Mobilizing local revenue capacities of African cities: Johannesburg and Nairobi

Kithatu-Kiwekete, Angelita Kuasa
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Public finance literature has minimally engaged the fiscal autonomy of African local governments, and cities in particular. African cities should independently generate a significant portion of revenue locally in order to finance a varied range of municipal services to a diverse municipal population. This study aims to provide insight through the contextual analysis of the revenue assignment function of African cities. The study explores fiscal discretion and appropriation as a reflection of local fiscal autonomy and how these manifest in local revenue instruments. The study employs an illustrative case study methodology on Nairobi and Johannesburg by means of an examination of local revenue generation particularly water revenue and municipal borrowing to examine the contrasting experience of local fiscal autonomy of these two cities. The legal and institutional frameworks of these cities provide for an array of OSR. Previously, local revenue tools did not address the financing needs for municipal services of infrastructure required to cater for the growing and diverse municipal populations. A national process of local government restructuring compelled the cities to realign local structures to enhance revenue mobilization in order to address the challenge of municipal service delivery. The regulatory environment was also amended to effect intergovernmental transfer arrangements as well as particular local revenue instruments in each case. In Nairobi, the structural and legal changes have effectively entrenched the centralist nature of the Kenyan government, severely limiting the city’s autonomy with regard to water revenue. The city’s fiscal capacity for municipal borrowing has been left largely unchanged by Kenyan local government reform. In Johannesburg, the democratic dispensation has enforced local fiscal autonomy that was evident in the apartheid white local authorities. The mammoth task of centrally managing all the city revenues has brought to the fore administrative challenges particularly regarding water revenue; however, the city’s fiscal capacity has improved its state of municipal borrowing. These findings confirm the decentralization rationale. Fiscal decentralization is thus important for asserting the function of revenue assignment to enhance local fiscal autonomy. The two case cities show that local capacity and the historical role of central government are important in ascribing and manifesting this function.
Thesis (Ph.D.)--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Law, 2016.
Municipal finance, Finance, Public