1. Comments Based on the Sierra Leone Experience
Sequencing Fiscal Decentralization Roy Bahl and Jorge Martinez-Vazquez Andrew young School of Policy Studies Georgia State University Atlanta, Georgia 30303
Comments Based on the Sierra Leone Experience
Ousman Barrie,
Local Government Finance Department
Ministry of Finance, Sierra Leone,
April 25, 2005

2. Introductory Remarks
The aim of these comments is experience sharing on the issue of sequencing fiscal decentralization
Yes, sequencing matters; comprehensiveness is crucial; and missing the steps can be costly
Practical realities often dictate deviations from the normative

3. Background to Fiscal Decentralization in Sierra Leone
Back to FD after 32 years of Centralization
Previous system failed largely due to lack of revenue autonomy
One-third of the 33 years of centralized governance were civil war years
Pre-decentralization deconcentration was highly asymmetric sector-wise
Decentralization preceded by years of reforms in other areas with less than desirable impact
institutional constraints to effective service delivery in Sierra Leone

4. Objectives of Fiscal Decentralization in Sierra Leone
The strongest reasons relate to economic development, political decentralization, fiscal discipline and administrative efficiency

5. Features of the Fiscal Decentralization System
Hard budget constraint
Borrowing by councils must be within guidelines
Councils prepare and approve own budgets
Councils provided with broad revenue raising powers with rate fixing powers
Funds follow the functions
Horizontal distribution of grants by formula

6. Champions Strong: The people and their elected representatives
The President
Ministry of Finance
External Donors
Weak:
Line MDAs
Ambivalent:
Ministry of Local Govt

7. Expenditure Assignment and Local Government Budget Processes
the expenditure assignment will be gradual, synchronised with an intensive capacity building for the councils
councils prepare and approve their own budgets, based on indicative grants ceiling from the centre, and their estimated own revenue

8. Revenue Assignment and Resource Distribution
Local councils have various revenue sources assigned to them, including head taxes, user fees, property rates, business licenses, shares in mining revenues, etc
a grants distribution system has been designed to reflect relative resource requirements on a function by function basis

9. Capacity Constraints and Capacity Building
capacity building high on the fiscal decentralization agenda of Sierra Leone
Brand new councils;
An inexperienced and long alienated electorate
Extremely Weak capacity at the centre
Minimal degree of deconcentration

10. Challenges and Risks Harmonizing and synchronizing donor interventions
Catching up on the outstanding implementing regulations and guidelines
Harmonizing existing laws
Transfer the hiring and firing powers in sync with the devolution process