UNIT 1:INTRODUCTION (DEFINING THE CONTEXT OF DEVELOPMENT FINANCING)

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UNIT 1 INTRODUCTION (DEFINING THE CONTEXT OF
DEVELOPMENT FINANCING)
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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 quasi-autonomous, 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?
• 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?
• 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?
• 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 Ghanas 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 Ghanas 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 Ghanas 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 Ghanas Decentralization Policy

• Main Components of Ghanas Decentralization
  Policy
• Political decentralisation
• Administrative Decentralisation
• Decentralized Development Planning
• Fiscal decentralization

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Overview of Ghanas Decentralization Policy

• Main Components of Ghanas 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 Ghanas Decentralization Policy

• Main Components of Ghanas 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 Ghanas Decentralization Policy

• Main Components of Ghanas 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 Ghanas Decentralization Policy

• Main Components of Ghanas 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 Ghanas Decentralization Policy

• Main Components of Ghanas 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?