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Key Text Issues in Fiscal Decentralisation: Ensuring Resources Reach (the Poor at) the Point of Service Delivery

Author: C N Devas
Date: 2002
Size: 17 pages (52.5 KB)

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Summary

Decentralisation of government is trendy. Yet, can decentralised governments be used to ensure that resources reach the point of service delivery, and specifically reach the poor? Are alternative models more promising? This paper from the DFID November 2002 Retreat explores these issues and looks at the challenges faced by governments to ensure that resources reach the most vulnerable sectors. Most of the services on which the poor depend have to be delivered at the local level. Therefore, mechanisms have to be found to ensure resources reach that level, whether that is through inter-governmental transfers to decentralised governments or through other channels.

In order to ensure that resources reach the poor at the point of service delivery three sets of critical and inter-related issues are taken into account: the design of transfers and allocation of resources; conditionality and citizen participation; and local capacity, monitoring and accountability. Uganda and Kenya are presented as examples of countries that have implemented inter- governmental transfer systems that have stimulated participation in budgetary choices and increased local accountability.

The effectiveness with which resources are translated into actual services depends not only on the appropriate design of the transfer system and the allocation formula but also on the capacity and incentives of local governments to respond. That in turn depends not only on grant conditionality but also on upward and downward accountability and the strength of civil society. Other findings are:

Transfers need to be predictable and provide appropriate incentives to local governments.
Conditionality transfers might help to ensure that resources are used to deliver services and to address poverty but central direction must be balanced by local discretion if the benefits of decentralisation are not to be lost.
Incorporating poverty factors into an allocation formula does not guarantee that the poor benefit. Nor do pro-poor conditions for transfers unless there are effective mechanisms for verifying that conditions have been met.
Providing local citizens with the information about entitlements and resource allocations and empowering the poor to organise to make demands, can increase the likelihood of pro-poor service delivery.
Alternative service delivery mechanisms such as deconcentration, Social Investment Funds and Local Funds offer certain benefits but are no substitute for a basic system of inter-governmental transfers to finance service delivery.

Policy pointers to ensure that resources reach the poor at the point of service delivery include the need to:

Decentralise resources to the level where there is scope for effective local accountability.
Support the strengthening of local government capacities, leadership and motivation to respond and deliver.
Enable local civil society organisations to scrutinise local budgets and resource use.
Empower the poor to organise themselves.

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Source: Devas, N. 2002, 'Issues in Fiscal Decentralisation: Ensuring Resources Reach the (Poor at) the Point of Service Delivery', paper presented at the DFID November 2002 Retreat
Author: Nick Devas , n.devas@bham.ac.uk
International Development Department (IDD), University of Birmingham, http://www.idd.bham.ac.uk
Organisation: International Development Department (IDD), University of Birmingham, http://www.idd.bham.ac.uk