DECENTRALISATION AS A MEANS TO IMPROVE GOVERNANCE AND POVERTY REDUCTION: EXPERIENCE FROM GHANA. Professor George Gyan-Baffour June 06, 2003

Transcription

1 DECENTRALISATION AS A MEANS TO IMPROVE GOVERNANCE AND POVERTY REDUCTION: EXPERIENCE FROM GHANA By Professor George Gyan-Baffour June 06,

2 I. Introduction For over a decade now, Ghana has been grappling with how to get citizens at the local level to be involved in decision-making and financing through a vigorous decentralisation process. Decentralisation involves devolution of political, administrative, and fiscal decision-making power from central governments to local governments. It creates an opportunity for citizens at the local level to participate in decisions that directly affect their lives. Underlying the rational for decentralization is the improvement of the governance system of a country by involving citizens at the grassroots level of society to be part of the governing authority and to be involved in the social, economic and political decisions that directly affect them wherever they reside in the country. Since most of the poor in countries such as Ghana lives in the rural areas, decentralization allows the poor to be closer to the institutions that make decisions to improve their worth and reduce their level of degradation resulting from poverty. This paper discusses the experiences in Ghana in our effort to decentralize our political, administrative and fiscal structures and systems and how these efforts have improved the governance of the nation and have affected our goal of reducing poverty. II. The Decentralization Efforts in Ghana In 1988, the Government of Ghana embarked on the implementation of a comprehensive policy to decentralise the system of government. The decentralisation programme had two main objectives: To create opportunity for the majority of Ghanaians who live in the rural areas - in villages and towns - to participate in decisions that directly affect their lives and increase their access to political authority 2

3 Promote local development through the involvement of the indigenous people as a way of improving ownership and commitment to enhance implementation leading to improvement in the living conditions of the local people The Local Government Law, 1988 (PNDC Law 207) was enacted to give legal backing to the decentralisation process. Central administrative authority was to be devolved to the district level. Twenty-two functional areas of government were fused at the sub national and local level into one administrative unit. The decentralization process was to be total including political decentralization, administrative decentralization, fiscal decentralization, and planning decentralization. Political Decentralization First, political decentralisation was to include the establishment and empowerment of local government structures, demarcation of administrative boundaries, and the promotion of popular participation of the people at the various levels of decisionmaking. Administrative decentralisation Administrative decentralisation refers to devolution of government power, roles, functions and responsibility from the central government to local and sub local government institutions. It includes restructuring the ministerial institutions, and ensuring an effective and meaningful integration of sectoral programmes, resources and assets into DA system so as to promote coordinated development and efficient resource utilisation. Fiscal Decentralisation Third, fiscal decentralisation relates to the division of fiscal responsibilities between central and local governments and the transfer of some well-defined financial resource mobilization and disbursement responsibilities from the former to the latter. In essence fiscal decentralisation seeks to make adequate financial resources available to the DAs; and ensures 3

4 a system of financial relations that would grant the DAs substantial discretion in allocating of expenditures. Decentralized Planning Finally, decentralised development planning involves the institutionalisation of bottom-up approach, integrated and participatory development planning processes that facilitate active involvement of all segments of society including identifiable groups, service providers in the public and private sectors, and non-governmental organisations at all levels of the decentralised system III. Decentralisation and Poverty Reduction Poverty still remains overwhelmingly a rural phenomenon in Ghana. About 36% of people in the rural areas lived below the poverty line in 1999 while only 17% of urban dwellers were considered poor. Various facets of the decentralization process in Ghana facilitate direct targeting of poverty reducing intervention to the rural folks at the district and sub-district level. The closeness of intervention provided by decentralized structures and features enhances the effects of interventions on poverty reduction tremendously. First, the political decentralization process in Ghana led to the establishment of 110 district Assemblies (DA), 1306 Urban, Zonal and Town/ Area Councils and 16,000 unit committees. These structures provide institutions for channelling poverty reduction resources closer to the rural communities where most of the poor reside. Second, administrative decentralisation process allows decisions about the districts development to be taken by people at the district level thus reflecting the real needs of the local people including the poor. Thirdly, while fiscal decentralization is not complete yet local governments are now allowed to generate resources internally which can then be used for local level development projects. Furthermore, the District Assembly Common Fund (DACF) of 5% of government expenditure is sent directly 4

5 to the district level for poverty reduction projects. Finally, a large proportion of benefits from HIPC savings are sent directly to the districts for programmes in health, education, sanitation, and water, the basic needs that the poor in the rural areas lack. Again one major dimension of poverty, a multidimensional construct, is the lack of capacity to influence social processes, make public policy choices, and participate in resources allocation. It is very clear that all the four facets of decentralization attempt to enhance the capacity of the rural folks, a large proportion of which are considered poor. Thus in addition to the ability of decentralized units in bringing decisions making closer to the poor decentralization in itself is poverty reducing attacking directly a major dimension of poverty by reducing political helplessness among the weak. IV. Decentralization and Good Governance The concept of governance is defined by the United Nations Development Programme (UNDP) as the exercise of economic, political and administrative authority to manage a country s affairs at all levels. It comprises mechanisms, processes, and institutions through which citizens and groups articulate their interests, exercise their legal rights, meet their legal obligations and mediate their differences. The question that one needs to address is that does decentralisation lead to enhanced governance. First, to the extent that decentralization facilitates the exercise of economic power through fiscal decentralization at lower levels of the society it increases the volume of power and allows power to be shared among many more people, which pushes governance a step further in the continuum toward governance by the people. Secondly, decentralization allows decision making to be shared by many reflecting diversity of opinions, which enrich the outcome of decision-making. 5

6 Third, decentralization increases participation and participation encourages commitment and commitment increases the likelihood of implementation thus increasing the performance of governments. Finally, decentralization can reduce the magnitude of excesses in corruption, in rent seeking, and in wanton dissipation of resources at the centre where these anti-social actions of government officials are difficult to detect. The Challenges While a lot have been done, the implementation of the objectives of decentralisation has not been smooth. Quite a number of fundamental issues are still outstanding. There still exist overlapping responsibilities between central and local governments. There is no clarity at various levels of government and within different sectors, ministries and departments regarding how the intended shifts in power, functions and resources should look like and how they should be managed. There is inadequate coordination between planning, budgeting and financing at the local level. Another major problem preventing decentralization and its positive effects on governance and poverty reduction the absence of capacity at the district level to perform the administrative, physical and the planning responsibilities devolved to them. For instance the National Development Planning Commission trained about 350 staff in 1987 but many of them abandoned their posts due to lack of administrative, technical and logistical support from the DAs, unattractive conditions of service, and undue delay in salary payments. The local government service bill is currently before parliament to help minimize this capacity building and retention problem by allowing the District Assemblies to employ and retain their own staff. 6