Budgeting and Strategic Planning in the Limbe City Council

CHAPTER ONE

GENERAL INTRODUCTION

BACKGROUND TO THE STUDY

Over the years, nations and governments have established a number of reforms to help them carryout their activities. Amongst the many reforms, decentralization is a major policy put in place to help promote the economic and political life of a country. The idea of budgeting and strategic planning is a vital aspect in the decentralization concept.

Governments all over the world have made human and environmental development their primary objective and have therefore used decentralization as a method of sharing developmental responsibilities with local government authorities especially councils.

Rondinelli (1981) defines decentralization as the transfer of authority to plan, make decisions and manage public functions from a higher level of government to individual, organization or agency at lower level. World Bank (1999) identifies four forms of decentralization which are deconcentration, delegation, devolution and privatization.

1. Deconcentration: It is the dispersion of responsibilities within a central government for example a regional branch office.
2. Delegation: It is a step further on deconcentration. With this, branches or agencies act as agents for the central government, executing certain functions on its behalf.
3. Devolution: It therefore does not only give agencies of government the power to function as agents of central government but also the power to decide on what to do.
4. Privatization: It involves the transfer of responsibility of non-governmental organization in the private sector.

It is important to stress on the fact that in practice, decentralization varies from country to country and the practice of decentralization has been a mix of the various forms.

Local authorities or councils in Cameroon were created with one main aim of providing services, creating or establishing good relationships with the people and to bring decision making to the level or place where development generally begins. Local councils like the Limbe City Council were created to strengthen democratic processes and lay the basis for the upsurge of autonomous institutions of governance within the structure of national government.

To ensure that the development and Decentralization policy is enforced, the Cameroonian government promulgated a local government law establishing 374 local government council consisting of 360 municipal councils and 14 city councils.

Part X article 55 of the 1972 constitution (Amended in 2008) and Bill to institute the general code of Regional and Local authorities (Law No 2019/024 of 24^th Dec 2019) have been the basis for the adoption of the current decentralization programme. There are massive responsibilities, spelt out in Book One Section 5 of the Bill to institute the general code of Regional and Local Authorities (December 2019) specifying the general role of Regional and Local Authorities in the decentralization process in Cameroon. Also, chapter II PART II (Financial Autonomy of local authorities) of the Law No 2019/024 of 24^th Dec 2019, section 11(1) lays down some provisions that local authorities have to own and establish their own budgets and resources for the management of regional and local authorities.

As such, they shall:

 – Freely draw up and vote their budgets.

 – Have their own resources.

– Receive resources from the state and other public or private sector.

 – Receive all or part of the proceeds from the exploitation of natural resources within their territory, under the conditions laid down by law.

– Generate the resources needed to promote the economic, social, health, educational, cultural and sports development in their areas of jurisdiction.

In summary of the Bill to institute the general code of Regional and Local authorities (Law No 2019/024 of 24^th Dec 2019), local authorities are basically charged with the following for development:

1. Ensure legal arbitration.
2. Register birth, death, marriage and divorce certificates.
3. Give building permits to ensure proper spatial development.
4. Build schools, provide books and furniture.
5. Maintain law and order.
6. Establish and maintain parks and gardens.
7. Provide street lights.
8. Provide health, sanitation and waste management service.
9. Provide social services.
10. Provide markets.

Local authorities are charged by various enactments including the Law No 2019/024 of 24^th Dec 2019(Bill to institute the general code of Regional and Local authorities
)of the national constitution to ensure physical transformation of the various local areas and stimulate socio-economic activities and development so as to change civic inertia, poverty and illiteracy to enhance equity, efficiency, effectiveness and economy in their locality. These functions of the local authorities cannot be achieved without adequate financial resources to support them. Inadequate financial resources can undermine the effective implementation of developmental projects in the councils. It is against this background that the new local government system has made provision for the financing of the local councils.

Fiscal decentralization is the transfer of responsibilities, power and resources to lower level public authority to mobilize funds for development that is autonomous and fully independent from the devolving authority when narrowed down to devolution. Local authorities are given responsibilities and financial means within the national level determining the scope and quality of services to be provided and amount of funds needed to deliver these services. 

