Local government finance reform in developing countries : the case of Tanzania

This book seeks to capture the ongoing local government finance process in Tanzania. Since 2002, we have had the good fortune and pleasure of contributing to this reform process in a variety of ways. As a result, the preparation of this book has benefited greatly from the cumulative insights and contributions of countless colleagues in the Government of Tanzania, particularly from the President's Office-Regional Administration and Local Government and from the Ministry of Finance. We would further like to thank Renata Simatupang and Andrey Timofeev for their research assistance in completing the manuscript. xi Poverty reduction on African continent represents a major development challenge. Since key government services such as basic education and health services are often delivered at the local government level, a successful poverty reduction strategy would be virtually impossible without the reform of local government finances. One big problem is that there is a lack of good examples of decentralization and local government finance reform in Africa. Although Uganda has often been touted as one of the big reformers in local government finance in Africa in the 1990s, ongoing local government finance reforms in Tanzania are garnering increasing interest in policy circles. Although Tanzanian local governments have played a significant role in the delivery of key government services since the 1980s, until recently the central government tightly controlled most of the financial resources available to the local government level. Yet in recent years, the Government of Tanzania has taken significant steps in reforming its system of local government finances. This book presents a comprehensive overview and detailed analysis of Tanzania's local government finance reforms, and draws lessons for other developing economies that wish to engage in fiscal decentralization reforms Front Matter....Pages i-xii An Overview of Local Government Finance Reform in Tanzania....Pages 1-20 Front Matter....Pages 21-21 The Assignment of Expenditure Responsibilities to the Local Government Level....Pages 23-43 The Management of Local Government Finances: Local Planning, Budgeting, and Service Delivery....Pages 44-58 Front Matter....Pages 59-59 Local Government Taxes in Tanzania: Weaknesses of the Current System of Local Government Revenues....Pages 61-90 The Proposed Transformation of the Local Government Revenue System in Tanzania....Pages 91-108 Front Matter....Pages 109-109 Principles for Developing a Sound Intergovernmental Fiscal Transfer System....Pages 111-139 Intergovernmental Fiscal Transfers in Tanzania: An Assessment of the Previous System of Local Government Allocations....Pages 140-152 The New System of Formula-based Grants in Tanzania....Pages 153-175 Front Matter....Pages 177-177 The Role of Local Government Borrowing in Tanzania’s System of Local Government Finance....Pages 179-191 Front Matter....Pages 193-193 Moving Forward: Local Government Finance and Tanzania’s Poverty Reduction Strategy....Pages 195-211 Lessons from Tanzania’s Local Government Finance Reform Experience....Pages 212-222 Back Matter....Pages 223-242 This book analyzes recent local government finance reforms in Tanzania, including the introduction of a formula-based system of intergovernmental grants. Due to the scope and speed of Tanzania's local government finance reforms, the country is becoming one of the best-practice examples of fiscal decentralization reform in Africa.