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Comments Based on the Sierra Leone Experience Ousman Barrie, Local Government Finance Department

Sequencing Fiscal Decentralization Roy Bahl and Jorge Martinez-Vazquez Andrew young School of Policy Studies Georgia State University Atlanta, Georgia 30303. Comments Based on the Sierra Leone Experience Ousman Barrie, Local Government Finance Department Ministry of Finance, Sierra Leone,

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Comments Based on the Sierra Leone Experience Ousman Barrie, Local Government Finance Department

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  1. Sequencing Fiscal DecentralizationRoy Bahl and Jorge Martinez-VazquezAndrew young School of Policy StudiesGeorgia State UniversityAtlanta, Georgia 30303 Comments Based on the Sierra Leone Experience Ousman Barrie, Local Government Finance Department Ministry of Finance, Sierra Leone, April 25, 2005

  2. Introductory Remarks • The aim of these comments is experience sharing on the issue of sequencing fiscal decentralization • Yes, sequencing matters; comprehensiveness is crucial; and missing the steps can be costly • Practical realities often dictate deviations from the normative

  3. Background to Fiscal Decentralization in Sierra Leone Back to FD after 32 years of Centralization Previous system failed largely due to lack of revenue autonomy One-third of the 33 years of centralized governance were civil war years Pre-decentralization deconcentration was highly asymmetric sector-wise Decentralization preceded by years of reforms in other areas with less than desirable impact institutional constraints to effective service delivery in Sierra Leone

  4. Objectives of Fiscal Decentralization in Sierra Leone • The strongest reasons relate to economic development, political decentralization, fiscal discipline and administrative efficiency

  5. Features of the Fiscal Decentralization System • Hard budget constraint • Borrowing by councils must be within guidelines • Councils prepare and approve own budgets • Councils provided with broad revenue raising powers with rate fixing powers • Funds follow the functions • Horizontal distribution of grants by formula

  6. Champions Strong: • The people and their elected representatives • The President • Ministry of Finance • External Donors Weak: • Line MDAs Ambivalent: • Ministry of Local Govt

  7. Expenditure Assignment and Local Government Budget Processes • the expenditure assignment will be gradual, synchronised with an intensive capacity building for the councils • councils prepare and approve their own budgets, based on indicative grants ceiling from the centre, and their estimated own revenue

  8. Revenue Assignment and Resource Distribution • Local councils have various revenue sources assigned to them, including head taxes, user fees, property rates, business licenses, shares in mining revenues, etc • a grants distribution system has been designed to reflect relative resource requirements on a function by function basis

  9. Capacity Constraints and Capacity Building • capacity building high on the fiscal decentralization agenda of Sierra Leone • Brand new councils; • An inexperienced and long alienated electorate • Extremely Weak capacity at the centre • Minimal degree of deconcentration

  10. Challenges and Risks • Harmonizing and synchronizing donor interventions • Catching up on the outstanding implementing regulations and guidelines • Harmonizing existing laws • Transfer the hiring and firing powers in sync with the devolution process

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