integration of sectoral programmes, resources and assets into
the Assembly system
Restructuring of 22 depts into 16, 13 and 11 depts under the
Metropolitan, Municipal and District Assemblies respectively
Passage of a Local Govt Service Act to bring all employees of
the MMDAs into the public service.
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Overview of Ghana’s
Decentralization Policy
Main Components of Ghana’s Decentralization Policy
C. Decentralised Development Planning
A bottom-up, integrated and participatory development
planning system.
Planning at district level, sub-district and sectoral levels
coordinated by the DPCU
RPCUs responsible for harmonising and synchronising
district devt plans based on national development policy
framework and guidelines issued by NDPC
Development of service centres as well as rational, efficient
and sustainable settlement and land use patterns
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Overview of Ghana’s
Decentralization Policy
Main Components of Ghana’s Decentralization Policy
D. Fiscal Decentralisation
Meant to enhance the Assemblies’ access to resources
Creation of the DACF , allocated based on a formula
prepared by the Administrator of DACF and approved by
Parliament
Establishment of ‘MPs Common Fund’
Ceding of income tax payable by informal sector operators,
vehicle operators, and betting, entertainment and
advertising companies to the MMDAs.
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Overview of Ghana’s
Decentralization Policy
Main Components of Ghana’s Decentralization Policy
D. Fiscal Decentralisation
IGF sources of the MMDAs: user fees, rates (basic and
property), licenses, investment incomes,
loans/overdrafts, etc
Submission of MMDA budget to the RCCs for
harmonisation, co-ordination and collation and
approval of by Min. of Finance.
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Financial Capital as One among Several
‘Capitals’ Needed for Development:
Finance (or Financial Capital)
Natural Capital
Human Capital
Institutional Capital
Social Capital
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Discussion Question
What kinds of knowledge about Development
Financing does the Planner require?
Why should Planners be Knowledgeable about
Development Financing?
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