Decentralization in Madagascar
This paper takes stock of Madagascar's first 10 years of decentralization. As it happened in many other developing countries, particularly in Africa, Madagascar's decentralization process has seen reversals, uncertainties and lack of clarity all along. This explains why Madagascar, despite the experience with decentralization, remains a highly centralized country with only about 3-4 percent of expenditures spent below the center and with very few prerogatives decentralized to the local level. Notwithstanding the structural impediments to decentralization in poor countries, many positive lessons can be drawn from the Madagascar case, which point to the potentials of the decentralization process. This study provides a detailed analysis of local government finances and develops a methodology for measuring local financing needs (local fiscal gap methodology). Based on this analysis, the study argues that a lot can be gained from simplifying administrative arrangements and fiscal relationships. Instead of a full-blown and ambitious decentralization strategy, this book suggests a number of reforms, which would go a long way by making the current structure work better. These reforms include: (1) a full transfer of the (limited) local competencies to commune, particularly local revenue collection; (2) increasing transfers to rural communes so that per capita allocations would be the same across communes-rural and urban; and (3) assigning revenues to one level of government only, except for some very specific types of taxes (such as on natural resources).
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- Jonathan Rodden, 2000. "Decentralization and the Challenge of Hard Budget Constraints," World Bank Other Operational Studies 11426, The World Bank.
- Stephen Knack & Nick Manning, 2000. "Toward More Operationally Relevant Indicators of Governance," World Bank Other Operational Studies 11407, The World Bank.
- Wolfgang Fengler & Frank Borge Wietzke, 2003. "Estimating Financing Needs for Local Services in Madagascar," World Bank Other Operational Studies 11287, The World Bank.
- Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
- Ravallion, Martin, 1998. "Reaching poor areas in a federal system," Policy Research Working Paper Series 1901, The World Bank.
- Satu Kahkonen & Anthony Lanyi, 2001. "Decentralization and Governance : Does Decentralization Improve Public Service Delivery?," World Bank Other Operational Studies 11382, The World Bank.
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