Local economic development, an emerging reality in sub saharan africa

4.3: Theory on Decentralization of Governance

For over many decades, scholars have advocated for decentralization as a means to achieve such goals as enhanced participation, greater control over local programmes by the citizenry, increased resource mobilization for development projects, democracy and better governance (Olowu and Wunsch, 2004: p. 1).

The last half of the twentieth century witnessed the sustained growth of the power of central governments within the developing and developed world. This was motivated by the growth of welfare states in the industrialized world while in the developing world, firstly by the political importance of creating national identities out of the ashes of colonialism and secondly by developmentalist attempts to guide the economy towards growth, and prosperity. Central governments increased their authority and involvement in the political, social and economic lives of their electorate to the scope unimagined by their 19th century advocates. With centralized policy, came excessive concentration of political power and discretion over resource allocation, which in turn brought comparative incentive towards corruption and inefficient management at both national and local level. The population grew dissatisfied with bureaucratic regimes which seemed far away and produced uniform outputs often unrelated to local needs and conditions. Local cultural and ethnic variation was suppressed for national identity defined by the central government (Faguet, 2006: p. 127 – 128).

The modern debate about decentralization and the decentralization theory could not be held back by the citizenry and scholars due to the advantages of a decentralized system of government and the failures of the centralized system. Advocates of decentralization theory condemn the impotence and misuse of centralized governments. The ills of corruption and political alienation are often regarded as the natural side-effects of a bureaucracy distant in space, which is insensitive, inefficient, and inflexible. Reformers advocated the decentralization of political authority and public resources to sub-national levels of government as a general panacea for these ills operating through the reduction of government to more manageable dimensions, thereby making it responsive and accountable to the governed. It should be noted that we recognize three types of decentralization: devolution, de-concentration, and delegation of power. Since this theory is like a wide elephant, we will concentrate on democratic devolution of power as an aspect of the decentralization theory (Faguet, 2006: p. 127 – 128 and Olowu and Wunsch, 2004: p. 5). Therefore, democratic devolution of power refers to the “legal acts and administrative measures that initiate a transfer of responsibility (authority), resources (human and financial), accountability, and rules (institutions) from the central government to local entities” (Olowu and Wunsch, 2004: p. 4-5).

Formally, devolution is the creation or increased reliance upon sub-national levels of government with some degree of political autonomy, that are substantially outside direct central government control yet subject to general policies and laws within a sovereign state. In other words, when there is transfer by law and other formal actions of responsibility, resources and accountability to the local level that is decentralization by devolution of power. What is important to us is decentralization which is devolution of power to local communities in a democratic manner as in the case study of SA. Here the local populations choose their various local officials through elections and the local administrations are directly accountable to their local citizenry (Ibid).

The theory of decentralization like most theories in Development and International Relations is multi disciplinary drawing its inspiration from political science, sociology, economics, public administration, etc. Therefore the word decentralization is more a semantic umbrella beneath which are a collection of different concepts than it is an understandably precise term. This study will concentrate on the more representative academic usages given decentralization by both political scientists and economists. It has been argued whether effective decentralization is more likely to occur under democratic, authoritarian, theocratic, or other regimes. This thesis will concentrate on decentralization under democratic regimes. Democratic controls will play a major role in our ability to theorize about decentralization (Faguet, 2006: p. 130-131).

“Decentralization will be understood as the devolution by the central (i.e. national) government of specific functions, with all the administrative, political and economic attributes that these entail, to local (i.e. municipal) governments which are independent of the central government and within a legally delimited geographic and functional domain” (Ibid, p. 131). However for the purpose of this report we will rely on the latter definition although both definitions are relevant.

4.3.1: The Argument for the Decentralization Theory

The decentralization theory emanates from the anxiety to have democratic regimes where citizens’ are well represented and also the economic point of view based on efficiency allocation, which has been added in recent era. The 17th and 18th centuries political philosophers³ were against autocratic central government and they strongly believed that democratic states such as ancient Athens have the best possibilities to preserve the liberties of citizens. Madison theorized on the need to prevent tyranny through a balance of powers not only within the central government, but also between regional and local governments (sub-national level) as well. The contemporary arguments for the decentralization theory are clearly put forward by Wolman, whose arguments in favour of decentralization are captioned under two main headings: Efficiency Values and Governance Values (Faguet, 2006: p. 132).

4.3.1.1: Efficiency Values

Efficiency values relates to the popular justification for decentralization as a means to maximize greater social welfare within a democratic local constituency. Wolman distinguishes the provision of public goods with the market for private goods in a decentralized government by arguing forcefully that within the private economy, individual preferences are articulated in a free market by the forces of demand and supply through price. To Wolman, the provision of public goods is predicated on the fact that a competitive market will not provide them for the population because they are not profitable. He none the less stresses on differences in individual preferences for public goods and services within communities. In a succinct manner he explains that the tax and service packages for the community should reflect correctly the community aggregate preferences. He noted that average deviation of individual preferences from the tax and service packages adopted by the community through locally elected government officials will be less in smaller communities of comparatively like-minded individuals than it will be in larger more heterogeneous areas within the central government. The upshot of the foregoing is that locative efficiency and social welfare will evidently be more enhanced or maximized under a highly decentralized political regime. This claim is supported by the argument that different preferences for public goods will produce different patens of demand that will be efficiently met only by responsive decentralized LG. This is a very tenable argument in the decentralization theory as canvassed by Wolman in his efficiency value approach (Faguet, 2006: p. 132 – 133 and Smith, 2007: p. 102).

