Fiscal Decentralization in Local Governments: Drivers to Over Central Government Dependence and Uneven Development in Tanzania

Abstract

Abstract Although decentralization is frequently used to improve service delivery and development, the impact of symmetrical fiscal decentralization on local government authorities ( lga s) and fair development has not been thoroughly investigated. Whilst symmetrical decentralization allows lga s to collect revenue and finance development projects, there are disparities among lga s in their ability to collect sufficient revenue and implement development projects. This study goes beyond prior research by investigating the way differences in the financial capacity of lga s affect development in various regions of Tanzania using a review of recent audit reports and studies. Results indicate that while certain lga s have shown a strong ability to collect revenue, others struggle considerably, due to factors such as historical background, revenue sources, population variations, urban-rural divides, and citizen awareness. Furthermore, the intergovernmental transfers, intended as an equalization strategy, have led to lga s remaining highly dependent on the central government and subject to the central government’s financial capacity. This study concludes that symmetrical fiscal decentralization in Tanzania has not achieved its intended goals. Despite some lga s over-collecting revenue, most remain heavily dependent on intergovernmental transfers, which are inconsistently distributed and often politically influenced, thus intensifying uneven development trends. The study recommends updating the 1998 policy to integrate asymmetrical decentralization, amending the Local Government Acts of 1982, building capacity to lga s, and shifting the central government’s role from controller to supporter.