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Fiscal Decentralization in Kenya: The Constituency Development Fund and the Growth of Government

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  • Bagaka, Obuya

Abstract

This paper explores the financial implications of fiscal decentralization policies on the central government's operating budget in Kenya. The paper evaluates how devolved funds under the constituency development fund (CDF) have been utilized to start healthcare capital projects (clinics) at the local level. The study finds that fiscal decentralization has promoted allocative efficiency and equity but at a cost of exporting tax burdens (operations and maintenance) to the central government emanating from capital projects implemented at the local level. The exported tax burdens have policy implications and call for reforms of the CDF program to reflect a benefit-expenditure structure.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11813.

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Date of creation: 10 Oct 2008
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Handle: RePEc:pra:mprapa:11813

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Keywords: fiscal decentralization; budget; devolution; constituency development fund; health care; allocative efficiency;

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  1. Ernesto H. Stein & Jorge M. Streb, 1998. "Fiscal Decentralization and Government Size in Latin America," IDB Publications 6436, Inter-American Development Bank.
  2. Roy Bahl, 1999. "Implementation Rules For Fiscal Decentralization," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9901, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
  4. Lindaman, Kara & Thurmaier, Kurt, 2002. "Beyond Efficiency and Economy: An Examination of Basic Needs and Fiscal Decentralization," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 915-34, July.
  5. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, Fall.
  6. Sharma, Chanchal Kumar, 2004. "Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes," MPRA Paper 204, University Library of Munich, Germany, revised Nov 2005.
  7. Hood, Ron & Husband, David & Fei Yu, 2002. "Recurrent expenditure requirements of capital projects - estimation for budget purposes," Policy Research Working Paper Series 2938, The World Bank.
  8. Ernesto H. Stein, 1998. "Fiscal Decentralization and Government Size in Latin America," Research Department Publications 4112, Inter-American Development Bank, Research Department.
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