OP-ED: All Politics is Local – So Why Not Economic Governance?

African citizens deserve governments that are responsive to their needs. Unfortunately, national governments – both in unitary and federal systems – are often too far removed from citizens to thoroughly understand what these needs are and how to address them.

In order to spur development on the continent, subnational governments and entities need to play a bigger role than they currently do. The obvious reason for this is that government policies, from health care to education, can be better tailored to the priorities of the citizens when policymakers operate locally.

In addition, public goods and services can be meted out based on evidence of what actually works in particular communities. While many African countries are beginning to embrace decentralization by ceding some responsibility to local and state governments, central authorities continue to dominate politically and, more importantly, economically. The Organisation for Economic Co-operation and Development estimates that in 85 percent of African countries, subnational governments account for less than 8 percent of GDP and 20 percent of public spending.

The implication of the economic mismatch that exists between national and subnational governments is two-fold. Firstly, subnational governments become functionally moribund as they possess limited capability and mandate to deliver on public goods. Secondly, because their importance pales in comparison to the national governments, they do not attract the same level of scrutiny on accountability thereby becoming avenues for inefficient spending and corruption.

The first point was recently made evident in South Africa, where an audit by the Department of Co-operative Governance and Traditional Affairs assessed that 31 percent of municipalities in the country are almost dysfunctional and another 31 percent are dysfunctional. This dysfunctionality was with regards to governance and accountability.

This scenario is not unique to South Africa. Across the continent, subnational governments are mere political structures without the capacity to translate proximity to citizenry into impact in their lives. Revenues are mostly from grants, and expenditures are mostly on salaries and wages. With limited capacity and mandate to generate revenue, policy focus has been on changing national laws to devolve some fiscal functions locally. This often stalls due to political disagreements regarding revenue partitioning.

There are, however, other steps, that subnational governments can take in lieu of changing extant fiscal laws. In particular, they can build efficiencies in areas where they have exclusivity in revenue collection such as land and property tax. To do this, they must first build capacity by attracting highly qualified talent, most of whom are often inclined to work at federal levels or with the private sector. This requires strong incentives such as opportunities for career growth, niche professional training, and other such benefits.

Having the right talent helps with the other steps of improving local government efficiency. For instance, the right staff can build and manage a digitized revenue management system, complete with a comprehensive database of taxpayers.

Furthermore, local government staff must be willing to use innovative tools based on behavioral economics to improve tax compliance. Such tools will include peer influencing and social network analysis which leverages communal proximity. By collecting and utilizing revenues more efficiently and effectively, local governments can more proactively make the case for more fiscal decentralization.

The second consequence of having disempowered local governments is that there is less attention given to them with respect to financial management and accountability. In Liberia, for example, the president is charged with appointing mayors, thereby removing the accountability that comes with electoral screening and representation.

The result of this is inevitable corruption or mismanagement of public funds. Fortunately, civil service organizations are starting to pay attention to this. In Nigeria, for example, there are a number of nonprofits that have created a niche for themselves in holding state governments accountable. Furthermore, tools like the Public Expenditure and Financial Accountability framework are increasingly being used in the assessment of public finance performance of subnational governments.

These efforts are, however, not enough to effectively assess state, municipal, provincial, and local authorities. Therefore, citizens have to be empowered to play the main role of demand-side accountability at the subnational level. One received wisdom of economic governance is that when citizens pay tax, they become more likely to hold government officials more accountable for public spending.

Unfortunately, this may not always be true because citizens need to understand complex economic issues before they will be capable of engaging governments. Therefore, central governments and their development partners must change strategies on local governance to reflect citizen empowerment. By educating citizens on the rudiments of public finance they can be more assertive in their activism. Such enlightenment means they will be able to ask public officials the right questions and channel concerns on lack of accountability more potently.

The audit report in South Africa showed that 86 percent of municipalities failed to materially comply with governance laws. This may either be because they lack the staff with the right technical know-how or they simply do not feel any sense of accountability. With improved capacity for efficient service delivery and activist citizenship, subnational governments in Africa can begin to complement the central governments in delivering public goods and services for development.

All politics is local, why not economic governance?

Featured photo by Staton Winter/UN Photo

Folorunso David

Folorunso David is a political economist and consultant on economic governance. He can be reached on twitter @funsodavid.

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