A recent trend in decentralisation in some large, varied countries is the creation of local jurisdictions whose spending is almost exclusively financed by grants from regional and national government. This paper argues that such partial, grants-financed decentralisation enables politicians to target benefits to pivotal voters and organised interest groups in exchange for political support. In such circumstances, donor policies that increase grants to existing jurisdictions for greater local spending exacerbate patronage politics. Instead, donors need to strengthen institutional and governance interventions so as to undermine patronage incentives.
In many developing countries, governments’ choice of decentralisation instruments results in the creation of village-level governments. These have low capacity and almost no access to tax bases. Their spending and decision-making powers are restricted to the administration of higher-tier grants – for local infrastructure, for example. Further, decentralisation to municipalities or cities with revenue-raising potential has been stalled, with revenue powers retained by central or regional governments.
Why do some countries choose to decentralise only partially? The prevailing view is that it does not matter: even grants-based decentralisation to rural local governments addresses government responsiveness to poor citizens. However, an alternative perspective is that grants-financed decentralisation enables politicians to target benefits so as to ‘buy’ political support. Anecdotal evidence across a range of countries in Africa, South Asia, and Latin America supports this theory’s contentions that:
- Swing voters in local jurisdictions provide greater vote returns when allocated private transfers such as jobs, cash, subsidies, and in-kind transfers, instead of broad public goods such as quality health and education.
- Partial decentralisation enables politicians to win elections by dividing the strength of swing voters while continuing to provide benefits to core supporters.
- Decentralisation helps to prolong clientelistic political competition at the expense of broad public goods platforms, even when elections become more broad-based and contested.
New local governments are usually not devolved sufficient grants to fulfil the expenditure responsibilities assigned to them. Technical assistance and lending programmes typically focus on addressing these vertical and horizontal fiscal imbalances. However, the alternative theory proposed argues that jurisdiction boundaries are deliberately chosen to maintain dependence on grants for political purposes. Therefore increasing grants to existing jurisdictions for greater local spending exacerbates patronage politics. Instead, donors should strengthen strategies that focus on institutional and governance interventions. These undercut patronage incentives and enable voters to mobilise to demand broad public services. Brazil provides some examples:
- In the state of Ceara, mass radio information campaigns forced mayors to deliver basic health services in response to public pressure.
- A campaign to recruit public health workers, also in Ceara, widely publicised the role of communities in improving public health, tripling infant polio and measles vaccination within a few years.
- In 2003, the government introduced random auditing of 600 municipal government expenditures by an independent public agency. Audit findings were widely publicised. Disclosure of information significantly reduced the re-election rates of corrupt mayors.
