Factors for Decentralisation in Developing Countries

Managing in Developing Countries

1. Why do developing countries decentralise and what factors determine success or failure? Use examples drawn from developing countries to illustrate your answer.

Decentralisation is the practice of transferring or moving state power, responsibility and resources to local governments and therefore communities. It is the practice of handing power and decision making over to local governments in order to increase reach to the community. Its goal is to therefore enable the country to develop more, due to the assumption that local governments know what their community needs. It concerns distributing power and resources, and therefore there is an increased amount of politics involved. This essay will focus on the process of decentralisation in China and Ghana. It will discuss the factors which determine the success and failure. This essay will argue that the main criteria which need to be met for decentralisation to be successful are set out by Olum:

“Successful implementation has to take into account six pre-conditions, namely; the establishment of institutional mechanisms, the creation of spaces for citizens’ participation, political will and civil will, capacity development at the local level, careful implementation, and democratic governance.” (Olum, 2014, p. 37)

These factors indicate whether or not decentralisation will work in the country it is implemented in or not. Despite the political factors, economic and environmental factors, if these six factors are not met, decentralisation is more likely to be unsuccessful in the country it is implemented in (Olum, 2014).

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Firstly, the question as to why developing countries decentralise varies on the nation. Different countries have different goals when they progress towards decentralisation, and this in turn affects the outcomes and the success, as well as how the success needs to be measured. Specifically, countries such as China see decentralisation as a way to achieve a market economy and democracy, however African countries such as Ghana see decentralisationas a way to become unified as a nation(Work, 2002). In Africa, decentralisation was also introduced as a tool to improve the governance and decrease poverty (Caldeira, Foucault & Rota-Graziosi, 2012). Other reasons include being able to enact plans which are designed specifically for locals, coordination, innovation, a workload decrease in higher levels of government, and improved accountability. The main idea of decentralisation is to allow the citizens of the country to actively participate in the decision-making process and governance of their country. The locals of the country are therefore held more accountable than the higher government, which ultimately creates more of an incentive to make good governance decisions for the country. Other common goals that countries have when they implement decentralisation include improved efficiency, governance and equity, development and poverty reduction (Smoke, 2003).

There are also many reasons that countries do not decentralise, and often they point to the fact that the country has a fear of loss of control of its finances and spending. It is extremely important for local governments to have a voice and have legitimate power, as this is the main way that communities and the general population can voice their needs. Good governance is important so that public resources and affairs can be managed properly. Overall, decentralisation encompasses many broad initiatives and ideas that countries can use as a form of governance.

While political decentralisation is the most common form that is taken up, this has flow on effects to the other forms of decentralisation; administrative and market.  Decentralisation is prevalent in many developing countries, although in many of these countries, it has not achieved its goal and this is likely due to the fact that the six factors were not met (Olum, 2014, p. 23.). However, there is not a model that is the same that works in all countries, and there is a great variation in success between countries.

Olum illustrates how important the six conditions for success of decentralisation are, and if these are not followed then the scheme will most likely result in failure. Establishment of local institutions is important so that the policies have an actual mechanism to be enacted in. The “creation of spaces for citizens’ participation” is extremely important so that the people are actually able to participate in governance and have a ready means to do so (Olum, 2014). “Political will and civil will” demonstrate buy in and a willingness from all stakeholders to participate in the decentralisation, and without this, as shown in Ghana, it will not work. “Capacity development at the local level” is important so that governance and the method of financing chosen for local governments is appropriate. Careful implementation is essential so that budgeting and methods to undertake the policies are clear and defined, and democratic governance is extremely important, if not the most important, as it is a huge political matter with handing over resources and power to local governments, and if this is not done democratically it could likely result in inequity and failure of the program (Olum, 2014).

Whilst there have been high expectations for decentralisation, and that it would improve and rapidly develop the countries it is implemented in, often there is a vast difference between the written policy on paper and how it is actually implemented. Development can mean a variety of things, depending on the nation and what their goals are. For example, in Ghana, there were broad and overly ambitious goals that were set with decentralisation, and the policies and method of how to carry them out were not properly passed down to local governments. Careful planning should have been done to ensure that weaknesses in the current system were being addressed (Ayee, 1997). 

For decentralisation to work also, the three dimensions of decentralisation must be met for it to be successful. The three dimensions, as described by Smoke, include “fiscal decentralisation, Institutional decentralisation and political decentralisation” (Smoke, 2003). There are certain things that a country needs to have in place before they decentralise, to ensure that it will work. These prerequisites include “strong enabling networks, effective local political systems, substantial locally derived resources and strong local capacity” (Smoke, 2003). If a country does not already have this, decentralisation may fail to meet its objectives, and the environment is not suitable yet for decentralisation.

In East Asia, many governments have introduced decentralisation. In China specifically much of the spending is allocated at local government level. The idea of this was to align governments with the citizens interests and that this would have benefits on many levels, including economic, political and administrative (Gadenne & Singhal, 2013). Financially, local governments can govern spending decisions and taxation, and competition can improve governance. Local innovation and competition have been very successful (Dollar, 2018). China opened their country to foreign investment, and by doing so they changed their country from a mainly centrally planned economy to delegating power and finances to local governments. By doing this, they encouraged innovation at a local level, and this has resulted in 9 per cent growth (Ramesh, 2013). Over the last thirty years, while China has been decentralised by changing its economy, this has resulted in improvement in public management and welfare distribution. The responsibility of financing welfare services is was pushed to local governments. Certain local governments in China manage changing welfare needs by using social and labour guards to suit their local requirements rather than using central policy, a direct type of decentralisation. Because all regions are different with different socio-economic needs, the “government’s governance style and diversity of industries have affected welfare arrangements for labour in China”. (Mok & Wu, 2013)

The main way that China has done this which encouraged success is incentives at local government, and decentralisation with deregulation. They also reduced higher level government control and encouraged them to support local governments and transferred the power to provincial and sub-national government (Ramesh, 2017). However, in China, results are the main objective, with the priority of following the rules after that. The issue with this is that it opens avenues for corruption, and China could benefit from creating more systems of accountability for their local or provincial level governments (Dollar, 2018).

