Restructuring Local Government Finance in Developing Countries

Examining issues of international relevance in the ongoing redesign of the South African local government fiscal system, the contributors to this volume analyse the major changes that have taken place since the demise of apartheid. The 1996 Constitutions and subsequent leglisation dramatically redefined the public sector, mandating the development of democratic local governments empowered to provide a wide variety of key public services. However, the definition and implentation of new local functions and the supporting democratic decision-making and managerial capabilities are emerging more slowly than expected. Some difficult choices and challenges commonly faced by developing countries must be dealt with before the system can evolve to more effectively meet the substantial role envisioned for local governments. The contributord outline these choices and challenges, consider options for meeting them and review the implications of different decisions. Their analyses also highlight the interrelationships among the elements of the local fiscal structure and emphasise the often-ignored challenge of how to define an appropriate fiscal decentralization implementation strategy in an environment where local governments are extremely diverse in terms of needs, resources and capacities. Through the research, much of it based n newly collected data, is specific to South Africa, the approach provides a model for other countries facoing similar fiscal decentalization policy changes.