Transcript Decentralization in operations: Comoros and Madagascar

Decentralization in operations:
Comoros and Madagascar
Political and Fiscal Context
Comoros
Political
context
Madagascar
 Permanent crisis. Comoros is  History of pre-colonial, colonial and
world leader in Coup d’Etats
 Secession of Anjouan: In
1997 the second largest and
poorest island separated from the
federation
post-colonial decentralization
 Since 2002, the country has
 Provinces played a critical role in the
four presidents resulting in a
conflict over resources and
competencies
 Push for decentralization after the
democratic transition of the early 1990s:
Commune elections in 1995 and provincial
elections in 2000
ratio in the region
political crisis of 2002. After the change of
government in June 2002, provinces were
suppressed
 Very low revenue/GDP-ratio (12%) and
high share of customs and VAT on
domestic revenue
 Anjouan is administered
 Communes represent 3-4% of total
separately
government finance; some urban
communes gained from decentralization,
most rural communes did not
 Lowest revenue/GDP ratio
Fiscal
framework and highest customs/revenue
World Bank Response
Comoros
AAA
Madagascar
 Permanent crisis management
 Decentralization ESW and
 Facilitation of fiscal decentralization policy dialogue centered around
negotiations in December 2002
(together with the IMF)
Lending  Emergency Credit (EERC) in 2001
to support the set-up of a decentralized
state: The EERC allocated the credit
amount to the three islands;
decentralization component was
allocated 30%
 Social Fund works at the
community level
the strengthening of communes
 Governance project finances
capacity building and the set-up of
cadastres at the commune level
 Social Fund and rural
development project support
communities
Comoros Emergency Credit (EERC)
Objective:
(i) Support the transition out of the secessionist crisis
(ii) mitigate distress of the poor
Management:
(i) Activities were determined by the three islands
(ii) Ministry of Plan was implementing agency
(iii) Anjouan managed its own activities
Decentralization:
(i) Pre-determined allocations by components (Poverty
reduction, decentralization, national reconciliation) and
islands: Anjouan 50%; Grande Comore 32%; Moheli 18%
(ii) The decentralization was mainly used for the payment of
salary arrears and the rehabilitation of administrative buildings
EERC Performance
Outcome:
(i) Uses of funds produced largely positive results.
(ii) Country adopted a new constitution; Anjouan had overcome its isolation
(iii) New lines of confrontation emerged in June 2002 after the election of
Union and island governments
Credit Performance:
(i) Credit was ranked marginally satisfactory because it reached the
best possible outcome under the difficult circumstances.
(ii) The decentralization sub-component was rated marginally unsatisfactory
because of the high prevalence of cars and administrative overheads
Lessons:
(i) Bank can play an important role in transition out of crisis
(ii) Bank should not overestimate its role. Decentralization processes are
very complex and, in a crisis context, even more difficult to implement.
Madagascar Decentralization ESW
Results:
(i) Madagascar remains a structurally centralized country
Current revenue as a share of GDP (excluding
grants) 1998
Breakdown of Central Budgetary Revenue 2001
(Source: IMF RED January 2003)
47.9
30
20
26.5
10.2
10
M
ad
ag
as
ca
Lo
r
w
in
co
m
e
SS
Af
ric
a
W
or
ld
0
1.1
19.6
0.7
4.1
Taxes on net income and profits
Taxes on property
Taxes on domestic goods and services
Taxes on foreign trade
Other taxes
Nontax revenue
(ii) Parallelism between deconcentrated and decentralized agents hampers
service delivery
(iii) Local government finance is marginal but communes are more
effective in revenue collection than deconcentrated intermediaries
Madagascar Decentralization ESW
Recommendations:
1) The decentralization strategy should focus on communes and consider
suppressing the regions as well as postponing the set-up of provinces
2) Communes need to be fully in charge over local government affairs
(i) Communes should be in charge of raising their own revenues
(ii) Transfers need to arrive on time;
(iii) Transfers should be substantially increased to rural communes
3) Improve service delivery within the deconcentrated framework:
(i) Creation of clear reporting rights between statistical services at the
province and central level
(ii) Investing in the analysis, treatment and verification of data at the
province and district level