4.3.1.2: Governance Value

Governance values constitute the second arm of Wolman’s argument for the decentralization theory, emphasizing responsiveness and accountability, diversity, and political participation enhanced within a decentralized government. As Wolman theorized, placing government closer to the people promotes greater reaction of local public authorities to the needs of the people and results in a closer relationship between the needs of the people and public policy. This does not only presuppose that decision-makers within a decentralized government are likely to be well informed about and familiar with the needs of their area, but also decentralization permits local public officials to be directly accountable in elected responsibilities for their acts or omissions as well as indirectly accountable to the local population through local elections (Faguet, 2006: p. 135 and Smith, 2007: p. 105).

Diversity in public policy is another argument in favor of decentralization theory through a variety of policy choices at the local level, some of which will be more successful than others. Once given policies have been shown to work, they can be taken up by other decentralized units and why not the central government. We note however that there is a lot of academic literature which stresses that decentralized structures promote innovation, while centralized structures promote adoption (Faguet, 2006: p. 135).

The devolution of genuine power to localities promotes political participation amongst the people because of the improved levels of interest and participation in local government which it brings. To make accountability more effective, additional opportunities for participation of the population are required for this gives room for greater public scrutiny of the actions and policies of both the local government and the central government. This process enhances democratic values thus promoting political stability. Similarly, decentralization provides the opportunity for citizens to debate and decide upon those local issues which matter most to them at local level, thus promoting political education. Lastly, local politics provides a nursery for local political leaders, who may progress to become national leaders. Decentralization has improved participation and enlarged the capacity of local administration to lobby through central government agencies, to make available national resources for local development (Faguet, 2006: p. 135 and Smith, 2007: 106).

The foundation of decentralization composed of a combination of the allocation efficiency argument with that concerning the responsiveness and accountability of local government. This is because the provision of public goods and services by the local government such as schools, health care, roads, etc, is expected to lead to income redistribution that benefits the poor – local safety nets. This enables local governments to target poverty more effectively because local public goods are non-excludable especially when user fees are not charged. The view that local government can be designed in a way that it accurately perceives the needs of its electorate with the motivation to attend to them better than central government represents an influential premise in favor of the decentralization theory (Faguet, 2006: p. 135 and Smith, 2007: p. 119).

Accountability in the provision of local public administration and the provision of public goods and services constitutes the essential part of the theory on decentralization of government. LG autonomy within democratic devolution creates real local power that opens local administration to resources and transparency. Institutional safeguards to protect against abuse of power by local leaders are guaranteed through an appropriate legal framework that ensures the rule of law, which makes public officials accountable to its electorate. LG will tend to respond to their needs population more than their central government peers LG in SA will in this way produce outcomes in rendering public services more efficiently. Decentralized governments can be more cost-effective by spending very less in the public administration and the provision of public services with better results (Smith, 2007: p. 17-20).

4.3.2: Critique of the Decentralization Theory

Thought the above arguments outline the decentralization theory which is relevant to this research, it does not explain in rigorous terms how decentralization achieves these results. The conditions necessary for decentralization to succeed are not clearly delineated. What are the mechanisms which decentralization of governance brings about improvements in efficiency of local public administration? What are the conditions to guarantee fair local elections that reflect the popular will of the people? (Faguet, 2006: p. 137)
A major rebuttal to the underlying principle raised by Wolman is that decentralization will complement or even intensify disparities among communities with different economic means. Decentralization has a tendency to create greater inequalities among municipalities with different levels of organizational capacity such the urban and rural municipalities in SA. Equally, decentralization to low levels of government may reduce efficiency by hindering the benefits of economies of scale in the provision of some services. Furthermore, the existence of externalities in the provision of local public goods by the central government or funding organizations or external market forces will reduce the overall efficiency for localities (Faguet, 2006: p. 134 and Nel et al, 2006: p. 55-62).

In a period of information technology, it is simply not convincing that data on local preferences and other relevant conditions, once accurately gathered, cannot be transmitted to the center without significant distortion or cost. In reality, the modernization of information technology would seem to have efficient transmission of information and reduce unit costs which will enable central government more viable to afford and get detailed information on local preferences for greater effectiveness (Faguet, 2006: p. 137).

Furthermore, local governments are generally not financially viable, lack the expertise and are victims to elite manipulations to function efficiently thus necessitating the directives of a central government which is technically capable and generally fit in the efficient management of the state. Municipalities usually lack the human, technical and economic resources for a successful LG. Therefore decentralized LG often lack competent personnel responsible for providing local public services, such as health care, education and agricultural extension worker, just to name a few. Decentralization will hinder career opportunities and civil servants will sometimes resist to work under LG because of greater career aspirations, life style and professionalism with the central government. It equally creates domination and oppression by local elites of the political process. Local resources will be treated as a municipal secret, providing politicians with numerous opportunities for corruption (Faguet, 2006: p. 150 and Smith, 2007: p. 105).