Fiscal Decentralisation and Local Economic Growth in Cameroon

ABSTRACT

A growing number of studies support the fact that by allowing local communities and regional entities to manage their own affairs through facilitating closer contacts between central and local authorities, decentralization enables more responses to people’s needs and priorities and makes growth more sustainable through genuine ownership; and that central government does not understand differences in local needs and conditions because the knowledge that happens to be thinly distributed across the entire community is not available to the central planning agency, as even the greatest central planning agency cannot decide whether, in a particular local village case, it is possible to implement a particular project at a specific time, only the local government can decide these things. However, at times when these facts and conditions occur, fiscal decentralization, does not lead to the economic growth of municipalities and even when this does, it at times has variations. What, therefore accounts for these failures and differences in variations? Thus, this study sought to establish the link between the implementation of the Fiscal Decentralisation policy and the economic growth of selected municipalities in Fako Division. Basing the study on a framework of theories of Federalism, the research made use of the i) Sociological theory, the Multi-factor theory and the political theory; and employing the descriptive survey design and using the random sampling and the stratified sampling techniques, a sample of 100 subjects of study were drawn from a target population of the financial management of the municipalities. Using the questionnaires and open-ended questions attached to these questionnaires as instruments of data collection, the study applied the chi-square of independence tool for data analysis. Thus, the study revealed a number findings including the fact that Fiscal decentralisation of councils takes into consideration the fiscal gap measures i.e. the extent to which the tax revenue capacity per capita of a council area is above or below its assessed relative spending needs per capita; that there is inevitably a degree of subjectivity in assessing needs of councils; and that there is the possible lack of investment in infrastructure projects with significant regional spillover benefits may impede economic growth. Recommendations included the fact that the tax bases of councils be upgraded; that the assessment of council be done by greater objectivity; and that greater investment in infrastructure projects be made to enable significant regional spillover benefits that would promote economic growth.