GOLD Report I - UCLG

39disbursements to local governments foroperations or transferred functions, whileinvestments are covered by occasionalgrants. Global transfers offer local governmentsmore freedom over spending, thoughthe allocation criteria are usually vague, asin the case of Algeria, Tunisia, Gabon, Guinea,Côte d’Ivoire, Senegal and also in Kenya(where the global transfers are combinedwith a sectoral grant for road works). InAlgeria, the allocation of the solidarity fundgrant (95% of the resources from this fund)is managed with clear eligibility criteria: forcommunities where wealth indices are lowerthan the national average. Finally, there arecountries that do not have an organizedsystem of transfers: in Niger and Togo,intergovernmental transfers are intermittentand dependent on the political situation.Similarly, particularly in UEMOA (WestAfrica Economic and Monetary Union) andCEMAC (Economic and Monetary Communityof Central Africa) countries, governmentsare often resistent to decentralizingthe financial resources in keeping with thesectoral policies that absorb, even so, largeflows of aid and public investment.III.2.3. The financial weightof local governmentsTwo indicators usefully measure the financialsignificance of local government: theshare of the nation’s Gross Domestic Product(GDP) allotted for local authorities, andthe actual amount of money that comesunder the control of local governments.Graph 1 (p. 38) shows the actual financialweight of local governments. The sample issmall because reliable data were availableonly for certain years in certain countries.Even so, this sample of countries at differentlevels of development is quite representative.In the UEMOA countries (West Africa Economicand Monetary Union), total municipalexpenditure of the area amounted to FCFA150 billion (€228 million) in 2004, i.e. 4.8%of State expenditure of around FCFA 3103billion (€4.7 billion). A World Bank study onthe experience of decentralization in 30 Africancountries revealed that expenditurecontrolled by local governments is around10% in South Africa, between 5 and 10% inNigeria, Uganda and Zimbabwe and between3 and 5% in Kenya, Ghana, Senegal,Mozambique and Zambia. Generally speaking,the average ratio between localexpenditure and national budget resourcesexcluding donations is below 5% and theratio between local expenditure and grossdomestic product (GDP) less than 1%.In addition, with the exception of South Africaand North Africa, local governments’resort to borrowing in other countries is at avery early stage.In view of the weakness of their own income(the insufficient flow of intergovernmentaltransfers is further exacerbated bythe allocation modalities and constraintson access to loan markets), it cannot bedenied that African local governments willhave trouble in meeting on their own thecosts of their ordinary activities and thetransferred powers, not to mention theirresponsibilities in local development andcombating poverty.One of the explicative factors is that own taxrevenue and local finance depend on themacroeconomic framework –and centralgovernments in sub-Saharan Africa facesevere financial constraints. The povertyaffecting large segments of the populationplaces limits on the tax take. On top of thiscomes the frequent lack of political will toredistribute the tax to ensure a better supportto local governments and more effectivemanagement of the fiscal chainparticularly in the collection of taxes. One ofthe top priority claims of elected bodies is abetter distribution of resources, with theaim of taking the share of own tax revenuesin relation to GDP to 2% and increasingfinancial transfers by 5 to 10%, which wouldmake it possible to double or even triplelocal resources, the current level of whichjeopardizes the positive fallout expectedfrom decentralization.