Vigorous revenue mobilization drive is required if the local authorities are to perform better. The effectiveness of revenue mobilization depends on factors such as fiscal policy, revenue administration monitoring operations and performance assessments. Unfortunately, many local authorities do not generate enough revenue. The reasons for their inability to mobilize enough revenue are numerous. Some of these are; poor planning, corrupt practices, poor mobilization strategies, poor budgeting and poor financial performance as the major reasons hence affecting their performance financially. 

Financial performance refers to the act of performing financial activity. In broader sense, financial performance refers to the degree to which financial objectives has been accomplished. It is the process of measuring the results of a firm’s policies and operations in monetary terms. The financial performance identifies how well a company generates revenues and manages its assets, liabilities, as well as strategically plan how to carryout expenditure of revenue and activities. Performance & financial management involves the deployment of various tools, techniques, and systems to help an organization implement its budgets, strategies and plans, and support the achievement of organizational objectives. Successfully executing strategy involves various disciplines, areas of capability, including planning and forecasting, budgeting and resource allocation, revenue and cost management, managing performance against objectives, and improving operational management and utilization of assets.

Prudent financial performance refers to how wisely resources are mobilized, planned and managed effectively and efficiently. Financial performance is therefore an important aspect of public administration of every nation and it is one of the elements that make government effective. It involves financial forecasting, financial planning and budgeting, financial reporting and auditing. Sound performance management is one of the important complements of effective management practices which seek to enhance the socio-economic development of local authorities in Cameroon.

Effective performance & financial management requires:

• Engaging people to determine their information needs(planning).
• Implementing processes and systems to collect the right data.
• Turning the data into information and insights and
• Presenting it in the best way.

In order to ensure sound financial performance there should be good budgeting and strategic planning. Jackson (1958) states that without financial independence local authorities must lead a very subdued life. Therefore, funds should be mobilized from taxes levied on citizens and residents within the territories of the local authorities. Officials must spend funds in a manner governed by rules and regulations.

• STATEMENT OF THE PROBLEM

Local authorities who are at the bottom of the pyramid of governmental institutions otherwise known as partners of central government of every country needs to generate sufficient revenue locally to support the central government development agenda. Budgets are necessary to prudently manage scarce financial resources and at the same time serve as means of expenditure authorization, control and evaluation base. Profit making organizations consider budgeting and strategic planning important elements in their policy making. The success of their organizations depends largely on good budget preparation and strategic planning of the activities as well as how to carryout expenditure.

Budgeting and strategic planning should be done based on availability of resources. Local authorities should ensure that they generate enough resources to compliment central government grants which are always inadequate. They can also look elsewhere for resources to support their budgets. It means some activities captured in the budget could not be undertaken or part touched. The Limbe City Council made up of sub divisional councils prepares budget but most times the expenditure always exceeds the revenue resulting in budget deficits.

This observation encourages numerous academicians to try to discover appropriate solutions for budget slacking, budget gamming, budget bias and poor planning that managers had to deal with, Harper (1999).

The study aims to look at whether, the Limbe city council can achieve their objectives with or without effective budgeting and strategic planning. It is to find out reasons for budget failure, deficits and poor planning at the Limbe city Council where budgeting and strategic planning is cited as a cause for poor performance in development process. To this effect, this work seeks to establish appropriate processes of proper budgeting and strategic planning which will be respected as well as ensuring that the measures put in place by the government are also implemented properly to boost the financial performance of local authorities.

1.3 RESEARCH QUESTIONS

The main research question of this study is how effective are the measures put in place to ensure proper budgeting and strategic planning in the Limbe City Council? The specific questions of the study are:

1) What are the measures put in place to ensure proper budgeting and strategic planning in the Limbe City Council?

2) What are some of the limitations faced by the Limbe City Council in relation to budgeting and strategic planning?

3) What are the consequences of poor budgeting and planning on the financial performance in the Council in its match to development?

1.4 OBJECTIVES OF THE STUDY

1.4.1 General Objective

The main objective of this study is to examine the effectiveness of the measures put in place to ensure proper budgeting and strategic planning in the Limbe City Council.

1.4.2 Specific objectives

1) To identify the measures put in place to ensure proper budgeting and strategic planning in the Limbe City Council.

2) To examine some of the limitations faced by the Limbe City Council in relation to budgeting and strategic planning.

3) To evaluate the consequences of poor budgeting and planning on the financial performance in the Council in its match to development.

FURTHER READING: PUBLIC ADMINISTRATION PROJECT TOPICS WITH MATERIALS