The pollution problems in China can be attributed to the fact that environmental governance in China became decentralised. In this system of environmental governance, blame is shifted and avoided so no one holds the real responsibility for environmental issues (Ran, 2017). China has some of the worst environmental damage and is one of the biggest contributors to pollution in the world, yet their system of environmental governance is one of the most decentralised. As we can infer, many see this decentralisation and as a result blame avoidance behaviour as the biggest reason for the environmental crisis. China’s Environmental Law states that “it is the local government’s responsibility to improve the environmental quality in their jurisdiction”, however it is difficult to address such a large problem from a local government level (Ran, 2017).

Economically, China’s decentralisation of budgeting is quite high. There are pros and cons for this, particularly where local governments were basically given enticements to follow policies which led to growth; they were granted the right to keep small surges in tax revenue from the local government level, as mentioned above, encouraging exports and foreign investment. This resulted in the barriers to investment not in the local government region. This caused ineffective protectionism. While the stability in China is endangered due to fast growth of credit and fiscal shortages,China has still been relatively able to achieve their macroeconomic guidelines.The six preconditions described by Olum have been partially met in China, resulting in successful economic growth however there are still many issues which need to be addressed.

In the case of decentralisation in Ghana, which is seen as very important, one of the main parts of Ghana’s reform is the MMDA or “District Assemblies” system. Recently, they added “38 new metropolitan, municipal, and district assemblies (MMDA), increasing the total number from 216 to 254” (Resnick, 2018). The aim of this was to increase growth in the country and accountability to the citizens, however, it has not had the desired effect with agricultural growth having plateaued and the District Assemblies being held more accountable towards upper levels of government rather than serving the people themselves.  Earlier decentralisation initiatives in Ghana also did not go to plan. The policies and context around the programmes are the main reason that their implementation failed. The main variables were to do with conflict resolution and management and societal wealth and resource distribution. Ghana is a country that was emerging from colonial rule, and this context is important to consider when examining decentralisation there.

Ghana did not see decentralisation as a trial and error approach combined with its inability to adapt the process and policy to learn from previous failures. Secondly, the sheer volume of people that this program was looking to serve and the number of objectives it wished to achieve meant that it was difficult to implement due to it being such a large-scale task. If the implementation program was planned while the objectives were decided, there may have been a higher probability of success, rather than just introducing new policy without a plan for the local governments to put it into practice.

Often when a policy is put into practice there are several issues that occur which need to be sorted out in the implementation. The issue in Ghana is that these are at the local government level with “the principles of popular control and political equality subject to substantial qualifications and restrictions” (Crawford, 2009). This criteria in the context of Ghana was not been planned or met properly.In terms of their District Assemblies system, there are problems regarding how well they represent the people and are accountable towards them. When surveyed, the people trusted parliamentary members more than the District Assemblies and would go to them if they had a problem (Fridy & Myers, 2019). This proves that there is a clear distrust towards the DAs from the citizens of Ghana and this is not an effective form of local government or decentralisation. The issue as well with the District Assembly members is that many of them make key decisions, however, they were not elected by the people they are supposed to represent (Kumi-Kyereme, Yankson, & Thomi, 2006).

“Plan (DMTDP) of Asutifi District for the period 2006-2009 was done and among other issues it was revealed that the sub-structures around which participatory governance hinges on are not properly developed. Out of a total number of nine (9) area councils, only three had offices and development plans prepared for them with the assistance of the Community Based Rural Development Project (CBRDP).”(Fridy & Myers, 2019)

From this information, we can tell that in this district the foundational level of participation is poor and unaccommodating of the rise of decentralisation in Ghana. The result of this was that local projects that were started due to decentralisation had been abandoned (Kumi-Kyereme, Yankson, & Thomi, 2006). The failures of this could be contributed to the fact that the people may not have actively participated in the planning or it did not meet their needs. There is overwhelming evidence that there needs to be consistency in planning for the policies to succeed. In addition to this, local organisational hierarchies and opinion leaders need to be considered before the planning and policies are madeso that they can fulfil their purpose and actively serve the people of Ghana in unifying and developing their nation (Kumi-Kyereme, Yankson, & Thomi, 2006). The six preconditions described by Olum have not been met at all in Ghana, resulting in unsuccessful decentralisation.

In conclusion, many countries decentralise for a variety of reasons and they have different goals and values. Across China and Ghana, the common six factors which contribute to decentralisation’s failure or success are whether or not there has been a formation of official mechanisms for decentralisation and an ability or mechanism for the citizens to fully participate. Additionally, a willing political environment and willing participants (the citizens) are required, as well as a development local government and proper implementation and planning of how it will be implemented. Governance needs to be conducted in a democratic manner otherwise it will also fail.

By altering and learning from failures from already implemented policies, successive governments could improve their outcomes. This essay has demonstrated through the studies of China and Ghana that decentralisation is not a set policy that can be implemented the same throughout every country. However, if the six factors mentioned are met, decentralisation could be a very effective form of governance, however it is still a work in progress and will constantly need adjustments to achieve its goal.

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